Segment Information

6 Months Ended

Jun. 30, 2017

Segment Information

Segment Information

13.  Segment Information

In conjunction with the acquisition of the New Business, management undertook a planning process which included reviewing how the Company compiles and reports financial information for review by the Company’s chief operating decision maker (CODM) to assess performance and allocate resources.  Beginning January 1, 2017, the Company realigned its internal management reporting structure to incorporate the New Business into the existing business, and reorganized its current reportable segments.  The realigned internal management reporting structure resulted in three new reportable segments for review by the CODM.  Beginning January 1, 2017, the Company’s CODM, its chief executive officer, receives and reviews financial information in this format.  The Company is reporting its results using the new reportable segment structure and has restated prior periods to conform to the change in reportable segments.  Those segments are Activated Carbon, Advanced Water Purification, and Alternative Materials.

The manufacturing and marketing of granular and powdered wood-based activated carbon and coal-based activated carbon reactivation portions of the New Business were combined with the existing Activated Carbon and Service segment and renamed the Activated Carbon segment.  In addition, sales of carbon adsorption equipment and associated costs previously reported in the Equipment segment were combined into the new Activated Carbon segment, as this activity is now aligned with the associated leasing of this same equipment.  Diatomaceous earth and perlite filtration media sales and associated costs of the New Business are being reported in the newly created Alternative Materials segment, which also includes the carbon cloth sales and associated costs that were previously reported in the Consumer segment.  The previously reported Equipment segment has been renamed the Advanced Water Purification segment, and now excludes any carbon related equipment sales.  In addition, some product sales and services related to the ultraviolet light and advanced ion exchange separation technologies that were previously included in the Activated Carbon and Service segment are all now reported in the Advanced Water Purification segment.

The Activated Carbon segment manufactures and markets granular and powdered activated carbon for use in applications to remove organic compounds from liquids, gases, water, and air.  This segment also consists of activities related to activated carbon including reactivation of spent carbon and the sale or leasing of related equipment, and maintenance at customer sites.  The Alternative Materials segment supplies diatomaceous earth and perlite filtration media for use in applications for decolorization, purification, decontamination, and filtration of liquids in various applications including food and beverage, industrial and pharmaceuticals, as well as carbon cloth for use in military, industrial, and medical applications.  The Advanced Water Purification segment provides solutions to customers’ water process problems through the design, fabrication, and operation of systems, as well as the sale of materials and services that utilize the Company’s enabling technologies: ultraviolet light and advanced ion exchange separation.  Intersegment net sales are not material.

The following segment information represents the results of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net sales
Activated Carbon	$	135,677	$	123,515	$	261,908	$	233,498
Alternative Materials		12,930		2,644		25,778		5,129
Advanced Water Purification		4,391		6,438		8,015		14,169
Consolidated net sales	$	152,998	$	132,597	$	295,701	$	252,796
Income (loss) from operations
Activated Carbon	$	11,509	$	12,526	$	20,030	$	21,220
Alternative Materials		567		395		(237)		822
Advanced Water Purification		(1,055)		(750)		(2,874)		(1,408)
		11,021		12,171		16,919		20,634
Reconciling items:
Interest income		26		29		32		35
Interest expense		(2,021)		(228)		(3,535)		(561)
Other income (expense) — net		5		(20)		505		203
Income before income tax provision	$	9,031	$	11,952	$	13,921	$	20,311
Depreciation and amortization
Activated Carbon	$	10,388	$	8,941	$	20,568	$	17,236
Alternative Materials		1,356		163		2,625		303
Advanced Water Purification		256		357		595		697
	$	12,000	$	9,461	$	23,788	$	18,236

As a result of the change in the segments, a portion of goodwill previously included in the Activated Carbon segment related to the ion exchange business was reassigned to the Advanced Water Purification segment.  As of June 30, 2017, goodwill balances were $42.1 million in the Activated Carbon segment, $18.4 million in the Alternative Materials segment, and $12.0 million in the Advanced Water Purification segment.  During the six months ended June 30, 2017, goodwill increased by $1.5 million and $1.1 million in the Activated Carbon and Alternative Materials segments, respectively, as a result of post-closing adjustments made during the measurement period relating to the New Business acquisition.  Additional fluctuations in the goodwill balance since December 31, 2016 reflect the effect of foreign currency translation.

Segment assets, which are reviewed by management, consist of the total of the net property, plant and equipment, intangibles, and goodwill balances on the Company’s condensed consolidated balance sheets as follows:

	June 30, 2017		December 31, 2016
Activated Carbon	$	407,890	$	387,117
Alternative Materials		73,558		67,394
Advanced Water Purification		19,052		18,790
Segment assets		500,500		473,301
Unallocated assets		320,116		301,917
Total assets	$	820,616	$	775,218