Quarterly report pursuant to Section 13 or 15(d)

Reportable Segments

v3.19.2
Reportable Segments
6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Reportable Segments
18. Reportable Segments:
Summarized financial information for the Company’s reportable segments is shown in the following table:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Sales:
 
 
 
 
 
 
 
 
Refining Services
 
$
117,290

 
$
112,071

 
$
223,134

 
$
212,785

Catalysts(1)
 
20,857

 
17,347

 
36,723

 
33,820

Performance Materials
 
118,872

 
126,538

 
179,961

 
189,280

Performance Chemicals
 
177,828

 
183,761

 
358,290

 
373,724

Eliminations(2)   
 
(3,172
)
 
(5,004
)
 
(7,212
)
 
(8,699
)
Total
 
$
431,675

 
$
434,713

 
$
790,896

 
$
800,910

 
 
 
 
 
 
 
 
 
Segment Adjusted EBITDA:(3)
 
 
 
 
 
 
 
 
Refining Services
 
$
42,824

 
$
41,277

 
$
82,555

 
$
76,809

Catalysts(4)
 
29,607

 
23,587

 
47,734

 
46,476

Performance Materials
 
29,221

 
28,567

 
39,736

 
40,625

Performance Chemicals
 
41,165

 
44,822

 
83,838

 
89,916

Total Segment Adjusted EBITDA(5)   
 
$
142,817

 
$
138,253

 
$
253,863

 
$
253,826

 
 
 
 
 
 
 
 
 
 
(1) 
Excludes the Company’s proportionate share of sales from the Zeolyst International and Zeolyst C.V. joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 10 to these condensed consolidated financial statements for further information). The proportionate share of sales is $39,124 and $49,513 for the three months ended June 30, 2019 and 2018, respectively. The proportionate share of sales is $68,602 and $87,862 for the six months ended June 30, 2019 and 2018, respectively.
(2) 
The Company eliminates intersegment sales when reconciling to the Company’s condensed consolidated statements of income.
(3) 
The Company defines Adjusted EBITDA as EBITDA adjusted for certain items as noted in the reconciliation below. Management evaluates the performance of its segments and allocates resources based on several factors, of which the primary measure is Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income as an indicator of the Company’s operating performance. Adjusted EBITDA as defined by the Company may not be comparable with EBITDA or Adjusted EBITDA as defined by other companies.
(4) 
The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $17,636 for the three months ended June 30, 2019, which includes $12,264 of equity in net income plus $1,659 of amortization of investment in affiliate step-up and $3,713 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $17,874 for the three months ended June 30, 2018, which includes $13,616 of equity in net income plus $1,659 of amortization of investment in affiliate step-up and $2,599 of joint venture depreciation, amortization and interest.
The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $25,993 for the six months ended June 30, 2019, which includes $14,300 of equity in net income plus $4,217 of amortization of investment in affiliate step-up and $7,476 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $34,681 for the six months ended June 30, 2018, which includes $25,442 of equity in net income plus $3,317 of amortization of investment in affiliate step-up and $5,922 of joint venture depreciation, amortization and interest.
(5) 
Total Segment Adjusted EBITDA differs from the Company’s consolidated Adjusted EBITDA due to unallocated corporate expenses.
A reconciliation of net income attributable to PQ Group Holdings to Segment Adjusted EBITDA is as follows:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
Reconciliation of net income attributable to PQ Group Holdings Inc. to Segment Adjusted EBITDA
 
 
 
 
 
 
 
 
Net income attributable to PQ Group Holdings Inc.
 
$
30,574

 
$
15,782

 
$
33,725

 
$
15,996

Provision for income taxes
 
20,307

 
13,649

 
22,754

 
13,120

Interest expense, net
 
28,540

 
27,221

 
57,158

 
56,384

Depreciation and amortization
 
45,090

 
46,983

 
90,984

 
95,471

Segment EBITDA
 
124,511

 
103,635

 
204,621

 
180,971

Unallocated corporate expenses
 
10,364

 
9,358

 
20,369

 
17,046

Joint venture depreciation, amortization and interest
 
3,713

 
2,599

 
7,476

 
5,922

Amortization of investment in affiliate step-up
 
1,659

 
1,659

 
4,217

 
3,317

Amortization of inventory step-up
 

 

 

 
1,603

Debt extinguishment costs
 

 

 

 
5,879

Net (gain) loss on asset disposals
 
(9,653
)
 
4,752

 
(8,833
)
 
5,904

Foreign currency exchange loss
 
3,612

 
6,757

 
923

 
11,820

LIFO expense
 
122

 
121

 
10,280

 
5,047

Transaction and other related costs
 
975

 
257

 
1,055

 
685

Equity-based compensation
 
5,370

 
3,796

 
8,770

 
7,627

Restructuring, integration and business optimization expenses
 
(13
)
 
2,405

 
719

 
3,484

Defined benefit pension plan cost (benefit)
 
552

 
(402
)
 
1,545

 
148

Other
 
1,605

 
3,316

 
2,721

 
4,373

Segment Adjusted EBITDA
 
$
142,817

 
$
138,253

 
$
253,863

 
$
253,826