S-1

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is the initial public offering of the common stock of PQ Group Holdings Inc., a Delaware corporation. PQ Group Holdings Inc. is offering shares of common stock to be sold in the offering.

Prior to this offering, there has been no public market for our common stock. The initial public offering price is expected to be between $ and $ per share. We intend to apply to list our common stock on the New York Stock Exchange under the symbol “PQG.”

See “Risk Factors” beginning on page 26 to read about factors you should consider before buying shares of our common stock.

To the extent that the underwriters sell more than shares of our common stock, the underwriters have the option for a period of 30 days from the date of this prospectus to purchase up to an additional shares of our common stock from us at the initial public offering price less the underwriting discount.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of our common stock on or about , 2017.

We have not authorized any person to provide you with any information or represent anything about us or this offering that is not contained in this prospectus or in any free writing prospectus we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Certain statistical information used throughout this prospectus is based on independent industry publications, reports by research firms or other published independent sources. Some statistical information is also based on our good faith estimates, which are derived from management’s knowledge of our industry and such independent sources referred to above. Certain supply share statistics, ranking and industry information included in this prospectus, including the size of certain markets and our estimated supply share position and the supply share positions of our competitors, are based on management estimates. These estimates have been derived from our management’s knowledge and experience in the industry and end uses into which we sell our products, as well as information obtained from surveys, reports by research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the industries into which we sell our products. We believe these data to be accurate as of the date of this prospectus. However, this information may prove to be inaccurate because this information cannot always be verified with complete certainty due to the limitations on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a result, you should be aware that industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable. We cannot guarantee the accuracy or completeness of any such information contained in this prospectus. Unless otherwise noted, all of our supply share position information presented in this prospectus is an approximation based on management’s knowledge and is based on our sales volumes relative to the estimated sales volumes for the year ended December 31, 2016 in relevant products or end uses into which we sell our products. In the case of our refining services product group, including the products and services thereof, such supply share position information excludes volume attributable to manufacturers who produce primarily for their own consumption. References to our being a leader in a supply share position or product group refer to our belief that we have one of the leading supply share positions, unless otherwise indicated or the context otherwise requires. In addition, references to various end uses into which we sell our products are based on how we define the end uses for our products.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them. In addition, we round certain percentages presented in this prospectus to the nearest whole number. As a result, figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. In addition, our name, logo and website name and address are our service marks or trademarks. Each trademark, trade name or service mark by any other company appearing in this prospectus belongs to its holder. Some of the more important trade names and trademarks that we use include Potters, PQ, Zeolyst, Zeolyst International and EcoServices. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the ™, ^SM, ^® and ^© symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, service marks, trade names and copyrights.

On May 4, 2016, we consummated a series of transactions (the “Business Combination”) to reorganize and combine the businesses of PQ Holdings Inc. (“PQ Holdings”) and Eco Services Operations LLC (“Eco”) under a new holding company, PQ Group Holdings Inc. (“PQ Group Holdings” or “the “company”), pursuant to a reorganization and transaction agreement, dated August 17, 2015, as amended, by and among PQ Group Holdings, PQ Holdings, PQ Corporation, Eco, Eco Services Holdings LLC, Eco Services Group Holdings LLC and certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP”). We refer to the business of PQ Holdings prior to the Business Combination as “legacy PQ” and the business of Eco prior to the Business Combination as “legacy Eco.”

Legacy Eco operated as a business unit of Solvay USA Inc. (“Solvay”) until the acquisition of substantially all of the assets of Solvay’s Eco Services business unit by Eco on December 1, 2014 (the “2014 Acquisition”). References in this prospectus to “Predecessor” include each of the periods from January 1, 2012 to November 30, 2014. For 2014, the results include 11 months of legacy Eco operating activity (January 1, 2014 to November 30, 2014) and include amounts that have been “carved out” from Solvay’s financial statements using assumptions and allocations made by Solvay to reflect Solvay’s Eco Services business unit on a stand-alone basis. References in this prospectus to “Successor” refer to the period from inception of Eco (July 30, 2014) to December 31, 2014, but only include one month of legacy Eco operating activity (December 1, 2014 to December 31, 2014), because there was no operating activity for the period from inception (July 30, 2014) to November 30, 2014, and reflect legacy Eco on a stand-alone basis.

On May 4, 2016, we consummated the Business Combination to reorganize and combine the businesses of PQ Holdings and Eco under a new holding company. In accordance with United States generally accepted accounting principles (“GAAP”), legacy Eco was the accounting acquirer in the Business Combination and, as such, legacy Eco is treated as our predecessor and therefore the financial information through May 4, 2016 only includes the results of legacy Eco. The financial information presented in this prospectus subsequent to May 4, 2016 is of PQ Group Holdings, which includes the operating results of legacy Eco and legacy PQ.

The following table summarizes, for each of the periods specified below and for which financial information is included for the issuer, PQ Group Holdings, in this prospectus, the portion, if any, of the financial results of the operations of legacy PQ and legacy Eco that is included in the financial results for such periods presented in accordance with GAAP.

The financial statements of our accounting predecessor contained in this prospectus for periods prior to the 2014 Acquisition are not necessarily indicative of what legacy Eco’s financial position, results of operations and cash flows would have been had legacy Eco operated as a separate, standalone entity independent of Solvay.

In an effort to supplement our financial information presented in accordance with GAAP, as a result of the required presentation of the 2014 Acquisition and the Business Combination and the related pro forma financial information presented in accordance with Article 11 of Regulation S-X, we have included in this prospectus the following non-GAAP financial measures to clarify and enhance an understanding of the historical results of our entire business:

Combined financial information and combined adjusted financial information do not reflect our results as presented in accordance with GAAP, may yield results that are not comparable on a period-to-period basis and may not reflect the actual results we would have achieved if the Business Combination had occurred at the beginning of the applicable period.

Additional information regarding our financial performance and non-GAAP measures, including pro forma adjusted financial information, combined financial information and combined adjusted financial information, together with a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure, is included in “Summary Historical and Unaudited Pro Forma Financial and Other Data.” In addition, such financial information should be read in conjunction with the disclosures set forth under “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes appearing elsewhere in this prospectus.

In connection with this offering, on , 2017, we effected a -for-1 split of our Class A common stock and then reclassified our Class A common stock into common stock. Immediately prior to this offering, we will convert each outstanding share of our Class B common stock into approximately shares of our common stock plus an additional number of shares determined by dividing the unreturned paid-in capital amount of such share of Class B common stock, or $ per share, by the initial public offering price of a share of our common stock in this offering, rounded to the nearest whole share. References to the “Reclassification” throughout this prospectus refer to the -for-1 split of our Class A common stock, the reclassification of our Class A common stock into our common stock and the conversion of our Class B common stock into our common stock. Unless otherwise indicated, all share data gives effect to the Reclassification, including the conversion of all shares of our Class B common stock into shares of our common stock, based upon an estimated Class B conversion factor determined by reference to an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus. Such share data is subject to change based on the actual number of shares of our common stock issued in connection with the conversion of our Class B common stock into our common stock. See “The Reclassification.”

PROSPECTUS SUMMARY

This summary highlights information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including the historical financial statements and related notes and the pro forma condensed combined financial information and related notes included elsewhere in this prospectus and the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” before deciding whether to invest in our common stock. Unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” “PQ Group Holdings,” or the “company” refer to PQ Group Holdings Inc. and its consolidated subsidiaries, including PQ Holdings Inc., Eco Services Operations Corp. and PQ Corporation, our primary operating company. We refer to the business of PQ Holdings Inc. prior to the Business Combination as “legacy PQ” and we refer to the business of Eco Services Operations LLC prior to the Business Combination as “legacy Eco.” See “Basis of Financial Presentation.” All information in this prospectus assumes no exercise of the underwriters’ option to purchase additional shares, unless otherwise noted.

Our Company

We are a leading global provider of catalysts, specialty materials and chemicals, and services that enable environmental improvements, enhance consumer products, and increase personal safety. Our products and solutions help companies produce vehicles with improved fuel efficiency and cleaner emissions. Our materials are critical ingredients in consumer products that make teeth brighter, skin softer, and wounds heal faster. We produce highly engineered materials that make highways and airports safer for drivers and pilots. Because our products are predominantly inorganic and carbon-free, we believe we contribute to improving the sustainability of our planet.

We believe our products deliver significant value to our customers, as demonstrated by our profit margins. Our products, which are mostly additives, catalysts, and services, typically constitute a small portion of our customers’ overall end-product costs yet are critical to product performance. For example, our catalysts are highly technical, customized products that require customer collaboration and significant lead time, resources, and intellectual property to develop. Through this collaborative innovation process, we have developed zeolite-based catalysts that are an effective and efficient method to reduce pollutants in diesel engines and enable our customers to meet increasingly stringent vehicle emission standards worldwide. In personal care applications, we have collaborated with leading consumer products companies over a number of years to develop a family of gentle silica-based dentifrice abrasives that produce more effective cleaning toothpastes. These collaborative efforts with our customers continue to drive our product innovation process.

Our value-added products seek to address global issues that are often either the subject of significant regulations or are driven by consumer preferences, which we believe positions us to grow in excess of gross domestic product growth rates. Consumer preferences and global regulations requiring environmentally friendlier products are at the core of many of our value-added products and, we believe, provide us with high-margin growth opportunities. For example, our products and services facilitate improvement in vehicle fuel efficiency and emissions, enable vehicles to be lighter, and allow tires to roll and engines to run with less friction. The production of higher octane gasoline, which is needed for certain smaller turbocharged engines, has generated additional demand for the alkylation units that use our refinery services.

For the year ended December 31, 2016, we generated sales of $1,064.2 million and a net loss of $(79.7) million, determined in accordance with GAAP. On a pro forma adjusted basis, which is a non-GAAP financial measure, we generated pro forma adjusted sales of $1,534.3 million and pro forma Adjusted EBITDA of $420.8 million, which represented a pro forma Adjusted EBITDA margin of approximately 27% for the same period. On a constant currency basis, our combined adjusted sales grew at a 1.5% compound annual growth rate from 2014 to 2016 and our combined Adjusted EBITDA grew at a 6.9% compound annual growth rate over the same time period. Additional information regarding our financial performance and non-GAAP measures, including pro forma adjusted sales, combined adjusted sales, pro forma Adjusted EBITDA and combined Adjusted EBITDA, together with a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure, is included in “Summary Historical and Unaudited Pro Forma Financial and Other Data.”

We have two reporting segments: environmental catalysts and services and performance materials and chemicals. In our environmental catalysts and services segment, we have three product groups: silica catalysts, zeolite catalysts, and refining services. In our performance materials and chemicals segment, we have two product groups: performance materials and performance chemicals.

In 2016, we served over 4,000 customers globally across many end uses from our 68 manufacturing facilities, which are strategically located across six continents. We believe we are a leader in each of our product groups, holding what we estimate to be a number one or number two supply share position for products that generated more than 90% of our 2016 pro forma sales. We believe that our global footprint and efficient network of strategically located manufacturing facilities provide us with a strong competitive advantage in serving our customers. We serve these customers both regionally as well as globally. We believe that we hold our leading supply share positions in the key regions that we serve while also benefiting from leading global presence and capabilities. Within our performance chemicals product group, we estimate that we had approximately three times the sodium silicate supply share of our closest competitor based on 2016 sales volume. This product group, which is the backbone across our additives and catalyst platform, is highly regionalized because of the expense of shipping sodium silicates extended distances due to their water content. Our refining services product group is also a highly regionalized business due to shipping costs and customer integration requirements, and in 2016 we estimate that we had a regenerated sulfuric acid supply share in excess of 50% in the United States, which we believe is substantially larger than our closest competitor. We recently reorganized our business to be market-based rather than product-based in order to better align our product groups with similar end uses to meet our customers’ needs.

We are highly diversified by business, geography, and end use, and in 2016 the majority of our pro forma adjusted sales were into applications that have historically had relatively predictable, consistent demand patterns driven by consumption or frequent replacement cycles.


2016 Pro Forma Adjusted Sales by End Use		2016 Pro Forma Adjusted Sales by Geography ⁽¹⁾


		(1) Based on the delivery destination for products sold in 2016.

Our Industry

We compete in the specialty chemicals and materials industry. Our industry is characterized by constant development of new products and the need to support customers with new product innovation and technical services to meet their challenges. In addition, customers demand consistent product quality and a reliable source of supply. Products sold to our customers can be highly value-added even when they represent only a small portion of the overall end product costs, and success can be achieved by helping customers improve their product performance, value, and quality. As a result, operating margins in this sector have historically been high and generally stable through economic cycles. In addition, many products in the specialty chemicals and materials industry benefit from economics that favor incumbent producers because the capital cost to expand existing capacity is typically significantly less than the capital cost necessary to build a new plant. The combination of attractive operating margins and moderate and generally predictable maintenance capital expenditure requirements can produce attractive cash flows. Our industry is also characterized by the need to produce consistent quality in a safe and environmentally sustainable manner.

The table below summarizes our key end use applications and products as well as the significant growth drivers in those applications.


Key End Uses	2016 Pro Forma Adjusted Sales⁽¹⁾			Significant Growth Drivers	Key PQ Products
Fuels & Emissions Controls		20	%	• Global regulatory requirements to: • Remove nitrogen oxides from emissions • Remove sulfur from diesel and gasoline • Increase gasoline octane in order to improve fuel efficiency while lowering vapor pressure to regulated levels for premium fuels • Improve lubricant characteristics to improve fuel efficiencies	• Refinery catalysts • Emissions control catalysts • Catalyst recycling services

Consumer Products		18	%	• Substitution of silicate materials for less environmentally friendly chemical additives in detergent and cleaning end uses • Demand for improved quality and shelf life of beverages • Demand for improved oral hygiene and appearance	• Silica gels for edible oil and beer clarification • Precipitated silicas and zeolites for the surface coating, dentifrice, and dishwasher and laundry detergent applications

Highway Safety & Construction		16	%	• Demand for enhanced “dry and wet” visibility of road and airport markings to improve safety • Drive for weight reduction in cements	• Reflective markings for roadways and airports • Hollow glass beads, or microspheres, for cement additives


Key End Uses	2016 Pro Forma Adjusted Sales⁽¹⁾			Significant Growth Drivers	Key PQ Products
Packaging & Engineered Plastics		17	%	• Demand for increased process efficiency and reduction of by-products in production of chemicals • Demand for high-density polyethylene lightweighting of automotive components • Enhanced properties in plastic composites for the automotive and electronics industries	• Catalysts for high-density polyethylene and chemicals syntheses • Antiblocks for film packaging • Solid and hollow microspheres for composite plastics

Industrial & Process Chemicals		21	%	• Demand in the tire industry for reduced rolling resistance • Usage of silicate in municipal water treatment to inhibit corrosion in aging pipelines • Growth in manufacturing in North America driving demand for metal finishing	• Silicate precursors for the tire industry • Silicate for water treatment • Glass beads, or microspheres, for metal finishing end uses

Natural Resources		8	%	• More environmentally friendly drilling fluids for oil and gas production • Recovery in global oil drilling / U.S. copper production • Growing demand for lighter weight cements in oil and natural gas wells	• Silicates for drilling muds • Hollow glass beads, or microspheres, for oil well cements • Sulfur derivatives for copper mining • Bleaching aids for paper

(1)

Pro forma adjusted sales percentages give effect to the consummation of the Business Combination and the related financing transactions as if they occurred on January 1, 2015 and include our proportionate share of total net sales of our Zeolyst Joint Venture, which we account for as an equity method investment in accordance with GAAP. For the year ended December 31, 2016, we had pro forma adjusted sales of $1,534.3 million, which included sales of $131.3 million representing our 50% proportionate share of our Zeolyst Joint Venture total net sales. As a result, the pro forma adjusted sales information presented does not reflect our sales as presented in our consolidated financial statements in accordance with GAAP.

Our Business

The table below summarizes certain information regarding our two reporting segments and our five product groups for the year ended December 31, 2016.


	Year ended December 31, 2016
(Dollars in millions) Segments and Product Groups	Sales			% of Total Sales			Pro Forma Adjusted Sales⁽¹⁾			% of Total Pro Forma Adjusted Sales⁽¹⁾⁽²⁾			Net Loss			Pro Forma Adjusted EBITDA⁽¹⁾			% of Total Pro Forma Adjusted EBITDA⁽¹⁾⁽³⁾			Estimated Supply Share Position⁽⁴⁾
Environmental Catalysts and Services:
Silica Catalysts	$	53.0			5.0	%	$	84.2			5.5	%											#2
Zeolite Catalysts		—			—			131.3			8.5	%											Primarily #1 or #2
Refining Services		373.7			35.0	%		373.7			24.3	%											#1

Subtotal	$	426.7			40.0	%	$	589.2			38.3	%				$	221.8			48.9	%
Performance Materials and Chemicals:
Performance Chemicals	$	437.5			41.0	%	$	663.9			43.2	%											Primarily #1⁽⁵⁾
Performance Materials		206.5			19.4	%		291.3			19.0	%											Primarily #1⁽⁶⁾
Sales Eliminations		(5.0	)		(0.4	%)		(8.0	)		(0.5	%)

Subtotal	$	639.0			60.0	%	$	947.2			61.7	%				$	231.8			51.1	%
Eliminations / Corporate		(1.5	)					(2.1	)								(32.8	)

Total	$	1,064.2			100.0	%	$	1,534.3			100.0	%	$	(79.7	)	$	420.8			100.0	%

(1)

Pro forma adjusted information gives effect to the consummation of the Business Combination and the related financing transactions as if they occurred on January 1, 2015 and include our proportionate share of the results of our Zeolyst Joint Venture, which we account for as an equity method investment in accordance with GAAP. For the year ended December 31, 2016, we had pro forma adjusted sales of $1,534.3 million, which included sales of $131.3 million representing our 50% proportionate share of our Zeolyst Joint Venture total net sales. As a result, the pro forma adjusted information presented does not reflect our results as presented in our consolidated financial statements in accordance with GAAP.

(2)	Percentage calculations exclude $2.1 million in intersegment sales eliminations.

(3)	Percentage calculations exclude $32.8 million in corporate expenses.

(4)

Estimated supply share positions are based on management’s estimates based on 2016 sales volume and represent our estimated global supply share positions for each of our product groups, except that the estimated supply share position for our refining services product group reflects our estimate of only our supply share position in the United States and excludes volume attributable to manufacturers who produce primarily for their own consumption.

(5)

We believe we hold #1 supply share positions with respect to products that accounted for approximately 73% of our performance chemicals product group’s 2016 pro forma adjusted sales, and that we hold #2 supply share positions with respect to products that accounted for the remaining approximately 27% of our performance chemicals product group’s 2016 pro forma adjusted sales.

(6)

We believe we hold #1 supply share positions with respect to products that accounted for approximately 89% of our performance materials product group’s 2016 pro forma adjusted sales, and that we hold #2 supply share positions with respect to products that accounted for the remaining approximately 11% of our performance materials product group’s 2016 pro forma adjusted sales.

We are an integrated, global provider of catalysts, specialty materials and chemicals, and services that share common end uses, manufacturing techniques, and process technology. For example, all of our product groups address challenges faced by global automotive companies to meet increasingly strict fuel efficiency standards.

Our manufacturing platform is based on furnace technology and proprietary knowledge developed from almost two centuries of combined experience at legacy PQ and legacy Eco applying silicates chemistry production and the development of applications across a broadening set of end uses. All of our product groups produce materials through our furnace process, other than our silica catalysts and zeolite catalysts product groups, which are derivatives of our performance chemicals product group. We believe we have a differentiated capability around furnace operations that enables us to operate more efficiently than most of our competitors.

Environmental Catalysts and Services

Our environmental catalysts and services business is a leading global innovator and producer of catalysts for the refinery, emissions control, and petrochemical industries and is also a leading provider of catalyst recycling services to the North American refining industry. We believe our products are mission critical for our customers in these growing applications and impart essential functionality in chemical and refining production processes and in emissions control for engines. Our catalysts are highly technical and customized for our customers and can require up to ten years of development and collaboration with customers in order to commercialize. Catalyst specifications are constantly evolving in order to address changing customer demands and requirements for lower cost and improved quality. As a result, we must continuously collaborate with our customers to create new and more efficient pathways for the production of chemicals and fuels. Our environmental catalysts and services business consists of three product groups: silica catalysts, zeolite catalysts, and refining services.

Silica Catalysts. In our silica catalysts product group, we sell both the finished catalyst and catalyst supports, which are critical catalyst components, for the production of high-density polyethylene (“HDPE”), a high strength and high stiffness plastic used in packaging films, bottles and containers, and other molded applications. We also produce a catalyst that is used globally for the production of methyl methacrylate, the monomer for acrylic engineering resins, a clear scratch-resistant plastic used in sheet or molded form to replace glass and as a durable surface coating.

Zeolite Catalysts. Our zeolite catalysts product group is a leading global supplier of emissions control catalysts as well as a supplier of specialty catalysts, precursors, and formulations to refineries and downstream petrochemicals and chemical companies. We operate through our Zeolyst Joint Venture with CRI Zeolites Inc., which is an affiliate of Royal Dutch Shell (“CRI”). Our Zeolyst Joint Venture is a long-standing partnership dating back to 1988, which combines our expertise in zeolites supply and technology and our partner’s expertise in global refinery catalyst sales and technology. These specialty zeolite-based catalysts are sold to the emissions control industry for use in diesel emission control units in both on-road and non-road diesel engines. In addition, our zeolite catalysts product group is a leading supplier of hydrocracking catalysts as a direct seller and supplier to other catalyst suppliers. This product group also produces other specialty catalysts, including aromatic catalysts that upgrade aromatic by-product streams, dewaxing catalysts that improve lube oil performance and diesel cold flow performance, and paraffin isomerization catalysts that upgrade olefins to high octane gasoline blending components, for refinery and petrochemical customers. From 2015 to 2020, global heavy- and light-duty diesel vehicle production is expected to grow at a compound annual growth rate of 4.1% and 2.8%, respectively. We believe that this estimated vehicle production growth combined with the continuing evolution of governmental regulation and product innovation involving emissions control will afford us with opportunities for growth in our zeolite catalysts product group.

Refining Services. Sulfuric acid is the primary catalyst used in the production of alkylates for gasoline production at refineries. Alkylates are a critical additive that increase octane in gasoline at low vapor pressure, and currently are used in most gasoline in the United States. Alkylate demand is expected to grow because its benefits are needed in certain smaller turbocharged engines to meet increasingly stringent fuel efficiency standards. The number of these turbocharged light-duty vehicles in the United States is expected to make up approximately 83% of all light-duty vehicles by 2025, a significant increase from approximately 18% in 2014, which we believe will increase the demand for higher-octane gasoline. Premium gasoline production grew at a

compound annual growth rate of 6.1% between 2011 and 2016 according to the United States Energy Information Administration. Our refining services product group provides recycling and end-to-end logistics for refiners who use sulfuric acid in their alkylation units. These recycling units also produce virgin sulfuric acid and sodium bisulfate, which we sell into the water treatment, mining, and general industrial and chemicals industries.

We estimate that we hold the number one supply share position in the United States for these sulfuric acid recycling services based upon our 2016 sales volume. Our refining services product group is highly regionalized due to shipping costs and customer integration requirements. Our facilities are located near or, in some cases, within our customers’ refineries and our products are often supplied directly to our customers by pipeline. In addition, product can be shipped by barge, rail, and truck. As a result, we believe that our integrated and strategically located network of facilities and end-to-end logistics assets in the United States provides us with a significant competitive advantage and would be costly for our competitors to replicate.

Our environmental catalysts and services business increased its sales from $35.5 million in 2014 (Successor period) to $426.7 million in 2016 (which reflects the Business Combination) and increased its Segment Adjusted EBITDA from $9.1 million in 2014 (Successor period) to $196.8 million in 2016 (which reflects the Business Combination). On a constant currency basis, our environmental catalysts and services business grew its combined adjusted sales at a 3.3% compound annual growth rate from 2014 to 2016 and grew its combined Adjusted EBITDA at a 16.2% compound annual growth rate over the same time period. This growth was driven in part by our focus on higher margin end uses and expansion of our customer base.

Performance Materials and Chemicals

Our performance materials and chemicals business is a silicates and specialty materials producer with leading supply positions in North America, Europe, South America, and Asia serving diverse and growing end uses such as personal and industrial cleaning products, fuel efficient tires (“green tires”), surface coatings, and food and beverage products. Our products are essential additives, ingredients, and precursors that are critical to the performance characteristics of our customers’ products, yet typically represent only a small portion of our customers’ overall end-product costs. We believe that our global footprint enables us to compete more effectively on a global basis due to the costs associated with shipping these products over extended distances and that our network of strategically located manufacturing facilities allows us to serve our customers at a lower cost than our competitors and with quicker delivery times for our products. Our performance materials are also being used in some cases as a substitute for less environmentally friendly materials. For example, specialty silicates are displacing phosphates in dish detergents, precipitated silicas are displacing carbon black in tires, and hollow and solid microspheres are displacing plastic volumes in transportation lightweighting applications. Our performance materials and chemicals business consists of two product groups: performance chemicals and performance materials.

Performance Chemicals. Our performance chemicals product group includes silicate products and derivatives, which are used in a variety of applications such as adsorbents for surface coatings, clarifying agents for edible oils and beverages, precursors for green tires, and additives for cleaning and personal care products. Silicates are a family of products manufactured primarily from readily available materials, such as industrial sand and soda ash. These raw materials are typically fused in a furnace and then dissolved in water under pressure to form water-soluble silicates for use in our downstream products, such as precipitated silica and silica gels. We sell our performance chemicals products to customers who use silicates as precursors, such as sodium silicates that are used in the growing precipitated silica applications, as well as for downstream derivative products, such as silicas used as additives in toothpaste formulation and silica gels that are used as adsorbents in food and beverage manufacturing. Our network of regional silicate plants is strategically located to support the customers that we serve. In addition, we maintain a few larger dedicated facilities to service our derivative products. Our performance chemicals product technology requires significant know-how and scale in order to be able to operate in a cost effective manner. We believe that we are the only global silicates producer who can supply all of the

major regions, and we estimate that we have three times the sodium silicates supply share as our nearest competitor based on 2016 sales volume. Key end uses for our performance chemicals products include catalyst precursors, food and beverage, personal care, cleaning products, coatings, tires, soil stabilization, paper de-inking, and sequestration. According to Notch Consulting, global demand for precipitated silica is estimated to grow at a compound annual growth rate of 5.8% between 2015 and 2020, driven primarily by expected increases in demand from tires, footwear and other rubber applications.

Performance Materials. Our performance materials product group includes specialty glass products, such as highly engineered microspheres made from either recycled glass or fresh batch material using our proprietary furnace operations. We believe that we are the industry leader in North America, Europe, South America, and Asia (excluding China) in microspheres. These products are used in the reflective markings used on roads and runways to enhance visibility at night and in poor weather to improve safety. Our microspheres, which can be solid or hollow, are also used as additives in plastics for lightweighting and as abrasive media, where they are used to clean, peen, and debur metal surfaces, such as for turbine blades used in aerospace and power generation industries.

Our performance materials and chemicals business increased its sales from zero in 2014 (Successor period) to $639.0 million in 2016 (which reflects the Business Combination) and increased its Segment Adjusted EBITDA from zero in 2014 (Successor period) to $158.7 million in 2016 (which reflects the Business Combination). On a constant currency basis, our performance materials and chemicals business grew its combined sales at a 0.6% compound annual growth rate from 2014 to 2016 and grew its combined Adjusted EBITDA at a 1.3% compound annual growth rate over the same time period. Excluding sales of products serving the oil and gas drilling industry, which experienced a cyclical downturn during 2014 and 2015, our performance materials and chemicals business grew its combined sales at a 2.0% compound annual growth rate from 2014 to 2016 and grew its combined Adjusted EBITDA at a 3.9% compound annual growth rate over the same time period. This growth was driven in part by our focus on higher margin products.

Our Competitive Strengths

Leading Global and Regional Positions in Attractive End Uses

We believe that we maintain a leading supply position in each of our major product groups, holding what we estimate to be the number one or two supply share position in 2016 for products that generated more than 90% of our pro forma sales. We believe that our global footprint and efficient network of strategically located manufacturing facilities provides us with a strong competitive advantage in serving our customers both globally and regionally, and that it would be costly for our competitors to replicate our network.

In our environmental catalysts and services business, we primarily compete on a global basis, with the exception of our refining services product group, where we compete on a more regional basis due to the costs associated with shipping these products over extended distances. We are a leading supplier of refinery hydrocracking catalysts and emissions control catalysts that are used in the heavy- and light-duty diesel industries to reduce nitrogen oxides emissions. We are also a global leader in specialty catalysts, such as catalysts for methyl methacrylate and for lube oil and diesel fuel dewaxing. In these applications, we primarily compete with other global producers such as W.R. Grace, BASF, UOP, and Albemarle, as well as other niche competitors such as Tosoh, Axens, and Haldor Topsoe.

In our refinery services product group, we compete in a number of regions where our facilities are required to be close to our refinery customers, and in some cases located within the refinery with a direct pipeline to deliver our product. We estimate that our refining services product group holds the number one supply share position in the United States in sulfuric acid regeneration based on 2016 sales volume with an estimated 53%

supply share. We also estimate that we had a 64% supply share in each of the West Coast and Gulf Coast areas based on 2016 sales volume, which we believe was greater than three times the supply share of our largest competitor. In our performance chemicals product group, where we also compete primarily on a regional basis due to the costs associated with shipping sodium silicates, we estimate that we had approximately three times the sodium silicates supply share of our nearest competitor based on 2016 sales volume. We are the only global silicates producer with operations in North America, Europe, and Asia. We believe that we have technical, cost, and proximity advantages in all of these regions as compared to our competitors as a result of the scale and breadth of our product offerings and operations.

These leadership positions serve industries that are attractive due to the need for customized and innovative products, stability of demand, and growth potential driven by the regulatory environment and consumer preferences. Our products generally require close customer collaboration to address end use challenges that are constantly evolving. We produce value-added products that are critical to the performance characteristics of our customers’ products. In addition, in 2016, a majority of our pro forma adjusted sales were to end uses such as fuels and emission controls, consumer products, and highway safety and construction that generally do not exhibit as pronounced cyclicality as other applications. Further, many of these end uses are growing due to increased global regulations, such as regulations regarding sulfur content in transportation fuel and particulate matter and nitrogen oxides emissions from on-road and non-road diesel engines. Increasingly stringent automotive fuel efficiency standards are also expected to lead to an increase in the demand for higher-octane gasoline. In addition, our products are ingredients in consumer products, which includes personal care and consumer cleaning products, where customers are seeking more environmentally friendly products without loss of effectiveness or performance. We believe that our products have the environmental and safety profile to address these evolving customer demands.

Long-Term, High-Quality Customer Relationships and Innovation Track Record

Many of our products require close customer collaboration to address application challenges that are constantly evolving. As a result, we work with our customers over many years in order to develop products to meet customized specifications and performance characteristics while also maintaining strict quality standards. The long lead-time required for product development and commercialization, which can be up to ten years in our environmental catalysts and services business, provides the opportunity for us to build long-term relationships with customers.

We collaborate with leading multinational companies that often seek global solutions. Our customers include large industrial companies such as BASF, Honeywell, and 3M, and global catalyst producers such as Albemarle and W.R. Grace. We also supply catalysts to leading chemical and petrochemical producers such as BASF, Dow Chemical, Lucite, LyondellBasell, and Shell. We supply personal care ingredients and additives to leading consumer products companies such as Unilever and Colgate-Palmolive. We have long-term relationships with our top ten customers, based on 2016 pro forma sales, that average more than 50 years. In addition, our customer base is diversified, with our top ten customers in 2016 representing approximately 24% of our pro forma sales for the year ended December 31, 2016 and no customer representing more than 4% of our pro forma sales during this period.

These long-term relationships have allowed us to innovate together with our customers to meet evolving demands. For example, we have developed zeolite-based catalysts that are an effective and efficient method to reduce pollutants from heavy- and light-duty diesel engines and enable our customers to meet increasingly stringent vehicle emission standards worldwide. In personal care applications, we have collaborated with leading consumer products companies over a number of years to develop a family of gentle silica-based dentifrice abrasives that produce more effective cleaning toothpastes. In addition, our proprietary silica catalyst has enabled development of a high strength HDPE resin that is used for making lightweight plastic gasoline tanks for automobiles.

Attractive and Stable Margins and Cash Flow

We have demonstrated the ability to maintain stable margins while continuing to grow our business in different macroeconomic environments. Our non-GAAP Adjusted EBITDA margins have averaged approximately 25.5% between 2012 and 2016. We believe that the stability of our margins and cash flows during this period is because our value-added products, which are critical to the performance of our customers’ products, typically represent only a small portion of our customers’ overall end-product costs.

Non-GAAP Adjusted EBITDA Margin⁽¹⁾

(1) Combined Adjusted EBITDA margin is presented for 2012 through 2015, pro forma Adjusted EBITDA margin is presented for 2016 and Adjusted EBITDA margin is presented for the first quarter of 2017.

Our products are predominantly inorganic and carbon-free, and are produced from readily available raw materials such as industrial sand and soda ash, which prices have historically been less volatile than oil. We also use natural gas in our furnaces where our North American facilities have benefited from the plentiful supplies of shale gas. In addition, we have long-term supply contracts with many of our key raw materials suppliers across our product groups. We have also been able to mitigate the impact of raw material or energy price volatility using a variety of mechanisms, including hedging and raw material cost pass-through clauses in our sales contracts and other adjustment provisions. For the year ended December 31, 2016, approximately 45% of our North American silicate pro forma sales, which is a significant portion of our performance chemicals product group sales, and approximately 94% of our refining services product group pro forma sales were sold under contracts that included raw material pass-through clauses.

For the year ended December 31, 2016, our net cash provided by operating activities was $119.7 million and our pro forma adjusted free cash flow conversion was 59%. Additional information regarding pro forma adjusted free cash flow conversion, including the definition thereof, is included in “Summary Historical and Unaudited Pro Forma Financial and Other Data.” Our free cash flow conversion is driven, in part, by our disciplined capital investment and tax attributes that may provide cash flow benefits in the future. We have invested in our infrastructure and growth over the last three years, and we expect to realize returns on these investments in the future with limited additional investment requirements. As of December 31, 2016, we had $383.2 million of net operating losses for U.S. federal income tax purposes, along with related net operating losses for state tax purposes, and $671.4 million of identified intangibles and goodwill from the Business Combination transaction, both of which may provide us with additional cash tax savings in future years in which we generate taxable income.

Strong Growth Potential Across the Portfolio

We focus on serving end use applications where we believe significant future growth potential exists. Our products address our customers’ needs, which are typically driven either by regulatory regimes or consumer preferences, on a global basis. In addition, our product sales and development efforts are driven by regional

infrastructure and development trends. In vehicles, we address regulated heavy- and light-duty diesel emission standards and sulfur content and vapor pressure requirements in gasoline. We expect that these regulations will create growth opportunities in excess of gross domestic product growth rates due to the constantly evolving standards that our customers need to address with new and improved products.

Light- and heavy-duty diesel engines are subject to a broad set of regulatory requirements, and we expect that these increasingly stringent standards will offer opportunities for our Zeolyst Joint Venture to develop products to assist our customers in meeting these standards. Countries typically adopt a set of standards that limit the amount of nitrogen oxides, carbon dioxide, and other emissions allowed for diesel engines. In many cases countries have established regulations that generally follow United States Environmental Protection Agency or European Union standards, but typically on a later implementation timeline. In addition, even more restrictive regulations are expected to be adopted in the future in many jurisdictions, such as EU VII, which would further reduce permitted emissions levels in the European Union. We believe that compliance with existing regulations as well as any future regulations provides us with opportunities to grow our sales of emissions control catalysts.

The following chart identifies the regulatory requirements for certain countries and regions in relation to the most comparable European Union standard for ease of comparability. See “Industry—Fuels & Emissions Controls” for more information regarding the European Union standards referred to in the chart below.

LOGO

Source: The International Council on Clean Transportation

Given the fuel efficiency standards that are driving the design of new engines and the resulting higher-octane gasoline requirements that can be achieved through alkylate blending, we believe that our refining services product group is well positioned to benefit from any related growth in demand for alkylates.

We produce catalysts for HDPE and methyl methacrylate production in the packaging and engineered plastics applications. According to an industry source, North American HDPE capacity is expected to grow at a compound annual growth rate of approximately 5.1% between 2016 and 2020, driven by North America’s global cost position in petrochemicals and increased use of these plastics as a substitute for heavier and less versatile

materials such as glass and metal. Methyl methacrylate is the monomer for acrylic engineering resins, a clear scratch-resistant plastic used in sheet form to replace glass and as a surface coating. We believe that we have an opportunity to grow our methyl methacrylate catalysts sales in the future as methyl methacrylate production increases as a result of, in part, increased production efficiencies enabled by our catalysts.

We believe that additional demand for retroreflectivity (or visibility) for roadway and aviation markings could provide us with significant growth opportunities. We benefit from increased use and density per mile of road markings that include our products. The most recent innovation from our performance materials product group is our ThermoDrop product, which simplifies the road striping operations for our customers by using a new durable thermal plastic road marking material. We have also introduced a new faster-drying road marking system, Visilok, which can reduce traffic disruption during striping operations and improve road worker safety by reducing the amount of time needed to complete the road marking process.

We also expect to benefit from trends towards the use of more environmentally friendly products where we believe we have opportunities to displace other less environmentally friendly materials. For example, our Ambosol magnesium silicate is used to eliminate color and odors in polyols, which are used in the production of polyurethane for, among other things, household products such as scratch-resistant coatings and foam insulation. In addition, our specialty silicates are displacing phosphates in dish detergents, precipitated silicas are displacing carbon black in tires, and solid and hollow microspheres are displacing plastic volumes in lightweighting applications. Most of our products are manufactured from commonly found materials such as industrial sand and soda ash, which are more environmentally friendly than carbon-based products. We have also developed a family of gentle silica-based dentifrice abrasives that produce more effective cleaning toothpastes and we have developed a product family, Britesil silicates, which improves convenience while eliminating phosphates in automatic dishwashing applications.

Experienced Management Team

Our senior management team has substantial industry experience and a proven track record. They average over 30 years of experience in our product groups, and their cumulative industry experience extends to a broad range of execution capabilities, including acquisition integration, strategic management, operations, sales and marketing, and new product and application development. In 2016, our management team integrated legacy Eco into our environmental catalysts and services business while also growing the business and successfully implementing cost initiatives. Our senior management team has also reorganized our company from a products-based business to a markets-based business to better align our offerings with the needs of our customers. There is a renewed focus on serving our customers by developing solutions through technical sales, services, and product development, and we have added additional management personnel experienced in innovation and market driven organizations. Our management owns approximately 11% of our outstanding common stock immediately prior to this offering, which we believe creates an alignment of interest with our shareholders.

Our Business Strategy

Our business strategy is to capitalize on our strong foundation, market-based approach, and management team to grow sales profitably, deploy capital efficiently, and generate free cash flow in order to create shareholder value. We believe that our history of operational excellence, technology leadership, and strong business execution developed from our almost two centuries of combined industry experience at legacy PQ and legacy Eco positions us well to execute on our business strategy. In the last two years, we have added senior executives to our management team, including our chief executive officer, Jim Gentilcore, and chief financial officer, Mike Crews, who bring significant public company leadership experience and a track record of customer-focused innovation and disciplined capital allocation to our business. We believe that Mr. Gentilcore’s

experience in the electronics industry is particularly relevant to our innovation efforts as we pursue new product innovation across our product groups. In addition, we believe that our recent reorganization better aligns our management structure with our customer needs to enable us to make more focused sales and product innovation investments. We believe there are significant opportunities to profitably grow our business, generate free cash flow and deliver shareholder value by executing on the following strategies:

Shift from a Products-based to a Markets-based Company

Our reorganization from a products-based to a markets-based company is fundamental to our growth strategy. Following the consummation of the Business Combination in May 2016, we have further realigned our product groups around critical markets that we serve. The combination of the legacy Eco and legacy PQ businesses expanded our presence in the refinery industry and provided us with valuable insight into key success factors for serving our refining and petrochemical customers. We have undertaken a similar approach in other important end uses that we serve such as personal care, highway safety, oil and gas, surface coatings, and electronics.

Our solution-oriented process starts with our customer’s specific needs, which are then identified as a product or service opportunity that is defined, sized, and evaluated to determine if it is within the core strength of our global development team. If not within our core capabilities, but determined to be a strategically important opportunity, we initiate a search for outside technology, partnerships, or acquisition targets that can deliver a cost-effective and profitable solution. This approach is in contrast to our prior approach developing products or new formulations first and then seeking to identify applications into which to sell that product or new formulation. We believe that our markets-based approach will result in product innovation that better meets our customers’ needs and supports our profitable growth.

Our sales and marketing organization has a broad base of customer and marketing experience. Since our business reorganization, we believe each of our operating segments has simplified its customer contact points and increased knowledge about the industries we serve. We have been able to eliminate duplicate sales calls that would occur among our previous business divisions and can prioritize our efforts around our most influential customer contacts. We have also removed the silos that previously impeded our ability to share important customer information within our organization. This integrated marketing effort allows for more rapid analysis and decision-making for our major strategic customers who are often served by multiple product groups. We believe these operational improvements will enable us to reduce product commercialization time and increase our return on marketing investment.

Prioritize Investment and Development to Innovate and Profitably Grow Sales

We have been able to successfully grow our sales into new applications through our innovation and development of new products to address evolving customer needs. For example, our zeolite catalysts product group developed new products to address new regulatory standards regarding vehicle emissions, and our performance chemicals product group collaborated with our customers to develop precipitated silica products to address their demands for more green tires. We will continue to focus on collaboration with our customers through our technical sales and research and development teams to better understand and address our customers’ evolving needs and invest in our growth by prioritizing innovation driven by these identified needs.

Within our innovation and product development process, our technology teams work closely with our customer facing teams to identify compelling customer needs that can be addressed through innovation or new product development. We seek to assess technology and commercialization hurdles early on in the development process so that we can quickly and efficiently evaluate our opportunity and, where appropriate, deprioritize, or abandon projects before expending significant resources. We are improving the way our research and development team shares information by removing silos and holding regular senior-level project reviews to

ensure best practices are shared and consistent metrics are used to determine a project’s merit and the size of the potential opportunity. We have already begun to see the benefits of our new processes with the successful commercialization of ThermoDrop, which we launched in February 2017. We collaborated with key customers to develop the ThermoDrop technology, which uses our highway safety microspheres and a proprietary striping application technology to enable our customers to more efficiently stripe highways. This technology has received strong customer acceptance since launch, and we are increasing our production to meet anticipated demand.

We will also selectively consider acquisitions as part of our growth strategy. We have identified a number of potential acquisition targets with complementary fits across both of our operating segments and, consistent with our markets-based focus, these targets also include downstream-focused businesses. We will seek to use acquisitions to increase our geographic presence, diversify our product offerings, and further secure our leadership positions with our customer base. We intend to focus our acquisition efforts on opportunities in our higher value-added solutions within or adjacent to our current product offerings. We intend to pursue these transactions in a disciplined manner by rigorously evaluating return on capital against our cost of capital in addition to the potential strategic benefits. We believe that our integration of legacy Eco demonstrates our ability to successfully execute on acquisitions and realize available synergies and other benefits.

Maintain Strong Margins and Cash Flow with Continuous Improvement Initiatives

Our margins historically have been stable due to our strong and long-standing value proposition to our customers and our strong technological, operational, and product capabilities. We intend to maintain and improve upon these margins by leveraging our operational excellence and continuing our approach to raw material cost pass-through and other appropriate cost sharing arrangements with our customers. We believe that our new organizational structure will allow us to better leverage distribution channels across our products in order to address end uses such as paints and coatings, personal care, and oil and gas, and we have also integrated our continuous improvement teams across our operating segments. For example, we have established a new global furnace operations team, a global engineering team, and a global sales and operations planning team to share best practices across all of our product groups. We have also formalized our sharing of best practices across many functional disciplines, such as supply chain, technology, working capital, and capital expenditure management. From these efforts, we expect to be able to reduce costs in our operations in order to increase our cash flow.

Risk Factors

An investment in our common stock involves a high degree of risk. Any of the factors set forth under “Risk Factors” may limit our ability to successfully execute on our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under “Risk Factors” in deciding whether to invest in our common stock. Among these important risks are the following:

•

as a global business, we are exposed to local business risks in different countries, which could have a material adverse effect on our financial condition, results of operations and cash flows;

•

we are affected by general economic conditions and an economic downturn could adversely affect our operations and financial results;

•

alternative technology or other changes in our customers’ products may reduce or eliminate the need for certain of our products;

•

if we are unable to pass on increases in raw material prices, including natural gas, to our customers or to retain or replace key suppliers, our results of operations and cash flows may be negatively affected;

•

certain of our product groups are subject to government regulation and could be adversely affected by future governmental regulation; and

•

as of March 31, 2017, we had total outstanding indebtedness of approximately $2,629.4 million and our substantial debt could limit our ability to pursue our growth strategy.

Our Principal Stockholders

Investment funds affiliated with CCMP, INEOS Investments Partnership (“INEOS”) and members of management and our board of directors acquired their respective ownership of PQ Group Holdings as a result of the following series of transactions:

•

In December 2014, investment funds affiliated with CCMP acquired an approximate 49% equity interest in PQ Holdings. INEOS and members of management owned the remaining approximate 51% equity interest in PQ Holdings.

•

Also in December 2014, investment funds affiliated with CCMP acquired an approximate 95% equity interest in Eco Services Group Holdings LLC, the indirect parent of Eco. Members of Eco’s management owned the remaining approximate 5% equity interest in Eco Services Group Holdings LLC.

•

In May 2016, we completed the Business Combination, in which the equity interests of PQ Holdings and Eco Services Group Holdings LLC were converted into equity interests in PQ Group Holdings.

As of March 31, 2017, and prior to giving effect to this offering and the Reclassification, investment funds affiliated with CCMP, INEOS, and members of management and our board of directors owned equity securities representing approximately 58%, 31%, and 11%, respectively, of our voting power. Investment funds affiliated with CCMP and INEOS will continue to hold a controlling interest in us, will continue to have significant influence over us and decisions made by our stockholders and may have interests that differ from yours. See “Risk Factors—Risks Related to this Offering and to our Common Stock.”

CCMP is a leading global private equity firm specializing in buyouts and growth equity investments in companies ranging from $250 million to more than $3 billion in assets. CCMP’s founders have invested over $16 billion since 1984, which includes their activities at J.P. Morgan Partners, LLC (a private equity division of JPMorgan Chase & Co.) and its predecessor firms. CCMP was formed in August 2006 when the buyout and growth equity investment professionals of J.P. Morgan Partners, LLC separated from JPMorgan Chase & Co. to commence operations as an independent firm. The foundation of CCMP’s investment approach is to leverage the combined strengths of its deep industry expertise and proprietary operating resources to create value by investing in three targeted industries—Industrial, Consumer and Healthcare.

INEOS is a leading manufacturer of petrochemicals, specialty chemicals and oil products. Comprising 18 businesses, with a production network spanning 105 manufacturing facilities in 22 countries, it produces more than 60 million tonnes of petrochemicals, 20 million tons per annum of crude oil refined products (fuels) and in 2016 it had sales of approximately $40 billion. Worldwide, INEOS employs 18,500 people. Its management philosophy is to operate a simple and decentralized organizational structure.

Additional Information

PQ Group Holdings Inc. was incorporated in Delaware on August 7, 2015. Our principal executive offices are located at 300 Lindenwood Drive, Valleybrooke Corporate Center, Malvern, Pennsylvania 19355, and our telephone number is (610) 651-4400. Our website address is www.pqcorp.com. The information that appears on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making the decision whether to purchase our common stock.

The Offering



Common stock offered by us		shares (or shares if the underwriters exercise their option to purchase additional shares in full).

Underwriters’ option to purchase additional shares		We have granted the underwriters a 30-day option from the date of this prospectus to purchase up to an additional shares.

Common stock to be outstanding after this offering		shares (or shares if the underwriters exercise the option to purchase additional shares in full). See “Description of Capital Stock.” For additional information regarding the impact of a change in the initial public offering price on the number of shares outstanding after completion of this offering related to the conversion of our Class B common stock, see “The Reclassification.”

Use of proceeds		We expect to receive net proceeds, after deducting underwriting discounts and commissions and estimated expenses payable by us, of approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares in full), based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus. We intend to use the net proceeds from the sale of our common stock in this offering to repay approximately $ million in aggregate principal amount of indebtedness, to pay fees and expenses associated with this offering and for working capital and other general corporate purposes. See “Use of Proceeds.”

Dividend policy		Our board of directors does not currently intend to pay dividends on our common stock. See “Dividend Policy.”

Principal stockholders		Upon completion of this offering, investment funds affiliated with CCMP and INEOS will continue to hold a controlling interest in us. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange. See “Management—Board Structure and Committee Composition.”

Risk factors		Investing in our common stock involves a high degree of risk. You should read carefully the “Risk Factors” section of this prospectus, beginning on page 26, for a discussion of factors that you should consider before deciding to invest in our common stock.

Proposed stock exchange symbol		“PQG.”

SUMMARY HISTORICAL AND UNAUDITED PRO FORMA

FINANCIAL AND OTHER DATA

The following table sets forth our summary historical and unaudited pro forma financial and other data as of the dates and for the periods indicated. The historical statement of operations data and cash flows data for the three month periods ended March 31, 2017 and 2016 and the historical balance sheet data as of March 31, 2017 presented below have been derived from our unaudited consolidated financial statements and related notes thereto included elsewhere in this prospectus. The statement of operations data and cash flows data for the years ended December 31, 2016 and 2015 and the balance sheet data as of December 31, 2016 and 2015 presented below have been derived from our audited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The statement of operations data and cash flows data for the period from inception (July 30, 2014) to December 31, 2014 have been derived from our Successor period financial statements and the related notes thereto included elsewhere in this prospectus. The balance sheet data as of December 31, 2014 has been derived from our Successor period financial statements and the related notes thereto, which are not included in this prospectus. The statement of operations data and cash flows data for the period from January 1, 2014 to November 30, 2014 have been derived from our Predecessor period financial statements and the related notes thereto included elsewhere in this prospectus. See “Basis of Financial Presentation.”

The unaudited pro forma statement of operations data gives effect to the Business Combination and the related financing transactions as if they occurred on January 1, 2015 and is derived from our historical consolidated financial statements and legacy PQ consolidated financial statements included elsewhere in this prospectus. Unaudited pro forma balance sheet data as of March 31, 2017 and statement of operations data for the three months ended March 31, 2017 is not presented because the Business Combination and related financing transactions are included in our consolidated financial results as of such date and for such periods. The unaudited pro forma statement of operations data is illustrative and not intended to represent what our results of operations would have been had the Business Combination and related financing transactions occurred on January 1, 2015 or to project our results of operations for any future period. The unaudited pro forma statement of operations data may not be comparable to, or indicative of, future performance.

This summary historical and unaudited pro forma financial and other data should be read in conjunction with the disclosures set forth under “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto appearing elsewhere in this prospectus.


															Successor			Predecessor
	Three months ended March 31,						Pro forma year ended December 31,			Years ended December 31,					Period from inception (July 30, 2014) to December 31, 2014			Period from January 1, 2014 to November 30, 2014
	2017			2016			2016			2016			2015					Period from January 1, 2014 to November 30, 2014
	Unaudited						Unaudited
(Dollars in thousands)
Statement of operations data:
Sales	$	332,931		$	93,913		$	1,403,041		$	1,064,177		$	388,875	$	35,539		$	361,823
Cost of goods sold		250,219			67,812			1,037,109			810,085			278,791		30,160			265,829

Gross profit		82,712			26,101			365,932			254,092			110,084		5,379			95,994
Selling, general and administrative expenses		34,449			8,131			145,041			107,601			34,613		2,623			45,168
Other operating expense, net		10,348			9,922			74,972			62,301			19,696		16,347			5,593

Operating income (loss)		37,915			8,048			145,919			84,190			55,775		(13,591	)		45,233
Equity in net (income) loss from affiliated companies		(5,877	)		—			(35,210	)		2,612			—		—			—
Interest expense, net		46,785			11,029			187,945			140,315			44,348		8,470			86
Debt extinguishment costs		—			—			1,793			13,782			—		—			—
Other (income) expense, net		2,232			—			(8,869	)		(3,402	)		—		—			—

(Loss) income before income taxes and noncontrolling interest		(5,225	)		(2,981	)		260			(69,117	)		11,427		(22,061	)		45,147
(Benefit) provision for income taxes		(2,910	)		150			57,967			10,041			—		—			14,602

Net (loss) income		(2,315	)		(3,131	)		(57,707	)		(79,158	)		11,427		(22,061	)		30,545
Less: Net income attributable to the noncontrolling interest		139			—			1,225			588			—		—			—

Net (loss) income attributable to PQ Group Holdings Inc.	$	(2,454	)	$	(3,131	)	$	(58,932	)	$	(79,746	)	$	11,427	$	(22,061	)	$	30,545


													Successor
	Three months ended March 31,						Years ended December 31,						Period from inception (July 30, 2014) to December 31, 2014
	2017			2016			2016			2015
	Unaudited

Earnings (loss) per share:
Basic
Class A shares	$	(5.71	)	$	—		$	(185.43	)	$	—		$	—
Class B shares		—			(2.07	)		—			7.58			(14.78	)
Diluted
Class A shares	$	(5.71	)	$	—		$	(185.43	)	$	—		$	—
Class B shares		—			(2.07	)		—			7.58			(14.78	)
Pro Forma
Class A shares	$	—		$	—		$	(137.03	)	$	—		$	—
Class B shares		—			—			—			—			—
Weighted average shares outstanding:
Basic
Class A shares		429,985			—			430,051			—			—
Class B shares		6,676,813			1,512,944			4,947,982			1,507,719			1,492,682
Diluted
Class A shares		429,985			—			430,051			—			—
Class B shares		6,676,813			1,512,944			4,947,982			1,507,719			1,492,682
Pro Forma
Class A shares		—			—			430,051			—			—
Class B shares		—			—			4,947,982			—			—

													Successor			Predecessor
	Three months ended March 31,						Years ended December 31,						Period from inception (July 30, 2014) to December 31, 2014			Period from January 1, 2014 to November 30, 2014
(Dollars in thousands)	2017			2016			2016			2015						Period from January 1, 2014 to November 30, 2014
	Unaudited

Balance sheet data (at end of period):
Cash and cash equivalents	$	54,126					$	70,742		$	25,155		$	22,627
Property, plant and equipment, net		1,185,141						1,181,388			481,073			472,156
Total assets		4,274,209						4,259,671			1,007,636			1,025,094
Total debt, including current portion		2,576,002						2,562,198			673,101			675,254
Total stockholders’ equity		1,040,668						1,027,944			235,293			217,824
Cash flows data:
Net cash provided by (used in):
Operating activities	$	6,696		$	18,114		$	119,720		$	44,715		$	(2,057	)	$	57,593
Investing activities		(27,094	)		(8,819	)		(1,929,680	)		(38,725	)		(888,347	)		(32,852	)
Financing activities		6,915			(1,012	)		1,861,433			(3,462	)		913,031			(24,741	)


	Three months ended March 31,				Years ended December 31,				Combined year ended December 31, 2014⁽¹⁾
(Dollars in thousands)	2017		2016		2016		2015		Combined year ended December 31, 2014⁽¹⁾
	Unaudited
Non-GAAP and other financial and operating data⁽²⁾:
Sales⁽³⁾:
Adjusted sales	$	365,639
Combined adjusted sales			$	357,526	$	1,534,306	$	1,573,019	$	1,619,000
Constant currency combined adjusted sales				354,561		1,517,498		1,528,783	$	1,471,864
Adjusted EBITDA⁽⁵⁾:
Adjusted EBITDA	$	101,183
Pro forma or combined Adjusted EBITDA⁽⁴⁾			$	89,516	$	420,746	$	413,145	$	395,298
Constant currency pro forma or combined Adjusted EBITDA⁽³⁾				88,604		416,378		403,555		364,563

(1)	Combined year ended December 31, 2014 represents the sum of the Successor and Predecessor periods and legacy PQ for the year ended December 31, 2014. Amounts included in the combined year ended December 31, 2014 are presented on a non-GAAP basis.

(2)

To supplement our financial information presented in accordance with GAAP, we use the following non-GAAP financial measures to clarify and enhance an understanding of the historical results of our entire business: adjusted sales, pro forma adjusted sales, combined adjusted sales, constant currency pro forma adjusted sales, constant currency combined adjusted sales, Adjusted EBITDA, pro forma Adjusted EBITDA, combined Adjusted EBITDA, constant currency pro forma Adjusted EBITDA, constant currency combined Adjusted EBITDA, Adjusted EBITDA margin, pro forma Adjusted EBITDA margin, combined Adjusted EBITDA margin, and adjusted free cash flow conversion (collectively, the “Non-GAAP Financial Measures”). We believe that the presentation of these Non-GAAP Financial Measures enhances an investor’s understanding of our financial performance. We further believe that these Non-GAAP Financial Measures are useful financial metrics to assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business. We also believe that these financial measures provide investors with a useful tool for assessing the comparability between periods as a result of the 2014 Acquisition and the Business Combination. We use these Non-GAAP Financial Measures for business planning purposes and in measuring our performance relative to that of our competitors. Each of the Adjusted EBITDA Non-GAAP Financial Measures presented in this prospectus includes an adjustment for depreciation, amortization and interest of our 50% share of our Zeolyst Joint Venture, which is accounted for under the equity method of accounting.

We believe these Non-GAAP Financial Measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of such Non-GAAP Financial Measures may vary from that of others in our industry. These Non-GAAP Financial Measures should not be considered as alternatives to sales, operating income (loss), net income (loss), earnings per share, cash flows data or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity.

EBITDA consists of net (loss) income attributable to us before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items that are included in net income and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) depreciation, amortization and interest of our Zeolyst Joint Venture as described above. In the case of Adjusted EBITDA, we believe that making such adjustments provides investors meaningful information to understand our operating results and ability to analyze financial and business trends on a period-to-period basis.

EBITDA and Adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

•

EBITDA and Adjusted EBITDA:

^¡

do not reflect the significant interest expense on our debt;

^¡

exclude impairments and adjustments for step-up amortization; and

^¡

do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

•

other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these Non-GAAP Financial Measures only supplementally.

In calculating EBITDA and Adjusted EBITDA, we add back certain non-cash, nonrecurring and other items and make certain adjustments that are based on assumptions and estimates. In addition, in evaluating these Non-GAAP Financial Measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

Constant currency information reflects comparative local currency financial information at the average foreign exchange rates for the three months ended March 31, 2017 for all historical periods. This measure provides information on pro forma adjusted sales, combined adjusted sales, pro forma Adjusted EBITDA and combined Adjusted EBITDA, assuming that foreign currency exchange rates had not changed between current and historical periods. The company believes such Non-GAAP Financial Measures, when used in conjunction with the GAAP measure of sales at actual currency rates, provides additional insight into the company’s operations, particularly in evaluating performance from one period to another without the impact of foreign currency charges.

(3)	The following table reconciles sales to adjusted sales, pro forma adjusted sales, combined adjusted sales, constant currency pro forma adjusted sales and constant currency combined adjusted sales for the periods presented.


												Legacy PQ Year ended December 31,			Successor		Predecessor
	Three months ended March 31,		Three months ended March 31,			Year ended December 31,			Year ended December 31,			Legacy PQ Year ended December 31,			Period from inception (July 30, 2014) to December 31,		Period from January 1, 2014 to November 30,
(Dollars in thousands)	2017		2016			2016			2015			2014			2014		2014
	Unaudited
Sales:
Sales	$	332,931	$	93,913		$	1,064,177		$	388,875		$	—		$	35,539	$	361,823
PQ legacy sales^(a)				236,990			338,864			1,024,326			1,114,904			—		—
Zeolyst Joint Venture sales^(b)		32,708		26,623			131,265			159,818			106,734			—		—

Adjusted sales	$	365,639

Combined adjusted sales^(c)				357,526			1,534,306			1,573,019			1,221,638			35,539		361,823
Foreign currency impact^(d)				(2,965	)		(16,808	)		(44,236	)		(147,136	)		—		—

Constant currency combined adjusted sales^(c)			$	354,561		$	1,517,498		$	1,528,783		$	1,074,502		$	35,539	$	361,823

(a)

Represents historical results of legacy PQ inclusive of eliminations between legacy Eco and legacy PQ of $0.4 million for the three months ended March 31, 2016. See “Supplemental Selected Consolidated Financial Data of Legacy PQ.”

(b)

Represents our 50% proportionate share of total net sales of our Zeolyst Joint Venture.

(c)

Represents combined financial information for each of the periods presented.

(d)

Represents the foreign currency impact on combined adjusted sales applying the average exchange rates in effect for the three months ended March 31, 2017.

(4)	Represents pro forma financial information for the year ended December 31, 2016 and combined financial information for each of the other periods presented.

(5)

The following table reconciles our net income (loss) to EBITDA, Adjusted EBITDA, pro forma Adjusted EBITDA, combined Adjusted EBITDA, constant currency pro forma Adjusted EBITDA and constant currency combined Adjusted EBITDA for the periods presented. Combined Adjusted EBITDA for the periods ended March 31, 2016, December 31, 2015 and the combined year ended December 31, 2014 represents the sum of our Adjusted EBITDA with that of legacy PQ. Our combined Adjusted EBITDA for the year ended December 31, 2014 represents the sum of the Successor and Predecessor periods and legacy PQ for the year ended December 31, 2014.


																	Successor			Predecessor
	Three months ended March 31,						Pro forma year ended December 31,			Years ended December 31,					Legacy PQ year ended December 31, 2014		Period from inception (July 30, 2014) to December 31, 2014			Period from January 1, 2014 to November 30, 2014
	2017			2016			2016			2016			2015		Legacy PQ year ended December 31, 2014					Period from January 1, 2014 to November 30, 2014
(Dollars in thousands)	Unaudited
Reconciliation of net income (loss) attributable to PQ Group Holdings Inc. to Adjusted EBITDA
Net income (loss) attributable to PQ Group Holdings Inc.	$	(2,454	)	$	(3,131	)	$	(58,932	)	$	(79,746	)	$	11,427			$	(22,061	)	$	30,545
Provision (benefit) for income taxes		(2,910	)		150			57,967			10,041			—				—			14,602
Interest expense, net		46,785			11,029			187,945			140,315			44,348				8,470			86
Depreciation and amortization		40,585			10,227			165,843			128,288			38,999				2,955			42,458

EBITDA	$	82,006		$	18,275		$	352,823		$	198,898		$	94,774			$	(10,636	)	$	87,691
Investment in affiliate and inventory step-up amortization^(a)		4,495			—			10,750			65,382			—				3,511			—
Impairment of intangible assets		—			—			6,873			6,873			—				—			—
Debt extinguishment costs		—			—			1,793			13,782			—				—			—
Net loss (gain) on asset disposals^(b)		348			1,543			4,805			4,216			3,911				—			—
Foreign currency exchange loss (gain)^(c)		1,986			—			(8,975	)		(3,558	)		—				—			—
Non-cash revaluation of inventory, including LIFO		2,479			—			1,343			1,310			—				—			—
Management advisory fees^(d)		1,250			125			5,250			3,583			590				42			—
Transaction and other related costs^(e)		1,379			1,126			2,648			4,664			4,241				15,506			—
Equity-based and other non-cash compensation		1,652			576			6,487			7,042			2,256				—			535
Restructuring, integration and business optimization expenses^(f)		1,701			5,506			17,857			16,258			4,147				247			—
Defined benefit plan pension cost		724			595			2,752			1,375			2,903				—			—
Joint venture depreciation, amortization and interest^(g)		2,639			—			10,263			6,920			—				—			—
Other legacy Eco adjustments^(h)		—			—			—			—			—				—			9,849
Other⁽ⁱ⁾		524			—			6,077			4,788			4,882				452			—

Adjusted EBITDA	$	101,183		$	27,746		$	420,746		$	331,533		$	117,704		—	$	9,122		$	98,075


																	Successor		Predecessor
	Three months ended March 31,					Pro forma year ended December 31,		Years ended December 31,						Legacy PQ Year Ended December 31, 2014			Period from inception (July 30, 2014) to December 31, 2014		Period from January 1, 2014 to November 30, 2014
	2017		2016			2016		2016			2015			Legacy PQ Year Ended December 31, 2014					Period from January 1, 2014 to November 30, 2014
(Dollars in thousands)	Unaudited

Reconciliation of legacy PQ net income (loss) to legacy PQ Adjusted EBITDA
Net income (loss) attributable to legacy PQ			$	1,102				$	(38,337	)	$	7,851		$	(3,611	)
Provision (benefit) for income taxes				3,904					11,391			22,902			7,548
Interest expense, net				26,413					37,310			108,375			111,553
Depreciation and amortization				23,621					32,052			93,122			91,342

EBITDA			$	55,040				$	42,416		$	232,250		$	206,832

Investment in affiliate step-up amortization^(a)				597					796			2,387			2,387
Goodwill impairment charge				—					—			—			—
Impairment of long-lived assets				—					—			425			—
Transaction and other related costs^(e)				299					(221	)		10,742			24,405
Foreign currency exchange loss (gain)^(c)				(3,206	)				(5,247	)		21,059			23,387
Management advisory fees^(d)				1,250					1,667			5,000			5,000
Restructuring, integration and business optimization exp.^(f)				1,563					1,599			4,496			4,572
Equity-based and other non-cash compensation				1,194					1,590			3,358			—
Debt extinguishment costs									40,153			—			2,476
Net loss (gain) on asset disposals^(b)				301					589			1,548			694
Joint venture depreciation, amortization, and interest^(g)				2,476					3,343			7,928			6,941
Other⁽ⁱ⁾				2,256					2,528			6,248			11,407

Legacy PQ Adjusted EBITDA			$	61,770					89,213			295,441			288,101


Combined Adjusted EBITDA—PQ Group Holdings^(j)				89,516					420,746			413,145			288,101		$	9,122	$	98,075
Foreign currency impact^(k)				(912	)				(4,368	)		(9,590	)		(30,735	)		—		—

Constant currency combined Adjusted EBITDA—PQ Group Holdings^((j)	$	101,183	$	88,604		$	420,746	$	416,378		$	403,555		$	257,366		$	9,122	$	98,075

(a)

The March 31, 2017 and December 31, 2016 adjustments represent the annual amortization of the inventory step-up associated with acquisition accounting and net acquisition accounting fair value adjustments associated with our Zeolyst Joint Venture and consists primarily of intangible assets such as customer relationships, formulations and product technology. The December 31, 2014 adjustments relate to the amortization of the inventory step-up associated with acquisition accounting related to the 2014 Acquisition.

(b)

Reflects the gain/loss on any sale or disposal of long-lived assets.

(c)

Reflects the exclusion of the negative or positive transaction gains and losses of foreign currency in the income statement primarily related to the non-permanent intercompany debt denominated in local currency translated to U.S. dollars.

(d)

Reflects management sponsor fees from PQ Holdings’ consulting agreements.

(e)

Relates to transaction and other related costs incurred for completed, pending and abandoned deals.

(f)

Relates to restructuring and integration costs, including severance costs, costs associated with plant closings and consolidation, relocation or integration costs and other non-recurring business optimization and restructuring charges.

(g)

Represents our 50% proportionate share of depreciation, amortization and interest expense of our Zeolyst Joint Venture.

(h)

Includes $12.9 million of corporate allocations and $(3.1) million of abatement revenue related to the 2014 Acquisition.

(i)

Represents (i) charges related to capital/franchise taxes, environmental accruals, legal fees, asset retirement accretion and other reimbursements for the three months ended March 31, 2017, (ii) $1.2 million of legal-related costs and other charges including capital taxes, asset retirement obligation accretion and other expense for the year ended December 31, 2016, (iii) costs under a transition services agreement with Solvay which provides certain transition services to Eco by Solvay following the 2014 Acquisition, which ended in 2015 and (iv) other adjustments.

(j)

Represents pro forma financial information for the year ended December 31, 2016 and combined financial information for each of the other periods presented.

(k)

Represents the foreign currency impact on combined Adjusted EBITDA applying the average exchange rates in effect for the three months ended March 31, 2017.


	Three months ended March 31,						Years ended December 31,
	2017			2016			2016			2015			2014
				(combined)			(pro forma)			(combined)			(combined)
							Unaudited
Non-GAAP cash flow data:
Adjusted free cash flow conversion⁽¹⁾		75	%		65	%		59	%		58	%		54	%

(1)

Free cash flow conversion is used by management as a measure of our ability to generate cash flow after considering capital expenditures to maintain and expand our business. Adjusted free cash flow conversion is calculated as Adjusted EBITDA, pro forma Adjusted EBITDA or combined Adjusted EBITDA, as applicable, (as presented on page 21) minus total aggregate capital expenditures, for each period, which is comprised of our attributable portion of Zeolyst Joint Venture capital expenditures and legacy PQ capital expenditures for such period not otherwise included in our capital expenditures, divided by such applicable Adjusted EBITDA amount. The following table presents such capital expenditure amounts for each of the periods presented.


											Successor		Predecessor
	Three months ended March 31,				Years ended December 31,				Legacy PQ Year Ended December 31, 2014		Period from inception (July 30, 2014) to December 31,		Period from January 1, 2014 to November 30,
(Dollars in thousands)	2017		2016		2016		2015		Legacy PQ Year Ended December 31, 2014		2014		2014
	Unaudited
PQ Group Holdings Capital Expenditures:
Maintenance capital expenditures	$	16,031	$	6,192	$	98,755	$	41,016	$	—	$	2,892	$	32,690
Expansion capital expenditures		7,819		3,299		31,584		855		—		—		—

Total capital expenditures	$	23,850	$	9,491	$	130,339	$	41,871	$	—	$	2,892	$	32,690

Legacy PQ Capital Expenditures:
Maintenance capital expenditures	$	—	$	9,011	$	13,696	$	77,384	$	63,461	$	—	$	—
Expansion capital expenditures		—		7,851		9,401		32,589		55,693		—		—

Total legacy PQ capital expenditures	$	—	$	16,862	$	23,097	$	109,973	$	119,154	$	—	$	—

Zeolyst Joint Venture Capital Expenditures
Maintenance capital expenditures	$	858	$	377	$	2,654	$	2,726	$	4,184	$	—	$	—
Expansion capital expenditures		1,006		4,356		16,199		19,011		21,614		—		—

Total attributable Zeolyst Joint Venture capital expenditures	$	1,864	$	4,733	$	18,853	$	21,737	$	25,798	$	—	$	—

Aggregate Capital Expenditures
Maintenance capital expenditures	$	16,889	$	15,580	$	115,105	$	121,126	$	67,645	$	2,892	$	32,690
Expansion capital expenditures		8,825		15,506		57,184		52,455		77,307		—		—

Total aggregate capital expenditures	$	25,714	$	31,086	$	172,289	$	173,581	$	144,952	$	2,892	$	32,690

An investment in our common stock involves risks. You should consider carefully the following risks and all of the other information contained in this prospectus before investing in our common stock. The risks described below are those that we believe are the material risks that we face. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment in our common stock. See “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this prospectus.

As a global business, we are exposed to local business risks in different countries, which could have a material adverse effect on our financial condition, results of operations and cash flows.

We have significant operations in many countries, including manufacturing sites, research and development facilities, sales personnel and customer support operations. Currently, we operate 68 manufacturing facilities across six continents. For the year ended December 31, 2016, our foreign subsidiaries accounted for 39% of our pro forma sales. Our operations are affected directly and indirectly by global regulatory, economic and political conditions, including:

We may not be successful in developing and implementing policies and strategies to address the foregoing factors in a timely and effective manner at each location where we do business. Consequently, the occurrence of one or more of the foregoing factors could have a material adverse effect on our international operations or upon our financial condition, results of operations and cash flows.

We are affected by general economic conditions and an economic downturn could adversely affect our operations and financial results.

We sell performance chemicals, performance materials and catalysts that are used in manufacturing processes and as components of, or ingredients in, other products and, as a result, our sales are correlated with and affected by fluctuations in the level of industrial production and manufacturing output and by fluctuations in general economic activity, including, for example, any potential impact of the vote by the United Kingdom to exit the European Union, commonly referred to as “Brexit.” Producers of performance chemicals, in particular, are likely to reduce their output in periods of significant contraction in industrial and consumer demand, while demand for the products we manufacture often depends on trends in demand in the end uses our customers serve. Our profit margins, as well as overall demand for our products, could decline as a result of factors outside our control, including economic recessions, changes in industrial production processes or consumer preferences, changes in laws and regulations affecting our industry and the manner in which they are enforced, inflation, fluctuations in interest and currency exchange rates and changes in the fiscal or monetary policies of governments in the regions in which we operate.

General economic conditions and macroeconomic trends could affect overall demand for our products and any overall decline in such demand could significantly reduce our sales and profitability. In addition, volatility and disruption in financial markets could adversely affect our sales and results of operations by limiting our customers’ ability to obtain the financing necessary to maintain or expand their own operations.

Exchange rate fluctuations could adversely affect our financial condition, results of operations and cash flows.

As a result of our international operations, for the year ended December 31, 2016, we generated 39% of our pro forma sales and incurred a significant portion of our expenses in currencies other than U.S. dollars. We incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the local currency of the transacting entity. The main currencies to which we are exposed, besides the U.S. dollar, are the Euro, the British pound, the Canadian dollar, the Mexican peso and the Brazilian real. The exchange rates between these currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to do so in the future. In many cases, we sell exclusively in those jurisdictions and do not have the ability to mitigate our exposure to currency fluctuations through our operations. Accordingly, to the extent that we are unable to match sales made in such foreign currencies with costs paid in the same currency, exchange rate fluctuations could adversely affect our financial condition, results of operations and cash flows. In the past, we have experienced economic loss and a negative impact on earnings as a result of foreign currency exchange rate fluctuations and any future fluctuations may have similar or greater impacts. We expect that the amount of our sales denominated in non-dollar currencies may increase in future periods. Given the volatility of exchange rates, there can be no assurance that we will be able to effectively manage our currency transaction risks or that any volatility in currency exchange rates will not have a material adverse effect on our financial condition or results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk.”

Additionally, because our consolidated financial results are reported in U.S dollars, the translation of sales or earnings generated in other currencies into U.S. dollars can result in a significant increase or decrease in the amount of those sales or earnings in our financial statements, which also affects the comparability of our results of operations and cash flows between financial periods. Further, currency fluctuations may negatively impact our debt service requirements, which are primarily in U.S. dollars.

Our international operations require us to comply with anti-corruption laws, trade and export controls and regulations of the U.S. government and various international jurisdictions in which we do business.

Doing business on a worldwide basis requires us and our subsidiaries to comply with the laws and regulations of the U.S. government and various international jurisdictions, and our failure to successfully comply

with these laws and regulations may expose us to liabilities. Such laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities.

In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act (“UKBA”). The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment, and requires us to maintain adequate record-keeping and internal accounting practices to accurately reflect our transactions. As part of our business, we may deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA and UKBA. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. As a result of our international operations, we are exposed to the risk of violating anti-corruption laws.

In addition, we are subject to applicable export controls and economic sanctions laws and regulations imposed by the U.S. government and other countries. Changes in such laws and regulations may restrict our business practices, including cessation of business activities in sanctioned countries or regions or with sanctioned entities or individuals, and may result in modifications to compliance programs. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts, loss of export privileges and other remedial measures.

We have established policies and procedures designed to assist us and our personnel in complying with applicable U.S. and international laws and regulations. These policies and procedures are codified in our Code of Conduct and other various policies. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these laws and regulations in every transaction in which we may engage, and such a violation could subject us to governmental investigations and adversely affect our reputation, business, financial condition and results of operations.

Alternative technology or other changes in our customers’ products may reduce or eliminate the need for certain of our products.

Many of the products that we sell are used in manufacturing processes and as components of or ingredients in other products and, as a result, changes in our customers’ end products or processes or alternative technology may enable our customers to reduce or eliminate consumption or use of our products. For example, over the last seven years, customers in the detergent industry have significantly reduced their use of zeolites. Additionally, shifting consumer preference could result in a significant reduction in the future use of fossil fuels, which would have a negative impact on our zeolite catalysts and refining services. If we are unable to respond appropriately to such new developments, such changes could seriously impair our ability to profitably market certain of our products.

Our new product development and research and development efforts may not succeed and our competitors may develop more effective or successful products.

The industries in which we operate are subject to periodic technological changes and ongoing product improvements. In order to maintain our margins and remain competitive, we must successfully develop, manufacture and market new or improved products. As a result, we must commit substantial resources each year to new product research and development. Ongoing investments in new product research and development could result in higher costs without a proportional increase in revenues. Additionally, for any new product program, there is a risk of technical or market failure, in which case we may need to commit additional resources to the program and may not be able to develop the new products needed to maintain our competitive position. Moreover, new products may have lower margins than the products they replace or may not successfully attract end users.

We also expect competition to increase as our competitors develop and introduce new and enhanced products. As such products are introduced, our products may become obsolete or our competitors’ products may be marketed more effectively. If we fail to develop new products, maintain or improve our margins with our new products or keep pace with technological developments, our business, financial condition, results of operations and cash flows will suffer.

Our substantial level of indebtedness could adversely affect our financial condition.

We have substantial indebtedness, which, as of March 31, 2017, totaled approximately $2,629.4 million. We intend to use the net proceeds from this offering primarily to repay a portion of our indebtedness. See “Use of Proceeds.” Our substantial indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences, including:

Although the terms of the agreements governing our outstanding indebtedness contain restrictions on the incurrence of additional indebtedness, such restrictions are subject to a number of important exceptions and indebtedness incurred in compliance with such restrictions could be substantial. If we and our restricted subsidiaries incur significant additional indebtedness, the related risks that we face could increase.

If we are unable to pass on increases in raw material prices, including natural gas, to our customers or to retain or replace our key suppliers, our results of operations and cash flows may be negatively affected.

We purchase significant amounts of raw materials, including soda ash, cullet, industrial sand, aluminum trihydrate, sodium hydroxide (commonly known as caustic soda) and sulfur (including hydrogen sulfite), in our performance chemicals, performance materials and refining services product groups, and we purchase significant amounts of natural gas to supply the energy required in our production process. The cost of these raw materials represents a substantial portion of our operating expenses and our results of operations have been, and could in the future be, significantly affected by increases in the costs of such raw materials. In addition, we obtain a significant portion of our raw materials from certain key suppliers. If any of those suppliers is unable to meet its obligations under current supply agreements, we may be forced to pay higher prices to obtain the necessary raw materials. Furthermore, if any of the raw materials that we use become unavailable within the geographic area from which we currently source them, we may not be able to obtain suitable and cost-effective substitutes. Any interruption of supply or any price increase of raw materials could adversely affect our profitability.

While we attempt to match raw material price increases with corresponding product price increases, our ability to pass on increases in the cost of raw materials to our customers is, to a large extent, dependent upon our contractual arrangements and market conditions. There may be periods of time during which we are not able to recover increases in the cost of raw materials due to our contractual arrangements or weakness in demand for, or

oversupply of, our products. Specifically, timing differences between price adjustments of raw materials, which may occur daily, and adjustments to our product prices, which in many cases are adjusted quarterly or less often, have had and may continue to have a negative effect on our profitability. Even in periods during which raw material prices decline, we may suffer decreasing profits if customers seek relief in the form of lower sales prices or if the raw material price reductions occur at a slower rate than decreases in the selling prices of our products. Furthermore, some of our performance chemicals customers may take advantage of fluctuating prices by building inventories when they expect product prices to increase and reducing inventories when they expect product prices to decrease. Such volatility can result in commercial disputes with customers and suppliers with respect to interpretations of complex contractual arrangements, the adverse resolution of which could reduce our profitability.

In the past, we have entered into long-term supply contracts for certain of our raw materials, including for certain of our North American soda ash. As these contracts expire, we may not be able to renegotiate or enter into new long-term supply contracts that will offer similar protection from price increases and other fluctuations on terms that are satisfactory to us or at all.

In addition, we have attempted to mitigate our exposure to the significant price volatility of natural gas, which has historically had a negative impact on our results of operations, by implementing a hedging program in the United States and entering into forward purchases in the United States, Canada, Europe and other parts of the world. Our hedging strategy may not be successful and if energy prices rise, our profitability could be adversely affected. With the exception of such natural gas contracts, we typically do not enter into long-term forward contracts to hedge against raw material price volatility.

The industries in which we operate are highly competitive and we face significant competition from large international producers and, particularly in Europe and certain Asia-Pacific regions, smaller regional competitors.

Our silica catalysts and zeolite catalysts primarily compete with other global producers in the petrochemicals and refining industries such as W.R. Grace, BASF, UOP, and Albemarle, as well as other niche competitors such as Tosoh, Axens, and Haldor Topsoe. We compete in the North American refining services industry with competitors such as Chemtrade and Veolia through our refining services product group. Additionally, our performance materials and chemicals business primarily competes with other global producers such as OxyChem, PPG and Evonik. We believe that we typically compete on the basis of performance, product consistency, quality, reliability, and ability to innovate in response to customer demands.

Our competitors may improve their competitive position in our core end use applications by successfully introducing new products, improving their manufacturing processes, expanding their capacity or manufacturing facilities or responding more effectively than us to new or emerging technologies and changes in customer requirements. Some of our competitors may be able to lower prices for our products if their costs are lower. In addition, consolidation among our competitors or customers may result in reduced demand for our products or make it more difficult for us to compete. Some of our competitors’ financial, technological and other resources may be greater than ours or they may have less debt than we do and, as a result, may be better able to withstand changes to industry conditions. The occurrence of any of these events could materially adversely affect our financial condition and results of operations.

We are subject to the risk of loss resulting from non-payment or non-performance by our customers.

Our credit procedures and policies may not be adequate to minimize or mitigate customer credit risk. Our customers may experience financial difficulties, including bankruptcies, restructurings and liquidations. These and other financial problems our customers may experience, as well as potential financial weakness in the industries in which we operate, may increase our risk in extending trade credit to customers. A significant adverse change in a customer’s financial position could cause us to limit or discontinue business with such

customer, require us to assume more credit risk relating to such customer’s receivables or limit our ability to collect accounts receivable from such customer, any of which could have a material adverse effect on our business, results of operations, financial condition and liquidity.

We rely on a limited number of customers for a meaningful portion of our business. A loss of one or more of these customers could adversely impact our profitability.

A loss of any significant customer, including a pipeline customer, or a decrease in the provision of products to any significant customer could have an adverse effect on our business until alternative arrangements are secured. Any alternative arrangement to replace the loss of a customer would result in increased variable costs relating to product shipment. In addition, any new customer agreement entered into by us may not have terms as favorable as those contained in our current customer agreements, which could have a material adverse effect on our business, financial condition and results of operations. For the year ended December 31, 2016 our top 10 customers represented approximately 24% of our pro forma sales and no single customer represented more than 4% of our pro forma sales.

Refineries, which represent a sizeable subset of our environmental catalysts and services business customers, have undergone significant consolidation and additional consolidation is possible in the future. Such consolidation could further increase our reliance on a small number of customers and further increase our customers’ leverage over us, resulting in downward pressure on prices and an adverse effect on our profitability.

Multi-year customer contracts in our refining services product group are subject to potential early termination and such contracts may not be renewed at the end of their respective terms.

Many of the customer contracts in our refining services product group are multi-year agreements. Sulfuric acid regeneration customer contracts are typically on five- to ten-year terms and virgin sulfuric acid customer contracts are typically on one- to five-year terms, with larger customers typically favoring longer terms. Excluding contracts with automatic evergreen provisions, approximately 60% of our sulfuric acid volume for the year ended December 31, 2016 was under contracts expiring at the end of 2019 or beyond. In addition, our sulfuric acid regeneration contracts with major refinery customers typically allow for termination with advance notice of one to two years. We cannot provide assurance that our existing contracts will not be subjected to early terminations or that our expiring contracts will be renewed at the end of their terms. If we receive a significant number of such contract terminations or experience non-renewals from key customers in our refining services product group, our results of operations, financial condition and cash flows may be materially adversely affected.

Reductions in highway safety spending or taxes earmarked for highway safety spending could result in a decline in our sales.

Approximately 12% of our pro forma adjusted sales for the year ended December 31, 2016 were derived from products sold into highway safety applications. Sales of our performance materials products for highway safety uses are in part dependent upon federal, state, local and foreign government budgets. A decrease in, or termination of, governmental budgeting for new highway safety programs or a significant decrease in the use of our performance materials products in any new highway safety projects could have an adverse effect on our business, financial condition, results of operations or cash flows by decreasing the profitability of our performance materials product group.

Our quarterly results of operations are subject to fluctuations because the demand for some of our products is seasonal.

Seasonal changes and weather conditions typically affect our performance materials and refining services product groups. In particular, our performance materials product group, which accounted for 19% of our pro forma adjusted sales for the year ended December 31, 2016, generally experiences lower sales and profit in the

first and fourth quarters of the year because highway striping projects typically occur during warmer weather months. Additionally, our refining services product group, which accounted for 24% of our pro forma adjusted sales for the year ended December 31, 2016, typically experiences similar seasonal fluctuations as a result of higher demand for gasoline products in the summer months. As a result, our working capital requirements tend to be higher in the first and fourth quarters of the year, which can adversely affect our liquidity and cash flows. Because of this seasonality associated with certain of our product groups, results for any one quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full year.

If we lose certain key personnel or are unable to hire additional qualified personnel, we may not be able to execute our business strategy and our business could be adversely affected.

Our success depends, in part, upon the continued services of our highly skilled personnel involved in management, research, production and distribution and, in particular, upon the efforts and abilities of our key officers. Although we believe that we are adequately staffed in key positions, we may not be able to retain such personnel on acceptable terms or at all, and such personnel may seek to compete with us in the future. If we lose the service of any of our key personnel, we may not be able to hire replacements with the same level of industry experience and knowledge necessary to execute our business strategy, which in turn could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Our expansion projects may result in significant expenditures before generating revenues, if any, which may materially and adversely affect our ability to implement our business strategy.

We have made and continue to make significant investments in each of our businesses. These projects require us to commit significant capital to, among other things, implement engineering plans and obtain the necessary permits before we generate revenues related to our investments in these businesses. Such projects may take longer to complete or require additional unanticipated expenditures and may never generate profits. If we fail to recover our investment, or these projects never become profitable, our ability to implement our business strategy may be materially and adversely affected.

We may be liable for damages based on product liability claims brought against us or our customers for costs associated with recalls of our or our customers’ products.

Even though we are generally a materials and services supplier rather than a manufacturer of finished goods, the sale of our products involves the risk of product liability claims and voluntary or government-ordered product recalls. For example, certain of the products that we manufacture provide critical performance functions to our customers’ end products, are used in and around other chemical manufacturing facilities, highways, airports and other locations where personal injury or property damage may occur or are used in certain consumer goods such as beverages, personal care products and medicinal applications. While we attempt to protect ourselves from product liability claims and exposures through our adherence to standards and specifications and through contractual negotiations, there can be no assurance that our efforts will ultimately protect us from any such claims. A product liability claim or voluntary or government-ordered product recall could result in substantial and unexpected expenditures, affect consumer or customer confidence in our products and divert management’s attention from other responsibilities. A product recall or successful product liability claim or series of claims against us in excess of our insurance coverage and for which we are not otherwise indemnified could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We are required to comply with a wide variety of laws and regulations, and are subject to regulation by various federal, state and foreign agencies, and our failure to comply with existing and future regulatory requirements could adversely affect our financial condition, results of operations and cash flows.

We compete in industries in which we and our customers are subject to federal, state, local, international and transnational laws and regulations. Such laws and regulations are numerous and sometimes conflicting, and

any future changes to such laws and regulations could adversely affect us. For example, our performance materials product group sells products used in highway safety applications, and such products are subject to laws and regulations that vary by state. If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls or seizures, any of which could have an adverse effect on our business, financial condition and results of operations.

In order to obtain regulatory approval for certain of our new products, we must, among other things, demonstrate to the relevant authority that the product is safe and effective for its intended uses and that we are capable of manufacturing the product in accordance with current regulations. The process of seeking approvals can be costly, time-consuming and subject to unanticipated and significant delays. Any delay in obtaining, or any failure to obtain or maintain, these approvals would adversely affect our ability to introduce new products and to generate sales from those products, and could have an adverse effect on our business, financial condition, results of operations or cash flows.

Our products, including the raw materials we handle, are subject to rigorous chemical registration and industrial hygiene regulations and investigation. There is risk that a key raw material, chemical or substance, or one of the end products of which our products are a part, may be recharacterized as having a toxicological or health-related impact on the environment, our customers or our employees. Industrial hygiene regulations are continually strengthened and if such recharacterization occurred, the relevant raw material, chemical or product may be banned or we may incur increased costs in order to comply with new requirements. Changes in industrial hygiene regulations also affect the marketability of certain of our products, and future regulatory changes may have a material adverse effect on our business.

New laws and regulations, and changes in existing laws and regulations, may be introduced in the future and could prevent or inhibit the development, distribution and sale of our products, including as a result of additional compliance costs, seizures, confiscation, recall or monetary fines. For example, as discussed in more detail in “Business—Environmental Regulations” and “Business—Chemical Product Regulation,” we may be materially impacted by regulatory initiatives worldwide with respect to chemical product safety such as the 2016 amendments to the U.S. Toxic Substances Control Act, the E.U. regulation “Registration, Evaluation, Authorisation and Restriction of Chemical Substances” (“REACH”), or similar regulations being enacted in other countries (e.g., China REACH; Korea REACH). Additionally, the current U.S. administration may seek to reduce current environmental standards and regulations, such as the Corporate Average Fuel Economy standards, which could have a material adverse effect on our sales into the fuels and emissions controls industries.

We are subject to extensive environmental, health and safety regulations and face various risks associated with potential non-compliance or releases of hazardous materials.

Like other chemical companies, our operations and properties are subject to extensive and stringent federal, state, local and foreign environmental laws and regulations. U.S. federal environmental laws that affects us include the Resource Conservation and Recovery Act (“RCRA”), the Clean Air Act, the Clean Water Act and the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”). These laws govern, among other things, emissions to the air, discharges or releases of hazardous substances to land, surface, subsurface strata and water, wastewater discharges and the generation, handling, storage, transportation, treatment, disposal and remediation of hazardous materials and petroleum products. We are also subject to other federal, state, local and foreign laws and regulations regarding chemical and product safety as well as employee health and safety matters, including process safety requirements. These laws and regulations may become more stringent over time and the failure to comply with such laws and regulations can result in significant fines or penalties.

We have in the past been and currently are the subject of investigations and enforcement actions pursuant to environmental laws, including the Clean Air Act. Some of these matters were resolved through the payment of significant monetary penalties and a requirement to implement corrective actions at our facilities. For instance, in

November 2015, the Pennsylvania Department of Environmental Protection issued a $1.7 million fine against us for allegedly excessive emissions of carbon monoxide and nitrogen oxides from our Chester, Pennsylvania site. We have appealed the alleged violations and the associated fine. We also remain subject to a 2007 Consent Decree that resolves certain alleged Clean Air Act violations at our seven refining services operating locations involving New Source Review, Prevention of Significant Deterioration and New Source Performance Standard obligations under the U.S. federal rules for the pollutants sulfur dioxide and sulfuric acid mist. The Consent Decree required Solvay (the owner at the time) to pay a $2 million penalty and spend approximately $34 million on air pollution controls at our facilities, the majority of which was received from customers in contractual arrangements. Work under the Consent Decree has proceeded since 2007, and we believe that all of the significant capital improvements related to the Consent Decree have been completed. One of our operating locations has been released from the scope of the Consent Decree and we are seeking release of the other locations covered by the Consent Decree.

We are required by these environmental laws and regulations to obtain registrations, licenses, permits and other approvals in order to operate, to make disclosures to public authorities about our chemical handling and usage activities and to install expensive pollution control and spill containment equipment at our facilities, or to incur other capital expenditures aimed at achieving or maintaining compliance with such laws and regulations. We are preparing to implement a substantial environmentally-driven capital improvement project over the next three years and failure to complete this project or to timely identify and implement other capital projects required to achieve or maintain compliance could expose us to enforcement and penalty.

Under CERCLA and analogous statutes in local and foreign jurisdictions, current and former owners and operators of land impacted by releases of hazardous substances are strictly liable for the investigation and remediation of the contamination resulting from the release. Liability under CERCLA and analogous laws is strict, unlimited, joint, several and retroactive, may be imposed regardless of fault and may relate to historical activities or contamination not caused by the affected property’s current owner or operator. We could be held responsible for all cleanup costs at a site, whether currently or formerly owned or operated, regardless of fault, knowledge, timing or cause of the contamination. Further, under CERCLA and analogous laws, we may be jointly and severally liable for contamination at third party sites where we or our predecessors in interest have sent waste for treatment or disposal, even if we complied with applicable laws. In addition, we may face liability for personal injury, property damage and natural resource damage resulting from environmental conditions attributable to hazardous substance releases at or from facilities we currently or formerly owned or operated or to which we sent waste. As such, a product spill or emission at one of our facilities or otherwise resulting from our operations could have adverse consequences on the environment and surrounding community and could result in significant liabilities with respect to investigation and remediation.

Our facilities have an extended history of industrial use, and soil and groundwater contamination exists at some of our sites. As of March 31, 2017, we had current investigation, remediation or monitoring obligations at several of our current or former sites, including Rahway, New Jersey; Dominguez, California; Martinez, California; and Tacoma, Washington. As of March 31, 2017, we had established reserves of approximately $4.8 million to cover anticipated expenses at these sites, all of which have reached relatively mature stages of either the investigation, remediation or monitoring process. Actual costs to complete these projects may exceed our current estimates. In addition, we have unresolved liability at several sites to which we or our predecessors allegedly arranged for the disposal or treatment of hazardous wastes. For example, at the Boyertown Sanitary Disposal site in Gilbertsville, Pennsylvania, we are participating in a group of parties who disposed of materials at the site to fund investigatory and remedial work.

As of March 31, 2017, our total reserves associated with environmental remediation and enforcement matters were $7.2 million. In addition to the ongoing remediation and monitoring activities discussed above, there is risk that the long-term industrial use at our facilities may have resulted in, or may in the future result in, contamination that has yet to be discovered, which could require additional, unplanned investigation and remediation efforts by us for which no reserves have been established, potentially without regard to whether we

knew of, or caused, the release of such hazardous substances. Discovery of additional or unknown conditions at our facilities could have an adverse impact on our business by substantially increasing our capital expenditures, including compliance, investigation and remediation costs. Such environmental liabilities attached to our properties, or for properties that we are otherwise responsible for, could have a material adverse effect on our results of operations or financial condition.

Existing and proposed regulations to address climate change by limiting greenhouse gas emissions may cause us to incur significant additional operating and capital expenses.

Certain of our operations result in emissions of greenhouse gases (“GHGs”), such as carbon dioxide. Growing concern about the sources and impacts of global climate change has led to a number of domestic and foreign legislative and administrative measures, both proposed and enacted, to monitor, regulate and limit carbon dioxide and other GHG emissions. In the European Union, our emissions are regulated under the E.U. Emissions Trading System (the “E.U. ETS”), an E.U.-wide trading scheme for industrial GHG emissions. The E.U. ETS is anticipated to become progressively more stringent over time, including by reducing the number of allowances to emit GHGs that E.U. member states will allocate without charge to industrial facilities. In the United States, the EPA has promulgated federal GHG regulations under the Clean Air Act that affect certain sources. For example, the EPA has issued mandatory GHG reporting requirements, under which our Dominguez, California and Baton Rouge, Louisiana facilities currently report. Moreover, California has enacted the Global Warming Solutions Act of 2006 (“Assembly Bill 32”), a law that establishes a comprehensive program to reduce GHG emissions from all sources throughout the state and contains reporting requirements under which our Dominguez and Martinez facilities currently report. Our Dominguez facility also participates in the emissions trading market established under Assembly Bill 32. Although we believe it is likely that GHG emissions will continue to be regulated in at least some regions of the United States and in other countries (in addition to the European Union) in the future, we cannot yet predict the form such regulation will take (such as a cap-and-trade program, technology mandate, emissions tax or other regulatory mechanism) or, consequently, estimate any costs that we may be required to incur in respect of such requirements, which could, for example, require that we install emissions control equipment, purchase emissions allowances, administer and manage our GHG emissions program or address other regulatory obligations. Such requirements could also adversely affect our energy supply or the costs and types of raw materials that we use for fuel. Accordingly, regulations controlling or limiting GHG emissions could have a material adverse effect on our business, financial condition or results of operations, including by reducing demand for our products.

Production and distribution of our products could be disrupted for a variety of reasons, and such disruptions could expose us to significant losses or liabilities.

Certain of the hazards and risks associated with our manufacturing processes and the related storage and transportation of raw materials, products and wastes may disrupt production at our manufacturing facilities and the distribution of products to our customers. These potentially disruptive risks include, but are not limited to, the following:

These hazards could expose employees, customers, the community and others to toxic chemicals and other hazards, contaminate the environment, damage property, result in personal injury or death, lead to an interruption

or suspension of operations, damage our reputation and adversely affect the productivity and profitability of a particular manufacturing facility or our business as a whole. Such hazards could also result in the need for remediation, governmental enforcement, regulatory shutdowns, the imposition of government fines and penalties and claims brought by governmental entities or third parties. Legal claims and regulatory actions could subject us to both civil and criminal penalties, which could affect our product sales, reputation and profitability.

If disruptions at our manufacturing facilities or in our distribution channels occur, alternative options with sufficient capacity or capabilities may not be available, may cost substantially more or may require significant time to start production or distribution. Any of these scenarios could negatively affect our business and financial performance. If one of our manufacturing facilities or distribution channels is unable to produce or distribute our products for an extended period of time, our sales may be reduced by the shortfall caused by the disruption and we may not be able to meet our customers’ needs, which could cause them to seek other suppliers. Furthermore, to the extent a production disruption occurs at a manufacturing facility that has been operating at or near full capacity, the resulting shortage of our product could be particularly harmful because production at the manufacturing facility may not be able to reach levels achieved prior to the disruption. Such risks are heightened in our refining services product group, which has operations and customers primarily located in the Gulf Coast, which is susceptible to a heightened risk of hurricanes, and Northern California, which is susceptible to a heightened risk of earthquakes.

The insurance that we maintain may not fully cover all potential exposures.

We maintain property, business interruption, casualty and other types of insurance, but such insurance may not cover all risks associated with the operation of our business or our manufacturing process and the related use, storage and transportation of raw materials, products and wastes in or from our manufacturing sites or distribution centers. While we have purchased what we deem to be adequate limits of coverage and broadly worded policies, our coverage is subject to exclusions and limitations, including higher self-insured retentions or deductibles and maximum limits and liabilities covered. Notwithstanding diligent efforts to successfully procure specialty coverage for environmental liability and remediation, we may incur losses beyond the limits or outside the terms of coverage of our insurance policies, including liabilities for environmental remediation. In addition, from time to time, various types of insurance for companies in the industries in which we operate have not been available on commercially acceptable terms or, in some cases, at all. We are potentially at additional risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain.

We could be subject to damages based on claims brought against us by our customers or lose customers as a result of the failure of our products to meet certain quality specifications.

Our products provide important performance attributes to our customers’ products. If a product fails to perform in a manner consistent with quality specifications, or has a shorter useful life than that which was guaranteed, a customer could seek replacement of the product or damages for costs incurred as a result of the product failing to perform as guaranteed. A successful claim or series of claims against us could cause reputational harm and have a material adverse effect on our financial condition and results of operations and could result in a loss of one or more customers.

We may engage in strategic acquisitions or dispositions of certain assets or businesses that could affect our business, results of operations, financial condition and liquidity.

We may selectively pursue complementary acquisitions, such as the Business Combination, and joint ventures, such as our Zeolyst Joint Venture, each of which inherently involves a number of risks and presents financial, managerial and operational challenges, including:

In addition, we may encounter unforeseen obstacles or costs in the integration of acquired businesses. For example, the presence of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may have a material adverse effect on our business. Our acquisition and joint venture strategy may not be received positively by customers, and we may not realize any anticipated benefits from acquisitions or joint ventures.

We may also opportunistically pursue dispositions of certain assets and businesses, which may involve material amounts of assets or lines of business, and could adversely affect our results of operations, financial condition and liquidity. If any such dispositions were to occur, under the terms of the agreements governing our outstanding indebtedness, we may be required to apply the proceeds of the sale to repay such indebtedness.

The pro forma and non-GAAP financial information included in this prospectus is presented for informational purposes only and may not be an indication of our financial condition or results of operations in the future.

The unaudited pro forma combined financial information included in this prospectus is presented for informational purposes only and is not necessarily indicative of what our actual financial condition or results of operations would have been had the Business Combination been completed on the date indicated. The assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect our financial condition or results of operations. Accordingly, our financial condition and results of operations in the future may not be consistent with, or evident from, such pro forma financial information. The non-GAAP financial information included in this prospectus includes information that we use to evaluate our past performance, but you should not consider such information in isolation or as an alternative to measures of our performance determined under GAAP. For further information regarding such limitations, see “Summary Historical and Unaudited Pro Forma Financial and Other Data.”

Our joint ventures may not operate according to their business plans if our partners fail to fulfill their obligations or differences in views among our partners results in delayed decisions or failures to agree on major issues, which may adversely affect our results of operations and force us to dedicate additional resources to these joint ventures.

We currently participate in a number of joint ventures and may enter into additional joint ventures in the future. The nature of a joint venture requires us to share control with unaffiliated third parties and we sometimes have joint and several liability with our joint venture partners. If our joint venture partners do not fulfill their obligations, or if differences in views among the joint venture participants results in delayed decisions or failures to agree on major issues, the affected joint venture may not be able to operate according to its business plan. For example, our Zeolyst Joint Venture is structured as a general partnership in which we are equal partners with CRI Zeolites Inc. Accordingly, we do not control the Zeolyst Joint Venture and cannot unilaterally undertake strategies, plans, goals and operations or determine when cash distributions will be made to us. Furthermore, we are liable on a joint and several basis with CRI Zeolites Inc. for all of the partnership’s liabilities if it does not have sufficient assets to satisfy such liabilities. Such factors may adversely affect our results of operation and force us to dedicate additional and unexpected resources to our joint ventures.

Our failure to protect our intellectual property rights could adversely affect our future performance and growth.

Protection of our proprietary processes, methods, compounds and other technologies is important to our business. We depend upon our ability to develop and protect our intellectual property rights to distinguish our

products from those of our competitors. Failure to protect our existing intellectual property rights may allow our competitors to copy our products and may result in the loss of valuable proprietary technologies or other intellectual property. Failure to protect our innovations and trademarks by securing intellectual property rights could also result in our having to pay other companies for infringing on their intellectual property rights. We rely on a combination of patent, trade secret, trademark and copyright law as well as regulatory and judicial enforcement to protect such technologies and trademarks. In addition, the laws of many foreign countries do not protect our intellectual property rights to the same extent as the laws of the United States. As of March 31, 2017, we owned over 50 patented inventions in the United States, with approximately 300 patents issued in countries around the world and approximately 150 patent applications pending worldwide covering more than 20 additional inventions. Some of these patents are licensed to others. In addition, we have acquired certain rights under patents and inventions of others through licenses. Should any of these licenses granted to us by third parties terminate prior to the expiration of the licensed intellectual property, we would need to cease using the licensed intellectual property, and either develop or license alternative technologies. In such a case, there can be no assurance that alternative technologies exist or that we would be able to obtain such a license on favorable terms.

Competitors and third parties may infringe on our patents or violate our intellectual property rights. Defending and enforcing our intellectual property rights can involve litigation and can be expensive and time consuming. Such proceedings could put our patents at risk of being invalidated and confidential information may be disclosed through the discovery process; these costs and diversion of resources could harm our business.

We cannot provide any assurances that any of our pending applications will mature into issued patents, or that any patents that have issued or may issue in the future do or will include claims with a scope sufficient to provide any competitive advantage. Patents involve complex legal and factual questions and, therefore, the issuance, scope, validity and enforceability of any patent claims we have or may obtain cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated or circumvented. Patents may be challenged in the courts, as well as in various administrative proceedings before the United States Patent and Trademark Office or foreign patent offices. We are currently and may in the future be a party to various adversarial patent office proceedings involving our patents or the patents of third parties. Such challenges can result in some or all of the claims of the challenged patent being invalidated, deemed unenforceable, or interpreted narrowly which, in the case of challenges to our own patents, may be adverse to our interests. Accordingly, the issuance of patents is not conclusive of the validity, scope, or enforceability of such patents. Moreover, even if valid and enforceable, competitors may be able to design around our patents or use pre-existing technologies to compete with us.

We also rely upon unpatented proprietary know-how, continuing technological innovation and other trade secrets to develop and maintain our competitive position, which may not provide us with complete protection against competitors. Misappropriation or unauthorized disclosure of our proprietary know-how could harm our competitive position or have an adverse effect on our business. While it is our policy to enter into confidentiality agreements with our employees and third parties to protect our intellectual property rights and we strive to maintain the physical security of our properties and the security of our IT systems, there can be no assurances that:

In addition, there can be no assurances that others will not obtain knowledge of these trade secrets through independent development or other access by legal means.

Measures taken by us to protect these assets and rights may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets or manufacturing expertise. In addition, as noted above, our patents and other intellectual property rights may be challenged, invalidated, circumvented or rendered unenforceable.

Furthermore, we cannot provide assurance that any pending patent or trademark application filed by us will result in an issued patent or registered trademark or, if patents are issued to us, that those patents will provide meaningful protection against competitors or against competitive technologies. The failure of our patents or other measures to protect our processes, apparatuses, technology, trade secrets and proprietary manufacturing expertise, methods and compounds or trademarks and provide us with freedom to exclude competition could have an adverse effect on our business, financial condition, results of operations and cash flows. See “Business—Intellectual Property.”

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

Our industry is characterized by vigiliant pursuit of intellectual property rights, particularly with respect to our silica catalysts and zeolite catalysts product groups. Like us, our competitors rely on intellectual property rights to maintain profitability and competitiveness. As the number of products and competitors has increased, the likelihood of intellectual property disputes has risen. Although it is our policy and intention not to infringe valid patents of which we are aware, our processes, apparatuses, technology, proprietary manufacturing expertise, methods, compounds and products may infringe on issued patents or infringe or misappropriate other intellectual property rights of others. Accordingly, we continually monitor third-party intellectual property to confirm our freedom to operate. Nevertheless, we may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of the patents or trademarks or infringement or misappropriation of other intellectual property rights of third parties by us or our licensees in connection with their use of our products. Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim, and could divert the attention of our management and technical personnel away from operating our business. If we were to discover that our processes, apparatuses, technology, products or trademarks infringe the valid intellectual property rights of others, we might need to obtain licenses from these parties or substantially reengineer or rebrand our products in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to reengineer our products successfully or at an acceptable cost. Moreover, if we are sued for infringement and lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products or technology or using the infringing trademark. Additionally or alternatively, we may seek to challenge third-party patents in administrative proceedings before the United States patent office or one or more foreign patent offices. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products, which could have an adverse effect on our business, financial condition, results of operations and cash flows. Even if we ultimately prevail, the existence of lawsuits could prompt our customers to switch to alternative products. In addition, we have agreed, and will continue to agree, to indemnify certain customers for certain intellectual property infringement claims related to intellectual property relating to our products and the manufacture thereof. Should there be infringement claims against our licensees, we could be required to indemnify them for losses resulting from such claims or to refund amounts they have paid to us.

Losses and damages in connection with information technology risks could adversely affect our operations.

Our operations materially depend on the reliable performance of a complex, worldwide and highly available information technology infrastructure with integrated processes. The networks and data centers we use are subject to damage by material events such as major disruptions to public infrastructure, including power outages,

cyber or terrorist attacks, viruses, physical or electronic break-ins and fires. Despite various disaster recovery plans, there can be no assurance that our systems are appropriately redundant and we do not control the operations at the back-up facility we use. Accordingly, such an event could cause material disruptions in our operations.

The broad use of information technology systems has increased the risk of unauthorized access to confidential data, such as customer information, strategic projects, product formulas and other trade secrets, and the risk of destruction or manipulation of material data by employees or third parties. Release of third party confidential information could materially harm our reputation, affect our relationships with such parties and expose us to liability. Although we have introduced many security measures, including firewalls and information technology security policies, we cannot ensure that these measures offer the appropriate level of security. A security breach or other compromise of our information security safeguards could expose our confidential information, including third party confidential information in our possession (such as customer information) to theft and misuse, which could in turn adversely affect our relationships with such third parties and have an adverse effect on our business, financial condition, results of operations and cash flows.

We depend on good relations with our workforce, and any significant disruptions could adversely affect our operations.

As of December 31, 2016, we had 2,949 employees globally, approximately 49% of which were represented by a union, works council or other employee representative body. As of December 31, 2016, approximately 66% of our U.S. unionized employees were covered under collective bargaining agreements that will expire on or before December 31, 2018. Failure to reach agreement with any of our unionized work groups regarding the terms of their collective bargaining agreements or annual pay increases may result in a labor strike, work stoppage or slowdown. In addition, a large number of our employees are employed in countries in which employment laws provide greater bargaining or other rights to employees than the laws of the United States. Such employment rights require us to work collaboratively with the legal representatives of the employees to effect any changes to labor arrangements. For example, many of our employees in Europe are represented by works councils that must approve any changes in conditions of employment, including salaries, benefits and staff changes, and may impede efforts to restructure our workforce. Although we believe that we have a good working relationship with our employees, a strike, work stoppage or slowdown by our employees or a dispute with our employees could result in a significant disruption to our operations or higher ongoing labor costs. In addition, our ability to make adjustments to control compensation and benefits costs, or otherwise adapt to changing business needs, may be limited by the terms and duration of our collective bargaining agreements.

We are subject to certain risks related to litigation filed by or against us, as well as administrative and regulatory proceedings, and adverse results may harm our business.

We cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of litigation and other administrative and regulatory proceedings filed by or against us, including remedies or damage awards, and adverse results in any litigation or other administrative and regulatory proceedings may materially harm our business. Litigation and other administrative and regulatory proceedings may include, but are not limited to, actions relating to intellectual property, commercial arrangements, environmental, health and safety matters, joint venture agreements, labor and employment matters, domestic and foreign antitrust matters or other harms resulting from the actions of individuals or entities outside of our control. In the case of intellectual property litigation and proceedings, adverse outcomes could include the cancellation, invalidation or other loss of material intellectual property rights used in our business and injunctions prohibiting our use of our processes, apparatuses, technology, trade secrets and proprietary manufacturing expertise, methods and compounds that are subject to third-party patents or other third-party intellectual property rights. Litigation based on environmental matters or exposure to hazardous substances in the workplace or from our products could result in significant liability for us. For example, we are currently subject to various asbestos premises liability claims that relate to employee or contractor exposure to asbestos contained in certain building materials at our sites. Furthermore, our

international operations expose us to potential administrative and regulatory proceedings in foreign jurisdictions. Antitrust authorities in Brazil have publicly announced that they are investigating alleged cartel activities by Brazilian silicate manufacturers, including our Brazilian subsidiary (“PQ Brazil”). The authorities allege that the activities occurred over an approximately 10-year period beginning in the late 1990s, which is prior to the time we owned PQ Brazil. PQ Brazil is fully cooperating with the authorities. Adverse outcomes in any of the foregoing could have a material adverse effect on our business. See “Business—Legal Proceedings.”

The terms of our indebtedness restrict our current and future operations, particularly our ability to respond to change or to take certain actions.

The indentures governing our outstanding indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to incur additional indebtedness, make investments, acquisitions, loans and advances, sell, transfer or otherwise dispose of our assets or incur liens. See “Description of Certain Indebtedness” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Debt.” In addition, the restrictive covenants in the agreements governing our senior secured credit facilities require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet these financial ratios and tests can be affected by events beyond our control.

A breach of such covenants could result in an event of default unless we obtain a waiver to avoid such default. If we are unable to obtain a waiver, such a default may allow our creditors to accelerate the related debt and may result in the acceleration of, or default under, any other debt to which a cross-acceleration or cross-default provision applies. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Because our operations are conducted through our subsidiaries and joint ventures, we are dependent on the receipt of distributions and dividends or other payments from our subsidiaries and joint ventures for cash to fund our operations and expenses, including to make future dividend payments, if any.

Our operations are conducted through our subsidiaries and joint ventures. As a result, our ability to make future dividend payments, if any, is dependent on the earnings of our subsidiaries and joint ventures and the payment of those earnings to us in the form of dividends, loans or advances and through repayment of loans or advances from us. Payments to us by our subsidiaries and joint ventures will be contingent upon our subsidiaries’ or joint ventures’ earnings and other business considerations and may be subject to statutory or contractual restrictions. We do not currently expect to declare or pay dividends on our common stock for the foreseeable future; however, to the extent that we determine in the future to pay dividends on our common stock, the agreements governing our outstanding indebtedness significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us.

We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.

We are required to test goodwill and any other intangible asset with an indefinite life for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. We are also required to evaluate indefinite-lived intangible assets and fixed assets for impairment if there are indicators of a possible impairment.

There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and fixed assets. If, as a result of a general economic slowdown or deterioration in one or more

of the industries in which we operate or in our financial performance or future outlook, or if the estimated fair value of our long-lived assets decreases, we may determine that one or more of our long-lived assets is impaired. An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on our results of operations and financial position.

As of December 31, 2016, we had $383.2 million of net operating losses for U.S. federal income tax purposes. Our ability to utilize these net operating losses to offset future income tax liabilities depends on our future financial performance and our future taxable income. In addition, our utilization of these net operating losses is currently limited under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), impacting our ability to realize the benefits of these net operating losses. If any ownership changes occur within three years of the closing date of the Business Combination among stockholders owning directly or indirectly 5% or more of our common stock and that result in an aggregate ownership change with respect to such stockholders of more than 50% of our common stock, our utilization of these net operating losses and certain built-in losses would be subject to an additional limitation imposed by Section 382 of the Code.

We have unfunded and underfunded pension plan liabilities. We will require current and future operating cash flow to fund these shortfalls. We have no assurance that we will generate sufficient cash flow to satisfy these obligations.

We maintain defined benefit pension plans covering employees who meet age and service requirements. While some of our plans have been frozen, our net pension liability and cost is materially affected by the discount rate used to measure pension obligations, the longevity and actuarial profile of our workforce, the level of plan assets available to fund those obligations and the actual and expected long-term rate of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of invested assets can result in corresponding increases and decreases in the valuation of plan assets, particularly equity securities, or in a change in the expected rate of return on plan assets. Assets available to fund the pension and other postemployment benefit obligations of our plans as of December 31, 2016 were approximately $285.1 million, or approximately $86.2 million less than the measured pension benefit obligation on a GAAP basis. In addition, any changes in the discount rate could result in a significant increase or decrease in the valuation of pension obligations, affecting the reported funded status of our pension plans as well as the net periodic pension cost in the following years. Similarly, changes in the expected return on plan assets can result in significant changes in the net periodic pension cost in the following years.

We also contribute to two multi-employer pension plans on behalf of certain of our employees in the United States pursuant to union agreements that generally provide defined benefits to employees covered by collective bargaining agreements. A total of approximately 18 employees currently participate in such multi-employer pension plans. Funding requirements for benefit obligations of multi-employer pension plans are subject to certain regulatory requirements and we may be required to make cash contributions to one of these plans to satisfy certain underfunded benefit obligations. Absent an applicable exemption, a contributor to a U.S. multi-employer plan is liable upon its withdrawal from, or the termination of, a plan for its proportionate share of the plan’s underfunding, if any.

We also provide certain health care and life insurance benefits to certain of our employees and their dependents in the United States upon the retirement of such employee from us pursuant to union agreements. Costs of these other post-employment benefit plans are dependent upon numerous factors, assumptions and estimates.

We are a “controlled company” within the meaning of the rules of the New York Stock Exchange and, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After completion of this offering, investment funds affiliated with CCMP and INEOS will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

We intend to utilize these exemptions following this offering. As a result, we will not have a majority of independent directors, our compensation committee will not consist entirely of independent directors and the board committees will not be subject to annual performance evaluations. In addition, we will not have a nominating and corporate governance committee. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.

The investment funds affiliated with CCMP and INEOS, however, are not subject to any contractual obligation to retain their controlling interest, except that they have agreed, subject to certain exceptions, not to sell or otherwise dispose of any shares of our common stock or other capital stock or other securities exercisable or convertible therefore for a period of at least 180 days after the date of this prospectus without the prior written consent of Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC. Except for this brief period, there can be no assurance as to the period of time during which the investment funds affiliated with CCMP and INEOS will maintain their ownership of our common stock following this offering.

Our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them.

Since our inception, there has not been a public market for our common stock, and an active public market for our common stock may not develop or be sustained following completion of this offering. In addition, the stock market in general has been highly volatile. As a result, the market price of our common stock is likely to be similarly volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value of their stock, including decreases unrelated to our operating performance or prospects, and could lose part or all of their investment. The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere in this prospectus and others such as:

In addition, broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly. We are exposed to the impact of any global or domestic economic disruption, including any potential impact of the vote by the United Kingdom to exit the European Union, commonly referred to as “Brexit.”

In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.

We are not currently required to comply with the rules of the Securities and Exchange Commission (the “SEC”) implementing Section 404 of the Sarbanes-Oxley Act and therefore are not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. Although we will be required to disclose changes that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until our second annual report required to be filed with the SEC.

To comply with the requirements of being a public company, we may need to undertake various actions, to develop, implement and test additional processes and other controls. Testing and maintaining internal controls can divert our management’s attention from other matters related to the operation of our business. In addition, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate resulting in our management being unable to assert that our internal control over financial reporting is effective.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As a private company, we identified a material weakness related to our control environment that was the result of the fact that Eco had insufficient resources and financial expertise to effectively carry out the accounting functions for its business. This identified material weakness contributed to control deficiencies in legacy Eco’s internal control over financial reporting that originated prior to the Business Combination. These deficiencies related to: (i) the inadequate design of controls to review the transactions within Eco’s account for goods received, but not invoiced, for appropriateness at period end which resulted in misstatements to cost of goods sold and property, plant and equipment and (ii) the inadequate design of appropriate controls to account for fair value adjustments to property, plant, and equipment, which resulted in misstatements to depreciation expense following the Business Combination. These control deficiencies were considered to be material weaknesses because they could have resulted in a misstatement of the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We have implemented improved processes and internal controls through integration with PQ Group Holdings processes and upgrading the organizational design and personnel performing the processes and controls specific to the Eco business unit. These control deficiencies were unremediated as of December 31, 2016 as the controls that we designed after the Business Combination to address these control deficiencies had not been operating for a sufficient amount of time to conclude that they had been remediated. We have completed further testing of these corrective actions and believe that the remediation activities were sufficient to remediate the previously existing material weaknesses as of March 31, 2017.

We cannot provide assurance that additional material weaknesses or control deficiencies will not occur in the future. If we identify additional material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting in future periods, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.

Your percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your influence over matters on which stockholders vote.

Following completion of this offering, our board of directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon exercise of options, or shares of our authorized but unissued preferred stock. Issuances of common stock or voting preferred stock would reduce your influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, would likely result in your interest in us being subject to the prior rights of holders of that preferred stock.

There may be sales of a substantial amount of our common stock after this offering by our current stockholders, and these sales could cause the price of our common stock to fall.

Following completion of this offering, there will be shares of our common stock outstanding. Of our issued and outstanding shares, all of the common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Following completion of this offering, approximately % of our outstanding common stock (or approximately % if the underwriters exercise their option to purchase additional shares in full) will be held by affiliates of CCMP and by INEOS.

Each of our officers, directors and certain holders of our common stock has entered into a lock-up agreement with Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC, as representatives of the underwriters, which regulates their sales of our common stock for a period of 180 days after the date of this prospectus, subject to certain exceptions. See “Shares Eligible for Future Sale—Lock-Up Agreements.”

Sales of substantial amounts of our common stock in the public market after this offering, or the perception that such sales will occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future. Of the shares of our common stock to be outstanding following completion of this offering, the shares offered by this prospectus will be eligible for immediate sale in the public market without restriction by persons other than our affiliates. Our remaining outstanding shares will become available for resale in the public market as shown in the chart below, subject to the provisions of Rule 144 and Rule 701.

Beginning 180 days after this offering, subject to certain exceptions, investment funds affiliated with CCMP may require us to register shares of our common stock held by them for resale under the federal securities laws, subject to reduction upon the request of the underwriter of the offering, if any. See “Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement.” Registration of those shares would allow the investment funds affiliated with CCMP to immediately resell their shares in the public market. Any such sales or anticipation thereof could cause the market price of our common stock to decline.

In addition, following completion of this offering, we intend to register shares of our common stock that we expect to issue pursuant to the 2017 Plan. For more information, see “Shares Eligible for Future Sale—Registration Statements on Form S-8.”

Provisions in our charter documents and Delaware law may deter takeover efforts that you feel would be beneficial to stockholder value.

In addition to investment funds affiliated with CCMP’s and INEOS’s beneficial ownership of a controlling percentage of our common stock, our certificate of incorporation and bylaws and Delaware law contain provisions that could make it harder for a third party to acquire us, even if doing so might be beneficial to our stockholders. These provisions include a classified board of directors and limitations on actions by our stockholders. In addition, our board of directors has the right to issue preferred stock without stockholder approval that could be used to dilute a potential hostile acquiror. Our certificate of incorporation also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock other than investment funds affiliated with CCMP and INEOS. As a result, you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures, and efforts by stockholders to change the direction or management of the company may be unsuccessful. See “Description of Capital Stock—Anti-Takeover Effects of our Certificate of Incorporation and Bylaws.”

If you purchase shares in this offering, you will suffer immediate and substantial dilution.

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the pro forma book value of your stock of $ per share as of March 31, 2017 based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, because the price that you pay will be substantially greater than the net tangible book value per share of the shares you acquire. You will experience additional dilution upon the exercise of options to purchase shares of our common stock, including those options currently outstanding and those granted in the future, and the issuance of restricted stock or other equity awards under our stock incentive plans. To the extent we raise additional capital by issuing equity securities, our stockholders will experience substantial additional dilution. See “Dilution.”

CCMP and INEOS will continue to have significant influence over us after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control.

Following completion of this offering, investment funds affiliated with CCMP and INEOS will continue to hold a controlling interest in us and will continue to have significant influence over us. Following completion of this offering, investment funds affiliated with CCMP will beneficially own % of our outstanding common stock ( % if the underwriters exercise their option to purchase additional shares in full) and INEOS will beneficially own % of our outstanding common stock ( % if the underwriters exercise their option to purchase additional shares in full). For as long as affiliates of CCMP and INEOS continue to beneficially own more than 50% of the voting power of our outstanding common stock, they will be able to direct the election of all of the members of our board of directors and could exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of additional indebtedness, the issuance of any additional shares of common stock or other equity securities, the repurchase or redemption of shares of our common stock and the payment of dividends. Similarly, investment funds affiliated with CCMP and INEOS will have the power to determine matters submitted to a vote of our stockholders without the consent of our other stockholders, will have the power to prevent a change in our control and could take other actions that might be favorable to them. Even if their combined ownership falls below 50%, investment funds affiliated with CCMP and INEOS will continue to be able to strongly influence or effectively control our decisions.

Additionally, CCMP and INEOS are in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us. CCMP and INEOS may also pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

There is no existing market for our common stock and we do not know if one will develop to provide you with adequate liquidity to sell our common stock at prices equal to or greater than the price you paid in this offering.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which an active trading market on the New York Stock Exchange will develop. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for our common stock will be determined by negotiations between us and the representative of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid in this offering, or at all.

As a public company, we will become subject to additional laws, regulations and stock exchange listing standards, which will impose additional costs on us and may strain our resources and divert our management’s attention.

Prior to this offering, we operated on a private basis. After this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange and other applicable securities laws and regulations. Compliance with these laws and regulations will increase our legal and financial compliance costs and make some activities more difficult, time-consuming or costly, which may strain our resources or divert management’s attention.

Regulations related to conflict minerals could adversely impact our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals,

originating from the Democratic Republic of Congo (the “DRC”) and adjoining countries. The SEC requires annual disclosure and reporting requirements for those companies who use conflict minerals mined from the DRC and adjoining countries in their products. These reporting requirements, first applicable to us in 2019, will require us to conduct due diligence to comply with such requirements. There will be costs associated with complying with these disclosure requirements, including for diligence to determine the sources of conflict minerals used in our products and other potential changes to products, processes or sources of supply as a consequence of such verification activities. These rules could adversely affect the sourcing, supply and pricing of materials used in our products. As there may be only a limited number of suppliers offering “conflict free” conflict minerals, we cannot be sure that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices.

Our management has broad discretion in the use of the net proceeds from this offering and may not use the net proceeds effectively.

We intend to use the net proceeds from this offering primarily to repay a portion of our indebtedness. Our management will have broad discretion in the application of the remaining net proceeds of this offering. We cannot specify with certainty the additional uses to which we will apply the remaining net proceeds that we will receive from this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity as part of your investment decision to assess whether the proceeds are being used appropriately. You may not agree with how the proceeds are used. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for the company. The failure by our management to apply these funds effectively could adversely affect our ability to continue to maintain and expand our business.

Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur, including our credit facilities and outstanding notes. See “—Because our operations are conducted through our subsidiaries and joint ventures, we are dependent on the receipt of distributions and dividends or other payments from our subsidiaries and joint ventures for cash to fund our operations and expenses, including to make future dividend payments, if any.” As a result, you may not receive any return on an investment in our common stock unless you sell your common stock for a price greater than that which you paid for it.

This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Industry,” contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs. Examples of forward-looking statements include, but are not limited to, statements we make regarding our liquidity, including our belief that our current level of operations, cash and cash equivalents, cash flow from operations and borrowings under our credit facilities and other lines of credit will provide us adequate cash to fund the working capital, capital expenditure, debt service and other requirements for our business for the foreseeable future. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Some of the key factors that could cause actual results to differ from our expectations include risks related to:

The forward-looking statements included in this prospectus are made only as of the date hereof. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

You should read this prospectus with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

In connection with this offering, on , 2017, we effected a -for-1 split of our Class A common stock and then reclassified our Class A common stock into common stock. Immediately prior to this offering, we had two classes of common stock outstanding, common stock and Class B common stock. The Class B common stock was identical to the Class A common stock, except that the Class B common stock was convertible into shares of our common stock as described below, and each share of Class B common stock was entitled to a preferential payment upon any liquidating distribution by us to holders of our capital stock, whether by dividend, distribution or otherwise, equal to the unreturned paid-in-capital amount for such share ($ ). After payment of this preference amount, each share of common stock and Class B common stock shared equally in all distributions by us to holders of our common stock.

Immediately prior to this offering, we will convert each outstanding share of our Class B common stock into approximately shares of our common stock plus an additional number of shares of our common stock determined by dividing the unreturned paid-in capital amount of such share of Class B common stock, or $ per share, by the initial public offering price of a share of our common stock in this offering, rounded to the nearest whole share.

References to the “Reclassification” throughout this prospectus refer to the -for-1 split of our Class A common stock, the reclassification of our Class A common stock into our common stock and the conversion of our Class B common stock into our common stock.

Assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, shares of common stock will be outstanding immediately after the Reclassification but before this offering. The actual number of shares of our common stock that will be issued as a result of the Reclassification is subject to change based on the actual initial public offering price. See “Description of Capital Stock.”

Because the number of shares of common stock into which a share of our Class B common stock is convertible will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would have a corresponding impact on the number of outstanding shares of our common stock presented in this prospectus after giving effect to this offering. The following number of shares of our common stock would be outstanding immediately after the Reclassification but before this offering, assuming the initial public offering prices for our common stock shown below.

We estimate that the net proceeds we will receive from the sale of the shares of our common stock in this offering, after deducting underwriting discounts and commissions and estimated expenses payable by us, will be approximately $ million (or $ million if the underwriters exercise their option to purchase additional shares in full). This estimate assumes an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus.

We intend to use the net proceeds from the sale of our common stock in this offering to repay approximately $ million in aggregate principal amount of indebtedness, to pay fees and expenses associated with this offering and for working capital and other general corporate purposes.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares in full), assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us. An increase (decrease) of 1.0 million in the number of shares offered by us in this offering would increase (decrease) the net proceeds to us from this offering by approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares in full), assuming the initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us. The information above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing.

Our board of directors does not currently intend to pay regular dividends on our common stock. However, we expect to reevaluate our dividend policy on a regular basis following this offering and may, subject to compliance with the covenants contained in the agreements governing our credit facilities, the indentures governing our outstanding notes, applicable law and other considerations, determine to pay dividends in the future. See “Description of Certain Indebtedness.”

The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2017 on (1) an actual basis and (2) an as adjusted basis to give effect to (i) the Reclassification that will be completed immediately prior to this offering, as described under “The Reclassification,” as if it had occurred on March 31, 2017 and based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, and (ii) the sale by us of shares of our common stock in this offering, assuming no exercise of the underwriters’ option to purchase additional shares, at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, and the application of the net proceeds therefrom, as described under “Use of Proceeds,” after deducting estimated underwriting discounts and commissions and estimated expenses payable by us.

The following table should be read in conjunction with “The Reclassification,” “Use of Proceeds,” “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings,” “Selected Consolidated Financial Data of PQ Group Holdings,” “Supplemental Selected Consolidated Financial Data of Legacy PQ,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes included elsewhere in this prospectus.

If you invest in our common stock, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. Dilution results from the fact that the initial public offering price per share of the common stock is substantially in excess of the book value per share of our common stock attributable to the existing stockholders for the presently outstanding shares of common stock. We calculate net tangible book value per share of our common stock by dividing the net tangible book value (total consolidated tangible assets less total consolidated liabilities) by the number of outstanding shares of our common stock.

Our net tangible book value at March 31, 2017 was approximately $(1,017.2) million, or $ per share of our common stock after giving effect to the Reclassification but before giving effect to this offering. Pro forma net tangible book value per share before this offering has been determined by dividing net tangible book value by the number of shares of common stock outstanding at March 31, 2017, assuming the Reclassification had taken place on March 31, 2017. Dilution in net tangible book value per share represents the difference between the amount per share that you pay in this offering and the net tangible book value per share immediately after this offering.

After giving effect to the receipt of the estimated net proceeds from our sale of shares in this offering, assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, and the application of the estimated net proceeds therefrom as described under “Use of Proceeds,” our pro forma net tangible book value at March 31, 2017 would have been approximately $ million, or $ per share of our common stock. This represents an immediate increase in net tangible book value per share of $ to existing stockholders and an immediate decrease in net tangible book value per share of $ to you. The following table illustrates this dilution per share.

If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book value per share after giving effect to this offering would be $ per share of our common stock. This represents an increase in pro forma net tangible book value of $ per share to existing stockholders and dilution in pro forma net tangible book value of $ per share of our common stock to you.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) our pro forma net tangible book value after giving effect to this offering by $ million, or by $ per share, assuming no change to the number of shares of our common stock offered by us as set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. Because the number of shares of our common stock into which a share of our Class B common stock is convertible will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would also have a corresponding impact on our pro forma net tangible book value per share of our common stock. Our pro forma net tangible book value per share of our common stock would have been the following at March 31, 2017, assuming the initial public offering prices for our common stock shown below:

The following table sets forth, as of March 31, 2017, the number of shares of our common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and to be paid by new investors purchasing shares in this offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Because the number of shares of our common stock into which a share of our Class B common stock is convertible will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would have a corresponding impact on the number of shares purchased by existing stockholders. The number of shares purchased by existing stockholders would have been the following as of March 31, 2017, assuming the initial public offering prices for our common stock shown below:

If the underwriters were to exercise their option to purchase additional shares in full, the percentage of shares of our common stock held by existing stockholders would be %, and the percentage of shares of our common stock held by new investors would be %.

To the extent any outstanding options or other equity awards are exercised or become vested or any additional options or other equity awards are granted and exercised or become vested or other issuances of our common stock are made, there may be further economic dilution to new investors.

The unaudited pro forma combined financial information for the year ended December 31, 2016 presented below was derived from our audited financial statements, which are included elsewhere in this prospectus.

On May 4, 2016, we consummated the Business Combination to reorganize and combine the businesses of legacy PQ and legacy Eco under a new holding company, PQ Group Holdings. Investment funds affiliated with CCMP held a controlling interest in legacy Eco prior to the Business Combination. Legacy Eco is treated as the acquirer in the Business Combination and the predecessor to PQ Group Holdings for accounting purposes.

The unaudited pro forma combined financial information includes our historical results of operations and the results of operations of legacy PQ, after giving pro forma effect to the following as if they had occurred on January 1, 2015:

The unaudited pro forma combined financial information has been prepared from, and should be read in conjunction with, the respective historical consolidated financial statements and related notes of PQ Group Holdings and legacy PQ appearing elsewhere in this prospectus. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with this unaudited pro forma combined financial information. The unaudited pro forma adjustments are based upon available information and assumptions that we believe are factually supportable, directly attributable to the Business Combination and the related financing transactions, and with respect to the statement of operations, expected to have a continuing impact on our business, and that we believe are reasonable under the circumstances. The unaudited pro forma combined statement of operations is not intended to represent what our results of operations would have been if the Business Combination and related financing transactions had occurred on January 1, 2015 or to project our results of operations for any future period. The unaudited pro forma combined statement of operations may not be comparable to, or indicative of, future performance.

Below is a summary of adjustments (1), (2), (3), and (4) outlined above to cost of goods sold to arrive at the net adjustment recorded in the pro forma statement of operations:

Below is a summary of the adjustments (6) and (7) outlined above to other operating expense, net to arrive at the net adjustment recorded in the pro forma statement of operations:

The following tables set forth our selected historical consolidated financial data as of and for the periods indicated.

On May 4, 2016, we consummated the Business Combination to reorganize and combine the business of legacy PQ and legacy Eco under a new holding company, PQ Group Holdings. Investment funds affiliated with CCMP held a controlling interest in legacy Eco prior to the Business Combination. Legacy Eco is treated as the acquirer in the Business Combination and the predecessor to PQ Group Holdings for accounting purposes.

Legacy Eco operated as a business unit of Solvay until the acquisition of substantially all of the assets of Solvay’s Eco Services business unit by Eco on December 1, 2014, and therefore, the financial statements of legacy Eco contained in this prospectus for periods prior to the 2014 Acquisition are not necessarily indicative of what legacy Eco’s financial position, results of operations and cash flows would have been had legacy Eco operated as a separate, standalone entity independent of Solvay. In connection with the 2014 Acquisition, the acquisition method of accounting was applied, and the assets and liabilities of legacy Eco were adjusted to fair value on December 1, 2014. Accordingly, with respect to the historical financial and related information of legacy Eco included in this prospectus, references to “Predecessor” include each of the periods from January 1, 2012 to November 30, 2014. For 2014, the results include 11 months of legacy Eco operating activity (January 1, 2014 to November 30, 2014) and include amounts that have been “carved out” from Solvay’s financial statements using assumptions and allocations made by Solvay to reflect Solvay’s Eco Services business unit on a stand-alone basis. References in this prospectus to “Successor” refer to the period from inception of Eco (July 30, 2014) to December 31, 2014, but only include one month of legacy Eco operating activity (December 1, 2014 to December 31, 2014), because there was no operating activity for the period from inception (July 30, 2014) to November 30, 2014, and reflects legacy Eco on a stand-alone basis.

The consolidated statement of operations data and cash flows data for the years ended December 31, 2016 and 2015, the Successor period from inception (July 30, 2014) to December 31, 2014 and Predecessor period from January 1, 2014 to November 30, 2014, and the consolidated balance sheet data as of December 31, 2016 and 2015 were derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data and cash flows data for the three months ended March 31, 2017 and 2016 and the consolidated balance sheet data as of March 31, 2017 were derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data and cash flows data for the years ended December 31, 2013 and 2012 and the consolidated balance sheet data as of December 31, 2014, 2013 and 2012 were derived from our combined financial statements not included in this prospectus.

The selected historical consolidated financial data set forth below does not give pro forma effect to the Business Combination or the 2014 Acquisition and should be read in conjunction with the disclosures set forth under “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

The following tables set forth certain selected consolidated financial data as of and for the periods indicated for legacy PQ on a stand-alone basis. The consolidated statement of operations data and cash flows data for the years ended December 31, 2015, 2014 and 2013 and the consolidated balance sheet data as of December 31, 2015 and 2014 were derived from legacy PQ’s audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of operations data and cash flows data for the year ended December 31, 2012 and the consolidated balance sheet data as of December 31, 2013 and 2012 were derived from legacy PQ’s consolidated financial statements not included in this prospectus. The consolidated statement of operations data and cash flows data for the three months ended March 31, 2016 and the consolidated balance sheet data as of March 31, 2016 were derived from legacy PQ’s unaudited consolidated financial statements included elsewhere in this prospectus.

The selected consolidated financial data set forth below should be read in conjunction with the “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the sections entitled “Risk Factors,” “Prospectus Summary—Summary Historical and Unaudited Pro Forma Financial and Other Data,” “Selected Consolidated Financial Data of PQ Group Holdings,” “Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings” and the historical audited and unaudited consolidated financial statements, including the related notes, appearing elsewhere in this prospectus. All references to years, unless otherwise noted, refer to our fiscal years, which end on December 31. All dollar values in this section, unless otherwise noted, are denoted in millions.

We are a leading global provider of catalysts, specialty materials and chemicals, and services that enable environmental improvements, enhance consumer products and increase personal safety. Our products and solutions help companies produce vehicles with improved fuel efficiency and cleaner emissions. Our materials are critical ingredients in consumer products that make teeth brighter, skin softer and wounds heal faster. We produce highly engineered materials that make highways and airports safer for drivers and pilots. Because our products are predominantly inorganic and carbon-free, we believe we contribute to improving the sustainability of our planet.

We conduct operations through two reporting segments: environmental catalysts and services and performance materials and chemicals. Our environmental catalysts and services business is a leading global innovator and producer of catalysts for the refinery, emissions control and petrochemical industries and is also a leading provider of catalyst recycling services to the North American refining industry. We believe our products are mission critical for our customers in these growing applications and impart essential functionality in chemical and refining production processes and in emissions control for engines. Our environmental catalysts and services business consists of three product groups: silica catalysts, zeolite catalysts and refining services. Our performance materials and chemicals business is a silicates and specialty materials producer with leading supply positions in North America, Europe, South America and Asia serving diverse and growing end uses such as personal and industrial cleaning products, fuel efficient tires (“green tires”), surface coatings and food and beverage. Our products are essential additives, ingredients, and precursors that are critical to the performance characteristics of our customers’ products, yet typically represent only a small portion of our customers’ overall end-product costs. Our performance materials and chemicals business consists of two product groups: performance chemicals and performance materials. In 2016, we served over 4,000 customers globally across many end uses from our 68 manufacturing facilities, which are strategically located across six continents.

On December 1, 2014, Eco Services Operations LLC (“Eco”), a Delaware limited liability company and an indirect subsidiary of investment funds affiliated with CCMP, acquired substantially all of the assets of Solvay’s Eco Services business unit (the “2014 Acquisition”).

On August 17, 2015, PQ Group Holdings Inc. (“PQ Group Holdings” or “the company”), PQ Holdings Inc. (“PQ Holdings”), PQ Corporation, Eco, Eco Services Intermediate Holdings LLC, Eco Services Group Holdings LLC, investment funds affiliated with CCMP, and certain other stockholders of PQ Holdings and Eco entered into a reorganization and transaction agreement pursuant to which the companies consummated a series of transactions (the “Business Combination”) to reorganize and combine the businesses of PQ Holdings and Eco

under a new holding company, PQ Group Holdings. The Business Combination was consummated on May 4, 2016. We refer to the business of PQ Holdings prior to the Business Combination as “legacy PQ” and the business of Eco prior to the Business Combination as “legacy Eco.”

In accordance with GAAP, legacy Eco was the accounting acquirer in the Business Combination and, as such, legacy Eco is treated as our predecessor. Investment funds affiliated with CCMP held a controlling interest in legacy Eco and a non-controlling interest in legacy PQ prior to the Business Combination.

In an effort to supplement our financial information presented in accordance with GAAP, and the related pro forma financial information presented in accordance with Article 11 of Regulation S-X, as a result of the required presentation of the 2014 Acquisition and the Business Combination, we have included in this prospectus the following non-GAAP financial measures to clarify and enhance an understanding of the historical results of our entire business:

Adjusted EBITDA is a non-GAAP financial measure that we use to evaluate our past performance. Adjusted EBITDA is presented as a key performance indicator as we believe it will enhance a prospective investor’s understanding of our results of operations and financial condition. EBITDA consists of net income (loss) attributable to PQ Group Holdings before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash or other items that are included in net income and EBITDA that we do not consider indicative of our ongoing operating performance. We believe that these adjustments provide investors with meaningful information to understand our operating results and ability to analyze our financial and business trends on a period-to-period basis.

You should not consider Adjusted EBITDA in isolation or as an alternative to (a) operating profit or profit for the period (as reported in accordance with GAAP), (b) cash flows from operating, investing and financing activities as a measure to meet our cash needs or (c) any other measures of performance under GAAP. You should exercise caution in comparing Adjusted EBITDA as reported by us to similar measures of other companies. In evaluating Adjusted EBITDA, you should be aware that we are likely to incur expenses similar to those eliminated in this presentation in the future and that certain of these items could be considered recurring in nature. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. For a discussion of additional limitations of Adjusted EBITDA as well as a reconciliation from net income (loss) for the periods presented to EBITDA and Adjusted EBITDA, see “Prospectus Summary—Summary Historical and Unaudited Pro Forma Financial and Other Data.”

Our environmental catalysts and services business consists of three product groups: silica catalysts, zeolite catalysts, and refining services. Our environmental catalysts and services sales have grown primarily due to expansion into new end applications, including emission control catalysts, polymer catalysts, and refining catalysts, as well as continued supply share gains. Sales in our environmental catalysts and services segment are made on both a purchase order basis and pursuant to long-term contracts.

Our performance materials and chemicals business consists of two product groups: performance chemicals and performance materials. Expansions into new applications, including personal care and consumer cleaning, as well as share gains in existing end uses, have added to the growth of our sales. We have seen recent declines in the pulp and paper and oil and gas end uses. Historically, our performance materials and chemicals business has experienced relatively stable demand both seasonally and throughout economic cycles, due to the diverse consumer and industrial end uses that our products serve. Product sales from our performance chemicals product group are made on both a purchase order basis and pursuant to long-term contracts. In the performance materials product group, sales have been driven by the growth of spending on repair, maintenance and upgrade of existing highways and the construction of new highways and roads by governments around the world. Product sales in our performance materials product group are made principally on a purchase order basis. There may be modest fluctuations in timing of orders, but orders are mainly driven by demand and general economic conditions.

Cost of goods sold consists of variable product costs, fixed manufacturing expenses, depreciation expense and freight expenses. Variable product costs include all raw materials, energy and packaging costs that are directly related to the manufacturing process. Fixed manufacturing expenses include all plant employment costs, manufacturing overhead and periodic maintenance costs. The primary raw materials used in the manufacture of products in our performance materials and chemicals business include soda ash, industrial sand, aluminum trihydrate, sodium hydroxide, and cullet. For the years ended December 31, 2016 and 2015, approximately 45% of sales with our largest sodium silicate customers in North America are made under contracts that include price adjustments for changes in the price of raw materials and natural gas. Under these contracts, there generally is a time lag of three to nine months for price changes to pass through, depending on the magnitude of the change in cost and other market dynamics. The primary raw materials for our environmental catalysts and services business include spent sulfuric acid, sulfur, sodium silicates, acids, bases, and certain metals. Most of our refining services contracts feature take-or-pay volume protection and/or quarterly price adjustments for commodity inputs, labor, the Chemical Engineering Index (U.S. chemical plant construction cost index) and natural gas. Over 94% and 91% of our refining services product group pro forma sales for the years ended December 31, 2016 and 2015, respectively, were under contracts featuring quarterly price adjustments. The price adjustments generally reflect actual costs for producing acid and tend to protect us from volatility in labor, fixed costs and raw material pricing. Freight expenses are generally passed through directly to customers. Spent acid for our refining services product group is supplied by customers for a nominal charge as part of their contracts. While natural gas is not a direct feedstock for any product, all businesses use natural gas powered furnaces to heat raw materials and create the chemical reactions necessary to produce end-products. We maintain multiple suppliers wherever possible, hedge exposure to fluctuations in prices for natural gas purchases in the United States, make forward purchases of natural gas in the United States, Canada, and Europe to mitigate our exposure to price volatility, and structure our customer contracts when possible to allow for the pass-through of raw material and natural gas costs.

We account for our investments in our equity joint ventures under the equity method. Our largest joint venture, the Zeolyst Joint Venture, manufactures high performance specialty zeolite-based catalysts for use in the emissions control industry, the petrochemical industry and other areas of the broader chemicals industry. We share proportionally in the management of our joint ventures with the other parties to each such joint venture.

Our results of operations are subject to seasonal fluctuations, primarily with respect to our performance materials and refining services product groups. As the road striping season occurs during warmer weather, sales, and earnings are primarily generated during the second and third quarters in our performance materials product group. Our refining services product group typically experiences similar seasonal fluctuations as a result of higher demand for gasoline products in the summer months. Working capital is built during the first half of the year, while cash generation occurs primarily in the second half of the fiscal year.

Inflationary pressures may have an adverse effect on us, impacting raw material costs and other operating costs, as well as resulting in higher fixed asset replacement costs. We attempt to manage these impacts with cost control, productivity improvements and contractual arrangements, as well as price increases to customers.

As a global business, we are subject to the impact of gains and losses on currency translations, which occur when the financial statements of foreign operations are translated into U.S. dollars. We operate a geographically diverse business with approximately 38% and 34% of our sales for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively, in currencies other than the U.S. dollar. Because our consolidated financial results are reported in U.S. dollars, sales or earnings generated in currencies other than the U.S. dollar can result in a significant increase or decrease in the amount of those sales and earnings when translated to U.S. dollars. The foreign currencies to which we have the most significant exchange rate exposure include the Euro, British pound, Canadian dollar, Brazilian real and the Mexican peso. See “—Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”

As a result of this offering, we will incur additional legal, accounting and other expenses that we did not previously incur, including costs associated with SEC reporting and corporate governance requirements. These requirements include compliance with the Sarbanes-Oxley Act and the listing standards of the New York Stock Exchange. Our financial statements following this offering will reflect the impact of these expenses.

In addition to the analysis of historical results of operations, we have prepared unaudited supplemental pro forma results of operations for the three months ended March 31, 2016 as well as the two years ended December 31, 2016 and 2015. The unaudited pro forma statements of operations reflect pro forma adjustments to the results of PQ Group Holdings to give effect to the Business Combination and the related financing transactions as if they had occurred on January 1, 2015. The unaudited pro forma adjustments include:

The unaudited pro forma statements of operations have been prepared in accordance with Article 11 of Regulation S-X by combining the historical results of operations of legacy Eco and legacy PQ for the periods prior to May 4, 2016 and should be read in conjunction with our historical consolidated financial statements and related notes thereto for the quarter ended March 31, 2017 and the year ended December 31, 2016 included elsewhere in this prospectus.

The unaudited pro forma statements of operations have been prepared for illustrative purposes only and are not necessarily indicative of the combined results of operations that would have been realized had the pro forma transactions been completed as of the dates indicated, nor are they meant to be indicative of any anticipated future results of operations. The unaudited pro forma adjustments are based upon available information and assumptions we believe are factually supportable, directly attributable to the Business Combination and the related financing transactions, and with respect to the statement of operations, expected to have a continuing impact on our business, and that we believe are reasonable under the circumstances. In addition, the unaudited pro forma statements of operations do not include any pro forma adjustments to reflect expected cost savings or restructuring actions which may be achievable or the impact of any non-recurring activity and transaction-related costs.

Management believes the unaudited pro forma statements of operations are a useful presentation of our results of operations as they provide comparative information, period-over-period, on a more comparable basis.

Historical and Pro Forma—Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

The following is a summary of our financial performance for the three months ended March 31, 2017 compared with the three months ended March 31, 2016.

Pro Forma: Net sales increased $2.0 million to $332.9 million. The increase in sales was primarily due to higher volumes and favorable pricing and customer mix in performance materials and chemicals, which was partially offset by lower environmental catalysts and services volumes and the impact of unfavorable foreign currency exchange.

The following is our condensed consolidated statement of operations and a summary of financial results, presented on a historical and pro forma basis, for the three months ended March 31, 2017 and March 31, 2016. The historical results of operations include Eco for all periods presented and legacy PQ for the three months ended March 31, 2017. The unaudited pro forma results of operations reflect pro forma adjustments to the results of PQ Group Holdings to give effect to the Business Combination and the related financing transactions as if they had occurred on January 1, 2015.

Sales for the three months ended March 31, 2017 were $332.9 million, an increase of $239.0 million, or 254.5%, compared to sales of $93.9 million for the three months ended March 31, 2016. The increase in sales within our performance materials and chemicals segment was due to the inclusion of $222.6 million of legacy PQ sales in our results of operations for the three months ended March 31, 2017. The increase in sales within our environmental catalysts and services segment was due to the inclusion of $17.1 million of legacy PQ sales in our results of operations for the three months ended March 31, 2017 and an increase of $0.3 million in sales in our refining services product group.

Performance Materials & Chemicals: Sales in performance materials and chemicals for the three months ended March 31, 2017 were $222.6 million, an increase of $8.1 million, or 3.8%, compared to sales of $214.5 million for the three months ended March 31, 2016. The increase in sales was primarily due to higher volumes of $9.4 million and higher average selling price and customer mix of $2.0 million, partly offset by the unfavorable effects of foreign currency translation of $3.3 million.

The increase in volumes within performance materials and chemicals was primarily driven by sales of sodium silicates, silicas, and Q-Cel hollowspheres and timing of metal finishing sales. The favorable increase in volumes was partially offset by lower conductive volumes, due to product life cycles. The higher average selling price is principally a result of favorable U.S. dollar denominated sales and U.S. dollar cost pass through pricing in certain foreign locations. The stronger U.S. dollar compared to the Euro, Mexican peso and British pound unfavorably impacted our sales.

Environmental Catalysts & Services: Sales in environmental catalysts and services for the three months ended March 31, 2017 were $111.3 million, a decrease of $5.5 million, or 4.7%, compared to sales of $116.8 million for the three months ended March 31, 2016. The decrease in sales was primarily due to lower volumes of $6.7 million, which was partially offset by higher average selling price and customer mix of $1.6 million.

The decrease in volumes within environmental catalysts and services was mainly due to record sales volumes to the methyl methacrylate industry in the first quarter 2016 and weaker demand for virgin sulfuric acid in the mining industry. The declines in volume were offset by higher average selling prices driven by the higher realization from refining services customer contracts.

Gross profit for the three months ended March 31, 2017 was $82.7 million, an increase of $56.6 million, or 216.9%, compared with $26.1 million for the three months ended March 31, 2016. The increase in gross profit was due to $51.5 million attributable to the inclusion of legacy PQ in our results of operations for the three months ended March 31, 2017 and an increase of $5.1 million in gross profit by our refining services product group. The increase in refining services gross profit was due to lower manufacturing costs of $5.4 million and favorable pricing of $0.8 million, which was offset by higher depreciation expense of $0.7 million and lower volumes of $0.4 million. The lower manufacturing costs were primarily driven by fixed plant cost reduction activities and lower raw materials pass through costs, mainly of sulfur.

Gross profit for the three months ended March 31, 2017 was $82.7 million, a decrease of $2.6 million, or 3%, compared with $85.3 million for the three months ended March 31, 2016. The $2.6 million of lower gross

profit was due to higher depreciation expense of $6.9 million, unfavorable volumes of $3.4 million and the unfavorable effects of foreign currency translation of $1.0 million, which was partially offset by lower manufacturing costs of $3.6 million, favorable pricing of $3.6 million and favorable customer mix of $1.5 million.

The lower volumes were primarily driven by lower virgin sulfuric acid volumes on sales to the mining industry and lower sales to the methyl methacrylate industry. The lower manufacturing costs were primarily driven by lower turnaround and maintenance costs within our plants as well as the pass-through of lower raw material costs, mainly of sulfur. The greater average selling price was a result of the positive impact of U.S. zeolite sales and strong performance in sodium silicates.

Historical: Selling, general and administrative expenses for the three months ended March 31, 2017 were $34.4 million, an increase of $26.3 million compared with $8.1 million for the three months ended March 31, 2016. The increase in selling, general and administrative expenses was due to $29.8 million attributable to the inclusion of legacy PQ in our results of operations for the three months ended March 31, 2017, partly offset by $3.5 million of lower selling, general and administrative expenses from the benefit of cost reduction initiatives.

Pro Forma: Selling, general and administrative expenses for the three months ended March 31, 2017 were $34.4 million, a decrease of $1.7 million, or 4.7%, as compared with $36.1 million for the three months ended March 31, 2016. The reduction in selling, general and administrative expenses relates to the benefit of cost reduction initiatives.

Historical: Other operating expense, net for the three months ended March 31, 2017 was $10.3 million, an increase of $0.4 million, compared with $9.9 million for the three months ended March 31, 2016. The increase in other operating expense, net was due to $7.7 million attributable to the inclusion of legacy PQ in our results of operations for the three months ended March 31, 2017, partly offset by $4.7 million of lower restructuring and severance related costs, $1.5 million of lower losses on sales of assets and $1.0 million lower transaction fees.

Pro Forma: Other operating expense, net for the three months ended March 31, 2017 was $10.3 million, a decrease of $10.5 million, or 50.5%, compared with $20.8 million for the three months ended March 31, 2016. The decrease was primarily driven by $5.6 million of lower restructuring and severance related charges, $2.9 million of lower intangible asset amortization, and $1.5 million of lower losses on asset sales.

Historical: Equity in net income of affiliated companies, net for the three months ended March 31, 2017 was $5.9 million, compared with zero for the three months ended March 31, 2016. The increase was primarily due to $9.2 million of earnings generated by the Zeolyst Joint Venture during the three months ended March 31, 2017, partly offset by $3.6 million of amortization on the fair value step-up of the underlying assets of the Zeolyst Joint Venture.

Pro Forma: Equity in net income of affiliated companies, net for the three months ended March 31, 2017 was $5.9 million, an increase of $2.3 million, or 63.9%, compared with $3.6 million for the three months ended March 31, 2016. The increase was primarily driven by increased sales volumes of $5.5 million in our Zeolyst Joint Venture pressure products, specialty catalysts products and hydrocracking products, which was partially offset by lower volumes in our Zeolyst Joint Venture’s Y-Powders products. Cost drivers include higher fixed costs and depreciation from expansion and inflation, and growth-related increases in selling, general and administrative and research and development expense and unfavorable inventory absorption.

Historical: Interest expense, net for the three months ended March 31, 2017 was $46.8 million, an increase of $35.8 million, as compared with $11.0 million for the three months ended March 31, 2016. Interest expense increased primarily due to higher third-party interest expense under our debt structure compared to the legacy Eco debt structure on a standalone basis.

Pro Forma: Interest expense, net for the three months ended March 31, 2017 was $46.8 million, an increase of $0.5 million, or 1.1%, compared with $46.3 million for the three months ended March 31, 2016.

Historical: Other expense, net was $2.3 million for the three months ended March 31, 2017 and consisted primarily of $2.0 million of foreign currency losses.

Pro Forma: Other expense, net was $2.3 million for the three months ended March 31, 2017, an unfavorable change of $5.8 million compared with other income, net of $3.5 million for the three months ended March 31, 2016. Other expense, net primarily consisted of $2.0 million of foreign currency losses for the three months ended March 31, 2017 as compared to $3.2 million of gains for the three months ended March 31, 2016. The change in foreign currency gains and losses for the three months ended March 31, 2017 was driven by a strengthening U.S. dollar (as compared to the prior year) on intercompany debt and the Euro term loan denominated in foreign currencies translated to U.S. dollars.

Historical: The benefit for income taxes for the three months ended March 31, 2017 was $2.9 million. The effective income tax rate for the three months ended March 31, 2017 was 55.8%. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three months ended March 31, 2017 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends offset by lower tax rates in foreign jurisdictions as compared to the U.S. tax rate, foreign withholding taxes, state taxes and non-deductible transaction costs.

Pro Forma: The benefit for income taxes for the three months ended March 31, 2017 was $2.9 million, an increase of $2.0 million, or 222.2%, compared to a $0.9 million benefit for the three months ended March 31, 2016. The effective income tax rate for the three months ended March 31, 2017 was 55.8% compared to 8.3% for the three months ended March 31, 2016.

The company’s effective income tax rate fluctuates based primarily on changes in income mix and, in this case, the change in Eco’s tax status. As a result of the Business Combination, Eco had a change in tax status. Eco was previously a partnership for tax purposes and, following the Business Combination, is taxed as a C-corporation. As a partnership, Eco had not previously recorded taxes (with the exception of minimal state taxes imposed on the partnership) as its members were responsible for their respective tax liabilities.

The difference between the U.S. federal statutory income tax rate and the company’s effective income tax rate for the three months ended March 31, 2017 and 2016 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends, offset by lower tax rates in foreign jurisdictions as compared to the U.S. tax rate, foreign withholding taxes, state taxes and non-deductible transaction costs.

Historical: For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net loss attributable to PQ Group Holdings was $2.4 million for the three months ended March 31, 2017 compared with a net loss of $3.1 million for three months ended March 31, 2016.

Pro Forma: For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net loss attributable to PQ Group Holdings was $2.4 million for the three months ended March 31, 2017 compared with a net loss of $10.4 million for the three months ended March 31, 2016.

Pro Forma Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Summarized pro forma Segment Adjusted EBITDA information is shown below in the following table.

Adjusted EBITDA for the three months ended March 31, 2017 was $101.2 million, an increase of $11.7 million, or 13.1%, compared with $89.5 million for the three months ended March 31, 2016.

Performance Materials & Chemicals: Adjusted EBITDA for the three months ended March 31, 2017 was $52.5 million, an increase of $2.3 million, or 4.6%, compared with $50.2 million for the three months ended March 31, 2016.

The increase in Adjusted EBITDA was due to price increases and favorable mix. The higher average selling price was a result of the positive impact of U.S. zeolite sales and strong performance in sodium silicate. The favorable product mix improvements were a result of increased volumes in personal care, spray dry silicas, and transportation safety. This was partially offset by higher manufacturing costs due to increased sales of specialty silicas in the United States and United Kingdom as well as increased labor costs related to an increase in production of spray dry silicas.

Environmental Catalysts & Services: Adjusted EBITDA for the three months ended March 31, 2017 was $56.4 million, an increase of $9.5 million, or 20.3%, compared with $46.9 million for the three months ended March 31, 2016.

The increase in Adjusted EBITDA was driven primarily by higher equity earnings of our Zeolyst Joint Venture driven by higher sales volumes in pressure products, specialty catalysts products, and hydrocracking

products, lower selling, general and administrative costs from the benefits of restructuring activities in the prior year, and lower fixed costs due to timing of turnaround and maintenance costs within our plants.

A reconciliation of Segment Adjusted EBITDA to combined net loss attributable to PQ Group Holdings is as follows:

Historical and Pro Forma—Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015

The following is a summary of our financial performance for the year ended December 31, 2016 compared with the prior year ended December 31, 2015.

The following is our consolidated statement of operations and a summary of financial results, presented on a historical and pro forma basis, for the years ended December 31, 2016 and December 31, 2015. The historical results of operations include Eco for all periods presented and legacy PQ from May 4, 2016, the date of consummation of the Business Combination, through December 31, 2016. The unaudited pro forma results of operations reflect pro forma adjustments to the results of PQ Group Holdings to give effect to the Business Combination and the related financing transactions as if they had occurred on January 1, 2015.

Sales for the fiscal year ended December 31, 2016 were $1,064.2 million, an increase of $675.3 million, or 173.6%, compared to sales of $388.9 million for the year ended December 31, 2015. The increase in sales in our

performance materials and chemicals segment was due to the inclusion of legacy PQ sales of $639.0 million in our results of operations for the period from May 4, 2016 to December 31, 2016. The increase in sales within our environmental catalysts and services segment was due to the inclusion of legacy PQ sales totaling $53.0 million in our results of operations for the period from May 4, 2016 to December 31, 2016, partly offset by a decrease of $15.2 million in sales from our refining services product group. The decrease in sales from our refining services product group was primarily due to lower pricing of $29.7 million, partially offset by an increase in volumes of $14.5 million. The lower pricing was driven by indexing to pass through lower raw material costs, mainly sulfur and natural gas. The higher volume was primarily driven by strong gasoline demand for the refining services product group, partly offset by lower virgin sulfuric acid shipments.

Performance Materials & Chemicals: Performance materials and chemicals sales for the year ended December 31, 2016 were $947.2 million, a decrease of $18.9 million, or 2.0%, compared to sales of $966.1 million for the year ended December 31, 2015. The decrease in sales was primarily due to the unfavorable effects of foreign currency translation of $25.1 million, partially offset by higher average selling price and customer mix of $4.4 million and higher volumes of $1.8 million.

The increase in volumes in performance materials and chemicals was the result of higher sales in precipitated silicas, spray dry silicate (in Europe) and strong customer demand for our personal care and microsphere products, which was partially offset by lower volumes of zeolite, beer gels, potassium silicate, spray dry silicate in the Americas, and microspheres within the performance materials product line. The lower demand in potassium silicate and spray dry silicate was due to lower drilling activity in North America. The higher average selling price is principally a result of favorable U.S. dollar denominated sales and U.S. dollar cost pass through pricing in certain foreign locations and higher selling prices for transportation safety and certain microsphere products, including hollow microspheres. Lower pricing for our cost adjusted pass through contracts in North America and lower microspheres customer mix partially offset this favorable pricing impact. The stronger U.S. dollar compared to a number of other major currencies, including the Canadian dollar, the Mexican peso, the British pound, and Brazilian real, unfavorably impacted our sales.

Environmental Catalysts & Services: Environmental catalysts and services sales for the year ended December 31, 2016 were $457.9 million, an increase of $10.8 million, or 2.4%, compared to sales of $447.1 million for the year ended December 31, 2015. The increase in sales was primarily due to increased volumes of $40.2 million, partially offset by lower average selling price, primarily from lower cost pass through pricing of $27.2 million, and the unfavorable effects of foreign currency translation of $2.2 million.

Environmental catalysts and services sales were higher from increased sales volumes, which were primarily driven by strong demand across multiple product lines, primarily in our silica catalyst product group serving the packaging and engineered plastics end uses and strong gasoline demand within our refining services product group. Average selling prices in the silica catalysts product group increased from favorable customer mix. This was partially offset by unfavorable indexing to lower pass through raw material costs, mainly sulfur and natural gas.

Gross profit for the year ended December 31, 2016 was $254.1 million, an increase of $144.0 million, or 130.8% compared with $110.1 million for the year ended December 31, 2015. The increase in gross profit was due to $142.6 million attributable to the inclusion of legacy PQ in our results of operations for the period from May 4, 2016 to December 31, 2016 and an increase of $1.4 million in gross profit from our refining services product group. The increase in refining services gross profit was due to lower manufacturing costs of $30.6 million and higher volumes of $10.2 million, which was offset by lower pricing and unfavorable customer

mix of $29.7 million and higher depreciation expense of $9.7 million. The lower manufacturing costs were primarily driven by lower raw material pass through costs, including sulfur and natural gas, and from fixed plant cost reduction activities.

Gross profit for the year ended December 31, 2016 was $365.9 million, an increase of $1.4 million, or 0.4% compared with $364.5 million for the year ended December 31, 2015. The $1.4 million of higher gross profit was due to lower manufacturing costs of $35.5 million and higher volumes of $15.9 million. The increase in gross profit was offset by increases in depreciation and amortization expense of $19.0 million, lower average selling price of $22.8 million, the unfavorable effects of foreign currency translation of $7.6 million and unfavorable product mix of $0.6 million.

The lower manufacturing costs were primarily driven by lower raw material pass-through costs, including sulfur, caustic and natural gas and by-product mix. The higher volume was primarily driven by strong demand across multiple product lines, including our silica catalyst product group serving the packaging and engineered plastics industries and our refining services product group, partially offset by lower volumes of higher margin potassium silicate and spray dry silicate (due to lower oil drilling activity) along with lower zeolite and beer gel volumes in the Americas. Our unfavorable variance in pricing relates to pass-through pricing of natural gas and sulfur.

Historical: Selling, general and administrative expenses for the year ended December 31, 2016 were $107.6 million, an increase of $73.0 million compared with $34.6 million for the year ended December 31, 2015. The increase in Selling, general and administrative was due to $76.2 million attributable to the inclusion of legacy PQ in our results of operations for the period from May 4, 2016 to December 31, 2016, partly offset by $3.2 million of lower Selling, general and administrative expenses from the benefit of cost reduction initiatives.

Pro Forma: Selling, general and administrative expenses for the year ended December 31, 2016 were $145.0 million as compared with $140.9 million for the year ended December 31, 2015.

Historical: Other operating expense, net for the year ended December 31, 2016 was $62.3 million, an increase of $42.6 million, or 216.2%, compared with $19.7 million for the year ended December 31, 2015. The increase in other operating expense, net was due to $48.4 million attributable to the inclusion of legacy PQ in our results of operations for the period from May 4, 2016 to December 31, 2016, partly offset by $5.6 million of lower restructuring and severance related costs.

Pro Forma: Other operating expense, net for the year ended December 31, 2016 was $75.0 million, an increase of $7.3 million, or 10.8%, compared with $67.7 million for the year ended December 31, 2015. The change was primarily driven by $6.4 million of intangible asset impairment charges, $6.1 million of higher restructuring and severance related charges and $4.0 million from the absence of prior year nitrogen oxide credit sales. These changes were partly offset by lower transaction and other related costs of $10.2 million. During the year ended December 31, 2015, we incurred separation charges related to an executive who left our company.

Historical: Equity in net loss of affiliated companies for the year ended December 31, 2016 was $2.6 million. The loss was due to the impact of $36.3 million of amortization on the fair value step-up of the underlying assets of our Zeolyst Joint Venture in connection with the Business Combination, partly offset by $33.2 million of earnings generated mainly by the Zeolyst Joint Venture from the Business Combination during the period from May 4, 2016 through December 31, 2016.

Pro Forma: Equity in net income of affiliated companies for the year ended December 31, 2016 was $35.2 million, a decrease of $5.9 million, compared with $41.1 million for the year ended December 31, 2015. The decrease was primarily driven by lower contribution from reduced sales of hydrocracking and specialty catalysts and other various cost increases, partially offset by increased volume in pressure products (primarily due to emission regulations). Cost drivers include higher fixed costs and depreciation from expansion and inflation, and growth-related increases in selling, general and administrative and research and development expense, partly offset by favorable inventory absorption. Hydrocracking demand was down primarily due to the timing of re-fills as the products used in hydrocracking typically have a two-to-four year life cycle before they must be replaced.

Historical: Interest expense, net for the year ended December 31, 2016 was $140.3 million, an increase of $96.0 million, or 216.7%, as compared with $44.3 million for the year ended December 31, 2015. Interest expense increased primarily due to higher third-party interest expense under our new debt structure compared to the legacy Eco debt structure on a standalone basis.

Pro Forma: Interest expense, net for the year ended December 31, 2016 was $187.9 million, a decrease of $11.7 million, or 5.9%, compared with $199.6 million for the year ended December 31, 2015. Interest expense decreased primarily due to the repricing of our new debt structure during the year ended December 31, 2016.

Historical: On May 4, 2016, and concurrently with the consummation of the Business Combination, the company refinanced its existing credit facilities. The company recorded $4.7 million of new creditor and third-party financing costs fees as debt extinguishment costs. In addition, previous unamortized deferred financing costs of $6.3 million and original issue discount of $1.0 million associated with the old debt were written off as debt extinguishment costs.

On November 14, 2016, the company repriced its existing senior secured term loan facility. The company recorded $0.5 million of new creditor and third-party financing costs fees as debt extinguishment costs. In addition, previously unamortized deferred financing costs of $0.6 million and original issue discount of $0.8 million associated with the previously outstanding debt were written off as debt extinguishment costs.

Pro Forma: On November 14, 2016, the company repriced its existing senior secured term loan facility. The company recorded $0.5 million of new creditor and third-party financing costs fees as debt extinguishment costs. In addition, previously unamortized deferred financing costs of $0.6 million and original issue discount of $0.7 million associated with the old debt were written off as debt extinguishment costs.

Historical: Other income, net was $3.4 million for the year ended December 31, 2016. Other income, net primarily consisted of $3.6 million of foreign currency gains for the year ended December 31, 2016. The change in foreign currency for the year ended December 31, 2016 was driven by a weakening U.S. dollar (as compared to the prior year) on intercompany debt denominated in foreign currencies translated to U.S. dollars.

Pro Forma: Other income, net was $8.8 million for the year ended December 31, 2016, a favorable change of $30.1 million, compared with $21.3 million of other expense, net for the year ended December 31, 2015. Other income, net primarily consisted of $8.8 million of foreign currency gain for the year ended December 31, 2016 as compared to a $21.1 million loss for the year ended December 31, 2015. The change in foreign currency for the year ended December 31, 2016 was driven by a weakening U.S. dollar (as compared to the prior year) on intercompany debt denominated in foreign currencies translated to U.S. dollars.

Historical: The provision for income taxes for the year ended December 31, 2016 was $10.0 million. The effective income tax rate for the year ended December 31, 2016 was (14.5%). As a result of the Business Combination, Eco had a change in tax status. Eco was previously a partnership for tax purposes and, following the Business Combination, is taxed as a C-corporation. As a result of being a partnership, Eco had not previously recorded deferred taxes as its members were responsible for their respective tax liabilities. Upon the change in tax status, Eco’s net deferred tax liability was recorded as a charge to the tax provision.

Pro Forma: The provision for income taxes for the year ended December 31, 2016 was $58.0 million compared with a $1.2 million provision for the year ended December 31, 2015. The effective income tax rate for the year ended December 31, 2016 was 22,295.0% compared to 4.8% for the year ended December 31, 2015. As a result of the Business Combination, Eco had a change in tax status. Eco was previously a partnership for tax purposes and, following the Business Combination, is taxed as a C-corporation. As a result of being a partnership, Eco had not previously recorded deferred taxes as its members were responsible for their respective tax liabilities. Upon the change in tax status, Eco’s net deferred tax liability was recorded as a charge to the tax provision. The company’s effective income tax rate fluctuates based on, among other factors, changes in income mix. The difference between the U.S. federal statutory income tax rate and the company’s effective income tax rate for the years ended December 31, 2016 and 2015 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends, differences between tax rates in foreign jurisdictions as compared to the U.S. tax rate, withholding taxes, and changes to reserves for uncertain tax positions.

Historical: For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net loss attributable to PQ Group Holdings Inc. was $79.7 million for the year ended December 31, 2016 compared with net income of $11.5 million for year ended December 31, 2015.

Pro Forma: For the foregoing reasons and after the effect of the non-controlling interest in earnings of subsidiaries for each period presented, net loss attributable to PQ Group Holdings was $59.0 million for the year ended December 31, 2016 compared to a net loss of $26.9 million for the year ended December 31, 2015.

Pro Forma Segment Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Summarized Segment Adjusted EBITDA information is shown below in the following table.

Adjusted EBITDA for the year ended December 31, 2016 was $420.8 million, an increase of $7.7 million, or 1.9%, compared with $413.1 million for the year ended December 31, 2015.

Performance Materials & Chemicals: Adjusted EBITDA for the year ended December 31, 2016 was $231.8 million, a decrease of $9.9 million, or 4.1%, compared with $241.7 million for the year ended December 31, 2015.

The decrease in Adjusted EBITDA was primarily due to the unfavorable effect of foreign currency translation of $6.3 million, prior year nitrogen oxide credit sales of $4.0 million that were not in the current year, and lower volumes of higher margin potassium silicate and spray dry silicate (due to lower oil drilling activity) along with lower zeolite and beer gel volumes in the Americas. This was partially offset by higher selling prices and mix improvements primarily from increased sales of higher margin specialty silicas, magnesium silicate, and spray dry silicates (in Europe), reduced sales of lower margin sodium silicates and improved mix in transportation safety.

Environmental Catalysts & Services: Adjusted EBITDA for the year ended December 31, 2016 was $221.8 million, an increase of $31.0 million, or 16.3%, compared with $190.8 million for the year ended December 31, 2015.

The increase in Adjusted EBITDA was due to higher volume primarily driven by strong demand across multiple product lines, including our silica catalyst product group serving the packaging and engineered plastics industries and our refining services product group and lower fixed plant cost reductions and plant turnaround expense. This was partially offset by the unfavorable effect of foreign currency translation of $1.0 million and unfavorable product mix.

A reconciliation of Segment Adjusted EBITDA to our pro-forma net income (loss) is as follows:

Year Ended December 31, 2015 Compared to the Period from Inception (July 30, 2014) to December 31, 2014 (Successor Period) and the Period from January 1, 2014 to November 30, 2014 (Predecessor Period)

The following is our consolidated statement of operations and a summary financial performance for the year ended December 31, 2015, the period from inception (July 30, 2014) to December 31, 2014 (“Successor” period) and the period from January 1, 2014 to November 30, 2014 (“Predecessor” period) and should be read in conjunction with our historical audited financial statements and notes thereto included elsewhere in this prospectus. These results of operations include legacy Eco for all periods presented and may not be comparable to our financial statements for periods following the Business Combination.

The following is a summary of our financial performance for the year ended December 31, 2015 compared with the Successor period and Predecessor period.

Sales for the year ended December 31, 2015, the Successor period and the Predecessor period was $388.9 million, $35.5 million and $361.8 million, respectively. Virgin sulfuric acid sales decreased due to lower pricing related to raw material (sulfur) costs passed through to customers and reduced volumes to a large customer. This was partially offset by an increase in regeneration volumes.

Gross profit for the year ended December 31, 2015, the Successor period and Predecessor period was $110.1 million, $5.3 million and $96.0, respectively. The increase in gross profit was primarily due to lower sulfur and natural gas prices, fixed plant costs and lower freight transportation costs.

Selling, general and administrative expenses for the year ended December 31, 2015, the Successor period and Predecessor period was $34.6 million, $2.6 million and $45.2 million, respectively. The decrease was primarily due to a lower depreciation expense in selling, general and administrative expense. Partially offsetting this decrease was an increase in certain selling, general and administrative expenses, due to post-acquisition transition costs associated with the 2014 Acquisition, including the costs of the Solvay transition services agreement, stock-based compensation expense, higher salaries, fringe benefits and severance expense, plus increased professional fees for accounting, legal and other advisory services.

Other operating expense, net for the year ended December 31, 2015, the Successor period and Predecessor period was $19.7 million, $16.3 million and $5.6 million, respectively. The decrease in operating expense, net was primarily due to one-time transaction fees incurred in the Successor and Predecessor periods related to the 2014 Acquisition.

Interest expense, net for the year ended December 31, 2015, the Successor period and Predecessor period was $44.3 million, $8.5 million and $0.1 million, respectively. The increase in interest expense was due to a full year of interest expense in 2015 for the $700.0 million of new debt obligations related to the Eco’s senior secured credit facilities and Eco’s 8.5% senior unsecured notes due 2022 issued on December 1, 2014.

Eco was a single member limited liability company, treated as a partnership for federal and state income tax purposes. All income tax liabilities and/or benefits of Eco were passed through to the member. As such, no recognition of federal or state income taxes for Eco was provided for in the Successor period financial statements.

For the Predecessor period financial statements, income taxes have been prepared on a separate return basis as if Solvay’s Eco Services business unit was a stand-alone entity. Historically, Solvay’s Eco Services business unit was included in the tax filings with other Solvay entities. Solvay’s Eco Services business unit’s tax results as presented are not reflective of the results that Eco generated following the 2014 Acquisition or would have generated on a stand-alone basis.

For the foregoing reasons, net income (loss) for the year ended December 31, 2015, the Successor period and the Predecessor period was $11.5 million, $(22.1) million and $30.5 million, respectively.

Our primary sources of liquidity consist of cash flow from operations, existing cash balances as well as funds available under our asset based lending revolving credit facility. We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources of funds. Our primary liquidity requirements include funding working capital requirements (primarily inventory and accounts receivable, net of accounts payable and other accrued liabilities), debt service requirements and capital expenditures. Our capital expenditures includes both maintenance of business, which include spending on maintenance of business and health, safety and environmental initiatives, and expansion, which includes spending to drive organic sales growth and cost savings initiatives. As reported for the three months ended March 31, 2017, we spent approximately $16.0 million in maintenance capital expenditures and $7.8 million in expansion capital expenditures. For the year ended December 31, 2016, we spent approximately $98.7 million in maintenance capital expenditures and $31.6 million in expansion capital expenditures.

We believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our asset based lending revolving credit facility, will be sufficient to meet our presently anticipated future cash needs for at least the next 12 months. We may also pursue strategic acquisition opportunities, which may impact our future cash requirements. We may, from time to time, increase borrowings under our asset based lending revolving credit facility to meet our future cash needs. As of March 31, 2017, we had cash and cash equivalents of $54.1 million and availability of $149.8 million under our asset based lending revolving credit facility, after giving effect to $18.6 million of outstanding letters of credit and $10.0 million of revolving credit facility borrowings, for a total available liquidity of $203.9 million.

As of March 31, 2017, our total indebtedness was $2,629.3 million, with up to $149.8 million of available borrowings under our asset based lending revolving credit facility. Our liquidity requirements are significant, primarily due to debt service requirements. As reported, our cash interest expense for the three months ended March 31, 2017 and 2016 was approximately $21.6 million and $6.0 million, respectively. Before any impact of hedges, a one percent change in assumed interest rates for our variable interest credit facilities would have an annual impact of approximately $17.5 million on interest expense.

Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future. Our management believes that our cash on hand, together with cash from operations and, if required, borrowings under our asset based lending revolving credit facility, will be sufficient for our cash requirements for the next twelve months.

Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

Net cash provided by operating activities was $6.7 million for the three months ended March 31, 2017, compared to $18.0 million provided during the same period in the three months ended March 31, 2016. Cash generated by operating earnings after giving effect to non-cash items recognized in the income statement during the period was higher during the three months ended March 31, 2017 by $25.2 million compared to the same period in the prior year. Cash provided by working capital during the three months ended March 31, 2017 was unfavorable compared to the three months ended March 31, 2016. Working capital for the three months ended March 31, 2017 used cash of $29.2 million, compared to cash provided of $7.5 million for the three months ended March 31, 2016.

The increase in non-cash items of $25.2 million as compared to the prior year period was due to an increase of $30.4 million of depreciation and amortization expense, $2.0 million of foreign currency losses, $1.9 million

of amortization of deferred financing costs and original issue discount, an increase in stock compensation expense of $1.1 million and $0.9 million of acquisition accounting valuation adjustments on inventory sold, which was partially offset by $5.9 million of net income from affiliated companies, $2.5 million of pension and postretirement plan net funding, $2.0 million of deferred income tax benefit and $1.2 million of lower net losses on asset disposals.

The decrease in cash from working capital of $36.7 million compared to the prior year was primarily due to unfavorable changes in accounts receivable, accounts payable, inventory and prepaid and other current assets. The unfavorable change was partially offset by favorable changes in accrued liabilities.

The unfavorable change in accounts receivable was due primarily to $4.9 million of higher accounts receivable from higher current year pricing and volumes and $12.0 million due to the impact from the Business Combination. The unfavorable change in accounts payable includes $15.0 million related to lower accruals related to plant turnaround capital expenditures, lower raw material sulfur costs and $5.1 million due to the impact from the Business Combination. The unfavorable change in inventory of $5.8 million is due to the impact from the Business Combination.

The favorable change in accrued liabilities is primarily due to the timing of accrued interest under our new debt structure and various other accruals.

Net cash used in investing activities was $27.1 million for the three months ended March 31, 2017, compared to cash used of $8.8 million during the same period in 2016. The increase in current year cash used in investing activities compared to the prior year was primarily due to increases in capital spending of $23.7 million. The capital expenditures increase was primarily due to $25.0 million related to the companies acquired as part of the Business Combination, partially offset by $1.3 million of lower capital spending in our refining services product group. The increase in capital spending was offset by the release of $5.4 million in restricted cash related to the New Markets Tax Credit (“NMTC”) financing.

Net cash provided by financing activities was $6.9 million for the three months ended March 31, 2017, compared to net cash used of $1.0 million during the same period in 2016. The change in cash from financing activities was primarily driven by $10.0 million in net revolver borrowings, which was partially offset by $1.8 million of debt repayments.

Net cash provided by operating activities was $119.7 million for the year ended December 31, 2016, compared to $44.7 million provided during the same period in the year ended December 31, 2015. Cash generated by operating earnings after giving effect to non-cash items recognized in the income statement during the period was higher during the year ended December 31, 2016 by $65.8 million compared to the same period in the prior year. Cash provided by working capital during the year ended December 31, 2016 was favorable compared to the year ended December 31, 2015. Working capital for the year ended December 31, 2016 provided cash of $6.3 million, compared to cash used of $3.0 million for the year ended December 31, 2015.

The increase in non-cash items of $65.8 million as compared to the prior year was due to an increase of $89.3 million of depreciation and amortization expense, $29.1 million of acquisition accounting valuation adjustments on inventory sold, $8.6 million of debt extinguishment costs, $11.1 million of pension and postretirement plan net funding and $7.6 million of dividends received from affiliates, which was partially offset by $90.6 million of lower net income.

The increase in cash from working capital of $9.3 million compared to the prior year was primarily due to favorable changes in accounts receivable and accounts payable, partially offset by unfavorable changes in prepaid and other current assets, accrued liabilities and other long-term assets and liabilities.

The favorable change in accounts receivable was due primarily to $1.2 million of lower accounts receivable from lower current year pricing and higher collections and $26.9 million due to the impact from the Business Combination. The favorable change in accounts payable includes $12.5 million favorability from timing of current year plant turnaround capital expenditures and higher raw material and transportation purchases.

The unfavorable change in prepaid expenses and other current assets was due to decreases in other receivable balances, mainly the prior year legacy Eco collection of $23.3 million from Solvay related to the 2014 Acquisition. The unfavorable change in accrued liabilities was mainly due to the timing of various accruals.

Net cash used in investing activities was $1,929.7 million for the year ended December 31, 2016, compared to cash used of $38.7 million during the same period in 2015. The increase in current year cash used in investing activities compared to the prior year was primarily due to the Business Combination activity, net of cash acquired in the Business Combination of $1,777.7 million, increases in capital spending of $80.4 million and increases in loans receivable of $15.6 million and related increases in restricted cash of $14.8 million under the NMTC financing. The capital expenditures increase was primarily due to $75.4 million related to the companies acquired as part of the Business Combination and $5.0 million in capital spending. Higher current year strategic project costs were partly offset by lower plant turnaround expenses.

Net cash provided by financing activities was $1,861.4 million for the year ended December 31, 2016, compared to net cash used of $3.4 million during the same period in 2015. The change in cash from financing activities was primarily driven by $1,865.0 million debt issuance activity from the Business Combination, net of repayments, $22.0 million net revolver payments in 2016, recent stock purchase activity of $2.5 million and payments of $1.6 million related to hedge premiums. This was partially offset by $22.0 million of cash received under the issuance of long-term debt under the NMTC financing and $5.1 million of current year equity contributions, most of which resulted from the Business Combination.

Net cash provided by operating activities was $44.7 million for the year ended December 31, 2015. The net cash provided by operating activities was the result of net income of $11.4 million, adjusted for noncash items of $36.2 million for depreciation, amortization, amortization of debt issuance costs, accretion of debt discount, pension expense, loss on disposal of fixed assets and stock-based compensation expense. Routine operating activities produced cash of $20.1 million through net changes in prepaid expenses and other current assets. These activities were offset by certain routine operating activities, which used cash of $23.1 million represented by net changes in accounts receivable, inventories, accounts payable, accrued expenses and other assets and liabilities.

Net cash used in operating activities for the period from inception (July 30, 2014) to December 31, 2014 (Successor period) was the result of a net loss of $22.1 million, adjusted for noncash items of $3.2 million for depreciation, amortization, including amortization of debt issuance costs, accretion of debt discount and $16.8 million of cash provided for routine operating activities represented by net changes in accounts receivable, other receivables, inventories, prepaid expenses, accounts payable, other payables, other current liabilities, accrued expenses and other long-term liabilities. For the Successor period, routine operating activities produced cash through a decrease in inventory of $4.9 million and an increase in accrued liabilities of $23.3 million. This was partially offset by an increase in accounts receivable of $7.9 million, an increase in prepaid and other current assets of $2.2 million and a decrease in accounts payable of $1.6 million.

Net cash provided by operating activities for the period from January 1, 2014 to November 30, 2014 (Predecessor period) was the result of net income of $30.5 million, adjusted for noncash items of $32.7 million

for depreciation, amortization, stock-based compensation and deferred income tax expense, and $5.7 million of cash used for routine operating activities, represented by changes in accounts receivable, other receivables, inventories, prepaid expenses, accounts payable, accrued expenses, other long-term liabilities and long-term deferred revenue. For the Predecessor period, routine operating activities used cash through an increase in accounts receivable of $4.1 million, an increase in inventories of $5.2 million and a decrease in other assets and liabilities of $5.8 million. This was partially offset by an increase in accounts payable of $6.8 million and an increase in accrued liabilities of $2.6 million.

Net cash used for investing activities was $38.7 million for the year ended December 31, 2015 due to purchases of property, plant, and equipment and intangible assets.

Net cash used for investing activities for the Successor period was $888.3 million, primarily as the result of cash paid for the 2014 Acquisition of $885.4 million and $2.9 million for capital expenditures.

Net cash used for investing activities for the Predecessor period was $32.9 million resulting primarily from capital expenditures.

Net cash used in financing activities was $3.4 million for the year ended December 31, 2015, primarily due to $5.0 million repayment of term loan borrowings, partially offset by proceeds from issuance of member’s equity of $1.5 million. Eco borrowed and repaid $12 million from its revolving credit facility during the year ended December 31, 2015.

Net cash provided by financing activities for the Successor period was $913.0 million. Cash provided from financing activities was the result of funding the 2014 Acquisition, including $239.9 million from the issuance of members’ equity, $497.5 million proceeds from issuance senior secured credit facilities borrowings, net of discount, and $200.0 million proceeds from the issuance of senior unsecured notes, partially offset by debt issuance costs of $24.4 million.

Net cash used for financing activities was $24.9 million for the Predecessor period, which included $24.7 million in net transfers to Solvay.

As of March 31, 2017 our total debt was $2,629.3 million, including $2.3 million of other foreign debt and $43.0 million of notes payable for the NMTC financing and excluding the original issue discount of $27.3 million and deferred financing fees of $26.0 million for our senior secured credit facilities. Our net debt was $2,529.9 million, excluding $2.3 million of other foreign debt, $43.0 million of NMTC, and including cash of $54.1 million. Our total available liquidity as of March 31, 2017 was $203.9 million, which represents our cash on hand of $54.1 million plus our excess availability under our asset based lending revolving credit facility of $149.8 million, after giving effect to $18.6 million of outstanding letters of credit and $10.0 million of ABL revolver borrowings. For a further description of our outstanding indebtedness, see “Description of Certain Indebtedness.”

Maintenance capital expenditures include spending on maintenance of business, health, safety and environmental initiatives. Expansion capital expenditures include spending to drive organic sales growth. These capital expenditures represent our “book” capital expenditures for which the company has recorded, but not necessarily paid for the capital expenditures.

Capital expenditures remained at a level sufficient for required maintenance and certain expansion growth initiatives during these periods. Maintenance capital expenditures are higher in the year ended December 31,

2016 due mainly to the Business Combination, partly offset by lower current year refining services plant turnaround maintenance costs. Expansion capital expenditures are higher in the year ended December 31, 2016 due to timing of our expansion projects related to our strategic growth and cost reduction initiatives, each from the Business Combination and in our refining services product group.

We paid $2.8 million in cash contributions into our defined benefit pension plans and other post-retirement plans during the three months ended March 31, 2017. We did not contribute any cash into our defined benefit pension plans or other post-retirement plans during the three months ended March 31, 2016. The periodic pension expense was $0.9 million and $0.6 million for those same periods, respectively.

We paid $2.9 million and $14.9 million in cash contributions into our defined benefit pension plans and other post-retirement plans during the years ended December 31, 2016 and 2015, respectively. Included in the 2015 cash contributions, legacy Eco paid $4.3 million in start-up contributions for the new defined benefit plan associated with the spin-off from Solvay in December 2014. The periodic pension expense was $2.0 million and $2.9 million for those same periods, respectively.

As of December 31, 2016, our pension plans and other post-retirement benefit plans were underfunded by $68.4 million and $4.6 million, respectively. In addition, our supplemental retirement plan had a liability of $13.2 million, which is funded by our general assets, including assets held in a Rabbi trust of $5.6 million, or restoration plan assets.

We had $18.6 million and $18.4 million of outstanding letters of credit on our revolver facility as of March 31, 2017 and December 31, 2016, respectively.

The following table reflects our contractual obligations, commercial commitments and long-term debt obligations as of December 31, 2016:

We expect that we will be able to fund our remaining obligations and commitments with cash flow from operations. To the extent we are unable to fund these obligations and commitments with cash flow from operations, we intend to fund these obligations and commitments with proceeds from available borrowing capacity under our ABL Facility or under future financings.

We prepare our consolidated financial statements in conformity with GAAP and our significant accounting significant policies are described in Note 2 to our consolidated financial statements. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We base our estimates and judgments on historical experience and other relevant factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified below the accounting policies and estimates that we believe are most critical in compiling our consolidated statements of financial condition and operating results.

Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of acquisition date fair values of the assets acquired and liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

Revenue, net of related discounts and allowances, is recognized when both title and risk of loss of the product have been transferred to the customer (generally upon shipment), the seller’s price to the buyer is fixed or determinable, collectability is reasonably assured and persuasive evidence of an arrangement exists. Customers take title and assume all the risks of ownership upon shipment (if terms are “FOB shipping point”) or upon delivery (if terms are “FOB destination”). Any deviation from the standard terms and arrangements are reviewed for the proper accounting treatment, and revenue recognition is revised accordingly.

We recognize rebates given to customers as a reduction of revenues based on an allocation of the cost of honoring rebates earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate. Rebates are recognized at the time revenue is recorded. We measure the rebate obligation based on the estimated amount of sales that will result in a rebate at the adjusted sales price per the respective sales agreement.

Amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues earned for the goods provided and are classified as revenue. Costs related to shipping and handling of products shipped to customers are classified as cost of goods sold.

We make certain assumptions and estimates when accruing for allowances for doubtful accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in its existing accounts receivable. A specific reserve for bad debt is recorded for known or suspected doubtful accounts receivable. For all other accounts, we recognize a reserve for bad debt based on the length of time receivables are past due and historical write-off experience. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required. We do not have any off-balance sheet credit exposure related to our customers.

Our estimates and assumptions made under the revenue recognition policy have been applied on a consistent basis. The amounts accrued for allowances and returns have not had a material impact on our financial condition or operating performance.

Property, plant and equipment are carried at cost and include expenditures for new facilities, major renewals and betterments. We capitalize the cost of furnace rebuilds as part of property, plant and equipment. Plant and equipment under capital leases are carried at the present value of minimum lease payments as determined at the beginning of the lease term. Maintenance, repairs and minor renewals are charged to expense as incurred. We capitalize certain internal costs associated with the implementation of purchased software. When property, plant and equipment is retired or otherwise disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time. We also lease property, plant and equipment, principally under operating leases. Rent expense for operating leases, which may have escalating rentals or rent holidays, is recorded on a straight-line basis over the respective lease terms.

Depreciation is provided on the straight-line method based on the estimated useful lives of the assets, which generally ranges from 15 to 33 years for buildings and improvements and 3 to 10 years for machinery and equipment. Leasehold improvements are depreciated using the straight-line method based on the shorter of the useful life of the improvement or remaining lease term.

We perform an impairment review of property, plant and equipment, and definite-lived intangible assets, when facts and circumstances indicate that the carrying value of an asset or asset group may not be recoverable from its undiscounted future cash flows. When evaluating long-lived assets for impairment, if the carrying amount of an asset or asset group is found not to be recoverable, then a potential impairment loss may be recognized. An impairment loss is measured by comparing the carrying amount of the asset or asset group to its fair value. Fair value is determined using quoted market prices when available, or other techniques including discounted cash flows. Our estimate of future cash flows involve assumptions concerning future operating performance, economic conditions and technological changes that may affect the future useful lives of the assets.

Goodwill and intangible assets with indefinite lives are not amortized, but are tested for impairment annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. A write-down occurs in periods in which it is determined that a reporting unit’s fair value is less than its book value.

Goodwill is tested for impairment at the reporting unit level. In performing tests for goodwill impairment, we are permitted to first perform a qualitative assessment about the likelihood of the carrying value of a reporting

unit exceeding its fair value. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount based on the qualitative assessment, it is required to perform a two-step goodwill impairment test to identify the potential goodwill impairment and measure the amount of the goodwill impairment loss, if any, to be recognized for that reporting unit. However, if an entity concludes otherwise based on the qualitative assessment, the two-step goodwill impairment test is not required. The option to perform the qualitative assessment can be utilized at our discretion, and the qualitative assessment need not be applied to all reporting units in a given goodwill impairment test. For an individual reporting unit, if we elect not to perform the qualitative assessment, or if the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we must perform the two-step goodwill impairment test for the reporting unit.

In applying the two-step process, the first step used to identify potential impairment involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is not impaired. If the carrying value exceeds the estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment, if any. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated potential impairment. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. That is, the estimated fair value of the reporting unit, as calculated in step one, is allocated to the individual assets and liabilities as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting unit and the loss establishes a new basis in the goodwill. Subsequent reversal of an impairment loss is not permitted.

For intangible assets other than goodwill, definite-lived intangible assets are amortized over their respective estimated useful lives. Intangible assets with indefinite lives are not amortized, but rather are tested for impairment at least annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the intangible asset below its carrying amount.

For definite-lived intangible assets, we amortize technical know-how over periods that range from fourteen to twenty years, customer relationships over periods that range from seven to fifteen years, trademarks over a fifteen year period, contracts over periods that range from two to sixteen years, and permits over five years.

We maintain defined benefit pension plans covering certain employees in the United States and Canada as well as certain employees in other international locations. Benefits for a majority of the plans are based on average final pay and years of service. Our funding policy, consistent with statutory requirements, is based on actuarial computations utilizing the projected unit credit method of calculation. Not all defined benefit pension plans are funded. In the United States and Canada, the pension plans’ assets include equity and fixed income securities. Certain assumptions are made regarding the occurrence of future events affecting pension costs, such as mortality, withdrawal, disablement and retirement, changes in compensation and benefits, and discount rates to reflect the time value of money.

The major elements in determining pension income and expense are pension liability discount rates and the expected return on plan assets. We reference rates of return on high-quality, fixed income investments when estimating the discount rate, and the expected period over which payments will be made based upon historical experience. The long-term rate of return used to calculate the expected return on plan assets is the average rate of return estimated to be earned on invested funds for providing pension benefits.

In addition to pension benefits, we provide certain health care benefits for employees who meet age, participation and length of service requirements at retirement. We use explicit assumptions using the best estimates available of the plan’s future experience. Principal actuarial assumptions include discount rates, present value factors, retirement age, participation rates, mortality rates, cost trend rates, Medicare reimbursement rates and per capita claims cost by age. Current interest rates, as of the measurement date, are used for discount rates in present value calculations.

We also have defined contribution plans covering U.S. employees of our company and employees of certain subsidiaries.

We operate within multiple tax jurisdictions and are subject to tax filing requirements and audit within these jurisdictions. We use the asset and liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized.

In determining the provision for income taxes, we provide deferred income taxes on income from foreign subsidiaries whose earnings are deemed by us not to be permanently reinvested as such earnings are taxable upon remittance to the United States. We establish contingent liabilities for possible assessments by taxing authorities resulting from uncertain tax positions including, but not limited to, transfer pricing, deductibility of certain expenses and other state, local, and foreign tax matters. We recognize a financial statement benefit for positions taken for tax return purposes when it will be more-likely-than-not that the positions will be sustained. We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. Tax examinations are often complex as tax authorities may disagree with the treatment of items reported by us and may require several years to resolve. These accrued liabilities represent a provision for taxes that are reasonably expected to be incurred on the basis of available information but which are not certain.

See Note 3 to the Audited Consolidated Financial Statements of PQ Group Holdings Inc. and Subsidiaries included elsewhere in this prospectus for a discussion of recently issued accounting standards and their effect on us.

Our major market risk exposure is potential losses arising from changing rates and prices regarding foreign currency exchange rate risk, interest rate risk, commodity price risk and credit risk. The audit committee of our board of directors regularly reviews foreign exchange, interest rate and commodity hedging activity and monitors compliance with our hedging policy. We do not use financial instruments for speculative purposes, and we limit our hedging activity to the underlying economic exposure.

Our financial results are subject to the impact of gains and losses on currency translations, which occur when the financial statements of foreign operations are translated into U.S. dollars. We operate a geographically diverse business with approximately 38% and 34% of our sales during the three months ended March 31, 2017 and the year ended December 31, 2016, respectively, coming from our international operations in currencies other than the U.S. dollar. Because consolidated financial results are reported in U.S. dollars, sales or earnings

generated in currencies other than the U.S. dollar can result in a significant increase or decrease in the amount of those sales and earnings when translated to U.S. dollars. The financial statements of our operations outside the United States, where the local currency is considered to be the functional currency, are translated into U.S. dollars using the exchange rate in effect at each balance sheet date for assets and liabilities and the average exchange rate for each period for sales, expenses, gains, losses and cash flows. The exchange rates between these currencies and the U.S. dollar in recent years have fluctuated significantly and may continue to do so in the future. The foreign currencies to which we have the most significant exchange rate exposure include the Euro, British pound, Canadian dollar, Brazilian real and the Mexican peso. Sales in these top five currencies represented approximately 27% of our total combined sales during the year ended December 31, 2016. A 10% change in these currencies would have impacted sales by approximately $28.3 million, or 3% of consolidated combined sales assuming product pricing remained constant. The effect of translating foreign subsidiaries’ balance sheets into U.S. dollars is included in other comprehensive income. The impact of gains and losses on transactions denominated in currencies other than the functional currency of the relevant operations are included in other non-operating expense. Income and expense items are translated at average exchange rates during the year. Net foreign exchange included in other expense was a $3.6 million gain for the year ended December 31, 2016. The foreign currency loss realized in the year ended December 31, 2016 was primarily driven by the non-permanent intercompany debt denominated in local currency translated to U.S. dollars and was principally non-cash in nature.

We are exposed to fluctuations in interest rates on our Senior Secured Credit Facilities and on our Floating Rate Senior Unsecured Notes. Changes in interest rates will not affect the market value of such debt but will affect the amount of our interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on our cash flow. As of December 31, 2016, a 100 basis point increase in assumed interest rates for our variable interest credit facilities, before impact of any hedges, would have an annual impact of approximately $17.5 million on interest expense.

We hedge the interest rate fluctuations on debt obligations through interest rate cap agreements. We record the fair value of these hedges as assets or liabilities and the related unrealized gains or losses are deferred in stockholders’ equity as a component of other comprehensive income (loss), net of tax. The interest rate caps had a fair value net asset of $3.5 million and $5.8 million at March 31, 2017 and December 31, 2016, respectively. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

In July 2016, we entered into interest rate cap agreements, paying a premium of $1.6 million to mitigate interest rate volatility from July 2016 through July 2020 by employing varying cap rates ranging from 1.50% to 3.00% on $1.0 billion of notional variable debt.

We purchase significant amounts of natural gas to supply the energy required in our production processes for our products in each of our segments. While natural gas is not a direct feedstock for any product, we use natural gas powered furnaces to heat raw materials and create the chemical reactions necessary to produce end-products. Therefore, exposure to the volatility in energy prices is less than that of producers of organic petrochemicals. We purchase approximately 14 million MMBtu’s of natural gas in a given year. Thus, a $1 increase in the cost of natural gas would impact our cost of goods sold by approximately $14 million absent hedging. Our purchase agreements with our customers typically provide for the pass through of natural gas price increases; however, there is no guarantee that we will continue to be able to pass through future price increases without loss of existing customers. We have implemented a hedging program in the United States which allows us to mitigate exposure to natural gas volatility with natural gas swap agreements. We also make forward purchases of natural gas related to our production at certain subsidiary locations.

The natural gas swap agreements had a fair value net asset of $0.1 million and $0.6 million at March 31, 2017 and December 31, 2016, respectively. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices of comparable contracts. The respective current and non-current assets are recorded in other current assets and other assets. The related unrealized gains or losses are recorded in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Realized gains and losses on natural gas hedges are included in production cost and subsequently charged to cost of goods sold in the consolidated statements of operations in the period in which inventory is sold.

We are exposed to credit risk on financial instruments to the extent our counterparty fails to perform certain duties as required under the provisions of an agreement. We only transact with counterparties having an appropriate credit rating for the risk involved. Credit exposure is managed through credit approval and monitoring procedures.

Concentration of credit risk can result primarily from trade receivables, for example, with certain customers operating in the same industry or customer groups located in the same geographic region. Credit risk related to these types of receivables is managed through credit approval and monitoring procedures. In the year ended December 31, 2016, we wrote off $0.2 million, or 0.02%, in bad debt on total combined sales of $1,064.2 million.

We compete in the specialty chemicals and materials industry. Our industry is characterized by constant development of new products and the need to support customers with new product innovation and technical services to meet their challenges. In addition, customers demand consistent product quality and a reliable source of supply. Products sold to our customers can be highly value-added even when they represent only a small portion of the overall end-product costs, and success can be achieved by helping customers improve their product performance, value, and quality. As a result, operating margins in this sector have historically been high and generally stable through economic cycles. In addition, many products in these specialty chemicals and materials industry benefit from economics that favor incumbent producers because the capital cost to expand existing capacity is typically significantly less than the capital cost necessary to build a new plant. The combination of attractive operating margins and moderate and generally predictable maintenance capital expenditure requirements can produce attractive cash flows. Our industry is also characterized by the need to produce consistent quality in a safe and environmentally sustainable manner.

The table below summarizes our key end uses and products as well as the significant growth drivers in those applications.

Favorable industry dynamics in the fuels and emission controls industries are driving increased demand and the need for constantly evolving product specifications for our catalyst products. These growth dynamics include increasingly stringent global emission control standards for heavy- and light-duty vehicles regulatory standards regarding vehicle mileage and fuel composition, and increased supply of natural gas by-products driven by shale gas proliferation in the United States.

Diesel Engine Standards. We believe demand for our zeolite-based catalyst will grow significantly due to continued tightening of global diesel emissions standards in both on-road and non-road diesel engines. Non-road diesel engines refer to heavy-duty diesel engines used in machinery or equipment, including locomotives and marine vessels. We believe that increased global awareness and the desire to reduce pollution from stationary and mobile pollution sources have increased the importance of emissions control catalysts.

On-Road Emissions Standards. Emission standards for heavy-duty diesel engines in the United States were first developed by the EPA in 1974. These emissions standards have progressively been tightened over time by a series of regulations called Tier 1 through Tier 3. The current emissions standard, Tier 3, for heavy-duty engines was phased in between 2007 and 2010. For example the standard for allowable nitrogen oxides emissions was 6.0 grams per brake horsepower-hour (“g/bhp-hr”) in 1990 versus the current 0.2 g/bhp-hr. Light-duty vehicles also have Tier 1 through Tier 3 standards that were originally part of the Clean Air Act of 1990. The current light-duty standard is Tier 3, which is to be phased in during 2017 and is scheduled to extend through 2025.

European emissions regulations for heavy-duty diesel engines are referred to as Euro I through Euro VI. Euro I standards were introduced in 1992 and the current Euro VI standards became effective in 2013 and 2014. An example of the increasingly stringent requirements for nitrogen oxides emissions is the standard of maximum allowable emissions of 8.0 grams per kilowatt-hour (“g/kWh”) under Euro I versus the current Euro VI maximum of 0.40 g/kWh. Light-duty vehicles have a similar set of increasingly stringent standards, called Euro 1 through Euro 6

Non-Road Emissions Standards. The EPA has adopted the standards for non-road diesel engines. Such standards were first adopted in 1994 and initially implemented between 1996 and 2000. These standards are known as Tier 1 through Tier 4 standards. The current standard, Tier 4, was phased in between 2008 and 2015. As an example, for larger engines, above 56 kW, the current Tier 4 nitrogen oxides standard is 0.40 g/kWh compared to the Tier 1 through Tier 3 standard of 9.2 g/kWh.

Likewise, the European Standards regulations for non-road engines have been structured as gradually more stringent tiers known as Stage I through V regulations. The first European legislation to regulate non-road engines was promulgated in 1997 and Stage I was implemented in 1999. The current Stage IV was implemented in 2014, and Stage V is expected to become effective in 2019 or 2020.

Global Emissions Standards. In many cases countries have established regulations that generally follow United States Environmental Protection Agency or European Union standards, but typically on a later implementation timeline. The chart below identifies each country’s regulatory requirements in relation to the most comparable European Union standard for ease of comparability. In addition, even more restrictive regulations are expected to be adopted in the future in many jurisdictions, such as EU VII, which would further reduce permitted emissions levels in the European Union. We believe that compliance with existing regulations as well as any future regulations provides us with opportunities to grow our sales of emissions control catalysts.

The demand for catalysts is also expected to grow due to the increasing use of these diesel engines, driven in part by the development and industrialization of emerging economies and anticipated global growth in gross domestic product. Heavy-duty vehicle production is expected to grow at a compound annual growth rate of 4.1% globally from 2015 to 2020, according to ACT Research. In addition, light-duty vehicle production is expected to grow at a compound annual growth rate of 2.8% from 2015 to 2020, according to LMC Automotive.

Refining Dynamics—Hydrocracking. Sales of our hydrocracking catalysts are expected to grow due to the increasingly stringent demands for lower sulfur content in fuels and the continued global trend towards processing heavy sour crudes, which have a higher sulfur content.

A hydrocracking unit is fed gas oil, which is heavier and has a higher boiling point than distillate fuel oil, and cracks these heavy molecules into distillate and gasoline in the presence of hydrogen and a catalyst. The hydrocracking process upgrades low-quality heavy gas oils into high-quality jet fuel, diesel, and gasoline. The rate of cracking and the end-products produced are dependent on the operating parameters and design of the hydrocracking catalysts. Below is an overview of the hydrocracking process for the production of diesel and other refinery products.

The hydrocracking unit initially requires larger quantities of catalyst and then requires smaller replacement quantities of catalyst each year until an entire replacement of catalyst is needed every 2 to 4 years.

Refiners have been installing hydrocrackers in response to increasing global demand for jet fuel, diesel, and kerosene. The hydrocracker also converts high-sulfur materials (lower value) into low-sulfur fuels (higher value) for vehicles and airplanes. Many countries have enacted increasingly stringent environmental laws to require lower sulfur content in diesel fuels. As a result, we believe that more hydrocracking capacity will be required to remove increasing amounts of sulfur from diesel fuels, particularly with increased use of sour crude. The table below summarizes certain sulfur regulations for diesel fuel.

Although the cost of hydrocracking catalysts are relatively small compared to the overall costs for operating a refinery, the consequence of a refiner using a low quality or contaminated catalyst could be significant. As a result, refiners generally choose to purchase high quality catalysts from well-known manufacturers and they typically value performance and reliability over price when making buying decisions.

Refining Dynamics—Alkylates. We believe our refining services products will benefit from regulations mandating higher vehicle fuel mileage and increasingly stringent fuel specifications. These trends create the need for higher octane in gasoline, which creates opportunities for our refining services product group. In addition, North American refineries are experiencing an increase in light olefins as a result of the increased use of shale oil and are therefore expected to increase demand for alkylation catalysts. We also expect that the relatively lower costs of gasoline will result in increased U.S. exports, which can help maintain refinery utilization in the U.S. gulf coast region.

The United States has regulated fuel economy for light-duty vehicles since the 1970s. The Corporate Average Fuel Economy (“CAFE”) standards were initially developed in 1975 and expanded in 2009 to include greenhouse gas emissions. Future standards are being considered for vehicle models developed between 2017 and 2025 which, if implemented as currently contemplated, would increase the fuel economy standard from 34.1 miles per gallon for vehicle models developed in 2016 to 49.6 miles per gallon for vehicle models developed in 2025.

In order to adapt to these potential regulations, automakers are making a variety of design changes to vehicles. One of these changes is to use smaller, more efficient turbocharged engines to increase power to compensate for the increased fuel economy. In addition, as consumers move to these more efficient engines to save money or gain engine performance, gasoline needs to have higher octane in order to run these high compression engines and to prevent “knock” or premature detonation of the fuel in the cylinder, which can damage engines. According to the Energy Information Administration, these shifts in engine design are expected to continue as automakers increase the use of turbocharging as one of the strategies to comply with increasingly stringent fuel economy standards.

Alkylates are a preferred blending component for gasoline because they boost octanes, while lowering vapor pressure, at more environmentally friendly specifications relative to other octane sources such as ethanol and butane. The Environmental Protection Agency, through the Clean Water Act regulations has reduced the maximum allowable vapor pressure and aromatic, benzene, and sulfur content in fuel. Alkylates are high octane sources with low vapor pressures, no olefins, no aromatics, and low sulfur.

The alkylation unit is a conversion process in the refinery used to convert olefins and isobutane, volatile and light compounds, from the fluid catalytic cracking unit and other units into high octane gasoline blending components. The alkylate produced from the unit are used as a premium gasoline blending stock because of their anti-knock and clean burning characteristics.

Alkylation units in refineries use either sulfuric acid or hydrofluoric acid as the catalyst material. Sulfuric acid has been the preferred technology due to its lower maintenance costs, safer handling, more environmentally friendly profile, and product quality. Hydrofluoric acid also is a more hazardous substance that typically requires additional safety precautions. Sulfuric acid catalysts are consumed as part of the alkylation process, and therefore need to be continually replaced with fresh catalyst. Sulfuric acid is used in approximately half the refining capacity in the United States. We believe that government regulations as well as the characteristics of sulfuric acid compared to hydrofluoric acid will cause refiners to select sulfuric acid technology in building or converting new alkylation units.

There are significant shale natural gas deposits in the United States. The United States Energy Information Administration predicts that by 2035, 46% of the United States’ natural gas supply will come from shale gas. The proliferation of shale gas has increased natural gas liquids production in the United States from 2.1 million barrels per day (“MMbbl/day”) in 2010 to 3.6 MMbbl/day by February 2017 according to the Energy Information Administration. Alkylation units are used to upgrade natural gas liquids, which are light, lower value compounds, to higher value-added refined products that can be blended into the gasoline pool. The Organization of the Petroleum Exporting Countries expects 74% of oil production growth for 2017 in the United States to be driven by the expanding production of shale oil, which would result in higher production of refined products. In addition, these refined products are increasingly being exported due to the historically lower cost of natural gas in the United States. According to the Energy Information Administration, exports of refined gasoline products from the United States have increased from 2.0 MMbbl/day in 2010 to 3.0MMbbl/day in 2016.

According to the Energy Information Administration, the demand in the United States for premium gasoline, which has higher octane and alkylate content than regular gasoline, grew at a compound annual growth rate of 6.1% from 2011 to 2016 as a result of higher octane requirements in higher turbocharged compression engines. The number of turbocharged light-duty vehicles in the United States is expected to make up approximately 83% of all light-duty vehicles by 2025, a significant increase from approximately 18% in 2014, which we believe will increase the demand for higher-octane gasoline. Higher production of natural gas liquids and increased demand for premium gasoline is expected to drive higher alkylation utilization and capacity.

We sell a variety of our products as additives, ingredients, and precursors for consumer products. This industry generally has not exhibited as pronounced cyclicality as other industries because products such as cosmetics, toiletries, and cleaning products are vital to consumer’s daily routines. Examples of such products include toothpaste, hair and skin care products, Epsom salt and automatic dishwashing detergents. We also address food and beverage applications such as materials for purification of beer and cooking oil. Growth in these end uses is expected to be driven by shifting consumer preferences, consumer demand for safer and more environmentally friendly products, and the increased demand for consumer products as a result of global demographic and development trends.

Consumer products companies compete by constantly investing to improve their product’s quality and performance. This improvement is critical to maintain their competitive advantage and brand equity in a dynamic industry that is constantly responding to shifting consumer preferences. We produce additives and ingredients that allow these companies to develop new products. For example, we have collaborated with leading consumer products companies over a number of years to develop a family of gentle silica-based dentifrice abrasives that produce more effective cleaning toothpastes.

Another key trend has been the increased demand by consumers for more sustainable, safe, and environmentally friendly products. Consumer products manufacturers have been challenged to develop products that meet these constraints without compromising quality and performance. Consumers have an increased awareness of product safety through online resources such as government databases and social media. Products such as cosmetics and toiletries are now more often promoted with labeling indicating that the product is free from harmful ingredients. For example, some cosmetics include labeling that indicates no parabens, sulfates, silicones, or petroleum derivatives. In addition, some consumers are more concerned about the environmental impact and sustainability of the products they use as evidenced by consumer products companies’ marketing campaigns and product branding addressing those issues. Our performance materials and chemicals business produces materials which are often being used as a substitute for other materials because our products are more environmentally friendly. For example, our specialty silicates are displacing phosphates in dish detergents and our silicate and silicate derivatives are recognized on the EPA’s Safer Chemicals Ingredients List for its Safer Choice products program.

In addition, demographic shifts in developed economies and wealth proliferation in developing economies are also driving increased demand for consumer products. In addition, the growth of the middle class in countries such as China and India are also driving growth of consumer products. According to an industry source, the consumption of cosmetic chemicals is expected to grow on average at 3.8% globally, 7.9% in China, and 3.6% in other Asian countries (excluding Japan) between 2015 and 2020.

Demand for our performance materials products is expected to grow due to favorable highway and construction industry dynamics including increased highway safety expenditures, product innovation in highway safety, and formulations shifts in adhesives, cements, and coatings.

Highway Safety. We produce highway and runway marking products that are used in the highway safety industry. Highway safety spending is generally predictable given the ongoing replacement and maintenance requirements as a result of road use. Road maintenance and road construction spending have historically been resilient during economic downturns as they are often used as a form of government stimulus.

Growth drivers in highway safety include the need to invest in the aging United States highways and local roadways, the aging of populations in developed economies which increases the need for greater pavement marking visibility, increased public awareness of the costs associated with road injuries and fatalities and to

address concerns from autonomous vehicle manufacturers. We believe that our road marking products can be very cost effective investments to address these trends. Demand for road markings in excess of periodic maintenance and road construction is expected to come from the implementation of brighter lines, more roads with edge lines, wider lines and more use of double lines to improve safety. As a result of these trends, United States federal highway spending has increased in seven of the ten years between 2005 and 2015.

Highway safety spending in developing economies is expected to grow faster than in developed economies as a result of their faster pace of construction of road infrastructure. Road marking in Europe and Japan generally exceed those in the United States, which we believe is a growth opportunity for our highway safety products to the extent the United States seeks to achieve similar standards.

Construction. Our products are additives for many construction products such as adhesives, cements, grouts, and surface coatings. Trends in this sector include the need for improved performance in products to address construction and infrastructure challenges such as customer requirements for more reliable and longer lasting materials. In addition, the trend toward more environmentally friendly products is also driving new product development. Growth in these products is driven by construction for new residential, commercial, and institutional infrastructure and for maintenance of existing infrastructure. Adhesives and coatings make up a large portion of the demand. According to an industry source, the coatings industry is expected to grow at a compound annual growth rate of 4% from 2016 to 2021.

According to an industry source, demand for adhesives in North America, Western Europe and Japan is expected to grow at a compound annual growth rate of 1 to 3% from 2015 to 2020. In contrast, demand for adhesives in China is expected to grow at a compound annual growth rate of 6% from 2015 to 2020.

Additives into these applications are usually only a small portion of the overall product cost yet they are critical to product performance. For example, in coatings, additives seldom exceed 5% of the volume of the formulation versus higher volume components such as resins, solvents (if solvent-based versus water-based), and pigments. These additives are priced based on performance and generally have high and stable margins. For example, we produce products that act as matting agents in coatings that replace more expensive materials in the coating formulation such as strontium chromate while maintaining product performance.

Regulations and consumer preferences are driving our customers to develop more environmentally friendly products such as coatings that meet global and local volatile organic compounds (“VOC”) requirements. Our products are used in waterborne coatings that are growing as a result of this low VOC requirement trend. We also supply our silicates for use in geopolymer products, a more environmentally friendly alternative to portland cements. Our additives allow for the geopolymer products to be manufactured at room temperature from waste materials resulting in a lower carbon footprint at a lower cost for customers.

We believe our catalysts and performance materials product will benefit from the continued growth in plastics in consumable and durable end use applications. Specifically, sales of plastics, such as polyolefins, nylons, and acrylics, continue to grow by displacing traditional materials, such as metal, glass, and wood in packaging, container, display, and building product end uses among others. Engineered plastics are expected to continue displacing metal in automotive, aerospace, and electronics applications to lightweight vehicles in response to fuel mileage standards, such as CAFE standards, and increased performance and reliability trends. Engineered plastics also add increased chemical and weather resistance among other attributes as compared to substitute products.

Polyolefins. Our catalysts and catalysts supports are used in the production of HDPE, which is a high strength and high stiffness polyethylene used in packaging films, bottles, containers, and other molded

applications. According to an industry source, North American HDPE capacity is expected to grow at a compound annual growth rate of 5% from 2016 to 2020, driven by general economic activity growth and the increased utilization of HDPE as a substitute for heavier and more expensive materials such as glass and metals. Further, we believe that we are well positioned to benefit from the increased HDPE capacity being built in the United States, due to our strong competitive position, and also as a result of ongoing investment in the United States by petrochemical companies given access to lower cost United States shale gas.

Engineered Plastics. Demand for acrylic plastics such as polymethyl methacrylate (“PMMA”), the polymer methyl methacrylate (“MMA”), is growing due to the displacement of glass in furniture, signage, and auto components. PMMA, also known as acrylic, is a clear scratch-resistant plastic used in sheet or molded form to replace glass and as a durable surface coating. A new MMA production facility requires an initial amount of catalyst and then requires smaller replacement amounts each year. According to an industry source, global MMA capacity is expected to grow at a compound annual growth rate of 3% from 2016 to 2021.

Composites. Composites are increasingly used as a component in the manufacture of automotive vehicles, given their lightweight properties in order to meet tightening mileage and performance standards. One type of composite is a plastic that is mixed while with a reinforcement material. Our solid and hollow microspheres are used as reinforcement material to produce composites that are lightweight and able to displace heavier plastics. These low-cost and anti-warping additives used in these composite formulations assist in the processing and use of plastics. In automobiles, composites are also displacing metal to reduce weight while performing to required standards. Given these trends, demand for composites in the United States is expected to grow at a compound annual growth rate of 4.9% from 2016 to 2022 according to Composites Manufacturing Magazine.

Industrial and process chemicals encompass a combination of diverse end uses where our chemicals are used as ingredients, precursors, and additives into chemical and industrial company products and applications. Key end uses for our products include green tires where our silicate precursors assist in reducing rolling resistance, municipal water treatment, where our silicates are used to inhibit pipeline corrosion, and in global manufacturing, where our performance materials are used in metal finishing. In addition to any growth consistent with general economic growth, we believe that demand for our products will also benefit from the trend toward more environmentally friendly products, such as in the green tire end use.

Green Tire. Increasingly stringent fuel mileage standards for automobiles and deteriorating air quality are driving automobile manufacturers to use alternative products to reduce vehicle emissions. Green tires have been developed to perform with lower rolling resistance than standard tires to reduce fuel consumption and the resulting emissions. The performance is enabled by a formulation in which precipitated silica and silanes are added to replace carbon black to achieve up to an 8% savings of fuel consumption. The amount of precipitated silica in green tires is double the amount in standard tires. The demand for precipitated silica in green tires is expected to grow at a compound annual growth rate of 10.6% from 2015 to 2020, according to Notch Consulting.

Water Treatment. Our silicates are used in water treatment chemicals as an inorganic corrosion inhibitor. Silicates provide protection to iron and steel by prohibiting corrosion by forming a protective layer in the pipe. The water treatment industry has been relatively stable given the continual need for clean municipal water independent of business cycles. We believe this industry will grow as a result of increasing water purity standards worldwide.

Metal Finishing. Our performance materials products are cost-effective, highly reliable abrasives used in metal finishing processes used in cleaning, peening, finishing and deburring metals. Our products are also used to surface-treat wood, stone, ceramics and glass. The metal finishing process is most prevalent in the aerospace and defense, automotive, and general industrial manufacturing industries where metal surfaces are hardened, such as for compressor blades in aerospace and power generation industries. We believe that our performance materials

products are a preferred substitute for other media such as industrial sand, aluminum oxide, iron, and steel, because they do not damage parts but do allow for better process control, limit surface contamination, and are more environmentally friendly.

We supply products to the oil and gas industry as ingredients and additives into oilfield chemicals for completion materials and drilling fluids. Completion materials, such as cement, are used after drilling in order to set a well for production, i.e. extraction of the oil and gas. In addition, we supply materials that are used in the production of metals in the mining process, such as in copper mining.

The oil and gas industry in the United States experienced a significant downturn which began at the end of 2014, with the decline in oil prices. The drilling and completion of wells declined significantly in response to the weak oil price environment. According to Wood Mackenzie, drilling and completion spending in North America fell 68% from 2014 to 2016. Some of our products are used in the oil and gas industry as additives to the cement used in well completions and solid microspheres added in to oil-driving muds. Sales of our products to the oil and gas industry declined in line with the decline in activity levels in this industry. According to an industry source, North American rig counts have more than doubled since June 2016 with U.S. shale oil drilling activity in the United States experiencing a recovery as compared to 2016 levels. Drilling and completion activity is expected to continue to recover. According to an industry source, upstream exploration and production annual spending in North America is expected to reach $233 billion in 2021, or 71% of 2014 peak spending levels, compared to $131 billion expected for 2017.

In the mining industry, we sell sulfuric acid that is used by mining companies in the recovery and leaching of copper from ores. Global copper consumption has typically grown in line with gross domestic product, driven by the industrialization of developing economies, global urbanization, and increasing global power demand. Because our customers generally operate mines at predictable output volumes regardless of commodity price, as consumer consumption tends to be inelastic, our sulfuric acid sales have historically been relatively stable and predictable. Customers in the mining industry are one of the few types of sulfuric acid customers who can buy acid from any location. We supply large mines in the western United States. Given the proximity of our manufacturing locations to the mines, we are able to limit our freight costs for our virgin sulfuric acid.

We are a global provider of catalysts, specialty materials and chemicals, and services with leading supply positions across our portfolio. We compete in the global specialty chemicals and materials industry where we seek to focus on attractive, high-growth applications. Our products and services provide critical performance to our customers’ products and we are able to offer many of our customers regionally sourced materials to reduce costs and improve delivery logistics. We provide our customers with a combination of product technology and applications knowledge, global supply chain capabilities, and local production and logistical support. We have two reporting segments: environmental catalysts and services and performance materials and chemicals. In our environmental catalysts and services segment, we have three product groups: silica catalysts, zeolite catalysts, and refining services. In our performance materials and chemicals segment, we have two product groups: performance materials and performance chemicals. Through these product groups we serve a diverse set of end uses and geographies.

The table below summarizes certain information regarding our two reporting segments and our five product groups for the year ended December 31, 2016.

Our environmental catalysts and services business is a leading global innovator and producer of catalysts for the refinery, emissions control, and petrochemical industries and is also a leading provider of catalyst recycling services to the North American refining industry. We believe our products are mission critical for our customers in these growing applications and impart essential functionality in chemical and refining production processes and in emission control for engines. Our catalysts are highly technical and customized for our customers, and can require up to ten years of development and collaboration with customers in order to commercialize. Catalyst specifications are constantly evolving in order to address changing customer demands and requirements for lower cost and improved quality. As a result, we must continuously collaborate with our customers to create new and more efficient pathways for the production of chemicals and fuels. Our environmental catalysts and services business consists of three product groups: silica catalysts, zeolite catalysts, and refining services.

Silica Catalysts. In our silica catalysts product group, we sell both the finished catalyst and catalysts supports, which are critical catalyst components, for the production of HDPE, a high strength and high stiffness plastic used in packaging films, bottles, containers, and other molded applications. We also produce a catalyst that is used globally for the production of methyl methacrylate, the monomer for acrylic engineering resins, a clear scratch-resistant plastic used in sheet or molded form to replace glass and as a durable surface coating. Because these catalysts are highly technical and customized for our customers to produce resins with specific properties, they are often covered under long-term supply agreements and, in some cases, we are a customer’s sole source supplier. In addition, we produce silicas products that are used to prevent opposite faces of polyolefin and polyester films from adhering to one another during manufacturing or otherwise.

Our specialty zeolite catalysts are used in an advanced emission control technology called selective catalytic reduction. This process uses ammonia to react with engine exhaust gases via our catalysts in order to convert nitrogen oxides, a pollutant, into nitrogen and water. We believe that our zeolite catalysts can enable selective catalytic reduction technology to reduce the amount of nitrogen oxides in such exhaust gases by more than 90%. A schematic of a typical diesel emissions control system is below.

We believe that this technology is one of the most cost-effective methods to reduce diesel engine emissions. Emissions control regulations have created demand for this technology and we believe that future regulations will generate additional growth and development opportunities for this technology and, as a result, our zeolite catalysts and precursors.

Our Zeolyst Joint Venture is a long-standing partnership dating back to 1988, which combines our expertise in zeolites supply and technology with our partner’s expertise in global refinery catalyst sales and technology. We supply sodium silicates from our performance chemicals product group to the Zeolyst Joint Venture to make specialty zeolites, which are used as precursors in emissions control and custom catalysts. We also produce specialty zeolites that are precursors for the production of hydrocracking catalysts and other refinery and petrochemical catalysts that are used by our other product groups and sold to third parties. We manage the production of these specialty zeolites given our expertise in zeolite production. These catalysts include aromatic catalysts that upgrade aromatic by-product streams, dewaxing catalysts that improve lube oil performance and diesel cold flow performance, and paraffin isomerization catalysts that upgrade olefins to high octane gasoline blending components, for refinery and petrochemical customers.

Refining Services. Sulfuric acid is the primary catalyst used in the production of alkylates for gasoline production at refineries. Alkylates are a critical additive that increases octane in gasoline at low vapor pressure, which is needed in order for turbocharged engines to meet increasingly stringent fuel efficiency standards. Our refining services product group provides recycling and end-to-end logistics for refiners who use sulfuric acid in their alkylation units. These recycling units also produce virgin sulfuric acid and sodium bisulfate, which we sell into the water treatment, mining, and general industrial and chemicals industries.

After sulfuric acid is used in an alkylation unit, it becomes spent acid, which is diluted with water and hydrocarbons, and then needs to be recycled before it can be reused. Sulfuric acid regeneration enables refineries to manage their spent acid and obtain fresh acid for reuse in their alkylation processes. Because storage space for fresh

and spent acid is typically limited, and the cost to refineries of interruption to their alkylation units would be significant, refineries seek to have a continuous and reliable source of supply for sulfuric acid. By providing regeneration services, as well as purchasing by-product sulfur from customers as a source of energy and for use in manufacturing virgin sulfuric acid, we believe that we provide our refining customers with a full solution for their sulfuric acid needs. Our refining services product group is highly regionalized due to shipping costs and our customer integration requirements. Our facilities are located near or, in some cases, within our customers’ refineries and our products are often supplied directly to our customers by pipeline. In addition product can be shipped by barge, rail and truck. As a result, we believe that our integrated and strategically located network of facilities and logistics assets in the United States provides us with a significant competitive advantage and would be costly for our competitors to replicate.

We believe that we benefit from industry economics that favor incumbent producers because the capital cost to expand existing capacity is typically significantly less than the capital cost necessary to build a new plant and new plants can involve more challenges in obtaining the necessary local, regional and state permits. In addition, existing supply chains, including captive pipeline connections and other transportation logistics add to the competitive advantages available to incumbent producers. As a result, we believe that our integrated and strategically located network of facilities and end-to-end logistics assets in the United States provide us with a significant competitive advantage and would be costly for our competitors to replicate. In 2016 we estimate that our refining services product group had a regenerated sulfuric acid supply share in excess of 50% in the United States, which we believe is substantially larger than our closest competitor.

Sulfuric acid is created either through the burning of sulfur in furnaces, or as a by-product of other industrial processes, primarily the smelting of copper and other base metals. We produce a range of virgin sulfuric acid products by burning sulfur in our plants for supply to a diverse set of end uses. Sulfur-burned acid is generally considered to be of higher purity and quality than smelter-produced acid and, as a result, smelter-produced acid is not suitable for some industrial users including several of our larger customers who require higher quality and differentiated sulfuric acid products, such as super-saturated sulfuric acid (oleum) and other high purity specialty acids. Virgin sulfuric acid and regenerated sulfuric acid are manufactured in our regeneration plants using the same production equipment and, in addition, we have one facility in Houston, Texas that produces only virgin sulfuric acid from sulfur.

Sales & Marketing. Our sales and marketing strategy for our environmental catalysts and services business is based on a collaborative approach to working with our customers. We have a proven track record of working closely with customers to develop and manufacture highly technical and customized products for specific uses, which generally requires significant technical support and collaboration. In our catalyst product groups, the sales force and technical experts from our research and development facilities assist with the design and development of new products for a client’s specific needs. This type of close working relationship often requires a non-disclosure agreement and joint development agreement and, in some cases, has enabled us to obtain exclusive supply arrangements for the developed product.

Our refining services product group relies on an experienced direct sales force to market our products and services. Our sales force and product stewardship staff remain engaged with our customers from the initial negotiation and implementation of a supply arrangement through the term of such supply arrangement and, in many cases, our sales force and product stewardship staff provide technical assistance to customers for the safe handling and storage of our products. We also rely on established chemical distributors to market and sell our virgin sulfuric acid and aluminum sulfate.

Our refining services product group is an end-to-end business model, taking spent acid from the back end of our customer’s production processes and returning cleaned, regenerated sulfuric acid via barge, trucks, rail, and pipeline for reuse by our customers. Spent acid for our refining services is generally supplied to us as part of a long-term supply contract. Pipelines are typically owned by our customers, while rail, road and some barge assets are typically third-party leased, and most barges are generally owned by the company. Managing the logistics involved in this end-to-end business model is a critical part of our refining services.

Most of our refining services contracts feature take-or-pay volume protection and/or quarterly price adjustments for commodity inputs, labor, the Chemical Engineering Plant Cost Index or natural gas. In 2016, approximately 94% of our refining services product group pro forma sales were sold under contracts that included some form of raw material pass-through clause. These price adjustments generally reflect our refining services actual cost structure in producing sulfuric acid, and tend to provide us with some protection against volatility in labor, fixed costs and raw material pricing. Freight expenses are generally passed through directly to customers. Excluding contracts with automatic evergreen provisions, approximately 60% of our sulfuric acid volume for the year ended December 31, 2016 was under contracts expiring at the end of 2019 or beyond.

Competition. Our silica catalysts and zeolite catalysts products groups are leading global catalyst platforms that primarily produce catalysts and services for customers in the petrochemicals and refining industries. In these areas we primarily compete with other global producers such as W.R. Grace, BASF, UOP, and Albemarle, as well as other niche competitors such as Tosoh, Axens, and Haldor Topsoe, and we typically compete on the basis of performance, product consistency, reliability, and responsiveness to changes in customer demand.

Refining services is a regional business due to shipping costs and customer integration requirements, and therefore our network of facilities is concentrated in the major areas of growth in sulfuric acid demand in the United States. These plants are located close to our major refining services customers and are typically integrated through well-established supply chain networks, including in some cases captive pipelines connecting us to our refining services customers. We compete in the North American refining services industry with competitors such as Chemtrade and Veolia and we compete on the basis of price, reliability, and responsiveness to changes in customer demand, which is a function of scale, proximity to customer locations and operational expertise. We estimate that our refining services product group holds the number one supply share position in the United States in sulfuric acid regeneration based on 2016 sales volume with an estimated 53% supply share. We also estimate that we had a 64% supply share in each of the West Coast and Gulf Coast regions based on 2016 sales volume, which we believe was greater than three times the supply share of our largest competitor.

Manufacturing. We manufacture our zeolyst-based catalyst products using sodium silicates liquids from our performance chemicals product group to make specialty zeolite products, which are either used directly to produce catalysts or are sold as a precursor to other catalyst manufacturers.

We produce regenerated sulfuric acid and virgin sulfuric acid through our furnace operations. Regenerated sulfuric acid is produced by breaking down the spent acid in our furnace into the usable components of sulfuric acid and water. Virgin sulfuric acid is produced by burning sulfur and certain sulfur-rich components at high temperatures within a furnace. The chart below summarizes the manufacturing platform for our refining services product group.

Our performance materials and chemicals business is a silicates and specialty materials producer with leading supply positions in North America, Europe, South America, and Asia serving diverse and growing end uses such as personal and industrial cleaning products, fuel efficient tires (“green tires”), surface coatings, and food and beverage. Our products are essential additives, ingredients, and precursors that are critical to the performance characteristics of our customers’ products, yet typically represent only a small portion of our customers’ overall end-product costs. We believe that our global footprint enables us to compete more effectively on a global basis due to the costs associated with shipping these products over extended distances. We believe that our network of strategically located manufacturing facilities allows us to serve our customers at a lower cost than our competitors and with quicker delivery times for our products. Our performance materials are also used in some cases as a substitute for less environmentally friendly materials. For example, specialty silicates are displacing phosphates in dish detergents, precipitated silicas are displacing carbon black in tires, and hollow and solid microspheres are displacing plastic volumes in transportation lightweighting applications. Our performance materials and chemicals business consists of two product groups: performance chemicals and performance materials.

Performance Chemicals. Our performance chemicals product group includes silicate products and derivatives, which are used in a variety of applications such as adsorbents for surface coatings, clarifying agents for edible oils and beverages, precursors for green tires, and additives for cleaning and personal care products. Silicates are a family of products manufactured primarily from readily available materials, such as industrial sand and soda ash. These raw materials are typically fused in a furnace and then dissolved in water under pressure to form water-soluble silicates for use in our downstream products, such as precipitated silica and silica gels. We sell our performance chemicals products to customers who use silicates as precursors, such as sodium silicates that are used in the growing precipitated silica end uses, as well as for downstream derivative products, such as silicas used as additives in toothpaste formulation and silica gels that are used as adsorbents in food and beverage manufacturing.

Our performance chemicals product group, which is the backbone across our additives and catalyst platform, is highly regionalized because of the expense of shipping sodium silicates extended distances due to their water content. As a result, our network of regional silicate plants is strategically located to support the customers that we serve. In addition, we maintain a few larger dedicated facilities to service our derivative products. Our performance chemicals product technology requires significant know-how and scale in order to be able to operate in a cost effective manner. We believe that we are the only global silicates producer who can supply all of the major regions and we estimate that we have three times the sodium silicates supply share as our nearest competitor based on 2016 sales volume. Key end uses for our performance chemicals products include catalyst precursors, food and beverage, personal care, cleaning products, coatings, tires, soil stabilization, paper de-inking, and sequestration.

Silicates. Silicates and their family of derivatives, such as silicas, have functional attributes that are used as additives and ingredients to enhance product performance as binders, fillers, flow control agents, and carriers in our customers’ products. Our silicates are used in a diverse range of applications. In detergents and cleaning products, silicates provide corrosion inhibition, alkalinity, emulsification, and deflocculation. In construction materials such as roofing granules, cement, ceramics, adhesives, and coatings, our products are used as a binding agent. In addition, our products are ingredients in the consumer products, which includes personal care and consumer cleaning products, where customers are seeking more environmentally friendly products without loss of effectiveness or performance. We believe that our products have the environmental and safety profile to address these evolving customer demands. Silicates and silicate derivatives are recognized on the Safer Chemicals Ingredients List of the EPA’s Safer Choice program, which we believe positively impacts our ability to compete in the consumer products applications.

Silica Derivatives. Silica derivatives include specialty silicas, zeolite products, spray dry silicates, magnesium silicate, and other specialty chemicals. Silica derivatives are used in personal care products as a

binder in pharmaceutical products, and as a source of alkaline in cleaning products, such as industrial cleaners. In addition, our silica derivatives are used in natural resources applications such as in drilling fluids as a lubricant binder. Some of our silicas and zeolites are used by our environmental catalysts and services business to produce catalysts and catalyst precursors. We believe that this internal source of supply is a competitive advantage both for our performance chemicals product group, which can take advantage of opportunities to maximize the use of our sodium silicates production capacity and for our silica catalysts and zeolite catalysts product groups, which are able to access a consistent quality source of precursors.

Silica Gels. Silica gels are used as drying agents or adsorbents and desiccants for food and industrial products. For example, silica gels are used in the brewing industry to remove certain compounds that cause chilled beer to look cloudy, and are used as clarification agents for wines and fruit juices, and as an adsorbent of free fatty acid and other contaminants in the refining of cooking oils. In personal care, silica gels are used as carriers for vitamins and pharmaceuticals, and as a flow conditioner and an oil absorption agent in face powders. In industrial and engineered plastics, silica gels are used for gloss control in coil, wood, general industrial, leather and other high-performance surface coatings applications. In addition, highly-porous specialty silica gels are used in ink-receptive coatings for inkjet media. Some recently developed silica-based products are designed for ultraviolet-cured coatings and other low solvent formulations that offer more environmentally friendly characteristics. Silica gels are also used to create coatings that have significant capacity to absorb ink in order to allow for quick setting of colorants and faster ink dry times, which can improve color density and reduce ink bleed.

Precipitated Silicas. Precipitated silicas represent the largest volume of specialty silicate products based on 2016 sales volume, but are also concentrated among a limited number of suppliers. Precipitated silica applications include filler in rubber for green tire applications and gel dentifrice formulations used in toothpaste as an abrasive or thickener. Precipitated silicas are an alternative to calcium phosphates because of their compatibility with different fluorides and their softness. In addition, precipitated silicas are used as functional filler in polyethylene membranes for lead-acid batteries, which are used in most automobiles. In agricultural end uses, precipitated silicas are used as carriers for liquid ingredients in dry animal feeds and as a flow aid and dispersant in insecticide formulations for crop care. We continue to collaborate with our customers to innovate in this industry. For example, we recently worked with certain customers to deliver new products for whitening and desensitizing toothpaste applications that offer improved cleaning performance with low abrasion.

Zeolites. We produce zeolites by combining sodium silicate with aluminum trihydrate and other materials. These products are used as adsorbents and detergents. We also use these products to serve newer applications such as stabilizers in the production of polyvinylchloride, a titanium dioxide replacement for paints and coatings, and coatings applications for food grade paper.

Other Specialty Silicates. Other specialty silicates that we produce are used for a variety of industrial, personal care, and cleaning products. End uses include refractory, cleaning products, oil processing, hair bleach, fire retardants, water treatment, and adhesives. Our specialty silicate products are also used in drilling fluids for oil and gas wells to maintain drill hole integrity.

Performance Materials. Our performance materials product group includes specialty glass products, such as highly engineered microspheres made from either recycled glass or fresh batch material using our proprietary furnace operations. We believe that we are the industry leader in North America, Europe, South America, and Asia (excluding China) in microspheres. These products are used in the reflective markings used on roads and runways to enhance visibility at night and in poor weather to improve safety. Our microspheres, which can be solid or hollow, are also used as additives in plastics for lightweighting and in abrasive media, where they are used to clean, peen and debur metal surfaces, such as for turbine blades used in aerospace and power generation industries.

In the highway safety applications, our microspheres are used with a variety of binders, such as water- and solvent-borne paint, epoxy coatings, and thermoplastics. Our microspheres are mixed in with, or dropped into,

these binders as pavement markings are being applied. These microspheres remain partly exposed after the markings dry and provide retroreflectivity that increases the visibility of the road markings at night and during inclement weather. We sell these microspheres primarily to federal and state government agencies, municipalities, highway contractors, binder manufacturers and airport agencies. Demand for our performance materials products has grown as a result of increased spending for maintenance and upgrading of existing roads and the construction of new roads around the world. Demand for our highway safety products is principally driven by replacement demand and new road construction and, as such, demand for these products has grown through economic cycles without exhibiting as pronounced cyclicality as other end uses. Highway safety budgets in the United States are typically funded by taxes on gasoline and are not typically tied to economic cycles or to the state and local government budgeting process. The United States federal government has taken an active role in implementing regulations and initiating infrastructure development in an effort to improve highway safety. In addition, the continuing need to maintain and upgrade an aging United States highway infrastructure, has translated into relatively consistent government expenditure in this area. The most recent innovation from our performance materials product group is our ThermoDrop product, which simplifies the road striping operations for our customers by using a new durable thermal plastic road marking material. We have also introduced a new faster-drying road marking system, Visilok, which can reduce traffic disruption during striping operations and improve road worker safety by reducing the amount of time needed to complete the road marking process.

We also sell highly specialized solid and hollow microspheres and metal coated particles for a variety of uses such as plastic additives, conductive applications, metal finishing, and other industrial and consumer applications. For metal finishing, our performance materials are propelled from blasting equipment to clean, peen, debur, and finish metal in industrial and process chemical end uses. Our performance material products offer the ability to design lighter parts while maintaining strength and reliability. Our performance materials are often a preferred substitute for other media such as industrial sand, aluminum oxide, iron and steel because they do not damage parts and they allow for better process control, limit surface contamination, and can be more environmentally friendly.

Other applications for our microspheres include additives into paints and coatings for thermal insulation, to reduce weight and ingredients in cosmetics to improve feel attributes and improve flow functionality. Our microspheres are also used in drilling fluids to provide lubrication and strength. Within the natural resources industry, our performance materials are used in oil-drilling muds to improve lubricity and reduce friction in horizontal drilling. In addition, our hollow microspheres are used as sensitizers for water-based industrial explosives in mining, quarrying, and construction. Sensitizers are also used in explosives to increase the energy of a detonation.

We believe that our industry leadership position, scale, and industry presence provides us with a competitive advantage over competitors who compete only in particular end uses. We believe that it would be costly and difficult for a new entrant or existing competitor to replicate our breadth or economies of scale in the production of microspheres.

Sales & Marketing. Our performance chemicals product group relies on a direct sales force to market our broad array of products. For most customers, our direct sales force calls on the customer, supported by our experienced technical staff. Our global sales force and technical staff employ a proactive and collaborative approach to the sales process. In many cases, particularly in our specialty products, our sales force assists our research and development team with the design and development of new products to meet a customer’s specific needs. Our performance materials product group uses a technically-trained internal sales force to market our product offerings in the different geographies that we serve. We sell highway safety products directly to road striping contractors, binder manufacturers and original equipment manufacturers through regional sales managers in North America, Europe and Asia. We also sell these products directly to states and municipalities through a bidding process that is handled by our corporate staff. Our performance materials products outside of highway safety are sold through a direct sales force and a network of distributors. In addition to our direct sales force, we use chemical distributors to market and sell a smaller portion of our performance materials and chemicals products to smaller customers.

For the year ended December 31, 2016, approximately 45% of our North American silicate pro forma sales, which represented a significant portion of our performance chemicals product group sales, were derived from contracts that included raw material pass-through clauses. Under these contracts, there is usually a time lag of between three and nine months for price changes to pass-through, depending on the magnitude of the change, industry dynamics and the terms of the particular contract.

Competition. In our performance materials and chemicals business, we primarily compete with other global producers such as OxyChem, PPG and Evonik. We are the only global silicates producer with operations in North America, Europe, and Asia, and we believe that we have technical and cost advantages in all of these regions as compared to our competitors as a result of the scale and breadth of our product offerings and operations. We compete primarily on a regional basis due to the costs associated with shipping sodium silicates, and we estimate that we had approximately three times the sodium silicate supply share of our nearest competitor based on 2016 sales volume. Our network of regional silicate plants is strategically located to support the industries that we serve. In addition, we maintain a few larger dedicated facilities to service our derivative products. We believe that our network of strategically located manufacturing facilities allows us to serve our customers at a lower cost than our competitors and with quicker delivery times for our products. In the industry served by our performance materials and chemicals business, we compete primarily on the basis of performance, product consistency, quality, reliability, and ability to innovate in response to customer demands. Our competitors are primarily regional suppliers.

Manufacturing. Performance chemicals are produced through an integrated supply chain beginning with regional and large scale upstream production of sodium silicates and downstream derivatives. Sodium silicates are produced regionally because of the expense of shipping sodium silicates extended distances due to their water content. Our sodium silicates are produced by fusing industrial sand and soda ash in our proprietary furnace operations. We dissolve the molten silicate from the furnace into water and sell these products in liquid form. Downstream derivatives are produced through a variety of chemical operations that create aqueous, solid, and gel forms for our products.

We produce our highway safety products and other microspheres by crushing raw materials, such as recycled glass or cullet, and then feeding these raw materials into a furnace. The product is coated or treated in other ways to meet particular customer and end use specifications. The beads are then bagged and stocked for shipment. The flowchart below outlines our performance materials’ production process.

Our operating headquarters are located in Malvern, Pennsylvania. We have 68 manufacturing facilities in 16 countries on six continents. We also have 13 administrative facilities and five research and development facilities located in nine countries. Our joint ventures operate out of seven facilities located in six countries, including six manufacturing facilities. We also own or lease other properties, including office buildings, warehouses, testing facilities and sales offices.

The table below presents summary information regarding our principal facilities as of December 31, 2016.

We are able to negotiate our supply agreements for our key raw materials based on our leading industry position and global scale in an effort to achieve competitive pricing. We also maintain a raw material quality audit and qualification program to ensure that the material we purchase satisfies stringent quality requirements. The key raw materials for our silica catalysts and zeolite catalysts product groups are sodium silicates, acids, bases and certain metals. The key raw materials used in our refining services product group include spent sulfuric acid and sulfur, both of which have generally been widely available in the geographies in which we operate. The key raw materials used in our performance chemicals product group include soda ash, industrial sand, aluminum trihydrate and sodium hydroxide. The key raw materials used in our performance materials product group include cullet, which is glass sourced from glass recyclers around the world. Cullet has generally been available in sufficient supply from local recyclers in the regions in which we operate.

While natural gas is not a direct feedstock for any individual product, we use natural gas powered furnaces to heat raw materials and create the chemical reactions necessary to manufacture our products. We maintain multiple suppliers wherever possible and we seek to hedge our exposure to fluctuations in prices for natural gas through hedging activity in the United States, forward purchases of natural gas in the United States, Canada, and Europe, and the use of pass-through clauses for raw material and natural gas costs in our customer contracts. However, we may not be successful in passing through all increases in raw material costs or maintaining an uninterrupted supply of natural gas for all of our furnaces. See “Risk Factors—Risks Related to Our Business—If we are unable to pass on increases in raw material prices, including natural gas, to our customers or to retain or replace our key suppliers, our results of operations and cash flows may be negatively affected.”

We benefit from the highly-skilled technical capabilities of our employees dedicated to new product development. We operate five research and development facilities in the United States, Canada, the United Kingdom, the Netherlands and France. Our research and development activities are directed toward the development of new and improved products, processes, systems and applications for customers. Our research and development team is organized to support each of our operating businesses and staffed with experienced scientists, technical service representatives and process engineers with direct knowledge of our products. This business group and customer-oriented team structure provides strong links between our product development and manufacturing functions and our customer collaboration and specifications. These connections enable us to focus our development on timely and relevant products for our customers while remaining attentive to manufacturing considerations to enable us to produce new products profitably and in a timely manner. Product development activities are organized into research and development projects that are subject to regular reviews by the business teams in order to understand and address our customers’ evolving needs and invest in our growth by prioritizing innovation driven by these identified needs. In addition, we are improving the way our research and development team shares information by removing silos and holding regular senior-level project reviews to ensure best practices are shared and consistent metrics are used to determine a project’s merit and the size of the potential opportunity. Pro forma research and development expenses were approximately $10.8 million for the year ended December 31, 2016 and combined research and development expenses were $10.3 million and $9.1 million for the years ended December 31, 2015 and 2014 (including Predecessor and Successor periods), respectively. This does not include research and development expenses of $16.0 million, $14.0 million or $12.9 million for the years ended December 31, 2016, 2015 or 2014, respectively, with respect to our Zeolyst Joint Venture.

We have entered into several long-standing joint ventures to supplement our businesses and access other geographic locations, minimize costs and accelerate growth in areas we believe have significant business potential.

Zeolyst Joint Venture. Our Zeolyst Joint Venture is a long-standing partnership with CRI, that dates back to 1988 and is focused on the development, manufacture and sale of zeolite-containing catalysts through manufacturing facilities located in Kansas and The Netherlands. We have a 50% ownership stake in our Zeolyst Joint Venture.

PQ Holdings Mexicana S.A. de C.V. PQ Holdings Mexicana was established in 2000 as a joint venture with Solvay Alkalis, Inc. for the manufacture, marketing and sale of various chemicals, including sodium silicate and metasilicate, through manufacturing facilities in Tlalnepantla and Guadalajara, Mexico. We have an 80% ownership stake in PQ Holdings Mexicana.

Potters (Thailand) Limited. Potters (Thailand) Limited was established in 1988 as a joint venture with Mr. Sompong Dowpiset for the manufacture of high-quality microspheres for industrial and highway safety applications through a manufacturing facility in Bangkok, Thailand. We have an approximate 75% ownership stake in Potters (Thailand) Limited.

Quaker Chemicals South Africa Pty Ltd. Quaker Chemicals South Africa was established in 1986 as a joint venture with the Quaker Chemical Corporation (“Quaker”) for the distribution and sale of specialty chemicals utilizing Quaker’s trademarks and incorporating Quaker’s formula and technical data through a manufacturing facility in Jacobs, South Africa. We have a 49% ownership stake in Quaker Chemicals South Africa.

PQ Silicates Limited. PQ Silicates was established in 1997 as a Taiwan joint venture with Mr. James Fang for the import and sale of sodium and potassium silicate. We have a 50% ownership stake in PQ Silicates.

We collaborate with multinational companies who often seek global solutions. Our customers include large industrial companies such as BASF, Honeywell and 3M and global catalyst producers such as Albemarle and W.R. Grace. We also supply catalysts to leading chemical and petrochemical producers such as BASF, Dow Chemical, Lucite, LyondellBassell and Shell. We supply personal care ingredients and additives to leading consumer products companies such as Unilever and Colgate-Palmolive. We have long-term relationships with our top ten customers, based on 2016 pro forma sales, that average more than 50 years. In addition, our customer base is diversified, with our top ten customers in 2016 representing approximately 24% of pro forma sales for the year ended December 31, 2016 and no customer representing more than 4% of our pro forma sales during this period.

We evaluate on a case-by-case basis how best to use patents, trademarks, copyrights, trade secrets and other available intellectual property protections in order to protect our products and our critical investments in research and development, manufacturing and marketing. We focus on securing and maintaining patents for certain inventions such as composition-of-matter, while maintaining other inventions such as process improvements as trade secrets, derived from our market-based business model, in an effort to maximize the value of our product portfolio and manufacturing capabilities and reinforce our competitive advantage. Our policy is to seek appropriate intellectual property protection for significant product and process developments in the major areas where the relevant products are manufactured or sold. Patents may cover products, processes, intermediate products and product uses. Patents extend for varying periods in accordance with the date of patent application

filing and the legal life of patents in the various countries in which the patents are registered. The protection afforded, which may also vary from country to country, depends upon the type of subject matter covered by the patent and the scope of the claims of the patent.

In most industrial countries, patent protection may be available for new substances and formulations, as well as for unique applications and production processes. However, given the geographical scope of our business and our continued growth strategy, there are regions of the world in which we do business or may do business in the future where intellectual property protection may be limited and difficult to enforce. Moreover, we monitor our competitors’ products and, if circumstances were to dictate that we do so, we would vigorously challenge the actions of others that conflict with our patents, trademarks and other intellectual property rights. We maintain appropriate information security policies and procedures reasonably designed to ensure the safeguarding of confidential information including, where appropriate, data encryption, access controls and employee awareness training.

We own or have rights to a number of patents relating to our products and processes. As of March 31, 2017, we own over 50 patented inventions in the United States, with approximately 300 patents issued in countries around the world and approximately 150 patent applications pending worldwide covering more than 20 additional inventions. As of March 31, 2017, we also had trademark rights in approximately 550 trademark registrations worldwide, including approximately 70 U.S. trademark registrations. We also have approximately 75 pending trademark applications, which include applications in the United States and worldwide. In addition to our registered and applied-for intellectual property portfolio, we also claim ownership of certain trade secrets and proprietary know-how developed by and used in our business. Including our joint ventures, we are party to certain arrangements whereby we license in the right to use certain intellectual property rights in connection with our business.

As of December 31, 2016, we had 2,949 employees worldwide, of which 1,394 were employed in the United States, 423 were employed in Canada, Mexico and Brazil, 833 were employed throughout Europe, 33 were employed in South Africa and 93 were employed in Indonesia. Our remaining employees are dispersed throughout Asia and Australia, primarily in Australia, China, Thailand and Japan. As of December 31, 2016, approximately 49% of our employees were represented by a union, works council or other employee representative body. We believe we have good relationships with our employees and their respective works councils, unions or other bargaining representatives. There have been no labor strikes or work stoppages in these locations in recent history.

Obtaining, producing and distributing many of our products involve the use, storage, transportation and disposal of toxic and hazardous materials. We are subject to extensive, evolving and increasingly stringent national and local environmental laws and regulations, which address, among other things, the following:

We apply the principles of the Environmental Management standard of the International Organization for Standardization (ISO 14001) at our facilities throughout the world. For chemical facilities in the United States, we also adhere to the Responsible Care RC14001 Technical Specifications of the American Chemistry Council.

We maintain policies and procedures to monitor and control environmental, health and safety risks, and to monitor compliance with applicable state, national, and international environmental, health and safety requirements. We have a strong environmental, health and safety organization. We have a staff of professionals who are responsible for environmental health, safety and product regulatory compliance. We have implemented a corporate audit program for all of our facilities. However, we cannot provide assurance that we will at all times be in full compliance with all applicable environmental laws and regulations. We expect that stringent environmental regulations will continue to be imposed on us and our industry in general. Evolving chemical regulation programs throughout the world could impose testing requirements or restrictions on our chemical raw materials and products. These programs include the 2016 amendments to the U.S. Toxic Substances Control Act, under which the EPA will prioritize and evaluate chemicals for regulation, the E.U. REACH regulations, which have ongoing registration and evaluation requirements with associated testing costs and potential restrictions, the Korea REACH law, which is requiring registration and potentially testing of chemicals, and similar programs being developed in Taiwan, Turkey, India, and elsewhere. Given knowledge of our chemicals and the various regulations promulgated to date, we do not anticipate costly testing requirements or severe restrictions, but cannot guarantee that we will be free of requirements for our products or raw materials that could materially affect our operations.

Environmental Remediation. Environmental laws and regulations require mitigation or remediation of the effects of the disposal or release of chemical substances. Under some of these regulations, as the current or former owner or operator of a property, we could be held liable for the costs of removal or remediation of hazardous substances on or under the property, without regard to whether we knew of or caused the contamination, and regardless of whether the practices that resulted in the contamination were permitted at the time they occurred. Many of our current or former production sites have an extended history of industrial use, and it is impossible to predict precisely what effect these laws and regulations will have on us in the future. Soil and groundwater contamination requiring investigation and remediation has been discovered at some of the sites, and might occur or be discovered at other sites. Several active and former facilities currently are undergoing investigation and remediation, including sites in Rahway, NJ; Dominguez, CA; Martinez, CA; and Tacoma, WA.

Environmental Programs. We have comprehensive environmental, health and safety compliance, auditing and management programs in place to assist in our compliance with applicable regulatory requirements and with internal policies and procedures, as appropriate. Each facility has developed and implemented specific critical occupational health, safety, environmental, security and loss control programs.

We also have implemented a Health, Safety and Environmental (“HSE”) organizational structure with executive committee level leadership and dedicated environmental experts. We have Regional HSE Specialists and Managers who are embedded in the field and provide HSE expertise and support to operating sites. Certain, larger sites may have dedicated environmental or safety personnel. We have an established Product Safety/Stewardship management system compliant with the RC14001 technical specification along with two Product Stewardship Managers, one of which is a REACH Specialist. We conduct Product Stewardship reviews as part of new product development and routinely evaluate product safety risk for raw materials, intermediates and products.

As a chemical company, we are subject to extensive and evolving regulations regarding the manufacture, processing, distribution, import, export, and labeling of our products and their raw materials. In the European Union, the REACH regulations went into effect in 2007 with implementation rolling out over time. REACH requires registration of chemicals, along with a dossier of toxicological and ecotoxicity test results, or a plan to conduct such tests if currently unavailable. Registered chemicals then can be subject to further evaluation and potential restrictions. Our high-volume chemicals have been registered under REACH; up to 15 lower-volume chemicals (mainly catalysts) will be registered by the 2018 deadline. To date, no testing has been required. A couple of our chemicals are being reviewed under REACH. Since the promulgation of REACH, other countries (e.g., China, Korea, Taiwan) have enacted and are in the process of implementing similar comprehensive regulation of chemicals. In the United States, legislation has been enacted that would require the EPA to review and require testing of certain chemicals. Given knowledge of our chemicals and the various regulations promulgated to date, we do not anticipate costly testing requirements or severe restrictions, but cannot guarantee that we will be free of requirements for our products or raw materials that could materially affect our operations. In particular, some of our products might be characterized as nanomaterials and then subjected to evolving new nanomaterial regulations.

From time to time we may be subject to various legal claims and proceedings incidental to the normal conduct of business, relating to such matters as personal injury, product liability and warranty claims, waste disposal practices, release of chemicals into the environment and other matters that may arise in the ordinary course of our business. We currently believe that there is no litigation pending that is likely to have a material adverse effect on our business. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Below is a list of the names, ages as of June 1, 2017, and positions, and a brief account of the business experience, of the individuals who serve as our executive officers and directors as of the date of this prospectus. Our certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors will be elected each year. Upon completion of this offering, we expect that each of our directors identified below will serve in the class indicated. Subject to any earlier resignation or removal in accordance with the terms of our certificate of incorporation and by-laws, our Class I directors will serve until the first annual meeting of stockholders following the completion of this offering; our Class II directors will serve until the second annual meeting of stockholders following the completion of this offering; and our Class III directors will serve until the third annual meeting of stockholders following the completion of this offering.

James F. Gentilcore became a director and our President and Chief Executive Officer in June 2016. Mr. Gentilcore most recently served as an Executive Advisor to CCMP from April 2014 to June 2016. He previously served as Chief Executive Officer of Edwards Group Limited, a developer and manufacturer of vacuum products, abatement systems and related services, from March 2013 to January 2014, and as a director from December 2007 until January 2014. Prior to that, he was the Chief Executive Officer of EPAC Technologies Inc., a logistics technology solutions company, from January 2009 until March 2011. Mr. Gentilcore also served as Chief Operating Officer of Brooks Automation Inc., a position he held from November 2005 until November 2007, after leading the merger between Brooks and Helix Technology Corp., where he had been the Chief Executive Officer from December 2002 until October 2005. Prior to that,

Mr. Gentilcore was the Chief Operating Officer of Advanced Energy Industries, Inc. Earlier in his career, he spent 10 years in the electronics materials industry with Air Products Inc., serving in various business development and operational roles. Mr. Gentilcore currently serves on the board of directors of Entegris, Inc. and Milacron Holdings Corp. and previously served as a member of the board of directors of KMG Chemicals Inc. from May 2014 to December 2016. Mr. Gentilcore was elected to serve as a member of our board of directors due to his more than 20 years of management experience and leadership of the company as our President and Chief Executive Officer.

Michael Crews became our Executive Vice President and Chief Financial Officer in August 2015. From 2008 to 2015, Mr. Crews was Executive Vice President and Chief Financial Officer at Peabody Energy, a private-sector coal company. From 1998 to 2008, Mr. Crews held various management positions at Peabody Energy including Vice President—Operations Planning, Assistant Treasurer and Director—Financial and Capital Planning. Mr. Crews began his career in KPMG’s audit function.

Scott Randolph became Executive Vice President and Group President—Performance Materials and Chemicals in December 2016. From March 2016 to December 2016, Mr. Randolph served as Vice President and President—Global Performance Chemicals after previously serving as Vice President and President—Performance Chemicals Americas and Australia and Performance Materials. From April 2005 to May 2016, Mr. Randolph served as President of Performance Materials. Mr. Randolph originally joined us as Senior Vice President Strategic Planning in February 2005. From 2000 to 2005, Mr. Randolph held the position of Chief Financial Officer with Peak Investments, LLC. From 1990 to 2000, Mr. Randolph held a number of management positions with Harris Chemical Group and IMC Global following IMC Global’s acquisition of Harris Chemical Group. Mr. Randolph’s last position with IMC Global was General Manager of the Worldwide Boron Business. From 1989 to 1990, Mr. Randolph held management positions with General Chemical. Prior to that, Mr. Randolph served as a nuclear trained naval officer from 1984 to 1989.

Paul Ferrall became Executive Vice President and Group President—Environmental Catalysts and Services in December 2016. Mr. Ferrall joined us in August 2005 as Senior Vice President of Global Plant Operations for the performance chemicals business and served as Vice President and President—Performance Chemicals Americas & Australia from November 2006 to August 2015, prior to transitioning to President of Refining Services in August 2015. Prior to joining us, Mr. Ferrall had been the president of Peak Chemical and Sulfur and, from 1995 to 2000, held several management positions with Harris Chemical Group and IMC Global, including Vice President of its Soda Products business. From 1978 to 1995, Mr. Ferrall held various positions of responsibility in engineering, operations, finance, sales and business management with Allied Chemical.

John Lau became Chief Technology Officer in January 2016. Dr. Lau joined us in July 1996 to lead our Exploratory Research department with the mission to develop new growth opportunities. Dr. Lau was appointed Vice President of Research and Development in 1998 and Vice President of Strategic Planning in 2005. In November 2006, Dr. Lau became Vice President and General Manager of Silica Catalysts and Zeolyst International and, in January 2011, became President of the Catalysts business. Prior to joining us, Dr. Lau held various research and management positions at W.R. Grace & Co. from 1984 to 1996. From 1982 to 1984, Dr. Lau was a research fellow at the University of California, Los Angeles.

Joseph S. Koscinski became Secretary, Vice President and General Counsel in November 2015. From August 1995 to November 2015, Mr. Koscinski was an attorney in the Business Services Group of Babst, Calland, Clements and Zomnir, P.C., a law firm in Pittsburgh, Pennsylvania, where he was named a shareholder in 2003 and where his corporate practice included mergers and acquisitions, real estate matters and commercial contracts. While in private practice, Mr. Koscinski served as outside corporate counsel to PQ Corporation since 2005.

William J. Sichko, Jr. became Chief Administrative Officer and Vice President in 2005. Mr. Sichko served as our Secretary from 2005 to November 2015, and is currently an Assistant Secretary. From 1998 through 2005,

Mr. Sichko was Chief Administrative Officer with Peak Investments, LLC. From 1991 through 1998, he held management positions with Harris Chemical Group and IMC Global following IMC Global’s acquisition of Harris Chemical, including serving as Senior Vice President of Human Resources from 1996 to 1998. From 1987 to 1991, Mr. Sichko was a manager with General Chemical.

Michael Boyce became the Chairman of our board of directors in 2005. From 2005 to April 2015, Mr. Boyce also served as our Chief Executive Officer. From 1998 to 2004, Mr. Boyce was the Chairman and Chief Executive Officer of Peak Investments, LLC. Prior to April 1998, he was President & Chief Operating Officer of Harris Chemical Group and Chief Executive Officer of Penrice Soda Products Pty. Ltd. in Australia. Before joining Harris Chemical Group, he was with General Chemical, where he spent two years as Vice President and General Manager of its Industrial Chemicals division. Prior to that, he was President of Catalyst Resources, Inc., a subsidiary of Phillips Petroleum Company that manufactures polypropylene and polyethylene polymerization catalysts. From 1983 through 1986, he was Vice President and General Manager of Sylvachem Corporation, a wholly owned subsidiary of SCM Corporation, a company active in specialty chemicals. Earlier in his career, he was with Union Carbide for 12 years, where he held a variety of positions in business management, sales & marketing and manufacturing. Mr. Boyce currently serves on the board of directors of AAR Corp. and Stepan Company. Mr. Boyce was elected to serve as a member of our board of directors due to his experience as our former Chairman and Chief Executive Officer, his insight into global manufacturing, supply and distribution practices and his international business experience.

Greg Brenneman became a director in 2014. Mr. Brenneman is the Executive Chairman of CCMP and is a member of the firm’s Investment Committee. Prior to joining CCMP in October 2008, Mr. Brenneman served as the Chief Executive Officer of QCE Holdings LLC (“Quiznos”), a U.S. quick service restaurant chain, from January 2007 until September 2008 and as the President of Quiznos from January 2007 until November 2007. He also served as the Executive Chairman from 2008 to 2009. Prior to joining Quiznos, Mr. Brenneman was the Chairman and Chief Executive Officer of Burger King Corporation from 2004 to 2006. Prior to joining Burger King, Mr. Brenneman was named the President and Chief Executive Officer of PwC Consulting in June 2002. Mr. Brenneman joined Continental Airlines in 1995 as the President and Chief Operating Officer and as a member of its board of directors. In 1994, Mr. Brenneman founded Turnworks, Inc., his personal investment firm that focuses on corporate turnarounds. Prior to founding Turnworks, Mr. Brenneman was a Vice President for Bain and Company. Mr. Brenneman currently serves on the board of directors of Milacron Holdings Corp., The Home Depot, Inc. and Baker Hughes Incorporated. Mr. Brenneman previously served on the board of directors of Automatic Data Processing, Inc., from 2001 until 2014 and Francesca’s Holding Corporation from 2010 until 2015. Mr. Brenneman was elected to serve as a member of our board of directors due to his leadership experience, over 20 years of business experience and extensive experience serving as a public company director.

Timothy Walsh became a director in 2014. Mr. Walsh is the President and Chief Executive Officer of CCMP and is a member of the firm’s Investment Committee. Mr. Walsh focuses on making investments in the industrial sector. Prior to joining CCMP upon its formation in August 2006, Mr. Walsh was with J.P. Morgan Partners, LLC and its predecessors from 1993 until 2006. Prior to that, Mr. Walsh worked on various industry-focused client teams within The Chase Manhattan Corporation. Mr. Walsh currently serves on the board of directors of Milacron Holdings Corp. and previously served as a member of the board of directors of Generac Holdings Inc. from 2006 until 2016. Mr. Walsh was elected to serve as a member of our board of directors due to his knowledge of the industrial sector and his extensive experience in business and finance.

Christopher Behrens became a director in 2014. Mr. Behrens is a Managing Director of CCMP and a member of the firm’s Investment Committee. Mr. Behrens focuses on making investments in the energy, industrial and distribution sectors. Prior to joining CCMP upon its formation in August 2006, Mr. Behrens was with J.P. Morgan Partners, LLC and its predecessors from 1994 until 2006. Prior to that, he was a Vice President in the Merchant Banking group of The Chase Manhattan Corporation. Mr. Behrens previously served as a member of the board of directors of Chaparral Energy, Inc. from 2010 until 2017. Mr. Behrens was elected to serve as a member of our board of directors due to his extensive experience in the energy, industrial and distribution sectors.

Mark McFadden became a director in September 2016. Mr. McFadden is a Managing Director of CCMP and focuses on making investments in the industrial sector. Prior to joining CCMP upon its formation in August 2006, Mr. McFadden was with J.P. Morgan Partners, LLC between 2002 and 2006. Prior to that, Mr. McFadden was an investment banking analyst at Credit Suisse First Boston and Bowles Hollowell Conner. Mr. McFadden currently serves on the board of directors of Milacron Holdings Corp. Mr. McFadden was elected to serve as a member of our board of directors due to his extensive experience in the industrial sector and his significant experience in, and knowledge of, corporate finance and strategic development.

Robert Toth became a director in September 2016. Mr. Toth is a Managing Director of CCMP. Prior to joining CCMP in 2016, Mr. Toth served as the Chief Executive Officer and President of Polypore International, Inc., a leading global high technology filtration company specializing in microporous membranes, since 2005, during which time Polypore transitioned from a private to a public company via a successful IPO in 2007 and was ultimately acquired in 2015. Mr. Toth was previously the President and Chief Executive Officer and a member of the board of directors of CP Kelco ApS, a global leader in the specialty hydrocolloids market. Prior to joining CP Kelco in 2001, Mr. Toth spent 19 years at Monsanto Company and Solutia Inc. where he held a variety of managerial and executive roles. Mr. Toth currently serves on the board of directors of Materion Corporation. Mr. Toth previously served on the board of directors of Polypore International, Inc. from 2005 until 2015. Mr. Toth was elected to serve as a member of our board of directors due to his extensive leadership experience and past service as a public company director.

Robert Coxon became a director in 2007. Mr. Coxon was previously a Senior Advisor to The Carlyle Group, assisting buyout teams in Europe, the United States, the Middle East and Asia until 2013. In that role, he advised Carlyle in making and managing investments in the chemicals sector and was based in London. Prior to joining Carlyle, Mr. Coxon was the Senior Vice President of ICI and the Chief Executive Officer of Synetix, a world leading catalyst company. In addition to serving on our board of directors, Mr. Coxon is also the Chairman of the UK Center for Process Innovation, an international research center in printable electronics, bio-processing and low carbon energy. Mr. Coxon previously served on the board of directors of AZ Electronic Materials SA, Jiangsu Sinorgchem Technology Co., Ltd., Ensus Ltd. and Stahl Holdings BV. Mr. Coxon was elected to serve as a member of our board of directors due to his extensive experience in the chemicals sector.

Andrew Currie became a director in 2008. Mr. Currie has been a director of INEOS, since 1999, a partner of INEOS since 2000 and a director of INEOS AG since March 2010 when the ownership of the INEOS business was transferred to Switzerland. He was previously a Managing Director of Laporte Performance Chemicals, having served as a director of the Inspec Group from 1994 until the Laporte acquisition of Inspec in 1998. Mr. Currie spent the first 15 years of his career with BP Chemicals in various technical and business management functions. Mr. Currie was elected to serve as a member of our board of directors due to his experience in the chemicals sector and his significant core business skills, including financial and strategic planning.

Jonny Ginns became a director in 2010. Mr. Ginns joined INEOS in 2006 as the Group General Counsel, having worked as an external lawyer for a number of years before that. He has experience across a wide range of fields, including mergers & acquisitions, disposals, joint ventures, litigation, finance and employee benefits, and acts as a director for a number of INEOS entities. Mr. Ginns was elected to serve as a member of our board of directors due to his significant core business skills, including financial and strategic planning.

Kyle Vann became a director in 2014. Mr. Vann is an Executive Advisor to CCMP since October 2012 and has provided consulting services to Entergy Corporation since 2005. He served for 25 years in various senior leadership positions at Koch Industries including as the Chief Executive Officer of Entergy-Koch LP, a joint venture between Koch Industries and Entergy Corporation. Before joining Koch Industries, Mr. Vann worked at Humble Oil and Refining Company (which later became part of Exxon) as a refinery engineer. Mr. Vann currently serves on the board of directors of EnLink Midstream Partners LP and Legacy Reserves LP. Mr. Vann was elected to serve as a member of our board of directors due to his extensive experience in exploration and production, midstream, energy services and trading.

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. Following this offering, a current copy of the code will be available on our website.

Upon consummation of this offering, we will have an audit committee and a compensation committee with the composition and responsibilities described below. Each committee will operate under a charter that will be approved by our board of directors. The composition of each committee will be effective upon the consummation of this offering. The members of each committee are appointed by the board of directors and serve until their successor is elected and qualified, unless they are earlier removed or resign. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues.

Because we will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange, we will not have a majority of independent directors, we will not have a nominating and corporate governance committee and our compensation committee will not be composed entirely of independent directors as defined under such standards. The responsibilities that would otherwise be undertaken by a nominating and corporate governance committee will be undertaken by the full board of directors, or, at its discretion, by a special committee established under the direction of the full board of directors. The controlled company exception does not modify the independence requirements for the audit committee and we intend to comply with the audit committee requirements of the Sarbanes-Oxley Act and the corporate governance standards of the New York Stock Exchange. Pursuant to such requirements, the audit committee must be composed of at least three members, a majority of whom must be independent within 90 days of the date of this prospectus, and all of whom must be independent within one year of the date of this prospectus.

The purpose of the audit committee will be set forth in the audit committee charter. The audit committee’s primary duties and responsibilities will be to:

Upon completion of this offering, the audit committee will consist of , and . is both an independent director and an “audit committee financial expert” within the meaning of Item

407 of Regulation S-K, and will serve as chair of the audit committee. Prior to the consummation of this offering, our board of directors will adopt a written charter under which the audit committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the New York Stock Exchange, will be available on our website.

The purpose of the compensation committee is to assist the board of directors in fulfilling its responsibilities relating to oversight of the compensation of our directors, executive officers and other employees and the administration of our benefits and equity-based compensation programs. The compensation committee reviews and recommends to our board of directors compensation plans, policies and programs and approves specific compensation levels for all executive officers. Upon completion of this offering, the compensation committee will consist of , and . Prior to the consummation of this offering, our board of directors will adopt a written charter under which the compensation committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the New York Stock Exchange, will be available on our website.

None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee. Upon the completion of this offering, our compensation committee will consist of and . Each of is employed by CCMP. For additional information regarding transactions between CCMP and its affiliates and us, see “Certain Relationships and Related Party Transactions.”

The following discussion and analysis of compensation arrangements should be read with the compensation tables and related disclosures set forth below. This discussion contains forward-looking statements that are based on our current plans and expectations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from the programs summarized in this discussion.

This section discusses the principles underlying the material components of our executive compensation program for our executive officers who are named in the Summary Compensation Table and the factors relevant to an analysis of these policies and decisions. For the year ended December 31, 2016, our “named executive officers” included our principal executive officer, our principal financial officer and our next three most highly compensated executive officers and our former principal executive officer.

Our executive compensation programs are determined and approved by the Compensation Committee. During 2016, the Compensation Committee was responsible for the oversight, implementation and administration of all of our executive compensation plans and programs. None of the named executive officers are members of the Compensation Committee or otherwise had any role in determining the compensation of the other named executive officers. However, the Compensation Committee does consider the recommendations of our Chief Executive Officer in setting compensation levels for our executive officers other than our Chief Executive Officer. The Compensation Committee determined all of the components of the compensation of our Chief Executive Officer.

We seek to implement our pay philosophy by providing a total compensation package which includes three main components: base salary, annual performance-based bonus and long-term equity-based awards. The Compensation Committee has taken into account individual performance and competitive market practice in sizing the compensation package for each named executive officer. In assessing market competitive practices, the Compensation Committee has historically relied on its experience and knowledge of general industry practices.

In conjunction with this offering, the Compensation Committee intends to make a more formal effort to compare executive officer compensation with market data. To that end, a compensation peer group has been formed, and is referenced in the discussion below. We will utilize a peer group as a tool in making compensation decisions for 2017, and expect to continue to utilize one when making compensation decisions going forward.

Base salary has been set with a view toward attracting and retaining executive officer talent.

Our annual incentive plan (the “PQIP”) is a broad based plan which pays according to the achievement of annual EBITDA goals, either on a company-wide or individual division basis.

Our long-term equity-based awards consist of stock options and restricted stock that are subject to time and/or performance vesting conditions. The long-term equity based awards made prior to this offering were made in amounts intended to be competitive for private equity backed ventures in the specialty chemicals space. The size of grants already made was not determined with reference to public company market data.

We believe that our executive compensation program is strongly aligned with the interests of our shareholders:

We intend to continue to promote share ownership and a strong pay for performance culture following this offering. We believe that this philosophy has been successful in motivating, retaining and incentivizing our named executive officers and providing value to our shareholders.

The Compensation Committee has engaged Compensation & Benefit Solutions (“CBS”) as the independent advisor to the Compensation Committee effective in 2017. The compensation consultant reviews the Company’s overall executive officer and director compensation in comparison to comparably-sized public companies in industries similar to the Company’s, helps the Compensation Committee identify the appropriate mix of compensation components for compensating our executive officers, and facilitates the Compensation Committee’s determination of our executive officers’ incentive based compensation. CBS does not provide any other services to the Company or our management or have any other direct or indirect business relationships with us or our management. The Compensation Committee has assessed the independence of CBS and concluded that its work does not raise any conflicts of interest.

Previously, the Compensation Committee did not utilize a peer group for purposes of determining executive compensation. In connection with this offering, the Compensation Committee selected a peer group of companies in the chemical and specialty chemical space with revenues ranging from approximately 50%-200% of the Company’s revenues. Compensation data drawn from the peer group will be a source of data which the Company will draw on in 2017.

In 2017, the Compensation Committee intends to review competitive compensation practices and a variety of other factors to confirm that the current structure of our cash compensation and equity-based awards is consistent with our compensation philosophy. In addition, in conjunction with this offering, the Compensation Committee has begun reviewing compensation data provided by CBS in order to determine the appropriate mix between cash compensation and equity-based awards and the appropriate size of equity-based awards in light of this offering, the position of the Company after giving effect to this offering and the need to retain the key leadership team following this offering.

Ongoing Role of the Compensation Committee and our Executive Officers in Setting Compensation

On an annual basis the Compensation Committee reviews compensation for the named executive officers in conjunction with performance discussions, salary increase recommendations, determination of bonus payouts, and deliberations regarding long term incentive grants. Going forward, the Compensation Committee will continue to conduct annual reviews of our executive compensation program to ensure that it remains aligned with our compensation philosophy.

Historically, our compensation has been highly individualized, the result of arm’s-length negotiations and based on a variety of informal factors including, our financial condition and available resources, our need for a particular position to be filled and the compensation levels of our other executive officers.

Going forward, we expect that our Compensation Committee will make decisions taking into account good governance best practices regarding compensation. This would include reliance on market data for the chemical and specialty chemical industry and the other considerations mentioned in this Compensation Discussion and Analysis.

For 2016, our compensation program for the named executive officers consisted of:

We provide an annual base salary to our named executive officers to induce talented executives to join or remain with our company, to compensate them for their services during the year and to provide them with a

stable source of income. In 2016, each of our named executive officers had an employment agreement or offer letter in place which set his minimum level of annual base salary. In certain cases current base salary has been raised from the minimums specified in the offer letters and employment agreements.

The base salary levels of continuing named executive officers are reviewed annually by our Compensation Committee to determine whether an adjustment is warranted. The Compensation Committee may take into account numerous factors in making its determination, none of which are dispositive or individually weighted, including our financial performance, the state of our industry and local economies in which we operate, the executive officer’s relative importance and responsibilities, the executive officer’s performance and periodic reference to comparable salaries paid to other executives of similar experience in our industry in general, based on the Compensation Committee’s expertise and knowledge of general industry practices. Commencing in 2017, the Compensation Committee will also take into account market data drawn from our peer group, referenced above.

The base salaries paid to our named executive officers during fiscal year 2016 are reported in the “Summary Compensation Table,” below. The annual base salaries in effect for each of our named executive officers as of year end 2015 and year end 2016 are as follows:

We provide our named executive officers with annual performance-based cash award opportunities linked to our annual financial performance. For 2016, the Compensation Committee chose adjusted EBITDA targets to measure our financial performance under the PQIP. For purposes of the PQIP, adjusted EBITDA is defined as earnings before interest and taxes with depreciation and amortization added back and adjusted for the following items: purchase accounting (or similar); losses (gains) on sale of or disposal of long-lived assets; foreign exchange(gains)/losses; revaluation of inventory, including LIFO adjustments; management advisory fees; transaction and other related costs; equity based and other non-cash compensation; restructuring, integration and business optimization expenses; and extraordinary, unusual and non-recurring expenses. These are referred to below as “EBITDA targets.”

The target annual performance-based cash award opportunity for each eligible executive was set as a percentage of annualized base salary (i.e., actual base salary paid during 2016). For 2016 the target award percentages were as follows:

The award payable for 2016 to Messrs. Gentilcore, Crews, and Biltz was based on the achievement of the EBITDA targets for each of the four divisions:

To the extent that a division achieved at least 95% of its annual EBITDA target, a threshold bonus of 25% of the targeted bonus attributable to that division was earned. To the extent that a division achieved at least 99% of its annual EBITDA target, the full portion of the executive’s target bonus attributable to that division was earned. Results between threshold and target were determined by linear interpolation.

To the extent that any of the divisions exceeded 100% of its annual EBIDTA target, an above-target pool was created. The above target pool was a dollar amount equal to 25% of the EBITDA above target, if any, in each of the four divisions.

Executives who were eligible to participate in the above target pool were allocated a portion of the above target pool as follows:

Depending on achieved performance levels, Messrs. Gentilcore, Crews and Biltz could earn zero bonus for below threshold performance, 25% of their target bonus opportunity for achievement of threshold performance, and 100% of their target bonus opportunity for achievement of 99% target performance, with no cap for the achievement of above target performance. Amounts earned based on achievement between threshold and target levels are determined by linear interpolation as described above. There is no adjustment of the objectively determined bonus payout based on individual performance. Actual bonus payouts were based on the below formula:

The award payable for 2016 for Mr. Randolph was based on the achievement of the Performance Chemicals division. To the extent that Performance Chemicals achieves at least 95% of its annual EBITDA target, a threshold bonus of 25% of the targeted bonus was earned. To the extent that Performance Chemicals achieves at least 99% of its annual EBITDA target, the full target bonus was paid. Results between threshold and target were determined by linear interpolation.

To the extent that Performance Chemicals exceeded its EBITDA target, an above target pool was created as determined in the manner described above. The above target pool was allocated to Mr. Randolph based on the dollar value of his target bonus divided by the dollar value of all participants’ target bonuses in the Performance Chemicals group times the value of the above target pool. There is no cap on the percentage of target bonus opportunity for the achievement of above-target performance.

The award payable for 2016 for Mr. Ferrall was based on the achievement of Refining Services (formerly Eco Services). To the extent that Refining Services achieved at least 95% of its annual EBITDA target, a threshold bonus of 25% of the targeted bonus was earned. To the extent that Refining Services achieved at least 99% of its annual EBITDA target, the full target bonus was paid. Results between threshold and target were determined by linear interpolation.

To the extent that Refining Services exceeded 100% of its EBIDTA target, an above target pool was created as determined in the manner described above. The above target pool was allocated to Mr. Ferrall based on the dollar value of his target bonus divided by the dollar value of all participants’ target bonuses in Refining Services times the value of the above target pool. There is no cap on the percentage of target bonus opportunity for the achievement of above-target performance.

The award payable for 2016 for Mr. Kolberg was based on the achievement of the Catalyst division. To the extent that Catalyst achieved at least 95% of its annual EBITDA target, a threshold bonus of 25% of the targeted bonus was earned. To the extent that Catalyst achieved at least 99% of its annual EBITDA target, the full target bonus was paid. Results between threshold and target were determined by linear interpolation.

To the extent that Catalyst exceeded 100% of its EBIDTA target, an above target pool was created as determined in the manner described above. The above target pool was allocated to Mr. Kolberg based on the dollar value of his target bonus divided by the dollar value of all participants’ target bonuses in the Catalyst group times the value of the above target pool. There is no cap on the percentage of target bonus opportunity for the achievement of above-target performance.

Actual bonus payouts for Messrs. Randolph, Ferrall and Kolberg were based on the below formula:

Annual performance award targets were based upon pro forma adjusted EBITDA for 2016 as set forth below. Actual pro forma adjusted EBITDA for 2016 is also set forth below.

Actual bonus payouts for each of our executive officers by business division were as follows:

Commencing in 2017, the PQIP will be structured to reflect PQ’s two operating segments:

For Messrs. Gentilcore and Crews, target annual performance-based cash incentive opportunities will be based on the achievement of the annual EBITDA targets for the two operating segments:

To the extent the Company exceeds its EBITDA target, an above target pool will be created, as described above for 2016 bonuses but determined based solely on achievement of the Company’s EBITDA target. An individual executive will be allocated an amount equal to the dollar value of his or her target bonus as a percentage of the dollar amount of all participants’ target bonuses, multiplied by the amount in the pool.

For Messrs. Randolph and Ferrall, target annual performance-based cash incentive opportunity will be based on the achievement of the EBITDA target for their respective operating segment:

To the extent the Company exceeds its EBITDA target, Messrs. Randolph and Ferrall will be eligible to receive amounts greater than their target bonuses in the same fashion as Messrs. Gentilcore and Crews.

Our equity incentive awards currently consist of restricted stock in the form of Class A Shares, options on Class A Shares, and restricted stock in the form of Class B Shares. Historically, executive officers have received other classes of equity, but over time all of those have been converted into restricted stock in the form of Class A Shares, options on Class A Shares, or restricted stock in the form of Class B Shares.

In keeping with our pay for performance culture, the options and restricted stock are partially time vested, partially performance vested and partially both time and performance vested. The terms of the performance vesting are described in more detail below.

Our equity incentive awards have typically been made to our named executive officers at the time of hire, promotion into a new position, or as consideration for a change in the terms of an employment contract or offer letter. In addition to these, awards have been made for other specific reasons, including employment contract or offer letter provisions which provide for grants subsequent to hire.

The time vested restricted stock and stock options vest ratably over periods ranging from three to four years, subject to accelerated vesting upon a change in control. The performance based stock options and performance vested restricted stock currently outstanding are all unvested and will only vest upon the occurrence of either: (1) the receipt of aggregate net proceeds by investment funds affiliated with CCMP with respect to their shares of capital stock of the Company, when divided by their equity investment in the Company, resulting in a quotient equal to or greater than two; or (2) from and after the date of the consummation of this offering, the achievement with respect to shares of common stock of an average closing trading price equal or exceeding, in any 10 trading day period, the lowest amount which when multiplied by the number of shares of common stock then held by investment funds affiliated with CCMP and added to the aggregate net proceeds received by investment funds affiliated with CCMP with respect to their shares of capital stock of the Company would yield a quotient of equal or greater than two when divided by the investment funds’ affiliated with CCMP equity investment in the Company. The quotients described under (1) and (2) above are referred to in this Compensation Discussion & Analysis as the “MOI Target.”

Unvested equity awards at the time of this offering will continue to vest pursuant to their original terms following this offering, after giving effect to any conversion of the underlying common stock as a result of the Reclassification described above.

All of our named executive officers currently own vested and unvested equity awards from grants made in and prior to 2016 in the form of time and performance vested restricted stock and options.

Long term equity based incentive awards were made in 2016 to Mr. Gentilcore, in connection with his joining the Company. Mr. Gentilcore’s 2016 equity grants were as follows:

Long term equity based incentive awards were made to Mr. Crews in 2016, in connection with the one year anniversary of his employment:

Long term equity based incentive awards were made to Mr. Randolph in 2016, in connection with a corporate reorganization tied to the merger of the Company with Refining Services.

Long term equity based incentive awards were made to Mr. Ferrall in 2016, in connection with a corporate reorganization tied to the merger of the Company with Refining Services.

Long term equity based incentive awards were made to Mr. Kolberg in 2016, in connection with the start of his employment, in accordance with his offer letter.

Long term equity based incentive awards were made to Mr. Biltz in 2016, in connection with the one year anniversary of his employment, per his offer letter. However, as noted below, all of these awards, other than 1,555 of the time vesting restricted Class B shares, were forfeited as a result of Mr. Biltz’s termination of employment and/or the failure of the performance vesting targets to be achieved.

Long term equity based incentive awards were made to Mr. Gentilcore in 2017, to correct a shortfall in his initial new hire grants (the grant date value of which had been initially determined using a target value that assumed a lower base salary than Mr. Gentilcore actually receives):

We expect to adopt a schedule of regular periodic grants once our shares become publicly traded. We anticipate awarding a significant portion of the annual pay mix in equity incentive awards for our executive officers, in a manner that is consistent with our compensation philosophy and competitive with our peer group practices.

We provide our named executive officers with certain executive benefits that the Compensation Committee believes are reasonable and in the best interests of the company and our shareholders. These are described in the footnotes to our 2016 Summary Compensation Table below. Consistent with our compensation philosophy, and subject to any revisions discussed below, we currently intend to continue to maintain our current benefits for our named executive officers, including executive physicals, life insurance and other benefits described in the footnotes below. The Compensation Committee, in its discretion, may revise, amend or add to an officer’s executive benefits if it deems it advisable. We believe these benefits are generally equivalent to benefits provided by comparable companies based on our expertise and knowledge of general industry practices.

Our named executive officers have the option to participate in various employee welfare benefit programs, including medical, dental and life insurance benefits. These benefit programs are generally available to all employees.

The company’s business needs require it on occasion to relocate certain employees. To meet this need, we may, on a case by case basis, cover certain expenses, including temporary housing, relocation, living and travel expenses. Relocation payments made in 2016 are described in the footnotes to our 2016 Summary Compensation Table below.

In 2017, the Company continued to maintain employment contracts with certain of its named executive officers that provide benefits upon a termination of employment.

As of December 31, 2016, the following severance terms were in place for each of the named executive officers other than Mr. Biltz:

Mr. Biltz received certain payments and benefits upon his stepping down and termination of employment in 2016. In accordance with the terms of his offer letter, and in consideration of Mr. Biltz entering into a release and waiver of claims, and subject to his compliance with the restrictive covenants set forth in his offer letter, the Company agreed to pay or provide Mr. Biltz the following: (i) base salary of $750,000 plus target bonus of $750,000, plus health benefits at active employee contribution rates in installments over a two year period beginning August 1, 2016 and (ii) a pro-rata amount of the annual performance bonus which would have been earned in 2016 (amount actually earned equal to $474,101). Pursuant to his separation agreement, in exchange for Mr. Biltz entering into a release and waiver of claims, the Company agreed not to repurchase Mr. Biltz’s 17,111 vested restricted Class B shares and the 18,668 Class B shares purchased by Mr. Biltz in 2015.

At the time of Mr. Biltz’s separation, in accordance with the terms of Mr. Biltz’s equity awards, Mr. Biltz had the right to vest in: (a) 37,125 Class A options provided the MOI Target was achieved on or before the six month anniversary of his last work date of June 24, 2016 and (b) 15,557 Class B restricted shares, provided the MOI Target was achieved on or before the six month anniversary of his separation date of July 31, 2016. The MOI Target for these options and shares was not met on the specified dates, and those shares and options were forfeited. In addition, in accordance with the terms of Mr. Biltz’s equity awards, at the time of his termination of employment, he was entitled to accelerated vesting of those time-based restricted shares that would have vested during the two year period following his separation date, which resulted in vesting of 10,371 of his unvested time vesting Class B restricted shares granted in 2015 and 1,555 of his unvested time vesting Class B restricted shares granted in 2016.

In determining which elements of compensation are to be paid, and how they are weighted, on a going forward basis, we expect to take into account whether a particular form of compensation will be deductible under Section 162(m) of the Code. Section 162(m) generally limits the deductibility of compensation paid to our named executive officers (other than our Chief Financial Officer) to $1 million during any fiscal year unless such compensation is “performance-based” under Section 162(m). However, under a Section 162(m) transition rule for compensation plans or agreements of corporations which are privately held and which become publicly held in an initial public offering, compensation paid under a plan or agreement that existed prior to the initial public offering, will not be subject to Section 162(m) until the earliest of (1) the expiration of the plan or agreement, (2) a material modification of the plan or agreement, (3) the issuance of all employer stock and other compensation that has been allocated under the plan, or (4) the first meeting of shareholders at which directors are to be elected that occurs after the close of the third calendar year following the year of the initial public offering, (the “Transition Date”). After the Transition Date, rights or awards granted under the plan, other than options and stock appreciation rights, will not qualify as “performance-based compensation” for purposes of Section 162(m) unless such rights or awards are granted or vest upon pre-established objective performance goals and certain other requirements are met.

Going forward, our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive program (including future equity awards and annual bonuses granted under the PQIP granted to our named executive officers as described above) should satisfy the requirements for exemption from the $1 million deduction limitation. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance-based and consistent with the goals of the company and its shareholders.

The following table sets forth certain information with respect to compensation earned by or paid to our named executive officers for the year ended December 31, 2016.

The following table summarizes plan-based awards granted to our named executive officers for the year ended December 31, 2016.

The following table sets forth certain information with respect to outstanding equity awards held by our named executive officers as of December 31, 2016.

We maintain a tax-qualified 401(k) defined contribution plan in which substantially all of our full-time U.S. employees, including our named executive officers, are eligible to participate. We currently provide an employer contribution equal to 4% of qualifying earnings and an employer matching contribution equal to 50% of a participant’s contributions up to 6% of qualifying earnings, subject to limits established by the Code. In addition, our named executive officers participate in the PQ Corporation Non-Qualified Personal Retirement Account Excess Savings Plan, an excess benefit plan designed to provide supplemental Personal Retirement Account contributions that cannot be provided under our 401(k) plan due to Code limits. We believe these plans provide our named executive officers with an opportunity for tax-efficient savings and long-term financial security.

All of our named executive officers participate in the PQ Corporation Non-Qualified Personal Retirement Account Excess Savings Plan, or the PRA SERP. The PRA SERP is an excess benefit plan designed to provide supplemental Personal Retirement Account contributions that cannot be provided under the PQ Corporation Savings Plan due to Code limits. The plan is administered by a committee appointed by our board of directors.

Contributions - There are no executive contributions under the PRA SERP. Each plan year, we credit to participant accounts under the PRA SERP the excess of (a) the amount that would have been credited for that year to the participant’s Personal Retirement Account under our 401(k) plan disregarding the dollar limits imposed by the Code for maximum annual compensation over (b) the amount that was actually so credited. The plan administrator may from time to time also elect to make special contributions to participant accounts.

Earning and losses - Participant accounts are deemed to be invested in Vanguard target retirement funds based on a participant’s age. At the end of each calendar quarter, we adjust participant accounts with earnings/losses equal to that calendar quarter’s return for the applicable target retirement fund.

Vesting and distributions - Participants vest in their accounts under the PRA SERP upon completion of three years of service or, if earlier, death or disability or a change in control. The value of a participant’s vested account balance is paid in a lump sum on the first to occur of the participant’s separation from service or disability, provided that distributions to “key employees” within the meaning of Section 416(i) of the Code as of the date of the participant’s separation from service will not be made until six (6) months after the participant’s separation from service or, if earlier, the participant’s death.

The following table provides information regarding participation by our named executive officers in the PRA SERP during the year ended December 31, 2016.

Pursuant to the terms of their respective offer letter, employment agreement or equity award agreement, our NEOs would have been entitled to the following severance payments and benefits in connection with a termination of his employment and/or the occurrence of a change in control on December 31, 2016.

During 2016, our independent directors received cash compensation for their services as directors. Certain directors were also granted stock options. The following table sets forth certain information with respect to cash compensation and stock options granted to our directors in 2016.

In 2016, each of our independent directors was paid an annual cash fee of $50,000, paid in equal quarterly installments, for his service on our board of directors. Mr. Coxon received an extra $10,000 retainer in respect of his position as chair of the Health, Safety and Environment Committee of our board of directors.

We do not pay any additional remuneration for director service to any of our directors who are either our officers, namely Mr. Gentilcore, or who are employees of CCMP or employees of INEOS. However, all directors are reimbursed for reasonable travel and lodging expenses incurred to attend meetings of our board of directors or a committee thereof.

The PQ Group Holdings, Inc. Stock Incentive Plan (the “2016 Plan”) authorizes our Compensation Committee to grant options, stock appreciation rights, restricted shares or other share based awards to selected employees. The 2016 Plan is administered by the Compensation Committee of the board of directors. The Compensation Committee determines the recipients of awards, the types of awards to be granted and the applicable terms, provisions, limitations and performance requirements of such awards. The Compensation Committee also has the authority to conclusively interpret the 2016 Plan and any award agreements under the plan.

The Company has reserved 908,189 of our shares of Class A common stock for issuance pursuant to the 2016 Plan. To the extent any award under the 2016 Plan is cancelled, terminated or forfeited, then the number of shares of common stock covered by the award so cancelled, terminated or forfeited will again be available for awards under the 2016 Plan.

The number of shares of common stock available for grants or subject to outstanding awards shall be proportionally adjusted in the event of any dividend payable in capital stock of the Company, and any stock split, share combination, cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other similar event.

The Compensation Committee, in its sole discretion, may determine that an award will be immediately vested in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its grant date, or until the occurrence of one or more specified events, subject in any case to the terms of the 2016

Plan. The Compensation Committee may impose on any award such additional terms and conditions as the Compensation Committee determines, including terms requiring forfeiture of awards in the event of a participant’s termination of service.

The Compensation Committee generally may terminate, suspend or amend the 2016 Plan in a manner that does not adversely affect outstanding awards at any time. The 2016 Plan will expire on September 28, 2024, unless earlier terminated, and thereafter will continue to govern outstanding awards granted under it.

We anticipate that at the time of, or shortly after, completion of this offering, we will make changes to certain of our compensation arrangements, including those covering our named executive officers and members of our board of directors. We expect to adopt a 2017 Equity Incentive Plan prior to the completion of this offering.

In December 2014, PQ Holdings and PQ Corporation entered into a consulting agreement with CCMP, pursuant to which CCMP agreed to provide PQ Holdings and its subsidiaries with certain financial advisory, consulting and other services in exchange for its pro rata portion of a $1.25 million quarterly consulting fee to be shared with INEOS AG pursuant to the INEOS AG consulting agreement described below under “—INEOS Consulting Agreement,” and the reimbursement of reasonable out-of-pocket expenses incurred in connection with the performance of services under the agreement. The agreement also provides for payment to CCMP of a transaction fee to be shared on a pro rata basis with INEOS AG in connection with any merger, recapitalization, reorganization or other similar transaction in an amount calculated based on the total transaction value.

We paid advisory fee payments totaling $5.8 million during the year ended December 31, 2016 and reimbursement payments totaling $0.2 million during each of the years ended December 31, 2016 and 2015.

The consulting agreement provides for customary exculpation and indemnification provisions in favor of CCMP and its affiliates. The agreement is terminable by CCMP at any time upon 30 days prior written notice. In connection with this offering, the consulting agreement will be terminated in exchange for a payment to CCMP of accrued and unpaid fees in the amount of approximately $ million. The indemnification and exculpation provisions in favor of CCMP and its affiliates will survive such termination.

In December 2014, PQ Holdings and PQ Corporation entered into an amended and restated consulting agreement with INEOS AG, an affiliate of INEOS, pursuant to which INEOS AG agreed to provide PQ Holdings and its subsidiaries with certain financial advisory, consulting and other services in exchange for its pro rata portion of a $1.25 million quarterly consulting fee to be shared with CCMP pursuant to the CCMP consulting agreement described above under “—CCMP Consulting Agreement,” and the reimbursement of reasonable out-of-pocket expenses incurred in connection with the performance of services under the agreement. The agreement also provides for payment to INEOS AG of a transaction fee to be shared on a pro rata basis with CCMP in connection with any merger, recapitalization, reorganization or other similar transaction in an amount calculated based on the total transaction value. The amended and restated consulting agreement with INEOS AG amended and restated the prior consulting agreement with INEOS Capital Partners, an affiliate of INEOS, which was entered into in July 2008 on substantially similar terms.

We paid advisory fees totaling $2.2 million, $2.3 million, $2.5 million and $0.6 million during the years ended December 31, 2016, 2015 and 2014 and the three months ended March 31, 2017, respectively.

The amended and restated consulting agreement provides for customary exculpation and indemnification provisions in favor of INEOS AG and its affiliates. The agreement is terminable by INEOS AG at any time upon 30 days prior written notice. In connection with this offering, the amended and restated consulting agreement will be terminated in exchange for a payment to INEOS AG of accrued and unpaid fees in the amount of approximately $ million. The indemnification and exculpation provisions in favor of INEOS AG and its affiliates will survive such termination.

In connection with the Business Combination, in May 2016, we entered into an amended and restated stockholders agreement with certain stockholders, including investments funds affiliated with CCMP, INEOS,

our directors and officers who hold shares of our common stock and certain other investors relating to rights and obligations with respect to ownership of our common stock, including the designation of certain director nominees, certain corporate governance rights, drag along rights, tag along rights, preemptive rights, demand and piggyback registration rights and related lockup obligations. In connection with the consummation of this offering, we intend to further amend and restate the stockholders agreement. We expect that, as so further amended and restated, the stockholders agreement will provide affiliates of CCMP with certain demand registration rights, including shelf registration rights, following the expiration of the 180-day lockup period in respect of shares of our common stock held by them and will also provide that, in the event that we register additional shares of our common stock for sale to the public following completion of this offering, we will be required to give notice of such registration to such affiliates of CCMP and certain other stockholders, and, subject to certain limitations, include shares of our common stock held by them in such registration. In addition, we will be required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares described above and to indemnify such stockholders and certain other persons against certain liabilities that may arise under the Securities Act in connection with any such offering and sale of our shares.

In connection with the offering by PQ Corporation of $525.0 million aggregate principal amount of Floating Rate Senior Unsecured Notes due 2022 in May 2016, Andrew Currie, a member of our board of directors, purchased $4 million in principal amount of such notes. Interest accrues on the notes at an annual rate equal to three-month LIBOR plus 10.75%, with a 1.0% LIBOR floor, payable and reset quarterly. Mr. Currie received interest payments in respect of the notes totaling $0.3 million and $0.1 million during the year ended December 31, 2016 and the three months ended March 31, 2017, respectively, and has not received any repayment in respect of the principal amount of such notes. See “Description of Certain Indebtedness—Floating Rate Senior Unsecured Notes due 2022.”

In December 2014, Eco Services Group Holdings LLC, Eco Services Intermediate Holdings LLC and Eco (collectively, the “Eco Entities”) entered into an advisory services and monitoring agreement with CCMP and Boyce Eco Investment LLC (“Boyce Eco”). Certain of our executive officers are members of Boyce Eco. Pursuant to the terms of the agreement, the Eco Entities made a one-time payment of $8 million and $1.6 million to each of CCMP and Boyce Eco, respectively, in return for advisory services performed in connection with the 2014 Acquisition. Pursuant to a payment direction and subscription agreement, in lieu of the Eco Entities making the $1.6 million payment to Boyce Eco, Boyce Eco agreed to contribute the $1.6 million transaction fee to the capital of Eco Services Group Holdings LLC. Eco Services Group Holdings LLC contributed this fee to Eco Services Intermediate Holdings LLC, who in turn contributed the amount to Eco, increasing Eco’s additional paid-in capital by $1.6 million.

In addition, CCMP agreed to provide the Eco Entities with certain financial advisory services in exchange for an annual consulting fee of $0.5 million and the reimbursement of reasonable out-of-pocket expenses incurred in connection with the performance of services under the agreement. The agreement provided for customary exculpation and indemnification provisions in favor of CCMP, Boyce Eco and each of their respective affiliates. The agreement terminated pursuant to its terms in May 2016 in connection with the Business Combination. The indemnification and exculpation provisions in favor of CCMP, Boyce Eco and each of their respective affiliates survived such termination.

CCMP received consulting fees totaling $0.3 million and $0.5 million during the years ended December 31, 2016 and 2015, respectively.

In July 2008, PQ Corporation entered into a purchase agreement with certain affiliates of INEOS pursuant to which PQ Corporation acquired certain assets and liabilities from, and certain stock of, the entities that comprised INEOS Silicas. In connection with such acquisition, PQ Corporation agreed to make certain future payments to INEOS Silicas Limited, an affiliate of INEOS, in an amount based on PQ Corporation’s U.K. taxable results. PQ Corporation paid INEOS Silicas Limited $2.3 million, $2.3 million, $1.1 million and $1.6 million during each of the years ended December 31, 2016, 2015 and 2014 and the three months ended March 31, 2017, respectively. INEOS Silicas Limited is entitled to additional payments totaling $0.3 million in the future.

In connection with this offering, we will adopt a policy with respect to the review, approval and ratification of related party transactions. Under the policy, the audit committee will be responsible for reviewing and approving related party transactions. The policy will apply to transactions, arrangements and relationships (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which the aggregate amount involved will, or may be expected to, exceed $120,000 with respect to any fiscal year, and where we (or one of our subsidiaries) are a participant and in which a related party has or will have a direct or indirect material interest. In the course of reviewing potential related party transactions, the audit committee will consider the nature of the related party’s interest in the transaction; the presence of standard prices, rates or charges or terms otherwise consistent with arms-length dealings with unrelated third parties; the materiality of the transaction to each party; the reasons for the company entering into the transaction with the related party; the potential effect of the transaction on the status of a director as an independent, outside or disinterested director or committee member; and any other factors the audit committee may deem relevant.

The following table shows information as of , 2017 regarding the beneficial ownership of our common stock (1) prior to this offering and (2) as adjusted to give effect to this offering by:

Unless otherwise indicated below, the address for each listed director, officer and stockholder is c/o PQ Group Holdings Inc., 300 Lindenwood Drive, Valleybrooke Corporate Center, Malvern, Pennsylvania 19355. Beneficial ownership has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after , 2017 through the exercise of any option, warrant or other right. For purposes of calculating each person’s or group’s percentage ownership, shares of common stock issuable pursuant to options exercisable within 60 days after , 2017 are included as outstanding and beneficially owned for that person or group but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner. To our knowledge, except under applicable community property laws or as otherwise indicated, the persons named in the table have sole voting and sole investment control with respect to all shares shown as beneficially owned. For more information regarding the terms of our common stock, see “Description of Capital Stock.” For more information regarding our relationship with certain of the persons named below, see “Certain Relationships and Related Party Transactions.”

The numbers listed below are based on shares of our common stock outstanding as of , 2017 after giving effect to the Reclassification as if it had occurred on that date. As of , 2017, prior to giving effect to the Reclassification, we had outstanding shares of Class A common stock and shares of Class B common stock. The actual number of shares of common stock to be issued to each holder of Class B common stock in the Reclassification is subject to change based on any changes to the initial public offering price. See “The Reclassification.”

The following is a summary of certain of our indebtedness that is currently outstanding. The following descriptions do not purport to be complete and are qualified in their entirety by reference to the agreements and related documents referred to herein, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part, and may be obtained as described under “Where You Can Find More Information” in this prospectus.

In connection with the Business Combination, on May 4, 2016, PQ Corporation entered into (a) a $200.0 million asset-based lending facility (the “ABL Facility”) with Citibank, N.A., as administrative agent and collateral agent (the “ABL Agent”), and the lenders from time to time party thereto and (b) a $1,200.0 million term loan facility (the “Term Loan Facility” and, together with the “ABL Facility,” the “Senior Secured Credit Facilities”) consisting of a U.S. dollar-denominated tranche in the amount of $900.0 million and a Euro-denominated tranche in the amount of approximately $300.0 million (or €265.0 million) with Credit Suisse AG, Cayman Island Branch, as administrative agent and collateral agent (the “Term Loan Agent”), and the lenders from time to time party thereto. On November 14, 2016, PQ Corporation entered into a repricing amendment to the Term Loan Facility, which increased the U.S. dollar-denominated tranche to a total amount of $927.8 million and the Euro-denominated tranche to a total amount of €283.3 million.

ABL Facility. The ABL Facility consists of a $150.0 million U.S. revolving credit facility available in U.S. dollars and such other currencies acceptable to the revolving lenders (the “U.S. ABL Facility”), a $10.0 million Canadian revolving credit facility available in Canadian dollars, U.S. dollars and such other currencies acceptable to the revolving lenders (the “Canadian ABL Facility”) and a $40.0 million UK and Netherlands revolving credit facility available in Euros, Pounds Sterling, U.S. dollars and such other currencies acceptable to the revolving lenders (the “European ABL Facility”), in each case, providing for loans and letters of credit thereunder and subject to certain borrowing base limits. Proceeds from the ABL Facility are available to finance the working capital needs and other general corporate purposes of PQ Corporation and its subsidiaries, including investments, restricted payments and any other purpose not prohibited thereby. A portion of the ABL Facility not to exceed $60 million is available for the issuance of letters of credit.

The ABL Facility provides the ABL Agent customary discretion to impose reserves or availability blocks, which could materially impair the amount of borrowings that would otherwise be available and may require repayment of certain amounts outstanding under the ABL Facility.

The ABL Facility provides that PQ Corporation may request increases to the ABL Facility in an aggregate principal amount not to exceed (w) the greater of (1) $50 million and (2) the amount by which the borrowing base exceeds the aggregate commitments then outstanding, so long as the total net leverage ratio does not exceed 5.80:1.00 after giving pro forma effect to any such increase plus (x) in the case of any incremental facilities that serve to effectively replace any commitment under the ABL Facility that is terminated under the “yank-a-bank” provisions, an amount equal to the portion of the relevant terminated commitment plus (y) the amount of any permanent voluntary reduction of the commitments under the ABL Facility and/or any incremental revolving facility. The lenders are not obligated to provide such additional commitments, and any increase in commitments is subject to customary conditions precedent.

Additional borrowings under the ABL Facility will be subject to the satisfaction of customary conditions, including absence of events of default and availability.

Term Loan Facility. The Term Loan Facility provides that PQ Corporation may (a) request increases to the Term Loan Facility and add one or more incremental term loan facilities and (b) add one or more incremental

cash-flow revolving facilities and increase commitments under any then existing incremental cash-flow revolving facilities in an aggregate principal amount not to exceed (w) $200 million less any other incremental borrowings incurred in reliance on that amount, plus (x) in the case of any incremental facilities that serve to effectively extend the maturity of any term loans or commitments or effectively replace any incremental cash-flow revolving facility, an amount equal to the reductions in the term loans or commitments to be replaced thereby or the terminated incremental cash-flow revolving facility, plus (y) the amount of certain voluntary prepayment of any term loans and any permanent reduction of the commitments under any incremental cash-flow revolving facility, plus (z) an unlimited amount so long as (1) if such incremental indebtedness is secured by a lien on the collateral on a pari passu basis with the Senior Secured Credit Facilities, we are in compliance on a pro forma basis with a senior secured net leverage ratio of no greater than 3.95:1.00, (2) if such incremental indebtedness is secured by a lien on the collateral by a lien that is junior to the lien securing the Senior Secured Credit Facilities, we are in compliance on a pro forma basis with a secured net leverage ratio of no greater than 4.70:1.00 or (3) if such incremental indebtedness is unsecured, we are in compliance on a pro forma basis with a total net leverage ratio of no greater than 5.80:1.00. The lenders are not obligated to provide such additional commitments, and the incurrence of any incremental indebtedness is subject to customary conditions precedent.

ABL Facility: The interest rate applicable to loans under the ABL Facility denominated in (a) U.S. dollars is equal to an applicable interest rate margin, plus, at our option, either (1) a base rate determined by the reference to the highest of (A) the prime commercial lending rate publicly announced by the ABL Agent as the “prime rate” in effect on such day, (B) the federal funds effective rate, plus 0.50%, and (C) the one-month LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits, plus 1.00%, or (2) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the specified interest period, as adjusted for certain statutory reserve requirements, (b) Canadian dollars is equal to an applicable interest rate margin, plus, at our option, either (1) the average rate applicable to Canadian dollar bankers’ acceptances (the “B/A Equivalent Rate”) or (2) the highest of (A) the prime commercial lending rate publicly announced by the ABL Agent in Canada as its “prime rate” as in effect on such day or (B) one-month B/A Equivalent Rate plus 1.0% per annum, or (c) Euros or Pounds Sterling is equal to an applicable interest rate margin, plus a LIBOR rate determined by reference to the costs of funds for the applicable currency deposits for the specified interest period, as adjusted for certain statutory reserve requirements.

A commitment fee is charged on the average daily unused portion of the ABL Facility, adjusted quarterly, of (a) 0.375% per annum if the average daily unused portion of the non-defaulting revolving lenders commitments is less than 50% or (b) 0.25% per annum if the average daily unused portion of the non-defaulting revolving lenders commitments is equal to or greater than 50%.

Term Loan Facility. Borrowings under the Term Loan Facility (x) denominated in U.S. dollars bear interest at a rate per annum equal to an applicable interest rate margin, plus, at our option (1) a base rate determined by reference to the highest of (A) the federal funds effective rate in effect on such day, plus 0.50%, (B) the one-month LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits, plus 1.00%, (C) the prime commercial lending rate publicly announced by the Term Loan Agent as the “prime rate” in effect and (D) 2.00% (solely with respect to initial term loans) or (2) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits, as adjusted for certain statutory reserve requirements, subject to a LIBOR rate floor and (y) denominated in euros bear interest at a rate per annum equal to an applicable interest rate margin, plus, at our option (1) a base rate determined by reference to the highest of (A) the federal funds effective rate in effect on such day plus, 0.50%, (B) the one-month LIBOR rate determined by reference to the cost of funds for euro deposits, plus 1.00%, (C) the prime commercial lending rate publicly announced by the Term Loan Agent as the “prime rate” in effect and (D) 2.00% (solely with respect to initial term loans) or (2) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits, as adjusted for certain statutory reserve requirements, subject to a LIBOR rate floor.

ABL Facility. If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and outstanding letters of credit under either the U.S. ABL Facility, the Canadian ABL Facility or the European ABL Facility exceeds the lesser of (i) the applicable commitment amount under such facility and (ii) the then applicable borrowing base for such facility, PQ Corporation must repay the outstanding loans under such facility (and cash collateralize outstanding letters of credit) in an aggregate amount equal to such excess. If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and outstanding letters of credit under the ABL Facility exceeds the lesser of (i) the sum of all commitments under the ABL Facility and (ii) the then-applicable U.S. Borrowing Base plus the then-applicable Canadian Borrowing Base plus the then-applicable European Borrowing Base, PQ Corporation must repay the outstanding loans under such facility (and cash collateralize outstanding letters of credit) in an aggregate amount equal to such excess.

Term Loan Facility. The Term Loan Facility requires PQ Corporation to prepay, subject to certain exceptions, outstanding term loans with:

We may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the Senior Secured Credit Facilities at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR borrowings.

All outstanding revolving loans under the ABL Facility are due and payable in full upon the expiration of its five-year term. In the case of the term loans borrowed under the Term Loan Facility, PQ Corporation is required to make scheduled quarterly payments equal to 0.25% of the original principal amount of the term loans made on the closing date of the Business Combination, with the balance due on the 6.5 year anniversary of such closing date, which date may be accelerated to six months prior to the maturity date of the 8.5% Senior Notes (as defined below) unless the 8.5% Senior Notes have been refinanced or repaid prior to such time.

All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed jointly and severally on a senior basis by: (i) in the case of the Term Loan Facility, PQ Holdings, certain of PQ Corporation’s existing and future direct and indirect wholly-owned domestic subsidiaries (collectively, the “U.S. Guarantors”); (ii) in the case of the U.S. ABL Facility, the U.S. Guarantors (other than any such person in its capacity as a primary obligor in respect of the relevant obligation); (iii) in the case of the Canadian ABL Facility, by each of the Canadian ABL Facility borrower’s wholly-owned Canadian subsidiaries (subject to customary exceptions), PQ Corporation and the U.S. Guarantors; and (iv) in the case of the European ABL Facility, by each of the European ABL Facility borrower’s wholly-owned subsidiaries organized under the laws of the Netherlands or the United Kingdom (subject to customary exceptions), PQ Corporation and the U.S. Guarantors.

All obligations under the Senior Secured Credit Facilities, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of the borrowers under each such facility and the assets of the respective guarantors under each such facility.

The assets securing the U.S. ABL Facility, the Canadian ABL Facility and the European ABL Facility (the “ABL Collateral”) include a first priority (subject to permitted liens and other exceptions) security interest in personal property consisting of accounts receivable, inventory, cash and cash equivalents (other than cash and cash equivalents constituting proceeds of Term Loan Collateral (as defined below), cash collateral subject to certain permitted liens or certain identifiable tax and trust funds), deposit accounts and securities accounts (other than any deposit account or securities account established solely to hold identified proceeds of Term Loan Collateral), and general intangibles, instruments, chattel paper, documents, commercial tort claims, letter of credit rights and supporting obligations related to the foregoing (other than capital stock and intellectual property), intellectual property to the extent attached to or necessary to sell the foregoing and books and records to the extent related to the foregoing, and, in each case, proceeds thereof, subject to customary exceptions.

The Term Loan Facility is secured by a second priority lien on and security interest in the ABL Collateral securing the U.S. ABL Facility.

The assets securing the Term Loan Facility (the “Term Loan Collateral”) include a first priority security interest (subject to permitted liens and other exceptions) on 100% of the present and future capital stock in PQ Corporation and the subsidiary guarantors’ direct subsidiaries (but limited in the case of the voting capital stock of any first-tier foreign subsidiary and any direct or indirect domestic subsidiary of which substantially all of its assets consist of the equity and/or debt of one or more direct or indirect foreign subsidiaries, to 65% of such capital stock), substantially all of PQ Corporation’s and the subsidiary guarantors’ material owned real property and equipment and all other personal property of PQ Corporation and the subsidiary guarantors to the extent not constituting collateral securing the ABL Facility on a first priority basis, including, without limitation, contracts (other than those relating to collateral securing the ABL Facility on a first priority basis), patents, copyrights, trademarks, other general intangibles, intercompany notes and proceeds of the foregoing, subject to customary exceptions.

The ABL Facility is secured by a second priority lien on and security interest in the Term Loan Collateral.

The Senior Secured Credit Facilities contain a number of restrictive covenants that, among other things and subject to certain exceptions, restrict the ability of PQ Corporation and the ability of its subsidiaries to:

PQ Holdings is also subject to a “passive holding company” covenant under the Senior Secured Credit Facilities.

In addition, the ABL Facility contains a financial covenant requiring PQ Corporation to maintain a 1.0:1.0 minimum trailing four quarter fixed charge coverage ratio, to be tested at any time that either (a) excess availability under the ABL Facility decreases to a level below the greater of 10% of the Line Cap (as defined below) and $20 million or (b) availability under the U.S. ABL Facility is less than $15 million, until the date on which (x) excess availability exceeds the greater of 10% of the Line Cap and $20 million for 30 consecutive days and (y) availability under the U.S. ABL Facility for each day over a 30 consecutive day period has been equal to or greater than $15 million. As used herein “Line Cap” means the lesser of (i) the aggregate commitments under the ABL Facility and (ii) the sum of the then-applicable U.S. borrowing base, the then-applicable Canadian borrowing base and the then-applicable European borrowing base.

The Senior Secured Credit Facilities also contain certain customary representations and warranties, affirmative covenants and reporting obligations. In addition, the lenders under the Senior Secured Credit Facilities are permitted to accelerate the loans and terminate commitments thereunder or exercise other specified remedies available to secured creditors upon the occurrence of certain events of default, subject to certain grace periods and exceptions, which include, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain material indebtedness, certain events of bankruptcy, certain events under the Employee Retirement Income Security Act of 1974, as amended, material judgments and changes of control.

In connection with the Business Combination, PQ Corporation issued $625.0 million aggregate principal amount of 6.75% Senior Secured Notes due 2022 (the “6.75% Senior Secured Notes”). Interest on the 6.75% Senior Secured Notes is payable semi-annually on May 15 and November 15 of each year. The 6.75% Senior Secured Notes will mature and be due in full on November 15, 2022.

The 6.75% Senior Secured Notes are guaranteed, jointly and severally, on a senior secured basis by CPQ Midco I Corporation, the direct parent of PQ Corporation (“CPQ”), and on a senior unsecured basis by PQ Holdings, in each case to the extent such entities are guarantors under the Term Loan Facility. The 6.75% Senior Secured Notes are also guaranteed, jointly and severally, on a senior secured basis by each of PQ Corporation’s existing and future restricted subsidiaries that guarantee the Term Loan Facility, the Floating Rate Senior Unsecured Notes (as defined herein) and any existing and future domestic subsidiaries that guarantee any other indebtedness under any other syndicated bank or capital markets indebtedness of PQ Corporation or any restricted subsidiary in an aggregate principal amount in excess of $50 million.

The 6.75% Senior Secured Notes and the related guarantees are secured, subject to certain permitted liens and exceptions, by: (i) a first-priority security interest in substantially all of PQ Corporation’s and the guarantors’ property and assets that secure the Term Loan Facility (other than collateral securing the ABL Facility on a first-priority basis) and (ii) a second-priority security interest in assets that constitute ABL Collateral. The liens securing the 6.75% Senior Secured Notes and the guarantees are pari passu with the liens securing the Term Loan Facility subject to the pari passu intercreditor agreement and subordinated to the liens securing the ABL Facility on a first-priority basis subject to the ABL Facility intercreditor agreement.

The 6.75% Senior Secured Notes are redeemable, in whole or in part, at the redemption prices (expressed as percentages of principal amount of 6.75% Senior Secured Notes to be redeemed) set forth below, plus accrued

and unpaid interest, if any, to, but not including, the redemption date, if redeemed on or after any of the dates below until the subsequent date below:

PQ Corporation may redeem up to 40% of the 6.75% Senior Secured Notes at any time prior to May 15, 2019 at a redemption price equal to 106.75% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the redemption date, with the net cash proceeds from certain equity offerings, including this offering. PQ Corporation may also redeem some or all of the 6.75% Senior Secured Notes at any time prior to May 15, 2019 at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make whole” premium.

Upon the occurrence of certain events defined as constituting a change of control, each holder of 6.75% Senior Secured Notes has the right, subject to certain conditions, to cause PQ Corporation to repurchase all or any part of such holder’s 6.75% Senior Secured Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.

If PQ Corporation or its restricted subsidiaries engage in certain asset sales, PQ Corporation generally must invest the net cash proceeds from such sales in its business within a period of time, prepay certain debt or, when the excess proceeds from such asset sales exceed $40 million, make an offer to purchase a principal amount of the outstanding 6.75% Senior Secured Notes equal to the excess net cash proceeds, subject to certain exceptions. The purchase price of the outstanding 6.75% Senior Secured Notes will be 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

If, six months prior to November 1, 2022, any of the 8.5% Senior Notes remain outstanding, each holder of the 6.75% Senior Secured Notes has the right to require, subject to certain conditions, PQ Corporation to repurchase all or any part of such holder’s 6.75% Senior Secured Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The indenture governing the 6.75% Senior Secured Notes contains a number of negative covenants that, among other things and, subject to exceptions, restrict the ability of PQ Corporation and its restricted subsidiaries to:

If the 6.75% Senior Secured Notes have an investment grade rating from Moody’s and S&P, and no default exists under the indenture governing the 6.75% Senior Secured Notes, PQ Corporation and its restricted subsidiaries will not be subject to certain of the covenants listed above.

The indenture governing the 6.75% Senior Secured Notes also contains certain customary affirmative covenants and events of default.

In connection with the Business Combination, PQ Corporation issued $525.0 million aggregate principal amount of Floating Rate Senior Unsecured Notes due 2022 (the “Floating Rate Senior Unsecured Notes”) concurrent with the issuance of the 6.75% Senior Secured Notes. The Floating Rate Senior Unsecured Notes bear interest at an annual rate equal to three-month LIBOR plus 10.75%, with a 1% LIBOR floor, payable and reset quarterly on March 15, June 15, September 15 and December 15 of each year. The Floating Rate Senior Unsecured Notes will mature on May 1, 2022, provided that if the 8.5% Senior Notes have been refinanced or otherwise repaid prior to such date, the Floating Rate Senior Unsecured Notes will instead mature on May 1, 2023.

The Floating Rate Senior Unsecured Notes are guaranteed, jointly and severally, on an unsecured basis, by (i) PQ Holdings, CPQ and each restricted subsidiary of PQ Corporation that from time to time guarantees indebtedness in respect of the Senior Secured Credit Facilities (other than any foreign subsidiary guaranteeing foreign subsidiary obligations thereunder), the 8.5% Senior Notes or the 6.75% Senior Secured Notes and (ii) each restricted subsidiary of PQ Corporation that guarantees any other indebtedness under any other syndicated bank or capital markets indebtedness of PQ Corporation in an aggregate principal amount in excess of $50 million.

The Floating Rate Senior Unsecured Notes are redeemable, in whole or in part, at the redemption prices (expressed as percentages of principal amount of Floating Rate Senior Unsecured Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon as of the date of prepayment, if redeemed on or after any of the dates below until the subsequent date below:

PQ Corporation may redeem up to 50% of the Floating Rate Senior Unsecured Notes at any time prior to May 4, 2018 at a redemption price equal to 106% of the principal amount of Floating Rate Senior Unsecured Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the net proceeds from certain equity offerings, including this offering. PQ Corporation may also redeem some or all of the Floating Rate Senior Unsecured Notes at any time prior to May 4, 2018 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest as of the date of prepayment, plus a “make whole” premium.

Upon the occurrence of certain events defined as constituting a change of control, each holder has the right, subject to certain conditions, to cause PQ Corporation to repurchase the Floating Rate Senior Unsecured Notes at the purchase prices (expressed as percentages of principal amount of Floating Rate Senior Unsecured Notes to be repurchased) set forth below, plus accrued and unpaid interest thereon as of the date of repurchase, if the change of control event occurs on or after any of the dates below until the subsequent date below:

Upon the occurrence of certain events defined as constituting a change of control at any time prior to May 4, 2018, PQ Corporation would be required to repurchase the Floating Rate Senior Unsecured Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest as of the date of repurchase, plus a “make whole” premium. If PQ Corporation or its restricted subsidiaries engage in certain asset sales, PQ Corporation generally must invest the net cash proceeds from such sales in its business within a period of time, prepay certain debt or, when the excess proceeds from such asset sales exceed $40 million in the aggregate, make an offer to purchase a principal amount of the outstanding Floating Rate Senior Unsecured Notes equal to the excess net cash proceeds, subject to certain exceptions. The purchase price of the outstanding Floating Rate Senior Unsecured Notes will be 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The notes purchase agreement governing the Floating Rate Senior Unsecured Notes contains a number of negative covenants that, among other things and, subject to exceptions, restrict the ability of PQ Corporation and its restricted subsidiaries to:

The notes purchase agreement governing the Floating Rate Senior Unsecured Notes also contains certain customary affirmative covenants and events of default.

In October 2014, Eco, together with Eco Finance Corp., issued $200.0 million aggregate principal amount of 8.5% Senior Notes due 2022 (the “8.5% Senior Notes”). Interest on the 8.5% Senior Notes is payable semi-annually on May 1 and November 1 of each year. The 8.5% Senior Notes will mature and be due in full on November 1, 2022.

In connection with the Business Combination, PQ Corporation assumed all of the obligations of Eco and Eco Finance Corp. under the 8.5% Senior Notes and the related indenture.

The 8.5% Senior Notes are guaranteed, jointly and severally, by PQ Holdings, CPQ and each of PQ Corporation’s existing and future domestic subsidiaries, in each case to the extent such entities are guarantors under the Senior Secured Credit Facilities.

The 8.5% Senior Notes are redeemable, in whole or in part, at the redemption prices (expressed as percentages of principal amount of 8.5% Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to, but not including, the redemption date, if redeemed on or after any of the dates below until the subsequent date below:

PQ Corporation may redeem up to 40% of the 8.5% Senior Notes at any time prior to November 1, 2017 at a redemption price equal to 108.5% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the redemption date, with the net cash proceeds from certain equity offerings, including this offering. PQ Corporation may also redeem some or all of the 8.5% Senior Notes at any time prior to November 1, 2017 at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make whole” premium.

Upon the occurrence of certain events defined as constituting a change of control, each holder of 8.5% Senior Notes has the right, subject to certain conditions, to cause PQ Corporation to repurchase all or any part of such holder’s 8.5% Senior Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

If PQ Corporation or its restricted subsidiaries engage in certain asset sales, PQ Corporation generally must invest the net cash proceeds from such sales in its business within a period of time, prepay certain debt or, when the excess proceeds from such asset sales exceed $25 million, make an offer to purchase a principal amount of the outstanding 8.5% Senior Notes equal to the excess net cash proceeds, subject to certain exceptions. The purchase price of the outstanding 8.5% Senior Notes will be 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The indenture governing the 8.5% Senior Notes contains a number of negative covenants that, among other things and, subject to exceptions, restrict the ability of PQ Corporation and its restricted subsidiaries to:

If the 8.5% Senior Notes have an investment grade rating from Moody’s and S&P, and no default exists under the indenture governing the 8.5% Senior Notes, PQ Corporation and its restricted subsidiaries will not be subject to certain of the covenants listed above.

The indenture governing the 8.5% Senior Notes also contains certain customary affirmative covenants and events of default.

We have entered into three separate NMTC financing arrangements to fund the expansion of manufacturing facilities in Paris, Texas and Augusta, Georgia. The NMTC program, which is administered by the United States Treasury Department, requires certain balance sheet commitments. The NMTC financing arrangements will provide the company with certain monetary benefits as an offset to specifically identified capital expenditures. The NMTC arrangements require that certain commitments and covenants be maintained over the course of seven years of the closing of the transaction in order to recognize the benefit.

On October 24, 2013, Potters entered into an NMTC financing arrangement with JPMorgan Chase Bank N.A. and several of its affiliates (“Chase”), and TX CDE V LLC, an affiliate of Texas LIC Development Company LLC d/b/a Texas Community Development Capital (“TX CDE”), whereby Chase agreed to contribute $6.6 million and an additional $15.6 million in funds lent to Chase by Potters Holdings II, L.P. to TX CDE. TX CDE, in turn, lent $21.0 million in the form of $5.4 million and $15.6 million notes, or the Loans, to Potters, which used the proceeds of the notes to finance the expansion of Potters’ manufacturing facility in Paris, Texas. The full $21.0 million remained outstanding as of March 31, 2017. The capital expenditures associated with the NMTC financing arrangement were completed in 2014.

On May 17, 2016, Potters entered into an NMTC financing arrangement with U.S. Bank N.A. and several of its affiliates (“USB”) and MRC XX, LLC, an affiliate of Midwest Renewable Capital, LLC (“MRC XX”), whereby USB agreed to contribute $3.7 million and an additional $7.8 million in funds lent to USB by Potters Holdings II, L.P. to MRC XX. MRC XX, in turn, lent $11.0 million in the form of $7.8 million, $1.3 million and $1.9 million notes, to Potters, which used the proceeds of the notes as working capital and to finance the expansion of Potters’ manufacturing facility in Augusta, Georgia. The full $11.0 million remained outstanding as of March 31, 2017. The capital expenditures and working capital associated with the NMTC financing arrangement were completed in 2017.

On December 29, 2016, Potters entered into another NMTC financing arrangement with USB and MRC XXI, LLC, an affiliate of Midwest Renewable Capital, LLC (“MRC XXI”), whereby USB agreed to contribute $3.8 million and an additional $7.8 million in funds lent to USB by Potters Holdings II, L.P. to MRC XXI. MRC XXI, in turn, lent $11.0 million in the form of $7.8 million, $1.4 million and $1.8 million notes, to Potters, which will use the proceeds of the Loans as working capital for another expansion of Potters’ manufacturing facility in Paris, Texas. The full $11.0 million remained outstanding as of March 31, 2017. Potters expects to expend the proceeds of the notes as working capital in 2017.

Upon the closing of this offering, the total amount of our authorized capital stock will consist of shares of common stock, par value $0.01 per share and shares of undesignated preferred stock. As of March 31, 2017, we had outstanding 625,653 shares of Class A common stock and 6,711,756 shares of Class B common stock. In connection with the Reclassification, all of the outstanding Class A common stock and Class B common stock was reclassified into shares of common stock. See “The Reclassification.” As of March 31, 2017, we had 103 stockholders of record of Class A common stock and 66 stockholders of record of Class B common stock and had outstanding options to purchase 248,900 shares of Class A common stock, which options were exercisable at a weighted average exercise price of $72.01 per share.

After giving effect to this offering, we will have shares of common stock and no shares of preferred stock outstanding. The following summary describes all material provisions of our capital stock. We urge you to read our certificate of incorporation and our bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part.

Our certificate of incorporation and bylaws will contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of our company unless such takeover or change in control is approved by our board of directors. These provisions include a classified board of directors, elimination of stockholder action by written consents (except in limited circumstances), elimination of the ability of stockholders to call special meetings (except in limited circumstances), advance notice procedures for stockholder proposals and supermajority vote requirements for amendments to our certificate of incorporation and bylaws.

Dividend Rights. Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of our common stock will be entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine.

Voting Rights. Each outstanding share of our common stock will be entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares of our common stock shall have no cumulative voting rights.

Preemptive Rights. Our common stock will not be entitled to preemptive or other similar subscription rights to purchase any of our securities.

Conversion or Redemption Rights. Our common stock will not have any conversion rights and there will be no redemption or sinking fund provisions applicable to our common stock.

Liquidation Rights. Upon our liquidation, the holders of our common stock will be entitled to receive pro rata our assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

Stock Exchange Listing. We intend to list our common stock on the New York Stock Exchange under the symbol “PQG.”

Our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations,

powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation before any payment is made to the holders of shares of our common stock. Under certain circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of our common stock and the market value of our common stock. Upon consummation of this offering, there will be no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.

Our certificate of incorporation and bylaws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by the board of directors.

Classified Board. Our certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board. Our certificate of incorporation will also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our board of directors. Upon completion of this offering, our board of directors will have members.

Action by Written Consent; Special Meetings of Stockholders. Our certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting once cease to beneficially own more than 50% of our outstanding shares. Our certificate of incorporation and bylaws will also provide that, except as otherwise required by law, special meetings of the stockholders can only be called by the chairman or vice-chairman of the board, the chief executive officer, or pursuant to a resolution adopted by a majority of the board of directors or, until the date that cease to beneficially own more than 50% of our outstanding shares, at the request of holders of 50% or more of our outstanding shares. Except as described above, stockholders will not be permitted to call a special meeting or to require the board of directors to call a special meeting.

Removal of Directors. Our certificate of incorporation will provide that our directors may be removed only for cause by the affirmative vote of at least 75% of the voting power of our outstanding shares of capital stock, voting together as a single class. This requirement of a supermajority vote to remove directors could enable a minority of our stockholders to prevent a change in the composition of our board.

Advance Notice Procedures. Our bylaws will establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting,

who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting. Although the bylaws will not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

Super Majority Approval Requirements. The Delaware General Corporation Law generally provides that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless either a corporation’s certificate of incorporation or bylaws requires a greater percentage. Our certificate of incorporation and bylaws will provide that the affirmative vote of holders of at least 75% of the total votes eligible to be cast in the election of directors will be required to amend, alter, change or repeal specified provisions once cease to beneficially own more than 50% of our outstanding shares. This requirement of a supermajority vote to approve amendments to our certificate of incorporation and bylaws could enable a minority of our stockholders to exercise veto power over any such amendments.

Authorized but Unissued Shares. Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

Business Combinations with Interested Stockholders. We have elected in our certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law, an antitakeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we are not subject to any anti-takeover effects of Section 203. However, our certificate of incorporation will contain provisions that have the same effect as Section 203, except that they provide that CCMP, and certain of its transferees and affiliates will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

Exclusive Forum. Our certificate of incorporation will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could find the choice of forum provisions contained in our certificate of incorporation to be inapplicable or unenforceable.

Our certificate of incorporation will provide that we renounce any interest or expectancy of the company in the business opportunities of CCMP and INEOS and of their respective officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries and each such party shall not have any obligation to offer us those opportunities unless presented to a director or officer of the company in his or her capacity as a director or officer of the company.

Our certificate of incorporation will limit the liability of our directors to the fullest extent permitted by the Delaware General Corporation Law and provides that we will indemnify them to the fullest extent permitted by such law. We expect to enter into indemnification agreements with our current directors and executive officers prior to the completion of this offering and expect to enter into a similar agreement with any new directors or executive officers. We expect to increase our directors’ and officers’ liability insurance coverage prior to the completion of this offering.

The transfer agent and registrar for our common stock will be . Its address is . Its telephone number is .

Immediately prior to this offering, there was no public market for our common stock, and we cannot predict what effect, if any, market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate.

Upon the consummation of this offering, we will have outstanding an aggregate of approximately shares of common stock. Of the outstanding shares, the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except any shares purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, may be sold only in compliance with the limitations described below. The remaining outstanding shares of common stock will be deemed restricted securities, as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which we summarize below. Approximately of these shares will be subject to lock-up agreements described below.

Taking into account the lock-up agreements described below, and assuming Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC do not release stockholders from these agreements, the following shares will be eligible for sale in the public market at the following times, subject to the provisions of Rule 144 and Rule 701:

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who is not our affiliate and has not been our affiliate at any time during the preceding three months will be entitled to sell any shares of our common stock that such person has beneficially owned for at least six months, including the holding period of any prior owner other than one of our affiliates, without regard to volume limitations. Sales of our common stock by any such person would be subject to the availability of current public information about us if the shares to be sold were beneficially owned by such person for less than one year.

Approximately shares of our common stock that are not subject to the lock-up agreements described below will be eligible for sale under Rule 144 immediately upon the consummation of this offering.

Beginning 90 days after the date of this prospectus, our affiliates who have beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

In general, under Rule 701 as currently in effect, any of our employees, directors, officers, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering is entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, in the case of affiliates, without having to comply with the holding period requirements of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, holding period, volume limitation or notice filing requirements of Rule 144.

Our officers, directors and other stockholders owning an aggregate of shares of our common stock will be subject to lock-up agreements with the underwriters that will restrict the sale of the shares of our common stock held by them for 180 days, subject to certain exceptions. See “Underwriters” for a description of these lock-up agreements.

Immediately after the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of our common stock issued or reserved for future issuance under our equity incentive plans. This registration statement would cover approximately shares. Shares registered under the registration statement will generally be available for sale in the open market after the 180-day lock-up period immediately following the date of this prospectus.

Beginning 180 days after the date of this prospectus, subject to certain exceptions, holders of shares of our common stock will be entitled to the registration rights described under “Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement.” Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the registration.

The following is a summary of certain material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of shares of our common stock issued pursuant to this offering by “non-U.S. holders,” as defined below. This summary deals only with shares of our common stock acquired by a non-U.S. holder in this offering that are held as capital assets within the meaning of Section 1221 of the Code. This summary does not address the U.S. federal income tax considerations applicable to a non-U.S. holder that is subject to special treatment under U.S. federal income tax laws, including: a dealer in securities or currencies; a financial institution; a tax-exempt organization; a non-U.S. government; an insurance company; a person holding shares of our common stock as part of a hedging, integrated, conversion or straddle transaction or a person deemed to sell shares of our common stock under the constructive sale provisions of the Code; a trader in securities that has elected the mark-to-market method of accounting; an entity or arrangement that is treated as a partnership (or is disregarded from its owner) for U.S. federal income tax purposes; a person that received shares of our common stock in connection with services provided to the company or any of its affiliates; a person whose “functional currency” is not the U.S. dollar; a “controlled foreign corporation”; or a “passive foreign investment” company.

This summary is based upon provisions of the Code, and applicable Treasury regulations promulgated or proposed thereunder, rulings, judicial decisions and administrative pronouncements of the Internal Revenue Service (“IRS”), all as in effect as of the date hereof. Those authorities may be changed, perhaps with retroactive effect, or may be subject to differing interpretations, which could result in U.S. federal income tax consequences different from those discussed below. There can be no assurance that the IRS will concur with the discussion of the tax considerations set forth below, and we have not obtained, and we do not intend to obtain, a ruling from the IRS with respect to the U.S. federal income tax consequences to a non-U.S. holder of the purchase, ownership or disposition of shares of our common stock. This summary does not address all aspects of U.S. federal income tax and does not address any state, local, non-U.S., gift, or estate tax considerations or any considerations relating to the alternative minimum tax or the Medicare tax on net investment income.

For purposes of this discussion, a “non-U.S. holder” is a beneficial holder of shares of our common stock that is for U.S. federal income tax purposes not a partnership or disregarded entity and not (i) an individual citizen or resident of the United States for U.S. federal income tax purposes; (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia (or otherwise treated as a domestic corporation for U.S. federal income tax purposes); (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if it (1) is subject to the primary supervision of a court within the United States and one or more “United States persons” (as defined in Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a person treated as a partner in such partnership for U.S. federal income tax purposes generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. Any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, and any person holding shares of our common stock through such a partnership, are urged to consult their own tax advisors regarding the tax consequents to them of acquiring, owning and disposing of shares of our common stock.

This summary is for general information only and is not, and is not intended to be, tax advice. Non-U.S. holders of shares of our common stock are urged to consult their own tax advisors concerning the tax considerations related to the acquisition, ownership and disposition of shares of our common stock in light of their particular circumstances, as well as any tax considerations relating to gift or estate taxes, the alternative

minimum tax or to the Medicare tax on net investment income, and any tax considerations arising under the laws of any other jurisdiction, including any state, local and non-U.S. income and other tax laws and under any applicable income tax treaty.

As discussed in the section entitled “Dividend Policy” above, we do not currently expect to make distributions in respect of our common stock. In the event that we do make a distribution of cash or property with respect to our common stock, any such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will first constitute a return of capital and will reduce a holder’s adjusted tax basis in such holder’s shares of our common stock, determined on a share-per-share basis, but not below zero. Any remaining excess will be treated as capital gain and subject to the tax treatment described below in the section entitled “—Sale, Exchange, Redemption or Certain Other Taxable Dispositions of Our Common Stock.”

Unless dividends, if any, are effectively connected with a non-U.S. holder’s U.S. trade or business (and if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained in the United States), dividends paid to a non-U.S. holder of shares of our common stock generally will be subject to U.S. federal income tax (which generally will be collected through withholding) at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty). Even if a non-U.S. holder is eligible for a lower treaty rate, dividend payments generally will be subject to withholding at a 30% rate (rather than the lower treaty rate) unless the non-U.S. holder provides a valid IRS Form W-8BEN or W-8BEN-E (or applicable successor form) certifying such holder’s qualification for the reduced rate.

Subject to the discussions below regarding backup withholding and the Foreign Account Tax Compliance Act, if dividends paid to a non-U.S. holder are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained in the United States), the non-U.S. holder will be exempt from U.S. federal withholding tax. To claim the exemption, the non-U.S. holder must furnish to us or the relevant withholding agent a valid IRS Form W-8ECI (or applicable successor form), certifying that the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States.

Any dividends paid on shares of our common stock that are effectively connected with a non-U.S. holder’s U.S. trade or business (and, if required by an applicable tax treaty, attributable to a permanent establishment or fixed base maintained in the United States) generally will be subject to U.S. federal income tax on a net income basis in the same manner as if such holder were a U.S. person. A non-U.S. holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable tax treaty) on a portion of its effectively connected earnings and profits for the taxable year. Non-U.S. holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.

Non-U.S. holders who do not timely provide us or the relevant withholding agent with the required certification, but who qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a tax treaty.

If at the time a distribution is made we are not able to determine whether or not it will be treated as a dividend for U.S. federal income tax purposes (as opposed to being treated as a return of capital or capital gain), we or a financial intermediary may withhold tax on all or a portion of such distribution at the rate applicable to dividends. However, a non-U.S. holder may obtain a refund of any excess withholding by timely filing an appropriate claim for refund with the IRS.

Any distribution described in this section would also be subject to the discussion below in the section entitled “Foreign Account Tax Compliance Act.”

Sale, Exchange, Redemption or Certain Other Taxable Dispositions of Our Common Stock

Subject to the discussions below regarding backup withholding and the Foreign Account Tax Compliance Act, a non-U.S. holder generally will not be subject to U.S. federal income tax or withholding tax on gain realized upon a sale, exchange or other taxable disposition of shares of our common stock (including a redemption, but only if the redemption would be treated as a sale or exchange rather than as a distribution for U.S. federal income tax purposes) unless: (i) the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained in the United States); (ii) the non-U.S. holder is a non-resident alien individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or (iii) we are or have been a “U.S. real property holding corporation” (“USRPHC”) for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period for shares of our common stock (the “relevant period”) and certain other conditions are met, as described below.

If the first exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax on a net basis with respect to such gain in the same manner as if such holder were a resident of the United States. In addition, if the non-U.S. holder is a corporation for U.S. federal income tax purposes, such gains may, under certain circumstances, also be subject to the branch profits tax at a rate of 30% (or at a lower rate prescribed by an applicable income tax treaty), as adjusted for certain items.

If the second exception applies, the non-U.S. holder generally will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on the gain from a disposition of shares of our common stock, which may be offset by capital losses allocable to U.S. sources during the taxable year of disposition (even though the non-U.S. holder is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third exception above, we believe we currently are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. Because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our other trade or business assets and our non-U.S. real property interests, there can be no assurances that we will not become a USRPHC in the future. Generally, a corporation is a USRPHC only if the fair market value of its U.S. real property interests (as defined in the Code) equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Even if we are or become a USRPHC, a non-U.S. holder would not be subject to U.S. federal income tax on a sale, exchange or other taxable disposition of shares of our common stock by reason of our status as a USRPHC so long as (i) shares of our common stock continue to be regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code) during the calendar year in which such disposition occurs and (ii) such non-U.S. holder does not own and is not deemed to own (directly, indirectly or constructively) more than 5% of the shares of our common stock at any time during the relevant period. If we are a USRPHC and the requirements described in clauses (i) or (ii) in the preceding sentence are not met, gain on the disposition of shares of our common stock generally will be taxed in the same manner as gain that is effectively connected with the conduct of a U.S. trade or business, except that the branch profits tax generally will not apply.

We or a financial intermediary must report annually to the IRS and to each non-U.S. holder the gross amount of the distributions on shares of our common stock paid to such holder and the tax withheld, if any, with respect to such distributions, regardless of whether withholding was required. This information also may be made

available under a specific treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established. A non-U.S. holder generally will be subject to backup withholding at the then applicable rate for dividends paid to such holder unless such holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or such other applicable form and documentation as required by the Code or the Treasury regulations) certifying under penalties of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code), or otherwise establishes an exemption. Dividends paid to non-U.S. holders subject to U.S. federal withholding tax, as described above in the section entitled “Distributions,” generally will be exempt from U.S. backup withholding.

Information reporting and, depending on the circumstances, backup withholding will apply to the payment of the proceeds of a sale or other disposition of shares of our common stock by a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or non-U.S., unless such holder certifies that it is not a U.S. person (as defined under the Code) and satisfies certain other requirements, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the U.S. through a non-U.S. office of a broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Prospective investors should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a credit against a non-U.S. holder’s U.S. federal income tax liability, if any, and may entitle such holder to a refund, provided that an appropriate claim is timely filed with the IRS.

Under legislation commonly referred to as the Foreign Account Tax Compliance Act, as modified by Treasury regulations and subject to any official interpretations thereof, any applicable intergovernmental agreement between the United States and a non-U.S. government to implement these rules and improve international tax compliance, or any fiscal or regulatory legislation or rules adopted pursuant to any such agreement (collectively, “FATCA”), a 30% withholding tax will apply to dividends on, or gross proceeds from the sale or other disposition of, shares of our common stock paid to certain non-U.S. entities (including financial intermediaries) unless various information reporting and due diligence requirements, which are different from and in addition to the certification requirements described elsewhere in this discussion, have been satisfied (generally relating to ownership by U.S. persons of interests in or accounts with those entities). The withholding rules apply currently to payments of dividends on shares of our common stock. The withholding rules are scheduled to apply to payments of gross proceeds from dispositions of shares of our common stock beginning January 1, 2019.

Holders of shares of our common stock should consult their tax advisors regarding the possible impact of FATCA on their investment in our common stock, including, without limitation, the process and deadlines for meeting the applicable requirements to prevent the potential imposition of the 30% withholding tax under FATCA.

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of our common stock subject to their receipt and acceptance of the shares from us and subject to prior sale. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of our common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of our common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ option to purchase additional shares described below.

The underwriters initially propose to offer part of the shares of our common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the initial offering of the shares of our common stock, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of our common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of our common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of our common stock listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of our common stock.

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ . We have agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority up to $ .

The underwriters have informed us that they do not intend for sales to discretionary accounts to exceed 5% of the total number of shares of our common stock offered by them.

We intend to apply to list our common stock on the New York Stock Exchange under the trading symbol “PQG.”

We and our officers, directors and certain holders of our common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their shares of our common stock or securities convertible into or exchangeable for shares of our common stock during the period from the data of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC. This agreement does not apply to any existing employee benefit plans. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

In order to facilitate the offering of our common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the option to purchase additional shares. The underwriters can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares. The underwriters may also sell shares in excess of the option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of our common stock in the open market to stabilize the price of our common stock. These activities may raise or maintain the market price of our common stock above independent market levels or prevent or retard a decline in the market price of our common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Sales of shares made outside the United States may be made by affiliates of the underwriters.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of our common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In particular, Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Jefferies LLC,

Deutsche Bank Securities Inc. and KeyBanc Capital Markets Inc. or certain of their affiliates are lenders or act as agents or arrangers under our Senior Secured Credit Facilities. As a result, certain of the underwriters or their affiliates may receive a portion of the proceeds from this offering.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State.

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (ASIC), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act. The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

The shares of our common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of our common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (DFSA). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

The shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (the “FIEL”) has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of our common stock.

Accordingly, the shares of our common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of our common stock constitutes either a “QII only private placement” or a “QII only secondary distribution” (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of our common stock. The shares of our common stock may only be transferred to QIIs.

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of our common stock constitutes either a “small number private placement” or a “small number private secondary distribution” (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of our common stock. The shares of our common stock may only be transferred en bloc without subdivision to a single investor.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our shares may not be circulated or distributed, nor may our shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (1) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (2) to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where our shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not transferred within six months after that corporation or that trust has acquired the shares under Section 275 of the SFA, except: (1) to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is by operation of law.

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

The validity of the issuance of the shares of common stock to be sold in this offering will be passed upon for us by Ropes & Gray LLP, Boston, Massachusetts. Certain legal matters in connection with this offering will be passed upon on behalf of the underwriters by Latham & Watkins LLP, Washington, District of Columbia.

The financial statements of PQ Group Holdings Inc. as of December 31, 2016 and 2015 and for the years then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Eco Services Operations LLC (accounting predecessor to PQ Group Holdings Inc.) for the period from inception (July 30, 2014) to December 31, 2014 (Successor Period), and of Eco, a business unit of Solvay USA Inc., for the period from January 1, 2014 through November 30, 2014 (Predecessor Period) included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an emphasis of matter paragraph referring to the “carve out” of the Predecessor financial statements from Solvay USA Inc.). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The financial statements of PQ Holdings Inc. as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock being offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and the shares of our common stock, reference is made to the registration statement and the exhibits and schedules filed as a part thereof. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete. We are not currently subject to the informational requirements of the Exchange Act. As a result of this offering, we will become subject to the informational requirements of the Exchange Act and, in accordance therewith, will file reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC’s website at www.sec.gov.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of PQ Group Holdings Inc. and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule, listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

We have audited the accompanying consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows of Eco Services Operations LLC and subsidiary (accounting predecessor to PQ Group Holdings, Inc.) for the period from inception (July 30, 2014) to December 31, 2014 (the “Successor Period”) and the accompanying statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows of Eco, a business unit of Solvay USA Inc., for the period from January 1, 2014 to November 30, 2014 (the “Predecessor Period”) (collectively the “financial statements”). These financial statements are the responsibility of the entities’ management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The entities were not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entities’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Eco Services Operations LLC and subsidiary for the period from inception (July 30, 2014) to December 31, 2014, in accordance with accounting principles generally accepted in the United States of America. Further, in our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Eco, a business unit of Solvay USA Inc., for the period from January 1, 2014 to November 30, 2014, in accordance with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, the accompanying financial statements of Eco, a business unit of Solvay USA Inc., have been “carved out” from Solvay USA Inc.’s financial statements using assumptions and allocations made by Solvay USA Inc. to depict Eco on a stand-alone basis and may not necessarily be indicative of Eco’s results of operations or cash flows had Eco operated as a stand-alone entity. Our opinion is not modified with respect to this matter.

PQ Group Holdings Inc. and subsidiaries (the “Company” or “PQ Group Holdings”) conducts operations through two principal businesses: Performance Materials & Chemicals: a fully integrated, global leader in silicate technology, producing sodium silicate, specialty silicas, zeolites, spray dry silicates, magnesium silicate, and other high performance chemical products used in a variety of end-uses such as adsorbents for surface coatings, clarifying agents for beverages, cleaning and personal care products and engineered glass products for use in highway safety, polymer additives, metal finishing and electronics end uses; and Environmental Catalysts & Services: an industry-leading refinery services company that is also a merchant sulfuric acid producer operating a network of plants serving a variety of end uses, including the oil refining, nylon, mining, general industrial and chemical industries and as an integrated silica catalyst and specialty zeolite-based catalyst producer, producing silica catalyst used in the production of high-density polyethylene (“HDPE”) and methyl methacrylate (“MMA”), and specialty zeolite-based catalysts sold to the emissions control industry, the petrochemical industry and other areas of the broader chemicals industry.

The Company experiences some seasonality, primarily with respect to the performance materials and refining services product groups. With respect to the performance materials product group, sales and earnings are generally higher during the second and third quarters of the year as highway striping projects typically occur during warmer weather months. Additionally, the refining services product group typically experiences similar seasonal fluctuations as a result of higher demand for gasoline products in the summer months. As a result, working capital requirements tend to be higher in the first and fourth quarters of the year, while higher cash generation occurs in the second and third quarters of the year.

On July 30, 2014, Eco Services Operations LLC (“Eco Services”), a newly formed Delaware limited liability company and certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP”), entered into an Asset Purchase Agreement with Solvay USA, Inc. (“Solvay”), a Delaware corporation, which provided for the sale, transfer and assignment by Solvay and the acquisition, acceptance and assumption by Eco Services, of substantially all of the assets of Solvay’s Eco Services business unit (“Eco”) of Solvay’s regeneration and virgin sulfuric acid production business operations in the United States (the “2014 Acquisition”). Prior to the Asset Purchase Agreement with Solvay, Eco operated as a business unit within Solvay, which is an indirect, wholly owned subsidiary of Solvay SA, an international industrial group active in chemistry and headquartered in Brussels, Belgium.

On December 1, 2014, Eco Services consummated the 2014 Acquisition (see Note 6 to these consolidated financial statements for further information). The consolidated financial statements for the period from inception (July 30, 2014) to December 31, 2014 reflect the financial results of Eco Services on a stand-alone basis (the “Successor Period”), with nominal activity between July 30 and November 30, 2014. Transaction costs attributed to the 2014 Acquisition as well as certain costs related to bridge financing and other interest expense were allocated to the Successor Period.

The financial statements prior to the 2014 Acquisition reflect the financial results based upon the historical cost basis of Solvay’s Eco business unit, and include amounts that have been “carved out” from Solvay’s financial statements using assumptions and allocations made by Solvay to depict Solvay’s Eco business unit on a stand-alone basis (the “Predecessor Period”). As a result, the Predecessor Period from January 1, 2014 to November 30, 2014 included herein may not necessarily be indicative of Solvay’s Eco business unit’s results of operations or cash flows had Solvay’s Eco business unit operated solely as a stand-alone entity during the period presented.

The financial statements related to the Predecessor Period were prepared using the historical basis of the assets and liabilities of Solvay’s Eco business unit and include all sales, costs, assets and liabilities directly attributable to Solvay’s Eco business unit. In addition, certain expenses reflected in the Predecessor Period are based on allocations of corporate expenses from Solvay using methodologies that in the opinion of management are reasonable and consistently applied. All such expenses are deemed to have been paid by Solvay’s Eco business unit to Solvay in the period in which the expenses were incurred. Net changes in the parent company investment in Solvay’s Eco business unit as shown in the statement of stockholders’ equity and cash flows for the Predecessor Period include amounts due to or from Solvay that are not regularly settled and therefore, represent investment of such amounts by Solvay.

Solvay used a centralized approach to cash management and financing the operations of Solvay’s Eco business unit as needed. Transactions between Solvay and Solvay’s Eco business unit were accounted for through the parent company investment. Accordingly, none of the cash, cash equivalents, debt or related interest expense at the Solvay level in the Predecessor Period have been assigned to Solvay’s Eco business unit with the exception of capital lease obligations and related interest expense that related to Solvay’s Eco business unit.

On August 17, 2015, the Company, PQ Holdings Inc. (“PQ Holdings”), Eco Services, certain investment funds affiliated with CCMP, and certain other stockholders of PQ Holdings and Eco Services entered into a reorganization and transaction agreement pursuant to which the companies consummated a series of transactions to reorganize and combine the businesses of PQ Holdings and Eco Services (the “Business Combination”), under a new holding company, PQ Group Holdings Inc. The Business Combination was consummated on May 4, 2016 (see Note 7 to these consolidated financial statements for further information).

In accordance with accounting principles generally accepted in the United States (“GAAP”), Eco Services is the accounting predecessor to PQ Group Holdings. Certain investment funds affiliated with CCMP held a controlling interest position in Eco Services prior to the Business Combination. In addition, certain investment funds affiliated with CCMP owned a non-controlling interest in PQ Holdings prior to the Business Combination and the merger with Eco Services constituted a change in control under the PQ Holdings credit agreements and bond indenture that were in place at the time of the Business Combination. Therefore, Eco Services is deemed to be the accounting acquirer. These consolidated financial statements are the continuation of Eco Services’ business prior to the Business Combination.

Concurrent with the closing of the Business Combination, the Company refinanced the existing credit facilities of PQ Holdings and Eco Services by (i) entering into a $1,200,000 senior secured term loan (consisting of a $900,000 senior secured term loan and a $300,000 Euro equivalent senior secured term loan), (ii) $625,000 in new senior secured notes, (iii) issuing $525,000 in senior unsecured notes, and (iv) entering into a $200,000 asset-based secured revolving credit facility (see Note 15 to these consolidated financial statements for further information). Additionally, PQ Group Holdings assumed the obligations under the indenture governing Eco Services’ outstanding $200,000 senior notes.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its controlled subsidiaries. Investments in affiliated companies are recorded at cost plus the Company’s equity in their undistributed earnings. All intercompany transactions have been eliminated.

All assets and liabilities of foreign subsidiaries and affiliated companies are translated to U.S. dollars using exchange rates in effect at the balance sheet date. Adjustments resulting from translation of the balance sheets and intercompany loans, which are considered permanent, are included in stockholders’ equity as part of accumulated other comprehensive loss. Adjustments resulting from translation of certain intercompany loans, which are not considered permanent and are denominated in foreign currencies, are included in other (income) expense, net in the consolidated statement of operations. Income and expense items are translated at average exchange rates during the year. Net foreign exchange included in other (income) expense, net was a gain of $3,558 for the year ended December 31, 2016. The Company did not incur any foreign exchange expense for the years ended December 31, 2015 or 2014 (including Predecessor and Successor periods). The foreign currency gains realized in 2016 were primarily driven by the non-permanent intercompany debt denominated in local currency and translated to U.S. dollars.

Cash and Cash Equivalents. Cash and cash equivalents include investments with original terms to maturity of 90 days or less from the time of purchase.

Restricted Cash. Restricted cash, which is restricted as to withdrawal or usage, is classified separately from cash and cash equivalents on our consolidated balance sheet. The proceeds from the New Markets Tax Credit (“NMTC”) financing arrangements are restricted for use and are classified on our consolidated balance sheet as other current assets. As of December 31, 2016, there remained $13,780 restricted cash that is required to be used to fund the capital expenditures associated with the NMTC arrangements. The Company did not have any restricted cash balances related to NMTC arrangements as of December 31, 2015. The remainder of the Company’s restricted cash balance outside of the NMTC arrangements is not significant. See Note 15 to these consolidated financial statements for further information.

Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. A specific reserve for bad debt is recorded for known or suspected doubtful accounts receivable. For all other accounts, the Company recognizes a reserve for bad debt based on the length of time receivables are past due and historical write-off experience. Account balances are charged against the allowance when the Company believes it is probable that the associated receivables will not be recovered. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required. The Company does not have any off-balance sheet credit exposure related to its customers. As of December 31, 2016 and 2015, the Company’s allowance for doubtful accounts was not material.

Inventories. All inventories are stated at the lower of cost or market. Certain domestic inventories are valued using the last-in, first-out (“LIFO”) method and all other inventories are valued using the weighted average cost or first-in, first-out (“FIFO”) methods.

Property, Plant and Equipment. Property, plant and equipment are carried at cost and include expenditures for new facilities, major renewals and betterments. The Company capitalizes the cost of furnace rebuilds as part of property, plant and equipment. Plant and equipment under capital leases are carried at the present value of minimum lease payments as determined at the beginning of the lease term. Maintenance, repairs and minor renewals are charged to expense as incurred. The Company capitalizes certain internal costs associated with the implementation of purchased software. When property, plant and equipment is retired or otherwise disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time. The Company also leases property, plant and equipment, principally under operating leases. Rent expense for operating leases, which may have escalating rentals or rent holidays, is recorded on a straight-line basis over the respective lease terms.

Depreciation is provided on the straight-line method based on the estimated useful lives of the assets, which generally range from 15 to 33 years for buildings and improvements and 3 to 10 years for machinery and equipment. Leasehold improvements are depreciated using the straight-line method based on the shorter of the useful life of the improvement or remaining lease term.

The Company capitalizes the interest cost associated with the development and construction of significant new plant and equipment and depreciates that amount over the lives of the related assets or ten years, whichever is shorter. Capitalized interest recorded during the year ended December 31, 2016 was $5,687 and was not material for the year ended December 31, 2015 or for the Successor or Predecessor Periods.

Spare Parts. Spare parts are maintained by the Company’s facilities to keep machinery and equipment in working order. Spare parts are capitalized and included in other long-term assets. Spare parts are measured at cost and are not depreciated or expensed until utilized; however, reserves may be provided on aged spare parts. When a spare part is utilized as part of an improvement to property, plant and equipment, the carrying value is depreciated over the applicable life once placed in service. Otherwise, the spare part is expensed and charged as a cost of production when utilized.

Investments in Affiliated Companies. Investments in affiliated companies are accounted for using the equity method of accounting if the investment provides the Company with the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investments in equity-method investees are recorded in the consolidated balance sheets as investments in affiliated companies, and the Company’s share of the investees’ earnings or losses, together with other-than temporary impairments in value, is recorded as equity in net income from affiliated companies in the consolidated statements of operations. Any differences between the Company’s cost of an equity method investment and the underlying equity in the net assets of the investment, such as fair value step-ups resulting from acquisitions, are accounted for according to their nature and impact the amounts recognized as equity in net income from affiliated companies in the consolidated statements of operations.

Goodwill and Intangible Assets. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company is required to test goodwill associated with each of its reporting units for impairment at least annually and whenever events or circumstances indicate that it is more likely than not that goodwill may be impaired. The Company performs its annual goodwill impairment test as of October 1 of each year.

Goodwill is tested for impairment at the reporting unit level. In performing tests for goodwill impairment, the Company is permitted to first perform a qualitative assessment about the likelihood of the carrying value of a reporting unit exceeding its fair value. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount based on the qualitative assessment, it is required to perform a two-step goodwill impairment test to identify the potential goodwill impairment and measure the amount of the goodwill impairment loss, if any, to be recognized for that reporting unit. However, if an entity concludes otherwise based on the qualitative assessment, the two-step goodwill impairment test is not required. The option to perform the qualitative assessment can be utilized at the Company’s discretion, and the qualitative assessment need not be applied to all reporting units in a given goodwill impairment test. For an individual reporting unit, if the Company elects not to perform the qualitative assessment, or if the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company must perform the two-step goodwill impairment test for the reporting unit.

In applying the two-step process, the first step used to identify potential impairment involves comparing the reporting unit’s estimated fair value to its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is not impaired. If the carrying value exceeds the estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment, if any. The second step of the process involves the calculation of an implied fair value of goodwill for each reporting unit for which step one indicated potential impairment. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. That is, the estimated fair value of the reporting unit, as calculated in step one, is allocated to the individual assets and liabilities as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting unit and the loss establishes a new basis in the goodwill. Subsequent reversal of an impairment loss is not permitted.

Impairment Assessment of Long-Lived Assets. The Company performs an impairment review of property, plant and equipment and definite-lived intangible assets when facts and circumstances indicate that the carrying value of an asset or asset group may not be recoverable from its undiscounted future cash flows. When evaluating long-lived assets for impairment, if the carrying amount of an asset or asset group is found not to be recoverable, a potential impairment loss may be recognized. An impairment loss is measured by comparing the carrying amount of the asset or asset group to its fair value. Fair value is determined using quoted market prices, when available, or other techniques including discounted cash flows. The Company’s estimates of future cash flows involve assumptions concerning future operating performance, economic conditions and technological changes that may affect the future useful lives of the assets.

Derivative Financial Instruments. The Company utilizes certain derivative financial instruments to enhance its ability to manage risk, including exposure to interest rates and natural gas price fluctuations that exist as part of ongoing business operations. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures.

All derivatives designated as hedges are recognized on the balance sheet at fair value. On the date a derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or as a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability (cash-flow hedge). Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss) to the extent that the derivative is effective as a hedge and until earnings are affected by the variability in cash flows of the designated hedged item. The ineffective portion is reported in earnings. Changes in the fair value of a derivative that is not designated or does not qualify as a cash-flow hedge are recorded in the consolidated statement of operations. Cash flows from derivative instruments are reported in the same cash-flow category as the cash flows from the items being hedged.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes

relating all derivatives that are designated cash-flow hedges to underlying forecasted transactions. The Company also formally assesses whether each hedging relationship is highly effective in achieving offsetting changes in fair values or cash flows of the hedged item during the period both at the inception of the hedge and on an ongoing basis. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly-effective hedge, hedge accounting is discontinued with respect to that derivative prospectively.

Fair Value Measurements. The Company measures fair value using the guidelines under GAAP. An asset’s fair value is defined as the price at which the asset could be exchanged in a current transaction between market participants. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor. See Note 4 to these consolidated financial statements regarding the application of fair value measurements.

The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. See Note 15 to these consolidated financial statements regarding the fair value of debt.

Revenue Recognition. Revenue, net of related discounts and allowances, is recognized when both title and risk of loss of the product have been transferred to the customer, the seller’s price to the buyer is fixed or determinable, collectability is reasonably assured, and persuasive evidence of an arrangement exists. Customers take title and assume all the risks of ownership upon shipment (if terms are “FOB shipping point”) or upon delivery (if terms are “FOB destination”). Any deviation from the standard terms and arrangements are reviewed for the proper accounting treatment, and revenue recognition is reported accordingly.

The Company recognizes rebates given to customers as a reduction of revenue based on an allocation of the cost of honoring rebates earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate. Rebates are recognized at the time revenue is recorded. The Company measures the rebate obligation based on the estimated amount of sales that will result in a rebate at the adjusted sales price per the respective sales agreement.

Shipping and Handling Costs. Amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues earned for the goods provided and are classified as revenue. Costs related to shipping and handling of products shipped to customers are classified as cost of goods sold.

Research and Development. Research and development costs of $7,266 for the year ended December 31, 2016 were expensed as incurred and reported in selling, general and administrative expenses in the consolidated statements of operations. There were no significant research and development costs incurred during the years ended December 31, 2015 or 2014.

Income Taxes. Prior to the Business Combination, Eco Services was a single member limited liability company and was treated as a partnership for federal and state tax purposes. All income tax liabilities and/or benefits of the Company were passed through to the member. As such, no recognition of federal or state income taxes for the Company have been provided for tax periods prior to the Business Combination. As a result of the Business Combination, Eco Services had a change in tax status and is taxed as a C-Corporation. See Note 18 to these consolidated financial statements for discussion of income taxes during the predecessor period.

The Company operates within multiple taxing jurisdictions and is subject to tax filing requirements and audit within these jurisdictions. The Company uses the asset and liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using statutory tax rates in effect for the year in

which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized.

In determining the provision for income taxes, the Company provides deferred income taxes on income from foreign subsidiaries as such earnings are taxable upon remittance to the United States. The Company establishes contingent liabilities for possible assessments by taxing authorities resulting from uncertain tax positions including, but not limited to, transfer pricing, deductibility of certain expenses and other state, local and foreign tax matters. The Company recognizes a financial statement benefit for positions taken for tax return purposes when it will be more-likely-than-not that the positions will be sustained. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. Tax examinations are often complex as tax authorities may disagree with the treatment of items reported by the Company and may require several years to resolve. These accrued liabilities represent a provision for taxes that are reasonably expected to be incurred on the basis of available information but which are not certain.

Asset Retirement Obligations. The Company records a liability when the fair value of any future obligation to retire a long-lived asset as a result of an existing or enacted law, statute, ordinance or contract is reasonably estimable. The Company also records a liability for the fair value of a conditional asset retirement obligation if the fair value can be reasonably estimated. When the liability is initially recorded, the Company capitalizes the cost by increasing the amount of the related long-lived asset. Over time, the Company adjusts the liability to its present value by recognizing accretion expense as an operating expense in the consolidated statement of operations each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company records a gain or loss if the actual costs differ from the accrued amount.

The Company has recorded asset retirement obligations (“AROs”) identified as part of the Business Combination in other long-term liabilities in order to recognize legal obligations associated with the retirement of tangible long-lived assets. The Company has assessed whether an ARO is required at each manufacturing facility and has recorded an obligation for those locations for which an obligation exists. The most significant of these are primarily attributable to environmental remediation liabilities associated with current operations that were incurred during the course of normal operations. The Company has AROs that are conditional in nature. The Company identified certain conditional AROs upon which it was able to reasonably estimate their fair value and recorded a liability. These AROs were triggered upon commitments by the Company to comply with local, state, and national laws to remove environmentally hazardous materials. The AROs have been recognized on a discounted basis using a credit adjusted risk free rate. Accretion of the AROs is recorded in other operating expense, net in the Company’s consolidated statements of operations and amounted to $177 for the year ended December 31, 2016. Following are changes in the Company’s ARO liability during the year ended December 31, 2016:

Environmental Expenditures. Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with the Company’s capitalization policy for property, plant and equipment. Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed. Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated. Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable. See Note 22 to these consolidated financial statements regarding commitments and contingencies, and Note 14 regarding the accrued environmental reserve.

Deferred Financing Costs. Financing costs incurred in connection with the issuance of long-term debt are deferred and presented as a direct reduction from the related debt instruments on the Company’s consolidated balance sheet. Deferred financing costs are amortized as interest expense using the effective interest method over the respective terms of the associated debt instruments.

Stock-Based Compensation. The Company applies the fair value based method to account for stock options and awards. See Note 21 to these consolidated financial statements regarding compensation expense associated with stock options and awards.

Pensions and Postretirement Benefits. The Company maintains qualified and non-qualified defined benefit pension plans that cover employees in the United States and Canada, as well as certain employees in other international locations. Benefits for a majority of the plans are based on average final pay and years of service. Our funding policy, consistent with statutory requirements, is based on actuarial computations utilizing the projected unit credit method of calculation. Not all defined benefit pension plans are funded. In the United States and Canada, the pension plans’ assets include equity and fixed income securities. In our other international locations, the pension plans’ assets include equity and fixed income securities, as well as insurance policies. Certain assumptions are made regarding the occurrence of future events affecting pension costs, such as mortality, withdrawal, disablement and retirement, changes in compensation and benefits, and discount rates to reflect the time value of money.

The major elements in determining pension income and expense are pension liability discount rates and the expected return on plan assets. The Company references rates of return on high-quality, fixed income investments when estimating the discount rate, and the expected period over which payments will be made based upon historical experience. The long-term rate of return used to calculate the expected return on plan assets is the average rate of return estimated to be earned on invested funds for providing pension benefits.

In addition to pension benefits, the Company provides certain health care benefits for employees who meet age, participation and length of service requirements at retirement. The Company uses explicit assumptions using the best estimates available of the plan’s future experience. Principal actuarial assumptions include: discount rates, present value factors, retirement age, participation rates, mortality rates, cost trend rates, Medicare reimbursement rates and per capita claims cost by age. Current interest rates, as of the measurement date, are used for discount rates in present value calculations.

The Company also has defined contribution plans covering domestic employees of the Company and certain subsidiaries.

pending against the Company or unasserted claims that may result in such proceedings, the Company and legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed, including the approximate term, how the guarantee arose, and the events or circumstances that would require the guarantor to perform under the guarantee.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications. As a result of the Business Combination, certain reclassifications have been made to the historical financial statements of Eco Services included in the consolidated financial statements to conform to the current presentation.

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, “pension costs”). Under current GAAP, there are several components of pension costs which are presented net to arrive at pension costs as included in the income statement and disclosed in the notes. As part of this amendment to the existing guidance, the service cost component of pension costs will be bifurcated from the other components and included in the same line item of the income statement as compensation costs are reported. The remaining components will be reported together below operating income on the income statement, either as a separate line item or combined with another line item on the income statement and disclosed. Additionally, with respect to capitalization to inventory, fixed assets, etc., only the service cost component will be eligible for capitalization upon adoption of the guidance. The new guidance is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted. The amendments should be applied retrospectively upon adoption with respect to the presentation of the service and other cost components of pension costs in the income statement, and prospectively for the capitalization of the service cost component in assets. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

In January 2017, the FASB issued guidance which eliminates the second step from the traditional two-step goodwill impairment test. Under current guidance, an entity performed the first step of the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount; if an impairment loss was indicated, the entity computed the implied fair value of goodwill to determine whether an impairment loss existed, and if so, the amount to recognize. Under the new guidance, an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value (the Step 1 test), with no further testing required. Any impairment loss recognized is limited to the amount of goodwill allocated to the reporting unit. The new guidance is effective for public companies that are SEC registrants for fiscal years beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests performed on testing dates after January 1,

2017. All entities are required to apply the guidance prospectively to goodwill impairment tests subsequent to adoption of the standard. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

In January 2017, the FASB issued guidance which clarifies the definition of a business and provides revised criteria and a framework to determine whether an integrated set of assets and activities is a business. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

In November 2016, the FASB issued guidance which clarifies the classification and presentation of changes in restricted cash on the statement of cash flows. The updates in the guidance require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash when reconciling the beginning-of-period and end-of-period total amounts. The updates also require a reconciliation between cash, cash equivalents and restricted cash presented on the balance sheet to the total of the same amounts presented on the statement of cash flows. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, and the new guidance should be applied retrospectively to each period presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements. As of December 31, 2016, the Company had $13,780 of restricted cash on its balance sheet related to its NMTC arrangements (see Note 15 to these consolidated financial statements for further information).

In October 2016, the FASB issued guidance which eliminates the deferral of the tax effects of intra-entity transfers of an asset other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party which has resulted in diversity in practice and increased complexity within financial reporting. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company early adopted the guidance effective January 1, 2017.

In August 2016, the FASB issued guidance which clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including debt prepayment or extinguishment costs and distributions from certain equity method investees. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, and the new guidance should be applied retrospectively to each period presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

In March 2016, the FASB issued guidance that includes targeted improvements to the accounting for employee stock-based compensation. The updates in the guidance include changes in the income tax consequences, balance sheet classification and cash flow statement reporting of stock-based payment transactions. For public companies, the new guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those years.

The Company adopted this new guidance as required on January 1, 2017, with no significant impact upon adoption to the Company’s consolidated financial statements. On a prospective basis from the adoption date, the Company will record all tax effects related to stock-based compensation through the statement of operations, and all tax-related cash flows resulting from stock-based award payments will be reported as operating activities in the statement of cash flows. The Company has made an accounting policy election under the new guidance to account for forfeitures of stock-based compensation awards as they occur.

In February 2016, the FASB issued guidance that amends the accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities for most leases (including those classified under existing GAAP as operating leases, which based on current standards are not reflected on the balance sheet), but will recognize expenses similar to current lease accounting. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. The new guidance must be adopted using a modified retrospective transition and provides for certain practical expedients. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements. The Company has operating lease agreements for which it expects to recognize right of use assets and corresponding liabilities on its balance sheet upon adoption of the new guidance.

In September 2015, the FASB issued guidance that changes the requirements for reporting measurement period adjustments to provisional amounts initially recognized in conjunction with a business combination. GAAP previously required an acquiring entity to retrospectively adjust, in prior period financial statements, the provisional amounts to reflect new information obtained during the measurement period (a period, which may not exceed one year from the date of the business combination, during which the acquiring entity may receive information about the facts and circumstances existing as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date). Under the new guidance, adjustments to the provisional amounts are reflected in the financial statements for the reporting period in which the adjustments are determined, including by recognizing in current period earnings the full effect of changes in depreciation, amortization or other income effects. The guidance requires that the acquiring entity either present separately on the face of the current period income statement or disclose in the notes to the current period financial statements, by line item, the amounts of the adjustments made during the current period. The Company early adopted the guidance as of December 31, 2015, with prospective application as required. The only business combination to occur since the adoption date was the Business Combination (see Note 7 to these consolidated financial statements for further information). As of December 31, 2016, the measurement period was substantially complete, and because the Business Combination occurred during the year ended December 31, 2016, there were no adjustments to provisional amounts to report for the period of May 4, 2016, the date of the Business Combination, through December 31, 2016 that would have impacted a prior reporting period, since all amounts recorded in the consolidated financial statements as of and for the year ended December 31, 2016 reflect the final valuation.

In July 2015, the FASB issued new guidance that changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value. The amendments in this guidance do not apply to inventory that is measured using LIFO or the retail inventory method; rather, the amendments apply to all other inventory, which includes inventory that is measured using FIFO or average cost. Within the scope of this new guidance, an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation, which is consistent with existing GAAP. The Company adopted the new guidance on January 1, 2017 as required. The guidance did not have a significant impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year of the issuance of the financial statements. If substantial doubt exists, additional disclosures are required. This guidance was effective for the Company starting with the year ended December 31, 2016, and is effective for annual and interim periods thereafter. The adoption of the guidance did not have an impact on the Company’s disclosure in the notes to its consolidated financial statements.

In May 2014, the FASB issued accounting guidance (with subsequent targeted amendments) that will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the guidance is that revenue recognized from a transaction or event that arises from a contract with a customer should reflect the consideration to which an entity expects to be entitled in exchange for goods or services provided. To achieve that core principle, the new guidance sets forth a five-step revenue recognition model that will need to be applied consistently to all contracts with customers, except those that are within the scope of other topics in the Accounting Standards Codification (“ASC”). Also required are enhanced disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The enhanced disclosures include qualitative and quantitative information about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized related to the costs to obtain or fulfill a contract. For public companies, the new requirements are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company is reviewing its key revenue streams and assessing the underlying customer contracts within the framework of the new guidance. The Company has evaluated the key aspects of its revenue streams for impact under the new guidance and is currently performing a detailed analysis of its customer agreements to quantify the potential changes under the guidance. The Company has not yet determined whether the guidance will have a significant impact on its existing revenue recognition practices, but there are new robust disclosure requirements that will have an impact on the Company’s reporting. The Company does not anticipate adopting the new guidance early, nor has it completed its determination of whether it will implement the guidance under the retrospective or modified retrospective transition methods of adoption.

Fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality. In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair value using methods, models and assumptions that management believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of management estimation and judgment which becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used.

The Company’s financial assets and liabilities carried at fair value have been classified based upon a fair value hierarchy. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). The classification of an asset or a liability is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2016 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. There were no assets or liabilities measured at fair value on a recurring basis as of December 31, 2015.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a non-recurring basis as of December 31, 2016. Refer to Note 13 to these consolidated financial statements for a description of the valuation techniques the Company utilized to determine such fair value. There were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2015.

The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 19 to these consolidated financial statements regarding defined supplementary retirement plans.

OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

The Company has interest rate caps and natural gas caps and swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk that is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset, the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company utilizes a default swap rate comparable to PQ Group Holdings. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of December 31, 2016, the credit valuation adjustment resulted in a minimal change in the fair value of the derivatives.

The following table presents the components of accumulated other comprehensive income (loss), net of tax, as of December 31, 2016 and 2015:

The following table presents the tax effects of each component of other comprehensive income (loss) for the years ended December 31, 2016 and 2015 (no other comprehensive income was noted for the Predecessor and Successor Periods during the year ended December 31, 2014):

The following table presents the change in accumulated other comprehensive income (loss), net of tax, by component for the years ended December 31, 2016 and 2015:

The following table presents the reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2016 and 2015. Amounts in parentheses indicate debits to profit/loss.

As described in Note 1 to these consolidated financial statements, on July 30, 2014, Eco Services entered into the 2014 Acquisition with Solvay, which provided for the sale, transfer and assignment by Solvay, and the acquisition, acceptance and assumption by Eco Services, of substantially all of the assets of Solvay’s Eco business unit, which constitutes the Eco Services business after the 2014 Acquisition. The 2014 Acquisition closed on December 1, 2014 (the “Closing Date”).

The purchase price for Eco was $890,000 in cash, subject to adjustment for certain items, including the actual level of working capital at the closing of the 2014 Acquisition, and a defined contribution plan adjustment. The working capital and defined contribution plan adjustments to the purchase price resulted in a reduction to the purchase price by $8,525 to $881,475 and were settled with Solvay as of June 30, 2015. Acquisition costs of $14,666 are included in other operating expense, net in the Company’s consolidated statement of operations for the Successor Period.

The 2014 Acquisition and related transactions were funded with the proceeds of the following transactions:

Concurrent with the consummation of the 2014 Acquisition, Eco Services entered into senior secured credit facilities, which consisted of a $500,000 seven-year term loan facility, all of which was drawn on the Closing

Date, and a $55,000 five-year revolving credit facility. See Note 15 to these consolidated financial statements for a more detailed description of Eco Services’ senior secured credit facilities.

Concurrent with the consummation of the 2014 Acquisition, Eco Services issued $200,000 in aggregate principal amount of senior notes. See Note 15 to these consolidated financial statements for a more detailed description of Eco Services’ senior unsecured notes.

In connection with the 2014 Acquisition, affiliates of CCMP contributed $230,000 in cash and members of Eco Services’ board of managers and management contributed $9,885 in cash.

The 2014 Acquisition was accounted for using the acquisition method of accounting. Under the acquisition method, the purchase price was allocated to Solvay’s Eco business unit’s net assets acquired based on the fair values of the assets acquired and the liabilities assumed as of the Closing Date. The excess of the purchase price over the fair values of these net assets was recorded as goodwill.

The following table sets forth the calculation and final allocation of the purchase price to the net assets acquired with respect to the 2014 Acquisition, which was finalized in 2015:

The Company believes that the expected revenue of Eco Services, the assembled workforce and several strategic benefits, including a comprehensive portfolio of brands, contributed to a total purchase price that resulted in the recognition of goodwill. Goodwill recognized as a result of the 2014 Acquisition is not deductible for income tax purposes.

The valuation of the intangible assets acquired and the related weighted-average amortization periods are as follows:

As described in Note 1 to these consolidated financial statements, on May 4, 2016, the Company, PQ Holdings, Eco Services, certain investment funds affiliated with CCMP and certain other stockholders of PQ Holdings and Eco Services completed the Business Combination. Eco Services is the accounting predecessor to PQ Group Holdings. Certain investment funds affiliated with CCMP held a controlling interest position in Eco Services prior to the Business Combination. In addition, certain investment funds affiliated with CCMP owned a noncontrolling interest in PQ Holdings prior to the Business Combination and the merger with Eco constituted a change in control under the various PQ Holdings credit agreements and bond indenture. Therefore, Eco Services is deemed to be the accounting acquirer. These financial statements are the continuation of Eco Services’ business prior to the Business Combination.

The Business Combination was accounted for using the acquisition method of accounting. Under the acquisition method, the purchase price is allocated to PQ Holdings’ net assets acquired based on the fair values of assets acquired and liabilities assumed as of the acquisition date. The excess of the purchase price over the fair values of these net assets is recorded as goodwill.

The following table sets forth the calculation and allocation of the purchase price to the net assets acquired with respect to the Business Combination, which was substantially complete as of December 31, 2016.

Total consideration for the Business Combination included $1,777,740 of cash, $910,800 of equity in the acquired PQ Holdings entities and $1,401 of assumed stock awards of PQ Holdings. The existing PQ Holdings credit facilities were not legally assumed as part of the Business Combination, and the extinguishment of the debt concurrent with the Business Combination was included as part of the consideration transferred (see Note 15 to these consolidated financial statements for further information). Acquisition costs of $1,583 are included in other operating expense, net in the Company’s consolidated statement of operations for the year ended December 31, 2016.

The Company believes that its diverse range of industrial, consumer and governmental applications in which its products are used were the primary reasons that contributed to a total purchase price that resulted in the recognition of goodwill. The goodwill associated with the Business Combination is not deductible for tax purposes.

The valuation of the intangible assets acquired and the related weighted-average amortization periods are as follows:

In accordance with the requirements of the purchase method of accounting for acquisitions, inventories were recorded at fair market value (which is defined as estimated selling prices less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity), which was $58,683 higher than the historical cost. The Company’s cost of goods sold includes a pre-tax charge of $29,086 for the year ended December 31, 2016 relating to the portion of the step-up on inventory sold during the period. A separate portion of the fair value step-up related to the domestic inventory accounted for under the LIFO method was included in inventory on the consolidated balance sheet as of December 31, 2016 as part of the new LIFO base layer on the acquired inventory (see Note 9 to these consolidated financial statements for further information).

The Company’s consolidated financial statements include PQ Holdings’ results of operations from May 4, 2016, the date of the Business Combination, through December 31, 2016. Net sales and operating income attributable to PQ Holdings’ during this period are included in the Company’s consolidated financial statements for the year ended December 31, 2016 and total $690,459 and $17,991, respectively.

The unaudited pro forma information has been derived from the Company’s historical consolidated financial statements and has been prepared to give effect to the Business Combination, assuming that the Business Combination occurred on January 1, 2015. These pro forma adjustments primarily relate to depreciation expense on stepped up fixed assets, amortization of acquired intangibles, cost of goods sold expense related to the sale of stepped up inventory, interest expense related to additional debt that would be needed to fund the Business Combination, and the estimated impact of these adjustments on the Company’s tax provision. The unaudited pro forma consolidated results of operations are provided for illustrative purposes and are not indicative of the Company’s actual consolidated results of operations or consolidated financial position. The unaudited pro forma results of operations do not reflect any operating efficiencies or potential cost savings which may result from the acquisitions.

Included in the pro forma net loss are adjustments to allocate charges incurred during the year ended December 31, 2016 to December 31, 2015. These non-recurring charges include a debt prepayment penalty of $26,250, one-time refinancing charges of $4,747 and transaction fee charges of $1,795 that are each reflected in the pro forma net loss for the year ended December 31, 2015.

The domestic inventory acquired as part of the Business Combination is valued based on the LIFO method. Therefore, the fair value allocated to the acquired LIFO inventory was treated as the new base inventory value. If inventories valued under the LIFO basis had been valued using the FIFO method, inventories would have been $30,338 lower than reported as of December 31, 2016, driven primarily by the purchase accounting fair value

step-up of the LIFO inventory base value associated with the Business Combination. As of December 31, 2016, inventory quantities for one of the Company’s LIFO pools were reduced below their levels at the Business Combination date. As a result of this reduction, LIFO inventory costs charged to cost of goods sold were computed based on the lower base layer costs at the Business Combination date. The impact on cost of goods sold and net income for the year ended December 31, 2016 was not material.

As a result of the Business Combination, the Company acquired investments in affiliated companies accounted for under the equity method. Affiliated companies accounted for on the equity method as of December 31, 2016 are as follows:

The Company’s investments in affiliated companies balance as of December 31, 2016 includes net purchase accounting fair value adjustments of $273,300 related to the Business Combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names. Consolidated equity in net income from affiliates is net of $36,296 of amortization expense related to purchase accounting fair value adjustments for the year ended December 31, 2016.

The following table summarizes the activity related to the Company’s investments in affiliated companies balance on the consolidated balance sheet:

The Company had net receivables due from affiliates of $4,196 as of December 31, 2016, which are included in prepaid and other current assets. Net receivables due from affiliates are generally non-trade receivables. Sales to affiliates were $1,587 for the year ended December 31, 2016. The Company purchased goods of $1,147 from affiliates, which is included in cost of goods sold during the year ended December 31, 2016.

On December 18, 2013, PQ Holdings and its joint venture, Zeolyst International, entered into a real estate tax abatement agreement with the Unified Government of Wyandotte County and Kansas City, Kansas that will utilize an Industrial Revenue Bond financing structure to achieve a 75% real estate tax abatement on the value of the improvements that will be constructed during the expansion of PQ Holdings and Zeolyst International’s facilities at the jointly-operated Kansas City, Kansas plant. The financing obligation and the industrial bond receivable have been presented net, as the financing obligation and the industrial bond meet the criteria for right of setoff conditions as prescribed in ASC 210-20-45.

A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows:

Depreciation expense was $89,453 and $28,790 for the years ended December 31, 2016 and 2015, respectively, and $2,103 and $33,171 for the Successor and Predecessor Periods of 2014, respectively.

The Company has organized its business around two operating segments based on the review of discrete financial results for each of the operating segments by the Company’s chief operating decision maker (the Company’s President and Chief Executive Officer), or CODM, for performance assessment and resource

allocation purposes. Each of the Company’s operating segments represents a reportable segment under GAAP. The Company’s reportable segments are organized based on the nature and economic characteristics of the Company’s products. The Company’s two reportable segments are Performance Materials and Chemicals (“PM&C”) and Environmental Catalysts and Services (“EC&S”).

The PM&C segment is a silicates and specialty materials producer with leading supply positions in North America, Europe, South America, and Asia serving end markets such as personal and industrial cleaning products, fuel efficient tires (or green tires), surface coatings, and food and beverage. The two product groups included in the PM&C segment are performance materials and performance chemicals. The EC&S segment is a leading global innovator and producer of catalysts for the refinery, emissions control, and petrochemical markets and is also a leading provider of catalyst recycling services to the North American refining market. The three product groups included in the EC&S segment are silica catalysts, zeolyst catalysts, and refining services. The EC&S segment includes equity in net income from Zeolyst International and Zeolyst C.V. (collectively, the “Zeolyst Joint Venture”), each of which are 50/50 joint ventures with CRI Zeolites, Inc. (a wholly-owned subsidiary of Royal Dutch Shell). The Zeolyst Joint Venture is accounted for using the equity method in the Company’s consolidated financial statements (see Note 10 to these consolidated financial statements for further information). Company management evaluates the EC&S segment’s performance, including the Zeolyst Joint Venture, on a proportionate consolidation basis. Accordingly, the revenues and expenses used to compute the EC&S segment’s adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) include the Zeolyst Joint Venture’s results of operations on a proportionate basis based on the Company’s 50% ownership level. Since the Company uses the equity method of accounting for the Zeolyst Joint Venture, these items are eliminated when reconciling to the Company’s consolidated results of operations.

The Company’s management evaluates the operating results of each reportable segment based upon Adjusted EBITDA. Adjusted EBITDA consists of EBITDA, which is a measure defined as net income before depreciation and amortization, interest expense and income taxes (each of which is included in the Company’s consolidated statements of operations), and adjusted for certain items as discussed below.

Summarized financial information for the Company’s reportable segments is shown in the following table:

A reconciliation from net income (loss) to Segment Adjusted EBITDA is as follows:

The Company’s consolidated results include equity in net loss from affiliated companies of $2,612 for the year ended December 31, 2016. This is primarily comprised of equity in net income of $33,518 in the EC&S segment from the Zeolyst Joint Venture for the year ended December 31, 2016. The remaining equity in net income for the Company is included in the PM&C segment, which is attributed to smaller investments and was not material. The Company’s equity in net income from affiliates was more than offset by $36,296 of amortization expense related to purchase accounting fair value adjustments associated with the Zeolyst Joint Venture for the year ended December 31, 2016 as a result of the Business Combination valuation. This portion of the Company’s consolidated equity in net loss from affiliated companies is reflected in the “Corporate and Eliminations” line item of the Company’s segment reconciliation of Adjusted EBITDA.

Capital expenditures for the Company’s reportable segments are shown in the following table:

Total assets by segment are not disclosed by the Company because the information is not prepared or used by the CODM to assess performance and to allocate resources.

Net sales and long-lived assets by geographic area are presented in the following tables. Net sales are attributed to countries based upon location of products shipped.

The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 are summarized as follows:

The Company completed its annual goodwill impairment assessments as of October 1, 2016 and 2015. (As a result of the 2014 Acquisition, there was no goodwill or indefinite-lived intangible asset impairment test required for 2014.) For the annual assessments, the Company bypassed the option to perform the qualitative assessment and proceeded directly to performing the first step of the two-step goodwill impairment test for each of its reporting units. As a result of the Business Combination, for the October 1, 2016 assessment, the Company identified four reporting units, two in each of its operating segments (PM&C and EC&S). For the October 1, 2015 assessment, the Company identified one reporting unit for testing.

The Company determined the fair value of its reporting units using a split between a market approach and an income, or discounted cash flow, approach. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Estimating the fair value of a reporting unit requires various assumptions including the use of projections of future cash flows and discount rates that reflect the risks associated with achieving those cash flows. The key assumptions used in estimating the fair value were the operating margin growth rates, revenue growth rates from implementation of strategic plans, the weighted average cost of capital, the perpetual growth rate, and the estimated earnings market multiples of each reporting unit. The market value was estimated using publicly traded

comparable company values by applying their most recent annual EBITDA multiples to the reporting unit’s trailing twelve months EBITDA. The income approach value was estimated using a discounted cash flow approach. The assumptions about future cash flows and growth rates are based on management’s assessment of a number of factors including the reporting unit’s recent performance against budget as well as management’s ability to execute on planned future strategic initiatives. Discount rate assumptions are based on an assessment of the risk inherent in those future cash flows.

As of October 1, 2016 and 2015, the fair values of each of the Company’s reporting units (with the exception of one) substantially exceeded their respective carrying values and therefore, the second step of the two-step goodwill impairment test was not required. For the Company’s performance chemicals reporting unit within its PM&C segment, the result of the annual goodwill impairment test as of October 1, 2016 indicated that the fair value of the reporting unit was in excess of its carrying amount by 10%. Actual sales trends for the reporting unit were lower than originally forecasted due to unfavorable foreign exchange as well as lower volumes in certain product groups, particularly in the base silicate, pulp and paper, and drilling markets. The Company believes the performance chemicals reporting unit remains well positioned over the long term with respect to its entire portfolio of products; however, a deterioration in the macroeconomic environment could adversely affect the fair value or carrying amount of this reporting unit. The amount of goodwill associated with this reporting unit was $577,667 as of the October 1, 2016 testing date.

In addition to the annual goodwill impairment assessment, the Company also performed the annual impairment test over its other indefinite-lived intangible assets as of October 1, 2016 and 2015. As a result of the test, the Company determined that the trade names related to its performance chemicals reporting unit within the PM&C segment and its catalysts reporting unit within the EC&S segment were impaired as of October 1, 2016. The impaired intangibles related to those identified as part of the Business Combination. The fair value of the respective trade names was determined using the relief-from-royalty method based on the discounted cash flows used in the goodwill impairment test. Slower sales growth rates for both reporting units led to the recognition of the impairment charges. Based on the testing performed, the Company recorded non-cash impairment charges of $5,350 related to trade names within the performance chemicals reporting unit and $1,523 related to trade names within the catalysts reporting unit. The impairment charges are included in the other operating expense, net line item of the Company’s consolidated statement of operations for the year ended December 31, 2016.

Gross carrying amounts and accumulated amortization for intangible assets other than goodwill are as follows:

The Company amortizes technical know-how over periods that range from fourteen to twenty years, customer relationships over periods that range from seven to fifteen years, trademarks over a fifteen year period, contracts over periods that range from two to sixteen years, and permits over five years.

Amortization of intangibles included in cost of goods sold on the consolidated statements of operations was $13,573 and $3,605 for the years ended December 31, 2016 and 2015, respectively, and $300 and $3,481 for the Successor and Predecessor Periods of 2014, respectively. Amortization of intangibles included in other operating expense, net on the consolidated statements of operations was $25,263 and $6,605 for the years ended December 31, 2016 and 2015, respectively, and $552 and $5,806 for the Successor and Predecessor Periods of 2014, respectively.

Estimated future aggregate amortization expense of intangible assets is as follows:

The following table summarizes the components of accrued liabilities as follows:

Concurrent with the closing of the Business Combination, the Company refinanced the existing credit facilities of PQ Holdings and Eco Services by (i) entering into a $1,200,000 senior secured term loan (consisting of a $900,000 senior secured term loan and a $300,000 Euro equivalent senior secured term loan), (ii) issuing $625,000 in new senior secured notes, (iii) issuing $525,000 in senior unsecured notes, and (iv) entering into a $200,000 asset-based secured revolving credit facility. The existing PQ Holdings credit facilities were not legally assumed as part of the Business Combination, and the extinguishment of the debt was included as part of the consideration transferred for the Business Combination (see Note 7 to these consolidated financial statements for further information).

The Company recorded $4,747 of new creditor and third-party financing costs as debt extinguishment costs. In addition, previous unamortized deferred financing costs of $6,252 and original issue discount of $989 associated with the previously outstanding debt were written off as debt extinguishment costs.

The Company incurred deferred financing fees associated with the financing of its debt. Such deferred financing costs are amortized over the terms of the related agreements. Amortization of deferred costs of $3,780 and $2,801 for the years ended December 31, 2016 and 2015, respectively, were included in interest expense. In addition, the Company paid original issue discount associated with the financing of its debt. The original issue discount is amortized over the terms of the related agreements. Amortization of original issue discount of $3,079 and $314 for the years ended December 31, 2016 and 2015, respectively, were included in interest expense.

Concurrent with the Business Combination, the Company entered into new senior secured credit facilities (collectively, the “New Senior Secured Credit Facilities”) comprised of a $1,200,000 term loan facility consisting of a $900,000 U.S. dollar-denominated tranche and a $300,000 Euro-denominated (or €265,000) tranche (the “Term Loan Facility”), and a $200,000 asset-based revolving credit facility (the “ABL Facility”). The Term Loan Facility was issued at 99.0% of the principal amount. Borrowings under the Term Loan Facility bore interest at a rate equal to the LIBOR rate (or EURIBOR rate, as applicable) or the base rate elected by the Company at the time of the borrowing plus a margin of 4.75% or 3.75%, respectively. Further, the LIBOR rate and base rate elected under the facilities are subject to a floor of 1.00% and 2.00%, respectively. The Term Loan Facility requires minimum scheduled quarterly principal payments equal to 0.25% of the original principal amount of the term loans made on the closing date of the Business Combination. The Term Loan Facility has a maturity date of November 4, 2022, which date may be accelerated prior to the maturity date of the 2022 Notes unless the 2022 Notes have been refinanced or repaid prior to such time.

On November 14, 2016 (the “First Amendment Closing Date”), the Company entered into the First Amendment Agreement to the Term Loan Facility (the “First Amendment”) pursuant to which the Company, among other things: (a) refinanced the existing $900,000 U.S. dollar-denominated tranche by issuing a U.S. dollar-denominated replacement term loan in the amount of $927,750 and (b) refinanced the existing €265,000 (or $300,000) Euro-denominated tranche by issuing a Euro-denominated replacement term loan in the amount of €283,338. Included in the U.S. dollar-denominated replacement term loan is an additional $30,000 principal amount of borrowings. Included in the Euro-denominated replacement term loan is an additional €19,000 principal amount of borrowings. The borrowings under the First Amendment bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of borrowing plus a margin of 4.25% for U.S. dollar-denominated LIBOR Rate loans, 4.00% for Euro-denominated LIBOR Rate loans or 3.25%, for base rate loans. These new replacement term loans have substantially the same terms under the original Term Loan Facility subject to the amendments contained in the First Amendment.

The Company recorded $474 of new creditor and third-party financing costs as debt extinguishment costs. In addition, previous unamortized deferred financing costs of $564 and original issue discount of $756 associated with the previously outstanding debt were written off as debt extinguishment costs.

The Company may at any time or from time to time voluntarily prepay loans under the Term Loan Facility in whole or in part without premium or penalty.

The Term Loan Facility further requires prepayments from certain “net cash proceeds” received and 50% of “excess cash flow” with step downs to lower percentages based on the Company’s leverage ratio, if applicable. In

accordance with the Term Loan Facility, net cash proceeds generally relate to proceeds received from the issuance or incurrence of certain indebtedness or proceeds received on the disposition of assets, adjusted for certain costs and expenses, and are payable promptly upon receipt, subject in the case of net cash proceeds from asset dispositions or condemnation/casualty events exceeding certain thresholds. Net cash proceeds in respect of asset dispositions are not payable if such proceeds are reinvested in the Company’s business within a certain specified time period. Excess cash flow is to be calculated annually and is defined as the sum of consolidated adjusted EBITDA, consolidated working capital adjustments and consolidated net income, each adjusted for various expenditures and/or proceeds commencing with the fiscal year ending on December 31, 2017. Prepayments with respect to excess cash flow, if any, are to be made on an annual basis due within 5 business days after the annual audited financials are delivered to the lenders thereunder of each year. The remaining principal balance of the term loans are due upon maturity.

The loans and guarantees under the Term Loan Facility are secured (i) by a first-priority security interest in, among other things, substantially all of the Company’s and the guarantors’ equity interests, equipment, intellectual property, pledged debt, material real estate assets, general intangibles, books, records and supporting obligations related to the foregoing and any other assets (other than collateral securing the ABL Facility on a first-priority basis) and (ii) by a second-priority security interest in receivables, inventory, deposit accounts and other collateral securing the ABL Facility. The liens securing the Term Loan Facility and the guarantees are pari passu with the liens securing the Senior Secured Notes subject to the pari passu intercreditor agreement.

The ABL Facility provides for up to $200,000 in revolving credit borrowings consisting of up to $150,000 in U.S. available borrowings, up to $10,000 in Canadian available borrowings and up to $40,000 of European available borrowings. Borrowings under the ABL Facility bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of the borrowing plus a margin of between 1.50%—2.00% or 0.50%—1.00%, respectively, depending on availability under the ABL Facility. In addition, there is an annual commitment fee equal to 0.375%, with a step-down to 0.25% based on the average usage of the revolving credit borrowings available. As of December 31, 2016, there were no revolving credit borrowings under the ABL Facility. Revolving credit borrowings are payable at the option of the Company throughout the term of the ABL Facility with the balance due May 4, 2021.

The Company has the ability to request letters of credit under the ABL Facility. The Company had $18,417 of letters of credit outstanding as of December 31, 2016, which reduce available borrowings under the ABL Facility by such amounts.

The loans and guarantees under the ABL Facility are secured (i) by a first-priority security interest in, among other things, substantially all of the Company’s and the guarantors’ receivables, inventory, deposit accounts and other collateral securing the ABL Facility on a first-priority basis and (ii) by a second-priority security interest in the property and assets that secure the Term Loan Facility. In addition, the ABL Facility is secured by the equity interests in, and substantially all of the assets of, certain foreign guarantors in connection with the Canadian dollar-denominated and Euro-denominated availability.

The Term Loan Facility and the ABL Facility contain various non-financial restrictive covenants. Each limits the ability of PQ Corporation and its restricted subsidiaries to incur certain indebtedness or liens, merge, consolidate or liquidate, dispose of certain property, make investments or declare or pay dividends, make optional payments, modify certain debt instruments, enter into certain transactions with affiliates, enter into certain sales and leasebacks, and certain other non-financial restrictive covenants. The ABL Facility also contains one financial covenant which applies when minimum availability under the ABL Facility exceeds a certain threshold. During such time, the Company is required to maintain a fixed-charge coverage ratio of at least 1.0 to 1.0.

Concurrent with the Business Combination, the Company issued $625,000 of 6.750% Senior Secured Notes due November 2022 (the “Senior Secured Notes”) in transactions exempt from or not subject to registration under the Securities Act pursuant to Rule 144A and Regulation S under the Securities Act of 1933. The Senior Secured Notes are senior secured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior debt, and are senior in right of payment to all of the Company’s existing and future subordinated debt. The Senior Secured Notes are effectively senior to all of the Company’s existing and future unsubordinated indebtedness that is not secured, to the extent of the value of the collateral securing the Senior Secured Notes. The Senior Secured Notes are effectively subordinated to the Company’s ABL Facility, to the extent of the value of the assets securing the ABL Facility on a first priority basis. The Senior Secured Notes are also structurally subordinated to the liabilities of PQ Corporation’s existing and future non-guarantor subsidiaries. The indenture relating to the Senior Secured Notes contains various limitations on the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, pay dividends or repay certain debt, make loans and investments, sell assets, create liens, enter into transactions with affiliates, enter into agreements restricting PQ Corporation’s subsidiaries ability to pay dividends, and merge and consolidate with other companies, among other things. Interest on the Senior Secured Notes is payable on May 15 and November 15 of each year, commencing November 15, 2016. No principal payments are required with respect to the Senior Secured Notes prior to their final maturity. The Senior Secured Notes mature on November 15, 2022.

The obligations of the Company under the Senior Secured Notes and the related indenture are guaranteed by PQ Holdings and CPQ Midco I Corporation, PQ Corporation’s direct parent, and each of PQ Corporation’s current and future domestic subsidiaries that is a guarantor under the Term Loan Facility. The obligations of the Company under the Senior Secured Notes and the indenture are secured (i) by a first-priority security interest in substantially all of the Company’s and the guarantors’ property and assets that secure the Term Loan Facility (other than collateral securing the ABL Facility on a first-priority basis) and (ii) by a second-priority security interest in receivables, inventory, deposit accounts and other collateral securing the ABL Facility. The liens securing the Senior Secured Notes and the guarantees are pari passu with the liens securing the Term Loan Facility subject to the pari passu intercreditor agreement.

If any Event of Default (other than a default relating to certain events of bankruptcy or insolvency of PQ Corporation or certain of its subsidiaries) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 30% in principal amount of the then total outstanding notes by notice to the Company may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding notes to be due and payable immediately. If an event of default arising from certain events of bankruptcy or insolvency of the Company occurs, the principal of, premium, if any, and interest on all the Senior Secured Notes shall become immediately due and payable without any declaration or other act on the part of the trustee or any holders.

Upon the occurrence of a change of control, as defined, each holder will have the right to require the Company to purchase all or any part of such holder’s Senior Secured Notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest.

Concurrent with the Business Combination, the Company issued $525,000 aggregate principal amount of floating rate Senior Unsecured Notes due 2022 (the “Senior Unsecured Notes”) in a concurrent private placement exempt from the registration requirements of the Securities Act. The notes were issued at 98.0% of the principal amount. The Senior Unsecured Notes will mature on May 1, 2022; provided that if the 2022 Notes have been

refinanced or otherwise repaid prior to such date, the Senior Unsecured Notes will instead mature on May 1, 2023. Interest on the Senior Unsecured Notes is paid and reset quarterly at an annual rate equal to the three-month LIBOR plus 10.75% per year, with a 1.0% LIBOR floor. The note purchase agreement relating to the Senior Unsecured Notes contains various limitations on the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, pay dividends or repay certain debt, make loans and investments, sell assets, create liens, enter into transactions with affiliates, enter into agreements restricting PQ Corporation’s subsidiaries ability to pay dividends, and merge and consolidate with other companies, among other things. Interest is payable on March 15, June 15, September 15, and December 15 of each year, commencing on June 15, 2016. The Senior Unsecured Notes are senior unsecured obligations of the Company and the guarantors. The obligations of the Company under the Senior Unsecured Notes and the related note purchase agreement are guaranteed by PQ Holdings and CPQ Midco I Corporation, PQ Corporation’s direct parent, and each of PQ Corporation’s subsidiaries that is a guarantor under the New Senior Secured Credit Facilities.

If any event of default (other than a default relating to certain events of bankruptcy or insolvency of PQ Corporation or certain of its subsidiaries) shall occur and be continuing, holders then holding greater than 50% of the sum of the aggregate principal amount of Senior Unsecured Notes then outstanding may, through the agent named in the note purchase agreement, declare the principal of, premium, if any, and accrued but unpaid interest on all the Senior Unsecured Notes to be due and payable and the same shall become immediately due and payable. If an event of default arising from certain events of bankruptcy or insolvency of the Company occurs, the principal of, premium, if any, and interest on all the Senior Unsecured Notes shall become immediately due and payable without any declaration or other act on the part of the agent or any holders.

Within ten days after the Company has knowledge of the occurrence of a change of control, as defined, the Company will give notice of the change of control to the agent and shall offer to prepay all, but not less than all, of the Senior Unsecured Notes held by each holder. In the event that the change of control occurs prior to the second anniversary of the closing date of the Senior Unsecured Notes, the notes will be prepaid at a price equal to 100% of the principal amount so prepaid, plus a make-whole premium. In the event that the change of control occurs on or after the second anniversary but before the third anniversary of the closing date, the Senior Unsecured Notes will be prepaid at a price equal to 106% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment. In the event that the change of control occurs on or after the third anniversary but before the fourth anniversary of the closing date, the Senior Unsecured Notes will be prepaid at a price equal to 103% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment. In the event that the change of control occurs on or after the fourth anniversary but before the fifth anniversary of the closing date, the Senior Unsecured Notes will be prepaid at a price equal to 101% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment. In the event that the change of control occurs on or after the sixth anniversary of the closing date, the Senior Unsecured Notes will be prepaid at a price equal to 100% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment.

On December 1, 2014, Eco Services entered into a credit agreement (the “Senior Credit Agreement”) governing a $555,000 senior secured credit facility, which included a $500,000 term loan facility and a $55,000 revolving credit facility (collectively, the “Senior Secured Credit Facilities”). The full amount of the $500,000 term loan facility was drawn on December 1, 2014 (the “Eco Credit Facility Closing Date”) to finance a portion of 2014 Acquisition with Solvay, including working capital and/or purchase price adjustments payable on the Eco Credit Facility Closing Date and the payment of related fees, expenses and other costs of the transactions. The Senior Credit Agreement was due to mature on December 1, 2021.

Borrowings under the Senior Credit Agreement bore interest at a rate per annum equal to an applicable interest rate margin, plus, at Eco Services’ option, either (a) a base rate determined by the reference to the highest of (1) the prime commercial lending rate publicly announced by the administrative agent as the “prime rate” as in effect on such day, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for an interest period of one month, plus 1.00% or (b) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the specified interest period, as adjusted for certain statutory reserve requirements. As of December 31, 2015, the interest rate on the Senior Credit Agreement was 4.75%.

The term loan facility was issued at 99.5% of the principal amount, resulting in an original issue discount on the term loan facility of $2,500. The accretion of the original issue discount is reported as interest expense, and is accreted under the effective interest method over the term of the loan.

Proceeds from the revolving credit facility were to be used to finance the Company’s working capital needs and other general corporate purposes, including investments, restricted payments and any other purpose not prohibited as defined in the Senior Credit Agreement. In 2015, the Company borrowed and repaid $12,000 under the revolving credit facility, resulting in no outstanding credit balance on the revolving credit facility as of December 31, 2015. The unamortized debt issuance costs of $1,585 as of December 31, 2015 related to the revolving credit facility are presented as a noncurrent asset.

A portion of the revolving credit facility, not to exceed $25,000, was also available for the issuance of letters of credit. As of December 31, 2015, Eco Services issued letters of credit totaling $13,270.

Concurrent with the Business Combination, on May 4, 2016 the Senior Secured Credit Facilities were refinanced and as such, there is no principal amount outstanding as of December 31, 2016.

In December 2014, Eco Services issued $200,000 aggregate principal amount of 8.50% senior notes due 2022 (the “2022 Notes”) under an indenture dated October 24, 2014. The 2022 Notes were issued in a private transaction exempt from the registration requirements of the Securities Act. Pursuant to the indenture governing the 2022 Notes, PQ Group Holdings assumed the obligations of Eco Services under the 2022 Notes following the Business Combination. Interest on the 2022 Notes is payable on May 1 and November 1 of each year. The 2022 Notes mature on November 1, 2022 and were issued at 100% of the principal amount. In 2014, the Successor Company recorded $3,000 of costs related to potential bridge financing that was charged to interest expense upon the issuance of the 2022 Notes. The 2022 Notes are unsecured senior obligations of the Company, pari passu in right of payment to all existing and future senior indebtedness of the Company, and effectively subordinated to all secured indebtedness of the Company to the extent of the value of the assets securing such senior indebtedness. The 2022 Notes are senior in right of payment to all subordinated indebtedness of the Company.

The Company is not required to make any mandatory redemption or sinking fund payments with respect to the 2022 Notes. However, under certain circumstances, the Company may be required to offer to purchase the 2022 Notes if it undergoes a change in control or a sale of assets.

At any time prior to November 1, 2017, the Company may redeem all or part of the 2022 Notes, at its option, at a redemption price equal to 100% of the principal amount redeemed plus an applicable make-whole premium and accrued and unpaid interest.

On and after November 1, 2017, the Company may redeem all or part of the 2022 Notes, at its option, at the redemption prices (expressed as percentages of the principal amount of the 2022 Notes redeemed) set forth below, plus accrued and unpaid interest, beginning on November 1 of each of the years indicated below:

In addition, until November 1, 2017, the Company may, at its option, on one or more occasions redeem up to 40% of the aggregate principal amount of the 2022 Notes at a redemption price equal to 108.50% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds of certain equity offerings, provided that at least 50% of the aggregate principal amount of the 2022 Notes originally issued remains outstanding immediately after the occurrence of each such redemption.

On October 24, 2013, PQ Holdings’ (and now the Company’s) subsidiary Potters Industries, LLC (“Potters”) entered into a NMTC financing arrangement with JPMorgan Chase Bank N.A. and several of its affiliates (“Chase”) and TX CDE V LLC, an affiliate of Texas LIC Development Company LLC d/b/a Texas Community Development Capital (“TX CDE”) to fund the expansion of Potters’ manufacturing facility in Paris, Texas (the “2013 NMTC Agreement”). The NMTC program, which is administered by the United States Treasury Department, requires certain balance sheet commitments. The 2013 NMTC Agreement will provide the Company with certain monetary benefits as an offset to specifically identified capital expenditures. The 2013 NMTC Agreement requires that certain commitments and covenants be maintained over a period of seven years in order to legally recognize the benefit. Chase agreed to contribute $6,634 and an additional $15,632 in funds lent to Chase by Potters Holdings II, L.P. to TX CDE. TX CDE, in turn, lent $21,000 in the form of $5,368 and $15,632 of notes to Potters, which used the proceeds to finance the expansion of Potters’ manufacturing facility in Paris, Texas. The capital expenditures associated with the 2013 NMTC Agreement were completed in 2014. The $21,000 of debt related to the 2013 NMTC was assumed as part of the Business Combination and was outstanding as of December 31, 2016.

In connection with the 2013 NMTC Agreement, the Company provided an indemnification related to its actions or inactions which cause either a NMTC disallowance or recapture event. In the event that the Company causes either a recapture or disallowance of the tax credits expected to be generated under this program, then the Company will be required to repay the disallowed or recaptured tax credits plus an amount sufficient to pay the taxes on such repayment to the counterparty of the agreement. This indemnification covers the Company’s actions and inactions prior to September 6, 2020. The maximum potential amount of future payments under this indemnification is approximately $12,600. The Company currently believes that the likelihood of a required payment under this indemnification is remote.

On May 17, 2016, Potters entered into a NMTC financing arrangement with U.S. Bank N.A. and several of its affiliates (“USB”) and MRC XX LLC, an affiliate of Midwest Renewable Capital, LLC (“MRC”), to fund the expansion of Potters’ manufacturing facility in Augusta, Georgia (the “May 2016 NMTC Agreement”). The May 2016 NMTC Agreement provides the Company with certain monetary benefits as an offset to specifically identified capital expenditures. The May 2016 NMTC Agreement requires that certain commitments and covenants be maintained over a period of seven years in order to legally recognize the benefit. USB agreed to

contribute $3,732 and an additional $7,822 in funds lent to USB by Potters Holdings II, L.P. to MRC. MRC, in turn, lent $11,000 in the form of $7,822, $1,311 and $1,866 of notes to Potters, which used the proceeds to finance the expansion of Potters’ manufacturing facility in Augusta, Georgia. The $11,000 was outstanding as of December 31, 2016. The capital expenditures associated with the May 2016 NMTC Agreement are expected to be completed in 2017.

In connection with the May 2016 NMTC Agreement, the Company provided an indemnification related to its actions or inactions which cause either a NMTC disallowance or recapture event. In the event that the Company causes either a recapture or disallowance of the tax credits expected to be generated under this program, then the Company will be required to repay the disallowed or recaptured tax credits plus an amount sufficient to pay the taxes on such repayment to the counterparty of the agreement. This indemnification covers the Company’s actions and inactions prior to May 17, 2023. The maximum potential amount of future payments under this indemnification is approximately $4,077. The Company currently believes that the likelihood of a required payment under this indemnification is remote.

On December 29, 2016, Potters entered into a second NMTC financing arrangement with USB and MRC whereby USB agreed to contribute $3,815 and an additional $7,775 in funds lent to USB by Potters Holdings II, L.P. to MRC. MRC, in turn, lent $11,000 in the form of $7,775, $1,402 and $1,823 of notes to Potters, which will use the proceeds as working capital for another expansion of Potters’ manufacturing facility in Paris, Texas (the “December 2016 NMTC Agreement”). The $11,000 was outstanding as of December 31, 2016. Potters expects to expend the proceeds of the notes as working capital in 2017.

In connection with the December 2016 NMTC Agreement, the Company provided an indemnification related to its actions or inactions which cause either a NMTC disallowance or recapture event. In the event that the Company causes either a recapture or disallowance of the tax credits expected to be generated under this program, then the Company will be required to repay the disallowed or recaptured tax credits plus an amount sufficient to pay the taxes on such repayment to the counterparty of the agreement. This indemnification covers the Company’s actions and inactions prior to December 29, 2023. The maximum potential amount of future payments under this indemnification is approximately $4,290. The Company currently believes that the likelihood of a required payment under this indemnification is remote.

The Company also has several note payable agreements denominated in Japanese Yen which enables the Company to borrow up to a total of 260,000 Japanese Yen, or $2,158. Borrowings bear interest at either TIBOR (“Tokyo Interbank Offered Rate”) plus a margin or the short-term prime rate with a weighted average rate of 0.53% as of December 31, 2016. The terms of the agreements vary and are renewable upon expiration of the term with the balances due in 2016. Borrowings under the agreement are payable at the option of the Company throughout the term of the agreements. Borrowings outstanding under these agreements were $2,158 as of December 31, 2016.

Certain of the Company’s foreign subsidiaries maintain other note payable agreements. These agreements are not further described as they are not significant to the consolidated financial statements.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction. As of December 31, 2016 and 2015, the fair value of the senior secured term loans and senior secured and unsecured notes was higher than book value by $68,477 and lower than book value by $42,375, respectively. The fair value of the senior secured term loans and senior secured and unsecured notes was derived from published loan prices at December 31, 2016 and 2015, as applicable. The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 4 to these consolidated financial statements for further information on fair value measurements).

The following table summarizes the components of other long-term liabilities as follows:

The Company uses interest rate related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments and uses commodity derivatives to manage its exposure to commodity price fluctuations. The Company does not speculate using derivative instruments.

By using derivative financial instruments to hedge exposures to changes in interest rates and commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is an asset, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is a liability, the Company owes the counterparty and, therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high quality counterparties. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The market risk associated with interest rate and commodity price contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Use of Derivative Financial Instruments to Manage Commodity Price Risk. The Company is exposed to risks in energy costs due to fluctuations in energy prices, particularly natural gas. The Company has a hedging program in the United States which allows the Company to mitigate exposure to natural gas volatility with natural gas swap agreements. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices of comparable contracts. The respective current and non-current liabilities are recorded in accrued liabilities and other long-term liabilities and the respective current and non-current assets are recorded in prepaid and other current assets and other long-term assets, as applicable. As the derivatives are highly effective and are designated and qualify as cash-flow hedges, the related unrealized gains or losses are recorded in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Realized gains and losses on natural gas hedges are included in production cost and subsequently charged to cost of goods sold in the consolidated statements of operations in the period in which inventory is sold.

Use of Derivative Financial Instruments to Manage Interest Rate Risk. The Company is exposed to fluctuations in interest rates on the New Senior Secured Credit Facilities and Senior Unsecured Notes. Changes in interest rates will not affect the market value of such debt but will affect the amount of our interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on debt obligations through interest rate cap agreements. The Company records these agreements at fair value as assets or liabilities. As the derivatives are highly effective and are designated and qualify as cash-flow hedges, the related unrealized gains or losses are deferred in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

In July 2016, the Company entered into interest rate cap agreements, paying a premium of $1,551 to mitigate interest rate volatility from July 2016 through July 2020 by employing varying cap rates ranging from 1.50% to 3.00% on $1,000,000 of notional variable rate debt.

The fair values of derivative instruments held as of December 31, 2016 are shown below:

The following table shows the effect of the Company’s derivative instruments designated as hedges on other comprehensive income (loss) (“OCI”) and the statement of income for the year ended December 31, 2016:

Amounts of unrealized gains in OCI that are expected to be reclassified to the consolidated statement of operations over the next twelve months are $533 as of December 31, 2016.

Years Ended December 31, 2016 and 2015, and the Period from Inception (July 30, 2014) to December 31, 2014 (Successor Period)

Income (loss) before income taxes and non-controlling interest within or outside the United States are shown below:

The provision (benefit) for income taxes as shown in the accompanying consolidated statements of operations consists of the following:

A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate of 35% to actual income tax expense is as follows:

The total tax provision of $10,041 for the year ended December 31, 2016 on the Company’s consolidated pre-tax income for the period differs from the U.S. statutory tax rate of 35% principally due to the repatriation of non-U.S. earnings, foreign income tax in jurisdictions with statutory rates different than the U.S. rate, state taxes, non-deductible transaction costs, foreign withholding taxes, changes in valuation allowance, and changes in uncertain tax positions.

Prior to the Business Combination, Eco Services was a single member LLC, treated as a partnership for federal and state tax purposes. Any income tax liabilities and/or benefits of Eco Services were passed through to

the member. As such, prior to May 4, 2016, the date of the Business Combination, no recognition of federal or state income taxes for Eco Services has been provided for in the Successor Financial Statements.

Included in the 2016 deferred tax asset and liability amounts for depreciation, intangible assets, inventory, natural gas contracts, and other above is ($75,539) of a net deferred tax liability related to the Company’s investment in Potters, which is a partnership for federal income tax purposes. The Company and one of its subsidiaries own in aggregate 100% of Potters and the assets and liabilities of Potters are included in the consolidated financial statements of the Company.

The $318,463 in net deferred tax liabilities as of December 31, 2016 consists of $195,327 in non-current deferred tax assets and $513,790 in net non-current deferred tax liabilities. Prior to the Business Combination, Eco Services was a single member LLC, treated as a partnership for federal and state tax purposes, with no deferred taxes provided.

The change in net deferred tax assets (liabilities) for the year ended December 31, 2016 was primarily related to the increase in deferred tax assets on accrued pension obligations, and book amortization of intangibles with no corresponding tax basis.

Following are changes in the deferred tax valuation allowance during the year ended December 31, 2016:

The net change in the total valuation allowance was an increase of $38,271 in 2016. Prior to the Business Combination, Eco Services was a single member LLC, treated as a partnership for federal and state tax purposes. Any income tax liabilities and/or benefits of Eco Services were passed through to the member. As such, prior to May 4, 2016, the date of the Business Combination, the valuation allowance was $0. The valuation allowance at December 31, 2016 was primarily related to foreign and state net operating loss carryforwards and tax credits that, in the judgment of management, are not more likely than not to be realized. In assessing the ability to realize deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considered the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies that are prudent in making this assessment. In order to fully realize deferred tax assets, the Company will need to generate future taxable income prior to the expiration of the net operating loss and credit carryforwards. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Management considered certain earnings in non-U.S. subsidiaries to be available for repatriation in the future. The tax cost associated with non-U.S. subsidiary earnings and distributions for the year ended December 31, 2016 has been recorded as tax expense for the period. In this regard the Company expects to deduct, rather than credit, foreign tax expense in computing the U.S. tax effects of repatriation from non-U.S. subsidiaries in 2016. The unremitted earnings of non-U.S. subsidiaries and affiliates that have not been reinvested abroad indefinitely amount to $190,586 as of December 31, 2016. The deferred U.S. federal and state income tax liability and deferred foreign withholding tax liability on these undistributed earnings is estimated to be $73,205.

As of December 31, 2016, the cumulative unremitted earnings of foreign subsidiaries outside the United States, considered permanently reinvested, for which no income or withholding taxes have been provided, approximated $194,444. Such earnings are expected to be reinvested indefinitely and, as a result, no deferred tax liability has been recognized with regard to such earnings. Determination of the deferred income tax liability on these unremitted earnings is not practicable, principally because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

The following table summarizes the activity related to our gross unrecognized tax benefits:

Included in the balance of total unrecognized tax benefits are potential benefits of $16,128 arising from legacy PQ Corporation, that if recognized, would affect the effective tax rate on income from continuing operations as of December 31, 2016.

Interest and penalties recognized related to uncertain tax positions amounted to ($2,054) in 2016. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period for which the event occurs requiring the adjustment. The $1,177 in accrued interest and penalties as of December 31, 2016 is recorded in other long-term liabilities in the consolidated balance sheet.

Due to the Business Combination, the Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2016:

Given that certain U.S. companies have net operating loss carryforwards, the statute for examination by taxing authorities in the United States, and certain state jurisdictions, will remain open for a period following the use of such net operating loss carryforwards, extending the period for examination beyond the years indicated above.

The Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2008 through 2016. To date, no material adjustments have been proposed as a result of these audits. As of December 31, 2016, the Company does not believe that there are any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company has a net operating loss carry-forward (“NOL”) available of $383,182 to reduce future federal taxes payable. The federal carry-forward period is 20 years. As a result of the Business Combination, $332,376 of the $383,182 may be subject to the limitations of Section 382 of the Internal Revenue Code (“IRC”). Although potentially subject to the limitations of IRC §382, management believes it is more likely than not that the Company will realize the entire $332,376 in pre-transaction NOLs in future years. The remaining $50,806 relates to periods after the Business Combination and would not be subject to IRC §382.

For state income tax purposes, the Company incurred net operating losses of $92,498 for 2016 that may be carried forward at periods ranging from 5 to 20 years among the states in which the Company is subject to tax to reduce future state income taxes payable. Cumulative state net operating losses carrying forward into 2017 are $547,641. A valuation allowance of $10,209 has been applied against the total $21,659 of state net operating loss deferred tax assets, leaving losses of $11,450 that have been recognized for financial accounting purposes for the portion of those losses that the Company believes, on a more likely than not basis, will be realized.

Foreign net operating losses of $59,426, of which $10,667 will begin to expire in 2037 with the remaining $48,749 carrying forward indefinitely, are available to reduce future foreign income taxes payable. A valuation allowance of $11,501 has been applied to $14,840 of deferred tax assets related to foreign net operating loss carry-forwards, leaving a net deferred tax asset relating to foreign net operating losses of $3,339 that has been recognized for financial accounting purposes.

For the Predecessor Period, income taxes have been prepared on a separate return basis as if Solvay’s Eco business unit was a stand-alone entity. Historically, Solvay’s Eco business unit was included in the tax filings with other Solvay entities. Tax expenses (benefits) as presented are not reflective of the results that Solvay’s Eco business unit will generate in the future or would have generated on a stand-alone basis.

The Company sponsors defined benefit pension plans covering employees in the United States and certain employees at its foreign subsidiaries. Benefits for a majority of the plans are based on average final pay and years of service. The Company’s funding policy is to fund the minimum required contribution under local statutory requirements.

The Company sponsors unfunded plans to provide certain health care benefits to retired employees in the United States and Canada. The plans pay a stated percentage of medical expenses reduced by deductibles and other coverage. The plans are unfunded and obligations are paid out of the Company’s operations.

The Company also has defined benefit supplementary retirement plans which provide benefits for certain U.S. employees in excess of qualified plan limitations. The obligations are paid out of the Company’s general assets, including assets held in a Rabbi trust, or restoration plan assets.

The Company uses a December 31 measurement date for all of its defined benefit pension, postretirement medical and supplementary retirement plans.

The following discussion includes information for the Eco Services benefit plans for all periods presented, and the acquired PQ Holdings benefit plans beginning on the date of the Business Combination. The Company assumed the liabilities related to those employees participating in the Eco Services benefit plans that were previously sponsored by Solvay upon the date of the 2014 Acquisition. Thus, activity for 2014 reflects the period from December 1, 2014 to December 31, 2014 for the Eco Services benefit plans.

The Eco Services benefit plans include two defined benefit pension plans and one retiree health plan, all based in the U.S. The PQ Holdings benefit plans include a U.S. defined benefit pension plan as well as the defined benefit pension plans for all of the Company’s foreign subsidiaries, two retiree health plans (one each in the U.S and Canada), and the Company’s defined benefit supplementary retirement plans.

Of the Company’s three defined benefit pension plans covering employees in the U.S., only the Eco Services Hourly Pension Plan continues to accrue benefits subsequent to December 31, 2016. All future accruals were frozen for the PQ Corporation Retirement Plan as of December 31, 2006 and for the Eco Services Pension Equity Plan as of December 31, 2016. With respect to the Company’s three retiree health plans, the PQ Holdings plans in the U.S. and Canada were closed to new retirees as of December 31, 2006. The Eco Services Postretirement Life and Dental Plan will be closed to new retirees effective July 1, 2017. The Company’s defined benefit supplementary retirement plans were frozen to future accruals as of December 31, 2006.

The following tables summarize changes in the benefit obligation, plan assets and funded status of the Company’s significant defined benefit pension plans as well as the components of net periodic benefit cost, including key assumptions:

There are no estimated net actuarial losses (gains) or prior service costs (credits) for the Company’s defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2017.

The total accumulated benefit obligation as of December 31, 2016 and 2015 for the Company’s U.S. pension plans was $244,003 and $66,706, respectively. The total accumulated benefit obligation as of December 31, 2016 for the Company’s foreign pension plans was $100,473.

The following table presents selected information about the Company’s pension plans with accumulated benefit obligations in excess of plan assets:

Significant weighted average assumptions used in determining the pension obligations include the following:

Significant weighted average assumptions used in determining net periodic benefit cost include the following:

The discount rate for each of the U.S. plans was determined by utilizing a yield curve model. The model develops a spot rate curve based on the yields available from a broad-based universe of high quality corporate bonds. The discount rate is then set as the weighted average spot rate, using the respective plan’s expected benefit cash flows as the weights.

In determining the expected return on U.S. plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and expected future performance. In addition, the Company may consult with and consider the opinions of our external advisors in developing appropriate return benchmarks.

The investment objective for the U.S. plans is to generate returns sufficient to meet future obligations. The strategy to meet the objective includes generating attractive returns using higher returning assets such as equity securities and balancing risk using less volatile assets such as fixed income securities. The U.S. plans invest in an allocation of assets across the two broadly-defined financial asset categories of equity and fixed income securities. The target allocations for the plan assets across the three U.S. plans are as follows: 45% equity securities and 55% fixed income investments for the PQ Corporation Retirement Plan; 50% equity securities and 50% fixed income investments for the Eco Services Pension Equity Plan; and 48% equity securities and 52% fixed income investments for the Eco Services Hourly Pension Plan.

Similar considerations are applied to the investment objectives of the non-U.S. plans as well as the asset classes available in each location and any legal restrictions on plan investments.

The Company classified plan assets based upon a fair value hierarchy (see Note 4 to these consolidated financial statements for further information). The classification of each asset within the hierarchy is based on the lowest level input that is significant to its measurement. The fair value hierarchy consists of three levels as follows:

The changes in the Level 3 pension plan assets for the year ended December 31, 2016 were as follows:

The Company expects to contribute $4,050 to the U.S. pension plans and $3,679 to the foreign pension plans in 2017.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Certain of the Company’s foreign subsidiaries maintain other defined benefit plans that are consistent with statutory practices. These plans are not included in the disclosures above as they are not significant to the Company’s consolidated financial statements.

The following tables summarize changes in the benefit obligation, plan assets and funded status of the Company’s defined benefit supplementary retirement plans, as well as the components of net periodic benefit cost, including key assumptions:

There are no estimated net actuarial gains for the Company’s defined benefit supplementary retirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2017.

The accumulated benefit obligation of our defined benefit supplemental retirement plans as of December 31, 2016 was $13,225.

The discount rate used in determining the defined benefit supplemental retirement plan obligation was 3.90% as of December 31, 2016.

The discount rate used in determining net periodic benefit cost was 3.40% for the year ended December 31, 2016. The rate of compensation increase for the year ended December 31, 2016 was zero, as all future accruals were frozen for the defined supplemental retirement plans as of December 31, 2006.

The Company expects to contribute $1,171 to the defined benefit supplementary retirement plans in 2017.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The following tables summarize changes in the benefit obligation, plan assets and funded status of the Company’s other postretirement benefit plans as well as the components of net periodic benefit cost, including key assumptions:

The estimated net actuarial loss (gain) for the Company’s retiree health plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2017 is ($76). The estimated prior service cost (credit) for the Company’s retiree health plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2017 is ($78).

Significant weighted average assumptions used in determining the net periodic benefit cost, the postretirement benefit obligations and trend rate include the following:

Note that the Eco Services retiree health plan only includes a life insurance and dental component; thus, the trend rate assumptions for 2015 were not applicable. The trend rate assumptions for 2016 reflect the acquired PQ Holdings retiree health plans.

A 1% change in the assumed health care cost trend would have increased (decreased) the accumulated postretirement benefit obligation as of December 31, 2016 and the periodic postretirement benefit cost for the year then ended as follows:

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Certain of the Company’s foreign subsidiaries maintain other postretirement benefit plans that are consistent with statutory practices. These plans are not included in the disclosures above as they are not significant to the Company’s consolidated financial statements.

Solvay’s Eco business unit received an allocation of the service cost, interest cost and expected return on plan assets of Eco Services’ pension and other postretirement plans based on a combination of salaries and headcount. The amount of net pension and other postretirement benefit expense allocated to Solvay’s Eco business unit related to these multiemployer plans was $1,790 for the Predecessor Period from January 1, 2014 to November 30, 2014.

The Company also has defined contribution plans covering domestic employees of the Company and certain subsidiaries. The Company recorded expenses of $1,205 and $1,511 related to these plans for the years ended December 31, 2016 and 2015, respectively, $85 for the Successor Period from inception (July 30, 2014) to December 31, 2014, and $1,848 for the Predecessor Period from January 1, 2014 to November 30, 2014.

During the period from January 1, 2014 to November 30, 2014, Solvay’s Eco business unit did not have an independent capital structure. Because of the absence of an independent capital structure during this time, there was no earnings per share calculation for the Predecessor Period. From the December 1, 2014 closing date of the 2014 Acquisition to May 4, 2016, the date of the Business Combination, the Company was structured as a single

member LLC, with capital contributions from affiliates of CCMP, the Company’s board of managers and management represented by a class of membership units (“Eco Services Class A Units” or “Eco Services Membership Units”). During this period, Eco Services also granted incentive awards to certain employees, directors and affiliates in the form of Class B Units of Eco Services (the “Eco Services Class B Units”), which provided recipients with the option to purchase Eco Services Class A Units upon the attainment of certain vesting and other restrictions (see Note 21 to these consolidated financial statements for further information regarding the Company’s equity incentive plans). At the date of the Business Combination, the existing Eco Services Class A Units were converted to Class B shares of PQ Group Holdings and the legacy PQ Holdings equity was converted to both Class A and Class B common shares of PQ Group Holdings. None of the Eco Class B Units had been exercised prior to the Business Combination, and all Eco Class B Units converted to Class A options of PQ Group Holdings at the date of the Business Combination (see Note 21).

The Company currently has two existing classes of common stock: Class A and Class B. Both Class A and Class B shares have been issued as restricted stock as part of the Company’s stock incentive plan (see Note 21 to these consolidated financial statements for further information), which are generally subject to certain service and/or performance vesting conditions. Non-qualified incentive stock options to purchase Class A shares have also been issued as part of the Company’s stock incentive plan, though no options had been exercised as of December 31, 2016. Class A and Class B shares have also been issued as purchases with no vesting restrictions. Holders of both Class A and Class B shares have rights to receive dividends and participate in earnings regardless of whether the shares have vested, but Class B shareholders have liquidation preference to receiving distributions before the holders of Class A common stock. Holders of vested Class A and Class B shares have equal voting rights, but for unvested shares, only the holders of Class B shares have voting rights, whereas holders of unvested Class A shares do not have voting rights.

Of the 626,135 shares of outstanding Class A common stock as of December 31, 2016, 429,985 shares were vested. With respect to the 6,726,907 shares of outstanding Class B common stock as of December 31, 2016, 6,676,813 shares were vested.

Basic earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common shares outstanding during the period for each class of common stock, respectively. In periods of income, the income is shared equally amongst Class A and B common stockholders. In the event of liquidation, the holders of Class B common stock have preference to receiving distributions before the holders of Class A common stock. As a result, holders of Class B common stock are considered preferential participating securities and will not be allocated any losses in the periods of net losses, but will be allocated income in the periods of net income using the two-class method.

Diluted earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period for each class of common stock, if dilutive. Potential shares reflect the unvested Class A and Class B shares as well as options to purchase Class A shares and Eco Services membership units, which have been included in the diluted earnings per share calculation using the treasury stock method. For purposes of calculating diluted earnings per share, income has been reallocated between the classes based on the diluted weighted average number of common shares outstanding for each class. In periods of net loss, inclusion of potential common shares would be anti-dilutive.

For both the basic and dilutive weighted average unit calculations, as a result of the Business Combination, the number of Eco Services membership units outstanding from January 1, 2016 through May 4, 2016, the date of the Business Combination, as well as for the historical periods presented for the year ended December 31,

2015 and the period from inception (July 30, 2014) to December 31, 2014 (Successor Period), were computed on the basis of the weighted average units outstanding for Eco Services during the respective periods multiplied by the exchange ratio established for Class B shares as part of the Business Combination. For the year ended December 31, 2015 and for the Successor 2014 period, Eco related units were retrospectively reflected as Class B shares for earnings per share purposes including in periods of loss since during these periods this was the only class of share in existence to absorb income and losses.

The reconciliation from basic to diluted weighted average shares outstanding is as follows:

The following table reconciles the components of basic and diluted income (loss) per share for the years ended December 31, 2016 and 2015, and for the period from inception (July 30, 2014) to December 31, 2014 (Successor period):

Prior to the Business Combination, the Company recognized stock-based compensation expense for incentive awards issued under the Eco Services Group Holdings Incentive Unit Agreement dated December 29, 2014 (the “Incentive Unit Agreement”). Under the Incentive Unit Agreement, the Company granted a total of 25,786 of Eco Services Class B Units to certain employees, directors and affiliates of the Company at an exercise price of $1,000/unit. Of this amount, 14,419 and 11,367 of Eco Services Class B Units were granted on January 13, 2015 and December 29, 2014, respectively. Immediately prior to the date of the Business Combination on May 4, 2016 and as of December 31, 2015, there were 25,093 of Eco Services Class B Units outstanding.

Of this total, 10,674 Eco Services Class B Units granted to employees (the “Management Awards”) had two vesting criteria, in which 50% were subject to a service (time-based) vesting condition and 50% were subject to a performance condition. The Eco Services Class B Units subject to the service condition vest 25% annually, with the first annual vesting date of December 1, 2015. The remaining 14,419 of Eco Services Class B Units awarded to directors and affiliates (the “Director Awards”) were subject to a service vesting condition only, consistent

with that of the Management Awards. The Eco Services Class B Units did not have a contractually defined maximum term. All of the Eco Services Class B Units were valued using a Black-Scholes option pricing model, and the fair value of an Eco Services Class B Unit was $448/unit. The key assumptions used in valuing the Eco Services Class B Units were as follows: expected term of seven years, expected volatility of 40.27%, risk-free interest rate of 2.02% and expected dividend yield of 0.00%.

The expected term represents the period of time over which the Eco Services Class B Units are expected to be outstanding prior to exercise or forfeiture. With the limited experience of the Company with respect to historical exercise and forfeiture rates or patterns, the expected term was estimated in the context of the four-year service award vesting as well as the timeframe for a liquidity event for the performance awards. The expected volatility was based on the actual stock price volatility of a peer group of companies. The risk-free interest rate was based on U.S. Treasury rates in effect at the time of the grants commensurate with the expected term. There was no dividend yield assumption since the Company has not paid dividends nor does it have an expectation of future dividend payouts.

The following table summarizes the activity of the Eco Services Class B Units during the year ended December 31, 2015 and through May 3, 2016, the date immediately preceding the Business Combination:

For the period from January 1, 2016 through May 3, 2016 and for the year ended December 31, 2015, the Company recognized stock-based compensation expense of $766 and $2,256, respectively, related to the Eco Services Class B Units. Since the Company was not subject to income taxes prior to the Business Combination, there was no tax benefit associated with the expense. The expense related to the 50% of the Management Awards and all of the Director Awards subject to the service condition, and was recognized on a straight-line basis over the vesting period for the awards. The 50% of the Management Awards subject to the performance condition only vest when specific liquidity events occur. As of May 3, 2016 and December 31, 2015, the performance-based criteria of the Management Awards was not considered probable, and therefore no expense for the Management Awards subject to the performance condition has been recognized.

The total fair value of Eco Services Class B Units that vested during the year ended December 31, 2015 was $2,213. No Eco Services Class B Units vested from the period from January 1, 2016 through May 3, 2016.

In conjunction with the Business Combination, the Company adopted a new incentive plan, namely the PQ Group Holdings Inc. Stock Incentive Plan. Under the terms of the plan, the Company is authorized to issue a total of 908,189 shares for Class A awards to employees, directors and affiliates of the Company, while the number of Class B awards that may be granted is determined by the Board of Directors from time-to-time. As part of the Business Combination, the 25,093 of outstanding Eco Services Class B Units at the date of the Business

Combination were canceled and replaced with 156,139 of PQ Group Holdings Class A Options (the “Class A Options”) to purchase PQ Group Holdings Class A common stock at an exercise price of $70.94/share. The Eco Services Class B Units were replaced by Class A Options in accordance with a formula to convert such awards, plus a vested cash component. The terms of the new awards were substantially identical to those in effect prior to the Business Combination, except for adjustments to the underlying number of shares (based on the conversion ratio) and the exercise price, which was now based on PQ Group Holdings Inc. Class A common stock. Additionally, although the Eco Services Class B Units did not have a contractually defined maximum term, the maximum term of the Class A Options is ten years.

The Company accounted for the cancelation and replacement (including a cash component) as a combination of a modification and a cash settlement. This resulted in no incremental compensation cost recognized at the time of the modification, but led to an acceleration of $1,174 of previously measured but unrecognized compensation cost.

The Class A Options were valued using a Black-Scholes option pricing model, and the fair value of a Class A Option at the modification (merger) date was $29.43. The key assumptions used in valuing the Class A Options were as follows: expected term of five years, expected volatility of 45.79%, risk-free interest rate of 1.54% and expected dividend yield of 0.00%.

With the limited experience of the Company with respect to historical exercise and forfeiture rates or patterns, the expected term was estimated in the context of the service award vesting period as well as the timeframe for a liquidity event for the performance awards, along with the ten year contractual maximum term. The expected volatility was compared to a range of the actual stock price volatility of a peer group of companies. The risk-free interest rate was based on U.S. Treasury rates in effect at the time of the grant commensurate with the expected term. There was no dividend yield assumption since the Company has not paid dividends nor does it have an expectation of future dividend payouts.

In addition to the Eco Services Class B Units that were canceled and replaced at the time of the Business Combination, the Company exchanged the outstanding option awards of PQ Holdings for options of PQ Group Holdings in connection with the merger. The terms of the PQ Group Holdings awards were substantially identical to those of the PQ Holdings awards, including the number of underlying shares and vesting conditions, with the exception of an exercise price of $70.94/share for the Class A Options. There are various vesting conditions associated with the exchanged awards, including satisfaction of certain service and performance based conditions.

The following table summarizes the activity of the Class A Options for the period from the date of the Business Combination of May 4, 2016 through December 31, 2016, which includes both the Eco Services Class B Units that were canceled and replaced, as well as the PQ Holdings options that were exchanged:

In addition to the exchange of the PQ Holdings options, the Company also exchanged PQ Holdings restricted stock for 197,144 shares of Class A restricted stock (“Class A Restricted Stock”) and 46,936 shares of Class B restricted stock (“Class B Restricted Stock”) of PQ Group Holdings. The Class A and Class B Restricted Stock were issued at substantially identical terms to the original PQ Holdings awards, with the exception of a new price ascribed to the shares.

The shares of the Class A restricted stock were all subject to the same vesting requirement that was identical to the original awards, namely a performance condition. As defined in the award agreements, each grant fully vests upon the occurrence of a defined liquidity event upon which certain investment funds affiliated with CCMP receive proceeds exceeding certain thresholds, subject to the employee’s continued service with the Company through the vesting date. The Class A restricted stock was valued at $70.94/share at the date of the exchange (merger date), with the fair value determined using multiples of EBITDA and the income approach, based on a discounted free cash flow model. Since all of the Class A restricted stock is subject to a performance condition that was not deemed probable for the period from the consummation of the Business Combination through December 31, 2016, no expense for the Class A restricted stock was recognized.

The shares of the Class B restricted stock were all subject to vesting requirements identical to the original awards, which included the satisfaction of certain service and performance based conditions. The Class A restricted stock was valued at $184.80/share at the date of the exchange (merger date), with the fair value determined using multiples of EBITDA and the income approach, based on a discounted free cash flow model.

The following table summarizes the activity of the Class A and Class B Restricted Stock for the period from the date of the Business Combination of May 4, 2016 through December 31, 2016:

The exchange of the PQ Holdings options and restricted stock for awards of PQ Group Holdings in the context of a business combination was accounted for as a modification of the awards. As a result, the cost of the replacement awards of PQ Group Holdings represents a combination of both pre- and post-merger services. The amount attributable to services prior to the Business Combination in connection with the modification was $1,401, and is considered part of the consideration transferred in the Business Combination (see Note 7 to these consolidated financial statements for further information). The remainder of the cost is attributed to post-merger services and is being recognized over the respective remaining vesting periods.

For the years ended December 31, 2016 and 2015, total stock-based compensation expense for the Company (inclusive of both the Eco Services Class B Units prior to the Business Combination and the awards replaced or exchanged at the consummation of the Business Combination) was $7,029 and $2,256, respectively. The income tax benefit recognized in the statement of operations for the year ended December 31, 2016 was $3,300 (there was no tax benefit for the year ended December 31, 2015 since the Company was not subject to income taxes).

Historically, Solvay maintained various share-based compensation plans for employees during the Predecessor Period. Employees participated in these share-based payment plans. Upon the 2014 Acquisition, all existing Solvay awards for Eco Services employees were terminated. Accordingly, no further stock-based compensation expense related to Solvay awards was provided in the Successor Period.

In the Predecessor Period, stock-based compensation expense was recognized on a straight-line basis in the statement of operations over the vesting periods relating to these awards. Share-based payment expense recognized during the Predecessor Period was $535. For purposes of determining the fair value of stock option awards, Solvay used the Black-Scholes option pricing model.

There is a risk of environmental impact in chemical manufacturing operations. The Company’s environmental policies and practices are designed to ensure compliance with existing laws and regulations and to minimize the possibility of significant environmental impact. The Company is also subject to various other lawsuits and claims with respect to matters such as governmental regulations, labor and other actions arising out of the normal course of business. No accrual for these matters currently exists, with the exception of those listed below, because management believes that the liabilities resulting from such lawsuits and claims are not probable or reasonably estimable.

PQ Holdings triggered the requirement of New Jersey’s Industrial Site Recovery Act (“ISRA”) statute with the PQ Holdings stock transfer/corporate merger in December 2004. As required under ISRA, a General Information Notice with respect to PQ Holdings’ two New Jersey locations was filed with the New Jersey Department of Environmental Protection (“NJDEP”) in December 2004 and again in July 2007. Based on an initial review of the facilities by the NJDEP in 2005, PQ Holdings estimated that $500 would be required for contamination assessment and removal work of one specific contaminant (polychlorinated biphenyls) that exceeded applicable NJDEP standards at these facilities, and had recorded a reserve for such amount as of December 31, 2005. During subsequent years, it was determined that additional assessment, removal and remediation work would be required and the reserve was increased to cover the estimated cost of such work. In addition, during this period, work had been performed and the reserve was reduced for actual costs incurred for the assessment and remediation work. Work at the Carlstadt, NJ facility has been completed and is closed from an ISRA standpoint, but as of December 31, 2016, the Company has recorded a reserve of $700 for costs required for contamination assessment and removal work at Rahway, NJ. There may be additional costs related to the remediation of Rahway, but until further investigation takes place, the Company cannot reasonably estimate the amount of additional liability that may exist.

As part of a Delaware River Basin Commission (“DRBC”) required Pollutant Minimization Plan (“PMP”), in July 2013, the PQ Holdings Chester facility conducted limited paint sampling for polychlorinated biphenyls (“PCBs”). Also, as part of demolition, repair and maintenance projects scheduled for the PQ Holdings’ Baltimore facility in 2014, PQ Holdings conducted limited paint sampling during the fall of 2013 for waste categorization purposes. Paint samples were analyzed for PCB Aroclor 1254, the specific PCB congener commonly used in the manufacture of paint until the late 1970s. The PQ Holdings analytical results indicated that PCB Aroclor 1254 is present in paint on some structures (e.g., piping, structural steel, tanks) in excess of the fifty (50) parts per million (“ppm”) regulatory threshold. Under the Toxic Substances Control Act (“TSCA”), there is no requirement to test

in use paint for PCB content. However, once PCB content is identified at concentrations at or above the regulatory threshold, absent specific approval from the U.S. Environmental Protection Agency (“EPA”), the PCB-containing paint is regulated as an unauthorized use of PCBs, and the paint must be addressed. The Company abated painted surfaces that have tested positive for PCBs at levels exceeding 50 ppm at Baltimore in 2015 and early 2016. Similar abatement of painted structures as necessary at Chester is currently in process. As of December 31, 2016, the Company recorded a reserve of $1,048 for the anticipated remediation costs of known PCB painted structures at the Company’s Baltimore and Chester facilities.

In 2011, the Company installed a Continuous Emissions Monitor (“CEM”) to measure CO, NOx and Opacity emissions from a furnace at the Company’s Chester facility in Pennsylvania, and the Company conducted Relative Accuracy Test Audits (“RATA”) as part of its efforts to certify the CEM. On May 5, 2014, the Pennsylvania Department of Environmental Protection (“PADEP”) officially notified the Company that it was certifying the CEM based on RATA test results dating back to November 2011 and instructed the Company to start entering data previously recorded by the CEM into the Agency’s on-line database. During the third and fourth quarters of 2014, the Company officially entered data recorded from the CEM up until the second quarter of 2013. In November 2015, PADEP issued an Assessment of Civil Penalty in the amount of $1,739 for alleged violations under the Pennsylvania Air Pollution Control Act during the period from August 11, 2011 through June 30, 2013. The Company appealed, and PADEP reduced the penalty assessment to $1,550. In January 2017, a hearing to review the merits of PQ’s appeal to the Environmental Hearing Board was held, followed by a 90 to 120 day briefing period after which the judge should render an opinion. As of December 31, 2016, the Company has recorded a reserve of $1,500 associated with the PADEP penalty.

As part of the Business Combination, the Company acquired a manufacturing facility at Warrington, United Kingdom. Asbestos-containing building material is present at the site, and asbestos removal and insulation replacement initiatives are underway. As of December 31, 2016, the Company has recorded a reserve of $532 for costs related to this program.

In 2008, the Company sold the property of a manufacturing facility located in the United States to the local port authority. In 2009, the port authority commissioned an environmental investigation of portions of the property. In 2010, the port authority advised the Company of alleged soil and groundwater contamination on the property and alleged the Company liable for certain conditions. The Company received and reviewed the environmental investigation documentation and determined it may have liability with respect to some, but not all, of the alleged contamination. As of December 31, 2016, the Company has recorded a reserve of $913, for costs related to this potential liability.

The Company has recorded a reserve of $1,776 as of December 31, 2016 to address remaining subsurface remedial and wetlands/marsh management activities at the Company’s Martinez, CA site. Although currently a sulfuric acid regeneration plant, the site originally was operated by Mountain Copper Company (“Mococo”) as a copper smelter. Also, the site sold iron pyrite to various customers and allowed their customers to deposit waste iron pyrite cinder and slag on the site. The property is adjacent to Peyton Slough, where Mococo had a permitted discharge point from its process. In 1997, the San Francisco Bay Regional Water Quality Control Board (“RWQCB”) required characterization and remediation of Peyton Slough for Copper, Zinc and Acidic Soils. Various remediation activities were undertaken and completed, and the site has received final concurrence from the Army Corps with respect to the completed work. The RWQCP has agreed that Eco has achieved the goals for vegetative cover, but the current marsh condition is not sustainable without continued operation of the tide gates. The Company is now working with the RWQCP on a plan to involve the County and work towards development of an alliance for operating, maintaining and funding the tide gates in the future.

As of December 31, 2016, the Company has recorded a reserve of $1,755 for subsurface remediation and the Soil Vapor Extraction Project at the Company’s Dominguez, CA site. In the 1980s and 1990s, the EPA and the Los Angeles Regional Water Quality Control Board conducted investigations of the site due to historic chlorinated pesticide and chlorinated solvent use. Soil and groundwater beneath the site were impacted by chlorinated solvents and associated breakdown products, petroleum hydrocarbons, chlorinated pesticides and metals. A Corrective Measures Plan approved in October 2011 requires (1) soil vapor extraction (“SVE”) in affected areas, (2) covering of unpaved areas containing pesticide impacted soil, and (3) annual groundwater monitoring of the perched water-bearing zone. Installation of the SVE unit has been completed and startup has occurred. The California Department of Toxic Substances Control (“DTSC”) has granted conditional approval of the Company’s soil management, and monitoring and maintenance plans. Most recently, the DTSC is requiring the Company to delineate the PCE plume on the eastern boundary of the site. Eco Services is now preparing an action plan to address this matter.

The Company has entered into various lease agreements for the rental of office and plant facilities, railcars, machinery and equipment, substantially all of which are classified as operating leases. Total rent expense under these agreements was $16,315 and $6,096 for the years ended December 31, 2016 and 2015, respectively and $471 and $5,647 for the Successor and Predecessor periods, respectively.

Total rent due under non-cancelable operating lease commitments as of December 31, 2016 is:

The Company has entered into short and long-term purchase commitments for various key raw materials and energy requirements. The purchase obligations include agreements to purchase goods that are enforceable and legally binding, and that specify all significant terms. The purchase commitments covered by these agreements are with various suppliers and total approximately $34,310 as of December 31, 2016.

PQ Holdings was previously liable to the seller of a business for potential multi-year UK tax benefits derived from the acquisition. PQ Holdings was contractually obligated to make a payment on an annual basis on its UK taxable results, which fluctuate period-to-period, until there was a change in control, as defined in the purchase agreement. As a result of the Business Combination, a change in control was triggered, and PQ Holdings is no longer liable for additional accruals under the arrangement as of May 4, 2016. At December 31, 2016, the Company has accrued $1,919 for this arrangement, representing the expected payment owed on the calculation of the liability for the tax years 2016 (through May 4, 2016) and 2015. The Company recorded these expenses as transaction and other related costs in other operating expense, net in the Company’s consolidated statements of operations.

The following table presents the components of restructuring and other related costs for the years ended December 31, 2016 and 2015, and the period from inception (July 30, 2014) to December 31, 2014 (Successor period) included in other operating expenses, net, in the accompanying consolidated statements of operations:

Subsequent to the 2014 Acquisition, the Company initiated a restructuring plan designed to improve organizational efficiency and streamline the operations of Eco Services as a stand-alone company. The primary impact of the plan to the Company’s consolidated results of operations was the recognition of severance costs related to a reduction-in-force. These costs included benefits payable under ongoing Company severance plan arrangements, whereby payments are attributable to employee services rendered with benefits that accumulate over time. The liabilities and associated charges related to these severance costs are recognized by the Company

when payment of the benefits becomes probable and estimable. Charges related to severance costs for the restructuring plan under ongoing benefit plan arrangements were $5,093 and $1,293 for the years ended December 31, 2016 and 2015.

Additionally, certain one-time costs related to retention bonuses were also recognized as part of the restructuring plan. The Company recognizes costs under one-time benefit arrangements by measuring the liability as of the employee communication date, which is based on the estimated fair value of the liability at the termination date, and recognizing the liability ratably over the required future service period based on the terms of the arrangement. Charges related to one-time costs for the restructuring plan were $2,678 for the year ended December 31, 2015 and $247 for the period from inception (July 30, 2014) to December 31, 2014 (Successor period).

Costs related to the restructuring plan affected employees in the Company’s EC&S segment, although these costs are excluded from the segment’s measure of profitability of Adjusted EBITDA (see Note 12 to these consolidated financial statements for further information). The activity in the accrued liability balance associated with the restructuring plan, all of which related to severance and other employee costs, was as follows for the years ended December 31, 2016 and 2015, and the period from inception (July 30, 2014) to December 31, 2014:

The remaining accrued liability balance associated with the restructuring plan at December 31, 2016 is expected to be paid in 2017.

The Company incurred severance and other business optimization costs of $7,537 and $176 for the years ended December 31, 2016 and 2015, respectively, These costs were not associated with formal restructuring plans and primarily related to severance charges for certain executives, transition/duplicate staffing, professional fees and other expenses related to the Company’s organizational changes.

Concurrent with the consummation of the 2014 Acquisition, Eco Services entered into a transition services agreement with Solvay (the “Transition Services Agreement”), which provided certain transition services by

Solvay to Eco Services and from Eco Services to Solvay. The services from Solvay included the provision of information technology services, certain workspace related services, cost accounting services and consulting services, among others. The Transition Services Agreement was terminated as of December 31, 2015. The Company recorded $4,882 and $462 of fees for the transition services provided in selling, general and administrative expenses for the year ended December 31, 2015 and for the period from inception (July 30, 2014) to December 31, 2014, respectively.

In connection with the 2014 Acquisition, Eco Services entered into a Cross-Services Agreement (the “CSA”) with Aroma Performance, a Solvay business unit (“Aroma”), on July 28, 2014. The CSA pertains to Eco Services’ Baton Rouge, LA site. In connection with the CSA, Eco Services (and now the Company) agreed to continue to provide certain services that it historically provided to Aroma when it operated as a component of Solvay, including its well water and process steam requirements, for an initial term of five years. Further, Eco Services also agreed to provide Aroma with the use of space, operating machinery and handling of chemicals on the site.

Under the CSA, the Company sells product to Aroma on an ongoing basis. Sales under the CSA totaled $1,047 and $1,272 for the years ended December 31, 2016 and 2015, respectively, and $124 for the period from inception (July 30, 2014) to December 31, 2014 (Successor period). The Company also provides hazardous waste removal services to Aroma under the CSA. Sales related to the hazardous waste removal services were $1,615 and $1,544 for the years ended December 31, 2016 and 2015, respectively, and $23 for the period from inception (July 30, 2014) to December 31, 2014 (Successor period).

The Company incurs certain shared costs, such as electricity, steam, other utility and plant administration costs, all of which are charged to Aroma primarily based on direct usage. The Company charged Aroma $2,686 and $3,745 for such expenses for the years ended December 31, 2016 and 2015, respectively, and $407 for the period from inception (July 30, 2014) to December 31, 2014 (Successor period).

In connection with the 2014 Acquisition, Eco Services entered into an agreement (the “Silica Sales Agreement”) with Solvay’s Silica business unit (“Silica”) pursuant to which Eco Services agreed to provide Silica with sulfuric acid produced at its Hammond, IN plant for a term of five years, renewing automatically for one year terms thereafter. Eco Services historically provided sulfuric acid to Silica when it operated as a component of Solvay, and the Company continues to sell product to Solvay under the Silica Sales Agreement on an ongoing basis. These sales totaled $1,743 and $1,983 for the years ended December 31, 2016 and 2015, respectively, and $145 for the period from inception (July 30, 2014) to December 31, 2014.

The Predecessor Period includes expense allocations for certain functions provided by Solvay and Solvay SA including, but not limited to, finance, legal, information technology, human resources and regulatory. These expenses have been allocated to Solvay’s Eco business unit on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue or headcount. For the period from January 1, 2014 to November 30, 2014, Solvay’s Eco business unit was allocated $12,942, with such amounts included in selling, general and administrative expenses within the statement of operations.

In addition, the Predecessor Period includes expense allocations from Solvay for employee benefit costs, including payroll taxes, group medical, dental and life insurance, postemployment and other benefits. These costs have been allocated on the basis of total salary expense. For the period from January 1, 2014 to November 30, 2014, Solvay’s Eco business unit was allocated $14,062 of employee benefit costs incurred by Solvay. For the period from January 1, 2014 to November 30, 2014, Solvay’s Eco business unit was allocated $565 of rent expense for shared facilities on the basis of sales.

The expense allocations have been determined on a basis that management considers to be a reasonable reflection of the utilization of services provided or the benefit received by Solvay’s Eco business unit during the periods presented. The allocations may not, however, reflect the expense Solvay’s Eco business unit would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if Solvay’s Eco business unit had been a stand-alone company would depend on a number of factors, including the chosen organization structure, which functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.

Solvay’s Eco business unit sold product to two other Solvay business units, with revenue recorded equivalent to cost incurred. These sales totaled $1,541 for the period from January 1, 2014 to November 30, 2014.

Solvay’s Eco business unit also provided hazardous waste removal services to one of these other Solvay business units at cost. Such sales totaled $754 for the period from January 1, 2014 to November 30, 2014. Solvay’s Eco business unit also operated a facility that is shared with another Solvay business unit. Solvay’s Eco business unit incurs certain shared costs, such as electricity, steam, other utility costs and plant administration costs, all of which are charged to this other business unit primarily based on direct usage. Solvay’s Eco Services business unit charged $5,799 for such expenses for the period from January 1, 2014 to November 30, 2014, with such amounts included as a reduction to cost of sales in the statement of operations.

Under the Predecessor Period presentation, which lacks an independent capital structure, it is not meaningful to show share capital or retained earnings for Solvay’s Eco business unit. The net assets are represented by the cumulative investment in Solvay’s Eco business unit by Solvay, which is shown as Parent company investment comprised of the accumulated earnings of Solvay’s Eco business unit and net transfers to/from the Parent.

All significant intercompany transactions between Solvay’s Eco business unit and Solvay have been included in the Predecessor Period and are considered to be effectively settled for cash at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the statements of cash flows as a financing activity as Parent company investment. Net transfers to/from Solvay are deemed borrowings and repayments to Solvay associated with Solvay’s centralized treasury function (for which bifurcation between gross borrowings and gross repayments is not practical). Accordingly, such activity is deemed a net financing activity for cash flow presentation purposes.

As part of Solvay’s 2004 sale of its Specialty Phosphates business, Solvay agreed to continue to supply sulfuric acid to a third party in support of the phosphoric acid production for its specialty phosphates business

under a preexisting supply agreement. This non-cancelable agreement extends to 2031, and was assumed by the Company in connection with the 2014 Acquisition.

The liability associated with this supply agreement was recorded at an estimated fair value of $27,300 in connection with the 2014 Acquisition. The fair value was determined by appraisal, based on the marked up price of the sulfuric acid over the price per the supply agreement, or mark up. The liability was $23,888 and $25,526 at December 31, 2016 and 2015, respectively, and is being amortized to cost of goods sold over the remaining term of the agreement.

The Company maintains certain policies and procedures for the review, approval and ratification of related party transactions to ensure that all transactions with selected parties are fair, reasonable and in the Company’s best interests. All significant relationships and transactions are separately identified by management if they meet the definition of a related party or a related party transaction. Related party transactions include transactions that occurred during the year, or are currently proposed, in which the Company was or will be a participant, and for which any related person had or will have a direct or indirect material interest. All related party transactions are reviewed, approved and documented by the appropriate level of the Company’s management in accordance with these policies and procedures.

On December 29, 2014, PQ Holdings, CCMP and PQ Corporation entered into a consulting agreement relating to the provision of certain financial and strategic advisory services and consulting services. Similarly, the consulting agreement between PQ Holdings, INEOS Capital Partners and PQ Corporation was amended and restated. Under the new consulting agreements, the Company agreed to pay an annual monitoring fee of $5,000 distributed to CCMP and INEOS AG equal to the Pro Rata Percentage, as defined, between CCMP and INEOS AG. The Company recorded $3,584 of management advisory fees in other operating expense in the consolidated statements of operations for the year ended December 31, 2016.

Concurrent with the consummation of the 2014 Acquisition, the Company entered into an advisory services and monitoring agreement with CCMP, pursuant to which CCMP provided certain advisory services to the Company. Pursuant to the advisory services and monitoring agreement, CCMP and certain members of the Company’s management and board of managers were paid a one-time fee on the Closing Date of $8,000 related to the 2014 Acquisition, Senior Secured Credit Facilities and 2022 Notes transactions, and CCMP received (i) an annual advisory fee of $500 and (ii) reimbursement for reasonable out-of-pocket expenses incurred in connection with the provision of services, including the reasonable fees and disbursements of legal counsel and other advisors retained by CCMP and travel and reasonable out-of-pocket expenses of each director appointed by CCMP to the Company’s board of managers or the board of directors of its affiliates, and of any other representative of CCMP in connection with their provision of such services. The advisory services and monitoring agreement also provided for customary exculpation, indemnification and confidentiality provisions. The one-time management fee was recorded by the Company as an increase to selling, general, and administrative expenses.

Effective January 1, 2015, the Company entered into a service agreement with CCMP (the “Services Agreement”) for the provision of services historically provided by Solvay. The services include product information and operations support, manufacturing support, electronic data processing and systems support, employee relations, and financial services. The Company recorded $1,616 for these services and reimbursable

expenses provided under the Service Agreement, which was recorded in selling, general and administrative expenses for the year ended December 31, 2015.

Pursuant to the advisory services and monitoring agreement, the Company agreed to pay certain investors a one-time fee of $1,600 for services provided related to the 2014 Acquisition. On January 13, 2015, pursuant to a payment direction and subscription agreement, in lieu of the Company paying this fee, these investors agreed to contribute the $1,600 transaction fee to the capital of Eco Services Group Holdings LLC (“Holdings”). Holdings contributed this fee to Eco Services Intermediate Holdings LLC (“Intermediate Holdings”). Intermediate Holdings in turn contributed this transaction fee to the Company, increasing the Company’s additional paid-in capital by $1,600.

For the year ended December 31, 2015, certain members of the Company’s board of managers and management contributed $1,538 in cash, which was invested directly into Holdings. Holdings contributed these proceeds to Intermediate Holdings. Intermediate Holdings in turn contributed the proceeds to the Company, increasing the Company’s additional paid-in capital by $1,538.

In connection with the offering by PQ Corporation of $525.0 million aggregate principal amount of Senior Unsecured Notes due 2022 in May 2016, a member of our board of directors purchased $4 million in principal amount of such notes. Interest accrues on the notes at an annual rate equal to three-month LIBOR plus 10.75%, with a 1.0% LIBOR floor, payable and reset quarterly. The director received interest payments in respect of the notes totaling $0.3 million during the year ended December 31, 2016 and has not received any repayment in respect of the principal amount of such notes.

The Company entered into a joint venture agreement (the “ZI Partnership Agreement”) in 1988 with CRI Zeolites Inc., a Royal Dutch Shell plc affiliate, to form Zeolyst International, our 50/50 joint venture partnership (the “Partnership”). Under the terms of the ZI Partnership Agreement, the Partnership leases certain land used in its Kansas City production facilities from PQ Corporation. This lease, which has been recorded as an operating lease, provided for rental payments of $187 for the year ended December 31, 2016. The terms of this lease are evergreen as long as the ZI Partnership Agreement is in place. The Partnership purchases certain of its raw materials from the Company and is charged for various manufacturing costs incurred at the Company’s Kansas City production facility. The amount of these costs charged to the Partnership during the year ended December 31, 2016 was $10,707. Certain administrative, marketing, engineering, management-related, and research and development services are provided to the Partnership by the Company. During the year ended December 31, 2016, the Partnership was charged $8,169 for these services. In addition, the Partnership was charged certain product demonstration costs of $1,663 during the year ended December 31, 2016.

From time to time, the Company makes sales to portfolio companies of funds that are affiliated with CCMP and companies that are affiliated with INEOS Capital Partners, but these sales are not material.

The Company has evaluated subsequent events since the balance sheet date and determined there are no additional items to disclose.

On August 17, 2015, PQ Holdings, Inc. (“PQ Holdings”), Eco Services Operations, LLC (“Eco Services”), certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP”), INEOS Capital Partners (“INEOS”) and certain other stockholders of PQ Holdings and Eco Services entered into a reorganization and transaction agreement pursuant to which the companies consummated a series of transactions to reorganize and combine the businesses of PQ Holdings and Eco Services (the “Business Combination”), under a new holding company, PQ Group Holdings Inc. (“PQ Group Holdings” or the “Parent Company”). The reorganization was consummated on May 4, 2016.

In accordance with accounting principles generally accepted in the United States (“GAAP”), Eco Services is the accounting predecessor to PQ Group Holdings. Certain investment funds affiliated with CCMP held a controlling interest position in Eco Services prior to the Business Combination. In addition, certain investment funds affiliated with CCMP owned a non-controlling interest in PQ Holdings and the merger with Eco Services constituted a change in control under the PQ Holdings credit agreements and bond indenture that were in place at the time of the Business Combination. Therefore, Eco Services is deemed to be the accounting acquirer. These Parent Company condensed financial statements are the continuation of Eco Services’ business prior to the Business Combination.

PQ Group Holdings is a holding company that conducts substantially all of its business operations through its wholly owned subsidiary, PQ Corporation. As specified in certain of PQ Corporation’s debt agreements entered into concurrently with the Business Combination, there are restrictions on the ability of PQ Corporation to make payments to its stockholder, PQ Group Holdings, on behalf of their equity interests (refer to Note 15 to our Consolidated Financial Statements entitled “Long-term Debt”).

The accompanying condensed Parent Company only financial statements are required in accordance with Rule 4-08(e)(3) of Regulation S-X. These condensed financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investment in its consolidated subsidiary is presented under the equity method of accounting. Under the equity method, investment in its subsidiaries is stated at cost plus contributions and equity in undistributed income (loss) of subsidiary less distributions received since the date of acquisition. For purposes of presenting net income, this presentation assumes that the Parent Company was in existence for the full year ended December 31, 2016. These parent-only financial statements should be read in conjunction with PQ Group Holdings’ audited Consolidated Financial Statements included elsewhere herein.

Refer to Note 21 of the notes to consolidated financial statements in this prospectus for a description of Stock-Based Compensation.

Refer to Note 20 of the notes to consolidated financial statements in this prospectus for a description of Common Stock.

On August 17, 2015, the Company PQ Holdings Inc. (“PQ Holdings”), Eco Services Operations LLC (“Eco Services”), certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP”), stockholders of PQ Holdings and Eco Services entered into a reorganization and transaction agreement pursuant to which the companies consummated a series of transactions to reorganize and combine the businesses of PQ Holdings and Eco Services (the “Business Combination”), under a new holding company, PQ Group Holdings Inc. The Business Combination was consummated on May 4, 2016.

In accordance with accounting principles generally accepted in the United States (“GAAP”), Eco Services is the accounting predecessor to PQ Group Holdings. Certain investment funds affiliated with CCMP held a controlling interest position in Eco Services prior to the Business Combination. In addition certain investment funds affiliated with CCMP owned a non-controlling interest in PQ Holdings prior to the Business Combination and the merger with Eco Services constituted a change in control under the PQ Holdings credit agreements and bond indenture that were in place at the time of the Business Combination. Therefore, Eco Services is deemed to be the accounting acquirer. These consolidated financial statements are the continuation of Eco Services’ business prior to the Business Combination.

The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with GAAP for interim financial reporting. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations for interim reporting. In the opinion of management, all adjustments of a normal and recurring nature necessary to state fairly the financial position and results of operations have been included. The results of operations are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to the historical financial statements to conform to the current presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016. The Company has continued to follow the accounting policies set forth in those consolidated financial statements.

In January 2017, the FASB issued guidance which eliminates the second step from the traditional two-step goodwill impairment test. Under current guidance, an entity performed the first step of the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount; if an impairment loss was indicated, the entity computed the implied fair value of goodwill to determine whether an impairment loss existed, and if so, the amount to recognize. Under the new guidance, an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value (the Step 1 test), with no further testing required. Any impairment loss recognized is limited to the amount of goodwill allocated to the reporting unit. The new guidance is effective for public companies that are SEC registrants for fiscal years beginning after December 15, 2019, with early adoption, permitted for goodwill impairment tests performed on testing dates after January 1, 2017. All entities are required to apply the guidance prospectively to goodwill impairment tests subsequent to adoption of the standard. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

between cash, cash equivalents and restricted cash presented on the balance sheet to the total of the same amounts presented on the statement of cash flows. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, and the new guidance should be applied retrospectively to each period presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements. As of March 31, 2017, the Company had $8,431 of restricted cash on its balance sheet related to its New Market Tax Credit financing arrangements as well as other small restricted cash balances.

In March 2016, the FASB issued guidance that includes targeted improvements to the accounting for employee stock-based compensation. The updates in the guidance include changes in the income tax consequences, balance sheet classification and cash flow statement reporting of stock-based payment transactions. The guidance also includes certain modifications applicable only to nonpublic entities. For public companies, the new guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those years.

The Company adopted this new guidance as required on January 1, 2017, with no significant impact upon adoption to the Company’s consolidated financial statements. On a prospective basis from the adoption date, the Company will record all tax effects related to stock-based compensation through the statement of operations, and all tax-related cash flows resulting from stock-based award payments will be reported as operating activities in the statement of cash flows. The Company is also making an accounting policy election under the new guidance to account for forfeitures of stock-based compensation awards as they occur.

Fair values are based on quoted market prices when available. When market prices are not available, fair values are generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality. In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair values using methods, models and assumptions that management believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of management estimation and judgment that becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used.

measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 12 to these condensed consolidated financial statements regarding defined supplementary retirement plans.

Derivative assets and liabilities can be exchange-traded or traded over-the-counter (“OTC”). The Company generally values exchange-traded derivatives using models that calibrate to market transactions and eliminate timing differences between the closing price of the exchange-traded derivatives and their underlying instruments. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

The Company has interest rate caps and natural gas caps and swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset, the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company utilizes a default swap rate comparable to PQ Group Holdings. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of March 31, 2017 and December 31, 2016, the credit valuation adjustment resulted in a minimal change in the fair value of the derivatives.

The following tables present the pre-tax, tax, and after-tax components of other comprehensive income (loss) for the three months ended March 31, 2017 and 2016:

The following table presents the change in accumulated other comprehensive loss, net of tax, by component for the three months ended March 31, 2017 and 2016:

The following table presents the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2017 and 2016. Amounts in parenthesis indicate debits to profit/loss.

The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity basis as of March 31, 2017 are as follows:

The Company’s investments in affiliated companies balance as of March 31, 2017 and December 31, 2016 includes net purchase accounting fair value adjustments of $269,675 and $273,300, respectively, related to the Business Combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names. Consolidated equity in net income from affiliates is net of $3,624 of amortization expense related to purchase accounting fair value adjustments for the three months ended March 31, 2017.

A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows:

Depreciation expense was $28,189 and $7,704 for the three months ended March 31, 2017 and 2016, respectively.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction. As of March 31, 2017 and December 31, 2016, the fair value of the senior secured term loans and senior secured and unsecured notes was higher than book value by $57,933 and $68,477, respectively. The fair value of the senior secured term loans and senior secured and unsecured notes was derived from published loan prices as of March 31, 2017 and December 31, 2016, as applicable. The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 3 to these condensed consolidated financial statements for further information on fair value measurements).

Use of Derivative Financial Instruments to Manage Interest Rate Risk. The Company is exposed to fluctuations in interest rates on its senior secured credit facilities and senior unsecured notes. Changes in interest rates will not affect the market value of such debt but will affect the amount of our interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on debt obligations through interest rate cap agreements. The Company records these agreements at fair value as assets or liabilities. As the derivatives are highly effective and are designated and qualify as cash-flow hedges, the related unrealized gains or losses are deferred in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

In July 2016, the Company entered into interest rate cap agreements, paying a premium of $1,551 to mitigate interest rate volatility from July 2016 through July 2020 by employing varying cap rates, ranging from 1.50% to 3.00% on $1,000,000 of notional variable-rate debt.

The fair values of derivative instruments held as of March 31, 2017 and December 31, 2016 are shown below:

The following tables show the effect of the Company’s derivative instruments designated as hedges on other comprehensive income (loss) (“OCI”) and the statement of income for the three months ended March 31, 2017:

Amounts of unrealized losses in OCI that are expected to be reclassified to the consolidated statement of operations over the next twelve months are $5 as of March 31, 2017.

The effective income tax rate for the three month period ended March 31, 2017 was 55.7% compared to (5.0%) for the three month period ended March 31, 2016. The Company’s effective income tax rate fluctuates based, primarily, on changes in income mix and, in this case, the change in Eco Service’s tax status. As a result of the Business Combination in May 2016, Eco Services had a change in tax status, whereas it was previously a partnership for tax purposes and now is taxed as a C-Corporation. Due to being a partnership, Eco Services had not previously recorded taxes (with the exception of minimal state taxes imposed on the partnership) as its members were responsible for their respective tax liabilities. Minimal taxes were recorded on the book loss incurred by Eco for the three months ended March 31, 2016 causing the fluctuation to the Company’s effective income tax rate in comparison to the taxes recorded for three months ending March 31, 2017.

The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for 2017 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends offset by lower tax rates in foreign jurisdictions as compared to the U.S. tax rate, foreign withholding taxes, state taxes and non-deductible transaction costs.

The following information is provided for (1) the Company-sponsored defined benefit pension plans covering employees in the U.S. and certain employees at its foreign subsidiaries, (2) the Company-sponsored unfunded plans to provide certain health care benefits to retired employees in the U.S. and Canada, and (3) the Company’s defined benefit supplementary retirement plans which provide benefits for certain U.S. employees in excess of qualified plan limitations.

minimize the possibility of significant environmental impact. The Company is also subject to various other lawsuits and claims with respect to matters such as governmental regulations, labor and other actions arising out of the normal course of business. No accrual for these matters currently exists, with the exception of those listed below, because management believes that the liabilities resulting from such lawsuits and claims are not probable or reasonably estimable.

The Company triggered the requirement of New Jersey’s Industrial Site Recovery Act (“ISRA”) statute with the PQ Holdings stock transfer/corporate merger in December 2004. As required under ISRA, a General Information Notice with respect to the Company’s two New Jersey locations was filed with the New Jersey Department of Environmental Protection (“NJDEP”) in December 2004 and again in July 2007. Based on an initial review of the facilities by the NJDEP in 2005, the Company estimated that $500 will be required for contamination assessment and removal work of one specific contaminant (polychlorinated biphenyls) that exceeded applicable NJDEP standards at these facilities, and had recorded a reserve for such amount as of December 31, 2005. During subsequent years, it was determined that additional assessment, removal and remediation work would be required and the reserve was increased to cover the estimated cost of such work. In addition, during this period, work had been performed and the reserve was reduced for actual costs incurred for the assessment and remediation work. Work at the Carlstadt facility has been completed and is closed from an ISRA standpoint, but as of March 31, 2017 and December 31, 2016, the Company has recorded a reserve of $669 and $700, respectively, for costs required for contamination assessment and removal work at Rahway. There may be additional costs related to the remediation of Rahway, but until further investigation takes place, the Company cannot reasonably estimate the amount of additional liability that may exist.

As part of a Delaware River Basin Commission (“DRBC”) required Pollutant Minimization Plan (“PMP”), in July 2013, the Company’s Chester facility conducted limited paint sampling for polychlorinated biphenyls (“PCBs”). Also, as part of demolition, repair and maintenance projects scheduled for the Company’s Baltimore facility in 2014, the Company conducted limited paint sampling during the fall of 2013 for waste categorization purposes. Paint samples were analyzed for PCB Aroclor 1254, the specific PCB congener commonly used in the manufacture of paint until the late 1970s. The Company’s analytical results indicated that PCB Aroclor 1254 is present in paint on some structures (e.g., piping, structural steel, tanks) in excess of the fifty (50) parts per million (“ppm”) regulatory threshold. Under the Toxic Substances Control Act (“TSCA”), there is no requirement to test in use paint for PCB content. However, once PCB content is identified at concentrations at or above the regulatory threshold, absent specific approval from the U.S. Environmental Protection Agency (“EPA”), the PCB-containing paint is regulated as an unauthorized use of PCBs, and the paint must be addressed. The Company abated painted surfaces that have tested positive for PCBs at levels exceeding 50 ppm at Baltimore in 2015 and early 2016. Similar abatement of painted structures as necessary at Chester is currently in process. As of March 31, 2017 and December 31, 2016, the Company recorded a reserve of $168 and $1,048, respectively, for the anticipated remediation costs of known PCB painted structures at the Company’s Baltimore and Chester facilities.

violations under the Pennsylvania Air Pollution Control Act during the period from August 11, 2011 through June 30, 2013. The Company appealed, and PADEP reduced the penalty assessment to $1,550. In January 2017, a hearing to review the merits of PQ’s appeal to the Environmental Hearing Board was held, followed by a 90 to 120 day briefing period after which the judge should render an opinion. As of March 31, 2017 and December 31, 2016, the Company has recorded a reserve of $1,500 associated with the PADEP penalty.

As part of the Business Combination, the Company acquired a manufacturing facility at Warrington, United Kingdom. Asbestos-containing building material is present at the site, and asbestos removal and insulation replacement initiatives are underway. As of March 31, 2017 and December 31, 2016, the Company has recorded a reserve of $537 and $532, respectively, for costs related to this program.

In 2008, the Company sold the property of a manufacturing facility located in the United States to the local port authority. In 2009, the port authority commissioned an environmental investigation of portions of the property. In 2010, the port authority advised the Company of alleged soil and groundwater contamination on the property and alleged the Company liable for certain conditions. The Company received and reviewed the environmental investigation documentation and determined it may have liability with respect to some, but not all, of the alleged contamination. As of March 31, 2017 and December 31, 2016, the Company has recorded a reserve of $867 and $913, respectively, for costs related to this potential liability.

The Company has recorded a reserve of $1,627 and $1,776 as of March 31, 2017 and December 31, 2016, respectively, to address remaining subsurface remedial and wetlands/marsh management activities at the Company’s Martinez, CA site. Although currently a sulfuric acid regeneration plant, the site originally was operated by Mountain Copper Company (“Mococo”) as a copper smelter. Also, the site sold iron pyrite to various customers and allowed their customers to deposit waste iron pyrite cinder and slag on the site. The property is adjacent to Peyton Slough, where Mococo had a permitted discharge point from its process. In 1997, the San Francisco Bay Regional Water Quality Control Board (“RWQCB”) required characterization and remediation of Peyton Slough for Copper, Zinc and Acidic Soils. Various remediation activities were undertaken and completed, and the site has received final concurrence from the Army Corps with respect to the completed work. The RWQCP has agreed that Eco has achieved the goals for vegetative cover, but the current marsh condition is not sustainable without continued operation of the tide gates. The Company is now working with the RWQCP on a plan to involve the County and work towards development of an alliance for operating, maintaining and funding the tide gates in the future.

As of March 31, 2017 and December 31, 2016, the Company has recorded a reserve of $1,716 and $1,755, respectively, for subsurface remediation and the Soil Vapor Extraction Project at the Company’s Dominguez, CA site. In the 1980s and 1990s, the EPA and the Los Angeles Regional Water Quality Control Board conducted investigations of the site due to historic chlorinated pesticide and chlorinated solvent use. Soil and groundwater beneath the site were impacted by chlorinated solvents and associated breakdown products, petroleum hydrocarbons, chlorinated pesticides and metals. A Corrective Measures Plan approved in October 2011 requires (1) soil vapor extraction (“SVE”) in affected areas, (2) covering of unpaved areas containing pesticide impacted soil, and (3) annual groundwater monitoring of the perched water-bearing zone. Installation of the SVE unit has been completed and startup has occurred. The California Department of Toxic Substances Control (“DTSC”) has granted conditional approval of the Company’s soil management, and monitoring and maintenance plans. Most recently, the DTSC is requiring the Company to delineate the PCE plume on the eastern boundary of the site. Eco Services is now preparing an action plan to address this matter.

Summarized financial information for the Company’s (1) Performance Materials and Chemicals and (2) Environmental Catalysts and Services reportable segments is shown in the following table:

The following table presents the components of restructuring and other related costs for the three months ended March 31, 2017 and 2016:

On July 30, 2014, Eco Services, a newly formed Delaware limited liability company and indirect subsidiary of certain investment funds affiliated with CCMP, entered into an Asset Purchase Agreement with Solvay USA, Inc. (“Solvay”), a Delaware corporation, which provided for the sale, transfer and assignment by Solvay and the acquisition, acceptance and assumption by Eco Services, of substantially all of the assets of Solvay’s Eco Services business unit of Solvay’s regeneration and virgin sulfuric acid production business operations in the United States (the “2014 Acquisition”). Prior to the Asset Purchase Agreement with Solvay, Eco Services operated as a business unit within Solvay, which is an indirect, wholly owned subsidiary of Solvay SA.

The activity in the accrued liability balance associated with the restructuring plan, all of which related to severance and other employee costs, was as follows for the three months ended March 31, 2017:

The remaining accrued liability balance associated with the restructuring plan at March 31, 2017 is expected to be paid in 2017.

The Company incurred severance and other business optimization costs of $366 and $1,010 for the three months ended March 31, 2017 and 2016, respectively, These costs were not associated with formal restructuring plans and primarily related to severance charges for certain executives, transition/duplicate staffing, professional fees and other expenses related to the Company’s organizational changes.

Diluted earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period for each class of common stock, if dilutive. Potential shares/units reflect the unvested Class A and Class B shares as well as options to purchase Class A shares and Eco Services membership units, which have been included in the diluted earnings per share calculation using the treasury stock method. For purposes of calculating diluted earnings per share, income has been reallocated between the classes based on the diluted weighted average number of common shares outstanding for each class. In periods of net loss, inclusion of potential common shares would be antidilutive.

For both the basic and dilutive weighted average shares calculations, as a result of the Business Combination, the number of Eco Services membership units outstanding for the three months ended March 31,

2016 were computed on the basis of the weighted average units outstanding for Eco Services during the period multiplied by the exchange ratio established for Class B shares as part of the Business Combination. For the three months ended March 31, 2016, units of Eco Services were retrospectively reflected as Class B shares for earnings per share purposes despite the net loss for the three months ended March 31, 2016, since during this period this was the only class of shares in existence to absorb income and losses.

The reconciliation from basic to diluted weighted average shares outstanding is as follows:

The following table reconciles the components of basic and diluted income (loss) per share for the three months ended March 31, 2017 and 2016:

The Company has evaluated subsequent events since the balance sheet date, and determined there are no additional items to disclose.

We have audited the accompanying consolidated financial statements of PQ Holdings Inc. and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three years in the period ended December 31, 2015.

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PQ Holdings Inc. and its subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the three years in the period ended December 31, 2015 in accordance with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it classifies deferred taxes in 2015 due to the adoption of Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes and in which it classifies deferred finance costs in 2015 due to the adoption of Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs. Our opinion is not modified with respect to this matter.

PQ Holdings Inc. and subsidiaries (the “Company”) conducts operations through three principal businesses: Performance Chemicals: a fully integrated, global leader in silicate technology, producing sodium silicate, specialty silicas, zeolites, spray dry silicates, magnesium silicate, and other high performance chemical products used in a variety of end-uses such as adsorbents for surface coatings, clarifying agents for beverages, cleaning and personal care products; Catalysts: an integrated silica catalyst and specialty zeolite-based catalyst producer with leading global market positions, producing silica catalyst used in the production of high-density polyethylene (“HDPE”), and specialty zeolite-based catalysts sold to the emissions control industry, the petrochemical industry and other areas of the broader chemicals industry; and Specialty Glass Materials: a leading global producer of engineered glass products for use in highway safety, polymer additives, metal finishing and electronics end markets, which is comprised of Highway Safety and Engineered Glass Materials (“EGM”). Highway Safety manufactures glass beads used for airport, highway and road safety applications to improve visibility in wet and nighttime driving conditions, where EGM produces solid and hollow glass spheres for use as polymer additives and fillers in specialized plastics, as engineered peening beads in metal finishing and as conductives in consumer electronics and other applications.

We experience some seasonality, primarily with respect to the Specialty Glass Materials business. As the road striping season occurs during warmer weather, sales and earnings are generated primarily during the second and third quarters. Working capital is built during the first half of the year, while cash generation occurs primarily in the second half of the fiscal year.

On May 31, 2007, PQ Corporation and its parent company, Niagara Holdings, Inc., entered into an Agreement and Plan of Merger with affiliates of The Carlyle Group (“2007 Sponsor”), including CPQ Holdings LLC (“CPQ Holdings“), and an affiliate of the previous owner of the Company, J.P. Morgan Partners, pursuant to which PQ Corporation continued as the surviving corporation and an indirect, wholly-owned subsidiary of CPQ Holding Corporation, which was a direct, wholly-owned subsidiary of CPQ Holdings (the “2007 Merger”). The 2007 Merger was consummated on July 30, 2007.

On July 2, 2008, the Company acquired certain assets and liabilities from and certain stock of the entities that comprised INEOS Silicas, a division of INEOS Group that was a global manufacturer of inorganic chemicals based on silica and alumina technology, from INEOS Capital Partners, formerly named INEOS Investments Partnership (“INEOS”) in exchange for cash and shares of CPQ Holding Corporation (the “2008 INEOS Silicas Acquisition”). After the closing of the 2008 INEOS Silicas Acquisition, INEOS Silicas was incorporated into the Performance Chemicals and Catalyst divisions of the Company. Since July 2, 2008, the financial statements include the results of operations of the acquired business.

On January 29, 2014, CPQ Holding Corporation changed its name to PQ Holdings Inc. (“Holdings”).

On September 11, 2014, Holdings entered into a stock purchase agreement (as amended on November 18, 2014) pursuant to which certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP” or “2014 Sponsor”) and INEOS, one of the existing stockholders of Holdings, acquired stock of Holdings from CPQ Holdings and certain other selling stockholders (the “2014 Stock Purchase”). The 2014 Stock Purchase was consummated on December 29, 2014. Following consummation of the sale, The Carlyle Group no longer holds any shares of Holdings. The 2014 Stock Purchase did not qualify as a business combination.

On August 18, 2015, the Company announced that Eco Services Holdings LLC (“Eco Services”), the Company and certain of their respective affiliates had signed a definitive agreement (the “Business Combination

Agreement”) pursuant to which the Company and Eco Services will reorganize under a newly formed holding company (the “Combined Company”). The Combined Company will retain the PQ Corporation name. The Company’s existing indirect shareholders (affiliates of CCMP, affiliates of INEOS Capital Partners and management) and Eco Services’ existing indirect equity holders (affiliates of CCMP and management) will constitute the sole shareholders of the Combined Company immediately following the closing of the business combination. The completion of the transactions is subject to certain closing conditions that are customary for transactions of this type, including regulatory clearance.

All assets and liabilities of foreign subsidiaries and affiliated companies are translated to U.S. dollars using exchange rates in effect at the balance sheet date. Adjustments resulting from translation of the balance sheets and intercompany loans, which are considered permanent, are included in stockholders’ equity as part of accumulated other comprehensive loss. Adjustments resulting from translation of certain intercompany loans, which are not considered permanent and are denominated in foreign currencies, are included in other expense (income), net in the consolidated statement of operations. Income and expense items are translated at average exchange rates during the year. Net foreign exchange included in other expense, net was a loss of $21,059, $23,387, and $4,414 for the years ended December 31, 2015, 2014, and 2013, respectively. The foreign currency losses realized in 2015, 2014, and 2013, were primarily driven by the non-permanent intercompany debt denominated in local currency translated to U.S. dollars.

Cash and Cash Equivalents. Cash and cash equivalents include investments with original terms to maturity of 90 days or less from the time of purchase.

Restricted Cash. Restricted cash, which is restricted as to withdrawal or usage, is classified separately from cash and cash equivalents on our consolidated balance sheet. The proceeds from the New Markets Tax Credit (“NMTC”) financing arrangement are restricted for use and are classified on our consolidated balance sheet as a noncurrent asset. As of December 31, 2013, there remained $16,890 restricted cash that is required to be used to fund the capital expenditure associated with the NMTC agreement and is recorded in other long-term assets on the consolidated balance sheet. During 2014, the balance was fully used to fund the capital expenditure associated with the NMTC agreement. See Note 13 to these consolidated financial statements for further information.

Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. A specific reserve for bad debt is recorded for known or suspected doubtful accounts receivable. For all other accounts, the Company recognizes a reserve for bad debt based on the length of time receivables are past due and historical write-off experience. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required. The Company does not have any off-balance sheet credit exposure related to its customers.

Inventories. All inventories are stated at the lower of cost or market. All domestic inventories are valued on the last-in, first-out (“LIFO”) method, and all other inventories are valued on the average cost and first-in,

first-out (“FIFO”) methods. When necessary, the Company provides allowances to adjust the carrying value of its inventory to the lower of cost or net realizable value, including any costs to sell or dispose. Appropriate consideration is given to obsolescence, excessive inventory levels, product deterioration and other factors in evaluating net realizable value.

Prepaid and Other Current Assets. Prepaid and other current assets primarily include prepayments on insurance and property tax, current deposits, income tax receivables, current deferred tax assets, value-added taxes, receivables from affiliates and other current assets.

Property, Plant, and Equipment. Property, plant and equipment are carried at cost and include expenditures for new facilities and major renewals and betterments. The Company capitalizes the cost of furnace rebuilds as part of property, plant and equipment. Plant and equipment under capital leases are carried at the present value of minimum lease payments. Maintenance, repairs and minor renewals are charged to expense as incurred. The Company capitalizes internal costs associated with the implementation of purchased software. When property, plant and equipment is retired or otherwise disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time.

Depreciation is generally provided on the straight-line method based on estimated useful lives of the assets, ranging up to thirty-three years for buildings, ten to twelve years for machinery and equipment, and three to seven years for computer hardware and software.

Investments. Investments are accounted for using the equity method of accounting if the investment provides us the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investments in equity-method investees are recorded in the consolidated balance sheets as investments in affiliated companies and the investees’ earnings or losses together with other-than temporary impairments in value is recorded as equity in net income from affiliated companies in the consolidated statements of operations.

Goodwill and Intangible Assets. Definite-lived intangible assets are amortized over their estimated useful life. Goodwill and intangible assets with indefinite lives are not amortized, but are tested for impairment annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. A write-down occurs in periods in which it is determined that a reporting unit’s fair value is less than its book value.

Generally accepted accounting principles require the Company to perform an impairment test at least annually. When evaluating goodwill for impairment, the Company can perform a qualitative step zero assessment. If the Company elects to skip or fails the qualitative assessment, then a quantitative assessment on the reporting units is performed. Under a qualitative assessment, the Company will consider the relevant events and circumstances and the extent to which they could affect the comparison of a reporting unit’s fair value to its carrying amount and form a conclusion indicating whether it is more likely than not that the reporting unit’s fair value is less than its carrying amount. The quantitative assessment is a two-step test. In step one the estimated fair value of the reporting unit is compared to its carrying value. If the estimated fair value is less than the carrying value, then step two is required. In step two the actual amount of the goodwill impairment is calculated by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value is determined in the same manner as the amount of goodwill recognized in a business

combination. See Note 11 to these consolidated financial statements for further discussion on goodwill impairment.

Other Long-term Assets. Other long-term assets primarily include pension benefits, deferred tax assets, and spare parts.

Valuation of Long-Lived Assets. The Company performs an impairment review of property, plant, and equipment and definite-lived intangible assets when facts and circumstances indicate the carrying value may not be recoverable from its undiscounted cash flows. When evaluating long-lived assets for impairment, if the carrying amount of an asset or asset group is found not to be recoverable, then an impairment loss is recognized. Any impairment loss is measured by comparing the carrying amount of the asset to its fair value. Fair value is determined using quoted market prices where available, or other techniques including discounted cash flows. The Company’s estimates of future cash flows involve assumptions concerning future operating performance, economic conditions, and technological changes that may affect the future useful lives of the assets.

Derivative Financial Instruments. The Company utilizes certain derivative financial instruments to enhance its ability to manage risk, including exposures to interest rates and natural gas price fluctuations that exist as part of ongoing business operations. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures.

All derivatives designated as hedges are recognized on the balance sheet at fair value. On the date a derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss) to the extent that the derivative is effective as a hedge, until earnings are affected by the variability in cash flows of the designated hedged item, and the ineffective portion is reported in earnings. Changes in the fair value of a derivative that is not designated or does not qualify as a cash flow hedge are recorded in the consolidated statement of operations. Cash flows from derivative instruments are reported in the same cash flow category as the cash flows from the items being hedged.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes relating all derivatives that are designated cash flow hedges to underlying forecasted transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each hedging relationship is highly effective in achieving offsetting changes in fair values or cash flows of the hedged item during the period. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, hedge accounting would be discontinued with respect to that derivative prospectively.

Fair Value Measurements. The Company measures fair value using the guidelines under U.S. generally accepted accounting principles. Fair value is defined as the price at which an asset could be exchanged in a current transaction between market participants. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor. See Note 4 to these consolidated financial statements regarding the application of fair value measurements.

The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. See Note 13 to these consolidated financial statements regarding the fair value of debt and Note 15 regarding other financial instruments.

Shipping and Handling Costs. Amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues earned for the goods provided and is classified as revenue. Costs related to shipping and handling of products shipped to customers are classified as cost of goods sold.

Research and Development. Research and development costs of $10,264, $9,142, and $8,661, for the years ended December 31, 2015, 2014, and 2013, respectively, were expensed as incurred and reported in selling, general and administrative expenses in the consolidated statements of operations.

Income Taxes. The Company operates within multiple taxing jurisdictions and is subject to tax filing requirements and audit within these jurisdictions. The Company uses the asset and liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized.

In determining the provision for income taxes, the Company provides deferred income taxes on income from foreign subsidiaries as such earnings are taxable upon remittance to the United States. The Company establishes contingent liabilities for possible assessments by taxing authorities resulting from uncertain tax positions including, but not limited to, transfer pricing, deductibility of certain expenses and other state, local, and foreign tax matters. The Company recognizes a financial statement benefit for positions taken for tax return purposes when it will be more-likely-than-not that the positions will be sustained. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. Tax examinations are often complex as tax authorities may disagree with the treatment of items reported by the Company and may require several years to resolve. These accrued liabilities represent a provision for taxes that are reasonably expected to be incurred on the basis of available information but which are not certain.

Asset Retirement Obligation. The Company records a liability when the fair value of any future obligation to retire a long-lived asset as a result of an existing or enacted law, statute, ordinance or contract is reasonably estimable. The Company also records a liability for the fair value of a conditional asset retirement obligation if

the fair value can be reasonably estimated. When the liability is initially recorded, the Company capitalizes the cost by increasing the amount of the related long-lived asset. Over time, the Company adjusts the liability to its present value by recognizing accretion expense as an operating expense in the consolidated statement of operations each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company records a gain or loss if the actual costs differ from the accrued amount.

The Company has recorded asset retirement obligations (“ARO”) in other long-term liabilities in order to recognize legal obligations associated with the retirement of tangible long-lived assets. The Company has assessed whether an ARO is required at each manufacturing facility and has recorded an obligation for those location for which an obligation exists. The most significant of these are primarily attributable to environmental remediation liabilities associated with current operations that were incurred during the course of normal operations. The Company has AROs that are conditional in nature. The Company identified certain conditional AROs upon which it was able to reasonably estimate their fair value and recorded a liability. These AROs were triggered upon commitments by the Company to comply with local, state, and national laws to remove environmentally hazardous materials. The AROs have been recognized on a discounted basis using a credit adjusted risk free rate. Accretion of the AROs is recorded in other operating expense and amounted to $304, $296, and $305, for the years ended December 31, 2015, 2014, and 2013, respectively. Following are changes in the ARO liability during the years ended December 31, 2015, 2014, and 2013:

Environmental Expenditures. Environmental expenditures that pertain to current operations or to future revenues are expensed or capitalized consistent with the Company’s capitalization policy for property, plant and equipment. Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed. Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated. Recoveries of expenditures for environmental remediation are recognized as assets only when recovery is deemed probable. See Note 20 to these consolidated financial statements regarding commitments and contingencies and Note 12 regarding the accrued environmental reserve.

Stock-Based Compensation. The Company applies the fair value based method to account for stock options and awards. See Note 18 to these consolidated financial statements regarding compensation expense associated with stock options and awards.

locations, the pension plans’ assets include equity and fixed income securities, as well as insurance policies. Certain assumptions are made regarding the occurrence of future events affecting pension costs, such as mortality, withdrawal, disablement and retirement, changes in compensation and benefits, and discount rates to reflect the time value of money.

In addition to pension benefits, the Company provides certain health care benefits for employees who meet age, participation and length of service requirements at retirement. These plans were closed to new retirees in the United States and Canada as of December 31, 2006. The Company uses explicit assumptions using the best estimates available of the plan’s future experience. Principal actuarial assumptions include: discount rates, present value factors, retirement age, participation rates, mortality rates, cost trend rates, Medicare reimbursement rates and per capita claims cost by age. Current interest rates, as of the measurement date, are used for discount rates in present value calculations.

The Company also has defined contribution plans covering domestic employees of the Company and certain subsidiaries.

Contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company and legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed, including the approximate term, how the guarantee arose, and the events or circumstances that would require the guarantor to perform under the guarantee.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Out of period adjustment. Included in the 2015 financial statements are certain out of period adjustments relating to errors that originated in 2014 and 2013. During 2015, the Company recorded a $3,064 charge to the provision for income taxes and a corresponding credit to deferred taxes related to an out of period adjustment associated with the accounting for deferred taxes of Convertible Preferred Equity Instrument (CPEC), a hybrid

equity instrument. The Company has determined that the impact of these out of period adjustments were not material to any of the years presented.

In February 2016, the FASB issued guidance that amends the accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities for most leases but will recognize expenses similar to current lease accounting. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new guidance must be adopted using a modified retrospective transition, and provides for certain practical expedients. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This guidance provides companies with the option to classify deferred tax liabilities and assets as non-current amounts, in a classified statement of financial position. For a particular tax paying component of an entity within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related valuation allowance, shall be offset and presented as a single non-current amount. These new requirements for nonpublic entities become effective for annual reporting periods beginning after December 15, 2017 and interim periods with annual reporting periods after December 15, 2018. A nonpublic entity may elect early application as of the beginning of an interim or annual period. The Company has elected to adopt the requirements of this standard as of December 31, 2015. In accordance with ASU 2015-17, in the December 31, 2014 consolidated balance sheet, the Company credited the current deferred tax asset by $8,076 and debited the current deferred tax liability by $6, concurrently debiting the non-current deferred tax asset and the non-current deferred tax liability by $1,653 and $6,417, respectively.

In September 2015, the FASB issued guidance that will change the requirements for reporting measurement period adjustments to provisional amounts initially recognized in conjunction with a business combination. Under GAAP, an acquiring entity currently is required to retrospectively adjust, in prior period financial statements, the provisional amounts to reflect new information obtained during the measurement period (a period, which may not exceed one year from the date of the business combination, during which the acquiring entity may receive information about the facts and circumstances existing as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date). Under the new guidance, adjustments to the provisional amounts will be reflected in the financial statements for the reporting period in which the adjustments are determined, including by recognizing in current period earnings the full effect of changes in depreciation, amortization or other income effects. The guidance requires that the acquiring entity either present separately on the face of the current period income statement or disclose in the notes to the current period financial statement, by line item, the amount of the adjustments made during the current period. The new guidance will be effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance with earlier application permitted for financial statements that have not yet been made available for issuance. The Company does not expect this guidance to have a significant impact on its consolidated financial statements.

In April 2015, the FASB issued accounting guidance (ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs) that requires deferred financing costs to be presented as a direct reduction from the related debt liability in the financial statements rather than as a separately recognized asset, as is the current requirement under U.S. GAAP. Under the new guidance, amortization of such costs will continue to be reported as interest expense. In August 2015, the FASB issued updated guidance (ASU 2015-15 Presentation and Subsequent

Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements) to include similar treatment for deferred financing costs associated with line of credit arrangements. The new guidance will be effective for interim and annual periods beginning after December 15, 2015 and must be adopted on a retrospective basis. Early adoption is permitted. The Company has elected to adopt the requirements of this standard as of December 31, 2015. In accordance with ASU 2015-03, the Company has presented net deferred financing costs of $4,228 and $6,141 as of December 31, 2015 and 2014, respectively, as a direct reduction of long term debt.

In January 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. Under this ASU, an entity will no longer be allowed to separately disclose extraordinary items, net of tax, in the income statement after income from continuing operations if an event or transaction is unusual in nature and occurs infrequently. ASU 2015-01 is effective for interim and annual reporting periods beginning after December 15, 2015 with early adoption permitted. The Company has adopted ASU 2015-01 effective December 31, 2015. The adoption did not have any impact on the Company’s financial position, results of operations or cash flows.

In November 2014, the FASB issued new accounting guidance ASU 2015-08 that provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period as a change in accounting principle under GAAP. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. This guidance also requires an acquired entity that elects the option to apply pushdown accounting in its separate financial statements to disclose information in the current reporting period that enables users of financial statements to evaluate the effect of pushdown accounting. The Company has adopted this guidance effective November 18, 2014, as the amendments are effective upon issuance. The adoption of this new guidance did not have any impact on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year of the issuance of the financial statements. If substantial doubt exists, additional disclosures would be required. This guidance will be effective beginning in the fourth quarter of fiscal year 2017, with early adoption permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial statements.

In May 2014, the FASB issued accounting guidance that will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the guidance is that revenue recognized from a transaction or event that arises from a contract with a customer should reflect the consideration to which an entity expects to be entitled in exchange for goods or services provided. To achieve that core principle the new guidance sets forth a five-step revenue recognition model that will need to be applied consistently to all contracts with customers, except those that are within the scope of other topics in the Accounting Standards Codification (“ASC”). Also required are enhanced disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The enhanced disclosures include qualitative and quantitative information about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized related to the costs to obtain or fulfill a contract. These new requirements for nonpublic entities become effective for annual reporting periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. A nonpublic entity may elect early application, but no earlier than

December 15, 2017, the effective date for public entities. The Company is assessing the impact of these new requirements on our financial statements.

In April 2014, the FASB issued authoritative guidance amending existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. Public entities will apply the amended guidance prospectively to all disposals occurring within annual periods beginning on or after December 15, 2014 and interim periods within those years. The Company has adopted this standard on January 1, 2015. Due to the change in requirements for reporting discontinued operations described above, presentation and disclosures of future disposal transactions after adoption may be different than under current standards.

In July 2013, the FASB issued ASU 2013-11 Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update is intended to improve the consistency surrounding the presentation of an unrecognized tax benefit when a net operating loss carryforward exists, requiring the unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The new requirements for nonpublic entities are effective for fiscal years beginning after December 15, 2014, and for interim periods within those fiscal years, with early adoption permitted. The Company has implemented the provisions of ASU 2013-11 in 2015.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2015 and 2014, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows:

The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 17 to these consolidated financial statements regarding defined supplementary retirement plans.

alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

The Company has interest rate caps and natural gas caps and swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability the Company utilizes a default swap rate comparable to PQ Holdings Inc. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of December 31, 2015 and 2014 the credit valuation adjustment resulted in a minimal change in the fair value of the derivatives.

The following table presents cumulative changes in accumulated other comprehensive loss, net of tax for December 31, 2015, 2014, and 2013:

The following tables present the pre-tax, tax, and after-tax components of other comprehensive income (loss) for the twelve months ended December 31, 2015, 2014, and 2013:

The following table presents the change in accumulated other comprehensive loss, net of tax, by component for the twelve months ended December 31, 2015, 2014, and 2013. Amounts in parentheses indicate debits.

The following table presents the reclassifications out of accumulated other comprehensive loss for the twelve months ended December 31, 2015, 2014, and 2013. Amounts in parentheses indicate debits to profit / loss.

Following are changes in the allowance for doubtful accounts during the years ended December 31, 2015, 2014, and 2013:

If inventories valued under the LIFO basis had been valued using the FIFO method, inventories would have been $4,729 and $2,641 lower than reported at December 31, 2015 and 2014, respectively. The higher LIFO basis of inventory compared to the FIFO method is due to the purchase accounting fair value step-up of inventory associated with the 2007 Merger and subsequent acquisitions.

The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity basis as of December 31, 2015 are as follows:

The Company’s investment in affiliates balance as of December 31, 2015 and 2014 includes net purchase accounting fair value adjustments of $66,207 and $68,593, respectively, consisting primarily of intangible assets such as customer relationships, formulations and product technology, and tradenames. Consolidated equity in net income from affiliates is net of $2,387, $2,387, and $2,387, of amortization expense related to purchase accounting fair value adjustments for the year ended December 31, 2015, 2014, and 2013.

The following table summarizes the activity related to the investments in affiliates balance on the consolidated balance sheet:

The Company had net receivables due from affiliates of $4,410 and $3,407 as of December 31, 2015 and 2014, respectively, which are included in prepaid and other current assets. Net receivables due from affiliates are generally non-trade receivables. Sales to and purchases from affiliates were not material for the years presented.

A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows:

Depreciation expense was $62,586, $59,904, and $57,089, for the years ended December 31, 2015, 2014, and 2013, respectively.

The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 is summarized as follows:

On May 1, 2015, the Company acquired certain assets and liabilities of a sodium silicate plant within the Performance Chemicals business of the Company for a total purchase price of $12,000. The Company accounted for the acquisition of these assets in accordance with ASC 805, “Business Combinations.” Under the purchase method of accounting, the acquired assets were recorded at their respective fair values as of the date of acquisition. The purchase price was allocated to tangible assets acquired and liabilities assumed based upon their estimated fair values. The fair value of identifiable assets acquired and liabilities assumed was $3,143 and $1,039, respectively, and principally included the acquisition of property, plant and equipment of $2,454, inventory of $689, and assumed liabilities of $1,039. The purchase price allocation, which is based on the estimated fair value of net assets acquired, resulted in the Company recording goodwill of $9,896. The Company believes that expected synergies of the acquisition is the primary reason that contributed to a total purchase price that resulted in the recognition of goodwill. Goodwill is expected to be fully deductible for tax purposes. The pro forma impact of this acquisition would not have been material to the Company’s results of operations for the years ended December 31, 2015 and 2014 respectively.

The Company completed its annual impairment assessments as of October 1, 2015 and 2014. For the annual assessments, the Company performed the two-step quantitative assessment for each of the reporting units. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. To determine the fair value of each reporting unit, the Company generally uses a market approach and an income, or discounted cash flow, approach.

In 2014, the Company determined fair value of its reporting units using only a market approach. The market value was estimated using publicly traded comparable company values by applying their most recent EBITDA multiples to the reporting unit’s trailing twelve months EBITDA as well as indicative values from the 2014 Stock Purchase. As part of the 2014 Stock Purchase, the Company received bids on the various businesses which were used to value its reporting units as part of the market approach.

In 2015, the Company determined fair value of its reporting units using both a market approach and an income, or discounted cash flow, approach. Estimating the fair value of a reporting unit requires various assumptions including the use of projections of future cash flows and discount rates that reflect the risks associated with achieving those cash flows. The key assumptions used in estimating the fair values were the operating margin growth rates, revenue growth rates from implementation of strategic plans, the weighted average cost of capital, the perpetual growth rate, and the estimated earnings market multiples of each reporting unit. The market value was estimated using publicly traded comparable company values by applying their most recent EBITDA multiples to the reporting unit’s trailing twelve months EBITDA. The income approach value was estimated using a discounted cash flow approach. The assumptions about future cash flows and growth rates are based on management’s assessment of a number of factors including the reporting unit’s recent performance against budget as well as management’s ability to execute on planned future strategic initiatives. Discount rate assumptions are based on an assessment of the risk inherent in those future cash flows.

At October 1, 2015 and 2014, the fair value of each of the five reporting units exceeded their respective carrying values and, therefore, step two was not required.

The Company has trade names that are not subject to amortization of $104,415 and $108,972 as of December 31, 2015 and 2014, respectively. The change in trade names during the year was due to the foreign currency impact. The Company performed an annual quantitative assessment on its intangibles not subject to amortization and concluded that no impairment charge was warranted.

Gross carrying amounts and accumulated amortization for intangible assets with estimable useful lives are as follows:

The amortization periods for formulations and product technology range from seven to twelve years. The Company amortizes customer relationships over periods that range from nine to twenty years. Amortizable trademarks are amortized over a ten year period. The amortization periods for the patents range from eight to fourteen years.

During the year ended December 31, 2015, 2014 and 2013, the Company wrote off fully amortized patents totaling $63, $4,047 and $338, respectively. During the year ended December 31, 2014 and 2013, the Company wrote off fully amortized noncompete agreements totaling $3,269 and $231, respectively

Total amortization of intangibles was $30,536, $31,438, and $32,217, for the years ended December 31, 2015, 2014, and 2013, respectively and is recorded in other operating expense in the consolidated statement of operations

Estimated future aggregate amortization expense of intangible assets is as follows:

The following table summarizes the components of accrued liabilities as follows:

As discussed in Note 3, the Company has elected to adopt the requirements of ASU 2015-03 as of December 31, 2015. In accordance with ASU 2015-03, the Company has presented net deferred financing costs of $4,228 and $6,141 as of December 31, 2015 and 2014, respectively, as a direct reduction of long term debt in the table above.

On February 15, 2013, the Company re-priced its senior secured terms loans to lower the applicable interest rate. The Company repaid all outstanding senior secured term loans in the aggregate amount of $1,220,000 including accrued interest of $11,762 and a prepayment premium of 1.00% of the principal amount of the existing term loans, or $12,200, and issued new senior secured term loans in an aggregate principal amount of $1,235,000 (the “2013 Term Loans”). The Company incurred early debt repayment fees of $12,200, of which $6,508 was recorded as original issue discount to long-term debt and $5,692 was immediately written off as debt extinguishment costs. The Company also recorded $1,771 of new third party financing costs as deferred financing fees. In addition, previous unamortized deferred financing costs of $2,592 and original issue discount of $11,993 associated with the old debt were written off as debt extinguishment costs.

On March 27, 2014, the Company re-priced its senior secured terms loans to lower the applicable interest rate. The Company repaid all outstanding senior secured term loans in the aggregate amount of $1,222,650 including accrued interest of $2,971 and issued new senior secured term loans in an aggregate principal amount of $1,222,650 (the “2014 Term Loans”). The 2014 Term Loans have substantially identical terms to the existing term loans except borrowings under the 2014 Term Loans bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of borrowing plus a margin of 3.00% or 2.00%, respectively. In addition, a prepayment premium of 1.00% will be payable on the 2014 Term Loans in the event of a re-pricing transaction prior to the one year anniversary of the effective date of the 2014 Term Loans. The Company recorded $536 of new creditor fees as original issue discount in long-term debt. In addition, previous unamortized deferred financing costs of $264 and original issue discount of $2,212 associated with the old debt were written off to debt extinguishment costs.

$1,967, and $1,892, for the years ended December 31, 2015, 2014, and 2013, were included in interest expense. In addition, the Company paid original issue discount associated with the financing of its debt. The original issue discount is amortized over the terms of the related agreements. Amortization of original issue discount of $6,822, $6,932, and $7,535, for the years ended December 31, 2015, 2014, and 2013, were included in interest expense.

On November 8, 2012, the Company entered into a new senior secured credit facility having a first lien term loan in the amount of $1,220,000 with a maturity date of May 8, 2017. Borrowings under the first lien term facilities bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of borrowing plus a margin of 4.25% or 3.25%, respectively. Further, the LIBOR or base rate elected under the facilities are also subject to a floor of 1.00% and 2.00%, respectively. The senior credit facility requires minimum quarterly principal payments of $3,050 on the first lien term loan, though such minimum payments may be reduced in accordance with any prepayments or increased if the amount of the Term Loans is increased.

On February 15, 2013, the Company re-priced its senior secured terms loans to lower the applicable interest rate and issued the 2013 Term Loans of $1,235,000. The 2013 Term Loans have substantially identical terms to the existing term loans except borrowings under the 2013 Term Loans bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of borrowing plus a margin of 3.50% or 2.50%, respectively. In addition, the minimum quarterly principal payments increased to $3,088, the maturity date was extended to August 7, 2017, and the prepayment premium of 1.00% will be payable on the 2013 Term Loans in the event of a re-pricing transaction prior to the one year anniversary of the effective date of the 2013 Term Loans.

On March 27, 2014, the Company re-priced its senior secured terms loans to lower the applicable interest rate and issued the 2014 Term Loans of $1,222,650. The 2014 Term Loans have substantially identical terms to the existing term loans except borrowings under the 2014 Term Loans bear interest at a rate equal to the LIBOR rate or the base rate elected by the Company at the time of borrowing plus a margin of 3.00% or 2.00%, respectively. In addition, a prepayment premium of 1.00% will be payable on the 2014 Term Loans in the event of a re-pricing transaction prior to the one year anniversary of the effective date of the 2014 Term Loans.

The loans and guarantees under the senior credit facility are secured by first-priority liens in substantially all of the tangible and intangible assets of PQ Corporation and certain of its material subsidiaries, including pledges of all present and future shares of capital stock of PQ Corporation and certain guarantors and each of PQ Corporation’s and such guarantors’ material directly wholly-owned domestic subsidiaries and 65% of the present and future shares of capital stock of each of PQ Corporation’s and such guarantors’ directly owned foreign restricted subsidiaries (other than certain Cayman subsidiaries which guarantee the senior credit facility), in each case subject to certain thresholds, exceptions and customary permitted liens.

The senior credit facility further requires prepayments from all “net cash proceeds” received and “excess cash flow,” if applicable. In accordance with the senior credit facility, net cash proceeds generally relate to proceeds received from the issuance or incurrence of certain indebtedness or proceeds received on the disposition of assets, adjusted for certain costs and expenses, and are payable promptly upon receipt, subject in the case of net cash proceeds from asset dispositions, to meeting the thresholds described below. Net cash proceeds in respect of asset dispositions are not payable if such proceeds are reinvested in the Company’s business within a certain specified time period or if they are under certain minimum amounts, both on an individual basis for any given disposition and in the aggregate for dispositions that, individually, would not meet the threshold. Excess cash flow is to be calculated annually and is defined as consolidated net income adjusted for various expenditures

and/or proceeds commencing with the fiscal year ending on December 31, 2014. Prepayments with respect to excess cash flow, if any, are to be made on an annual basis due within 10 days after the annual audited financials are delivered to the lenders thereunder of each year. The detailed calculations supporting those two prepayments are defined in the credit agreement. The remaining principal balance of the term loans are due upon maturity.

The senior credit facility provides for up to $150,000 in revolving credit borrowings. Borrowings under the revolving facility bear interest at a rate equal to the LIBOR or base rate elected by the Company at the time of borrowing plus a margin of 4.25% or 3.25%, respectively, subject to reduction based on certain leverage thresholds. In addition, there is an annual commitment fee equal to 0.50%, with a step-down to 0.25% based on certain leverage thresholds of the unused revolving credit borrowings available under the senior credit facility. Revolving credit borrowings are payable at the option of the Company throughout the term of the senior credit facility with the balance due May 8, 2017. As of December 31, 2015, there were no revolving credit borrowings under the senior credit facility. In accordance with the terms of the Company’s senior credit facility, repayments made by the Company relating to outstanding revolver borrowings are applied to all lenders on a pro-rata basis, subject to certain exceptions.

The senior credit facility contains various non-financial restrictive covenants. It limits the ability of PQ Corporation and its restricted subsidiaries to incur certain indebtedness or liens, merge, consolidate or liquidate, dispose of certain property, make investments or declare or pay dividends, make optional payments, modify certain debt instruments, enter into certain transactions with affiliates, or enter into certain sales and leasebacks, and it also provides limitation on other non-financial restrictive covenants. The Senior Credit Facility also contains one financial restrictive covenant. Commencing at the end of the first full fiscal quarter after the effective date of the Agreement, which was November 8, 2012, as of the end of any fiscal quarter of the Company for the four fiscal quarter period ending on such date, the Company’s Total Net First Lien Leverage Ratio, as defined, must be less than 5.75:1.00 (4.75:1.00 as of December 31, 2015), with annual step-downs. At December 31, 2015, the Company was in compliance with all loan covenants.

The Company may at any time or from time to time voluntarily prepay the senior secured loans in whole or in part without premium or penalty, except prior to the one year anniversary of the closing date, the Company shall pay a prepayment premium in an amount equal to 1.00% of the principal amount prepaid.

The Company has a $35,000 letter of credit sublimit under the senior credit facility subject to the availability under the revolving credit facility. The Company has letters of credit outstanding of $5,279 as of December 31, 2015, which reduce available borrowings under the revolving credit facility by such amounts.

On November 8, 2012, the Company issued $600,000 of 8.750% second lien senior secured notes due 2018 in transactions exempt from or not subject to registration under the Securities Act pursuant to Rule 144A and Regulation S under the Securities Act of 1933. The notes are senior secured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior debt and senior in right of payment to all of the Company’ existing and future subordinated debt. The notes will be effectively subordinated to all of the Company’s first lien senior secured debt, including the senior secured credit facility, to the extent of the value of the assets securing such debt. The notes will also be structurally subordinated to the liabilities of PQ Corporation’s existing and future non-guarantor subsidiaries. The indenture relating to the notes contains various limitations on the Company’s and its restricted subsidiaries’ ability to incur additional indebtedness, pay dividends or repay certain debt, make loans and investments, sell assets, create liens, enter into transactions with affiliates, enter into agreements restricting PQ Corporation’s subsidiaries ability to pay dividends, and merge and

consolidate with other companies, among other things. Interest on the notes is payable on May 1 and November 1 of each year, commencing May 1, 2013. No principal payments are required with respect to the notes prior to their final maturity. The notes mature on November 1, 2018. The obligations of the Company under the notes and the indenture are guaranteed by Holdings and CPQ Midco I Corporation, PQ Corporation’s direct parent, and each of PQ Corporation’s subsidiaries that is a guarantor under the new senior secured credit facility. The obligations of the Company under the notes and the indenture are secured by second-priority liens over substantially all of the tangible and intangible assets of Holdings and certain of its material subsidiaries, including pledges of all present and future shares of capital stock of CPQ Midco I Corporation, PQ Corporation and certain guarantors and each of PQ Corporation’s and such guarantors’ material directly wholly-owned domestic subsidiaries and 65% of the present and future shares of capital stock of each of PQ Corporation’s and such guarantors’ directly owned foreign restricted subsidiaries (other than certain Cayman subsidiaries which guarantee the notes), in each case subject to certain thresholds, exceptions and customary permitted liens.

If any event of default (other than a default relating to certain events of bankruptcy or insolvency of PQ Corporation or certain of its subsidiaries) shall occur and be continuing, the trustee or holders of at least 25% in principal amount of outstanding notes under the indenture may declare the principal of, premium, if any, and accrued but unpaid interest on all the notes to be due and payable and the same shall become immediately due and payable. If an event of default arising from certain events of bankruptcy or insolvency of the Company occurs, the principal of, premium, if any, and interest on all the notes shall become immediately due and payable without any declaration or other act on the part of the trustee or any holders.

Upon the occurrence of a Change of Control, each holder will have the right to require the Company to purchase all or any part of such holder’s notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest.

On October 24, 2013, the Company’s subsidiary Potters Industries, LLC (“Potters”) entered into a New Markets Tax Credit (“NMTC”) financing arrangement with JPMorgan Chase Bank N.A. and several of its affiliates (“Chase”) and TX CDE V LLC, an affiliate of Texas LIC Development Company LLC d/b/a Texas Community Development Capital (“TX CDE”) to fund the expansion of Potters’ manufacturing facility in Paris, Texas (the “NMTC Agreement”). The NMTC program, which is administered by the United States Treasury Department requires certain balance sheet commitments. The NMTC Agreement will provide the Company with certain monetary benefits as an offset to specifically identified capital expenditures. The NMTC Agreement requires that certain commitments and covenants be maintained over the course of the next 7 years, in order to legally recognize the benefit. Chase agreed to contribute $6,634 and an additional $15,632 in funds lent to Chase by Potters Holdings II, L.P. to TX CDE. TX CDE, in turn, lent $21,000 in the form of $5,368 and $15,632 notes, or the Loans, to Potters, which used the proceeds of the Loans to finance the expansion of Potters’ manufacturing facility in Paris, Texas. The capital expenditures associated with the NMTC Agreement were completed in 2014. The $21,000 was outstanding as of December 31, 2015 and 2014.

In connection with the NMTC transaction, the Company has provided an indemnification related to our actions or inactions which cause either a NMTC disallowance or recapture event. In the event that we cause either a recapture or disallowance of the tax credits expected to be generated under this program, then we will be required to repay the disallowed or recaptured tax credits plus an amount sufficient to pay the taxes on such repayment, to the counterparty of the agreement. This indemnification covers our actions and inactions prior to September 6, 2020. The maximum potential amount of future payments under this indemnification is approximately $12,600. The Company currently believe that the likelihood of us being required to make a payment under this indemnification is remote.

The Company also has several note payable agreements denominated in Japanese Yen which currently enables the Company to borrow up to a total of 260,000 Japanese Yen, or $2,158. Borrowings bear interest at either TIBOR (“Tokyo Interbank Offered Rate”) plus a margin or the short-term prime rate with a weighted average rate of 0.63% as of December 31, 2015 and as of December 31, 2014. The terms of the agreements vary and are renewable upon expiration of the term with the balances due in 2016. Borrowings under the agreement are payable at the option of the Company throughout the term of the agreements. Borrowings outstanding under these agreements were $2,158 and $2,184 as of December 31, 2015 and 2014, respectively.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction. As of December 31, 2015 and 2014, the fair value of the senior secured term loan and senior secured bond was lower than book value by $30,760 and $3,206, respectively. The fair value of the senior secured term loans and notes were derived from published loan prices at December 31, 2015 and 2014, as applicable. The fair value is classified as Level 1 based upon the fair value hierarchy and is determined using unadjusted quoted prices in active markets for identical liabilities.

Cash payments for interest were $103,108, $104,917, and $109,337, for the years ended December 31, 2015, 2014, and 2013, respectively.

The following table summarizes the components of other long-term liabilities as follows:

Use of Derivative Financial Instruments to Manage Interest Rate Risk. The Company is exposed to fluctuations in interest rates on the long-term senior secured term loan and revolving credit facility. Changes in interest rates will not affect the market value of such debt but will affect the amount of our interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on debt obligations through interest rate cap agreements. The Company records these agreements at fair value as assets or liabilities. As the derivatives are highly effective and are designated and qualify as cash-flow hedges, the related unrealized gains or losses are deferred in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

During 2013, the Company entered into interest rate cap agreements, paying a premium of $995 to mitigate interest rate volatility from September 2013 until March 2016, by employing a 2% cap rates on $800,000 of notional variable debt.

The following table shows the effect of the Company’s derivative instruments designated as hedges on other comprehensive income (loss) (OCI) and the statement of income:

Amounts of unrealized losses in OCI that are expected to be reclassified to the consolidated statement of operations over the next twelve months are $3,004 as of December 31, 2015.

Income (loss) before income taxes and noncontrolling interest within or outside the United States are shown below:

The provision (benefit) for income taxes as shown in the accompanying consolidated statements of operations consists of the following:

A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate of 35% to actual income tax expense (benefit) is as follows:

The total tax provision of $22,902 for the twelve months ended December 31, 2015 on the Company’s consolidated pre-tax income for the period differs from the U.S. statutory tax rate of 35% principally due to the repatriation of non-US earnings, foreign income tax in jurisdictions with statutory rates different than the U.S. rate, state taxes, non-deductible transaction costs, foreign withholding taxes, changes in valuation allowance, and changes in uncertain tax positions.

The total tax provision of $7,548 for the twelve months ended December 31, 2014 on the Company’s consolidated pre-tax income for the period differs from the U.S. statutory tax rate of 35% principally due to the repatriation of non-US earnings, foreign income tax in jurisdictions with statutory rates different than the U.S. rate, state taxes, non-deductible transaction costs, foreign withholding taxes, changes in valuation allowance, and changes in uncertain tax positions.

The total tax provision of $10,608 for the twelve months ended December 31, 2013 on the Company’s consolidated pre-tax income for the period differs from the U.S. statutory tax rate of 35% principally due to the repatriation of non-US earnings, foreign income tax in jurisdictions with statutory rates different than the U.S. rate, state taxes, foreign withholding taxes, changes in valuation allowance, and changes in uncertain tax positions.

Included in the 2015 deferred tax asset and liability amounts for depreciation, intangible assets, LIFO reserve, natural gas contracts, and other above is $42,451 of a net deferred tax liability related to the Company’s investment in Potters Industries, LLC, which is a partnership for Federal income tax purposes. The Company and one of its subsidiaries own in aggregate 100% of Potters Industries, LLC and the assets and liabilities of Potters Industries, LLC are included in the consolidated financial statements of the Company.

The $109,006 in net deferred tax liabilities as of December 31, 2015 consists of $4,191 in net non-current deferred tax assets and $113,197 in net non-current deferred tax liabilities.

The $107,798 in net deferred tax liabilities as of December 31, 2014 consists of $6,687 in non-current deferred tax assets and $114,485 in net non-current deferred tax liabilities.

The change in net deferred tax assets (liabilities) for the year ended December 31, 2015 was primarily related to the increase in deferred tax assets on accrued pension obligations, and book amortization of intangibles with no corresponding tax basis.

The change in net deferred tax assets (liabilities) for the year ended December 31, 2015 was primarily related to the increase in deferred tax liabilities on the undistributed earnings of non-US subsidiaries, partially offset by the book amortization of intangibles with no corresponding tax basis.

Following are changes in the deferred tax valuation allowance during the years ended December 31, 2015, 2014, and 2013:

The net change in the total valuation allowance was an increase of $900 in 2015. The valuation allowance at December 31, 2015 was primarily related to foreign and state net operating loss carryforwards and tax credits that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considered the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies that are prudent in making this assessment. In order to fully realize deferred tax assets, the Company will need to generate future taxable income prior to the expiration of the net operating loss and credit carryforwards. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Management considered certain earnings in non-U.S. subsidiaries to be available for repatriation in the future. The tax cost associated with non-U.S. subsidiary earnings and distributions for the years ended December 31, 2015 and 2014 has been recorded as tax expense for the period. In this regard the Company expects to deduct, rather than credit, foreign tax expense in computing the U.S. tax effects of repatriation from non-U.S. subsidiaries in 2015 and 2014. The unremitted earnings of non-U.S. subsidiaries and affiliates that have not been reinvested abroad indefinitely amount to $129,139 as of December 31, 2015. The deferred U.S. federal and state income tax liability and deferred foreign withholding tax liability on these undistributed earnings is estimated to be $49,767.

At December 31, 2015, the cumulative unremitted earnings of foreign subsidiaries outside the United States, considered permanently reinvested, for which no income or withholding taxes have been provided, approximated $94,475. Such earnings are expected to be reinvested indefinitely and, as a result, no deferred tax liability has been recognized with regard to such earnings. Determination of the deferred income tax liability on these unremitted earnings is not practicable principally because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

The following table summarizes the activity related to our gross unrecognized tax benefits:

Included in the balance of total unrecognized tax benefits are potential benefits of $19,419 and $15,503, that if recognized, would affect the effective tax rate on income from continuing operations as of December 31, 2015 and 2014, respectively.

Interest and penalties recognized related to uncertain tax positions amounted to ($1,313), $976 and $152 in 2015, 2014 and 2013, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period for which the event occurs requiring the adjustment. The accrued interest and penalties as of December 31, 2015 and 2014 are $3,131 and $5,843, respectively, and are recorded in other long-term liabilities in the consolidated balance sheet.

The Company files numerous consolidated and separate income tax returns in the U.S. Federal jurisdiction and in many state and foreign jurisdictions. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2015:

Given that the U.S. Company has net operating loss carryforwards, the statute for examination by taxing authorities in the United States, and certain state jurisdictions, will remain open for a period following the use of such net operating loss carryforwards extending the period for examination beyond the years indicated above.

The Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2003 through 2015. To date, no material adjustments have been proposed as a result of these audits. As of December 31, 2015, the Company does not believe that there are any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company has a net operating loss carry-forward (“NOL”) available of $288,017 to reduce future federal taxes payable. The federal carry-forward period is 20 years. $29,278 relates to periods prior to the 2007 Merger. $258,559 relates to periods after the 2007 Merger but prior to the 2014 Stock Purchase. $180 relates to periods after the 2014 Stock Purchase. Both, the 2007 Merger and 2014 Stock Purchase triggered the change in control provisions under IRC §382. Although subject to the limitations of IRC §382, management believes it is more likely than not that the Company will realize the entire $287,837 in pre-transaction NOLs in future years. The remaining $180 relates to NOLs generated following the 2014 Stock Purchase and would not be subject to IRC §382.

For state income tax purposes the Company incurred net operating losses of $14,997 for 2015 that may be carried forward at periods ranging from 5 to 20 years among the states in which the Company is subject to tax to reduce future state income taxes payable. Cumulative state net operating losses carrying forward into 2016 are $461,980. A valuation allowance of $12,789 has been applied against the total $18,511 of state net operating loss deferred tax assets, leaving losses of $5,722 that have been recognized for financial accounting purposes for the portion of those losses that the Company believes, on a more likely than not basis, will be realized.

Foreign net operating losses of $43,287, of which $14,563 will begin to expire in 2029 and the remaining $28,724 carried forward indefinitely, are available to reduce future foreign income taxes payable. A valuation allowance of $10,046 has been applied to $10,622 of deferred tax assets related to foreign net operating loss carry-forwards, leaving a net deferred tax asset relating to foreign net operating losses of $576 that have been recognized for financial accounting purposes.

The Company sponsors defined benefit pension plans covering employees in the United States and Canada and certain employees at its subsidiaries outside of North America (“Other”). Benefits for a majority of the Plans are based on average final pay and years of service. The Company’s funding policy is to fund the minimum required contribution under local statutory requirements. The Company uses a December 31 measurement date for its defined benefit plans.

The Company sponsors unfunded plans to provide certain health care benefits to retired employees in the United States and Canada. These plans were closed to new retirees in the United States and Canada as of December 31, 2006. The plans pay a stated percentage of medical expenses reduced by deductibles and other coverage. The plans are unfunded and obligations are paid out of the Company’s operations.

The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our significant benefit plans as well as the components of net periodic benefit costs, including key assumptions.

The estimated net actuarial loss (gain) for the pension plans that will be amortized from accumulated other comprehensive income into benefit cost in 2016 is $1,926 in the Company’s U.S. and Canada pension plans and $275 for the Company’s Other pension plans. The estimated prior service cost (credit) that will be amortized from accumulated other comprehensive income into benefit cost in 2016 is ($149) for the Company’s Other pension plans.

The total accumulated benefit obligation as of December 31, 2015 and 2014 for the U.S. and Canadian plans was $196,087 and $207,757, respectively. The total accumulated benefit obligation as of December 31, 2015 and 2014 for the Other pension plans was $71,551 and $82,290, respectively.

The following table presents selected information about the Company’s pension plans with accumulated benefit obligations in excess of plan assets:

Significant weighted average assumptions used in determining the pension obligations include the following:

Significant weighted average assumptions used in determining net periodic benefit cost include the following:

The U.S. discount rates were determined by utilizing a yield curve model. The model develops a spot rate curve based on the yields available from a broad based universe of high quality corporate bonds. The discount rate is then set as the weighted average spot rate, using the plan’s expected benefit cash flows as the weights.

The rate of compensation increase on the U.S. plan was zero for the years ended December 31, 2015, 2014, and 2013, as all future accruals were frozen in the United States as of December 31, 2006 in accordance with the plan amendment approved in 2005. The rate of compensation increase in determining the pension obligation on the Canadian plan was 3.50% and 3.75% for the year ended December 31, 2015 and 2014, respectively. The rate of compensation increase in determining the net periodic benefit cost on the Canadian plan was 3.75% for the years ended December 31, 2015, 2014 and 2013. In determining the expected return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and expected future performance. In addition, the Company may consult with and consider the opinions of our external advisors in developing appropriate return benchmarks.

The investment objective for the U.S. plan is to generate returns sufficient to meet future obligations. The strategy to meet the objective includes generating attractive returns using higher returning assets such as equity securities and balancing risk using less volatile assets such as fixed income securities. The plan invests in an allocation of assets across the three broadly-defined financial asset categories of equity, fixed income and cash. The target allocations for plan assets are 45 percent equity securities and 55 percent fixed income investments.

Similar considerations are applied to the investment objectives of the non-US plans as well as the asset classes available in each location and any legal restrictions on plan investments.

The Company categorized plan assets into a Fair Value Hierarchy. The hierarchy consists of three levels as follows:

The changes in the level 3 pension plan assets for the years ended December 31, 2015 and 2014 were as follows:

The Company expects to contribute $244 to the U.S. and Canada pension plans and $4,078 to the Other pension plans in 2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our defined benefit supplementary retirement plans as well as the components of net periodic benefit costs, including key assumptions.

The estimated net actuarial loss (gain) for the pension plans that will be amortized from accumulated other comprehensive loss into benefits cost in 2016 is $216 for our defined benefit supplementary retirement plans.

The accumulated benefit obligation of our defined benefit supplemental retirement plans for the years ended December 31, 2015 and 2014 was $14,128 and $15,019, respectively.

The discount rate used in determining the supplemental retirement plan pension obligations was 4.00% and 3.60% for the years ended December 31, 2015 and 2014, respectively.

The discount rate used in determining net periodic benefit cost was 3.60%, 4.30%, and 3.30%, for the years ended December 31, 2015, 2014, and 2013, respectively. The rate of compensation increase for the fiscal years ended December 31, 2015, 2014, and 2013, was zero as all future accruals were frozen for the defined supplemental retirement plans as of December 31, 2006 in accordance with the plan amendment approved in 2005.

The Company expects to contribute $1,168 to the defined benefit supplementary retirement plans in 2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our other postretirement benefit plans as well as the components of net periodic benefit costs, including key assumptions.

The estimated net actuarial loss (gain) for the pension plans that will be amortized from accumulated other comprehensive income into benefits cost in 2016 is ($51) for our retiree health plans.

Significant weighted average assumptions used in determining the net periodic benefit cost, the postretirement benefit obligations, and trend rate include the following:

A 1% change in the assumed health care cost trend would have increased (decreased) the accumulated postretirement benefit obligation at December 31, 2015 and the periodic postretirement benefit cost for the year ended as follows:

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The Company also has defined contribution plans covering domestic employees of the Company and certain subsidiaries. The Company recorded expenses of $6,638, $7,826, and $8,713, related to these plans for the years ended December 31, 2015, 2014, and 2013, respectively.

The Company applies the fair value based method to account for stock options and awards.

On January 29, 2014, CPQ Holding Corporation changed its name to PQ Holdings Inc.

On September 28, 2007, the Company established the CPQ Holding Corporation Stock Incentive Plan, (the “Stock Incentive Plan”). On July 2, 2008, the Stock Incentive Plan was amended. The number of shares that may be issued under the amended Stock Incentive Plan or be subject to awards may not exceed 692,495 shares. In accordance with the Stock Incentive Plan, the Company has the authority to issue restricted stock, options, stock appreciation rights, deferred stock units, and dividends.

In 2007 and 2008, the Company issued 355,269 shares of restricted Class A common stock and 895 deferred stock units under the Stock Incentive Plan. In February 2010, the Company issued 340,981 additional shares of restricted Class A common stock under the Stock Incentive Plan, of which a portion of the shares were awarded to certain employees new to the Stock Incentive Plan and a portion of the shares were awarded to certain employees previously awarded shares in 2007 and 2008. The restricted stock includes three separate tranches for vesting purposes; (1) Service shares, (2) Tranche 1 Performance shares, and (3) Tranche 2 Performance shares. The Service shares’ vesting is based on satisfying certain service conditions and the Tranche 1 and Tranche 2 shares’ vesting is based on satisfying certain performance conditions. All of the Service shares vested on certain dates during 2007, 2008, 2009, 2010 and 2011, subject to the employees’ continued service with the Company on such dates. In connection with the 2014 Stock Purchase, the vesting of Tranche 1 Performance shares was modified to provided that those shares will vest as follows: 100% of each grant fully vests on any Measurement Date, as defined in the amendment to the shareholder’s restricted stock agreement, upon certain investment funds affiliated with CCMP having received Proceeds, as defined, resulting in an MOI, as defined, of at least 2.0,

subject to the employee’s continued service with the Company through the vesting date. “MOI” is defined, as of the Measurement Date, as the quotient obtained on or prior to such Measurement Date by dividing (i) the sum of Proceeds received on such Measurement Date and all prior Measurement Dates, by (ii) the Principal Investment. All of the Tranche 2 Performance shares vested when the Company met three specified annual EBITDA targets, subject to the employees’ continued service with the Company on such dates when the EBITDA targets were met. The fair value of the awards was determined using multiples of EBITDA and the income approach, based on discounted free cash flow.

In 2015, the Company issued 57,923 shares of restricted Class D common stock and 34,628 shares of Class C options. Both share issuances have various vesting features, including satisfying certain service based and performance based conditions. The fair value of the Class D common stock awards was determined based on the equity valuation from recent transactions. The fair value of the Class C options was determined using a Black-Scholes option pricing model.

Activity of nonvested shares of restricted Class D common stock granted under the Company’s Stock Incentive Plan is shown below The weighted-average grant-date fair value of the restricted Class D common stock granted during 2015 was $160.71.

Compensation expense for all stock- based awards was $3,358, $0, and $1,011, for years ended December 31, 2015, 2014, and 2013, respectively, commensurate with the estimated vesting of the underlying awards.

In conjunction with the 2007 Merger, the Company received $315,000 of capital. In connection with the 2008 INEOS Acquisition, the Company received an additional $192,830 of capital. During 2009, the Company received an additional $2,250 of capital.

The 2007 Merger was accounted for as a purchase in accordance with U.S. GAAP. As a result of a 6.6% continuing ownership interest in PQ Holdings Inc. by certain stockholders (“Continuing Stockholders”), 93.4% of the purchase price was allocated to the assets and liabilities acquired at their respective fair values with the remaining 6.6% recorded at the Continuing Stockholders’ historical book values as of the date of the acquisition. As a result of the carryover of the Continuing Stockholders’ historical basis, stockholders’ equity (deficit) of PQ Holdings Inc. has been reduced by $53,532.

In connection with the 2014 Stock Purchase, Class C and Class D shares were authorized and issued. Class C and Class D shares are identical to Class A and Class B shares, respectively, except they do not have voting rights.

of the normal course of business. No accrual for these matters currently exists, with the exception of those listed below, because management believes that the liabilities resulting from such lawsuits and claims are not probable or reasonably estimable.

The Company triggered the requirement of New Jersey’s Industrial Site Recovery Act (“ISRA”) statute. As required under ISRA, a General Information Notice with respect to the Company’s two New Jersey locations was filed with the New Jersey Department of Environmental Protection (“NJDEP”) in December 2004 and again in July 2007. Based on an initial review of the facilities by the NJDEP in 2005, the Company estimated that $500 will be required for contamination assessment and removal work at these facilities, and had recorded a reserve for such amount as of December 31, 2005. During subsequent years, it was determined that additional assessment, removal and remediation work would be required and the reserve was increased to cover the estimated cost of such work. In addition, during this period, work had been performed and the reserve was reduced for actual costs incurred for the assessment and remediation work. As of December 31, 2015 and 2014, the Company has recorded a reserve of $1,625 and $2,039 for costs required for contamination assessment and remediation work at these facilities. The amounts charged to pre-tax earnings for environmental remediation and related costs/(benefits) were $0, $(89), and $1,500, for the years ended December 31, 2015, 2014, and 2013, respectively, and are recorded as other operation expense in the consolidated statements of operations. There may be additional costs related to soil and ground water remediation, but until further investigation takes place, the Company cannot reasonably estimate the amount of additional liability that may exist.

As part of a Delaware River Basin Commission (“DRBC”) required Pollutant Minimization Plan (“PMP”), in July 2013 the Company’s Chester facility conducted limited paint sampling for polychlorinated biphenyls (“PCBs”). Also, as part of demolition, repair and maintenance projects scheduled for the Company’s Baltimore facility in 2014, the Company conducted limited paint sampling during the fall of 2013 for waste categorization purposes. Paint samples were analyzed for PCB Aroclor 1254, the specific PCB congener commonly used in the manufacture of paint until the late 1970s. The Company’s analytical results indicated that PCB Aroclor 1254 is present in paint on some structures (e.g., piping, structural steel, tanks) in excess of the fifty (50) parts per million (“ppm”) regulatory threshold. Under the Toxic Substances Control Act (“TSCA”), there is no requirement to test in use paint for PCB content. However, once PCB content is identified at concentrations at or above the regulatory threshold, absent specific approval from the U.S. Environmental Protection Agency (“EPA”), the PCB-containing paint is regulated as an unauthorized use of PCBs, and the paint must be addressed. The Company is preparing to abate painted surfaces that have tested positive for PCBs at levels exceeding 50 ppm in 2015. As of December 31, 2015 and 2014, the Company recorded a reserve of $2,157 and $2,644 for the anticipated remediation costs of known PCB painted structures at the Company’s Baltimore and Chester facilities. The amounts charged to pre-tax earnings for remediation costs of known PCB painted structures were $1,000 and $2,935, for the years ended December 31, 2015 and 2014, respectively, and are recorded as other operation expense in the consolidated statements of operations.

In 2011, the Company installed a Continuous Emissions Monitor (“CEM”) to measure CO, NOx and Opacity emissions from a furnace at our Chester facility in Pennsylvania. Since this time, the Company has conducted Relative Accuracy Test Audits (“RATA”) as part of its efforts to certify the CEM. On May 5, 2014, Pennsylvania Department of Environmental Protection (“PADEP”) officially notified the Company that it was certifying the CEM based on RATA test results dating back to November 2011 and to start entering data previously recorded by the CEM into the Agency’s on-line database. During the third and fourth quarters of 2014, the Company officially entered data recorded from the CEM up until the second quarter of 2013. On January 8, 2015, the Environmental Program Manager for the Southeast Regional Office Air Quality Program of PADEP notified the Company that it would like to meet to discuss penalty calculations associated with CO and NOx emissions based on the CEM data. The penalty amount starting with fourth quarter 2011 through the second

quarter 2013 indicated in PADEP’s communication to the Company totals to $1,489. The Company is planning to meet with PADEP to propose significant reductions in the penalty amounts cited by the Agency. As of December 31, 2015 and 2014, the Company has recorded a reserve of $1,700 and $1,489, respectively, associated with the PADEP penalty and is recorded as other operation expense in the consolidated statements of operations.

As part of the 2008 INEOS Silicas Acquisition, the Company acquired a manufacturing facility at Warrington, United Kingdom. Asbestos-containing building material is present at the site, and asbestos removal and insulation replacement initiatives are underway. As of December 31, 2015 and 2014, the Company has recorded a reserve of $639 and $671, respectively, for costs related to this program.

In 2008, the Company sold the property of a manufacturing facility located in the United States to the local port authority. In 2009, the port authority commissioned an environmental investigation of portions of the property. In 2010, the port authority advised the Company of alleged soil and groundwater contamination on the property and alleged the Company liable for certain conditions. The Company received and reviewed the environmental investigation documentation and determined it may have liability with respect to some, but not all, of the alleged contamination. Respective legal counsel for the Company and the Port of Tacoma are currently engaged in efforts to negotiate the terms of a cost sharing agreement for the funding of additional study and subsequent abatement work to the extent necessary for the site. As of December 31, 2015 and 2014, the Company has recorded a reserve of $707 and $728, respectively, for costs related to this potential liability.

As part of the 2008 INEOS Silicas Acquisition, the Company is liable for potential multi-year UK tax benefits. The Company is contractually obligated to make a payment on an annual basis on its UK taxable results, which can fluctuate period to period, until there is a change in control, as defined in the purchase agreement. As of December 31, 2015 and 2014, the Company has accrued $5,385 and $6,457, respectively, for this matter representing the expected payment owed on the calculation of the liability for the tax year ended 2015 and 2014. The Company recorded these expenses as transaction related costs in other operating expense, net.

The Company has entered into various lease agreements for the rental of office and plant facilities and equipment, substantially all of which are classified as operating leases. Total rent expense under these agreements was $14,551, $13,476, and $10,939, for the years ended December 31, 2015, 2014, and 2013, respectively.

The Company rents its corporate office under a long-term operating lease agreement, which contains a provision for a mid-term rent increase. The Company records monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease term. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent liability, which is reflected in the consolidated balance sheet.

The Company has entered into short and long-term purchase commitments for various key raw materials and energy requirements. The purchase obligations include agreements to purchase goods that are enforceable and legally binding and that specify all significant terms. The purchase commitments covered by these agreements are with various suppliers and total approximately $13,031.

The Company maintains certain policies and procedures for the review, approval, and ratification of related party transactions to ensure that all transactions with selected parties are fair, reasonable and in the Company’s best interest. All significant relationships and transactions are separately identified by management if they meet the definition of a related party or a related party transaction. Related party transactions include transactions that occurred during the year, or are currently proposed, in which the Company was or will be a participant and which any related person had or will have a direct or indirect material interest. All related party transactions are reviewed, approved and documented by the appropriate level of the Company’s management in accordance with these policies and procedures.

PQ Holdings Inc., TC Group IV, L.L.C., an affiliate of The Carlyle Group, and PQ Corporation entered into a consulting agreement relating to the provision of certain financial and strategic advisory services and consulting services. The Company paid a one-time fee in the amount of $12,000 on July 30, 2007 for structuring the 2007 Merger. In addition, the Company agreed to pay an annual monitoring fee equal to $2,000. In conjunction with the 2008 INEOS Silicas Acquisition, the consulting agreement was amended whereby the Company agreed to increase the annual monitoring fee equal to $3,000, which was recorded in other operating expense in the consolidated statements of operations for the years ended December 31, 2014 and 2013. TC Group IV, L.L.C. assigned the consulting agreement to Carlyle Investment Management L.L.C., another affiliate of The Carlyle Group on June 7, 2012.

PQ Holdings Inc., INEOS, and PQ Corporation entered into a consulting agreement relating to the provision of certain financial and strategic advisory services and consulting services. The Company paid a one-time fee in the amount of $6,000 on July 2, 2008 for structuring the 2008 INEOS Silicas Acquisition. In addition, the Company agreed to pay an annual monitoring fee equal to $2,000, which was recorded in other operating expense in the consolidated statements of operations for the years ended December 31, 2014 and 2013.

In conjunction with the 2014 Stock Purchase, PQ Holdings Inc., CCMP, and PQ Corporation entered into a consulting agreement relating to the provision of certain financial and strategic advisory services and consulting services. Similarly, the consulting agreement between PQ Holdings, INEOS, and PQ Corporation was amended and restated. Under the new consulting agreements, the Company agreed to pay an annual monitoring fee of

$5,000 distributed to CCMP and INEOS equal to the Pro Rata Percentage, as defined, between CCMP and INEOS, which was recorded in other operating expense in the consolidated statements of operations for the year ended December 31, 2015.

The Company entered into a Joint Venture Agreement (the “ZI Partnership Agreement”) in 1988 with CRI Zeolites Inc., a Royal Dutch Shell plc affiliate, to form Zeolyst International, our 50/50 joint venture partnership (the “Partnership”). Under the terms of the ZI Partnership Agreement, the Partnership leases certain land used in its Kansas City production facilities from PQ Corporation. This lease, which has been recorded as an operating lease, provided for rental payments of $265, $250, and $235 for the years ended December 31, 2015, 2014 and 2013, respectively. The terms of this lease are evergreen as long as the Partnership agreement is in place. The Partnership purchases certain of its raw materials from the Company and is charged for various manufacturing costs incurred at the Company’s Kansas City production facility. The amount of these costs charged to the Partnership during the years ended December 31, 2015, 2014, and 2013, were $14,551, $14,284, and $13,044, respectively. Certain administrative, marketing, engineering, management-related, and research and development services are provided to the Partnership by the Company. During the years ended December 31, 2015, 2014, and 2013, the Partnership was charged $12,551, $10,164, and $9,769, respectively, for these services. In addition, the Partnership was charged certain product demonstration costs of $1,598, $1,832, and $1,970, during the years ended December 31, 2015, 2014, and 2013, respectively.

From time to time, the Company makes sales to portfolio companies of funds that are affiliated with CCMP and companies that are affiliated with INEOS, but these sales are not material.

There were no single customers with revenue transactions greater than 10% of total revenues for the years ended December 31, 2015, 2014, and 2013.

The Company has evaluated subsequent events from the balance sheet date through March 5, 2016, the date at which the financial statements were available to be issued, and determined there are no additional items to disclose.

The Company experiences some seasonality, primarily with respect to the Specialty Glass Materials business. As the road striping season occurs during warmer weather, sales and earnings are generated primarily during the second and third quarters. Working capital is built during the first and second quarters of the year, while cash generation occurs primarily in the second half of the fiscal year.

The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations for interim reporting. In the opinion of management, all adjustments of a normal and recurring nature necessary to state fairly the financial position and results of operations have been included. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015. The Company has continued to follow the accounting policies set forth in those consolidated statements.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that includes targeted improvements to the accounting for employee stock-based compensation. The updates in the guidance include changes in the income tax consequences, balance sheet classification and cash flow statement reporting of stock-based payment transactions. The guidance also includes certain modifications applicable only to nonpublic entities. The guidance is effective for public entities for annual periods beginning after December 15, 2016, and interim periods within those years, with early application permitted. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements.

within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new guidance must be adopted using a modified retrospective transition, and provides for certain practical expedients. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements. The Company has operating lease agreements for which it expects to recognize right of use assets and corresponding liabilities on its balance sheet upon adoption of the new guidance.

In September 2015, the FASB issued guidance that will change the requirements for reporting measurement period adjustments to provisional amounts initially recognized in conjunction with a business combination. Under GAAP, an acquiring entity currently is required to retrospectively adjust, in prior period financial statements, the provisional amounts to reflect new information obtained during the measurement period (a period, which may not exceed one year from the date of the business combination, during which the acquiring entity may receive information about the facts and circumstances existing as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date). Under the new guidance, adjustments to the provisional amounts will be reflected in the financial statements for the reporting period in which the adjustments are determined, including by recognizing in current period earnings the full effect of changes in depreciation, amortization or other income effects. The guidance requires that the acquiring entity either present separately on the face of the current period income statement or disclose in the notes to the current period financial statement, by line item, the amount of the adjustments made during the current period. The Company adopted the new guidance effective January 1, 2016. The Company will apply the adjustments prescribed by the guidance prospectively to new acquisitions. The guidance had no impact upon adoption on the Company’s consolidated financial statements.

In July 2015, the FASB issued new guidance that changes the measurement principle for inventory from the lower of cost or market to the lower of cost or net realizable value. The amendments in this guidance do not apply to inventory that is measured using last-in, first-out (“LIFO”) or the retail inventory method; rather, the amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (“FIFO”) or average cost. Within the scope of this new guidance, an entity should measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation, which is consistent with existing GAAP. The new guidance will be effective for public entities for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company does not expect this guidance to have a significant impact on its consolidated financial statements.

In August 2014, the FASB issued guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year of the issuance of the financial statements. If substantial doubt exists, additional disclosures would be required. This guidance will be effective starting with the annual period ending after December 15, 2016, with early adoption permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial statements.

uncertainty of revenues and cash flows from contracts with customers. The enhanced disclosures include qualitative and quantitative information about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized related to the costs to obtain or fulfill a contract. These new requirements for public entities become effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company is assessing the impact of these new requirements on its financial statements.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Financial assets and liabilities measured at fair value on a recurring basis are summarized as follows:

The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 12 to these condensed consolidated financial statements regarding defined supplementary retirement plans.

Derivative assets and liabilities can be exchange-traded or traded over the counter (“OTC”). The Company generally values exchange-traded derivatives using models that calibrate to market transactions and eliminate timing differences between the closing price of the exchange-traded derivatives and their underlying instruments. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC

derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

The Company has interest rate caps and natural gas caps and swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset, the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company utilizes a default swap rate comparable to PQ Holdings Inc. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of March 31, 2016 and December 31, 2015, the credit valuation adjustment resulted in a minimal change in the fair value of the derivatives.

The following table presents the tax effects of each component of other comprehensive income (loss) for the three months ended March 31, 2016 and 2015:

The following table presents the change in accumulated other comprehensive loss, net of tax, by component for the three months ended March 31, 2016 and 2015:

The following table presents the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2016 and 2015. Amounts in parenthesis indicate debits to profit / loss.

The majority of the Company’s other (income) expense, net consisted of a foreign exchange gain of ($3,206) for the three months ended March 31, 2016 and a foreign exchange loss of $18,204 for the three months ended March 31, 2015. These gains and losses are primarily driven by non-permanent intercompany debt arrangements denominated in local currencies which are translated to U.S. dollars.

The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity basis as of March 31, 2016 are as follows:

The Company’s investment in affiliates balance as of March 31, 2016 and December 31, 2015 includes net purchase accounting fair value adjustments of $65,610 and $66,207, respectively, consisting primarily of intangible assets such as customer relationships, formulations and product technology, and tradenames. Consolidated equity in net income from affiliates is net of $597 of amortization expense related to purchase accounting fair value adjustments for each of the three-month periods ended March 31, 2016 and 2015.

A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows:

Depreciation expense was $16,077 and $14,877 for the three months ended March 31, 2016 and 2015, respectively.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction. As of March 31, 2016 and December 31, 2015, the fair value of the senior secured term loans and senior secured notes was lower than book value by $53,688 and $30,760, respectively. The fair value of the senior secured term loans and notes was derived from published loan prices at March 31, 2016 and December 31, 2015, as applicable. The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 3 to these condensed consolidated financial statements for further information on fair value measurements).

Use of Derivative Financial Instruments to Manage Commodity Price Risk. The Company is exposed to risks in energy costs due to fluctuations in energy prices, particularly natural gas. The Company has a hedging program in the United States which allows the Company to mitigate exposure to natural gas volatility with natural gas swap and cap agreements. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices of comparable contracts. The respective current and non-current derivative liabilities are recorded in accrued liabilities and other long-term liabilities, and the respective current and non-current derivative assets are recorded in prepaid and other current assets and other long-term assets, as applicable. As the derivatives are highly effective and are designated and qualify as cash flow hedges, the related unrealized gains or losses are recorded in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Realized gains and losses on natural gas hedges are included in production cost and subsequently charged to cost of goods sold in the consolidated statements of operations in the period in which inventory is sold.

Use of Derivative Financial Instruments to Manage Interest Rate Risk. The Company is exposed to fluctuations in interest rates on the long-term senior secured term loans and revolving credit facility. Changes in interest rates will not affect the market value of such debt but will affect the amount of our interest payments over the terms of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on these debt obligations through interest rate cap agreements. The Company records these agreements at fair value as assets or liabilities. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices. As the derivatives are highly effective and are designated and qualify as cash flow hedges, the related unrealized gains or losses are deferred in stockholders’ equity as a component of other comprehensive income (loss), net of tax. Amounts accumulated in other comprehensive income related to interest rate cap agreements are reclassified to interest expense in the consolidated statements of operations when the related interest payments affect earnings. The Company had an $800,000 notional amount of 2% interest rate caps on its variable-rate debt at December 31, 2015, with a fair value of zero. The agreements expired during March 2016, and the Company had no interest rate cap agreements outstanding at March 31, 2016.

The following tables show the effect of the Company’s derivative instruments designated as hedges on other comprehensive income (loss) (OCI) and the statement of income:

Amounts of unrealized losses in OCI that are expected to be reclassified to the consolidated statement of operations over the next twelve months are $3,113 as of March 31, 2016.

The effective income tax rate for the three-month period ended March 31, 2016 was 71.5% compared to 11.7% for the three-month period ended March 31, 2015. The Company’s effective income tax rate fluctuates based on, among other factors, changes in income mix. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three months ended March 31, 2016 and 2015 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends, differences between tax rates in foreign jurisdictions as compared to the U.S. tax rate, non-deductible transaction costs, withholdings taxes, changes to reserves for uncertain tax positions and changes in valuation allowances against deferred tax assets in certain jurisdictions.

The following information is provided for the Company sponsored defined benefit pension plans covering (1) employees in the U.S. and Canada and (2) certain employees at its subsidiaries outside of North America (“Other Plans”), the Company sponsored unfunded plans to provide certain health care benefits to retired employees in the U.S. and Canada, and the Company’s defined benefit supplementary retirement plans which provide benefits for certain U.S. employees in excess of qualified plan limitations.

Certain of the Company’s foreign subsidiaries maintain other defined benefit pension and postretirement plans that are consistent with statutory practices. These plans are not included in the disclosures above as they are not significant to the Company’s condensed consolidated financial statements.

There is a risk of environmental impact in chemical manufacturing operations. The Company’s environmental policies and practices are designed to ensure compliance with existing laws and regulations and to minimize the possibility of significant environmental impact. The Company is also subject to various other lawsuits and claims with respect to matters such as governmental regulations, labor, and other actions arising out of the normal course of business. No accrual for these matters currently exists, with the exception of those listed below, because management believes that the liabilities resulting from such lawsuits and claims are not probable or reasonably estimable.

The Company triggered the requirement of New Jersey’s Industrial Site Recovery Act (“ISRA”) statute. As required under ISRA, a General Information Notice with respect to the Company’s two New Jersey locations was filed with the New Jersey Department of Environmental Protection (“NJDEP”) in December 2004 and again in July 2007. Based on an initial review of the facilities by the NJDEP in 2005, the Company estimated that $500 will be required for contamination assessment and removal work at these facilities, and had recorded a reserve for such amount as of December 31, 2005. During subsequent years, it was determined that additional assessment, removal and remediation work would be required and the reserve was increased to cover the estimated cost of such work. In addition, during this period, work had been performed and the reserve was reduced for actual costs incurred for the assessment and remediation work. As of March 31, 2016, the Company has recorded a reserve of $1,250 for costs required for contamination assessment and removal work at these facilities. There may be additional costs related to the remediation of these two facilities, but until further investigation takes place, the Company cannot reasonably estimate the amount of additional liability that may exist.

As part of a Delaware River Basin Commission required Pollutant Minimization Plan, in July 2013 the Company’s Chester facility conducted limited paint sampling for polychlorinated biphenyls (“PCBs”). Also, as part of demolition, repair and maintenance projects scheduled for the Company’s Baltimore facility in 2014, the Company conducted limited paint sampling during the fall of 2013 for waste categorization purposes. Paint samples were analyzed for PCB Aroclor 1254, the specific PCB congener commonly used in the manufacture of paint until the late 1970s. The Company’s analytical results indicated that PCB Aroclor 1254 is present in paint on some structures (e.g., piping, structural steel, tanks) in excess of the fifty (50) parts per million (ppm) regulatory threshold. Under the Toxic Substances Control Act, there is no requirement to test in use paint for PCB content. However, once PCB content is identified at concentrations at or above the regulatory threshold, absent specific approval from the U.S. Environmental Protection Agency, the PCB-containing paint is regulated as an unauthorized use of PCBs, and the paint must be addressed. The Company abated painted surfaces that have tested positive for PCBs at levels exceeding 50 ppm at Baltimore in 2015 and early 2016. As of March 31, 2016, the Company has recorded a reserve of $2,130 for the anticipated remediation costs of known PCB painted structures at the Company’s Baltimore and Chester facilities.

In 2011, the Company installed a Continuous Emissions Monitor (“CEM”) to measure CO, NOx and Opacity emissions from a furnace at our Chester facility in Pennsylvania, and the Company conducted Relative Accuracy Test Audits (“RATA”) as part of its efforts to certify the CEM. On May 5, 2014, the Pennsylvania Department of Environmental Protection (“PADEP”) officially notified the Company that it was certifying the

CEM based on RATA test results dating back to November 2011 and instructed the Company to start entering data previously recorded by the CEM into the PADEP’s on-line database. During the third and fourth quarters of 2014, the Company officially entered data recorded from the CEM up until the second quarter of 2013. In November 2015, the PADEP issued an Assessment of Civil Penalty in the amount of $1,739 for alleged violations under the Pennsylvania Air Pollution Control Act during the period from August 11, 2011 through June 30, 2013. The Company is planning to meet with the PADEP to propose significant reductions in the penalty amounts cited by the Agency. As of March 31, 2016, the Company has recorded a reserve of $1,700 associated with the PADEP penalty.

As part of the INEOS Silicas acquisition in July 2008, the Company acquired a manufacturing facility at Warrington, United Kingdom (“UK”). Asbestos-containing building material is present at the site, and asbestos removal and insulation replacement initiatives are underway. As of March 31, 2016, the Company has recorded a reserve of $619 for costs related to this program.

In 2008, the Company sold the property of a manufacturing facility located in the United States to the local port authority. In 2009, the port authority commissioned an environmental investigation of portions of the property. In 2010, the port authority advised the Company of alleged soil and groundwater contamination on the property and alleged the Company liable for certain conditions. The Company received and reviewed the environmental investigation documentation and determined it may have liability with respect to some, but not all, of the alleged contamination. As of March 31, 2016, the Company has recorded a reserve of $707 for costs related to this potential liability.

As part of the INEOS Silicas acquisition in July 2008, the Company is liable for potential multi-year UK tax benefits. The Company is contractually obligated to make a payment on an annual basis on its UK taxable results, which can fluctuate period to period, until there is a change in control, as defined in the purchase agreement. The Company made its most recent annual payment for the tax year ended 2014 during the three months ended March 31, 2016. As of March 31, 2016, the Company has accrued $3,000 for this matter representing the expected payment owed on the calculation of the liability for the tax years ended 2016 and 2015. The Company records these expenses as transaction related costs in other operating expense, net.

On May 4, 2016, the Company announced the closing of the merger of Eco Services Holdings LLC (“Eco Services”), the Company and certain of their respective affiliates pursuant to which the Company and Eco Services will reorganize under a newly formed holding company (the “Combined Company”) in an equity-for-equity transaction. The Combined Company will retain the PQ Corporation name, and the merger creates a leading global producer of inorganic specialty materials and catalysts positioned to deliver exceptional service and sustainable and innovative products to its customers.

Concurrently with the closing of the merger between the Company and Eco Services, the Company has also refinanced its existing credit facilities by entering into a $1,200,000 senior secured term loan (consisting of a $900,000 senior secured term loan and a $300,000 Euro equivalent senior secured term loan), $625,000 in new senior secured notes, $525,000 in senior unsecured notes, and a $200,000 asset-based secured revolving credit facility. The existing $200,000 of Eco Services notes will remain outstanding.

The Company has evaluated subsequent events from the balance sheet date through May 11, 2016, the date at which the financial statements were available to be issued, and determined there are no additional items to disclose.

Through and including , 2017 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

The following table sets forth the estimated expenses payable by us in connection with the sale and distribution of the securities registered hereby, other than underwriting discounts or commissions. All amounts are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority filing fee.

Section 145 of the General Corporation Law of the State of Delaware provides as follows:

A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.

A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

As permitted by the Delaware General Corporation Law, we have included in our certificate of incorporation a provision to eliminate the personal liability of our directors for monetary damages for breach of

their fiduciary duties as directors, subject to certain exceptions. In addition, our certificate of incorporation and bylaws provide that we are required to indemnify our officers and directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we are required to advance expenses to our officers and directors as incurred in connection with proceedings against them for which they may be indemnified.

We intend to enter into indemnification agreements with our directors and officers. These agreements will provide broader indemnity rights than those provided under the Delaware General Corporation Law and our certificate of incorporation. The indemnification agreements are not intended to deny or otherwise limit third-party or derivative suits against us or our directors or officers, but to the extent a director or officer were entitled to indemnity or contribution under the indemnification agreement, the financial burden of a third-party suit would be borne by us, and we would not benefit from derivative recoveries against the director or officer. Such recoveries would accrue to our benefit but would be offset by our obligations to the director or officer under the indemnification agreement.

The underwriting agreement provides that the underwriters are obligated, under certain circumstances, to indemnify our directors, officers and controlling persons against certain liabilities, including liabilities under the Securities Act. Reference is made to the form of underwriting agreement filed as Exhibit 1.1 hereto.

We maintain directors’ and officers’ liability insurance for the benefit of our directors and officers.

In connection with the Business Combination, on May 4, 2016 we issued (i) an aggregate of 430,107 shares of our Class A common stock in exchange for equity securities of PQ Holdings, (ii) an aggregate of 5,128,585 shares of our Class B common stock in exchange for equity securities of PQ Holdings, (iii) an aggregate of 1,513,683 shares of our Class B common stock in exchange for equity units of Eco Services Group Holdings LLC, (iv) an aggregate of 197,144 shares of our restricted Class A common stock subject to vesting conditions in exchange for restricted equity securities of PQ Holdings, (v) an aggregate of 46,936 shares of our restricted Class B common stock subject to vesting conditions in exchange for restricted equity securities of PQ Holdings, (vi) options to purchase an aggregate of 40,806 shares of our Class A common stock at a weighted average exercise price of $70.94 per share in exchange for outstanding options to purchase equity securities of PQ Holdings, and (vii) options to purchase an aggregate of 156,139 shares of our Class A common stock at a weighted average exercise price of $70.94 per share in exchange for Class A units of Eco Services Group Holdings LLC.

From May 4, 2016 through December 31, 2016, we issued (i) an aggregate of 34,431 shares of our Class B common stock for aggregate consideration of $5,012,849, (ii) options to purchase an aggregate of 61,049 shares of our Class A common stock at a weighted average exercise price of $71.01 per share under the PQ Group Holdings Inc. Stock Incentive Plan, (iii) an aggregate of 15,862 shares of our restricted Class B common stock subject to vesting conditions under the PQ Group Holdings Inc. Stock Incentive Plan and (iv) an aggregate of 1,935 shares of our Class B common stock under the PQ Group Holdings Inc. Stock Incentive Plan.

During the three months ended March 31, 2017, we issued (i) an aggregate of 406 shares of our restricted Class B common stock subject to vesting conditions under the PQ Group Holdings Inc. Stock Incentive Plan and (ii) options to purchase an aggregate of 49,435 shares of our Class A common stock at a weighted average exercise price of $79.25 per share under the PQ Group Holdings Inc. Stock Incentive Plan.

The issuances of the securities in the transactions described above were issued without registration in reliance on the exemptions afforded by Section 4(a)(2) of the Securities Act and Rules 506 and 701 promulgated thereunder.

In connection with the Business Combination, on May 4, 2016, PQ Corporation issued $625.0 million aggregate principal amount of 6.75% Senior Secured Notes at a price of 99% of their face value resulting in approximately $618.8 million of aggregate gross proceeds. The initial purchasers for the 6.75% Senior Secured Notes were Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Jefferies LLC, Goldman Sachs & Co. LLC, Deutsche Bank Securities Inc. and KeyBanc Capital Markets Inc. The aggregate amount of the initial purchasers’ discount on the 6.75% Senior Secured Notes was approximately $6.3 million. The 6.75% Senior Secured Notes were offered and sold to the initial purchasers in reliance on the exemption afforded by Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder and were offered and resold by the initial purchasers to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. investors outside the United States in compliance with Regulation S of the Securities Act.

Also in connection with the Business Combination, on May 4, 2016, PQ Corporation issued $525.0 million aggregate principal amount of Floating Rate Senior Unsecured Notes at a price of 98% of their face value resulting in approximately $514.5 million of aggregate gross proceeds. The Floating Rate Senior Unsecured Notes were issued in a private placement to accredited investors in reliance on the exemption afforded by Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.

The proceeds from the sale of the 6.75% Senior Secured Notes and the Floating Rate Senior Unsecured Notes were used, together with borrowings under PQ Corporation’s senior secured credit facilities and cash on hand, to repay outstanding indebtedness and redeem outstanding notes.

All schedules are omitted because they are not applicable or the required information is included in the financial statements or notes thereto.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes: (1) That for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) That for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Malvern, Commonwealth of Pennsylvania, on the 9^th day of June, 2017.

KNOW ALL MEN BY THESE PRESENTS, that each officer and director of PQ Group Holdings Inc. whose signature appears below constitutes and appoints James F. Gentilcore, Michael Crews and Joseph S. Koscinski, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for him or her and in his or her name, place and stead, in any and all capacities, to execute any or all amendments including any post-effective amendments and supplements to this Registration Statement, and any additional Registration Statement filed pursuant to Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:


Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒	(Do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(1)
Common stock, par value $0.01 per share	$100,000,000	$11,590


	*Per Share*		*Total*
Initial public offering price		$		$
Underwriting discounts and commissions (1)		$		$
Proceeds, before expenses, to us		$		$


Morgan Stanley		Goldman Sachs & Co. LLC		Citigroup		Credit Suisse


J.P. Morgan		Jefferies		Deutsche Bank Securities		KeyBanc Capital Markets


Prospectus Summary			1
Risk Factors			26
Cautionary Note Regarding Forward-Looking Statements			49
The Reclassification			51
Use of Proceeds			52
Dividend Policy			53
Capitalization			54
Dilution			56
Unaudited Pro Forma Condensed Combined Financial Information of PQ Group Holdings			59
Selected Consolidated Financial Data of PQ Group Holdings			64
Supplemental Selected Consolidated Financial Data of Legacy PQ			68
Management’s Discussion and Analysis of Financial Condition and Results of Operations			70


Industry			106
Business			117
Management			135
Executive and Director Compensation			141
Certain Relationships and Related Party Transactions			157
Principal Stockholders			160
Description of Certain Indebtedness			163
Description of Capital Stock			173
Shares Eligible for Future Sale			177
Material United States Federal Income Tax Considerations for Non-U.S. Holders of Common Stock			179
Underwriters			183
Legal Matters			189
Experts			189
Where You Can Find More Information			189
Index to Consolidated Financial Statements			F-1


	As of March 31, 2017
	Actual			As Adjusted⁽¹⁾
	(in thousands)
Cash and cash equivalents	$	54,126		$

Debt:
Senior secured U.S. dollar denominated term loan facility	$	923,111		$
Senior secured Euro denominated term loan facility		300,939
6.75% Senior Secured Notes due 2022		625,000
Floating Rate Senior Unsecured Notes due 2022		525,000
8.5% Senior Notes due 2022		200,000
ABL revolving credit facility		10,000
Other		45,322

Total debt		2,629,372

Stockholder’s Equity:
Class A common stock, $0.01 par value per share, 160,500,000 shares authorized, 627,251 shares issued and 625,653 shares outstanding on an actual basis; no shares authorized, issued or outstanding on an as adjusted basis		6
Class B common stock, $0.01 par value per share, 30,000,000 shares authorized, 6,728,091 shares issued and 6,711,756 shares outstanding on an actual basis; no shares authorized, issued or outstanding on an as adjusted basis		67
Common stock, $0.01 par value per share; no shares authorized, issued or outstanding on an actual basis; shares authorized and shares issued and outstanding on an as adjusted basis		—
Preferred stock, $0.01 par value per share, 1,500,000 shares authorized and no shares issued and outstanding on an actual basis; shares authorized and no shares issued or outstanding on an as adjusted basis		—
Additional paid-in capital		1,168,789
Accumulated deficit		(92,834	)
Treasury stock, at cost		(239	)
Accumulated other comprehensive loss		(39,740	)
Total stockholders’ equity		1,036,049
Noncontrolling interest		4,619

Total capitalization	$	3,670,040		$


		$
Assumed initial public offering price per share
Pro forma net tangible book value per share at March 31, 2017	$
Increase per share attributable to new investors in this offering

Pro forma net tangible book value per share after this offering

Dilution per share to new investors		$


	Shares Purchased				Total Consideration				Average Price
	Number	Percent			Amount	Percent			Per Share
Existing stockholders⁽¹⁾				%	$			%	$
New investors

Total			100	%			100	%	$


Class B shares issued and outstanding as of March 31, 2017
Less: Class B treasury shares as of March 31, 2017

Net Class B shares outstanding as of March 31, 2017
Class B conversion factor^(a)

Converted net Class B shares as of March 31, 2017
Common shares issued and outstanding as of March 31, 2017
Less: Common treasury shares as of March 31, 2017

Total common shares purchased by existing stockholders


	PQ Group Holdings Inc.			PQ Holdings Inc.
	Year Ended December 31, 2016			Period from January 1, 2016 through May 3, 2016			Pro Forma Adjustments			Pro Forma Combined
Sales	$	1,064,177		$	339,420		$	(556	)⁽¹⁾	$	1,403,041
Cost of goods sold		810,085			248,842			(21,818	)^(1)(2)(3)(4)		1,037,109

Gross profit		254,092			90,578			21,262			365,932
Selling, general and administrative expenses		107,601			39,404			(1,964	)⁽⁵⁾		145,041
Other operating expense, net		62,301			13,565			(894	)⁽⁶⁾⁽⁷⁾		74,972

Operating income		84,190			37,609			24,120			145,919
Equity in net loss (income) from affiliated companies		2,612			(8,078	)		(29,744	)⁽⁸⁾		(35,210	)
Interest expense		140,315			37,310			10,320	⁽⁹⁾		187,945
Debt extinguishment costs		13,782			40,153			(52,142	)^(10)(11)(12)		1,793
Other expense (income), net		(3,402	)		(5,467	)		—			(8,869	)

Income (loss) before income taxes and noncontrolling interest		(69,117	)		(26,309	)		95,686			260
Provision for income taxes		10,041			11,391			36,535	⁽¹³⁾		57,967

Net (loss) income		(79,158	)		(37,700	)		59,151			(57,707	)
Less: Net income attributable to the noncontrolling interest		588			637			—			1,225

Net (loss) income attributable to the Combined Business	$	(79,746	)	$	(38,337	)	$	59,151		$	(58,932	)


Class B shares⁽¹⁴⁾
Net (loss) per share, basic and diluted		—			—			—			—
Weighted average shares outstanding, basic and diluted		—			—			—			4,947,982

Class A shares⁽¹⁴⁾
Net (loss) per share, basic and diluted		—			—			—			(137,03	)
Weighted average shares outstanding, basic and diluted		—			—			—			430,051


Category	Adjustment
Adjustments that increase cost of goods sold
(2) Depreciation expense related to the step-up in fair value of property, plant and equipment	$	19,903
(3) Amortization expense related to the step-up in fair value of definite-lived intangible assets		4,949

		24,852
Adjustments that decrease cost of goods sold
(1) Removal of cost of goods sold related to intercompany sales		(556	)
(2) Removal of previously recognized depreciation expense recorded by PQ Holdings		(18,902	)
(3) Removal of previously recognized amortization expense recorded by PQ Holdings		(1,528	)
(4) Removal of the one-time charge related to the step-up in fair value of inventory		(25,684	)

		(46,670	)

Reduction in cost of goods sold	$	(21,818	)


Category	Adjustment
Adjustments that increase selling, general and administrative expenses
Depreciation expense related to the step-up in fair value of property, plant and equipment	$	1,161
Stock compensation expense based on the new capital structure		1,385

		2,546
Adjustments that decrease selling, general and administrative expenses
Removal of previously recognized depreciation expense recorded by PQ Holdings		(980	)
Removal of the stock compensation acceleration clause related to the Business Combination		(1,174	)
Removal of stock compensation expense based on the prior capital structure		(2,356	)

		(4,510	)

Reduction in selling, general and administrative expenses	$	(1,964	)


Category	Adjustment
Adjustments that increase other operating expense, net
(6) Amortization expense related to the step-up in fair value of definite-lived intangible assets	$	9,437

Adjustments that decrease other operating expense, net
(6) Removal of previously recognized amortization expense recorded by PQ Holdings		(8,536	)
(7) Removal of one-time transaction fees related to the Business Combination		(1,795	)

		(10,331	)

Reduction in other operating expense, net	$	(894	)


Category	Adjustment
Adjustments that increase equity in net loss (income) from affiliated companies
Removal of previously recognized amortization expense related to our Zeolyst Joint Venture	$	(796	)
Removal of the non-recurring step-up in fair value of inventory related to our Zeolyst Joint Venture		(31,159	)

		(31,955	)
Adjustments that decrease equity in net loss (income) from affiliated companies
Amortization expense related to the step-up of definite-lived intangible assets		2,211

Increase in equity in net loss (income) from affiliated companies	$	(29,744	)


								Amortization of
	Amount		Interest Rate			Interest Payment		OID		Deferred Financing Fees		Total Interest Expense
U.S. dollar-denominated term loan facility	$	900,000		5.25	%	$	17,106	$	614	$	464	$	18,184
Euro-denominated term loan facility		300,000		5.00	%		5,037		204		133		5,374
6.75% Senior Secured Notes due 2022		625,000		6.75	%		13,945		118		208		14,271
Floating Rate Senior Unsecured Notes due 2022		525,000		11.75	%		20,392		401		37		20,830

Total debt	$	2,350,000				$	56,480	$	1,337	$	842	$	58,659
Less historical interest expense of PQ Holdings Inc.													(39,244	)
Less historical interest expense of Eco Services													(9,095	)

Increase to pro forma interest expense												$	10,320


												Successor			Predecessor
	Three months ended March 31,						Year Ended December 31,					Period from inception (July 30, 2014) to December 31, 2014			Period from January 1, 2014 to November 30, 2014		Year Ended December 31,
	2017			2016			2016			2015							2013			2012
	*Unaudited*
	(Dollars in thousands)
Statement of operations data:
Sales	$	332,931		$	93,913		$	1,064,177		$	388,875	$	35,539		$	361,823	$	390,834		$	410,369
Cost of goods sold		250,219			67,812			810,085			278,791		30,160			265,829		286,371			294,754

Gross profit		82,712			26,101			254,092			110,084		5,379			95,994		104,463			115,615
Selling, general and administrative expenses		34,449			8,131			107,601			34,613		2,623			45,168		46,871			53,617
Other operating expense, net		10,348			9,922			62,301			19,696		16,347			5,593		—			—

Operating income (loss)		37,915			8,048			84,190			55,775		(13,591	)		45,233		57,592			61,998
Equity in net (income) loss from affiliated companies		(5,877	)		—			2,612			—		—			—		—			—
Interest expense, net		46,785			11,029			140,315			44,348		8,470			86		122			179
Debt extinguishment costs		—			—			13,782			—		—			—		—			—
Other (income) expense, net		2,232			—			(3,402	)		—		—			—		(3,266	)		(13,000	)

(Loss) income before income taxes and noncontrolling interest		(5,225	)		(2,981	)		(69,117	)		11,427		(22,061	)		45,147		60,736			74,819
(Benefit) provision for income taxes		(2,910	)		150			10,041			—		—			14,602		21,445			26,342

Net (loss) income		(2,315	)		(3,131	)		(79,158	)		11,427		(22,061	)		30,545		39,291			48,477
Less: Net income attributable to the noncontrolling interest		139			—			588			—		—			—		—			—

Net (loss) income attributable to PQ Group Holdings Inc.	$	(2,454	)	$	(3,131	)	$	(79,746	)	$	11,427	$	(22,061	)	$	30,545	$	39,291		$	48,477


										Successor			Predecessor
	Three months ended March 31, 2017			Year Ended December 31,						Period from inception (July 30, 2014) to December 31, 2014			Period from January 1, 2014 to November 30, 2014			Year Ended December 31,
	Three months ended March 31, 2017			2016			2015									2013			2012
	*Unaudited*
	(Dollars in thousands)
Balance sheet data (at end of period):
Cash and cash equivalents	$	54,126		$	70,742		$	25,155		$	22,627					$	—		$	—
Net working capital (deficit)⁽¹⁾		203,054			179,544			(9,895	)		(16,173	)					10,954			13,479
Property, plant and equipment, net		1,185,141			1,181,388			481,073			472,156						345,041			336,631
Total assets		4,274,209			4,259,671			1,007,636			1,025,094						742,046			756,291
Total liabilities		3,233,541			3,231,727			772,343			807,270						201,831			214,788
Total debt, net of original issue discount and deferred financing costs including current portion		2,576,002			2,562,198			673,101			675,254						—			—
Total stockholders’ equity		1,040,668			1,027,944			235,293			217,824						540,215			541,503
Cash flows data:
Net cash provided by (used in):
Operating activities	$	6,696		$	119,720		$	44,715		$	(2,057	)	$	57,593		$	84,448		$	81,195
Investment activities		(27,094	)		(1,929,680	)		(38,725	)		(888,347	)		(32,852	)		(41,703	)		(40,980	)
Financing activities		6,915			1,861,433			(3,462	)		913,031			(24,741	)		(42,745	)		(40,215	)
Effect of exchange rate changes		(3,133	)		(5,886	)		—			—			—			—			—


	Legacy PQ
	Three Months Ended March 31,			Legacy PQ
	Three Months Ended March 31,			Year Ended December 31,
(Dollars in thousands)	2016			2015		2014			2013		2012
	unaudited
Statement of operations data:
Sales	$	237,393		$	1,024,326	$	1,114,904		$	1,085,019	$	1,084,782
Cost of goods sold		173,613			748,756		818,483			795,416		803,159

Gross profit		63,780			275,570		296,421			289,603		281,623
Selling, general and administrative expenses		28,524			107,097		110,886			111,229		112,138
Other operating expense, net		11,461			51,516		71,148			49,373		42,261

Operating income		23,795			116,957		114,387			129,001		127,224
Equity in net income from affiliated companies		4,659			45,325		29,359			53,808		26,206
Interest expense, net		26,413			108,375		111,553			120,347		111,228
Debt extinguishment costs		—			—		2,476			20,287		20,063
Other expense, net		(3,422	)		21,383		23,886			3,316		(3,751	)

Income before income taxes and noncontrolling interest		5,463			32,524		5,831			38,859		25,890
Provision for income taxes		3,904			22,902		7,548			10,608		18,918

Net income (loss)		1,559			9,622		(1,717	)		28,251		6,972
Less: Net income attributable to the noncontrolling interest		457			1,771		1,894			1,521		1,788

Net income (loss) attributable to Legacy PQ	$	1,102		$	7,851	$	(3,611	)	$	26,730	$	5,184

Balance sheet data (at end of period):
Cash and cash equivalents	$	44,195		$	53,507	$	100,836		$	117,749	$	124,451
Net working capital (1)		157,925			140,887		135,247			153,980		150,235
Property, plant and equipment, net		576,534			569,168		546,716			510,345		496,242
Total assets		2,293,912			2,268,084		2,310,262			2,379,308		2,333,480
Total liabilities		2,207,911			2,191,967		2,212,714			2,232,422		2,216,117
Total debt, including current portion		1,820,012			1,803,763		1,807,404			1,809,201		1,781,449
Total stockholders' equity		86,001			76,117		97,548			146,886		117,363


	Historical												Pro Forma
	Three months ended March 31,						Change						Three months ended March 31,						Change
	2017			2016			$			%			2017			2016			$			%
	Unaudited			Unaudited									Unaudited			Unaudited
	(in millions, except percentages)
Sales	$	332.9		$	93.9		$	239.0			254.5	%	$	332.9		$	330.9		$	2.0			0.6	%
Cost of goods sold		250.2			67.8			182.4			269.0	%		250.2			245.6			4.6			1.9	%

Gross profit		82.7			26.1			56.6			216.9	%		82.7			85.3			(2.6	)		(3.0	)%

Gross profit margin		24.8	%		27.8	%								24.8	%		25.8	%
Selling, general and administrative expenses		34.4			8.1			26.3			324.7	%		34.4			36.1			(1.7	)		(4.7	)%
Other operating expense, net		10.3			9.9			0.4			4.0	%		10.3			20.8			(10.5	)		(50.5	)%

Operating income		38.0			8.1			29.9			369.1	%		38.0			28.4			9.6			33.8	%
Operating income margin		11.4	%		8.6	%								11.4	%		8.6	%
Equity in net income of affiliated companies		5.9			—			5.9			—			5.9			3.6			2.3			63.9	%
Interest expense, net		46.8			11.0			35.8			325.5	%		46.8			46.3			0.5			1.1	%
Other (income) expense, net		2.3			—			2.3			—			2.3			(3.5	)		5.8			(165.7	)%

Loss before income taxes and noncontrolling interest		(5.2	)		(2.9	)		(2.3	)		79.3	%		(5.2	)		(10.8	)		5.6			(51.9	)%

(Benefit) provision for income taxes		(2.9	)		0.2			(3.1	)		—			(2.9	)		(0.9	)		(2.0	)		222.2	%

Effective tax rate		55.8	%		(6.9	)%								55.8	%		8.3	%
Net loss		(2.3	)		(3.1	)		0.8			(25.8	)%		(2.3	)		(9.9	)		7.6			(76.8	)%
Less: Net income attributable to the noncontrolling interest		0.1			—			0.1			—			0.1			0.5			(0.4	)		(80.0	)%

Net loss attributable to PQ Group Holdings Inc.	$	(2.4	)	$	(3.1	)	$	0.7			(22.6	)%	$	(2.4	)	$	(10.4	)	$	8.0			(76.9	)%


	Pro Forma
	Year-ended December 31,						Change
	2016			2015			$			%
	(in millions, except percentages)
Segment Adjusted EBITDA⁽¹⁾:
Performance Materials & Chemicals	$	231.8		$	241.7		$	(9.9	)		(4.1	)%
Environmental Catalysts & Services⁽²⁾		221.8			190.8			31.0			16.3	%

Total Segment Adjusted EBITDA⁽³⁾		453.6			432.5			21.1			4.9	%
Corporate⁽⁴⁾		(32.8	)		(19.4	)		(13.4	)		69.1	%

Total Adjusted EBITDA⁽³⁾	$	420.8		$	413.1		$	7.7			1.9	%


	As of March 31,			As of December 31,
	2017			2016			2015
	(in millions)
Term Loan Facility (U.S. dollar denominated)	$	923.1		$	925.4		$	—
Term Loan Facility (Euro denominated)		300.9			297.3			—
6.75% Senior Secured Notes due 2022		625.0			625.0			—
Floating Rate Senior Unsecured Notes due 2022		525.0			525.0			—
8.5% Senior Notes due 2022		200.0			200.0			200.0
Eco Senior secured credit facilities		—			—			495.0
ABL Facility		10.0			—			—
Other		45.3			45.2			—

Total debt		2,629.3			2,617.9			695.0
Original issue discount		(27.3	)		(28.4	)		(2.2	)
Deferred financing costs		(26.0	)		(27.3	)		(19.7	)

Total debt, net of original issue discount and deferred financing costs	$	2,576.0		$	2,562.2		$	673.1

Less: current portion		(24.6	)		(14.5	)		(5.0	)

Total long term debt, net of original issue discount and deferred financing costs	$	2,551.4		$	2,547.7		$	668.1


	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 yrs
	(in millions)
Long-term debt^(a)	$	2,617.9	$	14.5	$	24.6	$	45.6	$	2,533.2
Interest payments^(b)		1,022.7		187.4		372.8		370.4		92.1
Operating leases		55.6		16.5		17.3		10.2		11.6
Purchase obligations^(c)		34.3		17.2		12.1		1.6		3.4
Other obligations^(d)		21.4		9.5		3.3		2.9		5.7

Total contractual obligations	$	3,751.9	$	245.1	$	430.1	$	430.7	$	2,646.0


Key End Uses	2016 Pro Forma Adjusted Sales⁽¹⁾		Significant Growth Drivers	Key PQ Products
Fuels & Emissions Controls		20%	• Global regulatory requirements to: • Remove nitrogen oxides from emissions • Remove sulfur from diesel and gasoline • Increase gasoline octane in order to improve fuel efficiency while lowering vapor pressure to regulated levels for premium fuels • Improve lubricant characteristics to improve fuel efficiencies	• Refinery catalysts • Emissions control catalysts • Catalyst recycling services
Consumer Products		18%	• Substitution of silicate materials for less environmentally friendly chemical additives in detergent and cleaning end uses • Demand for improved quality and shelf life of beverages • Demand for improved oral hygiene and appearance	• Silica gels for edible oil and beer clarification • Precipitated silicas and zeolites for the surface coating, dentifrice, and dishwasher and laundry detergent applications
Highway Safety & Construction		16%	• Demand for enhanced “dry and wet” visibility of road and airport markings to improve safety • Drive for weight reduction in cements	• Reflective markings for roadways and airports • Hollow glass beads, or microspheres, for cement additives
Packaging & Engineered Plastics		17%	• Demand for increased process efficiency and reduction of by-products in production of chemicals • Demand for high-density polyethylene lightweighting of automotive components • Enhanced properties in plastic composites for the automotive and electronics industries	• Catalysts for high-density polyethylene and chemicals syntheses • Antiblocks for film packaging • Solid and hollow microspheres for composite plastics


Location	Approximate Square Feet		Owned or leased
Administrative facilities:
Amersfoort, Netherlands		7,481	Leased
Lenexa, KS, United States		14,489	Leased
Malvern, PA, United States		33,000	Leased

Research and development facilities:
Toronto, Canada		2,500	Leased
St. Pourcain-sur-Sioule, France		30,916	Owned
Eijsden, Netherlands		4,306	Owned
Warrington, United Kingdom		14,155	Owned
Conshohocken, PA, United States		74,968	Owned

Manufacturing facilities:
Melbourne-Dandenong, Australia		48,378	Owned
Jacana, Brazil		43,753	Owned
Rio Claro, Brazil		193,750	Owned
Toronto, Canada		75,471	Owned
Valleyfield, Canada		46,000	Owned
Lamotte, France		130,567	Leased
Wurzen, Germany		124,915	Owned
Pasuruan, Indonesia		68,489	Owned
Guadalajara, Mexico		105,866	Owned
Tlalnepantla, Mexico		180,125	Owned
Eijsden, Netherlands		165,850	Owned/Leased⁽¹⁾
Maastricht, Netherlands		70,073	Leased
Winschoten, Netherlands		134,548	Leased
Delfzijl, Netherlands		38,373	Leased⁽²⁾
Bangkok, Thailand		12,056	Owned
Warrington, United Kingdom		385,218	Owned
Augusta, GA, United States		186,680	Owned
Baltimore, MD, United States		19,852	Owned
Baton Rouge, Louisiana, United States		13,503,600	Owned
Baytown, Texas, United States		348,480	Owned
Brownwood, TX, United States		107,900	Owned
Chester, PA, United States		172,707	Owned
Dominguez, California, United States		1,437,480	Owned
Gurnee, IL, United States		96,000	Owned
Joliet, IL, United States		168,657	Owned
Hammond, Indiana, United States		1,132,560	Owned
Houston, Texas, United States		2,003,760	Owned
Kansas City, Kansas, United States		220,679	Owned⁽³⁾
Martinez, California, United States		5,096,520	Owned
Muscatine, Iowa, United States		105,072	Owned
Rahway, New Jersey, United States		124,035	Owned
Paris, Texas, United States		147,158	Owned
Portland, Oregon, United States		1,176,120	Owned
Potsdam, New York, United States		88,798	Owned
South Gate, California, United States		71,632	Owned
St. Louis, Missouri, United States		44,034	Owned


Name	Age	Position

James F. Gentilcore	64	Chief Executive Officer, President and Director (Class director)

Michael Crews	50	Executive Vice President and Chief Financial Officer

Scott Randolph	55	Executive Vice President and Group President—Performance Materials and Chemicals

Paul Ferrall	60	Executive Vice President and Group President—Environmental Catalysts and Services

John Lau	62	Chief Technology Officer

Joseph S. Koscinski	51	Secretary, Vice President & General Counsel

William J. Sichko, Jr.	63	Chief Administrative Officer, Assistant Secretary and Vice President

Michael Boyce	68	Chairman of the Board of Directors (Class director)

Greg Brenneman	55	Director (Class director)

Timothy Walsh	54	Director (Class director)

Christopher Behrens	56	Director (Class director)

Mark McFadden	39	Director (Class director)

Robert Toth	56	Director (Class director)

Robert Coxon	69	Director (Class director)

Andrew Currie	61	Director (Class director)

Jonny Ginns	43	Director (Class director)

Kyle Vann	69	Director (Class director)


Name		Title
James Gentilcore⁽¹⁾		President and Chief Executive Officer (since July 1, 2016)
Michael Crews		EVP and Chief Financial Officer
Scott Randolph		EVP and Group President Performance Materials & Chemicals
Paul Ferrall		EVP and Group President Environmental Catalysts & Services
Ray Kolberg		President, Catalyst Product Group
George Biltz⁽²⁾		President and Chief Executive Officer (until June 24, 2016)


Albermarle Corporation	International Flavors & Fragrances, Inc.	Quaker Chemical Corporation
Cabot Corporation	Koppers Holdings Inc.	A. Schulman Inc.
Chemtura Corporation	Kraton Corporation	Sensient Technologies
FMC Corporation	Kronos Worldwide, Inc.	Stepan Company
GCP Applied Technology	Minerals Technologies, Inc.	Tronox Limited
H.B. Fuller Company	MPM Holdings Inc.	Valhi, Inc.
Innophos Holdings	Platform Specialty Products Corp.	W.R. Grace
Innospec, Inc.	PolyOne Corp.	Westlake Chemical Corp.


Name	YE 2015 Annual Salary		YE 2016 Annual Salary
James Gentilcore⁽¹⁾		—	$	825,000
Michael Crews	$	425,000	$	425,000
Scott Randolph	$	425,000	$	425,000
Paul Ferrall	$	425,000	$	425,000
Ray Kolberg⁽²⁾		—	$	425,000
George Biltz⁽³⁾	$	750,000		—


Name	FYE 2016 Target Award
James Gentilcore		100	%
Michael Crews		75	%
Scott Randolph		75	%
Paul Ferrall		75	%
Ray Kolberg		75	%
George Biltz		100	%


Business Segments	Target		Actual
Performance Materials & Chemicals	$	256,179	$	231,791
Environmental Catalysts & Services	$	207,741	$	221,804


Division	Percentage Earned			James Gentilcore		Michael Crews		Scott Randolph⁽¹⁾		Paul Ferrall		Ray Kolberg		George Biltz⁽²⁾
Performance Chemicals		87	%	$	0	$	0	$	0		N/A		N/A	$	0
Performance Materials (Formerly Potters)		100	%	$	103,125	$	79,688		N/A		N/A		N/A	$	93,750
Catalyst		111	%	$	265,374	$	205,062		N/A		N/A	$	820,246	$	241,249
Refining Services		105	%	$	153,012	$	118,236		N/A	$	472,947		N/A	$	139,102
2016 Total Bonus Award				$	521,511	$	402,986	$	0	$	472,947	$	820,246	$	474,101


Named Executive	Severance Benefits Payable Upon a Termination without Cause or for Good Reason*	Change in Control Severance Benefits**
James Gentilcore	2X base plus target bonus and pro-rated bonus for year of exit based on actual achievement of annual incentive targets; 24 months’ subsidized COBRA	Same as regular severance, plus accelerated vesting of equity pursuant to equity award agreement terms
Michael Crews	1.5 X base plus target bonus and pro-rated bonus for year of exit based on actual achievement of annual incentive targets; 18 months’ subsidized COBRA	Same as regular severance, plus accelerated vesting of equity pursuant to equity award agreement terms
Scott Randolph	2X base plus target bonus and pro-rated bonus for year of exit based on actual achievement of annual incentive target; 24 months’ subsidized COBRA	Same as regular severance plus accelerated vesting of equity pursuant to equity award agreement terms
Paul Ferrall	2X base plus target bonus and pro-rated bonus for year of exit based on actual achievement of annual incentive target; 24 months subsidized COBRA	Same as regular severance plus accelerated vesting of equity pursuant to equity award agreement terms
Ray Kolberg	1X base plus target bonus and pro-rated bonus for year of exit based on actual achievement of annual incentive target; 12 months’ subsidized COBRA	Same as regular severance plus accelerated vesting of equity pursuant to equity award agreement terms


Name	Severance Pay ($)	Benefits ($)
James Gentilcore
Michael Crews
Scott Randolph
Paul Ferrall
Ray Kolberg
George Biltz