10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _______________________________________

FORM 10-Q

 ___________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to               .

Commission File Number 001-33124

 ___________________________________________

INNOPHOS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 ___________________________________________

 

Delaware			20-1380758
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
259 Prospect Plains Road	Cranbury	New Jersey	08512
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 495-2495

 ____________________________________________

Securities registered pursuant to section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value	IPHS	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” "accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Page 1 of 43

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of November 1, 2019, the registrant had 19,690,774 shares of common stock outstanding.

Page 2 of 43

TABLE OF CONTENTS

		Page
PART I	Financial Information
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	40
PART II	Other Information
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		43

Page 3 of 43

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Unless the context requires otherwise, references to “Innophos,” “the Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Innophos Holdings, Inc. and its consolidated subsidiaries.

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” and/or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. The forward-looking statements in this Quarterly Report on Form 10-Q may include, among other things, statements about: (1) the pending Merger discussed herein; (2) global macroeconomic conditions and trends; (3) the behavior of financial markets, including fluctuations in foreign currencies, interest rates and turmoil in capital markets; (4) changes in regulatory controls regarding tariffs, duties, taxes and income tax rates; (5) our ability to implement and refine our Vision 2022 growth plan; (6) our ability to successfully identify and complete acquisitions in line with our Vision 2022 growth plan and effectively operate and integrate acquired businesses to realize the anticipated benefits of those acquisitions; (7) our ability to realize expected cost savings and efficiencies from our performance improvement and other optimization initiatives; (8) our ability to effectively compete in our markets, and to successfully develop new and competitive products that appeal to our customers; (9) changes in consumer preferences and demand for our products or a decline in consumer confidence and spending; (10) our ability to benefit from our investments in assets and human capital and the ability to complete projects successfully and on budget; (11) economic, regulatory and political risks associated with our international operations, most notably Mexico and China; (12) volatility and increases in the price of raw materials, energy and transportation, and fluctuations in the quality and availability of raw materials and process aids; (13) the impact of a disruption in our supply chain or our relationship with our suppliers; (14) our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; (15) our ability to meet quality and regulatory standards in the various jurisdictions in which we have operations or conduct business; and (16) other information that is not historical information.

You should refer to “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on February 27, 2019, and this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.  As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete discussion of all potential risks or uncertainties that may substantially impact our business. Moreover, we operate in a competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all of these factors on our business, financial condition or results of operations.

Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this Quarterly Report on Form 10-Q and any documents that we reference in this report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Page 4 of 43

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands, except per share amounts, the number of shares or where otherwise noted)

	September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	30,731		$	20,197
Accounts receivable, net of allowance for doubtful accounts ($884 and $688)	106,219			102,564
Inventories	170,290			180,203
Other current assets	35,136			24,094
Total current assets	342,376			327,058
Property, plant and equipment, net	237,803			240,235
Lease right-of-use assets	55,597			—
Goodwill	152,767			152,767
Intangibles and other assets, net	87,301			95,094
Total assets	$	875,844		$	815,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade and other	$	57,850		$	80,007
Other current liabilities	58,655			49,993
Total current liabilities	116,505			130,000
Long-term debt	340,000			300,000
Long-term lease liabilities	49,077			—
Other long-term liabilities	32,364			49,639
Total liabilities	$	537,946		$	479,639
Commitments and contingencies (Note 14)
Common stock, par value $.001 per share; authorized 100,000,000; issued 23,042,492 and 22,984,608; outstanding 19,690,774 and 19,613,085 shares	$	20		$	20
Paid-in capital	147,727			142,558
Common stock held in treasury, at cost (3,351,718 and 3,371,523 shares)	(177,097		)	(176,862		)
Retained earnings	372,885			372,815
Accumulated other comprehensive loss	(5,637		)	(3,016		)
Total stockholders' equity	337,898			335,515
Total liabilities and stockholders' equity	$	875,844		$	815,154

See notes to condensed consolidated financial statements

Page 5 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands, except per share amounts, the number of shares or where otherwise noted)

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net sales	$	189,349		$	196,934		$	565,801		$	609,099
Cost of goods sold	156,685			161,706			460,333			495,259
Gross profit	32,664			35,228			105,468			113,840
Operating expenses:
Selling, general and administrative	17,803			19,525			57,505			64,548
Research & development expenses	1,179			1,240			3,751			3,989
Total operating expenses	18,982			20,765			61,256			68,537
Operating income	13,682			14,463			44,212			45,303
Interest expense, net	3,990			3,428			11,580			9,530
Foreign exchange loss (gain)	373			(531		)	(478		)	409
Other (income), net	(5		)	(14		)	(16		)	(42		)
Income before income taxes	9,324			11,580			33,126			35,406
Provision (benefit) for income taxes	2,873			(2,510		)	16,580			4,155
Net income	$	6,451		$	14,090		$	16,546		$	31,251
Net income attributable to participating common shareholders	$	6,417		$	14,033		$	16,474		$	31,139
Per share data (Note 3):
Income per participating share:
Basic	$	0.33		$	0.72		$	0.84		$	1.60
Diluted	$	0.32		$	0.71		$	0.83		$	1.57
Weighted average participating shares outstanding:
Basic	19,583,316			19,525,284			19,575,764			19,511,097
Diluted	19,785,045			19,838,962			19,740,262			19,790,570
Other comprehensive income (loss), net of tax:
Change in interest rate swaps, (net of tax of $41, $0, $732, and $0)	$	(122	)	$	—		$	(2,195	)	$	—
Change in pension and post-retirement plans, (net of tax of ($19), $16, $13, and $228)	288			(47		)	(426		)	436
Other comprehensive income (loss), net of tax	$	166		$	(47	)	$	(2,621	)	$	436
Comprehensive (loss) income	$	6,617		$	14,043		$	13,925		$	31,687

See notes to condensed consolidated financial statements

Page 6 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Nine months ended
	September 30, 2019			September 30, 2018
Cash flows provided by operating activities
Net income	$	16,546		$	31,251
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	31,776			33,317
Amortization of deferred financing charges	322			322
Deferred income tax provision	242			7,006
Share-based compensation	5,188			4,143
Changes in assets and liabilities:
Accounts receivable	(3,655		)	(2,272		)
Inventories	9,913			(23,094		)
Other current assets	(11,042		)	(9,362		)
Accounts payable	(18,060		)	(1,167		)
Other current liabilities	5,041			10,291
Other long-term assets and liabilities, net	(11,608		)	(15,071		)
Net cash provided by operating activities	24,663			35,364
Cash flows used for investing activities:
Capital expenditures	(25,576		)	(47,800		)
Net cash used for investing activities	(25,576		)	(47,800		)
Cash flows provided by financing activities:
Long-term debt borrowings	51,000			86,000
Long-term debt repayments	(11,000		)	(51,000		)
Restricted stock forfeitures	(235		)	(251		)
Dividends paid	(28,318		)	(28,197		)
Net cash provided by financing activities	11,447			6,552
Effect of foreign exchange rate changes on cash and cash equivalents	—			181
Net change in cash	10,534			(5,703		)
Cash and cash equivalents at beginning of period	20,197			28,782
Cash and cash equivalents at end of period	$	30,731		$	23,079
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities:
Accrued additions to plant assets	$	5,242		$	5,073

See notes to condensed consolidated financial statements

Page 7 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Statement of Stockholders’ Equity (Unaudited)

(Dollars and shares in thousands)

	Number of Common Shares	Common Stock		Retained Earnings (Deficit)			Paid-in Capital / Common stock held in treasury			Accumulated Other Comprehensive Income/(Loss)			Total Shareholders' Equity
Balance, December 31, 2017	19,538	$	20	$	374,366		$	(38,629	)	$	(2,198	)	$	333,559
Net income				31,251									31,251
Other comprehensive income, (net of tax $228) (a)										436			436
Effects of U.S. enacted Tax Cuts and Jobs Act (a)				(293		)							(293		)
Effects of adoption of ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory				360									360
Equity-based compensation	75						3,649						3,649
Dividends declared ($1.44 per share) (b)				(28,293		)							(28,293		)
Balance, September 30, 2018	19,613	$	20	$	377,391		$	(34,980	)	$	(1,762	)	$	340,669
Balance, December 31, 2018	19,613	$	20	$	372,815		$	(34,304	)	$	(3,016	)	$	335,515
Net income				16,546									16,546
Other comprehensive loss, (net of tax $745)										(2,621		)	(2,621		)
Effects of adoption of ASC 842 (net of tax $3,966) (c)				11,897									11,897
Equity-based compensation plans	78						4,934						4,934
Dividends declared ($1.44 per share) (d)				(28,373		)							(28,373		)
Balance, September 30, 2019	19,691	$	20	$	372,885		$	(29,370	)	$	(5,637	)	$	337,898

(a) Includes the impact of ASU 2018-02, which transferred those amounts from accumulated other comprehensive income (loss) to retained earnings. See Note 16 to the Condensed Consolidated Financial Statements.

(b) $0.48 per share declared February 2018, May 2018, and July 2018

(c) On the transition to ASC 842 effective January 1, 2019, a deferred gain (net of taxes) related to a sale leaseback transaction was credited to Retained Earnings. See Note 8 to the Condensed Consolidated Financial Statements.

(d) $0.48 per share declared February 2019, April 2019, and August 2019

See notes to condensed consolidated financial statements

Page 8 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, the number of shares or where otherwise noted)

1. Basis of Statement Presentation

Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Innophos have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, for interim financial reporting and do not include all disclosures required by U.S. GAAP for annual financial reporting, and should be read in conjunction with the audited consolidated and combined financial statements of the Company at December 31, 2018 and for the three years then ended.

The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments which management considers necessary for a fair statement of the results of operations for the interim periods and is subject to year-end adjustments. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The December 31, 2018 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

Merger Agreement with One Rock Capital Partners

On October 20, 2019, Innophos Holdings, Inc., Iris Parent LLC, a Delaware limited liability company (“Parent”), and Iris Merger Sub 2019, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Innophos Holdings, Inc. (the “Merger”), with Innophos Holdings, Inc. surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of One Rock Capital Partners II, LP, a Delaware limited partnership (“ORC Fund II”).

At the time of the Merger, each share of Company common stock, par value $0.001 per share issued and outstanding will be automatically converted into the right to receive cash in an amount equal to $32.00 per share. The final purchase price is expected to be valued at approximately $932 million, including the assumption of debt.

The transactions contemplated by the Merger Agreement are subject to the satisfaction of certain customary conditions, including the approval of the Merger Agreement by the Company's stockholders, the receipt of regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties, and compliance by the parties with their respective obligations under the Merger Agreement.

Under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated, the Company would be required to pay Parent a fee of $10.3 million or $20.6 million, depending on the circumstance. Further, under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated by the Parent, the Parent would be required to pay the Company a fee of $40.0 million.

The closing of the transaction is expected to occur in the first quarter of 2020. Upon the completion of the transaction, Innophos will become a privately held company and shares of the Company's common stock will no longer be listed on any public market.

Annual Goodwill Impairment Test 

Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. During the third quarter of 2019, the Company changed the measurement date of the annual goodwill impairment test from the first month of the fourth quarter to the second month of the third quarter, which was a change in accounting principle. This change did not result in the delay, acceleration or avoidance of an impairment charge. We believe this timing is preferable as it better aligns the goodwill impairment test with the Company's strategic business planning process, which is a key component of the test. The change to the goodwill measurement date was applied prospectively, as retrospective application would have been impractical because the Company is unable to objectively select assumptions that would have been used in previous periods without the benefit of hindsight. The Company completed the required annual testing of goodwill for impairment and has determined that goodwill is not impaired.

Page 9 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

Error Correction 

During the fourth quarter of 2018, the Company identified an error associated with disclosing 2018 accrued capital expenditures and adjusting for them as non-cash investing activities in the Condensed Consolidated Statements of Cash Flows. The Company has evaluated the materiality of the error and concluded it was not material to any of the previously issued consolidated financial statements. However, the Company has elected to revise its consolidated cash flow statement for the period ending September 30, 2018 to correct the error.

The following table presents the effect of the revision on the selected line items previously reported in the consolidated cash flows statement for the nine months ended September 30, 2018:

	September 30, 2018						September 30, 2018
Consolidated Statement of Cash Flows	As reported			Adjustment			As revised
Cash flows from operating activities
Changes in assets and liabilities:
Accounts payable	$	(5,664	)	$	4,497		$	(1,167	)
Net cash provided by (used for) operations	$	30,867		$	4,497		$	35,364
Cash flows used for investing activities
Capital expenditures	$	(43,303	)	$	(4,497	)	$	(47,800	)
Net cash (used for) investing activities	$	(43,303	)	$	(4,497	)	$	(47,800	)
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities
Accrued additions to plant assets				$	5,073		$	5,073

These accompanying notes to the consolidated financial statements reflect the impact of this revision.

During the second quarter of 2019, the Company identified and corrected errors related to the valuation of its inventory located at one of its domestic subsidiaries and the translation of Accumulated other comprehensive income (loss) related to pension and post retirement obligations at a foreign subsidiary. The adjustments decreased Cost of goods sold by $3.1 million and Foreign exchange (gain) loss by $0.7 million resulting in an increase to income before income taxes of approximately $3.8 million in the three month period ended June 30, 2019 and increased the Inventory balance by $3.1 million and decreased Accumulated other comprehensive income before income taxes by $0.7 million as of June 30, 2019. Approximately $1.2 million of the cumulative adjustment should have been recorded during the first quarter of 2019 and the remaining $2.6 million related to prior periods. Management has concluded that these adjustments are not material to the periods presented or any of its previously issued financial statements, and are not expected to be material to the full year 2019 results.

Recently Issued Accounting Standards

Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset (ROU asset) representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new leases standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption (the effective date method). The Company adopted this standard as of January 1, 2019, and has elected the effective date method. The Company also elected the package of practical expedients, which among other things, does not require reassessment of prior conclusions to contracts containing a lease, lease

Page 10 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

classification, and initial direct costs. As an accounting policy election, the Company will exclude short-term leases (term of 12 months or less) from the balance sheet. The Company's lease agreements do not contain any residual value guarantees. Please see Note 8, "Leases", for further disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and hedging (Topic 815): Targeted improvements to accounting for hedging activities. This standard more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard on January 1, 2019, and there was no material impact on its financial position, results of operations and related disclosures.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates. ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU was effective upon issuance and did not have a material impact on the Company’s Consolidated Financial Statements.

Issued but not yet adopted

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. New disclosures include the interest crediting rates for cash balance plans, and an explanation of significant gains and losses related to changes in benefit obligations. The new standard is effective for fiscal years beginning after December 15, 2020, and must be applied retrospectively for all periods presented. Early adoption is permitted. The Company does not anticipate the adoption of this standard will have a material impact on its financial position, results of operations and related disclosures.

2. Revenue Recognition

Revenues are recognized when control of goods is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control passes either upon shipment or delivery, depending on the agreed sales terms with customers.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenues recognized. There were no significant changes to its estimates of variable consideration upon adoption.

The Company reports its business in three operating segments: Food, Health, and Nutrition; Industrial Specialties; and Other. The Company has three principal product lines within these operating segments: (i) Specialty Ingredients; (ii) Core Ingredients; and (iii) Co-Products and Other. Revenue recognition is measured on the same basis across these segments, products, markets, and geographic countries, with the performance obligation being the transfer of control of goods at a single point in time.

Page 11 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

	Three Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	98,909	$	3,773	$	8,438	$	16,534	$	127,654
Core Ingredients	15,626		2,137		23,493		10,097		51,353
Co-Products & Other	9,044		178		1,100		20		10,342
Total	$	123,579	$	6,088	$	33,031	$	26,651	$	189,349

	Three Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	105,127	$	6,726	$	9,754	$	17,682	$	139,289
Core Ingredients	14,431		1,704		21,005		8,152		45,292
Co-Products & Other	10,568		123		1,517		145		12,353
Total	$	130,126	$	8,553	$	32,276	$	25,979	$	196,934

	Nine Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	292,772	$	12,950	$	25,904	$	55,912	$	387,538
Core Ingredients	46,694		6,832		69,471		21,568		144,565
Co-Products & Other	26,810		397		6,188		303		33,698
Total	$	366,276	$	20,179	$	101,563	$	77,783	$	565,801

	Nine Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	332,525	$	19,005	$	26,472	$	57,511	$	435,513
Core Ingredients	43,120		5,947		60,988		27,366		137,421
Co-Products & Other	24,764		256		10,574		571		36,165
Total	$	400,409	$	25,208	$	98,034	$	85,448	$	609,099

Revenues for the geographic information are attributed to geographic areas based on the destination of the sale.

The Company's payment terms vary by geography and location of its customer and the products offered. Invoices are generated upon shipment of the goods, with the term between invoicing and when payment is due being insignificant.

Food, Health, and Nutrition and Industrial Specialties

The Food, Health and Nutrition reporting segment, as well as the Industrial Specialties reporting segment, consists of products in the Specialty Ingredients and Core Ingredients product lines.

Specialty Ingredients are the most value adding products in our portfolio. Specialty Ingredients consist of specialty phosphate products, specialty phosphoric acids, including polyphosphoric acid, and a range of other mineral, enzyme and botanical based specialty ingredients. The Company's Specialty Ingredients products have a wide range of applications, including:

• flavor enhancers in beverages;

• electrolytes in sports drinks;

• texture modifiers in cheeses;

• leavening agents in baked goods;

• calcium and phosphorus fortification in food and beverages;

Page 12 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

• moisture and color retention in seafood, poultry and meat;

• mineral, enzyme and botanical sources for a wide variety of fortified foods, beverages and dietary supplements;

• excipients in vitamins, minerals, nutritional supplements and pharmaceuticals; and

• abrasives in toothpaste.

Each product typically has a number of different applications and end uses. For example, the Company's dicalcium phosphate product can be used as an excipient for pharmaceutical and dietary supplements, a leavening agent in bakery products and as an abrasive in oral care products. The Company often works directly with customers to tailor products to their required specifications for their finished product application.

The Company's Core Ingredients product line includes food grade purified phosphoric acid, or PPA, technical grade PPA, sodium tripolyphosphate, or STPP, and detergent grade PPA. Food grade PPA can be used to produce phosphate salts and has a variety of applications in food and beverages. Technical grade PPA has applications in water treatment. The Company also sells technical grade PPA in the merchant market to third-party phosphate derivative producers. STPP is a key ingredient in cleaning products, including industrial and institutional cleaners and automatic dishwashing detergents and consumer laundry detergents outside the United States. In addition to its use in cleaning products, STPP is also used in water treatment, clay processing, and copper ore processing. The end use market for STPP is largely derived from consumer product applications. Detergent Grade PPA is a lower grade form of PPA used primarily in the production of STPP.

Other

The Other reporting segment consists of products in the Co-Products and Other product line.

The Company's Co-Products and Other product line includes granular triple super phosphate, or GTSP, and merchant green phosphoric acid, or MGA. GTSP is generated at the Company's Coatzacoalcos facility in Mexico as a co-product of its purified wet acid manufacturing process. GTSP is a fertilizer product used throughout Latin America for increasing crop yields in a wide range of agricultural sectors. The Company sells MGA in the merchant market to third party manufacturers of fertilizer products.

Practical Expedients and Exemptions

Management reviewed the practical expedients which a Company may utilize when implementing Topic 606 - Revenue from Contracts with Customers. As such, the Company has applied the practical expedient related to significant financing components and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

3. Earnings per Share (EPS)

The Company accounts for earnings per share in accordance with ASC 260 and related guidance, which requires two calculations of earnings per share (EPS) to be disclosed: basic EPS and diluted EPS. Under ASC Subtopic 260-10-45, as of January 1, 2009 unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as restricted stock, are considered participating securities for purposes of calculating EPS. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock, as shown in the table below.

The numerator for basic and diluted earnings per share is net earnings attributable to shareholders reduced by dividends attributable to unvested shares. The denominator for basic earnings per share is the weighted average number of common stock outstanding during the period. The denominator for diluted earnings per share is weighted average shares outstanding adjusted for the effect of dilutive outstanding stock options, performance share awards and restricted stock awards.

The following is a reconciliation of the weighted average basic number of common shares outstanding to the diluted number of common and common stock equivalent shares outstanding and the calculation of earnings per share using the two-class method:

Page 13 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	6,451		$	14,090		$	16,546		$	31,251
Less: earnings attributable to unvested shares	(34		)	(57		)	(72		)	(112		)
Net income available to participating common shareholders	$	6,417		$	14,033		$	16,474		$	31,139
Weighted average number of participating common and potential common shares outstanding:
Basic number of participating common shares outstanding	19,583,316			19,525,284			19,575,764			19,511,097
Dilutive effect of stock equivalents	201,729			313,678			164,498			279,473
Diluted number of weighted average participating common shares outstanding	19,785,045			19,838,962			19,740,262			19,790,570
Earnings per participating common share:
Earnings per participating common share—Basic	$	0.33		$	0.72		$	0.84		$	1.60
Earnings per participating common share—Diluted	$	0.32		$	0.71		$	0.83		$	1.57
Total outstanding options, performance share awards and unvested restricted stock not included in the calculation of diluted earnings per share as the effect would be anti-dilutive	966,943			431,751			982,049			465,956

Page 14 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

4. Stockholders’ Equity / Share-Based Compensation

The following table summarizes the components of share-based compensation expense, all of which has been classified as selling, general and administrative expense:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock options	$	366	$	398	$	1,168	$	1,282
Restricted stock	606		580		1,878		1,860
Performance shares	649		173		1,442		422
Stock grants	—		—		700		579
Total share-based compensation expense	$	1,621	$	1,151	$	5,188	$	4,143

5. Inventories

Inventories consist of the following:

	September 30, 2019		December 31, 2018
Raw materials	$	47,789	$	46,147
Finished products	106,561		119,407
Spare parts	15,940		14,649
	$	170,290	$	180,203

Inventory reserves for excess quantities, obsolescence or shelf-life expiration as of September 30, 2019 and December 31, 2018 were $14.8 million and $14.3 million, respectively.

Page 15 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

6. Other Current Assets

Other current assets consist of the following:

	September 30, 2019		December 31, 2018
Creditable taxes (value added taxes)	$	15,895	$	11,944
Vendor inventory deposits (prepaid)	3,434		454
Prepaid income taxes	11,378		6,658
Prepaid insurance	1,548		2,605
Other	2,881		2,433
	$	35,136	$	24,094

7. Goodwill

The following table provides a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period (in thousands):

	Food, Health and Nutrition		Industrial Specialties		Other		Total
Balance: January 1, 2019	$	129,484	$	23,283	$	—	$	152,767
Balance: September 30, 2019	$	129,484	$	23,283	$	—	$	152,767

8. Leases

The Company determines if an arrangement is a lease at inception. Lease Right of Use, or ROU, assets and noncurrent lease liabilities are presented as distinct accounts in the Condensed Consolidated Balance Sheet. Current lease liabilities are included within Other current liabilities in the Condensed Consolidated Balance Sheet. The Company does not have any Finance leases. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments, as the implicit rate is not readily determinable. The Company gives consideration to publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet. Certain leases include one or more options to renew, with renewal terms that can extend the lease up to five years and certain leases also include options to purchase the leased property. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors. We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.

The Company primarily leases rail cars, inventory tanks, buildings, equipment, and fleet cars. The Company recorded ROU assets of $48.8 million and lease liabilities of $48.9 million, respectively at January 1, 2019. The impact to the Company's Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Statement of Cash Flows was not material. As of September 30, 2019, the Company had 45 leases, with remaining terms ranging from less than 1 year to 20 years.

Page 16 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

Under one of its warehousing agreements with third-party service providers, the Company controls the amount, timing, placing, and removing of items for the entire capacity of the warehouse. Therefore the Company controls the asset, and the warehouse is deemed to be leased for accounting purposes. For this warehousing agreement, the Company accounts for the lease and non-lease components separately. The lease component consists of the warehouse and the non-lease components consist of services, such as loading, unloading, and maintenance. The Company allocates the consideration in the warehousing agreement to the lease and non-lease components using their relative standalone prices.

In December 2018, the Company sold its Chicago Heights, IL warehouse for $23.0 million. Under the agreement, the Company is leasing back the property from the purchaser over a period of 20 years. The Company is accounting for the leaseback as an operating lease. The annual rent for the initial period of 5 years is approximately $1.5 million plus taxes and subsequently will increase 10% every 5 years through the end of the lease. Prior to the adoption of the new lease standard, gains on sale-leaseback transactions were deferred and recognized in the statement of comprehensive income over the lease term. Under the new lease standard, gains on sale-leaseback transactions (subject to adjustment for off-market terms) are recognized immediately. Therefore, the sale-leaseback gain of $11.9 million (net of tax of $4.0 million) was deferred as of December 31, 2018 and on the transition to ASC 842 effective January 1, 2019, was reclassed to retained earnings.

The components of lease expense were as follows:

	Three months ended		Nine months ended
	September 30, 2019		September 30, 2019
Operating lease expense:
Cost of goods sold	$	1,538	$	4,529
Selling, general and administrative	902		2,711
Total lease expense	$	2,440	$	7,240

Supplemental balance sheet information related to the leases were as follows:

	September 30, 2019
Operating lease ROU assets	$	55,597
Current operating lease liabilities	$	6,830
Noncurrent operating lease liabilities	49,077
Total operating lease liabilities	$	55,907

Supplemental cash flow and other information related to the leases were as follows:

	Nine months ended
	September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,103
ROU assets obtained in exchange for new operating lease liabilities	$	11,844

	September 30, 2019
Weighted average remaining lease term of operating leases (in years)	11
Weighted average discount rate of operating leases	5.29	%

Page 17 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

Maturities of lease liabilities were as follows:

	September 30, 2019
2019	$	2,403
2020	9,455
2021	8,625
2022	8,068
2023	7,475
2024 and thereafter	39,521
Total lease payments	$	75,547
Less: imputed interest	19,640
Total lease obligations	$	55,907
Less: current obligations	6,830
Long-term lease obligations	$	49,077

As required by ASC 842, the future minimum operating lease payments on non-cancelable leases as of December 31, 2018 under the accounting standards in effect as of that period were as follows:

	December 31, 2018
2019	$	8,259
2020	7,130
2021	6,490
2022	6,032
2023	5,467
2024 and thereafter	33,957
Long-term lease obligations	$	67,335

9. Intangibles and Other Assets, net

Intangibles and other assets consist of the following:

	Useful life (years)	September 30, 2019		December 31, 2018
Developed technology and application patents, net of accumulated amortization of $36,636 for 2019 and $34,669 for 2018	7-20	$	9,639	$	11,606
Customer relationships, net of accumulated amortization of $32,265 for 2019 and $28,032 for 2018	5-20	63,247		67,479
Trade names and license agreements, net of accumulated amortization of $16,506 for 2019 and $14,599 for 2018	5-20	11,055		12,962
Non-compete agreements, net of accumulated amortization of $1,333 for 2019 and $1,319 for 2018	3-10	—		14
Total intangibles, net		$	83,941	$	92,061
Deferred financing costs, net of accumulated amortization of $4,654 for 2019 and $4,331 for 2018 (see Note 11)		$	969	$	1,291
Other assets		2,391		1,742
Total other assets, net		$	3,360	$	3,033
		$	87,301	$	95,094

Page 18 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

10. Other Current Liabilities

Other current liabilities consist of the following:

	September 30, 2019		December 31, 2018
Payroll related	$	14,967	$	15,656
Operating lease liabilities	6,830		—
Taxes other than income taxes	1,677		3,071
Benefits and pensions	4,981		5,680
Freight and rebates	4,233		6,431
Income taxes	3,333		1,355
Restructuring reserve	—		217
Deferred gain on sale leaseback transaction (a)	—		790
Deferred contract termination (b)	9,623		9,489
Interest rate hedge	1,553		—
Other	11,458		7,304
	$	58,655	$	49,993

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

11. Short-Term Borrowings, Long-Term Debt, and Interest Expense

Short-term borrowings and long-term debt consist of the following:

 

	September 30, 2019		December 31, 2018
Revolver borrowings under the credit facility due 2021	$	340,000	$	300,000
Long-term debt	$	340,000	$	300,000

The Company's credit facility includes a revolving line of credit from the lenders of up to $450.0 million, including a $20.0 million letter of credit sub-facility and a $20.0 million swingline loan facility, all maturing on December 22, 2021. The credit agreement governing this facility also provides for possible additional revolving indebtedness under an incremental facility of up to $150.0 million (for an aggregate of revolving capacity up to $600.0 million) upon future request by the Company to existing lenders (and depending on their consent) or from other willing financial institutions invited by the Company and reasonably acceptable to the administrative agent to join in the credit agreement. This revolving credit facility increase, if implemented, may provide for higher applicable margins to either the increased portion or possibly the entire revolving credit facility, with limitations, than those in effect for the original revolving commitments under the credit agreement.

As of September 30, 2019, $340.0 million was outstanding under the revolving line of credit, which approximates fair value (determined using level 2 inputs within the fair value hierarchy) with total availability at $109.5 million, taking into account $0.5 million in face amount of letters of credit issued under the sub-facility. The current weighted average interest rate for all debt is 4.4%.

Among its affirmative covenants, the credit agreement governing this credit facility requires the Company to maintain the following consolidated ratios (as defined and calculated according to the credit agreement) as of the end of each fiscal quarter:

(a) “Total Leverage Ratio” less than or equal to 3.50 to 1.00.

(b) “Interest Coverage Ratio” greater than or equal to 3.00 to 1.00.

Page 19 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

As of September 30, 2019, the Company was in full compliance with all debt covenant requirements.

Based on $190.0 million outstanding borrowings as floating rate debt, an immediate increase of one percentage point would cause an increase to interest expense of approximately $1.9 million per year.

Total interest paid by the Company for all indebtedness for the nine months ended September 30, 2019 and September 30, 2018 was $11.5 million and $10.4 million, respectively.

Interest expense, net consists of the following:

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Interest expense	$	3,967		$	3,703		$	11,592		$	10,281
Deferred financing cost	107			107			322			322
Interest income	(30		)	(18		)	(93		)	(50		)
Less: amount capitalized for capital projects	(54		)	(364		)	(241		)	(1,023		)
Total interest expense, net	$	3,990		$	3,428		$	11,580		$	9,530

In December 2018, the Company entered into an interest rate swap, swapping the LIBOR exposure of $150.0 million of floating rate debt, which is currently outstanding under our Credit Agreement, to a fixed rate to maturity obligation of 2.677% expiring in November 2021.

The Company manages interest rate risk by balancing the amount of fixed-rate and floating-rate debt to the extent practicable consistent with the credit status.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification in the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

Tabular Disclosure of Fair Values of Derivative Instruments
		Fair value as of
Derivatives designated as hedging instruments	Balance Sheet Location	September 30, 2019		December 31, 2018
Interest Rate Contract	Other current liabilities	$	1,553	$	—
	Other long-term liabilities	2,397		1,023
		$	3,950	$	1,023

Page 20 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

The table below presents the effect of the Company’s derivative financial instruments in the Consolidated Statements of Operations and AOCI for the three and nine months ended September 30, 2019 and September 30, 2018.

Tabular Disclosure of the Effect of Derivative Instruments
Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative			Location of Gain/(Loss) Reclassified from AOCI into Income	Amount of Gain/(Loss) Reclassified from AOCI into Income
Interest Rate Contract	$	(164	)	Interest Income/(Expense)	$	(162	)
Three months ended September 30, 2019	$	(164	)		$	(162	)
Interest Rate Contract	$	(2,927	)	Interest Income/(Expense)	$	(302	)
Nine months ended September 30, 2019	$	(2,927	)		$	(302	)
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Three months ended September 30, 2018	$	—			$	—
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Nine months ended September 30, 2018	$	—			$	—

12. Other Long-Term Liabilities

Other long-term liabilities consist of the following:

	September 30, 2019		December 31, 2018
Deferred income taxes	$	8,421	$	5,113
Pension and post retirement liabilities	9,639		9,238
Uncertain tax positions	320		320
Environmental liabilities	1,100		1,100
Deferred gain on sale leaseback transaction (a)	—		15,073
Deferred contract termination fee (b)	8,019		15,371
Interest rate hedge	2,397		1,023
Other liabilities	2,468		2,401
	$	32,364	$	49,639

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

13. Income Taxes

The effective income tax rate on income before taxes was approximately 50% for the nine months ended September 30, 2019 compared to approximately 12% for the comparable period in 2018. The change in the components of the effective tax rate is primarily due to the prior year enactment of the U.S.Tax Cuts and Jobs Act (the "Tax Act"), specifically the revision of the transition tax estimate, and the remeasurement of Net Operating Losses ("NOLs") used to offset the transition tax. These prior year revisions reduced the prior year effective income tax rate by 18%. In 2019, the Dutch income tax matter described below resulted in $6.3 million of expense which increased the effective tax rate by 19%. See Note 14 for further information.

Business is conducted in various countries throughout the world and is subject to tax in numerous jurisdictions. A significant number of tax returns are filed and subject to examination by various federal, state and local tax authorities. Tax

Page 21 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

examinations are often complex, as tax authorities may disagree with the treatment of items reported requiring several years to resolve. As such, the Company maintains liabilities for possible assessments by tax authorities resulting from known tax exposures for uncertain income tax positions. The Company’s policy is to accrue associated penalties in selling, general and administrative expenses and to accrue interest in net interest expense. Currently, the Company is under examination, or has been contacted for examination on income tax returns, for the years 2014 through 2017. During the quarter ended September 30, 2019, the Company's liability for unrecognized tax benefits was unchanged. The Company estimates the liability for unrecognized tax benefits will not change during the next twelve months. Other than the items mentioned above, as of September 30, 2019, no material adjustments have been proposed to the Company's tax positions and the Company currently does not anticipate any adjustments that would result in a material change to its financial position during the next twelve months.

Income taxes paid were $19.7 million and $16.6 million for the nine months ended September 30, 2019 and September 30, 2018, respectively.

14. Commitments and Contingencies

Environmental

The Company's operations are subject to extensive and changing federal, state, local and international environmental laws, rules and regulations. The Company's manufacturing sites have an extended history of industrial use, and soil and groundwater contamination have or may have occurred in the past and might occur or be discovered in the future.

Environmental efforts are difficult to assess for numerous reasons, including the discovery of new remedial sites, discovery of new information and scarcity of reliable information pertaining to certain sites, improvements in technology, changes in environmental laws and regulations, numerous possible remedial techniques and solutions, difficulty in assessing the involvement of and the financial capability of other potentially responsible parties and the extended time periods over which remediation occurs. Other than the items listed below, the Company is not aware of material environmental liabilities which are probable and estimable. As the Company's environmental contingencies are more clearly determined, it is reasonably possible that amounts may need to be accrued. However, management does not believe, based on current information, that environmental remediation requirements will have a material impact on the Company's results of operations, financial position or cash flows.

Future environmental spending is probable at the Company's site in Nashville, Tennessee, the eastern portion of which had been used historically as a landfill, and a western parcel therein, previously acquired from a third party, which reportedly had housed, but no longer does, a fertilizer and pesticide manufacturing facility. The Company has an estimated liability with a range of $0.9 million-$1.3 million. The remedial action plan for that site has yet to be finalized, and as such, the Company has recorded a liability, which represents the Company's best estimate, of $1.1 million as of September 30, 2019.

Litigation

In 2018, following a review of its global corporate and financing structure, Innophos’ management initiated a global entity simplification plan which included a strategy to merge two of the Company’s Dutch subsidiaries by the end of 2018. The contemplated merger was not completed in 2018 due to an administrative error committed and acknowledged by the Company’s Dutch legal counsel, Heussen B.V ("Heussen"). Such merger was ultimately completed in 2019. On May 17, 2019, changes to Dutch tax law were enacted and as expected, with retroactive effect to January 1, 2018. As a result of these changes in Dutch tax law and the merger of the two Dutch subsidiaries not completed in 2018, the Company recorded in its second quarter 2019 results a Dutch corporate income tax liability of $6.6 million for its 2018 tax year. Based on the foreign exchange rate on the date of payment, the liability was settled for $6.3 million in the third quarter of 2019. On July 23, 2019, the Company initiated a malpractice legal proceeding in the Netherlands against Heussen seeking reimbursement for all costs and liabilities resulting from their administrative error, including all related tax liabilities and other associated expenses and damages. Any recovery by the Company in respect of that proceeding will be recorded gross in the period it is received.

In addition, the Company is a party to legal proceedings and contractual disputes that arise in the ordinary course of its business. Except as to the matters specifically discussed, management believes the likelihood that the ultimate disposition of these matters will have a material adverse effect on the Company's business, results of operations, financial condition and/or cash flows is remote. However, these matters cannot be predicted with certainty and an unfavorable resolution of one or more

Page 22 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

of them could have a material adverse effect on the Company's business, results of operations, financial condition, and/or cash flows.

15. Pension Plans and Postretirement Benefits

Net periodic benefit expense for the United States plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	36		$	36		$	—		$	36		$	36
Interest cost	25			34			59			24			29			53
Expected return on assets	(40		)	—			(40		)	(38		)	—			(38		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(40		)	(40		)	—			(39		)	(39		)
net transition obligation	—			—			—			—			—			—
Net periodic (benefit) cost	$	(15	)	$	30		$	15		$	(14	)	$	26		$	12
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	108		$	108		$	—		$	109		$	109
Interest cost	76			102			178			71			87			158
Expected return on assets	(119		)	—			(119		)	(113		)	—			(113		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(118		)	(118		)	—			(119		)	(119		)
net transition obligation	—			—			—			—			—			—
Net periodic cost	$	(43	)	$	92		$	49		$	(42	)	$	77		$	35

Innophos has no minimum contribution requirements and does not plan to make cash contributions for its U.S. defined benefit pension plan in 2019.

Innophos had no minimum contribution requirements and did not make cash contributions for its U.S. defined benefit pension plan in 2018.

Page 23 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

Net periodic benefit expense for the Canadian plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	95		$	16		$	111		$	110		$	15		$	125
Interest cost	134			15			149			128			14			142
Expected return on assets	(202		)	—			(202		)	(199		)	—			(199		)
Amortization of
actuarial loss (gain)	52			—			52			47			1			48
prior service cost	13			—			13			13			—			13
net transition obligation	—			3			3			—			6			6
Exchange rate changes	47			(17		)	30			(97		)	32			(65		)
Net periodic cost	$	139		$	17		$	156		$	2		$	68		$	70
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	285		$	46		$	331		$	332		$	47		$	379
Interest cost	402			45			447			389			43			432
Expected return on assets	(605		)	—			(605		)	(602		)	—			(602		)
Amortization of
actuarial loss (gain)	154			—			154			142			3			145
prior service cost	38			—			38			39			—			39
net transition obligation	—			9			9			—			18			18
Exchange rate changes	(120		)	42			(78		)	121			(41		)	80
Net periodic cost	$	154		$	142		$	296		$	421		$	70		$	491

Innophos Canada, Inc. plans to make cash contributions to its Canadian defined benefit plan of approximately $0.3 million in 2019.

Innophos Canada, Inc. made cash contributions to its Canadian defined benefit plan of approximately $0.7 million in 2018.

Page 24 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

16. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component:

Three months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2019	$	(2,963	)	$	(2,840	)	$	(5,803	)
Other comprehensive (loss) before reclassifications	—			(244		)	(244		)
Amounts reclassified from accumulated other comprehensive income	288			122			410
Net current period other comprehensive (loss)	288			(122		)	166
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Three months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2018	$	(1,715	)	$	—		$	(1,715	)
Other comprehensive income before reclassifications	(47		)	—			(47		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Net current period other comprehensive income	(47		)	—			(47		)
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)
Nine months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2018	$	(2,249	)	$	(767	)	$	(3,016	)
Other comprehensive (loss) before reclassifications	—			(2,422		)	(2,422		)
Amounts reclassified from accumulated other comprehensive income	(426		)	227			(199		)
Net current period other comprehensive (loss)	(426		)	(2,195		)	(2,621		)
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Nine months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2017	$	(2,198	)	$	—		$	(2,198	)
Other comprehensive income before reclassifications	143			—			143
Amounts reclassified from accumulated other comprehensive income	293			—			293
Net current period other comprehensive income	436			—			436
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)

Page 25 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

17. Segment Reporting

The Company discloses certain financial and supplementary information about its reportable segments, revenue by products and revenues by geographic area. Operating segments are defined as components of an enterprise about which separate discrete financial information is evaluated regularly by the chief operating decision maker, in order to decide how to allocate resources and assess performance. The primary performance indicators for the chief operating decision maker are sales and EBITDA (defined as net income (loss) before interest, income taxes, depreciation and amortization). All references to sales in this Quarterly Report on Form 10-Q are recognized when title and risk of loss passes to the customer, which occurs either upon shipment or delivery, depending upon the agreed sales terms with customers.

The Company's chief executive officer is the chief operating decision maker and has determined to assess the Company's performance and allocate the appropriate resources based on the following operating segments: (1) Food, Health and Nutrition; (2) Industrial Specialties; and (3) Other. These reporting segments accurately reflect the underlying business dynamics and align with the strategic direction of the Company.

During the second quarter of 2019, the Company adjusted the EBITDA allocation for certain transactions to align it with the underlying business. As a result, EBITDA in the Other segment decreased by $1.4 million with corresponding increases to Food, Health and Nutrition of $1.0 million and Industrial Specialties of $0.4 million.

Three months ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	105,174	$	73,141	$	11,034	$	189,349
EBITDA	$	14,791	$	8,861	$	792	$	24,444
Depreciation and amortization expense	$	6,959	$	3,768	$	403	$	11,130
Three months ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	115,132	$	65,667	$	16,135	$	196,934
EBITDA	$	14,563	$	8,885	$	2,424	$	25,872
Depreciation and amortization expense	$	7,142	$	3,153	$	569	$	10,864
Nine Months Ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	326,783	$	204,064	$	34,954	$	565,801
EBITDA	$	48,758	$	23,891	$	3,833	$	76,482
Depreciation and amortization expense	$	20,128	$	10,714	$	934	$	31,776
Nine Months Ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	367,159	$	195,767	$	46,173	$	609,099
EBITDA	$	48,494	$	26,772	$	2,987	$	78,253
Depreciation and amortization expense	$	21,677	$	10,257	$	1,383	$	33,317

Page 26 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

A reconciliation of net income to EBITDA follows:

	Three months ended
	September 30, 2019		September 30, 2018
Net income	$	6,451	$	14,090
Provision for income taxes	2,873		(2,510		)
Interest expense, net	3,990		3,428
Depreciation and amortization	11,130		10,864
EBITDA	$	24,444	$	25,872
	Nine months ended
	September 30, 2019		September 30, 2018
Net income	$	16,546	$	31,251
Provision for income taxes	16,580		4,155
Interest expense, net	11,580		9,530
Depreciation and amortization	31,776		33,317
EBITDA	$	76,482	$	78,253

Page 27 of 43

INNOPHOS HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands, except per share amounts, share amounts or where otherwise noted)

18. Supply Agreement Termination

In June 2018, the Company agreed to terminate a previously long-term supply agreement and replaced it with a short-term agreement. In December 2018, as a result of the termination, the Company received consideration of $24.9 million which included $21.3 million in cash as well as receipt of certain tangible assets with a fair value of $3.6 million. The consideration was recorded as a deferred liability with $9.5 million in Other current liabilities and the remaining $15.4 million recorded in Other long-term liabilities. Beginning in January 2019, the deferred liability is being amortized on a straight-line basis through July 2021, which is the end of the new supply agreement, as a reduction of Cost of goods sold. For the three and nine months ended September 30, 2019 amortization of the deferred liability was $2.4 million and $7.2 million, respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Innophos is a leading international producer of specialty ingredient solutions that deliver versatile benefits for the food, health, nutrition and industrial markets. Innophos combines more than a century of experience in specialty phosphate manufacturing with a broad range of other specialty nutritional ingredients. Many of Innophos' products are application-specific compounds engineered to meet customer performance requirements and are often critical to the taste, texture and performance of foods, beverages, pharmaceuticals, oral care products and other applications. For example, Innophos products act as flavor enhancers in beverages, electrolytes in sports drinks, texture additives in cheeses, leavening agents in baked goods, pharmaceutical excipients, cleaning agents in toothpaste, and they also provide a wide range of nutritional fortification solutions for food, beverage and nutritional supplement manufacturers.

Merger Agreement with One Rock Capital Partners

On October 20, 2019, Innophos Holdings, Inc., Iris Parent LLC, a Delaware limited liability company (“Parent”), and Iris Merger Sub 2019, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into Innophos Holdings, Inc. (the “Merger”), with Innophos Holdings, Inc. surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of One Rock Capital Partners II, LP, a Delaware limited partnership (“ORC Fund II”).

At the time of the Merger, each share of Company common stock, par value $0.001 per share issued and outstanding will be automatically converted into the right to receive cash in an amount equal to $32.00 per share. The final purchase price is expected to be valued at approximately $932 million, including the assumption of debt.

The transactions contemplated by the Merger Agreement are subject to the satisfaction of certain customary conditions, including the approval of the Merger Agreement by the Company's stockholders, the receipt of regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties, and compliance by the parties with their respective obligations under the Merger Agreement.

Under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated, the Company would be required to pay Parent a fee of $10.3 million or $20.6 million, depending on the circumstance. Further, under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated by the Parent, the Parent would be required to pay the Company a fee of $40.0 million.

The closing of the transaction is expected to occur in the first quarter of 2020. Upon the completion of the transaction, Innophos will become a privately held company and shares of the Company's common stock will no longer be listed on any public market.

Page 28 of 43

Results of Operations

The following table sets forth a summary of the Company’s operations and their percentages of total revenue for the periods indicated (dollars in millions):

	Three Months Ended
	September 30, 2019					September 30, 2018
	Amount			%		Amount			%
Net sales	$	189.3		100.0		$	196.9		100.0
Cost of goods sold	156.6			82.7		161.7			82.1
Gross profit	32.7			17.3		35.2			17.9
Operating expenses:
Selling, general and administrative	17.8			9.4		19.5			9.9
Research & development	1.2			0.6		1.2			0.6
Income from operations	13.7			7.2		14.5			7.4
Interest expense, net	4.0			2.1		3.4			1.7
Foreign exchange (gain) loss, net	0.4			0.2		(0.5		)	(0.3	)
Provision for income taxes	2.8			1.5		(2.5		)	(1.3	)
Net income	$	6.5		3.4		$	14.1		7.2
	Nine Months Ended
	September 30, 2019					September 30, 2018
	Amount			%		Amount			%
Net sales	$	565.8		100.0		$	609.1		100.0
Cost of goods sold	460.3			81.4		495.3			81.3
Gross profit	105.5			18.6		113.8			18.7
Operating expenses:
Selling, general and administrative	57.5			10.2		64.5			10.6
Research & development	3.8			0.7		4.0			0.6
Income from operations	44.2			7.8		45.3			7.4
Interest expense, net	11.6			2.1		9.5			1.6
Foreign exchange (gain) loss, net	(0.5		)	(0.1	)	0.4			0.1
Provision for income taxes	16.6			2.9		4.1			0.7
Net income	$	16.5		2.9		$	31.3		5.1

Page 29 of 43

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Net Sales

Net sales represent the selling price of the products, net of any customer-related rebates, plus freight and any other items invoiced to customers. Net sales for the three months ended September 30, 2019 were $189.3 million, a decrease of $7.6 million, or 3.9%, as compared to $196.9 million for the same period in 2018, with prices up 1.3%, but volumes lower by 5.2%. Food, Health and Nutrition segment sales were down 8.6%, or $10.0 million, with selling prices higher by 2.7%, or $3.1 million, but volumes lower by 11.3%, or $13.1 million. Industrial Specialties segment sales were up 11.4%, or $7.5 million, with volumes higher by 10.2%, or $6.7 million, and selling prices higher by 1.2%, or $0.8 million. Other segment sales were lower by 31.6%, or $5.1 million, with volumes lower by 24.0%, or $3.9 million, and selling prices lower by 7.6%, or $1.2 million.

The Company calculates pure selling price dollar variances as the selling price for the current year to date period minus the selling price for the prior year to date period, and then multiplies the resulting selling price difference by the prior year to date period volume. Volume variance is calculated as the total sales variance minus the selling price variance and refers to the revenue effect of changes in tons sold at the relative prices applicable to the variation in tons, otherwise known as volume/mix.

The following table illustrates for the three months ended September 30, 2019 the percentage changes in net sales by reportable segment compared with the same period of the prior year, including the effect of price and volume/mix changes upon revenue:

	Price		Volume/Mix		Total
Food, Health and Nutrition	2.7	%	(11.3	)%	(8.6	)%
Industrial Specialties	1.2	%	10.2	%	11.4	%
Other	(7.6	)%	(24.0	)%	(31.6	)%
Total	1.3	%	(5.2	)%	(3.9	)%

Gross Profit

Gross profit represents net sales less cost of goods sold. Gross profit for the three months ended September 30, 2019 was $32.7 million, a decrease of $2.5 million, or 7.1% as compared to $35.2 million for the same period in 2018. Gross profit as a percentage of net sales decreased to 17.3% for the three months ended September 30, 2019 versus 17.9% for the same period in 2018.

The following table outlines the factors resulting in the year on year change in the three months ended September 30, 2019.

	$ (in millions)
Higher selling prices	$	2.7
Lower sales volume/mix	(3.1		)
Supply agreement termination amortization	2.4
Severance	(0.1		)
Higher raw materials costs (a)	(2.4		)
Higher manufacturing cost	(1.4		)
Higher value chain transition costs	(1.6		)
Higher depreciation and amortization	(0.9		)
Lower natural gas cost at our Coatzacoalcos, Mexico manufacturing facility	1.9
	$	(2.5	)

(a) Primarily sulfur, phosphate rock and third-party purified phosphoric acid.

Page 30 of 43

Operating Expenses and Research and Development

Operating expenses consist primarily of selling, general and administrative and research and development expenses. Operating expenses for the three months ended September 30, 2019 were $19.0 million, a decrease of $1.7 million, or 8.2%, as compared to $20.7 million for the same period in 2018. The decrease was primarily due to $1.7 million lower administration costs mainly from acquisition synergies, $0.7 million lower depreciation, and $0.5 million lower severance cost partially offset by $0.7 million higher non-cash stock compensation expense and short term bonus accruals, and $0.5 million higher acquisition related expense.

Operating Income

Operating income for the three months ended September 30, 2019 was $13.7 million, a decrease of $0.8 million, or 5.5%, as compared to $14.5 million for the same period in 2018. Operating income as a percentage of net sales decreased to 7.2% versus 7.4% for the same period in 2018, for the reasons noted above.

Interest Expense, net

Net interest expense, including deferred financing amortization expense, for the three months ended September 30, 2019 was $4.0 million, an increase of $0.6 million, or 16.6%, as compared to $3.4 million for the same period in 2018. The increase was primarily due to higher market interest rates and lower capitalized interest.

Foreign Exchange

Foreign exchange for the three months ended September 30, 2019 was a loss of $0.4 million as compared to a gain of $0.5 million for the same period in 2018. The U.S. Dollar is the functional currency of our Mexican and Canadian operations. The Company has greater foreign denominated asset balances (largely Mexican Peso and Canadian Dollar), such as VAT receivables and prepaid income taxes in foreign jurisdictions, than offsetting foreign denominated liability balances. Foreign exchange gain or loss is recorded on remeasurement of non-U.S. Dollar denominated monetary assets and liabilities. Such gains and losses fluctuate from period to period as the foreign currencies strengthen or weaken against the U.S. Dollar and the amount of non-U.S. Dollar denominated assets and liabilities increases or decreases.

Provision for Income Taxes

The effective income tax rate on income before taxes was approximately 31% for the three months ended September 30, 2019 compared to approximately -22% for the comparable period in 2018. The change in the components of the effective tax rate is primarily due to prior year enactment of the U.S.Tax Cuts and Jobs Act, or the Tax Act, including the revision of the transition tax estimate and the remeasurement of NOLs used to offset the transition tax. The revision of the transition tax estimate resulted in a one-time benefit for the quarter ending September 30, 2018 reducing prior year effective tax rate by 65%. This reduction was partially offset by an accrual for Canadian withholding tax, resulting from the reversal of the company’s permanent reinvestment assertion on its Canadian subsidiary, increasing the prior year effective tax rate by 10%. During the third quarter of 2019, the quarterly effective tax rate was impacted by a 2% increase driven by incremental U.S. tax on global intangible low-taxed income (“GILTI”).

Net Income

Net income for the three months ended September 30, 2019 was $6.5 million, as compared to $14.1 million for the same period in 2018, due to the factors described above.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Net Sales

Net sales represent the selling price of the products, net of any customer-related rebates, plus freight and any other items invoiced to customers. Net sales for the nine months ended September 30, 2019 were $565.8 million, a decrease of $43.3 million, or 7.1%, as compared to $609.1 million for the same period in 2018, with prices up 2.7%, and volumes lower by 9.8%. Food, Health and Nutrition segment sales were down 11.0%, or $40.4 million, with selling prices higher by 3.4%, or $12.5 million, but volumes lower by 14.4%, or $52.9 million. Industrial Specialties segment sales were up 4.2%, or $8.3 million, with volumes higher by 1.5%, or $3.0 million, and selling prices higher by 2.7%, or $5.3 million. Other segment sales were lower by 24.3%, or $11.2 million, with volumes lower by 21.0%, or $9.7 million, and selling prices lower by 3.3%, or $1.5 million.

The Company calculates pure selling price dollar variances as the selling price for the current year to date period minus the selling price for the prior year to date period, and then multiplies the resulting selling price difference by the prior year to

Page 31 of 43

date period volume. Volume variance is calculated as the total sales variance minus the selling price variance and refers to the revenue effect of changes in tons sold at the relative prices applicable to the variation in tons, otherwise known as volume/mix.

The following table illustrates for the nine months ended September 30, 2019 the percentage changes in net sales by reportable segment compared with the same period of the prior year, including the effect of price and volume/mix changes upon revenue:

	Price		Volume/Mix		Total
Food, Health and Nutrition	3.4	%	(14.4	)%	(11.0	)%
Industrial Specialties	2.7	%	1.5	%	4.2	%
Other	(3.3	)%	(21.0	)%	(24.3	)%
Total	2.7	%	(9.8	)%	(7.1	)%

Gross Profit

Gross profit represents net sales less cost of goods sold. Gross profit for the nine months ended September 30, 2019 was $105.5 million, a decrease of $8.3 million, or 7.3%, as compared to $113.8 million for the same period in 2018. Gross profit as a percentage of net sales decreased to 18.6% for the nine months ended September 30, 2019 versus 18.7% for the same period in 2018.

The following table outlines the factors resulting in the year on year change in the nine months ended September 30, 2019.

	$ (in millions)
Higher selling prices	$	16.2
Lower sales volume/mix	(16.0		)
Supply agreement termination amortization	7.2
Severance	(0.6		)
Higher raw materials costs (a) (b)	(7.3		)
Higher manufacturing cost (b)	(8.5		)
Lower value chain transition costs	0.2
Higher depreciation and amortization (b)	(1.3		)
Lower natural gas cost at our Coatzacoalcos, Mexico manufacturing facility	0.7
Lower turnaround cost at our Coatzacoalcos, Mexico manufacturing facility	0.9
Exchange Rate	0.2
	$	(8.3	)

(a) Primarily sulfur, phosphate rock and third-party purified phosphoric acid.

(b) For the nine months ended September 30, 2019, includes a $3.1 million benefit related to a cumulative adjustment of capitalized variances.

Operating Expenses and Research and Development

Operating expenses consist primarily of selling, general and administrative and research and development expenses. Operating expenses for the nine months ended September 30, 2019 were $61.3 million, a decrease of $7.2 million, or 10.5%, as compared to $68.5 million for the same period in 2018. The decrease was primarily due to $6.4 million lower administration costs, mainly from acquisition synergies, and $2.9 million lower depreciation, partially offset by $1.0 million higher non-cash stock compensation expense and $0.9 million higher severance expense.

Operating Income

Operating income for the nine months ended September 30, 2019 was $44.2 million, a decrease of $1.1 million, or 2.4%, as compared to $45.3 million for the same period in 2018. Operating income as a percentage of net sales increased to 7.8% versus 7.4% for the same period in 2018, for the reasons noted above.

Page 32 of 43

Interest Expense, net

Net interest expense, including deferred financing amortization expense, for the nine months ended September 30, 2019 was $11.6 million, an increase of $2.1 million, or 22.1%, as compared to $9.5 million for the same period in 2018. The increase was primarily due to higher market interest rates and lower capitalized interest.

Foreign Exchange

Foreign exchange for the nine months ended September 30, 2019 was a gain of $0.5 million as compared to a loss of $0.4 million for the same period in 2018. The U.S. Dollar is the functional currency of our Mexican and Canadian operations. The Company has greater foreign denominated asset balances (largely Mexican Peso and Canadian Dollar), such as VAT receivables and prepaid income taxes in foreign jurisdictions, than offsetting foreign denominated liability balances. Foreign exchange gain or loss is recorded on remeasurement of non-U.S. Dollar denominated monetary assets and liabilities. Such gains and losses fluctuate from period to period as the foreign currencies strengthen or weaken against the U.S. Dollar and the amount of non-U.S. Dollar denominated assets and liabilities increases or decreases.

Provision for Income Taxes

The effective income tax rate on income before taxes was approximately 50% for the nine months ended September 30, 2019 compared to approximately 12% for the comparable period in 2018. The change in the components of the effective tax rate is primarily due to the prior year enactment of the Tax Act, specifically the revision of the transition tax estimate, and the remeasurement of NOLs used to offset the transition tax. These prior year revisions reduced the prior year effective income tax rate by 18%. In 2019, the Dutch income tax matter of $6.3 million increased the effective tax rate by 19%. See Note 14 for further information.

Net Income

Net income for the nine months ended September 30, 2019 was $16.5 million, as compared to $31.3 million for the same period in 2018, due to the factors described above.

Page 33 of 43

Segment Reporting

The Company's chief executive officer is the chief operating decision maker and has determined to assess the Company's performance and allocate the appropriate resources based on the following operating segments: (1) Food, Health and Nutrition; (2) Industrial Specialties; and (3) Other. These reporting segments accurately reflect the underlying business dynamics and align with the strategic direction of the Company. The primary performance indicators for the chief operating decision maker are sales and earnings before interest, taxes, depreciation and amortization, or EBITDA. The following table sets forth the results of these indicators by segment for the three and nine months ended September 30, 2019 and September 30, 2018:

	Three Months Ended
	September 30, 2019			September 30, 2018			Net Sales % Change
Segment Net Sales
Food, Health and Nutrition	$	105,174		$	115,132		(8.6	)%
Industrial Specialties	73,141			65,667			11.4	%
Other	11,034			16,135			(31.6	)%
Total	$	189,349		$	196,934		(3.9	)%
Segment EBITDA
Food, Health and Nutrition	$	14,791		$	14,563
Industrial Specialties	8,861			8,885
Other	792			2,424
Total	$	24,444		$	25,872
Segment EBITDA % of net sales
Food, Health and Nutrition	14.1		%	12.6		%
Industrial Specialties	12.1		%	13.5		%
Other	7.2		%	15.0		%
Total	12.9		%	13.1		%
Depreciation and amortization expense
Food, Health and Nutrition	$	6,959		$	7,142
Industrial Specialties	3,768			3,153
Other	403			569
Total	$	11,130		$	10,864

Page 34 of 43

	Nine Months Ended
	September 30, 2019			September 30, 2018			Net Sales % Change
Segment Net Sales
Food, Health and Nutrition	$	326,783		$	367,159		(11.0	)%
Industrial Specialties	204,064			195,767			4.2	%
Other	34,954			46,173			(24.3	)%
Total	$	565,801		$	609,099		(7.1	)%
Segment EBITDA
Food, Health and Nutrition	$	48,758		$	48,494
Industrial Specialties	23,891			26,772
Other	3,833			2,987
Total	$	76,482		$	78,253
Segment EBITDA % of net sales
Food, Health and Nutrition	14.9		%	13.2		%
Industrial Specialties	11.7		%	13.7		%
Other	11.0		%	6.5		%
Total	13.5		%	12.8		%
Depreciation and amortization expense
Food, Health and Nutrition	$	20,128		$	21,677
Industrial Specialties	10,714			10,257
Other	934			1,383
Total	$	31,776		$	33,317

A reconciliation of net income to EBITDA follows:

	Three months ended
	September 30, 2019		September 30, 2018
Net income	$	6,451	$	14,090
Provision for income taxes	2,873		(2,510		)
Interest expense, net	3,990		3,428
Depreciation and amortization	11,130		10,864
EBITDA	$	24,444	$	25,872

	Nine Months Ended
	September 30, 2019		September 30, 2018
Net income	$	16,546	$	31,251
Provision for income taxes	16,580		4,155
Interest expense, net	11,580		9,530
Depreciation and amortization	31,776		33,317
EBITDA	$	76,482	$	78,253

Page 35 of 43

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Segment Net Sales:

Food, Health and Nutrition net sales decreased 8.6% for the three months ended September 30, 2019 compared with the same period in 2018. Volumes decreased 11.3%, due to the Company's decision to discontinue low-margin nutrition trading business and softer demand including customer destocking. Average selling price increased 2.7%.

Industrial Specialties net sales increased 11.4% for the three months ended September 30, 2019 compared with the same period in 2018. Volumes increased 10.2% due to higher acid sales and STPP volumes into Latin America, and average selling prices increased by 1.2%.

Other net sales decreased 31.6% for the three months ended September 30, 2019 compared with the same period in 2018. Volumes decreased 24.0% due primarily to lower co-product sales and average selling prices decreased 7.6%.

Segment EBITDA Percentage of Net Sales:

The 150 basis point increase in Food, Health and Nutrition EBITDA margins for the three months ended September 30, 2019 compared with the same period in 2018 is due to higher average selling prices which increased margins by 240 basis points, lower manufacturing and operating costs which increased margins by 190 basis points, supply agreement termination amortization (Note 18) which increased margins by 110 basis points, and other items which increased margins by 20 basis points. This increase was partially offset by lower sales volume/mix which decreased margins by 330 basis points, and higher value chain transition costs which decreased margins by 80 basis points.

The 140 basis point decrease in Industrial Specialties EBITDA margins for the three months ended September 30, 2019 compared with the same period in 2018 is due to higher manufacturing and operating costs which decreased margins by 510 basis points, higher raw material costs which decreased margins by 170 basis points, and value chain transition costs which decreased margins by 80 basis points. This decrease was partially offset by higher sales volume/mix which increased margins by 220 basis points, supply agreement termination amortization which increased margins by 140 basis points, lower natural gas cost at our Coatzacoalcos, Mexico manufacturing facility which increased margins by 130 basis points, higher average selling prices which increased margins by 100 basis points, and lower severance cost which increased margins by 30 basis points.

The 780 basis point decrease in Other EBITDA margins for the three months ended September 30, 2019 compared with the same period in 2018 is due to higher raw material costs which decreased margins by 790 basis points, lower average selling prices which decreased margins 690 basis points, and unfavorable translation which lowered margins by 530 basis points. This decrease was partially offset by lower manufacturing and operating costs which increased margins 450 basis points, lower natural gas cost at our Coatzacoalcos, Mexico manufacturing facility which increased margins by 350 basis points, higher sales volume/mix which increased margins by 280 basis points, and supply agreement termination amortization which increased margins by 150 basis points.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Segment Net Sales:

Food, Health and Nutrition net sales decreased 11.0% for the nine months ended September 30, 2019 compared with the same period in 2018. Volumes decreased 14.4%, due to the Company's decision to discontinue low-margin nutrition trading business and softer demand including customer destocking. Average selling price increased 3.4%.

Industrial Specialties net sales increased 4.2% for the nine months ended September 30, 2019 compared with the same period in 2018. Volumes increased 1.5%, and average selling prices increased by 2.7%.

Other net sales decreased 24.3% for the nine months ended September 30, 2019 compared with the same period in 2018. Volumes decreased 21.0% due primarily to reduced co-product sales and average selling prices decreased 3.3%.

Page 36 of 43

Segment EBITDA Percentage of Net Sales:

The 170 basis point increase in Food, Health and Nutrition EBITDA margins for the nine months ended September 30, 2019 compared with the same period in 2018 is due to higher average selling prices which increased margins by 290 basis points, lower operating costs which increased margins by 150 basis points, and supply agreement termination amortization and other items which increased margins by 110 basis points. This increase was partially offset by lower sales volume/mix which decreased margins by 240 basis points, and higher manufacturing costs which decreased margins by 140 basis points.

The 200 basis point decrease in Industrial Specialties EBITDA margins for the nine months ended September 30, 2019 compared with the same period in 2018 is due to higher manufacturing and operating costs which decreased margins by 390 basis points and higher raw material costs which decreased margins by 190 basis points. This decrease was partially offset by higher average selling prices which increased margins by 220 basis points, supply agreement termination amortization which increased margins by 130 basis points, and other items which increased margins by 30 basis points.

The 450 basis point increase in Other EBITDA margins for the nine months ended September 30, 2019 compared with the same period in 2018 is due to lower manufacturing and operating costs which increased margins 930 basis points, higher sales volume/mix which increased margins by 430 basis points, favorable translation which increased margins by 190 basis points, supply agreement termination amortization which increased margins by 150 basis points, and other items which increased margins by 40 basis points. This increase was partially offset by higher raw material costs which decreased margins by 960 basis points, and lower average selling prices which decreased margins 330 basis points.

Liquidity and Capital Resources

Historical

Our principal liquidity requirements have been for working capital and general corporate purposes, including capital expenditures, debt service, and our quarterly dividend program. Historically, the annual dividend payment was $1.92 per share or approximately $38 million per year. Under the terms of the Merger Agreement, as of October 20, 2019, the Company has suspended the payment of all dividends (see Note 1). We do not currently have a share repurchase program in place. We have historically satisfied our liquidity requirements with internally generated cash flows and availability under our revolving credit facility. We expect that our ability to generate cash from our operations and ability to borrow from our credit facilities should be sufficient to support working capital needs, planned growth and capital expenditures for the next 12 months and for the foreseeable future.

Cash Flow Summary

The following table sets forth a summary of the Company’s cash flows for the periods indicated.

(Dollars in millions)	Nine Months Ended
	September 30, 2019			September 30, 2018
Operating Activities	$	24.7		$	35.4
Investing Activities	(25.6		)	(47.8		)
Financing Activities	11.4			6.6
Effect of foreign exchange rate changes	—			0.2

Nine months ended September 30, 2019 compared to nine months ended September 30, 2018

Net cash provided by operating activities was $24.7 million for the nine months ended September 30, 2019 compared to $35.4 million for the same period in 2018, a decrease in cash of $10.7 million. The decrease in operating activities cash largely resulted from lower net income of $14.7 million and lower deferred income tax provision of $6.8 million, partially offset by lower working capital needs, primarily consisting of a favorable change in inventory of $33.0 million and unfavorable changes in accounts payable and other current liabilities of $16.9 million and $5.3 million, respectively.

Net cash used for investing activities was $25.6 million for the nine months ended September 30, 2019, compared to $47.8 million for the same period in 2018, an increase in cash of $22.2 million. The increase in cash was due to $22.2 million decrease in capital spending.

Page 37 of 43

Approximately 58% of the 2019 capital spending was for strategic growth and cost/productivity improvements and the remaining 42% was for plant maintenance projects.

    Net cash from financing activities for the nine months ended September 30, 2019 was a source of $11.4 million, compared to a source of $6.6 million the same period in 2018, an increase in cash of $4.8 million. This increase in cash was primarily due to decreased loan repayments of $40.0 million, partially offset by the decrease in loan borrowings of $35.0 million.

On September 30, 2019, the Company had cash and cash equivalents outside the United States of $24.9 million, or 81% of the Company's balance. The foreign cash amounts are not restricted by law to be used in other countries. The Company's current operating plan does not include any other repatriation of any additional cash and cash equivalents held outside the United States to fund the United States operations. However, in the event we do repatriate cash and cash equivalents held outside of the United States, we may be required to pay additional taxes, such as withholding taxes, to repatriate these funds.

Critical Accounting Estimates and Policies

There have been no material changes from the critical accounting estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, other than the change in the measurement date of the annual goodwill impairment test (see Note 1).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks as part of our ongoing business operations. Primary exposures include changes in interest rates, as borrowings under our credit agreement will bear interest at floating rates based on LIBOR plus an applicable borrowing margin. We manage our interest rate risk by balancing the amount of fixed-rate and floating-rate debt to the extent practicable consistent with our credit status. For fixed-rate debt, interest rate changes do not affect earnings or cash flows. Conversely, for floating-rate debt, interest rate changes generally affect our earnings and cash flows, assuming other factors are held constant.

At September 30, 2019, we had a $450.0 million revolving credit facility, of which $340.0 million of variable-rate debt was outstanding, which approximates fair value (determined using level 2 inputs within the fair value hierarchy). Total remaining availability was $109.5 million, taking into account $0.5 million in face amount of letters of credit issued under the sub-facility. In December 2018, the Company entered into an interest rate swap, swapping the LIBOR exposure of $150.0 million of floating rate debt, which is currently outstanding under our Credit Agreement, to a fixed rate to maturity obligation of 2.677% expiring in November 2021. The fair value of this interest rate swap is a liability of approximately $4.0 million as of September 30, 2019, of which $1.6 million is included in other current liabilities and $2.4 million is included in other long-term liabilities.

Changes in economic conditions could result in higher interest rates, thereby increasing our interest expense on our revolving line of credit. Changes in economic conditions may also result in lower operating income, reducing our funds available for capital investment, operations or other purposes. In addition, a substantial portion of our operating cash flow and available borrowing capacity on our credit facility has been used to repurchase shares, pay dividends, fund capital expenditures, fund working capital needs and service debt, which may affect our ability to make future acquisitions. We have and may continue to use interest rate protection agreements to minimize our exposure to interest rate fluctuation. Regardless of hedges, we may experience economic loss and a negative impact on earnings or net assets as a result of interest rate fluctuations. Based on $190.0 million outstanding borrowings as floating rate debt, an immediate increase of one percentage point would cause an increase to interest expense of approximately $1.9 million per year.

We do not currently, but may from time to time, hedge our currency rate and energy risks.

We believe that our concentration of credit risk related to trade accounts receivable is limited since these receivables are spread among a number of customers and are geographically dispersed. No customer accounted for more than 10% of our sales in the last 3 years.

Foreign Currency Exchange Rates

Page 38 of 43

The U.S. Dollar is the functional currency of the Canadian and Mexican operations. Accordingly, these operations’ monetary assets and liabilities are remeasured at current exchange rates, non-monetary assets and liabilities are remeasured at historical exchange rates, and revenue and expenses are remeasured at average exchange rates and at historical exchange rates for the related revenue and expenses of non-monetary assets and liabilities. All transaction gains and losses are included in net income.

Our principal source of exchange rate exposure in our foreign operations consists of expenses, such as labor expenses, which are denominated in the foreign currency of the country in which we operate. A decline in the value of the U.S. Dollar relative to the local currency would generally cause our operational expenses (particularly labor costs) to increase (conversely, a decline in the value of the foreign currency relative to the U.S. Dollar would cause these expenses to decrease). We believe that normal exchange rate fluctuations consistent with recent historical trends would have a modest impact on our expenses, and would not materially affect our financial condition or results of operations. Nearly all of our sales are denominated in U.S. Dollars and our exchange rate exposure in terms of sales revenues is minimal. However, the strength or weakness of the U.S. Dollar versus other currencies can affect our competitiveness in the United States and export markets.

Inflation and changing prices

Our costs and expenses will be subject to inflation and price fluctuations. Significant price fluctuations in raw materials, freight and energy costs, if not compensated for by cost savings from production efficiencies or price increases passed on to customers, could have a material effect on our financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance or special purpose entities”, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Page 39 of 43

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Control and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) that are designed to provide reasonable assurance that information required to be reported in the Company's consolidated financial statements and filings is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission, or SEC, and that such information is accumulated and communicated to the Company's management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

As of September 30, 2019, the Company completed an evaluation under the supervision and with the participation of the Company's management, including the Company's Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during or with respect to the third quarter of 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Page 40 of 43

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Note 14 of Notes to Consolidated Condensed Financial Statements in “Part I, Item 1. Financial Statements" contained in this Quarterly Report on Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The following statements highlight risk factors that may affect our financial condition and results of operations. These are not intended to be an exhaustive discussion for all such risks, and the statements below must be read together with the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2018.

The Company cannot provide any assurance that the Merger will be completed. Failure to complete the Merger could negatively affect the trading price of the Company’s common stock and its future business and financial results

Consummation of the Merger is subject to various conditions, including: (i) the adoption of the Merger Agreement by the Company’s stockholders, (ii) expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or all requisite consents pursuant thereto have been obtained, (iii) clearances, approvals and consents required to be obtained under the (a) antitrust laws of Mexico and (b) antitrust laws of Germany, in each case to permit the Merger, shall have been obtained, (iv) the absence of any law or order restraining, enjoining or otherwise prohibiting the Merger, and (v) the absence of a Company material adverse effect.

The conditions to the Merger may not be satisfied and the Merger Agreement could be terminated. In addition, satisfying the conditions to the Merger may take longer than the Company and Parent expect. The occurrence of any of these events individually or in combination could negatively affect the trading price of the Company’s common stock and the Company’s future business and financial results and subject the Company to the following:

•negative reactions from the financial markets, including declines in the price of the Company’s common stock due to the fact that the current price may reflect a market assumption that the Merger will be completed;

•reduced Company performance as a result of the allocation of some of the Company's human resources to completing the Merger; and

•potential payments by the Company to Parent for damages, or if the Merger Agreement is terminated under certain circumstances, a termination fee of either $10.3 million or $20.6 million.

The Company will be subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect the Company’s business

Uncertainty about the impact of the Merger, including on employees and customers, may have an adverse effect on the Company. These uncertainties may impair the Company’s ability to attract, retain and motivate personnel, and could cause customers, suppliers and others that deal with the Company to seek to change existing business relationships with the Company. If employees depart, the Company’s business could be adversely affected. In addition, the Merger Agreement restricts the Company, without the consent of Parent, from taking specified actions until the Merger is completed or the Merger Agreement is terminated. These restrictions may prevent the Company from pursuing otherwise attractive business opportunities and making other changes to the Company’s business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not have any share repurchases on the open market during the third quarter of 2019. From time to time, the Company reacquires shares from employees in connection with the vesting, exercise and forfeiture of awards under its equity compensation plans. In the third quarter of 2019, no such reacquisitions took place.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

Page 41 of 43

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

a) Exhibits. The following exhibits are filed or furnished as part of this report:

Exhibit No.	Description
2.1†	Agreement and Plan of Merger, dated as of October 20, 2019, by and among Iris Parent LLC, Iris Merger Sub 2019, Inc. and Innophos Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on October 20, 2019)
3.1	Amendment to Innophos Holdings, Inc.’s Amended and Restated Bylaws, dated as of October 19, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on October 20, 2019)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission (the “SEC”); provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
*	Not to be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor deemed to be incorporated by reference into any filing under that Act or the Securities Act of 1933, as amended.

Page 42 of 43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INNOPHOS HOLDINGS, INC.
	/s/ Kim Ann Mink
By:	Kim Ann Mink
Its:	Chief Executive Officer, President and Director
	(Principal Executive Officer)
Dated:	November 6, 2019
INNOPHOS HOLDINGS, INC.
	/s/ Mark Feuerbach
By:	Mark Feuerbach
Its:	Interim Chief Financial Officer
	(Principal Financial Officer)
Dated:	November 6, 2019

Page 43 of 43

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Kim Ann Mink, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Innophos Holdings, Inc. (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 6, 2019	By:	/S/    KIM ANN MINK
			Kim Ann Mink
			Chief Executive Officer, President and Director (Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Mark Feuerbach, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Innophos Holdings, Inc. (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 6, 2019	By:	/S/    Mark Feuerbach
			Mark Feuerbach
			Interim Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

I, Kim Ann Mink, certify that:

1. the accompanying Quarterly Report on Form 10-Q for the period ended September 30, 2019 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Innophos Holdings, Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided Innophos Holdings, Inc. and will be retained by Innophos Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: November 6, 2019

/S/    KIM ANN MINK        

Kim Ann Mink

Chief Executive Officer and Director

(Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to the requirements of 18 U.S.C. § 1350 and is not being filed as a part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

I, Mark Feuerbach, certify that:

1. the accompanying Quarterly Report on Form 10-Q for the period ended September 30, 2019 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Innophos Holdings, Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided Innophos Holdings, Inc. and will be retained by Innophos Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: November 6, 2019

/S/  Mark Feuerbach

Mark Feuerbach

Interim Chief Financial Officer

(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to the requirements of 18 U.S.C. § 1350 and is not being filed as a part of the Report or as a separate disclosure document.

XML

Goodwill

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The following table provides a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period (in thousands):

	Food, Health and Nutrition		Industrial Specialties		Other		Total
Balance: January 1, 2019	$	129,484	$	23,283	$	—	$	152,767
Balance: September 30, 2019	$	129,484	$	23,283	$	—	$	152,767

XML

Earnings per Share (EPS)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings per Share (EPS)

Earnings per Share (EPS)

The Company accounts for earnings per share in accordance with ASC 260 and related guidance, which requires two calculations of earnings per share (EPS) to be disclosed: basic EPS and diluted EPS. Under ASC Subtopic 260-10-45, as of January 1, 2009 unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as restricted stock, are considered participating securities for purposes of calculating EPS. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock, as shown in the table below.

The numerator for basic and diluted earnings per share is net earnings attributable to shareholders reduced by dividends attributable to unvested shares. The denominator for basic earnings per share is the weighted average number of common stock outstanding during the period. The denominator for diluted earnings per share is weighted average shares outstanding adjusted for the effect of dilutive outstanding stock options, performance share awards and restricted stock awards.

The following is a reconciliation of the weighted average basic number of common shares outstanding to the diluted number of common and common stock equivalent shares outstanding and the calculation of earnings per share using the two-class method:

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	6,451		$	14,090		$	16,546		$	31,251
Less: earnings attributable to unvested shares	(34		)	(57		)	(72		)	(112		)
Net income available to participating common shareholders	$	6,417		$	14,033		$	16,474		$	31,139
Weighted average number of participating common and potential common shares outstanding:
Basic number of participating common shares outstanding	19,583,316			19,525,284			19,575,764			19,511,097
Dilutive effect of stock equivalents	201,729			313,678			164,498			279,473
Diluted number of weighted average participating common shares outstanding	19,785,045			19,838,962			19,740,262			19,790,570
Earnings per participating common share:
Earnings per participating common share—Basic	$	0.33		$	0.72		$	0.84		$	1.60
Earnings per participating common share—Diluted	$	0.32		$	0.71		$	0.83		$	1.57
Total outstanding options, performance share awards and unvested restricted stock not included in the calculation of diluted earnings per share as the effect would be anti-dilutive	966,943			431,751			982,049			465,956

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Short-Term Borrowings, Long-Term Debt, and Interest Expense

Short-Term Borrowings, Long-Term Debt, and Interest Expense

Short-term borrowings and long-term debt consist of the following:

 

	September 30, 2019		December 31, 2018
Revolver borrowings under the credit facility due 2021	$	340,000	$	300,000
Long-term debt	$	340,000	$	300,000

The Company's credit facility includes a revolving line of credit from the lenders of up to $450.0 million, including a $20.0 million letter of credit sub-facility and a $20.0 million swingline loan facility, all maturing on December 22, 2021. The credit agreement governing this facility also provides for possible additional revolving indebtedness under an incremental facility of up to $150.0 million (for an aggregate of revolving capacity up to $600.0 million) upon future request by the Company to existing lenders (and depending on their consent) or from other willing financial institutions invited by the Company and reasonably acceptable to the administrative agent to join in the credit agreement. This revolving credit facility increase, if implemented, may provide for higher applicable margins to either the increased portion or possibly the entire revolving credit facility, with limitations, than those in effect for the original revolving commitments under the credit agreement.

As of September 30, 2019, $340.0 million was outstanding under the revolving line of credit, which approximates fair value (determined using level 2 inputs within the fair value hierarchy) with total availability at $109.5 million, taking into account $0.5 million in face amount of letters of credit issued under the sub-facility. The current weighted average interest rate for all debt is 4.4%.

Among its affirmative covenants, the credit agreement governing this credit facility requires the Company to maintain the following consolidated ratios (as defined and calculated according to the credit agreement) as of the end of each fiscal quarter:

(a) “Total Leverage Ratio” less than or equal to 3.50 to 1.00.

(b) “Interest Coverage Ratio” greater than or equal to 3.00 to 1.00.

As of September 30, 2019, the Company was in full compliance with all debt covenant requirements.

Based on $190.0 million outstanding borrowings as floating rate debt, an immediate increase of one percentage point would cause an increase to interest expense of approximately $1.9 million per year.

Total interest paid by the Company for all indebtedness for the nine months ended September 30, 2019 and September 30, 2018 was $11.5 million and $10.4 million, respectively.

Interest expense, net consists of the following:

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Interest expense	$	3,967		$	3,703		$	11,592		$	10,281
Deferred financing cost	107			107			322			322
Interest income	(30		)	(18		)	(93		)	(50		)
Less: amount capitalized for capital projects	(54		)	(364		)	(241		)	(1,023		)
Total interest expense, net	$	3,990		$	3,428		$	11,580		$	9,530

In December 2018, the Company entered into an interest rate swap, swapping the LIBOR exposure of $150.0 million of floating rate debt, which is currently outstanding under our Credit Agreement, to a fixed rate to maturity obligation of 2.677% expiring in November 2021.

The Company manages interest rate risk by balancing the amount of fixed-rate and floating-rate debt to the extent practicable consistent with the credit status.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification in the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

Tabular Disclosure of Fair Values of Derivative Instruments
		Fair value as of
Derivatives designated as hedging instruments	Balance Sheet Location	September 30, 2019		December 31, 2018
Interest Rate Contract	Other current liabilities	$	1,553	$	—
	Other long-term liabilities	2,397		1,023
		$	3,950	$	1,023

The table below presents the effect of the Company’s derivative financial instruments in the Consolidated Statements of Operations and AOCI for the three and nine months ended September 30, 2019 and September 30, 2018.

Tabular Disclosure of the Effect of Derivative Instruments
Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative			Location of Gain/(Loss) Reclassified from AOCI into Income	Amount of Gain/(Loss) Reclassified from AOCI into Income
Interest Rate Contract	$	(164	)	Interest Income/(Expense)	$	(162	)
Three months ended September 30, 2019	$	(164	)		$	(162	)
Interest Rate Contract	$	(2,927	)	Interest Income/(Expense)	$	(302	)
Nine months ended September 30, 2019	$	(2,927	)		$	(302	)
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Three months ended September 30, 2018	$	—			$	—
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Nine months ended September 30, 2018	$	—			$	—

XML

Inventories (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories consist of the following:

	September 30, 2019		December 31, 2018
Raw materials	$	47,789	$	46,147
Finished products	106,561		119,407
Spare parts	15,940		14,649
	$	170,290	$	180,203

XML

Intangibles and Other Assets, net (Tables)

9 Months Ended

Sep. 30, 2019

Intangible Assets and Other Noncurrent Assets, Net [Abstract]

Summary of Intangibles and Other Assets

Intangibles and other assets consist of the following:

	Useful life (years)	September 30, 2019		December 31, 2018
Developed technology and application patents, net of accumulated amortization of $36,636 for 2019 and $34,669 for 2018	7-20	$	9,639	$	11,606
Customer relationships, net of accumulated amortization of $32,265 for 2019 and $28,032 for 2018	5-20	63,247		67,479
Trade names and license agreements, net of accumulated amortization of $16,506 for 2019 and $14,599 for 2018	5-20	11,055		12,962
Non-compete agreements, net of accumulated amortization of $1,333 for 2019 and $1,319 for 2018	3-10	—		14
Total intangibles, net		$	83,941	$	92,061
Deferred financing costs, net of accumulated amortization of $4,654 for 2019 and $4,331 for 2018 (see Note 11)		$	969	$	1,291
Other assets		2,391		1,742
Total other assets, net		$	3,360	$	3,033
		$	87,301	$	95,094

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net sales	$ 189,349	$ 196,934	$ 565,801	$ 609,099
Cost of goods sold	156,685	161,706	460,333	495,259
Gross profit	32,664	35,228	105,468	113,840
Operating expenses:
Selling, general and administrative	17,803	19,525	57,505	64,548
Research & development expenses	1,179	1,240	3,751	3,989
Total operating expenses	18,982	20,765	61,256	68,537
Operating income	13,682	14,463	44,212	45,303
Interest expense, net	3,990	3,428	11,580	9,530
Foreign exchange loss (gain)	373	(531)	(478)	409
Other (income), net	(5)	(14)	(16)	(42)
Income before income taxes	9,324	11,580	33,126	35,406
Provision (benefit) for income taxes	2,873	(2,510)	16,580	4,155
Net income	6,451	14,090	16,546	31,251
Net income attributable to participating common shareholders	$ 6,417	$ 14,033	$ 16,474	$ 31,139
Income per participating share:
Basic (in dollars per share)	$ 0.33	$ 0.72	$ 0.84	$ 1.60
Diluted (in dollars per share)	$ 0.32	$ 0.71	$ 0.83	$ 1.57
Weighted average participating shares outstanding:
Basic (in shares)	19,583,316	19,525,284	19,575,764	19,511,097
Diluted (in shares)	19,785,045	19,838,962	19,740,262	19,790,570
Other comprehensive income (loss), net of tax:
Change in interest rate swaps, (net of tax of $41, $0, $732, and $0)	$ (122)	$ 0	$ (2,195)	$ 0
Change in pension and post-retirement plans, (net of tax of ($19), $16, $13, and $228)	288	(47)	(426)	436
Other comprehensive income (loss), net of tax	166	(47)	(2,621)	436	[1]
Comprehensive (loss) income	$ 6,617	$ 14,043	$ 13,925	$ 31,687

[1] Includes the impact of ASU 2018-02, which transferred those amounts from accumulated other comprehensive income (loss) to retained earnings. See Note 16 to the Condensed Consolidated Financial Statements.

XML

Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other Liabilities Disclosure [Abstract]
Payroll related	$ 14,967	$ 15,656
Operating lease liabilities	6,830	0
Taxes other than income taxes	1,677	3,071
Benefits and pensions	4,981	5,680
Freight and rebates	4,233	6,431
Income taxes	3,333	1,355
Restructuring reserve	0	217
Deferred gain on sale leaseback transaction	0	790
Deferred contract termination	9,623	9,489
Interest rate hedge	1,553	0
Other	11,458	7,304
Other current liabilities	$ 58,655	$ 49,993

XML

Statement of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	1 Months Ended						9 Months Ended
	Aug. 31, 2019	Apr. 30, 2019	Feb. 28, 2019	Jul. 31, 2018	May 31, 2018	Feb. 28, 2018	Sep. 30, 2019	Sep. 30, 2018
Other comprehensive income (loss), tax							$ (745)	$ 228
Dividends declared (in dollars per share)	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 1.44	$ 1.44
Retained Earnings (Deficit)
Tax impact of adoption of ASC 842							$ 3,966

XML

Leases - Supplemental Cash Flow and Other Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 7,103
ROU assets obtained in exchange for new operating lease liabilities	$ 11,844
Weighted average remaining lease term of operating leases (in years)	11 years
Weighted average discount rate of operating leases	5.29%

XML

Segment Reporting - Reconciliation of Net Income to EBITDA (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting [Abstract]
Net income	$ 6,451	$ 14,090	$ 16,546	$ 31,251
Provision (benefit) for income taxes	2,873	(2,510)	16,580	4,155
Interest expense, net	3,990	3,428	11,580	9,530
Depreciation and amortization	11,130	10,864	31,776	33,317
EBITDA	$ 24,444	$ 25,872	$ 76,482	$ 78,253

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information by Segment

Three months ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	105,174	$	73,141	$	11,034	$	189,349
EBITDA	$	14,791	$	8,861	$	792	$	24,444
Depreciation and amortization expense	$	6,959	$	3,768	$	403	$	11,130
Three months ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	115,132	$	65,667	$	16,135	$	196,934
EBITDA	$	14,563	$	8,885	$	2,424	$	25,872
Depreciation and amortization expense	$	7,142	$	3,153	$	569	$	10,864
Nine Months Ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	326,783	$	204,064	$	34,954	$	565,801
EBITDA	$	48,758	$	23,891	$	3,833	$	76,482
Depreciation and amortization expense	$	20,128	$	10,714	$	934	$	31,776
Nine Months Ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	367,159	$	195,767	$	46,173	$	609,099
EBITDA	$	48,494	$	26,772	$	2,987	$	78,253
Depreciation and amortization expense	$	21,677	$	10,257	$	1,383	$	33,317

Reconciliation of Net Income to EBITDA

A reconciliation of net income to EBITDA follows:

	Three months ended
	September 30, 2019		September 30, 2018
Net income	$	6,451	$	14,090
Provision for income taxes	2,873		(2,510		)
Interest expense, net	3,990		3,428
Depreciation and amortization	11,130		10,864
EBITDA	$	24,444	$	25,872
	Nine months ended
	September 30, 2019		September 30, 2018
Net income	$	16,546	$	31,251
Provision for income taxes	16,580		4,155
Interest expense, net	11,580		9,530
Depreciation and amortization	31,776		33,317
EBITDA	$	76,482	$	78,253

XML

Stockholders' Equity / Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense (benefit)	$ 1,621	$ 1,151	$ 5,188	$ 4,143
Stock options
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense (benefit)	366	398	1,168	1,282
Restricted stock
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense (benefit)	606	580	1,878	1,860
Performance shares
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense (benefit)	649	173	1,442	422
Stock grants
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense (benefit)	$ 0	$ 0	$ 700	$ 579

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Environmental liabilities	$ 1,100		$ 1,100
Dutch income tax liability	6,600	$ 6,300
Dutch income tax liability, net settlement	6,300
Nashville, TN
Loss Contingencies [Line Items]
Environmental liabilities	1,100
Nashville, TN | Minimum
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies	900
Nashville, TN | Maximum
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies	$ 1,300

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense - Fair Values of Derivative Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Interest rate hedge, current	$ 1,553	$ 0
Interest rate hedge, noncurrent	2,397	1,023
Interest Rate Contract	$ 3,950	$ 1,023

XML

Segment Reporting - By Segment (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting Information [Line Items]
Net sales	$ 189,349		$ 196,934	$ 565,801	$ 609,099
EBITDA	24,444		25,872	76,482	78,253
Depreciation and amortization	11,130		10,864	31,776	33,317
Food, Health and Nutrition
Segment Reporting Information [Line Items]
Net sales	105,174		115,132	326,783	367,159
EBITDA	14,791		14,563	48,758	48,494
Depreciation and amortization	6,959		7,142	20,128	21,677
Industrial Specialties
Segment Reporting Information [Line Items]
Net sales	73,141		65,667	204,064	195,767
EBITDA	8,861		8,885	23,891	26,772
Depreciation and amortization	3,768		3,153	10,714	10,257
Other
Segment Reporting Information [Line Items]
Net sales	11,034		16,135	34,954	46,173
EBITDA	792		2,424	3,833	2,987
Depreciation and amortization	$ 403		$ 569	$ 934	$ 1,383
Reconciling adjustment | Food, Health and Nutrition
Segment Reporting Information [Line Items]
EBITDA		$ 1,000
Reconciling adjustment | Industrial Specialties
Segment Reporting Information [Line Items]
EBITDA		400
Reconciling adjustment | Other
Segment Reporting Information [Line Items]
EBITDA		$ (1,400)

XML

Basis of Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Annual Goodwill Impairment Test

Annual Goodwill Impairment Test 

Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. During the third quarter of 2019, the Company changed the measurement date of the annual goodwill impairment test from the first month of the fourth quarter to the second month of the third quarter, which was a change in accounting principle. This change did not result in the delay, acceleration or avoidance of an impairment charge. We believe this timing is preferable as it better aligns the goodwill impairment test with the Company's strategic business planning process, which is a key component of the test. The change to the goodwill measurement date was applied prospectively, as retrospective application would have been impractical because the Company is unable to objectively select assumptions that would have been used in previous periods without the benefit of hindsight. The Company completed the required annual testing of goodwill for impairment and has determined that goodwill is not impaired.

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Innophos have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, for interim financial reporting and do not include all disclosures required by U.S. GAAP for annual financial reporting, and should be read in conjunction with the audited consolidated and combined financial statements of the Company at December 31, 2018 and for the three years then ended.

The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments which management considers necessary for a fair statement of the results of operations for the interim periods and is subject to year-end adjustments. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The December 31, 2018 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

Merger Agreement with One Rock Capital Partners

On October 20, 2019, Innophos Holdings, Inc., Iris Parent LLC, a Delaware limited liability company (“Parent”), and Iris Merger Sub 2019, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Innophos Holdings, Inc. (the “Merger”), with Innophos Holdings, Inc. surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of One Rock Capital Partners II, LP, a Delaware limited partnership (“ORC Fund II”).

At the time of the Merger, each share of Company common stock, par value $0.001 per share issued and outstanding will be automatically converted into the right to receive cash in an amount equal to $32.00 per share. The final purchase price is expected to be valued at approximately $932 million, including the assumption of debt.

The transactions contemplated by the Merger Agreement are subject to the satisfaction of certain customary conditions, including the approval of the Merger Agreement by the Company's stockholders, the receipt of regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties, and compliance by the parties with their respective obligations under the Merger Agreement.

Under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated, the Company would be required to pay Parent a fee of $10.3 million or $20.6 million, depending on the circumstance. Further, under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated by the Parent, the Parent would be required to pay the Company a fee of $40.0 million.

The closing of the transaction is expected to occur in the first quarter of 2020. Upon the completion of the transaction, Innophos will become a privately held company and shares of the Company's common stock will no longer be listed on any public market.

Annual Goodwill Impairment Test 

Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. During the third quarter of 2019, the Company changed the measurement date of the annual goodwill impairment test from the first month of the fourth quarter to the second month of the third quarter, which was a change in accounting principle. This change did not result in the delay, acceleration or avoidance of an impairment charge. We believe this timing is preferable as it better aligns the goodwill impairment test with the Company's strategic business planning process, which is a key component of the test. The change to the goodwill measurement date was applied prospectively, as retrospective application would have been impractical because the Company is unable to objectively select assumptions that would have been used in previous periods without the benefit of hindsight. The Company completed the required annual testing of goodwill for impairment and has determined that goodwill is not impaired.

Error Correction 

During the fourth quarter of 2018, the Company identified an error associated with disclosing 2018 accrued capital expenditures and adjusting for them as non-cash investing activities in the Condensed Consolidated Statements of Cash Flows. The Company has evaluated the materiality of the error and concluded it was not material to any of the previously issued consolidated financial statements. However, the Company has elected to revise its consolidated cash flow statement for the period ending September 30, 2018 to correct the error.

The following table presents the effect of the revision on the selected line items previously reported in the consolidated cash flows statement for the nine months ended September 30, 2018:

	September 30, 2018						September 30, 2018
Consolidated Statement of Cash Flows	As reported			Adjustment			As revised
Cash flows from operating activities
Changes in assets and liabilities:
Accounts payable	$	(5,664	)	$	4,497		$	(1,167	)
Net cash provided by (used for) operations	$	30,867		$	4,497		$	35,364
Cash flows used for investing activities
Capital expenditures	$	(43,303	)	$	(4,497	)	$	(47,800	)
Net cash (used for) investing activities	$	(43,303	)	$	(4,497	)	$	(47,800	)
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities
Accrued additions to plant assets				$	5,073		$	5,073

These accompanying notes to the consolidated financial statements reflect the impact of this revision.

During the second quarter of 2019, the Company identified and corrected errors related to the valuation of its inventory located at one of its domestic subsidiaries and the translation of Accumulated other comprehensive income (loss) related to pension and post retirement obligations at a foreign subsidiary. The adjustments decreased Cost of goods sold by $3.1 million and Foreign exchange (gain) loss by $0.7 million resulting in an increase to income before income taxes of approximately $3.8 million in the three month period ended June 30, 2019 and increased the Inventory balance by $3.1 million and decreased Accumulated other comprehensive income before income taxes by $0.7 million as of June 30, 2019. Approximately $1.2 million of the cumulative adjustment should have been recorded during the first quarter of 2019 and the remaining $2.6 million related to prior periods. Management has concluded that these adjustments are not material to the periods presented or any of its previously issued financial statements, and are not expected to be material to the full year 2019 results.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset (ROU asset) representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new leases standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption (the effective date method). The Company adopted this standard as of January 1, 2019, and has elected the effective date method. The Company also elected the package of practical expedients, which among other things, does not require reassessment of prior conclusions to contracts containing a lease, lease

classification, and initial direct costs. As an accounting policy election, the Company will exclude short-term leases (term of 12 months or less) from the balance sheet. The Company's lease agreements do not contain any residual value guarantees. Please see Note 8, "Leases", for further disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and hedging (Topic 815): Targeted improvements to accounting for hedging activities. This standard more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard on January 1, 2019, and there was no material impact on its financial position, results of operations and related disclosures.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates. ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU was effective upon issuance and did not have a material impact on the Company’s Consolidated Financial Statements.

Issued but not yet adopted

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. New disclosures include the interest crediting rates for cash balance plans, and an explanation of significant gains and losses related to changes in benefit obligations. The new standard is effective for fiscal years beginning after December 15, 2020, and must be applied retrospectively for all periods presented. Early adoption is permitted. The Company does not anticipate the adoption of this standard will have a material impact on its financial position, results of operations and related disclosures.

Revenue Recognition Policy

Revenues are recognized when control of goods is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control passes either upon shipment or delivery, depending on the agreed sales terms with customers.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenues recognized. There were no significant changes to its estimates of variable consideration upon adoption.

The Company reports its business in three operating segments: Food, Health, and Nutrition; Industrial Specialties; and Other. The Company has three principal product lines within these operating segments: (i) Specialty Ingredients; (ii) Core Ingredients; and (iii) Co-Products and Other. Revenue recognition is measured on the same basis across these segments, products, markets, and geographic countries, with the performance obligation being the transfer of control of goods at a single point in time.

XML

Pension Plans and Postretirement Benefits

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Pension Plans and Postretirement Benefits

Pension Plans and Postretirement Benefits

Net periodic benefit expense for the United States plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	36		$	36		$	—		$	36		$	36
Interest cost	25			34			59			24			29			53
Expected return on assets	(40		)	—			(40		)	(38		)	—			(38		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(40		)	(40		)	—			(39		)	(39		)
net transition obligation	—			—			—			—			—			—
Net periodic (benefit) cost	$	(15	)	$	30		$	15		$	(14	)	$	26		$	12
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	108		$	108		$	—		$	109		$	109
Interest cost	76			102			178			71			87			158
Expected return on assets	(119		)	—			(119		)	(113		)	—			(113		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(118		)	(118		)	—			(119		)	(119		)
net transition obligation	—			—			—			—			—			—
Net periodic cost	$	(43	)	$	92		$	49		$	(42	)	$	77		$	35

Innophos has no minimum contribution requirements and does not plan to make cash contributions for its U.S. defined benefit pension plan in 2019.

Innophos had no minimum contribution requirements and did not make cash contributions for its U.S. defined benefit pension plan in 2018.

Net periodic benefit expense for the Canadian plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	95		$	16		$	111		$	110		$	15		$	125
Interest cost	134			15			149			128			14			142
Expected return on assets	(202		)	—			(202		)	(199		)	—			(199		)
Amortization of
actuarial loss (gain)	52			—			52			47			1			48
prior service cost	13			—			13			13			—			13
net transition obligation	—			3			3			—			6			6
Exchange rate changes	47			(17		)	30			(97		)	32			(65		)
Net periodic cost	$	139		$	17		$	156		$	2		$	68		$	70
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	285		$	46		$	331		$	332		$	47		$	379
Interest cost	402			45			447			389			43			432
Expected return on assets	(605		)	—			(605		)	(602		)	—			(602		)
Amortization of
actuarial loss (gain)	154			—			154			142			3			145
prior service cost	38			—			38			39			—			39
net transition obligation	—			9			9			—			18			18
Exchange rate changes	(120		)	42			(78		)	121			(41		)	80
Net periodic cost	$	154		$	142		$	296		$	421		$	70		$	491

Innophos Canada, Inc. plans to make cash contributions to its Canadian defined benefit plan of approximately $0.3 million in 2019.

Innophos Canada, Inc. made cash contributions to its Canadian defined benefit plan of approximately $0.7 million in 2018.

XML

Basis of Statement Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended				9 Months Ended		12 Months Ended
	Oct. 20, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Common stock, par value (in dollars per share)		$ 0.001				$ 0.001		$ 0.001
Accounts payable						$ (18,060)	$ (1,167)
Net cash provided by (used for) operations						24,663	35,364
Capital expenditures						(25,576)	(47,800)
Net cash (used for) investing activities						(25,576)	(47,800)
Accrued additions to plant assets						5,242	5,073
Cost of goods sold		$ (156,685)			$ (161,706)	(460,333)	(495,259)
Foreign exchange loss (gain)		373			(531)	(478)	409
Income before income taxes		9,324			$ 11,580	33,126	35,406
Inventories		$ 170,290				$ 170,290		$ 180,203
Inventory And AOCI Adjustments
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of goods sold			$ 3,100
Foreign exchange loss (gain)			700
Income before income taxes			3,800
Inventories			3,100
Other comprehensive income before tax			$ 700
Prior period reclassification adjustment				$ 1,200				$ 2,600
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounts payable							(5,664)
Net cash provided by (used for) operations							30,867
Capital expenditures							(43,303)
Net cash (used for) investing activities							(43,303)
Restatement Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accounts payable							4,497
Net cash provided by (used for) operations							4,497
Capital expenditures							(4,497)
Net cash (used for) investing activities							(4,497)
Accrued additions to plant assets							$ 5,073
Subsequent Event
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Common stock, par value (in dollars per share)	$ 0.001
Stock valuation at date of merger (in dollars per share)	$ 32.00
Iris Merger Sub 2019, Inc | Subsequent Event
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Merger, net purchase price	$ 932,000
Merger, contingent asset	40,000
Iris Merger Sub 2019, Inc | Minimum | Subsequent Event
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Merger, contingent liability	10,300
Iris Merger Sub 2019, Inc | Maximum | Subsequent Event
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Merger, contingent liability	$ 20,600

XML

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 47,789	$ 46,147
Finished products	106,561	119,407
Spare parts	15,940	14,649
Inventories	170,290	180,203
Inventory reserves	$ 14,800	$ 14,300

XML

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance			$ 335,515	$ 333,559
Other comprehensive income before reclassifications	$ (244)	$ (47)	(2,422)	143
Amounts reclassified from accumulated other comprehensive income	410	0	(199)	293
Other comprehensive income (loss), net of tax	166	(47)	(2,621)	436	[1]
Ending balance	337,898	340,669	337,898	340,669
Pension and Other Postretirement Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(2,963)	(1,715)	(2,249)	(2,198)
Other comprehensive income before reclassifications	0	(47)	0	143
Amounts reclassified from accumulated other comprehensive income	288	0	(426)	293
Other comprehensive income (loss), net of tax	288	(47)	(426)	436
Ending balance	(2,675)	(1,762)	(2,675)	(1,762)
Changes in Fair Value of Effective Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(2,840)	0	(767)	0
Other comprehensive income before reclassifications	(244)	0	(2,422)	0
Amounts reclassified from accumulated other comprehensive income	122	0	227	0
Other comprehensive income (loss), net of tax	(122)	0	(2,195)	0
Ending balance	(2,962)	0	(2,962)	0
Accumulated Other Comprehensive Income/(Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(5,803)	(1,715)	(3,016)	(2,198)
Other comprehensive income (loss), net of tax			(2,621)	436	[1]
Ending balance	$ (5,637)	$ (1,762)	$ (5,637)	$ (1,762)

[1] Includes the impact of ASU 2018-02, which transferred those amounts from accumulated other comprehensive income (loss) to retained earnings. See Note 16 to the Condensed Consolidated Financial Statements.

XML

Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)	50.00%	12.00%
Effective tax rate reconciliation, change due to Tax Cuts and Jobs Act		18.00%
Dutch income tax liability	$ 6.6		$ 6.3
Effective tax rate reconciliation, estimated impact of foreign tax audit	19.00%
Income taxes paid	$ 19.7	$ 16.6

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense - Interest Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Debt Disclosure [Abstract]
Interest expense	$ 3,967	$ 3,703	$ 11,592	$ 10,281
Deferred financing cost	107	107	322	322
Interest income	(30)	(18)	(93)	(50)
Less: amount capitalized for capital projects	(54)	(364)	(241)	(1,023)
Total interest expense, net	$ 3,990	$ 3,428	$ 11,580	$ 9,530

XML

Supply Agreement Termination

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Supply Agreement Termination

Supply Agreement Termination

In June 2018, the Company agreed to terminate a previously long-term supply agreement and replaced it with a short-term agreement. In December 2018, as a result of the termination, the Company received consideration of $24.9 million which included $21.3 million in cash as well as receipt of certain tangible assets with a fair value of $3.6 million. The consideration was recorded as a deferred liability with $9.5 million in Other current liabilities and the remaining $15.4 million recorded in Other long-term liabilities. Beginning in January 2019, the deferred liability is being amortized on a straight-line basis through July 2021, which is the end of the new supply agreement, as a reduction of Cost of goods sold. For the three and nine months ended September 30, 2019 amortization of the deferred liability was $2.4 million and $7.2 million, respectively.

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental

The Company's operations are subject to extensive and changing federal, state, local and international environmental laws, rules and regulations. The Company's manufacturing sites have an extended history of industrial use, and soil and groundwater contamination have or may have occurred in the past and might occur or be discovered in the future.

Environmental efforts are difficult to assess for numerous reasons, including the discovery of new remedial sites, discovery of new information and scarcity of reliable information pertaining to certain sites, improvements in technology, changes in environmental laws and regulations, numerous possible remedial techniques and solutions, difficulty in assessing the involvement of and the financial capability of other potentially responsible parties and the extended time periods over which remediation occurs. Other than the items listed below, the Company is not aware of material environmental liabilities which are probable and estimable. As the Company's environmental contingencies are more clearly determined, it is reasonably possible that amounts may need to be accrued. However, management does not believe, based on current information, that environmental remediation requirements will have a material impact on the Company's results of operations, financial position or cash flows.

Future environmental spending is probable at the Company's site in Nashville, Tennessee, the eastern portion of which had been used historically as a landfill, and a western parcel therein, previously acquired from a third party, which reportedly had housed, but no longer does, a fertilizer and pesticide manufacturing facility. The Company has an estimated liability with a range of $0.9 million-$1.3 million. The remedial action plan for that site has yet to be finalized, and as such, the Company has recorded a liability, which represents the Company's best estimate, of $1.1 million as of September 30, 2019.

Litigation

In 2018, following a review of its global corporate and financing structure, Innophos’ management initiated a global entity simplification plan which included a strategy to merge two of the Company’s Dutch subsidiaries by the end of 2018. The contemplated merger was not completed in 2018 due to an administrative error committed and acknowledged by the Company’s Dutch legal counsel, Heussen B.V ("Heussen"). Such merger was ultimately completed in 2019. On May 17, 2019, changes to Dutch tax law were enacted and as expected, with retroactive effect to January 1, 2018. As a result of these changes in Dutch tax law and the merger of the two Dutch subsidiaries not completed in 2018, the Company recorded in its second quarter 2019 results a Dutch corporate income tax liability of $6.6 million for its 2018 tax year. Based on the foreign exchange rate on the date of payment, the liability was settled for $6.3 million in the third quarter of 2019. On July 23, 2019, the Company initiated a malpractice legal proceeding in the Netherlands against Heussen seeking reimbursement for all costs and liabilities resulting from their administrative error, including all related tax liabilities and other associated expenses and damages. Any recovery by the Company in respect of that proceeding will be recorded gross in the period it is received.

In addition, the Company is a party to legal proceedings and contractual disputes that arise in the ordinary course of its business. Except as to the matters specifically discussed, management believes the likelihood that the ultimate disposition of these matters will have a material adverse effect on the Company's business, results of operations, financial condition and/or cash flows is remote. However, these matters cannot be predicted with certainty and an unfavorable resolution of one or more

of them could have a material adverse effect on the Company's business, results of operations, financial condition, and/or cash flows.

XML

Other Current Liabilities

9 Months Ended

Sep. 30, 2019

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

Other Current Liabilities

Other current liabilities consist of the following:

	September 30, 2019		December 31, 2018
Payroll related	$	14,967	$	15,656
Operating lease liabilities	6,830		—
Taxes other than income taxes	1,677		3,071
Benefits and pensions	4,981		5,680
Freight and rebates	4,233		6,431
Income taxes	3,333		1,355
Restructuring reserve	—		217
Deferred gain on sale leaseback transaction (a)	—		790
Deferred contract termination (b)	9,623		9,489
Interest rate hedge	1,553		—
Other	11,458		7,304
	$	58,655	$	49,993

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

XML

Other Current Assets

9 Months Ended

Sep. 30, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets

Other Current Assets

Other current assets consist of the following:

	September 30, 2019		December 31, 2018
Creditable taxes (value added taxes)	$	15,895	$	11,944
Vendor inventory deposits (prepaid)	3,434		454
Prepaid income taxes	11,378		6,658
Prepaid insurance	1,548		2,605
Other	2,881		2,433
	$	35,136	$	24,094

XML

Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Revenues are recognized when control of goods is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control passes either upon shipment or delivery, depending on the agreed sales terms with customers.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenues recognized. There were no significant changes to its estimates of variable consideration upon adoption.

The Company reports its business in three operating segments: Food, Health, and Nutrition; Industrial Specialties; and Other. The Company has three principal product lines within these operating segments: (i) Specialty Ingredients; (ii) Core Ingredients; and (iii) Co-Products and Other. Revenue recognition is measured on the same basis across these segments, products, markets, and geographic countries, with the performance obligation being the transfer of control of goods at a single point in time.

	Three Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	98,909	$	3,773	$	8,438	$	16,534	$	127,654
Core Ingredients	15,626		2,137		23,493		10,097		51,353
Co-Products & Other	9,044		178		1,100		20		10,342
Total	$	123,579	$	6,088	$	33,031	$	26,651	$	189,349

	Three Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	105,127	$	6,726	$	9,754	$	17,682	$	139,289
Core Ingredients	14,431		1,704		21,005		8,152		45,292
Co-Products & Other	10,568		123		1,517		145		12,353
Total	$	130,126	$	8,553	$	32,276	$	25,979	$	196,934

	Nine Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	292,772	$	12,950	$	25,904	$	55,912	$	387,538
Core Ingredients	46,694		6,832		69,471		21,568		144,565
Co-Products & Other	26,810		397		6,188		303		33,698
Total	$	366,276	$	20,179	$	101,563	$	77,783	$	565,801

	Nine Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	332,525	$	19,005	$	26,472	$	57,511	$	435,513
Core Ingredients	43,120		5,947		60,988		27,366		137,421
Co-Products & Other	24,764		256		10,574		571		36,165
Total	$	400,409	$	25,208	$	98,034	$	85,448	$	609,099

Revenues for the geographic information are attributed to geographic areas based on the destination of the sale.

The Company's payment terms vary by geography and location of its customer and the products offered. Invoices are generated upon shipment of the goods, with the term between invoicing and when payment is due being insignificant.

Food, Health, and Nutrition and Industrial Specialties

The Food, Health and Nutrition reporting segment, as well as the Industrial Specialties reporting segment, consists of products in the Specialty Ingredients and Core Ingredients product lines.

Specialty Ingredients are the most value adding products in our portfolio. Specialty Ingredients consist of specialty phosphate products, specialty phosphoric acids, including polyphosphoric acid, and a range of other mineral, enzyme and botanical based specialty ingredients. The Company's Specialty Ingredients products have a wide range of applications, including:

• flavor enhancers in beverages;

• electrolytes in sports drinks;

• texture modifiers in cheeses;

• leavening agents in baked goods;

• calcium and phosphorus fortification in food and beverages;

• moisture and color retention in seafood, poultry and meat;

• mineral, enzyme and botanical sources for a wide variety of fortified foods, beverages and dietary supplements;

• excipients in vitamins, minerals, nutritional supplements and pharmaceuticals; and

• abrasives in toothpaste.

Each product typically has a number of different applications and end uses. For example, the Company's dicalcium phosphate product can be used as an excipient for pharmaceutical and dietary supplements, a leavening agent in bakery products and as an abrasive in oral care products. The Company often works directly with customers to tailor products to their required specifications for their finished product application.

The Company's Core Ingredients product line includes food grade purified phosphoric acid, or PPA, technical grade PPA, sodium tripolyphosphate, or STPP, and detergent grade PPA. Food grade PPA can be used to produce phosphate salts and has a variety of applications in food and beverages. Technical grade PPA has applications in water treatment. The Company also sells technical grade PPA in the merchant market to third-party phosphate derivative producers. STPP is a key ingredient in cleaning products, including industrial and institutional cleaners and automatic dishwashing detergents and consumer laundry detergents outside the United States. In addition to its use in cleaning products, STPP is also used in water treatment, clay processing, and copper ore processing. The end use market for STPP is largely derived from consumer product applications. Detergent Grade PPA is a lower grade form of PPA used primarily in the production of STPP.

Other

The Other reporting segment consists of products in the Co-Products and Other product line.

The Company's Co-Products and Other product line includes granular triple super phosphate, or GTSP, and merchant green phosphoric acid, or MGA. GTSP is generated at the Company's Coatzacoalcos facility in Mexico as a co-product of its purified wet acid manufacturing process. GTSP is a fertilizer product used throughout Latin America for increasing crop yields in a wide range of agricultural sectors. The Company sells MGA in the merchant market to third party manufacturers of fertilizer products.

Practical Expedients and Exemptions

Management reviewed the practical expedients which a Company may utilize when implementing Topic 606 - Revenue from Contracts with Customers. As such, the Company has applied the practical expedient related to significant financing components and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

XML

Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2019

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets consist of the following:

	September 30, 2019		December 31, 2018
Creditable taxes (value added taxes)	$	15,895	$	11,944
Vendor inventory deposits (prepaid)	3,434		454
Prepaid income taxes	11,378		6,658
Prepaid insurance	1,548		2,605
Other	2,881		2,433
	$	35,136	$	24,094

XML

Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Other Liabilities Disclosure [Abstract]

Summary of Other Current Liabilities

Other current liabilities consist of the following:

	September 30, 2019		December 31, 2018
Payroll related	$	14,967	$	15,656
Operating lease liabilities	6,830		—
Taxes other than income taxes	1,677		3,071
Benefits and pensions	4,981		5,680
Freight and rebates	4,233		6,431
Income taxes	3,333		1,355
Restructuring reserve	—		217
Deferred gain on sale leaseback transaction (a)	—		790
Deferred contract termination (b)	9,623		9,489
Interest rate hedge	1,553		—
Other	11,458		7,304
	$	58,655	$	49,993

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

XML

Intangibles and Other Assets, net (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Total intangibles, net	$ 83,941	$ 92,061
Deferred financing costs, net of accumulated amortization of $4,654 for 2019 and $4,331 for 2018 (see Note 11)	969	1,291
Accumulated amortization of debt issuance costs	4,654	4,331
Other assets	2,391	1,742
Total other assets, net	3,360	3,033
Intangibles and other assets, net	87,301	95,094
Developed technology and application patents
Finite-Lived Intangible Assets [Line Items]
Total intangibles, net	9,639	11,606
Accumulated amortization	$ 36,636	34,669
Developed technology and application patents | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	7 years
Developed technology and application patents | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	20 years
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Total intangibles, net	$ 63,247	67,479
Accumulated amortization	$ 32,265	28,032
Customer relationships | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	5 years
Customer relationships | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	20 years
Trade names and license agreements
Finite-Lived Intangible Assets [Line Items]
Total intangibles, net	$ 11,055	12,962
Accumulated amortization	$ 16,506	14,599
Trade names and license agreements | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	5 years
Trade names and license agreements | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	20 years
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Total intangibles, net	$ 0	14
Accumulated amortization	$ 1,333	$ 1,319
Non-compete agreements | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	3 years
Non-compete agreements | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	10 years

XML

Basis of Statement Presentation

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Statement Presentation

Basis of Statement Presentation

Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Innophos have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, for interim financial reporting and do not include all disclosures required by U.S. GAAP for annual financial reporting, and should be read in conjunction with the audited consolidated and combined financial statements of the Company at December 31, 2018 and for the three years then ended.

The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments which management considers necessary for a fair statement of the results of operations for the interim periods and is subject to year-end adjustments. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The December 31, 2018 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

Merger Agreement with One Rock Capital Partners

On October 20, 2019, Innophos Holdings, Inc., Iris Parent LLC, a Delaware limited liability company (“Parent”), and Iris Merger Sub 2019, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Innophos Holdings, Inc. (the “Merger”), with Innophos Holdings, Inc. surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of One Rock Capital Partners II, LP, a Delaware limited partnership (“ORC Fund II”).

At the time of the Merger, each share of Company common stock, par value $0.001 per share issued and outstanding will be automatically converted into the right to receive cash in an amount equal to $32.00 per share. The final purchase price is expected to be valued at approximately $932 million, including the assumption of debt.

The transactions contemplated by the Merger Agreement are subject to the satisfaction of certain customary conditions, including the approval of the Merger Agreement by the Company's stockholders, the receipt of regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties, and compliance by the parties with their respective obligations under the Merger Agreement.

Under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated, the Company would be required to pay Parent a fee of $10.3 million or $20.6 million, depending on the circumstance. Further, under certain circumstances defined within the Merger Agreement, in the event that the Merger Agreement is terminated by the Parent, the Parent would be required to pay the Company a fee of $40.0 million.

The closing of the transaction is expected to occur in the first quarter of 2020. Upon the completion of the transaction, Innophos will become a privately held company and shares of the Company's common stock will no longer be listed on any public market.

Annual Goodwill Impairment Test 

Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. During the third quarter of 2019, the Company changed the measurement date of the annual goodwill impairment test from the first month of the fourth quarter to the second month of the third quarter, which was a change in accounting principle. This change did not result in the delay, acceleration or avoidance of an impairment charge. We believe this timing is preferable as it better aligns the goodwill impairment test with the Company's strategic business planning process, which is a key component of the test. The change to the goodwill measurement date was applied prospectively, as retrospective application would have been impractical because the Company is unable to objectively select assumptions that would have been used in previous periods without the benefit of hindsight. The Company completed the required annual testing of goodwill for impairment and has determined that goodwill is not impaired.

Error Correction 

During the fourth quarter of 2018, the Company identified an error associated with disclosing 2018 accrued capital expenditures and adjusting for them as non-cash investing activities in the Condensed Consolidated Statements of Cash Flows. The Company has evaluated the materiality of the error and concluded it was not material to any of the previously issued consolidated financial statements. However, the Company has elected to revise its consolidated cash flow statement for the period ending September 30, 2018 to correct the error.

The following table presents the effect of the revision on the selected line items previously reported in the consolidated cash flows statement for the nine months ended September 30, 2018:

	September 30, 2018						September 30, 2018
Consolidated Statement of Cash Flows	As reported			Adjustment			As revised
Cash flows from operating activities
Changes in assets and liabilities:
Accounts payable	$	(5,664	)	$	4,497		$	(1,167	)
Net cash provided by (used for) operations	$	30,867		$	4,497		$	35,364
Cash flows used for investing activities
Capital expenditures	$	(43,303	)	$	(4,497	)	$	(47,800	)
Net cash (used for) investing activities	$	(43,303	)	$	(4,497	)	$	(47,800	)
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities
Accrued additions to plant assets				$	5,073		$	5,073

These accompanying notes to the consolidated financial statements reflect the impact of this revision.

During the second quarter of 2019, the Company identified and corrected errors related to the valuation of its inventory located at one of its domestic subsidiaries and the translation of Accumulated other comprehensive income (loss) related to pension and post retirement obligations at a foreign subsidiary. The adjustments decreased Cost of goods sold by $3.1 million and Foreign exchange (gain) loss by $0.7 million resulting in an increase to income before income taxes of approximately $3.8 million in the three month period ended June 30, 2019 and increased the Inventory balance by $3.1 million and decreased Accumulated other comprehensive income before income taxes by $0.7 million as of June 30, 2019. Approximately $1.2 million of the cumulative adjustment should have been recorded during the first quarter of 2019 and the remaining $2.6 million related to prior periods. Management has concluded that these adjustments are not material to the periods presented or any of its previously issued financial statements, and are not expected to be material to the full year 2019 results.

Recently Issued Accounting Standards

Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset (ROU asset) representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new leases standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption (the effective date method). The Company adopted this standard as of January 1, 2019, and has elected the effective date method. The Company also elected the package of practical expedients, which among other things, does not require reassessment of prior conclusions to contracts containing a lease, lease

classification, and initial direct costs. As an accounting policy election, the Company will exclude short-term leases (term of 12 months or less) from the balance sheet. The Company's lease agreements do not contain any residual value guarantees. Please see Note 8, "Leases", for further disclosures.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and hedging (Topic 815): Targeted improvements to accounting for hedging activities. This standard more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard on January 1, 2019, and there was no material impact on its financial position, results of operations and related disclosures.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates. ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU was effective upon issuance and did not have a material impact on the Company’s Consolidated Financial Statements.

Issued but not yet adopted

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. New disclosures include the interest crediting rates for cash balance plans, and an explanation of significant gains and losses related to changes in benefit obligations. The new standard is effective for fiscal years beginning after December 15, 2020, and must be applied retrospectively for all periods presented. Early adoption is permitted. The Company does not anticipate the adoption of this standard will have a material impact on its financial position, results of operations and related disclosures.

XML

Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease ROU assets	$ 55,597	$ 48,800	$ 0
Current operating lease liabilities	6,830		0
Noncurrent operating lease liabilities	49,077		$ 0
Total lease obligations	$ 55,907	$ 48,900

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Tax amounts related to changes in interest rate swaps	$ 41	$ 0	$ 732	$ 0
Tax amounts related to changes in pension and post-retirement plans	$ (19)	$ 16	$ 13	$ 228

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-33124
Entity Registrant Name	INNOPHOS HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-1380758
Entity Address, Address Line One	259 Prospect Plains Road
Entity Address, City or Town	Cranbury
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08512
City Area Code	609
Local Phone Number	495-2495
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	IPHS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		19,690,774
Entity Central Index Key	0001364099
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Shell Company	false

XML

Supply Agreement Termination (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Dec. 31, 2018	Sep. 30, 2019	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Supply commitment, contract termination agreement, consideration	$ 24,900
Supply commitment, contract termination agreement, cash proceeds	21,300
Assets received as part of the supply agreement termination	3,600
Deferred contract termination fee, current	9,489	$ 9,623	$ 9,623
Deferred contract termination fee, noncurrent	$ 15,371	8,019	8,019
Deferred contract termination fee, amortization		$ 2,400	$ 7,200

XML

Pension Plans and Postretirement Benefits - Net Periodic Benefit Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
U.S.
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	$ 36	$ 36	$ 108	$ 109
Interest cost	59	53	178	158
Expected return on assets	(40)	(38)	(119)	(113)
Amortization of prior service cost	0	0	0	0
Amortization of unrecognized (gain) loss	(40)	(39)	(118)	(119)
Amortization of net transition obligation	0	0	0	0
Net periodic (benefit) cost	15	12	49	35
U.S. | Pension benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	0	0	0	0
Interest cost	25	24	76	71
Expected return on assets	(40)	(38)	(119)	(113)
Amortization of prior service cost	0	0	0	0
Amortization of unrecognized (gain) loss	0	0	0	0
Amortization of net transition obligation	0	0	0	0
Net periodic (benefit) cost	(15)	(14)	(43)	(42)
U.S. | Other benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	36	36	108	109
Interest cost	34	29	102	87
Expected return on assets	0	0	0	0
Amortization of prior service cost	0	0	0	0
Amortization of unrecognized (gain) loss	(40)	(39)	(118)	(119)
Amortization of net transition obligation	0	0	0	0
Net periodic (benefit) cost	30	26	92	77
Canada
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	111	125	331	379
Interest cost	149	142	447	432
Expected return on assets	(202)	(199)	(605)	(602)
Amortization of prior service cost	13	13	38	39
Amortization of unrecognized (gain) loss	52	48	154	145
Amortization of net transition obligation	3	6	9	18
Exchange rate changes	30	(65)	(78)	80
Net periodic (benefit) cost	156	70	296	491
Canada | Pension benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	95	110	285	332
Interest cost	134	128	402	389
Expected return on assets	(202)	(199)	(605)	(602)
Amortization of prior service cost	13	13	38	39
Amortization of unrecognized (gain) loss	52	47	154	142
Amortization of net transition obligation	0	0	0	0
Exchange rate changes	47	(97)	(120)	121
Net periodic (benefit) cost	139	2	154	421
Canada | Other benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	16	15	46	47
Interest cost	15	14	45	43
Expected return on assets	0	0	0	0
Amortization of prior service cost	0	0	0	0
Amortization of unrecognized (gain) loss	0	1	0	3
Amortization of net transition obligation	3	6	9	18
Exchange rate changes	(17)	32	42	(41)
Net periodic (benefit) cost	$ 17	$ 68	$ 142	$ 70

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense - Derivatives and AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain/(Loss) Recognized in AOCI on Derivative	$ (164)	$ 0	$ (2,927)	$ 0
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain/(Loss) Recognized in AOCI on Derivative	(164)	0	(2,927)	0
Interest Income/(Expense)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain/(Loss) Reclassified from AOCI into Income	(162)	0	(302)	0
Interest Income/(Expense) | Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Gain/(Loss) Reclassified from AOCI into Income	$ (162)	$ 0	$ (302)	$ 0

XML

Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Goodwill [Line Items]
Goodwill	$ 152,767	$ 152,767
Food, Health and Nutrition
Goodwill [Line Items]
Goodwill	129,484	129,484
Industrial Specialties
Goodwill [Line Items]
Goodwill	23,283	23,283
Other
Goodwill [Line Items]
Goodwill	$ 0	$ 0

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Changes in accumulated other comprehensive income (loss) by component:

Three months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2019	$	(2,963	)	$	(2,840	)	$	(5,803	)
Other comprehensive (loss) before reclassifications	—			(244		)	(244		)
Amounts reclassified from accumulated other comprehensive income	288			122			410
Net current period other comprehensive (loss)	288			(122		)	166
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Three months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2018	$	(1,715	)	$	—		$	(1,715	)
Other comprehensive income before reclassifications	(47		)	—			(47		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Net current period other comprehensive income	(47		)	—			(47		)
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)
Nine months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2018	$	(2,249	)	$	(767	)	$	(3,016	)
Other comprehensive (loss) before reclassifications	—			(2,422		)	(2,422		)
Amounts reclassified from accumulated other comprehensive income	(426		)	227			(199		)
Net current period other comprehensive (loss)	(426		)	(2,195		)	(2,621		)
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Nine months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2017	$	(2,198	)	$	—		$	(2,198	)
Other comprehensive income before reclassifications	143			—			143
Amounts reclassified from accumulated other comprehensive income	293			—			293
Net current period other comprehensive income	436			—			436
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)

XML

Earnings per Share (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income	$ 6,451	$ 14,090	$ 16,546	$ 31,251
Less: earnings attributable to unvested shares	(34)	(57)	(72)	(112)
Net income available to participating common shareholders	$ 6,417	$ 14,033	$ 16,474	$ 31,139
Weighted average number of participating common and potential common shares outstanding:
Basic number of participating common shares outstanding (in shares)	19,583,316	19,525,284	19,575,764	19,511,097
Dilutive effect of stock equivalents (in shares)	201,729	313,678	164,498	279,473
Diluted number of weighted average participating common shares outstanding (in shares)	19,785,045	19,838,962	19,740,262	19,790,570
Earnings per participating common share:
Earnings per participating common share - Basic (in dollars per share)	$ 0.33	$ 0.72	$ 0.84	$ 1.60
Earnings per participating common share - Diluted (in dollars per share)	$ 0.32	$ 0.71	$ 0.83	$ 1.57
Total outstanding options, performance share awards and unvested restricted stock not included in the calculation of diluted earnings per share as the effect would be anti-dilutive (in shares)	966,943	431,751	982,049	465,956

XML

Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component:

Three months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2019	$	(2,963	)	$	(2,840	)	$	(5,803	)
Other comprehensive (loss) before reclassifications	—			(244		)	(244		)
Amounts reclassified from accumulated other comprehensive income	288			122			410
Net current period other comprehensive (loss)	288			(122		)	166
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Three months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at June 30, 2018	$	(1,715	)	$	—		$	(1,715	)
Other comprehensive income before reclassifications	(47		)	—			(47		)
Amounts reclassified from accumulated other comprehensive income	—			—			—
Net current period other comprehensive income	(47		)	—			(47		)
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)
Nine months ended September 30, 2019	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2018	$	(2,249	)	$	(767	)	$	(3,016	)
Other comprehensive (loss) before reclassifications	—			(2,422		)	(2,422		)
Amounts reclassified from accumulated other comprehensive income	(426		)	227			(199		)
Net current period other comprehensive (loss)	(426		)	(2,195		)	(2,621		)
Balance at September 30, 2019	$	(2,675	)	$	(2,962	)	$	(5,637	)
Nine months ended September 30, 2018	Pension and Other Postretirement Adjustments			Changes in Fair Value of Effective Cash Flow Hedges			Total
Balance at December 31, 2017	$	(2,198	)	$	—		$	(2,198	)
Other comprehensive income before reclassifications	143			—			143
Amounts reclassified from accumulated other comprehensive income	293			—			293
Net current period other comprehensive income	436			—			436
Balance at September 30, 2018	$	(1,762	)	$	—		$	(1,762	)

XML

Other Long-Term Liabilities

9 Months Ended

Sep. 30, 2019

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

Other Long-Term Liabilities

Other long-term liabilities consist of the following:

	September 30, 2019		December 31, 2018
Deferred income taxes	$	8,421	$	5,113
Pension and post retirement liabilities	9,639		9,238
Uncertain tax positions	320		320
Environmental liabilities	1,100		1,100
Deferred gain on sale leaseback transaction (a)	—		15,073
Deferred contract termination fee (b)	8,019		15,371
Interest rate hedge	2,397		1,023
Other liabilities	2,468		2,401
	$	32,364	$	49,639

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

XML

Basis of Statement Presentation (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The following table presents the effect of the revision on the selected line items previously reported in the consolidated cash flows statement for the nine months ended September 30, 2018:

	September 30, 2018						September 30, 2018
Consolidated Statement of Cash Flows	As reported			Adjustment			As revised
Cash flows from operating activities
Changes in assets and liabilities:
Accounts payable	$	(5,664	)	$	4,497		$	(1,167	)
Net cash provided by (used for) operations	$	30,867		$	4,497		$	35,364
Cash flows used for investing activities
Capital expenditures	$	(43,303	)	$	(4,497	)	$	(47,800	)
Net cash (used for) investing activities	$	(43,303	)	$	(4,497	)	$	(47,800	)
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities
Accrued additions to plant assets				$	5,073		$	5,073

XML

Other Long-Term Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Other Long-Term Liabilities

Other long-term liabilities consist of the following:

	September 30, 2019		December 31, 2018
Deferred income taxes	$	8,421	$	5,113
Pension and post retirement liabilities	9,639		9,238
Uncertain tax positions	320		320
Environmental liabilities	1,100		1,100
Deferred gain on sale leaseback transaction (a)	—		15,073
Deferred contract termination fee (b)	8,019		15,371
Interest rate hedge	2,397		1,023
Other liabilities	2,468		2,401
	$	32,364	$	49,639

(a) See Note 8 to the Consolidated Financial Statements for further details.

(b) See Note 18 to the Consolidated Financial Statements for further details.

XML

Stockholders' Equity / Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Summary of Components of Stock-Based Compensation Expense

The following table summarizes the components of share-based compensation expense, all of which has been classified as selling, general and administrative expense:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock options	$	366	$	398	$	1,168	$	1,282
Restricted stock	606		580		1,878		1,860
Performance shares	649		173		1,442		422
Stock grants	—		—		700		579
Total share-based compensation expense	$	1,621	$	1,151	$	5,188	$	4,143

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows:

	Three months ended		Nine months ended
	September 30, 2019		September 30, 2019
Operating lease expense:
Cost of goods sold	$	1,538	$	4,529
Selling, general and administrative	902		2,711
Total lease expense	$	2,440	$	7,240

Supplemental Balance Sheet Information

Supplemental balance sheet information related to the leases were as follows:

	September 30, 2019
Operating lease ROU assets	$	55,597
Current operating lease liabilities	$	6,830
Noncurrent operating lease liabilities	49,077
Total operating lease liabilities	$	55,907

Supplemental Cash Flow and Other Information

Supplemental cash flow and other information related to the leases were as follows:

	Nine months ended
	September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,103
ROU assets obtained in exchange for new operating lease liabilities	$	11,844

	September 30, 2019
Weighted average remaining lease term of operating leases (in years)	11
Weighted average discount rate of operating leases	5.29	%

Maturities of Lease Liabilities

Maturities of lease liabilities were as follows:

	September 30, 2019
2019	$	2,403
2020	9,455
2021	8,625
2022	8,068
2023	7,475
2024 and thereafter	39,521
Total lease payments	$	75,547
Less: imputed interest	19,640
Total lease obligations	$	55,907
Less: current obligations	6,830
Long-term lease obligations	$	49,077

Maturities of Lease Liabilities Under Prior Guidance

As required by ASC 842, the future minimum operating lease payments on non-cancelable leases as of December 31, 2018 under the accounting standards in effect as of that period were as follows:

	December 31, 2018
2019	$	8,259
2020	7,130
2021	6,490
2022	6,032
2023	5,467
2024 and thereafter	33,957
Long-term lease obligations	$	67,335

XML

Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lessee, Operating Leases

Leases

The Company determines if an arrangement is a lease at inception. Lease Right of Use, or ROU, assets and noncurrent lease liabilities are presented as distinct accounts in the Condensed Consolidated Balance Sheet. Current lease liabilities are included within Other current liabilities in the Condensed Consolidated Balance Sheet. The Company does not have any Finance leases. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments, as the implicit rate is not readily determinable. The Company gives consideration to publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet. Certain leases include one or more options to renew, with renewal terms that can extend the lease up to five years and certain leases also include options to purchase the leased property. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors. We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.

The Company primarily leases rail cars, inventory tanks, buildings, equipment, and fleet cars. The Company recorded ROU assets of $48.8 million and lease liabilities of $48.9 million, respectively at January 1, 2019. The impact to the Company's Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Statement of Cash Flows was not material. As of September 30, 2019, the Company had 45 leases, with remaining terms ranging from less than 1 year to 20 years.

Under one of its warehousing agreements with third-party service providers, the Company controls the amount, timing, placing, and removing of items for the entire capacity of the warehouse. Therefore the Company controls the asset, and the warehouse is deemed to be leased for accounting purposes. For this warehousing agreement, the Company accounts for the lease and non-lease components separately. The lease component consists of the warehouse and the non-lease components consist of services, such as loading, unloading, and maintenance. The Company allocates the consideration in the warehousing agreement to the lease and non-lease components using their relative standalone prices.

In December 2018, the Company sold its Chicago Heights, IL warehouse for $23.0 million. Under the agreement, the Company is leasing back the property from the purchaser over a period of 20 years. The Company is accounting for the leaseback as an operating lease. The annual rent for the initial period of 5 years is approximately $1.5 million plus taxes and subsequently will increase 10% every 5 years through the end of the lease. Prior to the adoption of the new lease standard, gains on sale-leaseback transactions were deferred and recognized in the statement of comprehensive income over the lease term. Under the new lease standard, gains on sale-leaseback transactions (subject to adjustment for off-market terms) are recognized immediately. Therefore, the sale-leaseback gain of $11.9 million (net of tax of $4.0 million) was deferred as of December 31, 2018 and on the transition to ASC 842 effective January 1, 2019, was reclassed to retained earnings.

The components of lease expense were as follows:

	Three months ended		Nine months ended
	September 30, 2019		September 30, 2019
Operating lease expense:
Cost of goods sold	$	1,538	$	4,529
Selling, general and administrative	902		2,711
Total lease expense	$	2,440	$	7,240

Supplemental balance sheet information related to the leases were as follows:

	September 30, 2019
Operating lease ROU assets	$	55,597
Current operating lease liabilities	$	6,830
Noncurrent operating lease liabilities	49,077
Total operating lease liabilities	$	55,907

Supplemental cash flow and other information related to the leases were as follows:

	Nine months ended
	September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,103
ROU assets obtained in exchange for new operating lease liabilities	$	11,844

	September 30, 2019
Weighted average remaining lease term of operating leases (in years)	11
Weighted average discount rate of operating leases	5.29	%

Maturities of lease liabilities were as follows:

	September 30, 2019
2019	$	2,403
2020	9,455
2021	8,625
2022	8,068
2023	7,475
2024 and thereafter	39,521
Total lease payments	$	75,547
Less: imputed interest	19,640
Total lease obligations	$	55,907
Less: current obligations	6,830
Long-term lease obligations	$	49,077

As required by ASC 842, the future minimum operating lease payments on non-cancelable leases as of December 31, 2018 under the accounting standards in effect as of that period were as follows:

	December 31, 2018
2019	$	8,259
2020	7,130
2021	6,490
2022	6,032
2023	5,467
2024 and thereafter	33,957
Long-term lease obligations	$	67,335

XML

Stockholders' Equity / Share-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stockholders' Equity / Share-Based Compensation

Stockholders’ Equity / Share-Based Compensation

The following table summarizes the components of share-based compensation expense, all of which has been classified as selling, general and administrative expense:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock options	$	366	$	398	$	1,168	$	1,282
Restricted stock	606		580		1,878		1,860
Performance shares	649		173		1,442		422
Stock grants	—		—		700		579
Total share-based compensation expense	$	1,621	$	1,151	$	5,188	$	4,143

XML

Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
2019	$ 2,403
2020	9,455
2021	8,625
2022	8,068
2023	7,475
2024 and thereafter	39,521
Total lease payments	75,547
Less: imputed interest	19,640
Total lease obligations	55,907	$ 48,900
Less: current obligations	6,830		$ 0
Long-term lease obligations	$ 49,077		$ 0

XML

Leases - Narrative (Details) $ in Thousands	1 Months Ended	9 Months Ended
	Dec. 31, 2018 USD ($)	Sep. 30, 2019 USD ($) lease	Jan. 01, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease ROU assets	$ 0	$ 55,597	$ 48,800
Lease liabilities		$ 55,907	$ 48,900
Lessee, Number of Leases | lease		45
Gross proceeds from sale	$ 23,000
Lease renewal term	20 years
Annual rental payments rent increase period	5 years
Annual rental payments	$ 1,500
Annual rental increase every five years (percent)	10.00%
Annual rental payments rent increase renewal period	5 years
Sale-leaseback gain	$ 11,900
Sale-leaseback gain, tax	$ 4,000
Minimum
Lessee, Lease, Description [Line Items]
Operating lease remaining term		1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating lease remaining term		20 years

XML

Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Retained Earnings (Deficit)	Paid-in Capital / Common stock held in treasury	Accumulated Other Comprehensive Income/(Loss)
Beginning balance (in shares) at Dec. 31, 2017			19,538
Beginning balance at Dec. 31, 2017		$ 333,559	$ 20	$ 374,366	$ (38,629)	$ (2,198)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		31,251		31,251
Other comprehensive income, (net of tax)	[1]	436				436
Effects of U.S. enacted Tax Cuts and Jobs Act	[1]	(293)		(293)
Effect of adoption | Accounting Standards Update 2016-16		360		360
Equity-based compensation (in shares)			75
Equity-based compensation		3,649			3,649
Dividends declared ($1.44 per share)	[2]	(28,293)		(28,293)
Ending balance (in shares) at Sep. 30, 2018			19,613
Ending balance at Sep. 30, 2018		340,669	$ 20	377,391	(34,980)	(1,762)
Beginning balance at Jun. 30, 2018						(1,715)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		14,090
Other comprehensive income, (net of tax)		(47)
Ending balance (in shares) at Sep. 30, 2018			19,613
Ending balance at Sep. 30, 2018		340,669	$ 20	377,391	(34,980)	(1,762)
Beginning balance (in shares) at Dec. 31, 2018			19,613
Beginning balance at Dec. 31, 2018		335,515	$ 20	372,815	(34,304)	(3,016)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		16,546		16,546
Other comprehensive income, (net of tax)		(2,621)				(2,621)
Effect of adoption | Accounting Standards Update 2016-02	[3]	11,897		11,897
Equity-based compensation (in shares)			78
Equity-based compensation		4,934			4,934
Dividends declared ($1.44 per share)	[4]	(28,373)		(28,373)
Ending balance (in shares) at Sep. 30, 2019			19,691
Ending balance at Sep. 30, 2019		337,898	$ 20	372,885	(29,370)	(5,637)
Beginning balance at Jun. 30, 2019						(5,803)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		6,451
Other comprehensive income, (net of tax)		166
Ending balance (in shares) at Sep. 30, 2019			19,691
Ending balance at Sep. 30, 2019		$ 337,898	$ 20	$ 372,885	$ (29,370)	$ (5,637)

[1] Includes the impact of ASU 2018-02, which transferred those amounts from accumulated other comprehensive income (loss) to retained earnings. See Note 16 to the Condensed Consolidated Financial Statements.

[2] $0.48 per share declared February 2018, May 2018, and July 2018

[3] On the transition to ASC 842 effective January 1, 2019, a deferred gain (net of taxes) related to a sale leaseback transaction was credited to Retained Earnings. See Note 8 to the Condensed Consolidated Financial Statements.

[4] $0.48 per share declared February 2019, April 2019, and August 2019

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense - Debt Components (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Long-term debt	$ 340,000	$ 300,000
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Revolver borrowings under the credit facility due 2021	$ 340,000	$ 300,000

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	23,042,492	22,984,608
Common stock, shares outstanding (in shares)	19,690,774	19,613,085
Treasury stock, shares held (in shares)	3,351,718	3,371,523
Allowance for doubtful accounts	$ 884	$ 688

XML

Earnings per Share (EPS) (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of Earnings per Share

The following is a reconciliation of the weighted average basic number of common shares outstanding to the diluted number of common and common stock equivalent shares outstanding and the calculation of earnings per share using the two-class method:

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	6,451		$	14,090		$	16,546		$	31,251
Less: earnings attributable to unvested shares	(34		)	(57		)	(72		)	(112		)
Net income available to participating common shareholders	$	6,417		$	14,033		$	16,474		$	31,139
Weighted average number of participating common and potential common shares outstanding:
Basic number of participating common shares outstanding	19,583,316			19,525,284			19,575,764			19,511,097
Dilutive effect of stock equivalents	201,729			313,678			164,498			279,473
Diluted number of weighted average participating common shares outstanding	19,785,045			19,838,962			19,740,262			19,790,570
Earnings per participating common share:
Earnings per participating common share—Basic	$	0.33		$	0.72		$	0.84		$	1.60
Earnings per participating common share—Diluted	$	0.32		$	0.71		$	0.83		$	1.57
Total outstanding options, performance share awards and unvested restricted stock not included in the calculation of diluted earnings per share as the effect would be anti-dilutive	966,943			431,751			982,049			465,956

XML

Goodwill (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Reconciliation of the Carrying Amount of Goodwill

The following table provides a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period (in thousands):

	Food, Health and Nutrition		Industrial Specialties		Other		Total
Balance: January 1, 2019	$	129,484	$	23,283	$	—	$	152,767
Balance: September 30, 2019	$	129,484	$	23,283	$	—	$	152,767

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt consist of the following:

 

	September 30, 2019		December 31, 2018
Revolver borrowings under the credit facility due 2021	$	340,000	$	300,000
Long-term debt	$	340,000	$	300,000

Components of Interest Expense, Net

Interest expense, net consists of the following:

	Three months ended						Nine months ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Interest expense	$	3,967		$	3,703		$	11,592		$	10,281
Deferred financing cost	107			107			322			322
Interest income	(30		)	(18		)	(93		)	(50		)
Less: amount capitalized for capital projects	(54		)	(364		)	(241		)	(1,023		)
Total interest expense, net	$	3,990		$	3,428		$	11,580		$	9,530

Schedule of Derivative Instruments

The table below presents the fair value of the Company's derivative financial instruments as well as their classification in the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

Tabular Disclosure of Fair Values of Derivative Instruments
		Fair value as of
Derivatives designated as hedging instruments	Balance Sheet Location	September 30, 2019		December 31, 2018
Interest Rate Contract	Other current liabilities	$	1,553	$	—
	Other long-term liabilities	2,397		1,023
		$	3,950	$	1,023

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The table below presents the effect of the Company’s derivative financial instruments in the Consolidated Statements of Operations and AOCI for the three and nine months ended September 30, 2019 and September 30, 2018.

Tabular Disclosure of the Effect of Derivative Instruments
Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative			Location of Gain/(Loss) Reclassified from AOCI into Income	Amount of Gain/(Loss) Reclassified from AOCI into Income
Interest Rate Contract	$	(164	)	Interest Income/(Expense)	$	(162	)
Three months ended September 30, 2019	$	(164	)		$	(162	)
Interest Rate Contract	$	(2,927	)	Interest Income/(Expense)	$	(302	)
Nine months ended September 30, 2019	$	(2,927	)		$	(302	)
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Three months ended September 30, 2018	$	—			$	—
Interest Rate Contract	$	—		Interest Income/(Expense)	$	—
Nine months ended September 30, 2018	$	—			$	—

XML

Intangibles and Other Assets, net

9 Months Ended

Sep. 30, 2019

Intangible Assets and Other Noncurrent Assets, Net [Abstract]

Intangibles and Other Assets, net

Intangibles and Other Assets, net

Intangibles and other assets consist of the following:

	Useful life (years)	September 30, 2019		December 31, 2018
Developed technology and application patents, net of accumulated amortization of $36,636 for 2019 and $34,669 for 2018	7-20	$	9,639	$	11,606
Customer relationships, net of accumulated amortization of $32,265 for 2019 and $28,032 for 2018	5-20	63,247		67,479
Trade names and license agreements, net of accumulated amortization of $16,506 for 2019 and $14,599 for 2018	5-20	11,055		12,962
Non-compete agreements, net of accumulated amortization of $1,333 for 2019 and $1,319 for 2018	3-10	—		14
Total intangibles, net		$	83,941	$	92,061
Deferred financing costs, net of accumulated amortization of $4,654 for 2019 and $4,331 for 2018 (see Note 11)		$	969	$	1,291
Other assets		2,391		1,742
Total other assets, net		$	3,360	$	3,033
		$	87,301	$	95,094

XML

Inventories

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	September 30, 2019		December 31, 2018
Raw materials	$	47,789	$	46,147
Finished products	106,561		119,407
Spare parts	15,940		14,649
	$	170,290	$	180,203

Inventory reserves for excess quantities, obsolescence or shelf-life expiration as of September 30, 2019 and December 31, 2018 were $14.8 million and $14.3 million, respectively.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows provided by operating activities
Net income	$ 16,546	$ 31,251
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	31,776	33,317
Amortization of deferred financing charges	322	322
Deferred income tax provision	242	7,006
Share-based compensation	5,188	4,143
Changes in assets and liabilities:
Accounts receivable	(3,655)	(2,272)
Inventories	9,913	(23,094)
Other current assets	(11,042)	(9,362)
Accounts payable	(18,060)	(1,167)
Other current liabilities	5,041	10,291
Other long-term assets and liabilities, net	(11,608)	(15,071)
Net cash provided by operating activities	24,663	35,364
Cash flows used for investing activities:
Capital expenditures	(25,576)	(47,800)
Net cash used for investing activities	(25,576)	(47,800)
Cash flows provided by financing activities:
Long-term debt borrowings	51,000	86,000
Long-term debt repayments	(11,000)	(51,000)
Restricted stock forfeitures	(235)	(251)
Dividends paid	(28,318)	(28,197)
Net cash provided by financing activities	11,447	6,552
Effect of foreign exchange rate changes on cash and cash equivalents	0	181
Net change in cash	10,534	(5,703)
Cash and cash equivalents at beginning of period	20,197	28,782
Cash and cash equivalents at end of period	30,731	23,079
Non-cash investing and financing activities:
Accrued additions to plant assets	$ 5,242	$ 5,073

XML

Short-Term Borrowings, Long-Term Debt, and Interest Expense - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Debt Instrument [Line Items]
Total leverage ratio	3.50
Interest coverage ratio	3.00
Outstanding borrowings as floating rate debt	$ 190,000,000.0
Effect of one percentage point increase to interest expense	1,900,000
Interest paid	11,500,000	$ 10,400,000
Line of Credit
Debt Instrument [Line Items]
Letters of credit outstanding	500,000
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	450,000,000.0
Line of credit facility, additional borrowing capacity	150,000,000.0		$ 150,000,000.0
Line of credit facility, maximum borrowing capacity including higher borrowing capacity option	600,000,000.0
Amount outstanding under line of credit	340,000,000.0
Line of credit facility, remaining borrowing capacity	$ 109,500,000
Weighted average interest rate	4.40%
Letter of Credit | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 20,000,000.0
Bridge Loan | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 20,000,000.0
Interest Rate Swap
Debt Instrument [Line Items]
Interest rate swap, fixed rate to maturity obligation interest rate			2.677%

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 30,731	$ 20,197
Accounts receivable, net of allowance for doubtful accounts ($884 and $688)	106,219	102,564
Inventories	170,290	180,203
Other current assets	35,136	24,094
Total current assets	342,376	327,058
Property, plant and equipment, net	237,803	240,235
Lease right-of-use assets	55,597	0
Goodwill	152,767	152,767
Intangibles and other assets, net	87,301	95,094
Total assets	875,844	815,154
Current liabilities:
Accounts payable, trade and other	57,850	80,007
Other current liabilities	58,655	49,993
Total current liabilities	116,505	130,000
Long-term debt	340,000	300,000
Long-term lease obligations	49,077	0
Other long-term liabilities	32,364	49,639
Total liabilities	537,946	479,639
Commitments and contingencies (Note 14)
Common stock, par value $.001 per share; authorized 100,000,000; issued 23,042,492 and 22,984,608; outstanding 19,690,774 and 19,613,085 shares	20	20
Paid-in capital	147,727	142,558
Common stock held in treasury, at cost (3,351,718 and 3,371,523 shares)	(177,097)	(176,862)
Retained earnings	372,885	372,815
Accumulated other comprehensive loss	(5,637)	(3,016)
Total stockholders' equity	337,898	335,515
Total liabilities and stockholders' equity	$ 875,844	$ 815,154

XML

Leases - Maturities of Lease Liabilities Under Prior Guidance (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 8,259
2020	7,130
2021	6,490
2022	6,032
2023	5,467
2024 and thereafter	33,957
Long-term lease obligations	$ 67,335

XML

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Lessee, Lease, Description [Line Items]
Lease expense	$ 2,440	$ 7,240
Cost of goods sold
Lessee, Lease, Description [Line Items]
Lease expense	1,538	4,529
Selling, general and administrative
Lessee, Lease, Description [Line Items]
Lease expense	$ 902	$ 2,711

XML

Pension Plans and Postretirement Benefits - Additional Information (Details) - Pension benefits - USD ($)	12 Months Ended
	Dec. 31, 2018	Sep. 30, 2019
U.S.
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer minimum contribution requirements		$ 0
Anticipated employer cash contributions		0
Cash contributions	$ 0
Canada
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Anticipated employer cash contributions		$ 300,000
Cash contributions	$ 700,000

XML

Other Long-Term Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other Liabilities Disclosure [Abstract]
Deferred income taxes	$ 8,421	$ 5,113
Pension and post retirement liabilities	9,639	9,238
Uncertain tax positions	320	320
Environmental liabilities	1,100	1,100
Deferred gain on sale leaseback transaction	0	15,073
Deferred contract termination fee	8,019	15,371
Interest rate hedge	2,397	1,023
Other liabilities	2,468	2,401
Other long-term liabilities	$ 32,364	$ 49,639

XML

Pension Plans and Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Schedule of Net Periodic Benefit Expense

Net periodic benefit expense for the United States plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	36		$	36		$	—		$	36		$	36
Interest cost	25			34			59			24			29			53
Expected return on assets	(40		)	—			(40		)	(38		)	—			(38		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(40		)	(40		)	—			(39		)	(39		)
net transition obligation	—			—			—			—			—			—
Net periodic (benefit) cost	$	(15	)	$	30		$	15		$	(14	)	$	26		$	12
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	—		$	108		$	108		$	—		$	109		$	109
Interest cost	76			102			178			71			87			158
Expected return on assets	(119		)	—			(119		)	(113		)	—			(113		)
Amortization of
prior service cost	—			—			—			—			—			—
unrecognized (gain) loss	—			(118		)	(118		)	—			(119		)	(119		)
net transition obligation	—			—			—			—			—			—
Net periodic cost	$	(43	)	$	92		$	49		$	(42	)	$	77		$	35

Net periodic benefit expense for the Canadian plans:

	Three months ended September 30, 2019									Three months ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	95		$	16		$	111		$	110		$	15		$	125
Interest cost	134			15			149			128			14			142
Expected return on assets	(202		)	—			(202		)	(199		)	—			(199		)
Amortization of
actuarial loss (gain)	52			—			52			47			1			48
prior service cost	13			—			13			13			—			13
net transition obligation	—			3			3			—			6			6
Exchange rate changes	47			(17		)	30			(97		)	32			(65		)
Net periodic cost	$	139		$	17		$	156		$	2		$	68		$	70
	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	Pension benefits			Other benefits			Total			Pension benefits			Other benefits			Total
Service cost	$	285		$	46		$	331		$	332		$	47		$	379
Interest cost	402			45			447			389			43			432
Expected return on assets	(605		)	—			(605		)	(602		)	—			(602		)
Amortization of
actuarial loss (gain)	154			—			154			142			3			145
prior service cost	38			—			38			39			—			39
net transition obligation	—			9			9			—			18			18
Exchange rate changes	(120		)	42			(78		)	121			(41		)	80
Net periodic cost	$	154		$	142		$	296		$	421		$	70		$	491

XML

Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Net sales	$ 189,349	$ 196,934	$ 565,801	$ 609,099
U.S.
Disaggregation of Revenue [Line Items]
Net sales	123,579	130,126	366,276	400,409
Canada
Disaggregation of Revenue [Line Items]
Net sales	6,088	8,553	20,179	25,208
Mexico
Disaggregation of Revenue [Line Items]
Net sales	33,031	32,276	101,563	98,034
Other Countries
Disaggregation of Revenue [Line Items]
Net sales	26,651	25,979	77,783	85,448
Specialty Ingredients
Disaggregation of Revenue [Line Items]
Net sales	127,654	139,289	387,538	435,513
Specialty Ingredients | U.S.
Disaggregation of Revenue [Line Items]
Net sales	98,909	105,127	292,772	332,525
Specialty Ingredients | Canada
Disaggregation of Revenue [Line Items]
Net sales	3,773	6,726	12,950	19,005
Specialty Ingredients | Mexico
Disaggregation of Revenue [Line Items]
Net sales	8,438	9,754	25,904	26,472
Specialty Ingredients | Other Countries
Disaggregation of Revenue [Line Items]
Net sales	16,534	17,682	55,912	57,511
Core Ingredients
Disaggregation of Revenue [Line Items]
Net sales	51,353	45,292	144,565	137,421
Core Ingredients | U.S.
Disaggregation of Revenue [Line Items]
Net sales	15,626	14,431	46,694	43,120
Core Ingredients | Canada
Disaggregation of Revenue [Line Items]
Net sales	2,137	1,704	6,832	5,947
Core Ingredients | Mexico
Disaggregation of Revenue [Line Items]
Net sales	23,493	21,005	69,471	60,988
Core Ingredients | Other Countries
Disaggregation of Revenue [Line Items]
Net sales	10,097	8,152	21,568	27,366
Co-Products & Other
Disaggregation of Revenue [Line Items]
Net sales	10,342	12,353	33,698	36,165
Co-Products & Other | U.S.
Disaggregation of Revenue [Line Items]
Net sales	9,044	10,568	26,810	24,764
Co-Products & Other | Canada
Disaggregation of Revenue [Line Items]
Net sales	178	123	397	256
Co-Products & Other | Mexico
Disaggregation of Revenue [Line Items]
Net sales	1,100	1,517	6,188	10,574
Co-Products & Other | Other Countries
Disaggregation of Revenue [Line Items]
Net sales	$ 20	$ 145	$ 303	$ 571

XML

Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Creditable taxes (value added taxes)	$ 15,895	$ 11,944
Vendor inventory deposits (prepaid)	3,434	454
Prepaid income taxes	11,378	6,658
Prepaid insurance	1,548	2,605
Other	2,881	2,433
Other current assets	$ 35,136	$ 24,094

XML

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

	Three Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	98,909	$	3,773	$	8,438	$	16,534	$	127,654
Core Ingredients	15,626		2,137		23,493		10,097		51,353
Co-Products & Other	9,044		178		1,100		20		10,342
Total	$	123,579	$	6,088	$	33,031	$	26,651	$	189,349

	Three Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	105,127	$	6,726	$	9,754	$	17,682	$	139,289
Core Ingredients	14,431		1,704		21,005		8,152		45,292
Co-Products & Other	10,568		123		1,517		145		12,353
Total	$	130,126	$	8,553	$	32,276	$	25,979	$	196,934

	Nine Months Ended September 30, 2019
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	292,772	$	12,950	$	25,904	$	55,912	$	387,538
Core Ingredients	46,694		6,832		69,471		21,568		144,565
Co-Products & Other	26,810		397		6,188		303		33,698
Total	$	366,276	$	20,179	$	101,563	$	77,783	$	565,801

	Nine Months Ended September 30, 2018
	U.S.		Canada		Mexico		Other Countries		Total
Specialty Ingredients	$	332,525	$	19,005	$	26,472	$	57,511	$	435,513
Core Ingredients	43,120		5,947		60,988		27,366		137,421
Co-Products & Other	24,764		256		10,574		571		36,165
Total	$	400,409	$	25,208	$	98,034	$	85,448	$	609,099

XML

Segment Reporting

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company discloses certain financial and supplementary information about its reportable segments, revenue by products and revenues by geographic area. Operating segments are defined as components of an enterprise about which separate discrete financial information is evaluated regularly by the chief operating decision maker, in order to decide how to allocate resources and assess performance. The primary performance indicators for the chief operating decision maker are sales and EBITDA (defined as net income (loss) before interest, income taxes, depreciation and amortization). All references to sales in this Quarterly Report on Form 10-Q are recognized when title and risk of loss passes to the customer, which occurs either upon shipment or delivery, depending upon the agreed sales terms with customers.

The Company's chief executive officer is the chief operating decision maker and has determined to assess the Company's performance and allocate the appropriate resources based on the following operating segments: (1) Food, Health and Nutrition; (2) Industrial Specialties; and (3) Other. These reporting segments accurately reflect the underlying business dynamics and align with the strategic direction of the Company.

During the second quarter of 2019, the Company adjusted the EBITDA allocation for certain transactions to align it with the underlying business. As a result, EBITDA in the Other segment decreased by $1.4 million with corresponding increases to Food, Health and Nutrition of $1.0 million and Industrial Specialties of $0.4 million.

Three months ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	105,174	$	73,141	$	11,034	$	189,349
EBITDA	$	14,791	$	8,861	$	792	$	24,444
Depreciation and amortization expense	$	6,959	$	3,768	$	403	$	11,130
Three months ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	115,132	$	65,667	$	16,135	$	196,934
EBITDA	$	14,563	$	8,885	$	2,424	$	25,872
Depreciation and amortization expense	$	7,142	$	3,153	$	569	$	10,864
Nine Months Ended September 30, 2019	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	326,783	$	204,064	$	34,954	$	565,801
EBITDA	$	48,758	$	23,891	$	3,833	$	76,482
Depreciation and amortization expense	$	20,128	$	10,714	$	934	$	31,776
Nine Months Ended September 30, 2018	Food, Health and Nutrition		Industrial Specialties		Other		Total
Net sales	$	367,159	$	195,767	$	46,173	$	609,099
EBITDA	$	48,494	$	26,772	$	2,987	$	78,253
Depreciation and amortization expense	$	21,677	$	10,257	$	1,383	$	33,317

A reconciliation of net income to EBITDA follows:

	Three months ended
	September 30, 2019		September 30, 2018
Net income	$	6,451	$	14,090
Provision for income taxes	2,873		(2,510		)
Interest expense, net	3,990		3,428
Depreciation and amortization	11,130		10,864
EBITDA	$	24,444	$	25,872
	Nine months ended
	September 30, 2019		September 30, 2018
Net income	$	16,546	$	31,251
Provision for income taxes	16,580		4,155
Interest expense, net	11,580		9,530
Depreciation and amortization	31,776		33,317
EBITDA	$	76,482	$	78,253

XML

Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective income tax rate on income before taxes was approximately 50% for the nine months ended September 30, 2019 compared to approximately 12% for the comparable period in 2018. The change in the components of the effective tax rate is primarily due to the prior year enactment of the U.S.Tax Cuts and Jobs Act (the "Tax Act"), specifically the revision of the transition tax estimate, and the remeasurement of Net Operating Losses ("NOLs") used to offset the transition tax. These prior year revisions reduced the prior year effective income tax rate by 18%. In 2019, the Dutch income tax matter described below resulted in $6.3 million of expense which increased the effective tax rate by 19%. See Note 14 for further information.

Business is conducted in various countries throughout the world and is subject to tax in numerous jurisdictions. A significant number of tax returns are filed and subject to examination by various federal, state and local tax authorities. Tax

examinations are often complex, as tax authorities may disagree with the treatment of items reported requiring several years to resolve. As such, the Company maintains liabilities for possible assessments by tax authorities resulting from known tax exposures for uncertain income tax positions. The Company’s policy is to accrue associated penalties in selling, general and administrative expenses and to accrue interest in net interest expense. Currently, the Company is under examination, or has been contacted for examination on income tax returns, for the years 2014 through 2017. During the quarter ended September 30, 2019, the Company's liability for unrecognized tax benefits was unchanged. The Company estimates the liability for unrecognized tax benefits will not change during the next twelve months. Other than the items mentioned above, as of September 30, 2019, no material adjustments have been proposed to the Company's tax positions and the Company currently does not anticipate any adjustments that would result in a material change to its financial position during the next twelve months.

Income taxes paid were $19.7 million and $16.6 million for the nine months ended September 30, 2019 and September 30, 2018, respectively.