Quarterly report pursuant to Section 13 or 15(d)

Reportable Segments

v3.10.0.1
Reportable Segments
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Reportable Segments
17. Reportable Segments:
Summarized financial information for the Company’s (1) Environmental Catalysts & Services and (2) Performance Materials & Chemicals reportable segments is shown in the following table:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2018
 
2017
 
2018
 
2017
Net sales:
 
 
 
 
 
 
 
 
Silica Catalysts
 
$
17,347

 
$
20,045

 
$
33,820

 
$
37,185

Refining Services
 
112,071

 
103,947

 
212,785

 
198,088

Environmental Catalysts & Services(1)
 
129,418

 
123,992

 
246,605

 
235,273

 
 
 
 
 
 
 
 
 
Performance Chemicals
 
183,761

 
169,038

 
373,724

 
339,987

Performance Materials
 
126,538

 
99,470

 
189,280

 
153,243

Eliminations
 
(4,138
)
 
(2,404
)
 
(7,021
)
 
(4,521
)
Performance Materials & Chemicals
 
306,161

 
266,104

 
555,983

 
488,709

 
 
 
 
 
 
 
 
 
Inter-segment sales eliminations(2)
 
(866
)
 
(829
)
 
(1,678
)
 
(1,784
)
 
 
 
 
 
 
 
 
 
Total
 
$
434,713

 
$
389,267

 
$
800,910

 
$
722,198

 
 
 
 
 
 
 
 
 
Segment Adjusted EBITDA:(3)
 
 
 
 
 
 
 
 
Environmental Catalysts & Services(4)
 
$
64,864

 
$
64,311

 
$
123,285

 
$
120,678

Performance Materials & Chemicals
 
73,389

 
66,333

 
130,541

 
118,856

Total Segment Adjusted EBITDA(5)
 
$
138,253

 
$
130,644

 
$
253,826

 
$
239,534

 
 
 
 
 
 
 
 
 
 
(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 $49,513 and $30,661 for the three months ended June 30, 2018 and 2017, respectively. The proportionate share of sales is $87,862 and $63,369 for the six months ended June 30, 2018 and 2017, respectively.
(2) 
The Company eliminates intersegment sales when reconciling to the Company’s consolidated statements of operations.
(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 Environmental Catalysts and Services 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 plus $2,599 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Environmental Catalysts and Services segment is $13,205 for the three months ended June 30, 2017, which includes $8,675 of equity in net income plus $1,659 of amortization of investment in affiliate step-up plus $2,871 of joint venture depreciation, amortization and interest.
The Adjusted EBITDA from the Zeolyst Joint Venture included in the Environmental Catalysts and Services 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 plus $5,922 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Environmental Catalysts and Services segment is $25,292 for the six months ended June 30, 2017, which includes $14,499 of equity in net income plus $5,283 of amortization of investment in affiliate step-up plus $5,510 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 (loss) attributable to PQ Group Holdings to Segment Adjusted EBITDA is as follows:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2018
 
2017
 
2018
 
2017
Reconciliation of net income (loss) attributable to PQ Group Holdings Inc. to Segment Adjusted EBITDA
 
 
 
 
 
 
 
 
Net income (loss) attributable to PQ Group Holdings Inc.
 
$
15,782

 
$
(1,609
)
 
$
15,996

 
$
(4,063
)
Provision for income taxes
 
13,649

 
3,007

 
13,120

 
97

Interest expense, net
 
27,221

 
48,176

 
56,384

 
94,961

Depreciation and amortization
 
46,983

 
42,620

 
95,471

 
83,206

Segment EBITDA
 
103,635

 
92,194

 
180,971

 
174,201

Unallocated corporate expenses
 
9,358

 
7,882

 
17,046

 
15,589

Joint venture depreciation, amortization and interest
 
2,599

 
2,871

 
5,922

 
5,510

Amortization of investment in affiliate step-up
 
1,659

 
1,658

 
3,317

 
5,282

Amortization of inventory step-up
 

 

 
1,603

 
871

Debt extinguishment costs
 

 

 
5,879

 

Net loss on asset disposals
 
4,752

 
2,577

 
5,904

 
2,925

Foreign currency exchange loss
 
6,757

 
14,370

 
11,820

 
16,356

Non-cash revaluation of inventory, including LIFO
 
121

 

 
5,047

 
2,479

Management advisory fees
 

 
1,250

 

 
2,500

Transaction and other related costs
 
257

 
2,955

 
685

 
4,334

Equity-based and other non-cash compensation
 
3,796

 
1,176

 
7,627

 
2,828

Restructuring, integration and business optimization expenses
 
2,405

 
1,351

 
3,484

 
3,052

Defined benefit pension plan cost
 
(402
)
 
685

 
148

 
1,409

Other
 
3,316

 
1,675

 
4,373

 
2,198

Segment Adjusted EBITDA
 
$
138,253

 
$
130,644

 
$
253,826

 
$
239,534