| Reportable Segments |
Reportable Segments:
Summarized financial information for the Company’s (1) Performance Materials & Chemicals and (2) Environmental Catalysts & Services reportable segments is shown in the following table:
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Three months ended
September 30, |
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Nine months ended
September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net sales: |
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|
|
|
|
|
Performance Materials & Chemicals |
$ |
277,072 |
|
|
$ |
256,219 |
|
|
$ |
765,781 |
|
|
$ |
429,867 |
|
Environmental Catalysts & Services(1)
|
115,541 |
|
|
114,271 |
|
|
350,814 |
|
|
312,490 |
|
Eliminations(2)
|
(784 |
) |
|
(511 |
) |
|
(2,568 |
) |
|
(911 |
) |
Total |
$ |
391,829 |
|
|
$ |
369,979 |
|
|
$ |
1,114,027 |
|
|
$ |
741,446 |
|
Segment Adjusted EBITDA:(3)
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Performance Materials & Chemicals |
$ |
65,885 |
|
|
$ |
64,604 |
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|
$ |
184,741 |
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|
$ |
111,178 |
|
Environmental Catalysts & Services(4)
|
61,900 |
|
|
56,341 |
|
|
182,578 |
|
|
135,044 |
|
Total Segment Adjusted EBITDA(5)
|
$ |
127,785 |
|
|
$ |
120,945 |
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|
$ |
367,319 |
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|
$ |
246,222 |
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—————
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(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 $37,622 and $28,184 for the three months ended September 30, 2017 and 2016, respectively. The proportionate share of sales is $100,991 and $48,461 for the nine months ended September 30, 2017 and 2016, respectively.
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(2)
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The Company eliminates intersegment sales when reconciling to the Company’s consolidated statements of operations. |
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(3)
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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. |
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(4)
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The Adjusted EBITDA from the Zeolyst Joint Venture included in the environmental catalyst and services segment is $14,398 for the three months ended September 30, 2017, which includes $10,151 of equity in net income plus $1,658 of amortization of investment in affiliate step-up plus $2,563 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the environmental catalyst and services segment is $10,316 for the three months ended September 30, 2016, which includes $4,683 of equity in net loss plus $12,291 of amortization of investment in affiliate step-up plus $2,690 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the environmental catalyst and services segment is $39,690 for the nine months ended September 30, 2017, which includes $24,594 of equity in net income plus $6,941 of amortization of investment in affiliate step-up plus $8,073 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the environmental catalyst and services segment is $19,962 for the nine months ended September 30, 2016, which includes $9,213 of equity in net loss plus $24,606 of amortization of investment in affiliate step-up plus $4,534 of joint venture depreciation, amortization and interest.
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(5)
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Total Segment Adjusted EBITDA differs from the Company’s consolidated Adjusted EBITDA due to unallocated corporate expenses. |
A reconciliation from net loss to Segment Adjusted EBITDA is as follows:
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Three months ended
September 30, |
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Nine months ended
September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation of net loss attributable to PQ Group Holdings Inc. to Segment Adjusted EBITDA |
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Net loss attributable to PQ Group Holdings Inc. |
$ |
(3,345 |
) |
|
$ |
(10,017 |
) |
|
$ |
(7,408 |
) |
|
$ |
(90,410 |
) |
Provision for (benefit from) income taxes |
5,172 |
|
|
(3,536 |
) |
|
5,269 |
|
|
36,013 |
|
Interest expense, net |
49,079 |
|
|
48,610 |
|
|
144,041 |
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|
94,362 |
|
Depreciation and amortization |
45,929 |
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|
43,611 |
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|
129,135 |
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|
85,602 |
|
Segment EBITDA |
96,835 |
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|
78,668 |
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|
271,037 |
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|
125,567 |
|
Unallocated corporate expenses |
7,885 |
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|
7,316 |
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|
23,474 |
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|
13,940 |
|
Joint venture depreciation, amortization and interest |
2,563 |
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|
2,690 |
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|
8,073 |
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|
4,534 |
|
Amortization of investment in affiliate step-up |
1,660 |
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|
12,291 |
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|
6,942 |
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|
24,606 |
|
Amortization of inventory step-up |
— |
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|
5,804 |
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|
871 |
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|
23,518 |
|
Debt extinguishment costs |
453 |
|
|
— |
|
|
453 |
|
|
11,858 |
|
Losses on disposal of fixed assets |
3,494 |
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|
627 |
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|
6,419 |
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|
2,288 |
|
Foreign currency exchange losses |
5,256 |
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|
3,151 |
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|
21,612 |
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|
6,240 |
|
Non-cash revaluation of inventory, including LIFO |
750 |
|
|
329 |
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|
3,229 |
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|
775 |
|
Management advisory fees |
1,250 |
|
|
1,250 |
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|
3,750 |
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|
2,333 |
|
Transaction and other related costs |
966 |
|
|
1,696 |
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|
5,300 |
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|
6,240 |
|
Equity-based and other non-cash compensation |
1,041 |
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|
1,137 |
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|
3,869 |
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|
4,916 |
|
Restructuring, integration and business optimization expenses |
4,957 |
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|
2,839 |
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|
8,009 |
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|
14,567 |
|
Defined benefit pension plan cost |
791 |
|
|
1,244 |
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|
2,200 |
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|
2,642 |
|
Other |
(116 |
) |
|
1,903 |
|
|
2,081 |
|
|
2,198 |
|
Segment Adjusted EBITDA
|
$ |
127,785 |
|
|
$ |
120,945 |
|
|
$ |
367,319 |
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|
$ |
246,222 |
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