Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2020 |
Document Transition Report | false |
Entity File Number | 1-16091 |
Entity Registrant Name | POLYONE CORP |
Entity Incorporation, State or Country Code | OH |
Entity Tax Identification Number | 34-1730488 |
Entity Address, Address Line One | 33587 Walker Road |
Entity Address, City or Town | Avon Lake |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 44012 |
City Area Code | 440 |
Local Phone Number | 930-1000 |
Title of 12(b) Security | Common Shares, par value $.01 per share |
Trading Symbol | POL |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 91,397,264 |
Entity Central Index Key | 0001122976 |
Amendment Flag | false |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Sales | $ 711.5 | $ 750.6 |
Cost of sales | 540 | 582.5 |
Gross margin | 171.5 | 168.1 |
Selling and administrative expense | 118.7 | 121 |
Operating income | 52.8 | 47.1 |
Interest expense, net | (9.4) | (15.9) |
Other income, net | 1.6 | 0.1 |
Income from continuing operations before income taxes | 45 | 31.3 |
Income tax expense | (11.9) | (8.8) |
Net income from continuing operations | 33.1 | 22.5 |
(Loss) income from discontinued operations, net of income taxes | (0.3) | 15.8 |
Net income | 32.8 | 38.3 |
Net income attributable to noncontrolling interests | 0 | (0.1) |
Net income attributable to PolyOne common shareholders | $ 32.8 | $ 38.2 |
Earnings per share attributable to PolyOne common shareholders - Basic: | ||
Continuing operations (in USD per share) | $ 0.38 | $ 0.29 |
Discontinued operations (in USD per share) | 0 | 0.20 |
Total (in USD per share) | 0.38 | 0.49 |
Earnings per share attributable to PolyOne common shareholders - Diluted: | ||
Continuing operations (in USD per share) | 0.38 | 0.29 |
Discontinued operations (in USD per share) | 0 | 0.20 |
Total (in USD per share) | $ 0.38 | $ 0.49 |
Weighted-average shares used to compute earnings per common share: | ||
Basic (in shares) | 86.3 | 77.8 |
Plus dilutive impact of share-based compensation (in shares) | 0.4 | 0.4 |
Diluted (in shares) | 86.7 | 78.2 |
Anti-dilutive shares not included in diluted common shares outstanding (in shares) | 0.8 | 0.9 |
Cash dividends declared per share of common stock (in USD per share) | $ 0.2025 | $ 0.1950 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 32.8 | $ 38.3 |
Other comprehensive (loss) income, net of tax: | ||
Translation adjustments and related hedging instruments | (7.3) | 4.2 |
Cash flow hedges | (3.4) | (1) |
Total other comprehensive (loss) income | (10.7) | 3.2 |
Total comprehensive income | 22.1 | 41.5 |
Comprehensive income attributable to noncontrolling interests | 0 | (0.1) |
Comprehensive income attributable to PolyOne common shareholders | $ 22.1 | $ 41.4 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,280.2 | $ 864.7 |
Accounts receivable, net | 382.4 | 330 |
Inventories, net | 271.1 | 260.9 |
Other current assets | 56.9 | 57.7 |
Total current assets | 1,990.6 | 1,513.3 |
Property, net | 400.8 | 407.4 |
Goodwill | 684.2 | 685.7 |
Intangible assets, net | 461.4 | 469.3 |
Operating lease assets, net | 58.9 | 63.8 |
Other non-current assets | 146.8 | 133.8 |
Total assets | 3,742.7 | 3,273.3 |
Current liabilities: | ||
Short-term and current portion of long-term debt | 18.2 | 18.4 |
Accounts payable | 329.6 | 287.7 |
Current operating lease obligations | 19.6 | 21 |
Accrued expenses and other current liabilities | 320.4 | 375.4 |
Total current liabilities | 687.8 | 702.5 |
Non-current liabilities: | ||
Long-term debt | 1,209.7 | 1,210.9 |
Pension and other post-retirement benefits | 55.9 | 56.6 |
Non-current operating lease obligations | 39.3 | 42.8 |
Other non-current liabilities | 211.4 | 207.8 |
Total non-current liabilities | 1,516.3 | 1,518.1 |
SHAREHOLDERS' EQUITY | ||
PolyOne shareholders’ equity | 1,538.6 | 1,051.9 |
Noncontrolling interest | 0 | 0.8 |
Total equity | 1,538.6 | 1,052.7 |
Total liabilities and equity | $ 3,742.7 | $ 3,273.3 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities | ||
Net income | $ 32.8 | $ 38.3 |
Adjustments to reconcile net income to net cash used by operating activities: | ||
Depreciation and amortization | 19.9 | 23.3 |
Share-based compensation expense | 2.1 | 2.5 |
Changes in assets and liabilities, net of the effect of acquisitions: | ||
Increase in accounts receivable | (56.9) | (53) |
Increase in inventories | (13) | (12) |
Increase in accounts payable | 44.6 | 1.2 |
Decrease in pension and other post-retirement benefits | (3.2) | (1.9) |
Increase in post-acquisition earnout liabilities | 1 | 0 |
Decrease in accrued expenses and other assets and liabilities, net | (19.1) | (23.1) |
Payment of post-acquisition date earnout liability | (21) | 0 |
Net cash used by operating activities | (12.8) | (24.7) |
Investing Activities | ||
Capital expenditures | (11.1) | (9.9) |
Business acquisitions, net of cash acquired | 0 | (119.6) |
Net proceeds from divestiture | 7.1 | 0 |
Net proceeds from other assets | 5.2 | 1.6 |
Net cash provided (used) by investing activities | 1.2 | (127.9) |
Financing Activities | ||
Borrowings under credit facilities | 0 | 374.7 |
Repayments under credit facilities | 0 | (269.2) |
Purchase of common shares for treasury | (13.6) | 0 |
Cash dividends paid | (15.6) | (15.6) |
Repayment of long-term debt | (2) | (1.6) |
Payments of withholding tax on share awards | (1.3) | (1.3) |
Proceeds from equity offering, net of underwriting discount and issuance costs | 496.3 | 0 |
Payment of acquisition date earnout liability | (32.9) | 0 |
Net cash provided by financing activities | 430.9 | 87 |
Effect of exchange rate changes on cash | (3.8) | 3 |
Increase (decrease) in cash and cash equivalents | 415.5 | (62.6) |
Cash and cash equivalents at beginning of year | 864.7 | 170.9 |
Cash and cash equivalents at end of period | $ 1,280.2 | $ 108.3 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Millions | Total | Total PolyOne shareholders' equity | Common Shares | Common Shares Held in Treasury | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Non-controlling Interests | ||||
Beginning balance at Dec. 31, 2018 | $ 540.6 | $ 540 | $ 1.2 | $ (1,018.7) | $ 1,166.9 | $ 472.9 | $ (82.3) | $ 0.6 | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 122,200 | |||||||||||
Beginning balance, Treasury shares (in shares) at Dec. 31, 2018 | (44,500) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 38.3 | 38.2 | 38.2 | 0.1 | ||||||||
Other comprehensive gain (loss) | 3.2 | 3.2 | 3.2 | |||||||||
Cash dividends declared | [1] | (14.8) | (14.8) | (14.8) | ||||||||
Share-based compensation and exercise of awards | 1.6 | 1.6 | $ 1.1 | 0.5 | ||||||||
Share-based compensation and exercise of awards (in shares) | 100 | |||||||||||
Ending balance at Mar. 31, 2019 | 568.9 | 568.2 | $ 1.2 | $ (1,017.6) | 1,167.4 | 496.3 | (79.1) | 0.7 | ||||
Ending balance (in shares) at Mar. 31, 2019 | 122,200 | |||||||||||
Ending balance, Treasury shares (in shares) at Mar. 31, 2019 | (44,400) | |||||||||||
Beginning balance at Dec. 31, 2019 | 1,052.7 | 1,051.9 | $ 1.2 | $ (1,043.1) | 1,175.2 | 1,001.2 | (82.6) | 0.8 | ||||
Beginning balance (in shares) at Dec. 31, 2019 | 122,200 | |||||||||||
Beginning balance, Treasury shares (in shares) at Dec. 31, 2019 | (45,300) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 32.8 | 32.8 | 32.8 | 0 | ||||||||
Other comprehensive gain (loss) | (10.7) | (10.7) | (10.7) | |||||||||
Noncontrolling interest activity | (0.8) | (0.8) | ||||||||||
Cash dividends declared | (18.7) | [2] | (18.7) | [2] | (18.7) | [1] | ||||||
Repurchase of common shares | (13.6) | (13.6) | $ (13.6) | |||||||||
Repurchase of common shares (in shares) | (1,000) | |||||||||||
Common shares equity offering | 496.1 | 496.1 | $ 0.2 | $ 161.3 | 334.6 | |||||||
Common shares equity offering (in shares) | 15,300 | |||||||||||
Share-based compensation and exercise of awards | 1.1 | 1.1 | $ 1.6 | (0.5) | ||||||||
Share-based compensation and exercise of awards (in shares) | 200 | |||||||||||
Ending balance at Mar. 31, 2020 | $ 1,538.6 | $ 1,538.6 | $ 1.4 | $ (893.8) | $ 1,509.3 | $ 1,015 | $ (93.3) | $ 0 | ||||
Ending balance (in shares) at Mar. 31, 2020 | 122,200 | |||||||||||
Ending balance, Treasury shares (in shares) at Mar. 31, 2020 | (30,800) | |||||||||||
[1] | (1) Dividends declared per share were $0.1950 for the period ending March 31, 2019. | |||||||||||
[2] | (1) Dividends declared per share were $0.2025 for the period ended March 31, 2020. |
Statement of Shareholders' Equi
Statement of Shareholders' Equity (Parenthetical) $ in Millions | Jan. 01, 2020USD ($) | |
ASU 2016-13 | ||
Cumulative effect adjustment | $ (0.3) | [1] |
[1] | (2) In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires companies to immediately recognize an estimate of the credit losses that are expected to occur over the life of certain financial instruments. We recognized a cumulative-effect adjustment of $0.3 million to beginning retained earnings upon adoption of this standard on January 1, 2020. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal, recurring and necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2019 of PolyOne Corporation. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “PolyOne” and the “Company” mean PolyOne Corporation and its consolidated subsidiaries. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2020. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations . Accounting Standards Adopted On January 1, 2020, the Company adopted ASU 2016-13. ASU 2016-13 changed the impairment model for most financial instruments. Previous guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company is required to use a current expected credit loss (CECL) model that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of the update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. The adoption of ASU 2016-13 resulted in a cumulative-effect adjustment to beginning retained earnings that was not material. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | On December 19, 2019, we entered into a definitive share purchase agreement (the Agreement) with Clariant AG, a corporation organized and existing under the laws of Switzerland (Clariant), and through one of our wholly owned subsidiaries, a definitive business transfer agreement (the BTA), with Clariant Chemicals (India) Limited, a public limited company incorporated in India and an indirect majority-owned subsidiary of Clariant (Clariant India). Pursuant to the Agreement, we have agreed to acquire Clariant’s global masterbatch business outside of India, and pursuant to the BTA, we have agreed to purchase Clariant India’s masterbatch business, for a net purchase price of $1.45 billion in cash, subject to customary working capital and net debt adjustments (the businesses are collectively referred to as Clariant Masterbatch (or MB) and the acquisitions are collectively referred to as the Clariant MB Acquisition). Each of the Agreement and the BTA contain certain customary termination rights, and, with respect to the Agreement only, the requirement that PolyOne pay a termination fee in the event the Agreement is terminated under certain conditions. The closing of each acquisition is expected to occur in 2020, subject to the receipt of regulatory approvals, the satisfaction or waiver of customary closing conditions and, in the case of the Clariant India masterbatch acquisition, shareholder approval of Clariant India, which occurred in February. In connection with the Clariant MB Acquisition, on December 19, 2019, we entered into a Commitment Letter with a number of banks (the Commitment Parties), pursuant to which the Commitment Parties have provided a 12-month commitment for a $1.15 billion senior unsecured bridge loan facility (the Bridge Facility) for purposes of funding the Clariant MB Acquisition. The Commitment Parties’ commitments under the Bridge Facility were subsequently reduced on a dollar-for-dollar basis by the net proceeds from the issuance of common shares described below. The Company currently intends to issue new senior unsecured notes in lieu of borrowing under the Bridge Facility. We intend to use (i) a portion of the net proceeds from the sale of our Performance Products and Solutions segment (PP&S), (ii) the net proceeds from the issuance of common shares in an underwritten public offering that we completed in February 2020 and (iii) the net proceeds of an anticipated senior unsecured notes offering to finance the Clariant MB Acquisition, including the payment of related fees and expenses. Our acquisitions of PlastiComp, Inc. (PlastiComp) on May 31, 2018 and Fiber-Line, LLC (Fiber-Line) on January 2, 2019 involve contingent earnout consideration. The PlastiComp earnout has a ceiling of $35.0 million, which was reached during the first quarter of 2020 and is reflected within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The Fiber-Line earnout was paid in the first quarter of 2020. During the three months ended March 31, 2020, earnout charges of $1.0 million were recorded within Selling and administrative expense on the Condensed Consolidated Statements of Income, primarily attributable to improved earnings from the acquisitions. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | On October 25, 2019, PolyOne divested its PP&S segment to SK Echo Group S.à r.l.. We received total proceeds from the divestiture of $768.9 million, which were net of cash transaction costs and includes a working capital adjustment of $7.1 million received in the first quarter of 2020. Upon completion of the transaction, we recognized an after-tax gain of $457.7 million during 2019, which is included in the (Loss) income from discontinued operations, net of income taxes line of the Condensed Consolidated Statements of Income. PolyOne has continuing involvement with the former PP&S business following the close of the transaction. The Company entered into a four-year distribution agreement with the former PP&S business to be the exclusive distributor for certain products, under terms that were similar prior to the disposal transaction. PolyOne and the former PP&S business have also entered into contract manufacturing and supply agreements for certain products for a two-year period. The following table summarizes the major line items constituting pretax income of discontinued operations associated with PP&S for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Sales $ — $ 149.3 Cost of sales — (121.1) Selling and administrative expense (0.4) (6.9) (Loss) income of discontinued operations before income taxes (0.4) 21.3 Income tax expense 0.1 (5.5) (Loss) income from discontinued operations, net of income taxes $ (0.3) $ 15.8 The following table presents the depreciation, amortization, and capital expenditures of our discontinued operations for the three months ended March 31, 2019. No such amounts were recorded for the three months ended March 31, 2020. (In millions) Three Months Ended March 31, 2019 Depreciation and amortization $ 3.8 Capital Expenditures 2.5 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | Goodwill as of March 31, 2020 and December 31, 2019 and changes in the carrying amount of goodwill by segment were as follows: (In millions) Specialty Engineered Materials Color, Additives and Inks PolyOne Distribution Total Balance at December 31, 2019 $ 236.3 $ 447.8 $ 1.6 $ 685.7 Currency translation (1.0) (0.5) — (1.5) Balance at March 31, 2020 $ 235.3 $ 447.3 $ 1.6 $ 684.2 Indefinite and finite-lived intangible assets consisted of the following: As of March 31, 2020 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (92.6) $ (1.2) $ 193.0 Patents, technology and other 244.0 (83.4) (1.7) 158.9 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (176.0) $ (2.9) $ 461.4 As of December 31, 2019 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (89.1) $ (1.0) $ 196.7 Patents, technology and other 244.0 (79.6) (1.3) 163.1 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (168.7) $ (2.3) $ 469.3 |
Leasing Arrangements
Leasing Arrangements | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASING ARRANGEMENTS | We lease certain manufacturing facilities, warehouse space, machinery and equipment, vehicles and information technology equipment under operating leases. The majority of our leases are operating leases. Finance leases are immaterial to our condensed consolidated financial statements. Operating lease assets and obligations are reflected within Operating lease assets, net, Current operating lease obligations, and Non-current operating lease obligations, respectively, on the Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost from continued operations recognized within our Condensed Consolidated Statements of Income were as follows: (In millions) Condensed Consolidated Statements of Income Location Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Lease cost: Operating lease cost Cost of sales $ 1.8 $ 2.7 Operating lease cost Selling and administrative expense 4.0 3.1 Other (1) Selling and administrative expense 0.8 0.1 Total operating lease cost $ 6.6 $ 5.9 (1) Other lease costs include short-term lease costs and variable lease costs We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of March 31, 2020 and 2019 was 3.9 and 4.2 years, respectively. The discount rate implicit within our leases is generally not determinable and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rates used to measure our operating lease liabilities as of March 31, 2020 and 2019 was 4.1% and 5.3%, respectively. Maturity Analysis of Lease Liabilities: As of March 31, 2020 (In millions) Operating Leases 2020 $ 17.6 2021 16.5 2022 11.9 2023 8.0 2024 4.3 Thereafter 7.7 Total lease payments 66.0 Less amount of lease payment representing interest (7.1) Total present value of lease payments $ 58.9 |
Inventories, Net
Inventories, Net | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | Components of Inventories, net are as follows: (in millions) As of March 31, 2020 As of December 31, 2019 Finished products $ 165.1 $ 157.6 Work in process 9.5 8.0 Raw materials and supplies 96.5 95.3 Inventories, net $ 271.1 $ 260.9 |
Property, Net
Property, Net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, NET | Components of Property, net are as follows: (in millions) As of March 31, 2020 As of December 31, 2019 Land and land improvements $ 32.3 $ 32.8 Buildings 232.1 231.8 Machinery and equipment 745.7 748.9 Property, gross 1,010.1 1,013.5 Less accumulated depreciation (609.3) (606.1) Property, net $ 400.8 $ 407.4 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not impact the Company’s current tax provision. We have elected to recognize the tax on the global intangible low-taxed income (GILTI) as a period expense in the period the tax is incurred and we have included a provisional estimate for GILTI in our estimated annual effective tax rate. During the three months ended March 31, 2020, the Company’s effective tax rate of 26.5% was above the U.S. federal statutory rate of 21.0% primarily due to state taxes (2.2%), foreign withholding tax liability accrued associated with the future repatriation of certain current year foreign earnings (1.7%), certain other non-deductible items (1.4%), and adjustments to deferred tax liabilities (1.1%). These unfavorable items were partially offset by the U.S. research and development credit (1.3%). During the three months ended March 31, 2019, the Company’s effective tax rate of 28.1% was above the U.S. federal statutory rate of 21.0% primarily due to unfavorable tax effects of foreign valuation allowances (4.0%), tax on GILTI (3.2%), state taxes (1.1%), and certain other non-deductible items (1.5%). These unfavorable items were partially offset by the U.S. research and development credit (1.9%). |
Financing Arrangements
Financing Arrangements | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | Debt consists of the following instruments: As of March 31, 2020 (in millions) Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate Senior secured revolving credit facility due 2022 $ — $ — $ — — % Senior secured term loan due 2026 622.9 9.3 613.6 3.35 % 5.25% senior notes due 2023 600.0 3.4 596.6 5.25 % Other Debt 17.7 — 17.7 Total Debt 1,240.6 12.7 1,227.9 Less short-term and current portion of long-term debt 18.2 — 18.2 Total long-term debt, net of current portion $ 1,222.4 $ 12.7 $ 1,209.7 As of December 31, 2019 (in millions) Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate Senior secured revolving credit facility due 2022 $ — $ — $ — 3.90 % Senior secured term loan due 2026 624.5 9.8 614.7 4.01 % 5.25% senior notes due 2023 600.0 3.7 596.3 5.25 % Other Debt 18.3 — 18.3 Total Debt 1,242.8 13.5 1,229.3 Less short-term and current portion of long-term debt 18.4 — 18.4 Total long-term debt, net of current portion $ 1,224.4 $ 13.5 $ 1,210.9 The agreements governing our senior secured revolving credit facility, our senior secured term loan, and the indentures and credit agreements governing other debt, contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of March 31, 2020, we were in compliance with all covenants. The estimated fair value of PolyOne’s debt instruments at March 31, 2020 and December 31, 2019 was $1,111.5 million and $1,271.8 million, respectively. The fair value of PolyOne’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | Operating income is the primary measure that is reported to our chief operating decision maker (CODM) for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant closure and phase-in costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, and other liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate and eliminations . PolyOne has three reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; and (3) Distribution. Segment information for the three months ended March 31, 2020 and 2019 is as follows: Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 (In millions) Sales to Total Sales Operating Sales to Total Sales Operating Color, Additives and Inks $ 255.4 $ 256.5 $ 40.5 $ 262.1 $ 263.3 $ 39.5 Specialty Engineered Materials 169.2 185.3 22.3 175.8 189.9 20.5 Distribution 283.4 289.5 19.4 312.7 317.3 19.5 Corporate and eliminations 3.5 (19.8) (29.4) — (19.9) (32.4) Total $ 711.5 $ 711.5 $ 52.8 $ 750.6 $ 750.6 $ 47.1 Total Assets (In millions) As of March 31, 2020 As of December 31, 2019 Color, Additives and Inks $ 1,224.3 $ 1,215.8 Specialty Engineered Materials 774.8 774.0 Distribution 271.0 235.6 Corporate and eliminations 1,472.6 1,047.9 Total assets $ 3,742.7 $ 3,273.3 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ensure safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows. In September 2007, the United States District Court for the Western District of Kentucky (Court) in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al ., held that PolyOne must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls, Inc. (Westlake Vinyls)), together with certain defense costs of Goodrich Corporation. The rulings also provided that PolyOne can seek indemnification for contamination attributable to Westlake Vinyls. Following the rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. We will adjust our accrual, in the future, consistent with any such future allocation of costs. Additionally, we continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement. The environmental obligation at the site arose as a result of an agreement between The B.F. Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither PolyOne nor The Geon Company ever operated the facility. Since 2009, PolyOne, along with respondents Westlake Vinyls, and Goodrich Corporation, have worked with the United States Environmental Protection Agency (USEPA) on the investigation of contamination at the site as well as the evaluation of potential remedies to address the contamination. The USEPA issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In April 2019, the respondents signed an Administrative Settlement Agreement and Order on Consent with the USEPA to conduct the remedial actions at the site. In February 2020, the three companies agreed to a draft Consent Decree and draft remedial action Work Plan, which are currently under USEPA review. Our current reserve of $99.6 million is consistent with the USEPA's estimates contained in the ROD. On March 13, 2013, PolyOne acquired Spartech Corporation (Spartech). One of Spartech's subsidiaries, Franklin-Burlington Plastics, Inc. (Franklin-Burlington), operated a plastic resin compounding facility in Kearny, New Jersey, located adjacent to the Passaic River. The USEPA requested that companies located in the area of the lower Passaic River, including Franklin-Burlington, cooperate in an investigation of contamination of approximately 17 miles of the lower Passaic River Study Area (LPRSA). In response, Franklin-Burlington and approximately 70 other companies (collectively, the Cooperating Parties) agreed, pursuant to an Administrative Order on Consent (AOC) with the USEPA, to assume responsibility for development of a Remedial Investigation and Feasibility Study of the LPRSA. Franklin-Burlington has not admitted to any liability or agreed to bear any other costs for remediation or natural resource damage. In 2015, the Cooperating Parties submitted to the USEPA a remedial investigation report and feasibility study for the LPRSA and are currently engaged in technical discussions with the USEPA regarding those documents. Neither of those documents contemplates who is responsible for remediation or how such costs might be allocated to PRPs. In March 2016, the USEPA issued a ROD selecting a remedy for an eight-mile portion of the LPRSA at an estimated and discounted cost of $1.4 billion. On March 31, 2016, the USEPA sent a Notice of Potential Liability to over 100 companies, including Franklin-Burlington, and several municipalities for this eight-mile portion. In September 2016, the USEPA reached an agreement with Occidental Chemical Corporation (OCC), which orders OCC to conduct the remedial design for the lower eight-mile portion of the Passaic River. In September 2017, the USEPA sent a letter to over 80 companies, including Franklin-Burlington, indicating that the USEPA would engage the recipients in an allocation process for the lower eight miles of the LPRSA and has engaged a third-party allocator as part of that process. Along with other parties, Franklin-Burlington is participating in the development of this allocation process with the allocator retained by the USEPA, and this process is expected to continue through at least 2020. On June 30, 2018, OCC, independent of the USEPA, filed suit against 100 named entities, including Franklin-Burlington, seeking contribution for past and future costs associated with the remediation of the lower eight-mile portion of the LPRSA. Based on the currently available information, we have not identified evidence that Franklin-Burlington contributed any of the primary contaminants of concern to the lower Passaic River. A timeline as to when an allocation of the remedial costs may be determined is not yet known and any allocation to Franklin-Burlington has not been determined. As a result of these uncertainties, we are unable to estimate a liability related to this matter and, as of March 31, 2020, we have not accrued for costs of remediation related to the lower Passaic River. During the three months ended March 31, 2020, PolyOne recognized $0.3 million of expense related to environmental remediation costs, compared to $2.1 million recognized during the three months ended March 31, 2019. During the three months ended March 31, 2020, PolyOne received $0.2 million of insurance recoveries for previously incurred environmental costs. No such reimbursements were recovered during the three months ended March 31, 2019 . These expenses and insurance recoveries are included within Cost of sales within our Condensed Consolidated Statements of Income. Insurance recoveries are recognized as a gain when received. Our Condensed Consolidated Balance Sheets include accruals totaling $109.7 million and $112.0 million as of March 31, 2020 and December 31, 2019, respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other current liabilities and Other non-current liabilities on the accompanying Condensed Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at March 31, 2020. However, such additional costs, if any, cannot be currently estimated. |
Derivatives and Hedging
Derivatives and Hedging | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING | We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. In accordance with ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), that ongoing assessment will be done qualitatively for highly effective relationships. Net Investment Hedge During October and December 2018, as a means of mitigating the impact of currency fluctuations on our euro investments in foreign entities, we executed a total of six cross currency swaps, in which we will pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars with a combined notional amount of 250.0 million euros and which mature in March 2023. This effectively converts a portion of our U.S. dollar denominated fixed-rate debt to euro denominated fixed-rate debt. That conversion resulted in gains of $2.1 million for the three months ended March 31, 2020 and 2019, respectively. These gains were recognized within Interest expense, net within the Condensed Consolidated Statements of Income. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized within A ccumulated Other Comprehensive Income (AOCI) to offset the changes in the values of the net investment being hedged. For the three months ended March 31, 2020 and 2019, gains of $8.8 million and $4.6 million, respectively, were recognized within translation adjustments in AOCI, net of tax. Derivatives Designated as Cash Flow Hedging Instruments In August 2018, we entered into two interest rate swaps with a combined notional amount of $150.0 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $150.0 million of our floating rate debt to a fixed rate. We began to receive floating rate interest payments based upon one-month U.S. dollar LIBOR and in return are obligated to pay interest at a fixed rate of 2.732% until November 2022. We have designated these swap contracts as cash flow hedges pursuant to Accounting Standards Codification Topic 815, Derivatives and Hedging . The net interest payments accrued each month for these highly effective hedges are reflected in net income as adjustments of interest expense and the remaining change in the fair value of the derivatives is recorded as a component of AOCI. The amount of expense recognized within Interest expense, net in our Condensed Consolidated Statements of Income was $0.4 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020 and 2019, losses of $3.4 million and $1.0 million were recognized in AOCI, net of tax. All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts present value using market based observable inputs, including interest rate curves and foreign currency rates. The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows: (In millions) Balance Sheet Location As of March 31, 2020 As of December 31, 2019 Assets Cross Currency Swaps (Net Investment Hedge) Other non-current assets $ 26.5 $ 14.7 Liabilities Interest Rate Swap (Cash Flow Hedge) Other non-current liabilities $ 9.7 $ 5.1 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal, recurring and necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2019 of PolyOne Corporation. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “PolyOne” and the “Company” mean PolyOne Corporation and its consolidated subsidiaries. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2020. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations . |
Accounting Standards Adopted | Accounting Standards Adopted On January 1, 2020, the Company adopted ASU 2016-13. ASU 2016-13 changed the impairment model for most financial instruments. Previous guidance required the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under ASU 2016-13, the Company is required to use a current expected credit loss (CECL) model that immediately recognizes an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of the update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. The adoption of ASU 2016-13 resulted in a cumulative-effect adjustment to beginning retained earnings that was not material. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following table summarizes the major line items constituting pretax income of discontinued operations associated with PP&S for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Sales $ — $ 149.3 Cost of sales — (121.1) Selling and administrative expense (0.4) (6.9) (Loss) income of discontinued operations before income taxes (0.4) 21.3 Income tax expense 0.1 (5.5) (Loss) income from discontinued operations, net of income taxes $ (0.3) $ 15.8 The following table presents the depreciation, amortization, and capital expenditures of our discontinued operations for the three months ended March 31, 2019. No such amounts were recorded for the three months ended March 31, 2020. (In millions) Three Months Ended March 31, 2019 Depreciation and amortization $ 3.8 Capital Expenditures 2.5 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Changes in Carrying Amount of Goodwill by Operating Segment | Goodwill as of March 31, 2020 and December 31, 2019 and changes in the carrying amount of goodwill by segment were as follows: (In millions) Specialty Engineered Materials Color, Additives and Inks PolyOne Distribution Total Balance at December 31, 2019 $ 236.3 $ 447.8 $ 1.6 $ 685.7 Currency translation (1.0) (0.5) — (1.5) Balance at March 31, 2020 $ 235.3 $ 447.3 $ 1.6 $ 684.2 |
Schedule of Finite-Lived Intangible Assets | Indefinite and finite-lived intangible assets consisted of the following: As of March 31, 2020 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (92.6) $ (1.2) $ 193.0 Patents, technology and other 244.0 (83.4) (1.7) 158.9 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (176.0) $ (2.9) $ 461.4 As of December 31, 2019 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (89.1) $ (1.0) $ 196.7 Patents, technology and other 244.0 (79.6) (1.3) 163.1 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (168.7) $ (2.3) $ 469.3 |
Schedule of Indefinite-Lived Intangible Assets | Indefinite and finite-lived intangible assets consisted of the following: As of March 31, 2020 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (92.6) $ (1.2) $ 193.0 Patents, technology and other 244.0 (83.4) (1.7) 158.9 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (176.0) $ (2.9) $ 461.4 As of December 31, 2019 (In millions) Acquisition Cost Accumulated Amortization Currency Translation Net Customer relationships $ 286.8 $ (89.1) $ (1.0) $ 196.7 Patents, technology and other 244.0 (79.6) (1.3) 163.1 Indefinite-lived trade names 109.5 — — 109.5 Total $ 640.3 $ (168.7) $ (2.3) $ 469.3 |
Leasing Arrangements (Tables)
Leasing Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of Lease Cost | The components of lease cost from continued operations recognized within our Condensed Consolidated Statements of Income were as follows: (In millions) Condensed Consolidated Statements of Income Location Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Lease cost: Operating lease cost Cost of sales $ 1.8 $ 2.7 Operating lease cost Selling and administrative expense 4.0 3.1 Other (1) Selling and administrative expense 0.8 0.1 Total operating lease cost $ 6.6 $ 5.9 (1) Other lease costs include short-term lease costs and variable lease costs |
Schedule of Maturity of Operating Lease Liabilities | Maturity Analysis of Lease Liabilities: As of March 31, 2020 (In millions) Operating Leases 2020 $ 17.6 2021 16.5 2022 11.9 2023 8.0 2024 4.3 Thereafter 7.7 Total lease payments 66.0 Less amount of lease payment representing interest (7.1) Total present value of lease payments $ 58.9 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Components of Inventories, Net | Components of Inventories, net are as follows: (in millions) As of March 31, 2020 As of December 31, 2019 Finished products $ 165.1 $ 157.6 Work in process 9.5 8.0 Raw materials and supplies 96.5 95.3 Inventories, net $ 271.1 $ 260.9 |
Property, Net (Tables)
Property, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Components of Property, Net | Components of Property, net are as follows: (in millions) As of March 31, 2020 As of December 31, 2019 Land and land improvements $ 32.3 $ 32.8 Buildings 232.1 231.8 Machinery and equipment 745.7 748.9 Property, gross 1,010.1 1,013.5 Less accumulated depreciation (609.3) (606.1) Property, net $ 400.8 $ 407.4 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Components of Debt | Debt consists of the following instruments: As of March 31, 2020 (in millions) Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate Senior secured revolving credit facility due 2022 $ — $ — $ — — % Senior secured term loan due 2026 622.9 9.3 613.6 3.35 % 5.25% senior notes due 2023 600.0 3.4 596.6 5.25 % Other Debt 17.7 — 17.7 Total Debt 1,240.6 12.7 1,227.9 Less short-term and current portion of long-term debt 18.2 — 18.2 Total long-term debt, net of current portion $ 1,222.4 $ 12.7 $ 1,209.7 As of December 31, 2019 (in millions) Principal Amount Unamortized discount and debt issuance cost Net Debt Weighted average interest rate Senior secured revolving credit facility due 2022 $ — $ — $ — 3.90 % Senior secured term loan due 2026 624.5 9.8 614.7 4.01 % 5.25% senior notes due 2023 600.0 3.7 596.3 5.25 % Other Debt 18.3 — 18.3 Total Debt 1,242.8 13.5 1,229.3 Less short-term and current portion of long-term debt 18.4 — 18.4 Total long-term debt, net of current portion $ 1,224.4 $ 13.5 $ 1,210.9 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Segment information for the three months ended March 31, 2020 and 2019 is as follows: Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 (In millions) Sales to Total Sales Operating Sales to Total Sales Operating Color, Additives and Inks $ 255.4 $ 256.5 $ 40.5 $ 262.1 $ 263.3 $ 39.5 Specialty Engineered Materials 169.2 185.3 22.3 175.8 189.9 20.5 Distribution 283.4 289.5 19.4 312.7 317.3 19.5 Corporate and eliminations 3.5 (19.8) (29.4) — (19.9) (32.4) Total $ 711.5 $ 711.5 $ 52.8 $ 750.6 $ 750.6 $ 47.1 Total Assets (In millions) As of March 31, 2020 As of December 31, 2019 Color, Additives and Inks $ 1,224.3 $ 1,215.8 Specialty Engineered Materials 774.8 774.0 Distribution 271.0 235.6 Corporate and eliminations 1,472.6 1,047.9 Total assets $ 3,742.7 $ 3,273.3 |
Derivatives and Hedging (Tables
Derivatives and Hedging (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows: (In millions) Balance Sheet Location As of March 31, 2020 As of December 31, 2019 Assets Cross Currency Swaps (Net Investment Hedge) Other non-current assets $ 26.5 $ 14.7 Liabilities Interest Rate Swap (Cash Flow Hedge) Other non-current liabilities $ 9.7 $ 5.1 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | Dec. 19, 2019 | Feb. 29, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | May 31, 2018 |
Business Acquisition [Line Items] | |||||
Purchase price, net | $ 0 | $ 119,600,000 | |||
Increase to contingent liabilities | $ 1,000,000 | ||||
Clariant | |||||
Business Acquisition [Line Items] | |||||
Purchase price, net | $ 1,450,000,000 | ||||
Clariant | Bridge Facility | Bridge Loan | |||||
Business Acquisition [Line Items] | |||||
Debt term | 12 months | ||||
Maximum borrowing capacity | $ 1,150,000,000 | ||||
PlastiComp | |||||
Business Acquisition [Line Items] | |||||
Earn-out ceiling | $ 35,000,000 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - Performance Products and Solutions - Discontinued Operations, Disposed of by Sale - USD ($) $ in Millions | Oct. 25, 2019 | Mar. 31, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash consideration | $ 768.9 | |
Consideration, working capital adjustment | $ 7.1 | |
Gain on disposal, net of tax | $ 457.7 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Discontinued Operation, Alternative Cash Flow Information [Abstract] | ||
Depreciation and amortization | $ 0 | $ 3,800,000 |
Capital Expenditures | 0 | 2,500,000 |
Performance Products and Solutions | Discontinued Operations, Disposed of by Sale | ||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||
Sales | 0 | 149,300,000 |
Cost of sales | 0 | (121,100,000) |
Selling and administrative expense | (400,000) | (6,900,000) |
(Loss) income of discontinued operations before income taxes | (400,000) | 21,300,000 |
Income tax expense | 100,000 | (5,500,000) |
(Loss) income from discontinued operations, net of income taxes | $ (300,000) | $ 15,800,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill and Changes in Carrying Amount of Goodwill by Operating Segment (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 685.7 |
Currency translation | (1.5) |
Goodwill, Ending Balance | 684.2 |
Specialty Engineered Materials | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 236.3 |
Currency translation | (1) |
Goodwill, Ending Balance | 235.3 |
Color, Additives and Inks | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 447.8 |
Currency translation | (0.5) |
Goodwill, Ending Balance | 447.3 |
PolyOne Distribution | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 1.6 |
Currency translation | 0 |
Goodwill, Ending Balance | $ 1.6 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Indefinite and Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (176) | $ (168.7) |
Currency Translation | (2.9) | (2.3) |
Indefinite-lived Intangible Assets [Line Items] | ||
Acquisition Cost | 640.3 | 640.3 |
Net | 461.4 | 469.3 |
Trade Names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived trade names | 109.5 | 109.5 |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Acquisition Cost | 286.8 | 286.8 |
Accumulated Amortization | (92.6) | (89.1) |
Currency Translation | (1.2) | (1) |
Finite-Lived Intangible Assets, Net, Total | 193 | 196.7 |
Patents, technology and other | ||
Intangible Assets [Line Items] | ||
Acquisition Cost | 244 | 244 |
Accumulated Amortization | (83.4) | (79.6) |
Currency Translation | (1.7) | (1.3) |
Finite-Lived Intangible Assets, Net, Total | $ 158.9 | $ 163.1 |
Leasing Arrangements - Lease Co
Leasing Arrangements - Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Total operating lease cost | $ 6.6 | $ 5.9 |
Cost of sales | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | 1.8 | 2.7 |
Selling and administrative expense | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | 4 | 3.1 |
Other | $ 0.8 | $ 0.1 |
Leasing Arrangements - Narrativ
Leasing Arrangements - Narrative (Details) | Mar. 31, 2020 | Mar. 31, 2019 |
Leases [Abstract] | ||
Weighted average remaining lease term | 3 years 10 months 24 days | 4 years 2 months 12 days |
Weighted average discount rate | 4.10% | 5.30% |
Leasing Arrangements - Schedule
Leasing Arrangements - Schedule of Maturity of Lease Liabilities (Details) $ in Millions | Mar. 31, 2020USD ($) |
Operating Leases | |
2020 | $ 17.6 |
2021 | 16.5 |
2022 | 11.9 |
2023 | 8 |
2024 | 4.3 |
Thereafter | 7.7 |
Total lease payments | 66 |
Less amount of lease payment representing interest | (7.1) |
Total present value of lease payments | $ 58.9 |
Inventories, Net - Components o
Inventories, Net - Components of Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished products | $ 165.1 | $ 157.6 |
Work in process | 9.5 | 8 |
Raw materials and supplies | 96.5 | 95.3 |
Inventories, net | $ 271.1 | $ 260.9 |
Property, Net (Details)
Property, Net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property, gross | $ 1,010.1 | $ 1,013.5 |
Less accumulated depreciation | (609.3) | (606.1) |
Property, net | 400.8 | 407.4 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 32.3 | 32.8 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 232.1 | 231.8 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | $ 745.7 | $ 748.9 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 2650.00% | 28.10% |
Effective tax rate reconciliation, state, percent | 2.20% | 1.10% |
Effective tax rate reconciliation, repatriation of foreign earnings, percent | 1.70% | |
Effective tax rate reconciliation, other nondeductible item, percent | 1.40% | 1.50% |
Effective tax rate reconciliation adjustments to deferred tax liabilities, percent | 1.10% | |
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Percent | 1.30% | 1.90% |
Effective tax rate reconciliation, effect of valuation allowance, percent | 4.00% | |
Effective tax rate reconciliation, GILTI, percent | 3.20% |
Financing Arrangements - Compon
Financing Arrangements - Components of Long-Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Principal Amount | $ 1,240.6 | $ 1,242.8 |
Unamortized discount and debt issuance cost | 12.7 | 13.5 |
Long-term Debt, Total | 1,227.9 | 1,229.3 |
Less short-term and current portion of long-term debt, Principal Amount | 18.2 | 18.4 |
Less short-term and current portion of long-term debt, Unamortized discount and debt issuance cost | 0 | 0 |
Less short-term and current portion of long-term debt | 18.2 | 18.4 |
Total long-term debt, gross, net of current | 1,222.4 | 1,224.4 |
Debt excluding current, unamortized discount and debt issuance costs | 12.7 | 13.5 |
Total long-term debt, net of current portion | 1,209.7 | 1,210.9 |
Senior secured revolving credit facility due 2022 | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Principal Amount | 0 | 0 |
Unamortized discount and debt issuance cost | 0 | 0 |
Long-term Debt, Total | $ 0 | $ 0 |
Weighted average interest rate | 0.00% | 3.90% |
Senior secured term loan due 2026 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Principal Amount | $ 622.9 | $ 624.5 |
Unamortized discount and debt issuance cost | 9.3 | 9.8 |
Long-term Debt, Total | $ 613.6 | $ 614.7 |
Weighted average interest rate | 3.35% | 4.01% |
5.25% Senior Notes Due 2023 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Interest rate, stated percentage | 5.25% | 5.25% |
Principal Amount | $ 600 | $ 600 |
Unamortized discount and debt issuance cost | 3.4 | 3.7 |
Long-term Debt, Total | $ 596.6 | $ 596.3 |
Weighted average interest rate | 5.25% | 5.25% |
Other Debt | ||
Debt Instrument [Line Items] | ||
Principal Amount | $ 17.7 | $ 18.3 |
Unamortized discount and debt issuance cost | 0 | 0 |
Long-term Debt, Total | $ 17.7 | $ 18.3 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Fair value of debt instruments | $ 1,111.5 | $ 1,271.8 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Sales | $ 711.5 | $ 750.6 | |
Operating Income | 52.8 | 47.1 | |
Total assets | 3,742.7 | $ 3,273.3 | |
Corporate and eliminations before intersegment eliminations | |||
Segment Reporting Information [Line Items] | |||
Sales | 3.5 | 0 | |
Corporate and eliminations | |||
Segment Reporting Information [Line Items] | |||
Sales | (19.8) | (19.9) | |
Operating Income | (29.4) | (32.4) | |
Corporate and eliminations | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Total assets | 1,472.6 | 1,047.9 | |
Color, Additives and Inks | |||
Segment Reporting Information [Line Items] | |||
Sales | 255.4 | 262.1 | |
Color, Additives and Inks | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 256.5 | 263.3 | |
Operating Income | 40.5 | 39.5 | |
Color, Additives and Inks | Operating Segments | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Total assets | 1,224.3 | 1,215.8 | |
Specialty Engineered Materials | |||
Segment Reporting Information [Line Items] | |||
Sales | 169.2 | 175.8 | |
Specialty Engineered Materials | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 185.3 | 189.9 | |
Operating Income | 22.3 | 20.5 | |
Specialty Engineered Materials | Operating Segments | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Total assets | 774.8 | 774 | |
Distribution | |||
Segment Reporting Information [Line Items] | |||
Sales | 283.4 | 312.7 | |
Distribution | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Sales | 289.5 | 317.3 | |
Operating Income | 19.4 | $ 19.5 | |
Distribution | Operating Segments | Continuing Operations | |||
Segment Reporting Information [Line Items] | |||
Total assets | $ 271 | $ 235.6 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Jun. 30, 2018entitymi | Mar. 31, 2016USD ($)company | Mar. 13, 2013companymi | Sep. 30, 2017companymi | Sep. 30, 2016mi | Mar. 31, 2016USD ($)mi | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Feb. 29, 2020company | Dec. 31, 2019USD ($) |
Schedule of Equity Method Investments [Line Items] | ||||||||||
Accrued probable future environmental expenditures | $ 109,700,000 | $ 112,000,000 | ||||||||
Expense related to environmental activities | 300,000 | $ 2,100,000 | ||||||||
Insurance recoveries | 200,000 | $ 0 | ||||||||
Contamination of Passaic River Study Area | ||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||
Loss Contingency, number of third-party companies assuming responsibility for development of RIFS | company | 70 | |||||||||
Calvert City | ||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||
Number of companies negotiating Consent Decree | company | 3 | |||||||||
Accrued probable future environmental expenditures | $ 99,600,000 | |||||||||
Lower Passaic River | Contamination of Passaic River Study Area | ||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||
Length of portion of river | mi | 8 | 17 | 8 | 8 | 8 | |||||
Total estimated cost of remedy | $ 1,400,000,000 | $ 1,400,000,000 | ||||||||
Number of companies receiving notice of potential liability | company | 100 | |||||||||
Number of companies receiving notice of process to allocate remedial costs | company | 80 | |||||||||
Number of entities named in suit | entity | 100 |
Derivatives and Hedging - Narra
Derivatives and Hedging - Narrative (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)swap | Aug. 31, 2018USD ($)swap | |
Derivative [Line Items] | ||||
Unrealized loss | $ 3.4 | $ 1 | ||
Net Investment Hedging | Cross Currency Swaps | ||||
Derivative [Line Items] | ||||
Notional amount | $ 250 | |||
Unrealized gain | 8.8 | 4.6 | ||
Cash Flow Hedging | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Notional amount | $ 150 | |||
Number of interest rate swaps | swap | 2 | |||
Floating rate debt | $ 150 | |||
Floating rate | 2.732% | |||
Unrealized loss | 3.4 | 1 | ||
Interest expense, net | Net Investment Hedging | Cross Currency Swaps | ||||
Derivative [Line Items] | ||||
Number of cross currency swaps | swap | 6 | |||
Conversion benefit | 2.1 | 2.1 | ||
Interest expense, net | Cash Flow Hedging | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Expense recognized | $ 0.4 | $ 0.1 |
Derivatives and Hedging - Fair
Derivatives and Hedging - Fair Value of Derivatives (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Net Investment Hedging | Cross Currency Swaps | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 26.5 | $ 14.7 |
Cash Flow Hedging | Interest Rate Swap | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 9.7 | $ 5.1 |
Uncategorized Items - pol-20200
Label | Element | Value | [1] |
Accounting Standards Update 2016-13 [Member] | Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (300,000) | |
Accounting Standards Update 2016-13 [Member] | Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (300,000) | |
[1] | (2) In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires companies to immediately recognize an estimate of the credit losses that are expected to occur over the life of certain financial instruments. We recognized a cumulative-effect adjustment of $0.3 million to beginning retained earnings upon adoption of this standard on January 1, 2020. |