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Segment Information
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Information Segment Information
Realignment of Reportable Segments in 2020
As part of the Company’s continuing efforts to drive growth and greater operating efficiencies, in January 2020, the Company changed its reporting segments to align around its two growth platforms: (i) Adhesives and (ii) Coatings and Composites. At September 30, 2020, the Company’s continuing operations has three reportable segments, which consist of the following businesses:
•Adhesives: these businesses focus on the global adhesives market. They include the Company’s global wood adhesives business, which now also includes the oilfield technologies group, including: forest products resin assets in North America, Latin America, Australia and New Zealand; and global formaldehyde.
•Coatings and Composites: these businesses focus on the global coatings and composites market. They include the Company’s base and specialty epoxy resins and Versatic™ Acids and Derivatives businesses.
•Corporate and Other: primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions and foreign exchange gains and losses.
The Company has recast its Net Sales and Segment EBITDA (as defined below) for the Successor period July 2, 2019 through September 30, 2019 and for the Predecessor periods July 1, 2019 and January 1, 2019 through July 1, 2019 to reflect the new reportable segments.

Reportable Segments
Following are net sales and Segment EBITDA for continuing operations by reportable segment. Segment EBITDA is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) adjusted for certain non-cash items and other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the Board of Directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Corporate and Other is primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions and foreign exchange gains and losses not allocated to continuing segments.
Net Sales (1):
Following is continuing operations revenue by reportable segment. Product sales within each reportable segment share economically similar risks. These risks include general economic and industrial conditions, competitive pricing pressures and the Company’s ability to pass on fluctuations in raw material prices to its customers. A substantial number of the Company’s raw material inputs are petroleum-based and their prices fluctuate with the price of oil. Due to differing regional industrial and economic conditions, the geographic distribution of revenue may impact the amount, timing and uncertainty of revenue and cash flows from contracts with customers.
Following is net sales by reportable segment disaggregated by geographic region:
SuccessorPredecessor
Three Months Ended September 30, 2020
July 2, 2019 through September 30, 2019
7/1/2019
AdhesivesCoatings and CompositesTotalAdhesivesCoatings and CompositesTotalAdhesivesCoatings and CompositesTotal
North America$221 $122 $343 $269 $138 $407 $— $— $— 
Europe5 132 137 6 124 130 — — — 
Asia Pacific34 87 121 39 70 109 — — — 
Latin America33 — 33 47 — 47 — — — 
Total$293 $341 $634 $361 $332 $693 $— $— $— 
SuccessorPredecessor
Nine Months Ended September 30, 2020July 2, 2019 through September 30, 2019
January 1, 2019 through July 1, 2019
 AdhesivesCoatings and CompositesTotalAdhesivesCoatings and CompositesTotalAdhesivesCoatings and CompositesTotal
North America$670 $379 $1,049 $269 $138 $407 $562 $286 $848 
Europe14 393 407 6 124 130 15 305 320 
Asia Pacific96 209 305 39 70 109 81 129 210 
Latin America94 — 94 47 — 47 103 — 103 
Total$874 $981 $1,855 $361 $332 $693 $761 $720 $1,481 
(1)Intersegment sales are not significant and, as such, are eliminated within the selling segment.
Reconciliation of Net Loss to Segment EBITDA:
 SuccessorPredecessorSuccessorPredecessor
 Three Months Ended September 30, 2020July 2, 2019 through September 30, 2019July 1, 2019Nine Months Ended September 30, 2020July 2, 2019 through September 30, 2019January 1, 2019 through July 1, 2019
Reconciliation:
Net (loss) income attributable to Hexion Inc.$(102)$(43)$3,054 $(203)$(43)$2,894 
Add: Net income attributable to noncontrolling interest— — — — — 1 
Less: Net (loss) income from discontinued operations(76)1 119 (79)1 135 
Net (loss) income from continuing operations$(26)$(44)$2,935 $(124)$(44)$2,760 
Income tax expense (benefit) 17 (5)191 8 (5)201 
Interest expense, net25 28 — 76 28 89 
Depreciation and amortization (1)
47 48 — 143 48 43 
EBITDA63 27 3,126 103 27 3,093 
Adjustments to arrive at Segment EBITDA:
Asset impairments$— $— $— $16 $— $— 
Business realignment costs (2)
19 12 — 57 12 14 
Transaction costs (3)
1 5 — 4 5 26 
Realized and unrealized foreign currency (gains) losses(3)9 — 2 9 (7)
Reorganization items, net (4)
— — (3,099)— — (2,943)
Non-cash impact of inventory step-up (5)
— 27 (27)— 27 (27)
Other non-cash items (6)
6 1 — 291 9 
Other (7)
5 5 18 9 5 36 
Total adjustments28 59 (3,108)117 59 (2,892)
Segment EBITDA$91 $86 $18 $220 $86 $201 
Segment EBITDA (8):
Adhesives$58 $59 $18 $156 $59 $135 
Coatings and Composites50 44 — 115 44 96 
Corporate and Other(17)(17)— (51)(17)(30)
Total$91 $86 $18 $220 $86 $201 
(1)For the nine months ended September 30, 2020, accelerated depreciation of $2 has been included in “Depreciation and amortization.”
(2)Business realignment costs for the Successor and Predecessor periods below included:
SuccessorPredecessorSuccessorPredecessor
Three Months Ended September 30, 2020July 2, 2019 through September 30, 2019July 1, 2019Nine Months Ended September 30, 2020July 2, 2019 through September 30, 2019January 1, 2019 through July 1, 2019
Severance costs$4 $4 $— $15 $4 $8 
In-process facility rationalizations5 3 — 13 3 3 
Business services implementation6 — — 17 — — 
Legacy environmental reserves4 4 — 8 4 1 
Other— 1 — 4 1 2 
(3)For the Successor three and nine months ended September 30, 2020, transaction costs included certain professional fees related to strategic projects. For the Successor period from July 2, 2019 through September 30, 2019 and the Predecessor period from January 1, 2019 through July 1, 2019, transaction costs primarily included $4 and $23, respectively, of certain professional fees and other expenses related to the Company’s Chapter 11 proceedings.
(4)Represents incremental costs incurred directly as a result of the Company’s Chapter 11 proceedings after the date of filing, gains on settlement of liabilities under the Plan and the net impact of fresh start accounting adjustments. The amounts excludes the “Non-cash impact of inventory step-up” discussed below.
(5)Represents $27 of non-cash expense related to the step up of finished goods inventory on July 1 as part of fresh start accounting that was expensed in the successor period upon the sale of the inventory.
(6)Other non-cash items for the Successor and Predecessor periods presented below included:
SuccessorPredecessorSuccessorPredecessor
Three Months Ended September 30, 2020July 2, 2019 through September 30, 2019July 1, 2019Nine Months Ended September 30, 2020July 2, 2019 through September 30, 2019January 1, 2019 through July 1, 2019
Fixed asset write-offs$— $— $— $6 $— $3 
Stock-based compensation costs4 5 — 13 5 — 
Long-term retention programs1 — — 7 — 5 
One-time capitalized variance impact of inventory fresh start step-up— (4)— — (4)— 
Other1 — — 3 — 1 

(7)Other for Successor and Predecessor periods presented below included:
SuccessorPredecessorSuccessorPredecessor
Three Months Ended September 30, 2020July 2, 2019 through September 30, 2019July 1, 2019Nine Months Ended September 30, 2020July 2, 2019 through September 30, 2019January 1, 2019 through July 1, 2019
Legacy expenses$2 $4 $— $7 $4 $3 
IT outage (recoveries) costs, net— (1)— (4)(1)9 
Management fees and other3 2 — 6 2 6 
Accelerated deferred revenue— — 18 — — 18