SEGMENT REPORTING

9 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

We identify our segments based on our management structure and the financial information used by our chief executive officer, who is our chief operating decision maker, to assess segment performance and allocate resources among our operating units.  We have the following two reportable segments:

Electronic Materials

Electronic Materials includes products and solutions for the semiconductor industry.  We manufacture and sell CMP consumables, including CMP slurries and polishing pads, and high-purity process chemicals used to etch and clean silicon wafers in the production of semiconductors, photovoltaics (solar cells) and flat panel displays.

Performance Materials

Performance Materials includes pipeline performance products and services, wood treatment products, and products and equipment used in the precision optics industry.

Our chief operating decision maker evaluates segment performance based upon revenue and segment adjusted EBITDA.  Segment adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, adjusted for certain items that affect comparability from period to period.  These adjustments include items related to the Acquisition, such as Acquisition and integration-related expenses, the impact of fair value adjustments to inventory acquired from KMG, certain costs related to the KMG-Bernuth warehouse fire, net of insurance recovery, net restructuring charges related to the wood treatment reporting unit, and costs related to the Pandemic, net of grants received. We exclude these items from earnings when presenting our adjusted EBITDA measure because we believe they will be incurred infrequently and/or are otherwise not indicative of a segment's regular, ongoing operating performance. Adjusted EBITDA is also the basis of a performance metric for our fiscal 2020 Short-Term Incentive Program ("STIP").  In addition, our chief operating decision maker does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.

Revenue from external customers by segment are as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Segment Revenue:
Electronic Materials:
CMP Slurries	$	117,680	$	108,617	$	359,828	$	345,244
Electronic Chemicals	78,614		80,103		234,693		198,474
CMP Pads	24,073		23,403		65,476		71,868
Total Electronic Materials	220,367		212,123		659,997		615,586
Performance Materials	54,360		59,759		182,066		143,465
Total	$	274,727	$	271,882	$	842,063	$	759,051

Capital expenditures by segment are as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Capital Expenditures:
Electronic Materials	$	6,141	$	11,293	$	19,720	$	27,842
Performance Materials	33,550		1,286		79,247		2,909
Corporate	3,900		852		8,967		3,096
Total	$	43,591	$	13,431	$	107,934	$	33,847

Adjusted EBITDA by segment is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2020		2019		2020		2019
Segment adjusted EBITDA:
Electronic Materials	$	76,855	$	70,859	$	227,662	$	220,594
Performance Materials	26,959		27,425		84,370		63,152
Unallocated corporate expenses	(11,773)		(12,527)		(38,226)		(35,621)
Interest expense	(10,406)		(12,757)		(33,079)		(32,978)
Interest income	131		417		589		2,004
Depreciation and amortization	(31,324)		(26,587)		(95,516)		(70,476)
Acquisition and integration-related expenses	(2,735)		(2,910)		(7,785)		(33,108)
Charge for fair value write-up of acquired inventory sold	—		(42)		—		(14,869)
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery	(622)		(4,450)		(1,220)		(4,450)
Net costs related to restructuring of the wood treatment business	293		—		293		—
Costs related to the Pandemic, net of grants received	(112)		—		(349)		—
Income before income taxes	$	47,266	$	39,428	$	136,739	$	94,248

The two segments operate independently and serve different markets and customers, as a result there are no sales between segments. The unallocated portions of corporate functions, including finance, legal, human resources, information technology, and corporate development, are not directly attributable to a reportable segment.