SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2019

Human Nutrition & Health

The Company's Human Nutrition & Health ("HNH") segment provides human grade choline nutrients and mineral amino acid chelated products through this segment for wellness applications. Choline is recognized to play a key role in the development and structural integrity of brain cell membranes in infants, processing dietary fat, reproductive development and neural functions, such as memory and muscle function. The Company's mineral amino acid chelates, specialized mineral salts, and mineral complexes are used as raw materials for inclusion in premier human nutrition products. Proprietary technology has been combined to create an organic molecule in a form the body can readily assimilate. Sales growth for human nutrition applications is reliant on differentiation from lower-cost competitive products through scientific data, intellectual property and customer perceptions of brand value. Consequently, the Company makes investments in such activities for long-term value differentiation. This segment also serves the food and beverage industry for beverage, bakery, dairy, confectionary, and savory manufacturers. The Company partners with our customers from ideation through commercialization to bring on-trend beverages, baked goods, confections, dairy and meat products to market. The Company's expertise in trends analysis and product development, combined with manufacturing capabilities in customized spray dried and emulsified powders, blended lipid systems, liquid flavor delivery systems, juice and dairy bases, chocolate systems, as well as ice cream bases and variegates makes the Company a one-stop solutions provider for beverage and dairy product development needs. Additionally, this segment provides microencapsulation solutions to a variety of applications in food, pharmaceutical and nutritional ingredients to enhance performance of nutritional fortification, processing, mixing, and packaging applications and shelf-life. Major product applications are baked goods, refrigerated and frozen dough systems, processed meats,

seasoning blends, confections, and nutritional supplements. The Company also creates cereal systems for ready-to-eat cereals, grain-based snacks, and cereal based ingredients.

Animal Nutrition & Health

The Company’s Animal Nutrition & Health (“ANH”) segment provides nutritional products derived from its microencapsulation and chelation technologies in addition to basic choline chloride. For ruminant animals, the Company’s microencapsulated products boost health and milk production, delivering nutrient supplements that are biologically available, providing required nutritional levels. The Company’s proprietary chelation technology provides enhanced nutrient absorption for various species of production and companion animals and is marketed for use in animal feed throughout the world. ANH also manufactures and supplies choline chloride, an essential nutrient for monogastric animal health, predominantly to the poultry, pet and swine industries. Choline, which is manufactured and sold in both dry and aqueous forms, plays a vital role in the metabolism of fat. In poultry, choline deficiency can result in reduced growth rates and perosis in young birds, while in swine production choline is a necessary and required component of gestating and lactating sow diets for both liver health and prevention of leg deformity.

Sales of value-added encapsulated products are highly dependent on overall industry economics as well as the Company's ability to leverage the results of university and field research on the animal health and production benefits of our products. Management believes that success in the commodity-oriented basic choline chloride marketplace is highly dependent on the Company’s ability to maintain its strong reputation for excellent product quality and customer service. The Company continues to drive production efficiencies in order to maintain its competitive-cost position to effectively compete in a competitive global marketplace.

Specialty Products

Ethylene oxide, at the 100% level and blended with carbon dioxide, is sold as a sterilant gas, primarily for use in the health care industry. It is used to sterilize a wide range of medical devices because of its versatility and effectiveness in treating hard or soft surfaces, composites, metals, tubing and different types of plastics without negatively impacting the performance of the device being sterilized. The Company’s 100% ethylene oxide product and blends are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to. The Company’s inventory of these specially built drums and cylinders, along with its four filling facilities, represents a significant capital investment. Contract sterilizers and medical device manufacturers are principal customers for this product. The Company also sells single use canisters with 100% ethylene oxide for use in sterilizing re-usable devices typically processed in autoclave units in hospitals. As a fumigant, ethylene oxide blends are highly effective in killing bacteria, fungi, and insects in spices and other seasoning materials.

The Company also distributes a number of other gases for various uses, most notably propylene oxide and ammonia. Propylene oxide is marketed and sold in the U.S. as a fumigant to aid in the control of insects and microbiological spoilage; and to reduce bacterial and mold contamination in certain shell and processed nut meats, processed spices, cacao beans, cocoa powder, raisins, figs and prunes. The Company distributes its propylene oxide product in the U.S. primarily in recyclable, single-walled, carbon steel cylinders according to standards outlined by the EPA and the DOT. Propylene oxide is also sold worldwide to customers in approved reusable and recyclable drum and cylinder packaging for various chemical synthesis applications, such as increasing paint durability and manufacturing specialty starches and textile coatings. Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder drum and cylinder packaging approved for use in the countries these products are shipped to. The Company's inventory of cylinders for these products also represents a significant capital investment.

The Company’s micronutrient agricultural nutrition business sells chelated minerals primarily into high value crops. The Company has a unique and patented two-step approach to solving mineral deficiency in plants to optimize health, yield and shelf-life. First, the Company determines optimal mineral balance for plant health. The Company then has a foliar applied Metalosate product range, utilizing patented amino acid chelate technology. Its products quickly and efficiently deliver mineral nutrients. As a result, the farmer/grower gets healthier crops that are more resistant to disease and pests, larger yields and healthier food for the consumer with extended shelf life for produce being shipped long distances.

Industrial Products

Certain derivatives of choline chloride are manufactured and sold into industrial applications predominately as a component for hydraulic fracturing of shale natural gas wells. The Company’s products offer an attractive, effective and more environmentally responsible alternative than other clay stabilizers. Industrial grade choline bicarbonate is completely chloride free and the Company's choline chloride reduces the amount of chlorides released into the environment up to 75% when compared to potassium chloride. The Industrial Products segment also includes the manufacture and sale of methylamines. Methylamines are a primary building block for the manufacture of choline products and are produced at its Italian operation and sold for a wide range of industrial applications in Europe.

The segment information is summarized as follows:

Business Segment Assets



	September 30, 2019		December 31, 2018
Human Nutrition & Health	$	692,558	$	702,692
Animal Nutrition & Health	136,680		136,810
Specialty Products	182,002		59,558
Industrial Products	15,590		22,822
Other Unallocated ⁽¹⁾	69,798		59,473
Total	$	1,096,628	$	981,355

⁽¹⁾ Other unallocated assets consist of certain cash, capitalized loan issuance costs, other assets, investments, and deferred income taxes, which the Company does not allocate to its individual business segments.

Business Segment Net Sales



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Human Nutrition & Health	$	86,142	$	85,890	$	257,163	$	253,966
Animal Nutrition & Health	42,286		40,410		129,127		128,587
Specialty Products	24,888		17,629		68,219		58,233
Industrial Products	5,279		11,114		22,669		39,354
Total	$	158,595	$	155,043	$	477,178	$	480,140

Business Segment Earnings Before Income Taxes



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Human Nutrition & Health	$	13,193		$	13,107		$	39,234		$	35,724
Animal Nutrition & Health	6,122			5,100			16,423			19,607
Specialty Products	6,699			5,767			22,275			19,476
Industrial Products	842			1,751			3,390			6,843
Transaction and integration costs, ERP implementation costs, and unallocated legal fees ⁽²⁾	(688		)	(202		)	(2,253		)	(1,784		)
Unallocated amortization expense ⁽³⁾	(138		)	—			(157		)	—
Interest and other (expense) ⁽⁴⁾	(1,594		)	(1,994		)	(4,802		)	(6,099		)
Total	$	24,436		$	23,529		$	74,110		$	73,767

⁽²⁾ Transaction and integration costs and unallocated legal fees for the three and nine month ended September 30, 2019 and 2018, respectively, were primarily related to acquisitions. ERP implementation costs for the three and nine months ended September 30, 2019 and 2018 were related to a project in connection with a company-wide ERP system implementation.
⁽³⁾ Unallocated amortization expense for the three and nine months ended September 30, 2019 was related to amortization of an intangible asset in connection with a company-wide ERP system implementation.
⁽⁴⁾ Interest and other (expense) for the three and nine months ended September 30, 2019 and 2018 included amortization expense related to capitalized loan issuance costs.

Depreciation/Amortization



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Human Nutrition & Health	$	7,411	$	8,372	$	22,880	$	25,288
Animal Nutrition & Health	1,646		1,397		4,847		3,996
Specialty Products	2,372		1,019		4,983		3,039
Industrial Products	116		176		406		527
Unallocated amortization expense ⁽⁵⁾	$	138	$	—	$	157	$	—
Amortization expense related to deferred financing cost ⁽⁶⁾	$	70	$	70	$	212	$	610
Total	$	11,753	$	11,034	$	33,485	$	33,460

⁽⁵⁾ Unallocated amortization expense for the three and nine months ended September 30, 2019 was related to amortization of an intangible asset in connection with a company-wide ERP system implementation.
⁽⁶⁾ Amortization expense related to capitalized loan issuance costs was included in interest and other (expense) in Company's condensed consolidated statement of earnings.

Capital Expenditures



	Nine Months Ended September 30,
	2019		2018
Human Nutrition & Health	$	14,136	$	6,041
Animal Nutrition & Health	2,788		3,002
Specialty Products	2,050		1,376
Industrial Products	583		909
Total	$	19,557	$	11,328