Financial Information by Segment

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Financial Information by Segment

Financial Information by Segment

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 September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Rubber	63	%	67	%	61	%	66	%
Specialty	37	%	33	%	39	%	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 September 30, 2020 and 2019:

	Rubber		Specialties		Corporate		Total segments
	(In thousands)
2020
Net sales from external customers	$	178,406	$	103,630	$	—	$	282,036
Adjusted EBITDA	$	28,525	$	26,477	$	—	$	55,002
Corporate charges	—		—		(6,714)		(6,714)
Depreciation and amortization of intangible assets and property, plant and equipment	(13,828)		(10,171)		—		(23,999)
Excluding equity in earnings of affiliated companies, net of tax	(141)		—		—		(141)
Income/(loss) from operations before income tax expense and finance costs	$	14,556	$	16,305	$	(6,714)	$	24,147
Interest and other financial expense, net	—		—		(10,769)		(10,769)
Reclassification of actuarial losses from AOCI	—		—		(2,272)		(2,272)
Income tax expense/(benefit)	—		—		(2,250)		(2,250)
Equity in earnings of affiliated companies, net of tax	141		—		—		141
Net income/(loss)							$	8,997
2019
Net sales from external customers	$	247,371	$	122,824	$	—	$	370,195
Adjusted EBITDA	$	38,097	$	29,957	$	—	$	68,054
Corporate charges	—		—		(7,543)		(7,543)
Depreciation and amortization of intangible assets and property, plant and equipment	(13,524)		(8,467)		—		(21,991)
Excluding equity in earnings of affiliated companies, net of tax	(134)		—		—		(134)
Income/(loss) from operations before income tax expense and finance costs	$	24,439	$	21,490	$	(7,543)	$	38,386
Interest and other financial expense, net	—		—		(6,500)		(6,500)
Reclassification of actuarial losses from AOCI	—		—		—		—
Income tax expense/(benefit)	—		—		(7,767)		(7,767)
Equity in earnings of affiliated companies, net of tax	134		—		—		134
Net income/(loss)							$	24,253

Segment reconciliation for the nine months ended September 30, 2020 and 2019:

	Rubber		Specialties		Corporate		Total segments
	(In thousands)
2020
Net sales from external customers	$	502,894	$	317,797	$	—	$	820,691
Adjusted EBITDA	$	63,060	$	71,024	$	—	$	134,084
Corporate charges	—		—		(15,125)		(15,125)
Depreciation and amortization of intangible assets and property, plant and equipment	(41,382)		(28,339)		—		(69,721)
Excluding equity in earnings of affiliated companies, net of tax	(426)		—		—		(426)
Income/(loss) from operations before income tax expense and finance costs	$	21,253	$	42,684	$	(15,125)	$	48,811
Interest and other financial expense, net	—		—		(28,657)		(28,657)
Reclassification of actuarial losses from AOCI	—		—		(7,325)		(7,325)
Income tax expense/(benefit)	—		—		(4,006)		(4,006)
Equity in earnings of affiliated companies, net of tax	426		—		—		426
Net income							$	9,250
2019
Net sales from external customers	$	760,230	$	393,695	$	—	$	1,153,925
Adjusted EBITDA	$	113,755	$	90,394	$	—	$	204,149
Corporate charges	—		—		(17,680)		(17,680)
Depreciation and amortization of intangible assets and property, plant and equipment	(41,502)		(29,988)		—		(71,490)
Excluding equity in earnings of affiliated companies, net of tax	(424)		—		—		(424)
Income/(loss) from operations before income tax expense and finance costs	$	71,829	$	60,406	$	(17,680)	$	114,555
Interest and other financial expense, net	—		—		(20,509)		(20,509)
Reclassification of actuarial losses from AOCI	—		—		—		—
Income tax expense/(benefit)	—		—		(26,515)		(26,515)
Equity in earnings of affiliated companies, net of tax	424		—		—		424
Net income							$	67,955

The sales information noted above relates to external customers only. ‘Corporate’ 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' comprises the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)
Restructuring expenses	$	—	$	2,710	$	—	$	3,833
Consulting fees related to Company strategy	—		(674)		—		831
Extraordinary expense items related to COVID-19	822		—		3,548		—
Long Term Incentive Plan	1,182		2,025		1,242		7,137
EPA-related expenses	1,487		1,549		5,053		2,957
Other non-operating	3,222		1,933		5,283		2,922
Expense from operations before income taxes and finance costs	$	6,714	$	7,543	$	15,125	$	17,680