Financial Information by Segment & Geographic Area

12 Months Ended

Dec. 31, 2019

Financial Information by Segment & Geographic Area

Segment information

The Company’s business is organized by its two carbon black product types. For corporate management purposes and all periods presented the Company had Rubber Carbon Black and Specialty Carbon Black as reportable operating segments. Rubber carbon black is used in the reinforcement of rubber in tires and mechanical rubber goods, Specialties are used as pigments and performance additives in coatings, polymers, printing and special applications.

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segment:


	2019		2018		2017
Rubber	66	%	65	%	64	%
Specialty	34	%	35	%	36	%

The senior management team, which is composed of the CEO, CFO and certain other senior management members is the chief operating decision maker (“CODM”). The senior management team monitors the operating segments’ results separately in order to facilitate decisions regarding the allocation of resources and determine the segments’ performance. Orion uses Adjusted EBITDA as the segments' performance measure. The CODM does not review reportable segment asset or liability information for purposes of assessing performance or allocating resources.

Adjustment items are not allocated to the individual segments as they are managed on a group basis.

Segment reconciliation for the years ended December 31, 2019, 2018 and 2017:


	Rubber		Specialties		Corporate and other		Total segments
	(In thousands)
2019
Net sales from external customers	$	967,899	$	508,454	$	—	$	1,476,353
Adjusted EBITDA	$	145,170	$	122,167	$	—	$	267,337
Corporate charges	—		—		(22,916)		(22,916)
Depreciation and amortization of intangible assets and property, plant and equipment	(58,645)		(38,067)		—		(96,713)
Excluding equity in earnings of affiliated companies, net of tax	(558)		—		—		(558)
Income from operations before income tax expense and finance costs	85,967		84,100		(22,916)		147,151
Interest and other financial expense, net	—		—		(27,572)		(27,572)

Income tax expense	—		—		(33,216)		(33,216)
Equity in earnings of affiliated companies, net of tax	558		—		—		558
Net income							$	86,920
Assets	$	696,516	$	417,834	$	143,043	$	1,257,394
Total expenditures for additions to long-lived assets	$	132,556	$	26,147	$	—	$	158,703
2018
Net sales from external customers	$	1,032,818	$	545,385	$	—	$	1,578,203
Adjusted EBITDA	$	144,887	$	149,255	$	—	$	294,142
Corporate charges	—		—		910		910
Depreciation and amortization of intangible assets and property, plant and equipment	(57,127)		(41,029)		—		(98,156)
Excluding equity in earnings of affiliated companies, net of tax	(591)		—		—		(591)
Income from operations before income tax expense and finance costs	87,169		108,226		910		196,305
Interest and other financial expense, net	—		—		(28,642)		(28,642)

Income tax expense	—		—		(46,944)		(46,944)
Equity in earnings of affiliated companies, net of tax	591		—		—		591
Net income							$	121,310
Assets	$	685,243	$	436,337	$	151,442	$	1,273,022
Total expenditures for additions to long-lived assets	$	67,885	$	43,171	$	—	$	111,057
2017
Net sales from external customers	$	849,410	$	478,887	$	—	$	1,328,297
Adjusted EBITDA	$	111,490	$	145,488	$	—	$	256,978
Corporate charges	—		—		(20,204)		(20,204)
Depreciation and amortization of intangible assets and property, plant and equipment	(60,403)		(37,953)		—		(98,356)
Excluding equity in earnings of affiliated companies, net of tax	(547)		—		—		(547)
Income from operations before income tax expense and finance costs	50,540		107,535		(20,204)		137,871
Interest and other financial expense, net	—		—		(44,135)		(44,135)
Reclassification of actuarial losses from AOCI	—		—		(9,687)		(9,687)
Income tax expense	—		—		(19,736)		(19,736)
Equity in earnings of affiliated companies, net of tax	547		—		—		547
Net income							$	64,860
Assets	$	610,782	$	357,492	$	196,092	$	1,164,366
Total expenditures for additions to long-lived assets	$	52,584	$	46,397	$	—	$	98,981

The sales information noted above relates to external customers only. ‘Corporate and other’ includes income and expense that cannot be directly allocated to the business segments or are managed on corporate level and includes finance income and expenses, taxes and items with less bearing on the underlying core business.

Income from operations before income taxes and finance costs of the segment 'Corporate and other' comprises the following:


	2019		2018		2017
	(In thousands)
Restructuring expenses/(income)	$	3,628	$	(24,633)	$	6,492
Consulting fees related to Company strategy	3,005		4,804		2,807
Long Term Incentive Plan	9,438		13,919		8,835
Other non-operating	6,844		5,000		2,070
Expenses/(income) from operations before income taxes and finance costs	$	22,916	$	(910)	$	20,204

Geographic information


Net sales	Years Ended December 31,
			2019			2018			2017
			(In thousands)
Germany	$	593,769		$	628,709		$	524,065
United States	394,349			401,935			330,424
South Korea	241,235			279,016			246,551
Brazil	94,541			95,611			80,143
China	63,149			75,638			64,645
South Africa	54,746			56,373			46,844
Other	23,601			24,293			23,129
Rest of Europe ⁽¹⁾	10,964			16,628			12,496
Total	$	1,476,353		$	1,578,203		$	1,328,297

⁽¹⁾ Only a holding company is located in Luxembourg, accordingly no revenue is generated in the country of domicile.

Revenue generated for the year ended December 31, 2019 from the largest customer in the “Rubber” segment amounted to $195.6 million. Revenue from the largest customer in the “Rubber” segment for the year ended December 31, 2018 was $201.7 million and for the year ended December 31, 2017 revenue from the largest customer in the “Rubber” segment was $144.4 million, respectively. There is each another customer with more than, or equal to 10% of revenue for the period 2019 and 2018.


Long-lived tangible assets⁽¹⁾	December 31
			2019			2018
			(In thousands)
Germany	$	81,388		$	104,823
Sweden	26,419			26,351
Italy	43,547			29,586
Poland	12,148			12,964
Rest of Europe ⁽²⁾	6,179			5,815
Subtotal Europe	169,681			179,539
United States	220,200			139,929
South Korea	112,303			115,036
South Africa	15,983			16,894
Brazil	23,662			21,395
China	19,655			10,719
Other	100			22
Total	$	561,585		$	483,534

⁽¹⁾ Long-lived assets include property. plant and equipment, net.

⁽²⁾ Only a holding company is located in Luxembourg, accordingly no revenue is generated in the country of domicile.