Financial Information by Segment

3 Months Ended

Mar. 31, 2020

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 percent of revenue recognized in each of the Company’s reportable segment:


	Three Months Ended March 31,
	2020		2019
Rubber	64	%	66	%
Specialty	36	%	34	%

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 three months ended March 31, 2020 and 2019:


	Rubber		Specialties		Corporate		Total segments
	(In thousands)
2020
Net sales from external customers	$	216,228	$	119,779	$	—	$	336,007
Adjusted EBITDA	$	35,768	$	28,076	$	—	$	63,844
Corporate charges	—		—		(2,323)		(2,323)
Depreciation and amortization of intangible assets and property, plant and equipment	(15,293)		(8,552)		—		(23,845)
Excluding equity in earnings of affiliated companies, net of tax	(133)		—		—		(133)
Income from operations before income tax expense and finance costs	20,342		19,524		(2,323)		37,543
Interest and other financial expense, net	—		—		(9,610)		(9,610)
Reclassification of actuarial losses from AOCI	—		—		(2,398)		(2,398)
Income tax expense	—		—		(7,635)		(7,635)
Equity in earnings of affiliated companies, net of tax	133		—		—		133
Net income							$	18,032

2019
Net sales from external customers	$	253,128	$	131,586	$	—	$	384,714
Adjusted EBITDA	$	35,165	$	29,402	$	—	$	64,567
Corporate charges	—		—		(5,636)		(5,636)
Depreciation and amortization of intangible assets and property, plant and equipment	(13,765)		(10,330)		—		(24,095)
Excluding equity in earnings of affiliated companies, net of tax	(137)		—		—		(137)
Income from operations before income tax expense and finance costs	21,263		19,072		(5,636)		34,699
Interest and other financial expense, net	—		—		(6,443)		(6,443)
Reclassification of actuarial losses from AOCI	—		—		—		—
Income tax expense	—		—		(9,439)		(9,439)
Equity in earnings of affiliated companies, net of tax	137		—		—		137
Net income							$	18,954

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:


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Restructuring expenses/(income)	$	—	$	89
Consulting fees related to Company strategy	—		916
Long Term Incentive Plan	(1,139)		3,553
EPA-related expense	2,589		718
Other non-operating	873		360
Expense from operations before income taxes and finance costs	$	2,323	$	5,636