Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 25, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-34581 | |
Entity Registrant Name | Kraton Corp | |
Entity Central Index Key | 0001321646 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0411521 | |
Entity Address, Address Line One | 15710 John F. Kennedy Blvd. | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Houston, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77032 | |
City Area Code | 281 | |
Local Phone Number | 504-4700 | |
Title of 12(b) Security | Common Stock, par value $0.01 | |
Trading Symbol | KRA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 32,148,136 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 90,196 | $ 85,901 |
Receivables, net of allowance for doubtful accounts of $764 and $598 | 263,234 | 180,258 |
Inventories of products, net | 411,993 | 318,885 |
Inventories of materials and supplies, net | 34,512 | 34,164 |
Prepaid expenses | 13,953 | 11,844 |
Other current assets | 17,843 | 15,338 |
Total current assets | 831,731 | 646,390 |
Property, plant, and equipment, net of accumulated depreciation of $778,466 and $732,279 | 929,481 | 942,703 |
Goodwill | 373,303 | 375,061 |
Intangible assets, net of accumulated amortization of $359,505 and $330,070 | 269,848 | 294,734 |
Investment in unconsolidated joint venture | 12,050 | 12,723 |
Deferred income taxes | 77,683 | 83,534 |
Long-term operating lease assets, net | 95,100 | 84,042 |
Other long-term assets | 20,113 | 21,770 |
Total assets | 2,609,309 | 2,460,957 |
Current liabilities: | ||
Current portion of long-term debt | 74,923 | 72,347 |
Accounts payable-trade | 221,308 | 176,229 |
Other payables and accruals | 203,206 | 167,364 |
Due to related party | 14,619 | 17,147 |
Total current liabilities | 514,056 | 433,087 |
Long-term debt, net of current portion | 825,459 | 865,516 |
Deferred income taxes | 123,700 | 125,559 |
Long-term operating lease liabilities | 77,894 | 67,898 |
Deferred income | 137,439 | 151,329 |
Other long-term liabilities | 151,997 | 168,566 |
Total liabilities | 1,830,545 | 1,811,955 |
Commitments and contingencies (Note 11) | ||
Kraton stockholders’ equity: | ||
Preferred stock, $0.01 par value; 100,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value; 500,000 shares authorized; 32,148 shares issued and outstanding at September 30, 2021; 31,873 shares issued and outstanding at December 31, 2020 | 321 | 319 |
Additional paid in capital | 409,799 | 401,445 |
Retained earnings | 362,062 | 240,464 |
Accumulated other comprehensive loss | (43,859) | (37,865) |
Total Kraton stockholders’ equity | 728,323 | 604,363 |
Noncontrolling interest | 50,441 | 44,639 |
Total equity | 778,764 | 649,002 |
Total liabilities and equity | $ 2,609,309 | $ 2,460,957 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Receivables, allowances | $ 764 | $ 598 |
Accumulated depreciation | 778,466 | 732,279 |
Total accumulated amortization | $ 359,505 | $ 330,070 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 32,148,000 | 31,873,000 |
Common stock, shares outstanding (in shares) | 32,148,000 | 31,873,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue | $ 526,888 | $ 373,438 | $ 1,457,782 | $ 1,156,386 |
Cost of goods sold | 360,197 | 304,684 | 1,015,533 | 875,388 |
Gross profit | 166,691 | 68,754 | 442,249 | 280,998 |
Operating expenses: | ||||
Research and development | 10,378 | 9,454 | 29,621 | 30,158 |
Selling, general, and administrative | 44,927 | 35,285 | 120,243 | 122,745 |
Depreciation and amortization | 31,674 | 31,313 | 94,947 | 93,828 |
(Gain) loss on disposal of fixed assets | 180 | (527) | 526 | (34) |
Impairment of goodwill | 0 | 400,000 | 0 | 400,000 |
Operating income (loss) | 79,532 | (406,771) | 196,912 | (365,699) |
Other income (expense) | 808 | 259 | (877) | 837 |
Disposition and exit of business activities | 0 | 0 | 0 | 175,189 |
Loss on extinguishment of debt | 0 | (848) | 0 | (14,943) |
Earnings of unconsolidated joint venture | 89 | 81 | 344 | 310 |
Interest expense, net | (9,989) | (13,527) | (31,353) | (44,454) |
Income (loss) before income taxes | 70,440 | (420,806) | 165,026 | (248,760) |
Income tax benefit (expense) | (15,234) | 18,189 | (36,876) | 48,082 |
Consolidated net income (loss) | 55,206 | (402,617) | 128,150 | (200,678) |
Net income attributable to noncontrolling interest | (2,182) | (1,177) | (5,486) | (2,998) |
Net income (loss) attributable to Kraton | $ 53,024 | $ (403,794) | $ 122,664 | $ (203,676) |
Earnings (loss) per common share: | ||||
Basic (in dollars per share) | $ 1.65 | $ (12.67) | $ 3.82 | $ (6.40) |
Diluted (in dollars per share) | $ 1.62 | $ (12.67) | $ 3.76 | $ (6.40) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 32,148 | 31,787 | 32,075 | 31,728 |
Diluted (in share) | 32,692 | 31,787 | 32,610 | 31,728 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) attributable to Kraton | $ 53,024 | $ (403,794) | $ 122,664 | $ (203,676) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, net of tax of $0 | (11,620) | 11,656 | (21,402) | 14,136 |
Reclassification of foreign currency translation adjustments from disposition and exit of business activities, net of tax of $0 | 0 | 0 | 0 | 66,533 |
Unrealized gain on cash flow hedges, net of tax expense of $458 | 0 | 0 | 0 | 1,387 |
Reclassification of loss on cash flow hedge, net of tax benefit of $293 | 0 | 0 | 0 | 1,002 |
Unrealized gain (loss) on net investment hedge, net of tax expense of $1,991, benefit of $3,334, expense of $4,574, and benefit of $3,315, respectively | 6,708 | (11,434) | 15,408 | (14,089) |
Reclassification of gain on net investment hedge, net of tax of $0 | 0 | 0 | 0 | (899) |
Increase in benefit plans liability, net of tax benefit of $571 and $571, respectively | 0 | (1,714) | 0 | (1,714) |
Other comprehensive income (loss), net of tax | (4,912) | (1,492) | (5,994) | 66,356 |
Comprehensive income (loss) attributable to Kraton | 48,112 | (405,286) | 116,670 | (137,320) |
Comprehensive income attributable to noncontrolling interest | 2,229 | 1,856 | 5,904 | 4,419 |
Consolidated comprehensive income (loss) | $ 50,341 | $ (403,430) | $ 122,574 | $ (132,901) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, tax effect | $ 0 | $ 0 | ||
Reclassification of foreign currency translation adjustments from disposition and exit of business activities, tax effect | $ 0 | 0 | ||
Unrealized gain (loss) on cash flow hedges, tax effect | 458,000 | |||
Reclassification of (gain) loss on cash flow hedge, tax effect | (293,000) | |||
Unrealized gain (loss) on net investment hedge, tax expense (benefit) | $ 1,991,000 | (3,334,000) | 4,574,000 | (3,315,000) |
Reclassification of gain on net investment hedge, tax effect | $ 0 | 0 | ||
(Increase) decrease in pension liability, (tax) benefit | $ 571,000 | $ 571,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Total Kraton Stockholders’ Equity | Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Beginning balance at Dec. 31, 2019 | $ 789,428 | $ 751,443 | $ 318 | $ 392,208 | $ 464,712 | $ (105,795) | $ 37,985 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | 209,020 | 208,086 | 208,086 | 934 | |||
Other comprehensive income (loss) | 64,381 | 64,788 | 64,788 | (407) | |||
Retired treasury stock from employee tax withholdings | (678) | (678) | (1,927) | 1,249 | |||
Non-cash compensation related to equity awards | 2,848 | 2,848 | 1 | 2,847 | |||
Ending balance at Mar. 31, 2020 | 1,064,999 | 1,026,487 | 319 | 393,128 | 674,047 | (41,007) | 38,512 |
Beginning balance at Dec. 31, 2019 | 789,428 | 751,443 | 318 | 392,208 | 464,712 | (105,795) | 37,985 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | (200,678) | ||||||
Ending balance at Sep. 30, 2020 | 662,790 | 620,386 | 319 | 397,121 | 262,385 | (39,439) | 42,404 |
Beginning balance at Mar. 31, 2020 | 1,064,999 | 1,026,487 | 319 | 393,128 | 674,047 | (41,007) | 38,512 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | (7,081) | (7,968) | (7,968) | 887 | |||
Other comprehensive income (loss) | 4,209 | 3,060 | 3,060 | 1,149 | |||
Retired treasury stock from employee tax withholdings | (66) | (66) | (160) | 94 | |||
Non-cash compensation related to equity awards | 1,897 | 1,897 | 1,897 | ||||
Ending balance at Jun. 30, 2020 | 1,063,958 | 1,023,410 | 319 | 394,865 | 666,173 | (37,947) | 40,548 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | (402,617) | (403,794) | (403,794) | 1,177 | |||
Other comprehensive income (loss) | (813) | (1,492) | (1,492) | 679 | |||
Retired treasury stock from employee tax withholdings | (4) | (4) | (10) | 6 | |||
Non-cash compensation related to equity awards | 2,266 | 2,266 | 0 | 2,266 | |||
Ending balance at Sep. 30, 2020 | 662,790 | 620,386 | 319 | 397,121 | 262,385 | (39,439) | 42,404 |
Beginning balance at Dec. 31, 2020 | 649,002 | 604,363 | 319 | 401,445 | 240,464 | (37,865) | 44,639 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | 34,593 | 33,229 | 33,229 | 1,364 | |||
Other comprehensive income (loss) | (9,427) | (8,775) | (8,775) | (652) | |||
Retired treasury stock from employee tax withholdings | (4,862) | (4,862) | 1 | (3,816) | (1,047) | ||
Exercise of stock options | 4,092 | 4,092 | 1 | 4,091 | |||
Non-cash compensation related to equity awards | 2,924 | 2,924 | 0 | 2,924 | |||
Ending balance at Mar. 31, 2021 | 676,322 | 630,971 | 321 | 404,644 | 272,646 | (46,640) | 45,351 |
Beginning balance at Dec. 31, 2020 | 649,002 | 604,363 | 319 | 401,445 | 240,464 | (37,865) | 44,639 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | 128,150 | ||||||
Ending balance at Sep. 30, 2021 | 778,764 | 728,323 | 321 | 409,799 | 362,062 | (43,859) | 50,441 |
Beginning balance at Mar. 31, 2021 | 676,322 | 630,971 | 321 | 404,644 | 272,646 | (46,640) | 45,351 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | 38,351 | 36,411 | 36,411 | 1,940 | |||
Other comprehensive income (loss) | 8,716 | 7,693 | 7,693 | 1,023 | |||
Retired treasury stock from employee tax withholdings | (69) | (69) | (50) | (19) | |||
Non-cash compensation related to equity awards | 2,595 | 2,595 | 2,595 | ||||
Ending balance at Jun. 30, 2021 | 725,915 | 677,601 | 321 | 407,189 | 309,038 | (38,947) | 48,314 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Consolidated net income (loss) | 55,206 | 53,024 | 53,024 | 2,182 | |||
Other comprehensive income (loss) | (4,865) | (4,912) | (4,912) | 47 | |||
Distribution to noncontrolling interest | (102) | 0 | (102) | ||||
Non-cash compensation related to equity awards | 2,610 | 2,610 | 2,610 | ||||
Ending balance at Sep. 30, 2021 | $ 778,764 | $ 728,323 | $ 321 | $ 409,799 | $ 362,062 | $ (43,859) | $ 50,441 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Consolidated net income | $ 128,150 | $ (200,678) |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||
Depreciation and amortization | 94,947 | 93,828 |
Lease amortization | 18,138 | 18,463 |
Amortization of debt original issue discount | 0 | 148 |
Amortization of debt issuance costs | 1,893 | 2,426 |
Amortization of deferred income | (10,821) | (8,460) |
(Gain) loss on disposal of property, plant, and equipment | 526 | (34) |
Loss on extinguishment of debt | 0 | 14,943 |
Impairment of goodwill | 0 | 400,000 |
Earnings from unconsolidated joint venture, net of dividends received | 123 | 197 |
Deferred income tax benefit | (3,040) | (64,576) |
Release of uncertain tax positions | 0 | (3,316) |
Gain on disposition and exit of business activities | 0 | (175,189) |
Share-based compensation | 8,129 | 7,011 |
Decrease (increase) in: | ||
Accounts receivable | (88,336) | 5,033 |
Inventories of products, materials, and supplies | (100,657) | 10,083 |
Other assets | (4,811) | 769 |
Increase (decrease) in: | ||
Accounts payable-trade | 50,371 | (37,073) |
Other payables and accruals | 16,670 | 3,377 |
Other long-term liabilities | (13,395) | (3,567) |
Due to related party | (1,493) | (1,032) |
Net cash provided by operating activities | 96,394 | 62,353 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Kraton purchase of property, plant, and equipment | (61,884) | (54,138) |
KFPC purchase of property, plant, and equipment | (350) | (3,727) |
Purchase of software and other intangibles | (8,657) | (6,118) |
Cash proceeds (payments) from disposition and exit of business activities | (876) | 510,500 |
Net cash provided by (used in) investing activities | (71,767) | 446,517 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from debt | 103,000 | 77,000 |
Repayments of debt | (103,000) | (534,733) |
KFPC proceeds from debt | 54,889 | 63,559 |
KFPC repayments of debt | (71,654) | (76,555) |
Finance lease payments | (559) | (134) |
Purchase of treasury stock | (4,931) | (748) |
Proceeds from the exercise of stock options | 4,092 | 0 |
Settlement of interest rate swap | 0 | (1,295) |
Debt issuance costs | 0 | (1,575) |
Net cash used in financing activities | (18,163) | (474,481) |
Effect of exchange rate differences on cash | (2,169) | (6,601) |
Net increase in cash and cash equivalents | 4,295 | 27,788 |
Cash and cash equivalents, beginning of period | 85,901 | 35,033 |
Cash and cash equivalents, end of period | 90,196 | 62,821 |
Supplemental disclosures during the period: | ||
Cash paid for income taxes, net of refunds received | 21,053 | 6,649 |
Cash paid for interest, net of capitalized interest | 19,566 | 43,966 |
Capitalized interest | 2,367 | 2,226 |
Supplemental non-cash disclosures: increase (decrease) during the period: | ||
Property, plant, and equipment accruals | 766 | (13,054) |
Operating leases | $ 27,063 | $ 18,012 |
General
General | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
General | General Description of our Business. We are a leading global sustainable specialty chemicals company that manufactures styrenic block copolymers (“SBCs”), specialty polymers, and high-value bio-based products primarily derived from pine wood pulping co-products. Our operations are managed through two operating segments: (i) Polymer segment and (ii) Chemical segment. SBCs are highly-engineered synthetic elastomers, which we originally invented and commercialized. Our SBCs enhance the performance of numerous products by imparting greater flexibility, resilience, strength, durability, and processability, and are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, and paving and roofing products. We manufacture and sell isoprene rubber through a multi-year Isoprene Rubber Supply Agreement (“IRSA”) with DL Chemical. We refine and further upgrade crude tall oil and crude sulfate turpentine, into value-added specialty chemicals. These pine-based specialty products are sold into adhesive and tire markets, and we produce and sell a broad range of performance chemicals into markets that include fuel additives, oilfield chemicals, coatings, metalworking fluids and lubricants, inks, flavors and fragrances, and mining. Agreement and Plan of Merger. On September 27, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with DL Chemical, a company organized under the laws of the Republic of Korea (“Parent”), DLC US Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Intermediate Merger Subsidiary”), and DLC US, Inc., a Delaware corporation and a wholly-owned subsidiary of Intermediate Merger Subsidiary (“Merger Subsidiary”). Parent is a subsidiary of DL Holdings Co., Ltd. (formerly Daelim Industrial Co., Ltd.). Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, the Merger Subsidiary will merge with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect and wholly-owned subsidiary of Parent. Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of the Company, par value $0.01 per share, then outstanding will be converted into the right to receive $46.50 in cash, without interest, other than (1) those shares owned by Parent or any subsidiary of Parent or the Company (which will be cancelled without any consideration) and (2) any shares as to which appraisal rights have been properly exercised, and not withdrawn, in accordance with the Delaware General Corporation Law. The Merger Agreement also provides that all outstanding awards of restricted stock units (including those that are performance-based), notional units and phantom units with respect to the Company’s common stock that are outstanding prior to the effective time of the Merger will be cancelled at or immediately prior to the effective time and converted into the right to receive an amount in cash based on an agreed price. The obligations of the parties to consummate the Merger, which is expected to occur by the end of the first half of 2022, are subject to the satisfaction or waiver of customary closing conditions set forth in the Merger Agreement, including, among others, (1) the adoption of the Merger Agreement by the Company’s stockholders, (2) the expiration or termination of any waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as the receipt of certain antitrust approvals outside of the United States, (3) the receipt of clearance from the Committee on Foreign Investment in the United States, (4) the lack of any governmental authority restraining, enjoining or otherwise prohibiting the Merger and (5) the absence of a “material adverse effect” with respect to the Company. While the Merger is not conditioned on Parent or any other party obtaining debt financing, Parent has obtained debt financing commitments pursuant to a debt commitment letter from the parties thereto for the purpose of financing the transactions contemplated by the Merger and paying related fees and expenses. The obligations of the financing sources under the debt commitment letter are subject to customary conditions. Either the Company or Parent may terminate the Merger Agreement prior to the Effective Time in certain circumstances, including (1) by mutual agreement, (2) by either party if the Merger is not completed by September 26, 2022, (3) by either party if a governmental authority of competent jurisdiction has issued a final non-appealable governmental order or law permanently prohibiting the Merger (provided such party is not in breach of any provision of the Merger Agreement that resulted in such prohibition), (4) the Company’s stockholders fail to adopt the Merger Agreement, or (5) the other party breaches its representations, warranties or covenants in the Merger Agreement or otherwise breaches its obligations under the Merger Agreement such that the applicable condition to the consummation of the Merger is not satisfied, subject in certain cases, to the right of the breaching party to cure the breach and payment of termination fees. In addition, subject to the conditions and applicable termination fees as prescribed in the Merger Agreement, prior to obtaining approval of the Company’s stockholders, (x) the Company may terminate the Merger Agreement in order to enter into a definitive agreement with a third party to effect a superior proposal, and (y) Parent may terminate the Merger Agreement in the event of an adverse recommendation change with respect to the Merger. For additional information related to the Merger Agreement and related transactions, please refer to our Current Report on Form 8-K filed with the SEC on September 27, 2021 and our Proxy Statement filed with the SEC on October 21, 2021. Basis of Presentation. The accompanying unaudited condensed consolidated financial statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary, except our 50% investment in our joint venture, Kraton Formosa Polymers Corporation (“KFPC”), located in Mailiao, Taiwan. KFPC is a variable interest entity for which we have determined that we are the primary beneficiary and, therefore, have consolidated into our financial statements. Our 50% investment in our joint venture located in Kashima, Japan, is accounted for under the equity method of accounting. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective annual periods or any other interim period, in particular due to the effect of seasonal changes and weather conditions that typically affect our sales into paving, roadmarking, roofing, and construction applications. In particular, sales volumes into these applications are generally higher in the second and third quarter of the calendar year as warm and dry weather is more conducive to paving and roofing activity. Reclassifications. Certain amounts reported in the condensed consolidated financial statements and notes to the condensed consolidated financial statements for the prior periods may have been reclassified to conform to the current reporting presentation. Significant Accounting Policies. Our significant accounting policies have been disclosed in Note 1 Description of Business, Basis of Presentation, and Significant Accounting Policies in our most recent Annual Report on Form 10-K. There have been no changes to the accounting policies, which are disclosed in our most recent Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements we present in this report have been prepared in accordance with our policies. Use of Estimates. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include: • the useful lives of long-lived assets; • allowances for doubtful accounts and sales returns; • valuation of goodwill; • the valuation of derivatives, deferred taxes, property, plant and equipment, inventory, share-based compensation, and deferred income; and • liabilities for employee benefit obligations, environmental matters, asset retirement obligations, income tax uncertainties, and other contingencies. Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these condensed consolidated financial statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction’s tax laws. Overall effective tax rate may therefore vary considerably from quarter to quarter and from year to year based on the actual or projected location of operations, levels of income, intercompany gains or losses, and other factors. In accordance with U.S. GAAP for interim reporting, we have historically estimated our full-year effective tax rate and applied this rate to ordinary income or loss for the reporting period. We have determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate this historical method would not provide reliable results for the quarter ended September 30, 2021. Therefore, a discrete year-to-date method of reporting was used for the quarter ended September 30, 2021. We will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted. We have established valuation allowances against a variety of deferred tax assets, including net operating loss carryforwards, foreign tax credits and other income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Adopted in the Current Period We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This standard is effective for fiscal years beginning after December 15, 2020. Adoption of this standard did not materially impact our financial position, results of operations, and cash flows. We adopted ASU 2019-12 effective January 1, 2021. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This standard is applicable to our contracts and hedging relationships that reference LIBOR. The amendments may be applied through December 31, 2022. We will apply this guidance to transactions and modifications of these arrangements as appropriate. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope . This standard is effective beginning on January 7, 2021. Our analysis of ASU 2021-01 was completed during 2021, and there is no material change to our financial position, results of operations, and cash flows. We adopted ASU 2021-01 effective January 7, 2021. New Accounting Standards to be Adopted in Future Periods In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) . This standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing, and we expect to adopt ASU 2020-06 effective on January 1, 2022. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally, this occurs at a point in time when the risk of loss and title to the product transfers to the customer. Our standard terms of delivery are included in our contracts of sale, order confirmation documents, and invoices. As such, all revenue is considered revenue recognized from contracts with customers, and we do not have other sources of revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized net of sales tax, value-added taxes, and other taxes. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Certain customers may receive cash-based incentives (including rebates, price supports, and sales commission), which are accounted for as variable consideration. We estimate rebates and price supports based on the expected amount to be provided to customers and reduce revenues recognized once the performance obligation has been met. Sales commissions are recorded as an increase in cost of goods sold once the performance obligation has been met. We do not expect to have significant changes in our estimates for variable considerations. We have deferred revenue of $164.2 million related to contractual commitments with customers for which the performance obligation will be satisfied over time, which currently ranges from one Specific to the IRSA, the contract provided Isoprene Rubber sales revenue of $5.3 million and $1.8 million for the three months ended September 30, 2021 and 2020, respectively, and $21.2 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively. Included within Isoprene Rubber sales revenue is amortization of deferred income of $2.4 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $10.0 million and $7.5 million for the nine months ended September 30, 2021 and 2020, respectively, which represents non-cash revenue realized as the products are sold under the IRSA. Occasionally, we enter into bill-and-hold contracts, where we invoice the customer for products even though we retain possession of the products until a point in time in the future when the products are shipped to the customer. In these contracts, the primary performance obligation is satisfied at a point in time when the product is segregated from our general inventory, it is ready for shipment to customer, and we do not have the ability to use the product or direct it to another customer. Additionally, we have a secondary performance obligation related to custodial costs, including storage and freight, which is satisfied over time once the product has been delivered to the customer. We did not recognize any revenue related to bill-and-hold arrangements for the three months ended September 30, 2021 and 2020 and the nine months ended September 30, 2021. During the nine months ended September 30, 2020, we recognized $4.2 million of revenue related to these bill-and-hold arrangements. We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Polymer Segment (In thousands) Performance Products $ 180,671 $ 117,353 $ 485,770 $ 354,452 Specialty Polymers 110,673 78,629 308,481 232,851 Cariflex (1) — — — 36,930 Isoprene Rubber 5,261 1,833 21,191 17,436 Other 484 725 1,243 1,103 Polymer Product Line Revenue $ 297,089 $ 198,540 $ 816,685 $ 642,772 ____________________________________________________ (1) Cariflex is included in the results of operations through March 6, 2020. See Note 4 Disposition and Exit of Business Activities for further information on the divestiture of our Cariflex business. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Chemical Segment (In thousands) Adhesives $ 82,239 $ 63,901 $ 228,295 $ 189,789 Performance Chemicals 131,300 99,919 368,639 295,509 Tires 16,260 11,078 44,163 28,316 Chemical Product Line Revenue $ 229,799 $ 174,898 $ 641,097 $ 513,614 September 30, 2021 December 31, 2020 (In thousands) Contract receivables (1) $ 260,081 $ 179,805 Contract liabilities (2) $ 164,204 $ 175,511 ____________________________________________________ (1) Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets. |
Disposition and Exit of Busines
Disposition and Exit of Business Activities | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposition and Exit of Business Activities | Disposition and Exit of Business Activities On March 6, 2020, we completed the sale of our Cariflex business to Daelim Industrial Co., Ltd. for gross proceeds of $530.0 million, adjusted for incremental working capital of $4.9 million, less contractual capital contributions of $25.3 million. The original $5.8 million of incremental working capital was reduced in the second quarter of 2021 by $0.9 million due to payment of a statutory tax obligation. The sale closed and is subject to a customary post-closing working capital adjustment and a contractual capital contribution post-closing adjustment. Upon closing, we recognized a gain of $175.2 million, and as part of the consideration received, entered into a multi-year IRSA with DL Chemical. As the IRSA product sales are at cost, we deferred approximately $180.6 million, of which $158.2 million and $22.4 million were recorded within deferred income and other payables and accruals, respectively, on the Condensed Consolidated Balance Sheet as of March 31, 2020. The deferred income will be amortized into revenue as a non-cash transaction when the products are sold. In accordance with the IRSA, we will supply Isoprene Rubber to DL Chemical for a period of five years from the sale closing date, with an optional extension for an additional five years. We used the $509.6 million net proceeds from the sale of our Cariflex business principally for repayment of the full outstanding balance of $290.0 million under the U.S. dollar denominated tranche (the “USD Tranche”) of the Company’s senior secured term loan facility (the “Term Loan Facility”) and repayment in the amount of €145.0 million, or approximately $166.8 million, of borrowings under the Euro dollar denominated tranche (the “Euro Tranche”) of the Term Loan Facility. We used the remaining proceeds in accordance with the terms of the Term Loan Facility to make additional repayments of debt and invested in strategic assets of the Company. For further discussion on assets held for sale, see Note 5 Assets Held for Sale to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation We account for share-based awards under the provisions of ASC 718, Compensation—Stock Compensation . Accordingly, share-based compensation cost is measured at the grant date based on the fair value of the award, and we expense these costs using the straight-line method over the requisite service period, generally three years. Share-based compensation expense was $2.6 million and $2.3 million for the three months ended September 30, 2021 and 2020, respectively, and $8.1 million and $7.0 million for the nine months ended September 30, 2021 and 2020, respectively. The Company’s annual grant of share-based awards generally occurs in the first quarter under our Kraton Corporation Amended and Restated 2016 Equity and Cash Incentive Plan, as amended (the “A&R 2016 Plan”). |
Detail of Certain Balance Sheet
Detail of Certain Balance Sheet Accounts | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Certain Balance Sheet Accounts | Detail of Certain Balance Sheet Accounts September 30, 2021 December 31, 2020 (In thousands) Inventories of products: Finished products $ 300,738 $ 240,021 Work in progress 3,140 3,074 Raw materials 115,023 84,039 Inventories of products, gross 418,901 327,134 Inventory reserves (6,908) (8,249) Total inventories of products, net $ 411,993 $ 318,885 Intangible assets: Contractual agreements $ 263,075 $ 265,375 Technology 146,113 147,011 Customer relationships 60,402 60,623 Tradenames/trademarks 84,379 83,519 Software 75,384 68,276 Intangible assets 629,353 624,804 Less accumulated amortization: Contractual agreements 126,267 110,811 Technology 79,113 74,693 Customer relationships 41,210 40,205 Tradenames/trademarks 57,943 53,951 Software 54,972 50,410 Total accumulated amortization 359,505 330,070 Intangible assets, net of accumulated amortization $ 269,848 $ 294,734 Other payables and accruals: Employee related $ 48,494 $ 52,145 Short-term operating lease liabilities 18,825 18,299 Interest payable 12,912 3,873 Capital project accruals 5,912 1,149 Customer related 10,958 10,484 Short-term deferred income 26,765 24,182 Income tax payable 44,850 26,367 Utilities payable 3,705 2,886 Property and other taxes 2,515 1,303 Other 28,270 26,676 Total other payables and accruals $ 203,206 $ 167,364 Other long-term liabilities: Pension and other post-retirement benefits $ 117,890 $ 133,634 Long-term tax liability 18,359 19,530 Other 15,748 15,402 Total other long-term liabilities $ 151,997 $ 168,566 Changes in accumulated other comprehensive income (loss) by component were as follows: Cumulative Foreign Currency Translation Cash Flow Hedges, Net of Tax Net Investment Hedges, Net of Tax Benefit Plans Liability, Net of Tax Total (In thousands) December 31, 2019 $ (29,389) $ (2,389) $ 13,624 $ (87,641) $ (105,795) Other comprehensive income (loss) before reclassifications 14,136 1,387 (14,089) (1,714) (280) Amounts reclassified to (income) expense from accumulated other comprehensive loss (1) 66,533 1,002 (899) — 66,636 Net other comprehensive income (loss) for the year 80,669 2,389 (14,988) (1,714) 66,356 September 30, 2020 $ 51,280 $ — $ (1,364) $ (89,355) $ (39,439) December 31, 2020 $ 73,575 $ — $ (13,156) $ (98,284) $ (37,865) Other comprehensive income (loss) before reclassifications (21,402) — 15,408 — (5,994) Net other comprehensive income (loss) for the year (21,402) — 15,408 — (5,994) September 30, 2021 $ 52,173 $ — $ 2,252 $ (98,284) $ (43,859) ____________________________________________________ (1) Amounts reclassified to (income) expense from accumulated other comprehensive income (loss) are related to cumulative foreign currency translation and settlement of a net investment hedge, which are recorded in disposition and exit of business activities in the Condensed Consolidated Statement of Operations. Additionally, the settlement of interest rate swaps are recorded in loss on extinguishment of debt in the Condensed Consolidated Statement of Operations. All these costs are in connection with the divestiture of our Cariflex business and subsequent repayments of debt. |
Earnings Per Share ("EPS")
Earnings Per Share ("EPS") | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share ("EPS") | Earnings Per Share (“EPS”) Basic EPS is computed by dividing net income attributable to Kraton by the weighted-average number of shares outstanding, excluding non-vested restricted stock awards during the period. Diluted EPS is computed by dividing net income attributable to Kraton by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options, were exercised, settled, or converted into common stock and were dilutive. The diluted weighted-average number of shares used in our diluted EPS calculation is determined using the treasury stock method. The computation of diluted EPS excludes weighted average restricted share units of 493,187 and 454,366 for the three and nine months ended September 30, 2020, respectively, as they are anti-dilutive due to a net loss attributable to Kraton. The calculations of basic and diluted EPS are as follows: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 53,024 32,148 $ (403,794) 31,863 Amounts allocated to unvested restricted shares — — 963 (76) Amounts available to common stockholders 53,024 32,148 $ 1.65 (402,831) 31,787 $ (12.67) Diluted: Amounts allocated to unvested restricted shares — — (963) 76 Non participating share units — 473 — — Stock options added under the treasury stock method — 71 — — Amounts reallocated to unvested restricted shares — — 963 (76) Amounts available to stockholders and assumed conversions $ 53,024 32,692 $ 1.62 $ (402,831) 31,787 $ (12.67) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 122,664 32,089 $ (203,676) 31,836 Amounts allocated to unvested restricted shares (54) (14) 691 (108) Amounts available to common stockholders 122,610 32,075 $ 3.82 (202,985) 31,728 $ (6.40) Diluted: Amounts allocated to unvested restricted shares 54 14 (691) 108 Non participating share units — 475 — — Stock options added under the treasury stock method — 60 — — Amounts reallocated to unvested restricted shares (53) (14) 691 (108) Amounts available to stockholders and assumed conversions $ 122,611 32,610 $ 3.76 $ (202,985) 31,728 $ (6.40) Share Repurchase Program. During the nine months ended September 30, 2021, we did not repurchase any shares of our common stock. Under our previously authorized share repurchase program, which ended on February 7, 2021, we repurchased 311,152 shares of our common stock at an average price of $32.14 per share and a total cost of $10.0 million. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following: September 30, 2021 December 31, 2020 Principal Debt Issuance Costs Total Principal Debt Issuance Costs Total (In thousands) Euro Tranche $ 98,303 $ (779) $ 97,524 $ 104,159 $ (996) $ 103,163 4.25% Senior Notes 400,000 (6,139) 393,861 400,000 (6,995) 393,005 5.25% Senior Notes 335,384 (3,700) 331,684 355,366 (4,221) 351,145 ABL Facility — — — — — — KFPC Loan Agreement 17,730 — 17,730 52,730 (18) 52,712 KFPC Revolving Facilities 55,988 — 55,988 37,003 — 37,003 Finance lease obligations 3,595 — 3,595 835 — 835 Total debt 911,000 (10,618) 900,382 950,093 (12,230) 937,863 Less current portion of total debt 74,923 — 74,923 72,347 — 72,347 Long-term debt $ 836,077 $ (10,618) $ 825,459 $ 877,746 $ (12,230) $ 865,516 Senior Secured Term Loan Facility. The Euro Tranche interest rate applicable margin is 2.0%. Our Term Loan Facility will mature on March 8, 2025. For a summary of additional terms of the Term Loan Facility, see Note 9 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. As of the date of this filing, the effective interest rate for the Euro Tranche is 2.79%. The Term Loan Facility contains a number of customary affirmative and negative covenants, and we were in compliance with those covenants as of the date of this filing. 4.25% Senior Notes due 2025. Kraton Polymers LLC and its wholly-owned financing subsidiary Kraton Polymers Capital Corporation issued $400.0 million aggregate principal amount of 4.25% Senior Notes due 2025 (the “4.25% Senior Notes”) in December 2020, which mature on December 15, 2025. The 4.25% Senior Notes are general unsecured, senior obligations, and are unconditionally guaranteed on a senior unsecured basis by each of Kraton Corporation and certain of our wholly-owned domestic subsidiaries. We pay interest on the Senior Notes at 4.25% per annum, semi-annually in arrears on June 15 and December 15 of each year. 5.25% Senior Notes due 2026. Kraton Polymers LLC and its wholly-owned financing subsidiary Kraton Polymers Capital Corporation issued €290.0 million (or approximately $335.4 million) aggregate principal amount of 5.25% Senior Notes due 2026 (the “5.25% Senior Notes”) in May 2018, which mature on May 15, 2026. The 5.25% Senior Notes are general unsecured, senior obligations, and are unconditionally guaranteed on a senior unsecured basis by each of Kraton Corporation and certain of our wholly-owned domestic subsidiaries. We pay interest on the senior notes at 5.25% per annum, semi-annually in arrears on May 15 and November 15 of each year. ABL Facility. Our asset-based revolving credit facility provides financing of up to $300.0 million (the “ABL Facility”). The ABL Facility also provides that we have the right at any time to request up to $100.0 million of additional commitments, provided that we satisfy certain additional conditions. We had no outstanding borrowings under the ABL Facility as of September 30, 2021. The termination date of the ABL Facility is December 3, 2025 (subject to earlier termination if certain outstanding indebtedness under the Term Loan Facility or our senior unsecured notes is not previously refinanced). Borrowing availability under the ABL Facility is subject to borrowing base limitations based on the level of receivables and inventory available for security. Revolver commitments under the ABL Facility consist of U.S. and Dutch revolving credit facility commitments, which may be reallocated subject to certain conditions, provided the Dutch revolver commitments may not exceed $100.0 million. The ABL Facility contains a number of customary affirmative and negative covenants, and we were in compliance with those covenants as of the date of this filing. For a summary of additional terms of the ABL Facility, see Note 9 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. KFPC Loan Agreement. As of September 30, 2021, approximately NTD 494.0 million (or approximately $17.7 million) was outstanding on KFPC’s syndicated loan agreement (the “KFPC Loan Agreement”). For the nine months ended September 30, 2021, the effective interest rate for borrowings on the KFPC Loan Agreement was 1.8%. The KFPC Loan Agreement contains certain financial covenants that change during the term of the KFPC Loan Agreement. KFPC was in compliance with those covenants as of the date of this filing. In each case, these covenants are calculated and tested on an annual basis at December 31 st each year. The KFPC Loan Agreement will mature on January 17, 2022. For a summary of additional terms of the KFPC Loan Agreement, see Note 9 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. KFPC Revolving Facilities. KFPC also has four revolving credit facilities (the “KFPC Revolving Facilities”) to provide funding for working capital requirements and/or general corporate purposes, which allow for total borrowings of up to NTD 2.5 billion (or approximately $89.8 million). All of the KFPC Revolving Facilities are subject to variable interest rates. As of September 30, 2021, NTD 1.6 billion (or approximately $56.0 million) was drawn on the KFPC Revolving Facilities. Debt Issuance Costs. We had debt issuance cost of $12.5 million as of September 30, 2021, of which $1.9 million related to the ABL Facility, which is recorded as an asset (of which $0.5 million was included in other current assets) and $10.6 million is recorded as a reduction to long-term debt. We amortized $1.9 million and $2.4 million during the nine months ended September 30, 2021 and 2020, respectively. Debt Maturities . The remaining principal payments on our outstanding total debt, including finance leases, as of September 30, 2021, are as follows: Principal Payments (In thousands) October 1, 2021 through September 30, 2022 $ 74,923 October 1, 2022 through September 30, 2023 993 October 1, 2023 through September 30, 2024 1,094 October 1, 2024 through September 30, 2025 98,599 October 1, 2025 through September 30, 2026 735,391 Thereafter — Total debt $ 911,000 See Note 9 Fair Value Measurements, Financial Instruments, and Credit Risk for fair value information related to our long-term debt. |
Fair Value Measurements, Financ
Fair Value Measurements, Financial Instruments, and Credit Risk | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value Measurements, Financial Instruments, and Credit Risk | Fair Value Measurements, Financial Instruments, and Credit Risk ASC 820, Fair Value Measurements and Disclosures defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. ASC 820 requires entities to, among other things, maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. In accordance with ASC 820, these two types of inputs have created the following fair value hierarchy: • Level 1—Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are not active; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and • Level 3—Inputs that are unobservable and reflect our assumptions used in pricing the asset or liability based on the best information available under the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). Recurring Fair Value Measurements . The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. These financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which judgment may affect the valuation of their fair value and placement within the fair value hierarchy levels. As of September 30, 2021 and December 31, 2020, the Company has no assets or liabilities utilizing significant unobservable inputs (or Level 3) to derive its estimated fair values. Fair Value Measurements at Reporting Date Using Balance Sheet Location September 30, 2021 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (In thousands) Retirement plan asset – noncurrent Other long-term asset $ 2,828 $ 2,828 $ — Derivative liability – current Other payables and accruals (14) — (14) Total $ 2,814 $ 2,828 $ (14) Fair Value Measurements at Reporting Date Using Balance Sheet Location December 31, 2020 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (In thousands) Retirement plan asset – noncurrent Other long-term assets $ 2,454 $ 2,454 $ — Derivative liability – current Other payables and accruals (219) — (219) Total $ 2,235 $ 2,454 $ (219) The following table presents the carrying values and approximate fair values of our long-term debt. September 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Euro Tranche (significant other observable inputs – level 2) $ 98,303 $ 98,242 $ 104,159 $ 103,574 4.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 400,000 $ 415,784 $ 400,000 $ 409,880 5.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 335,384 $ 345,288 $ 355,366 $ 367,886 ABL Facility $ — $ — $ — $ — Finance lease obligations $ 3,595 $ 3,595 $ 835 $ 835 KFPC Loan Agreement $ 17,730 $ 17,730 $ 52,730 $ 52,730 KFPC Revolving Facilities $ 55,988 $ 55,988 $ 37,003 $ 37,003 The ABL Facility, finance lease obligations, KFPC Loan Agreement, and KFPC Revolving Facilities are variable rate instruments, and as such, the fair value approximates the carrying value. Financial Instruments Interest Rate Swap Agreements. Periodically, we enter into interest rate swap agreements to hedge or otherwise protect against interest rate fluctuation on a portion of our variable rate debt. These interest rate swap agreements are designated as cash flow hedges on our exposure to the variability of future cash flows. In an effort to convert a substantial portion of our future interest payments pursuant to the USD Tranche to a fixed interest rate, in February and March 2016, we entered into a series of interest rate swap agreements with an aggregate notional value of $925.4 million, effective dates of January 3, 2017, and maturity dates of December 31, 2020. Based on debt repayments, we have exited all of the interest rate swap agreements originally entered into in 2017. We reclassified out of other comprehensive income (loss) the settlement of our interest rate swaps that amounted to a $1.3 million loss on extinguishment of debt for the nine months ended September 30, 2020. Foreign Currency Hedges. Periodically, we enter into foreign currency agreements to hedge or otherwise protect against fluctuations in foreign currency exchange rates. These agreements do not qualify for hedge accounting, and gains/losses resulting from both the up-front premiums and/or settlement of the hedges at expiration of the agreements are recognized in the period in which they are incurred. We settled these hedges and recorded a loss of $0.2 million and a loss of $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and a loss of $2.4 million and a gain of $0.5 million for the nine months ended September 30, 2021 and 2020, respectively, which are recorded in cost of goods sold in the Condensed Consolidated Statements of Operations. These contracts are structured such that these gains/losses from the mark-to-market impact of the hedging instruments materially offset the underlying foreign currency exchange gains/losses to reduce the overall impact of foreign currency exchange movements throughout the period. Net Investment Hedge. During the year ended December 31, 2018, we designated €290.0 million of euro-denominated borrowing as a hedge against a portion of our net investment in the Company’s European operations. The mark-to-market of this instrument was a gain of $8.7 million and a loss of $14.8 million for the three months ended September 30, 2021 and 2020, respectively, and a gain of $20.0 million and a loss of $14.6 million for the nine months ended September 30, 2021 and 2020, respectively, which is recorded within accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. Credit Risk The use of derivatives creates exposure to credit risk in the event that the counterparties to these instruments fail to perform their obligations under the contracts, which we seek to minimize by limiting our counterparties to major financial institutions with acceptable credit ratings and by monitoring the total value of positions with individual counterparties. We analyze our counterparties’ financial condition prior to extending credit, and we establish credit limits and monitor the appropriateness of those limits on an ongoing basis. We also obtain cash, letters of credit, or other acceptable forms of security from customers to provide credit support, where appropriate, based on our financial analysis of the customer and the contractual terms and conditions applicable to each transaction. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax provision was an expense of $15.2 million and a benefit of $18.2 million for the three months ended September 30, 2021 and 2020, respectively, and an expense of $36.9 million and a benefit of $48.1 million for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, our effective tax rate differed from the U.S. corporate statutory tax rate of 21.0% primarily due to the mix of our pretax income or loss generated in various local and foreign jurisdictions, partially offset by the change in valuation allowance. During the nine months ended September 30, 2020, our effective tax rate differed from the U.S. corporate statutory tax rate of 21.0% primarily due to the non-deductible goodwill impairment loss and the mix of our pretax income or loss generated in various foreign jurisdictions, offset by the intercompany transfer of certain intellectual property rights to our Dutch subsidiary and the tax impact of the sale of our Cariflex business. The provision for income taxes differs from the amount computed by applying the U.S. corporate statutory income tax rate to income (loss) before income taxes for the reasons set forth below. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Income taxes at the statutory rate $ (14,792) $ 88,370 $ (34,655) $ 52,240 State taxes, net of federal benefit (934) 266 (2,317) 530 Foreign tax rate differential (921) (240) (1,566) (7,539) Permanent differences 800 (928) (773) (4,846) Cariflex disposition — 18,912 — 22,652 Dutch transfer of assets — — — 65,527 Tax credits — 157 800 800 Uncertain tax positions (129) (209) (490) 2,698 Valuation allowance 580 (139) 1,614 282 Goodwill impairment — (84,000) — (84,000) Return to provision adjustments 162 (4,000) 511 (262) Income tax benefit (expense) $ (15,234) $ 18,189 $ (36,876) $ 48,082 Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a deferred tax benefit will not be realized. We consider all available material evidence, both positive and negative, in assessing the appropriateness of a valuation allowance for our deferred tax assets. As of September 30, 2021 and December 31, 2020, we recorded a valuation allowance of $37.9 million and $39.5 million, respectively, against our net operating loss carryforwards and other deferred tax assets. We currently believe that certain unremitted foreign earnings of our subsidiaries will permanently reinvest for an infinite period of time. Accordingly, we have not provided deferred taxes for the differences between these subsidiaries’ book basis and underlying tax basis or on related foreign currency translation adjustment amounts. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Our U.S. federal income tax returns, for 2005 remain open to examination, as a result of the utilization of net operating loss carryforwards from 2005. In addition, open tax years for state and foreign jurisdictions remain subject to examination. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying condensed consolidated financial statements for any adjustments that might be incurred due to federal, state, or foreign audits. We recognize the effect of income tax positions only when it is more likely than not of being sustainable. The taxes are recorded in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes . Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. As of September 30, 2021 and December 31, 2020, we had total unrecognized tax benefits of $9.1 million and $8.8 million, respectively, if recognized, would impact our effective tax rate. During the nine months ended September 30, 2021 and 2020, we had an increase of $0.3 million and a decrease of $2.5 million, respectively, primarily related to our uncertain tax positions in the U.S. and Europe. We recorded interest and penalties related to unrecognized tax benefits within the provision for income taxes. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Lease Commitments All of our lease right-of-use (“ROU”) assets and lease liabilities are related to operating and finance leases, where the lease term exceeds one year. Our operating leases are generally for railcars, office space, and equipment and our finance leases are generally related to equipment and buildings used to conduct our operations. These operating and finance leases were discounted using a weighted-average rate of 3.66% and 4.78%, respectively, which is based on a weighted average borrowing rate of specific debt. Non-variable lease costs include the amortization of the asset recorded on a straight-line basis. Variable lease components are non-index based payments resulting from usage or performance of the underlying asset. We have no material lessor or sublease income. Operating Leases The components of lease cost for operating leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Lease cost $ 6,056 $ 6,035 $ 18,138 $ 18,463 Variable lease cost 99 759 415 813 Operating lease expense $ 6,155 $ 6,794 $ 18,553 $ 19,276 The operating lease liabilities on a discounted basis arising from obtaining ROU assets as of September 30, 2021 were comprised as follows: Leased Asset Class Polymer Chemical Percentage Average Months Remaining on the Lease Weighted Average in Months (In thousands) Railcars $ 2,052 $ 22,697 25.6 % 41 10.5 Buildings 29,925 11,500 42.8 % 43 18.3 Equipment 1,441 16,993 19.1 % 30 5.7 Land 6,756 41 7.0 % 235 16.5 Other 579 4,735 5.5 % 25 1.4 Total $ 40,753 $ 55,966 52.4 The following tables show the undiscounted cash flows for the operating lease liabilities. September 30, 2021 (In thousands) October 1, 2021 through December 31, 2021 $ 5,810 2022 21,494 2023 18,714 2024 14,610 2025 12,246 Thereafter 36,293 Total undiscounted operating lease liabilities 109,167 Present value discount (12,414) Foreign currency and other (34) Total discounted operating lease liabilities $ 96,719 December 31, 2020 (In thousands) 2021 $ 21,098 2022 15,992 2023 14,309 2024 10,668 2025 8,605 Thereafter 26,988 Total undiscounted operating lease liabilities 97,660 Present value discount (11,474) Foreign currency and other 11 Total discounted operating lease liabilities $ 86,197 Finance Leases The components of lease cost for finance leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Lease amortization $ 186 $ 177 $ 765 $ 533 Lease interest 50 13 125 40 Finance lease expense $ 236 $ 190 $ 890 $ 573 The finance lease liabilities on a discounted basis arising from obtaining ROU assets as of September 30, 2021 were comprised as follows: Leased Asset Class Polymer Chemical Percentage Average Months Remaining on the Lease Weighted Average in Months (In thousands) Equipment $ 694 $ 2,901 100.0 % 64 64.0 Total $ 694 $ 2,901 64.0 The following tables show the undiscounted cash flows for the finance lease liabilities. September 30, 2021 (In thousands) October 1, 2021 through December 31, 2021 $ 631 2022 964 2023 1,142 2024 1,142 2025 18 Thereafter 3 Total undiscounted finance lease liabilities 3,900 Present value discount (301) Foreign currency and other (4) Total discounted finance lease liabilities $ 3,595 December 31, 2020 (In thousands) 2021 $ 232 2022 232 2023 232 2024 232 2025 — Thereafter — Total undiscounted finance lease liabilities 928 Present value discount (92) Foreign currency and other (1) Total discounted finance lease liabilities $ 835 These finance lease liabilities are included within current and long-term debt on the Condensed Consolidated Balance Sheets. See Note 8 Long-Term Debt for additional information. (b) Legal Proceedings We received an initial notice from the tax authorities in Brazil during the fourth quarter of 2012 in connection with tax credits that were generated from the purchase of certain goods that were subsequently applied by us against taxes owed. The tax authorities are currently assessing R$10.2 million, or approximately $1.9 million, including penalties and interest. We have appealed the assertion by the tax authorities in Brazil that the goods purchased were not eligible to earn the credits. While the outcome of this proceeding cannot be predicted with certainty, we do not expect this matter to have a material adverse effect upon our financial position, results of operations or cash flows. We and certain of our subsidiaries, from time to time, are parties to various other legal proceedings, claims and disputes that have arisen in the ordinary course of business. These claims may involve significant amounts, some of which would not be covered by insurance. A substantial settlement payment or judgment in excess of our accruals could have a material adverse effect on our financial position, results of operations or cash flows. While the outcome of these proceedings cannot be predicted with certainty, we do not expect any of these existing matters, individually or in the aggregate, to have a material adverse effect upon our financial position, results of operations or cash flows. (c) Asset Retirement Obligations The changes in the aggregate carrying amount of our asset retirement obligations (“ARO”) are as follows: Nine Months Ended September 30, 2021 2020 (In thousands) Beginning balance $ 6,332 $ 6,523 Additional accruals 316 119 Accretion expense 310 257 Obligations settled (707) (344) Foreign currency translation (309) 246 Ending balance $ 5,942 $ 6,801 In the first quarter of 2021, the Company recorded an ARO of $0.3 million related to the office rebuild of our research facility in Europe. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits The components of net periodic benefit cost related to pension benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans (In thousands) Service cost $ — $ 513 $ 48 $ 443 $ — $ 1,538 $ 143 $ 1,327 Interest cost 1,398 311 1,665 419 4,193 933 4,965 1,259 Expected return on plan assets (2,485) (852) (2,303) (675) (7,455) (2,554) (6,908) (2,057) Amortization of prior service cost — 5 — 4 — 14 — 13 Amortization of net actuarial loss 605 262 408 253 1,815 786 1,223 758 Net periodic benefit (income) cost $ (482) $ 239 $ (182) $ 444 $ (1,447) $ 717 $ (577) $ 1,300 The components of net periodic benefit cost other than the service cost component are included in other income (expense) on our Condensed Consolidated Statements of Operations. We made contributions of $12.8 million and $5.9 million to our pension plans in the nine months ended September 30, 2021 and 2020, respectively. The components of net periodic benefit cost related to other post-retirement benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 U.S. Plans U.S. Plans U.S. Plans U.S. Plans (In thousands) Service cost $ 85 $ 85 $ 255 $ 255 Interest cost 163 195 488 585 Amortization of prior service cost (438) (438) (1,313) (1,313) Amortization of net actuarial loss 243 213 728 638 Net periodic benefit cost $ 53 $ 55 $ 158 $ 165 The components of net periodic benefit cost other than the service cost component are included in other income (expense) on our Condensed Consolidated Statements of Operations. We made contributions of $0.7 million and $1.0 million to our other post-retirement plans in the nine months ended September 30, 2021 and 2020, respectively. |
Industry Segments and Foreign O
Industry Segments and Foreign Operations | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Industry Segments and Foreign Operations | Industry Segments and Foreign Operations Our operations are managed through two operating segments: (i) Polymer segment; and (ii) Chemical segment. In accordance with the provisions of ASC 280, Segment Reporting , our chief operating decision maker has been identified as our President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. • Polymer Segment is comprised of our SBCs and other engineered polymers business. • Chemical Segment is comprised of our pine-based specialty products business. Our chief operating decision maker uses operating income (loss) as the primary measure of each segment’s operating results in order to allocate resources and in assessing the company’s performance. In accordance with ASC 280, Segment Reporting , we have presented operating income for each segment. The following table summarizes our operating results by segment. We do not have sales between segments. Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 297,089 $ 229,799 $ 526,888 $ 198,540 $ 174,898 $ 373,438 Cost of goods sold 206,766 153,431 360,197 163,544 141,140 304,684 Gross profit 90,323 76,368 166,691 34,996 33,758 68,754 Operating expenses: Research and development 7,835 2,543 10,378 7,234 2,220 9,454 Selling, general, and administrative 25,860 19,067 44,927 19,112 16,173 35,285 Depreciation and amortization 12,794 18,880 31,674 13,042 18,271 31,313 (Gain) loss on disposal of fixed assets 12 168 180 698 (1,225) (527) Impairment of goodwill — — — — 400,000 400,000 Operating income (loss) $ 43,822 $ 35,710 79,532 $ (5,090) $ (401,681) (406,771) Other income 808 259 Loss on extinguishment of debt — (848) Earnings of unconsolidated joint venture 89 81 Interest expense, net (9,989) (13,527) Income (loss) before income taxes $ 70,440 $ (420,806) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 816,685 $ 641,097 $ 1,457,782 $ 642,772 $ 513,614 $ 1,156,386 Cost of goods sold 564,941 450,592 1,015,533 481,200 394,188 875,388 Gross profit 251,744 190,505 442,249 161,572 119,426 280,998 Operating expenses: Research and development 21,921 7,700 29,621 22,056 8,102 30,158 Selling, general, and administrative 65,654 54,589 120,243 70,074 52,671 122,745 Depreciation and amortization 38,394 56,553 94,947 39,337 54,491 93,828 (Gain) loss on disposal of fixed assets 126 400 526 508 (542) (34) Impairment of goodwill — — — — 400,000 400,000 Operating income (loss) $ 125,649 $ 71,263 196,912 $ 29,597 $ (395,296) (365,699) Other income (expense) (877) 837 Disposition and exit of business activities — 175,189 Loss on extinguishment of debt — (14,943) Earnings of unconsolidated joint venture 344 310 Interest expense, net (31,353) (44,454) Income (loss) before income taxes $ 165,026 $ (248,760) The following table presents long-lived assets including goodwill and total assets. September 30, 2021 December 31, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Property, plant, and equipment, net $ 520,796 $ 408,685 $ 929,481 $ 523,067 $ 419,636 $ 942,703 Investment in unconsolidated joint venture $ 12,050 $ — $ 12,050 $ 12,723 $ — $ 12,723 Goodwill $ — $ 373,303 $ 373,303 $ — $ 375,061 $ 375,061 Total assets $ 1,230,473 $ 1,378,836 $ 2,609,309 $ 1,104,954 $ 1,356,003 $ 2,460,957 (a) Goodwill The Company conducts an annual impairment review of goodwill on October 1st of each year, unless events occur which trigger the need for an interim impairment review. Changes in goodwill from January 1, 2021 through September 30, 2021 were as follows: Chemical (In thousands) Balance at January 1, 2021 $ 375,061 Foreign currency translation (1,758) Balance at September 30, 2021 $ 373,303 (b) Revenue by Geography For geographic reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. Long-lived assets consist primarily of property, plant, and equipment, which are attributed to the geographic location in which they are located and are presented at historical cost. Following is a summary of revenue by geographic region: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 124,399 $ 93,472 $ 217,871 $ 77,586 $ 69,559 $ 147,145 Germany 36,541 15,461 52,002 21,388 11,390 32,778 All other countries 136,149 120,866 257,015 99,566 93,949 193,515 $ 297,089 $ 229,799 $ 526,888 $ 198,540 $ 174,898 $ 373,438 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 317,594 $ 248,497 $ 566,091 $ 235,289 $ 214,684 $ 449,973 Germany 98,211 43,887 142,098 69,256 32,610 101,866 All other countries 400,880 348,713 749,593 338,227 266,320 604,547 $ 816,685 $ 641,097 $ 1,457,782 $ 642,772 $ 513,614 $ 1,156,386 (c) Capital Expenditures Our capital expenditures of property, plant, and equipment for the Polymer segment, excluding capital expenditures by the KFPC joint venture, were $33.2 million and $27.3 million during the nine months ended September 30, 2021 and 2020, respectively, and capital expenditures of property, plant, and equipment for our Chemical segment were $28.7 million and $26.9 million during the nine months ended September 30, 2021 and 2020, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We own a 50% equity investment in an SBC manufacturing joint venture in Kashima, Japan. Our outstanding payables were $14.1 million and $14.8 million as of September 30, 2021 and December 31, 2020, respectively, which were recorded in due to related party on the Condensed Consolidated Balance Sheets. Our total purchases from the joint venture were $6.3 million and $6.1 million for the three months ended September 30, 2021 and 2020, respectively, and $21.7 million and $20.9 million for the nine months ended September 30, 2021 and 2020, respectively. We own a 50% variable interest in KFPC, an HSBC manufacturing joint venture in Mailiao, Taiwan. The KFPC joint venture is fully consolidated in our financial statements, and our joint venture partner, Formosa Petrochemical Corporation (“FPCC”), is a related party affiliate. Under the terms of the joint venture agreement, FPCC is to provide certain site services and raw materials to KFPC. Additionally, we purchase certain raw materials from FPCC for our other manufacturing locations. Our outstanding payables were $0.5 million and $2.3 million as of September 30, 2021 and December 31, 2020, respectively, which were recorded in due to related party on the Condensed Consolidated Balance Sheets. Our total purchases from this joint venture were $15.8 million and $10.7 million for the three months ended September 30, 2021 and 2020, respectively, and $40.2 million and $36.4 million for the nine months ended September 30, 2021 and 2020, respectively. See Note 15 Variable Interest Entity, for further discussion related to the KFPC joint venture. |
Variable Interest Entity
Variable Interest Entity | 9 Months Ended |
Sep. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Variable Interest Entity | Variable Interest Entity We hold a variable interest in a joint venture with FPCC to own and operate a 30 kiloton HSBC plant at FPCC’s petrochemical site in Mailiao, Taiwan. Included in the below assets and liabilities is a land lease with FPCC to support our operations at the HSBC plant. Kraton and FPCC are each 50% owners of the joint venture company, KFPC. Under the provisions of an offtake agreement with KFPC, we have exclusive rights to purchase all production from KFPC. Additionally, following a ramp-up period, the agreement requires us to purchase a minimum of 80% of the plant production capacity each year at a defined fixed margin. This offtake agreement represents a variable interest that provides us the power to direct the most significant activities of KFPC and exposes us to the economic variability of the joint venture. As such, we have determined that we are the primary beneficiary of this variable interest entity. As a result, we have consolidated KFPC in our financial statements and reflected FPCC’s 50% ownership as a noncontrolling interest. During the three months ended September 30, 2021, KFPC declared a dividend to Kraton and FPCC in aggregate of $0.2 million. The dividend is expected to be paid in the fourth quarter of 2021. The following table summarizes the carrying amounts of assets and liabilities as of September 30, 2021 and December 31, 2020 for KFPC before intercompany eliminations. September 30, 2021 December 31, 2020 (In thousands) Cash and cash equivalents $ 5,918 $ 3,097 Other current assets 19,607 17,304 Property, plant, and equipment, net 144,472 150,838 Intangible assets 7,485 7,959 Long-term operating lease assets, net 6,978 7,178 Other long-term assets 5,734 5,187 Total assets $ 190,194 $ 191,563 Current portion of long-term debt $ 73,718 $ 72,156 Current liabilities 8,494 5,209 Long-term debt — 17,559 Deferred income taxes 699 661 Long-term operating lease liabilities 6,401 6,700 Total liabilities $ 89,312 $ 102,285 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsWe have evaluated events and transactions that occurred after the balance sheet date and determined that there were no other significant events or transactions that would require recognition or disclosure in our condensed consolidated financial statements for the period ended September 30, 2021. |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying unaudited condensed consolidated financial statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary, except our 50% investment in our joint venture, Kraton Formosa Polymers Corporation (“KFPC”), located in Mailiao, Taiwan. KFPC is a variable interest entity for which we have determined that we are the primary beneficiary and, therefore, have consolidated into our financial statements. Our 50% investment in our joint venture located in Kashima, Japan, is accounted for under the equity method of accounting. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective annual periods or any other interim period, in particular due to the effect of seasonal changes and weather conditions that typically affect our sales into paving, roadmarking, roofing, and construction applications. In particular, sales volumes into these applications are generally higher in the second and third quarter of the calendar year as warm and dry weather is more conducive to paving and roofing activity. |
Reclassifications | Reclassifications. Certain amounts reported in the condensed consolidated financial statements and notes to the condensed consolidated financial statements for the prior periods may have been reclassified to conform to the current reporting presentation. |
Use of Estimates | Use of Estimates. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include: • the useful lives of long-lived assets; • allowances for doubtful accounts and sales returns; • valuation of goodwill; • the valuation of derivatives, deferred taxes, property, plant and equipment, inventory, share-based compensation, and deferred income; and • liabilities for employee benefit obligations, environmental matters, asset retirement obligations, income tax uncertainties, and other contingencies. |
Income Tax in Interim Periods | Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these condensed consolidated financial statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction’s tax laws. Overall effective tax rate may therefore vary considerably from quarter to quarter and from year to year based on the actual or projected location of operations, levels of income, intercompany gains or losses, and other factors. In accordance with U.S. GAAP for interim reporting, we have historically estimated our full-year effective tax rate and applied this rate to ordinary income or loss for the reporting period. We have determined that since small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate this historical method would not provide reliable results for the quarter ended September 30, 2021. Therefore, a discrete year-to-date method of reporting was used for the quarter ended September 30, 2021. We will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted. We have established valuation allowances against a variety of deferred tax assets, including net operating loss carryforwards, foreign tax credits and other income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not |
New Accounting Pronouncements | Accounting Standards Adopted in the Current Period We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This standard is effective for fiscal years beginning after December 15, 2020. Adoption of this standard did not materially impact our financial position, results of operations, and cash flows. We adopted ASU 2019-12 effective January 1, 2021. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This standard is applicable to our contracts and hedging relationships that reference LIBOR. The amendments may be applied through December 31, 2022. We will apply this guidance to transactions and modifications of these arrangements as appropriate. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope . This standard is effective beginning on January 7, 2021. Our analysis of ASU 2021-01 was completed during 2021, and there is no material change to our financial position, results of operations, and cash flows. We adopted ASU 2021-01 effective January 7, 2021. New Accounting Standards to be Adopted in Future Periods In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) . This standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing, and we expect to adopt ASU 2020-06 effective on January 1, 2022. |
Revenue Recognition | Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally, this occurs at a point in time when the risk of loss and title to the product transfers to the customer. Our standard terms of delivery are included in our contracts of sale, order confirmation documents, and invoices. As such, all revenue is considered revenue recognized from contracts with customers, and we do not have other sources of revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized net of sales tax, value-added taxes, and other taxes. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Certain customers may receive cash-based incentives (including rebates, price supports, and sales commission), which are accounted for as variable consideration. We estimate rebates and price supports based on the expected amount to be provided to customers and reduce revenues recognized once the performance obligation has been met. Sales commissions are recorded as an increase in cost of goods sold once the performance obligation has been met. We do not expect to have significant changes in our estimates for variable considerations. We have deferred revenue of $164.2 million related to contractual commitments with customers for which the performance obligation will be satisfied over time, which currently ranges from one Specific to the IRSA, the contract provided Isoprene Rubber sales revenue of $5.3 million and $1.8 million for the three months ended September 30, 2021 and 2020, respectively, and $21.2 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively. Included within Isoprene Rubber sales revenue is amortization of deferred income of $2.4 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $10.0 million and $7.5 million for the nine months ended September 30, 2021 and 2020, respectively, which represents non-cash revenue realized as the products are sold under the IRSA. Occasionally, we enter into bill-and-hold contracts, where we invoice the customer for products even though we retain possession of the products until a point in time in the future when the products are shipped to the customer. In these contracts, the primary performance obligation is satisfied at a point in time when the product is segregated from our general inventory, it is ready for shipment to customer, and we do not have the ability to use the product or direct it to another customer. Additionally, we have a secondary performance obligation related to custodial costs, including storage and freight, which is satisfied over time once the product has been delivered to the customer. We did not recognize any revenue related to bill-and-hold arrangements for the three months ended September 30, 2021 and 2020 and the nine months ended September 30, 2021. During the nine months ended September 30, 2020, we recognized $4.2 million of revenue related to these bill-and-hold arrangements. We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Polymer Segment (In thousands) Performance Products $ 180,671 $ 117,353 $ 485,770 $ 354,452 Specialty Polymers 110,673 78,629 308,481 232,851 Cariflex (1) — — — 36,930 Isoprene Rubber 5,261 1,833 21,191 17,436 Other 484 725 1,243 1,103 Polymer Product Line Revenue $ 297,089 $ 198,540 $ 816,685 $ 642,772 ____________________________________________________ (1) Cariflex is included in the results of operations through March 6, 2020. See Note 4 Disposition and Exit of Business Activities for further information on the divestiture of our Cariflex business. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Chemical Segment (In thousands) Adhesives $ 82,239 $ 63,901 $ 228,295 $ 189,789 Performance Chemicals 131,300 99,919 368,639 295,509 Tires 16,260 11,078 44,163 28,316 Chemical Product Line Revenue $ 229,799 $ 174,898 $ 641,097 $ 513,614 September 30, 2021 December 31, 2020 (In thousands) Contract receivables (1) $ 260,081 $ 179,805 Contract liabilities (2) $ 164,204 $ 175,511 ____________________________________________________ (1) Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets. (2) Our contract liability consists of $152.7 million of non-cash deferred income related to the IRSA and $9.7 million of non-cash deferred income related to a supply agreement with a significant lubricant additive customer. The impact from currency exchange rates is $1.9 million. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Polymer Segment (In thousands) Performance Products $ 180,671 $ 117,353 $ 485,770 $ 354,452 Specialty Polymers 110,673 78,629 308,481 232,851 Cariflex (1) — — — 36,930 Isoprene Rubber 5,261 1,833 21,191 17,436 Other 484 725 1,243 1,103 Polymer Product Line Revenue $ 297,089 $ 198,540 $ 816,685 $ 642,772 ____________________________________________________ (1) Cariflex is included in the results of operations through March 6, 2020. See Note 4 Disposition and Exit of Business Activities for further information on the divestiture of our Cariflex business. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Chemical Segment (In thousands) Adhesives $ 82,239 $ 63,901 $ 228,295 $ 189,789 Performance Chemicals 131,300 99,919 368,639 295,509 Tires 16,260 11,078 44,163 28,316 Chemical Product Line Revenue $ 229,799 $ 174,898 $ 641,097 $ 513,614 |
Schedule of contract with customer, asset and liability | September 30, 2021 December 31, 2020 (In thousands) Contract receivables (1) $ 260,081 $ 179,805 Contract liabilities (2) $ 164,204 $ 175,511 ____________________________________________________ (1) Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets. |
Detail of Certain Balance She_2
Detail of Certain Balance Sheet Accounts (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of certain balance sheet accounts | September 30, 2021 December 31, 2020 (In thousands) Inventories of products: Finished products $ 300,738 $ 240,021 Work in progress 3,140 3,074 Raw materials 115,023 84,039 Inventories of products, gross 418,901 327,134 Inventory reserves (6,908) (8,249) Total inventories of products, net $ 411,993 $ 318,885 Intangible assets: Contractual agreements $ 263,075 $ 265,375 Technology 146,113 147,011 Customer relationships 60,402 60,623 Tradenames/trademarks 84,379 83,519 Software 75,384 68,276 Intangible assets 629,353 624,804 Less accumulated amortization: Contractual agreements 126,267 110,811 Technology 79,113 74,693 Customer relationships 41,210 40,205 Tradenames/trademarks 57,943 53,951 Software 54,972 50,410 Total accumulated amortization 359,505 330,070 Intangible assets, net of accumulated amortization $ 269,848 $ 294,734 Other payables and accruals: Employee related $ 48,494 $ 52,145 Short-term operating lease liabilities 18,825 18,299 Interest payable 12,912 3,873 Capital project accruals 5,912 1,149 Customer related 10,958 10,484 Short-term deferred income 26,765 24,182 Income tax payable 44,850 26,367 Utilities payable 3,705 2,886 Property and other taxes 2,515 1,303 Other 28,270 26,676 Total other payables and accruals $ 203,206 $ 167,364 Other long-term liabilities: Pension and other post-retirement benefits $ 117,890 $ 133,634 Long-term tax liability 18,359 19,530 Other 15,748 15,402 Total other long-term liabilities $ 151,997 $ 168,566 |
Schedule of accumulated other comprehensive income (loss) | Changes in accumulated other comprehensive income (loss) by component were as follows: Cumulative Foreign Currency Translation Cash Flow Hedges, Net of Tax Net Investment Hedges, Net of Tax Benefit Plans Liability, Net of Tax Total (In thousands) December 31, 2019 $ (29,389) $ (2,389) $ 13,624 $ (87,641) $ (105,795) Other comprehensive income (loss) before reclassifications 14,136 1,387 (14,089) (1,714) (280) Amounts reclassified to (income) expense from accumulated other comprehensive loss (1) 66,533 1,002 (899) — 66,636 Net other comprehensive income (loss) for the year 80,669 2,389 (14,988) (1,714) 66,356 September 30, 2020 $ 51,280 $ — $ (1,364) $ (89,355) $ (39,439) December 31, 2020 $ 73,575 $ — $ (13,156) $ (98,284) $ (37,865) Other comprehensive income (loss) before reclassifications (21,402) — 15,408 — (5,994) Net other comprehensive income (loss) for the year (21,402) — 15,408 — (5,994) September 30, 2021 $ 52,173 $ — $ 2,252 $ (98,284) $ (43,859) ____________________________________________________ (1) Amounts reclassified to (income) expense from accumulated other comprehensive income (loss) are related to cumulative foreign currency translation and settlement of a net investment hedge, which are recorded in disposition and exit of business activities in the Condensed Consolidated Statement of Operations. Additionally, the settlement of interest rate swaps are recorded in loss on extinguishment of debt in the Condensed Consolidated Statement of Operations. All these costs are in connection with the divestiture of our Cariflex business and subsequent repayments of debt. |
Earnings Per Share ("EPS") (Tab
Earnings Per Share ("EPS") (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Calculations of basic and diluted earnings per share | The calculations of basic and diluted EPS are as follows: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 53,024 32,148 $ (403,794) 31,863 Amounts allocated to unvested restricted shares — — 963 (76) Amounts available to common stockholders 53,024 32,148 $ 1.65 (402,831) 31,787 $ (12.67) Diluted: Amounts allocated to unvested restricted shares — — (963) 76 Non participating share units — 473 — — Stock options added under the treasury stock method — 71 — — Amounts reallocated to unvested restricted shares — — 963 (76) Amounts available to stockholders and assumed conversions $ 53,024 32,692 $ 1.62 $ (402,831) 31,787 $ (12.67) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 122,664 32,089 $ (203,676) 31,836 Amounts allocated to unvested restricted shares (54) (14) 691 (108) Amounts available to common stockholders 122,610 32,075 $ 3.82 (202,985) 31,728 $ (6.40) Diluted: Amounts allocated to unvested restricted shares 54 14 (691) 108 Non participating share units — 475 — — Stock options added under the treasury stock method — 60 — — Amounts reallocated to unvested restricted shares (53) (14) 691 (108) Amounts available to stockholders and assumed conversions $ 122,611 32,610 $ 3.76 $ (202,985) 31,728 $ (6.40) |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following: September 30, 2021 December 31, 2020 Principal Debt Issuance Costs Total Principal Debt Issuance Costs Total (In thousands) Euro Tranche $ 98,303 $ (779) $ 97,524 $ 104,159 $ (996) $ 103,163 4.25% Senior Notes 400,000 (6,139) 393,861 400,000 (6,995) 393,005 5.25% Senior Notes 335,384 (3,700) 331,684 355,366 (4,221) 351,145 ABL Facility — — — — — — KFPC Loan Agreement 17,730 — 17,730 52,730 (18) 52,712 KFPC Revolving Facilities 55,988 — 55,988 37,003 — 37,003 Finance lease obligations 3,595 — 3,595 835 — 835 Total debt 911,000 (10,618) 900,382 950,093 (12,230) 937,863 Less current portion of total debt 74,923 — 74,923 72,347 — 72,347 Long-term debt $ 836,077 $ (10,618) $ 825,459 $ 877,746 $ (12,230) $ 865,516 |
Remaining principal payments on outstanding total debt | The remaining principal payments on our outstanding total debt, including finance leases, as of September 30, 2021, are as follows: Principal Payments (In thousands) October 1, 2021 through September 30, 2022 $ 74,923 October 1, 2022 through September 30, 2023 993 October 1, 2023 through September 30, 2024 1,094 October 1, 2024 through September 30, 2025 98,599 October 1, 2025 through September 30, 2026 735,391 Thereafter — Total debt $ 911,000 |
Fair Value Measurements, Fina_2
Fair Value Measurements, Financial Instruments, and Credit Risk (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of financial assets and liabilities accounted for at fair value on a recurring basis | The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. These financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which judgment may affect the valuation of their fair value and placement within the fair value hierarchy levels. As of September 30, 2021 and December 31, 2020, the Company has no assets or liabilities utilizing significant unobservable inputs (or Level 3) to derive its estimated fair values. Fair Value Measurements at Reporting Date Using Balance Sheet Location September 30, 2021 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (In thousands) Retirement plan asset – noncurrent Other long-term asset $ 2,828 $ 2,828 $ — Derivative liability – current Other payables and accruals (14) — (14) Total $ 2,814 $ 2,828 $ (14) Fair Value Measurements at Reporting Date Using Balance Sheet Location December 31, 2020 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (In thousands) Retirement plan asset – noncurrent Other long-term assets $ 2,454 $ 2,454 $ — Derivative liability – current Other payables and accruals (219) — (219) Total $ 2,235 $ 2,454 $ (219) |
Schedule of carrying values and approximate fair values of long-term debt | The following table presents the carrying values and approximate fair values of our long-term debt. September 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Euro Tranche (significant other observable inputs – level 2) $ 98,303 $ 98,242 $ 104,159 $ 103,574 4.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 400,000 $ 415,784 $ 400,000 $ 409,880 5.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 335,384 $ 345,288 $ 355,366 $ 367,886 ABL Facility $ — $ — $ — $ — Finance lease obligations $ 3,595 $ 3,595 $ 835 $ 835 KFPC Loan Agreement $ 17,730 $ 17,730 $ 52,730 $ 52,730 KFPC Revolving Facilities $ 55,988 $ 55,988 $ 37,003 $ 37,003 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of effective tax rates | The provision for income taxes differs from the amount computed by applying the U.S. corporate statutory income tax rate to income (loss) before income taxes for the reasons set forth below. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Income taxes at the statutory rate $ (14,792) $ 88,370 $ (34,655) $ 52,240 State taxes, net of federal benefit (934) 266 (2,317) 530 Foreign tax rate differential (921) (240) (1,566) (7,539) Permanent differences 800 (928) (773) (4,846) Cariflex disposition — 18,912 — 22,652 Dutch transfer of assets — — — 65,527 Tax credits — 157 800 800 Uncertain tax positions (129) (209) (490) 2,698 Valuation allowance 580 (139) 1,614 282 Goodwill impairment — (84,000) — (84,000) Return to provision adjustments 162 (4,000) 511 (262) Income tax benefit (expense) $ (15,234) $ 18,189 $ (36,876) $ 48,082 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease, cost | The components of lease cost for operating leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Lease cost $ 6,056 $ 6,035 $ 18,138 $ 18,463 Variable lease cost 99 759 415 813 Operating lease expense $ 6,155 $ 6,794 $ 18,553 $ 19,276 The components of lease cost for finance leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Lease amortization $ 186 $ 177 $ 765 $ 533 Lease interest 50 13 125 40 Finance lease expense $ 236 $ 190 $ 890 $ 573 |
Schedule of lease by asset type | The operating lease liabilities on a discounted basis arising from obtaining ROU assets as of September 30, 2021 were comprised as follows: Leased Asset Class Polymer Chemical Percentage Average Months Remaining on the Lease Weighted Average in Months (In thousands) Railcars $ 2,052 $ 22,697 25.6 % 41 10.5 Buildings 29,925 11,500 42.8 % 43 18.3 Equipment 1,441 16,993 19.1 % 30 5.7 Land 6,756 41 7.0 % 235 16.5 Other 579 4,735 5.5 % 25 1.4 Total $ 40,753 $ 55,966 52.4 The finance lease liabilities on a discounted basis arising from obtaining ROU assets as of September 30, 2021 were comprised as follows: Leased Asset Class Polymer Chemical Percentage Average Months Remaining on the Lease Weighted Average in Months (In thousands) Equipment $ 694 $ 2,901 100.0 % 64 64.0 Total $ 694 $ 2,901 64.0 |
Schedule of operating lease, liability, maturity | The following tables show the undiscounted cash flows for the operating lease liabilities. September 30, 2021 (In thousands) October 1, 2021 through December 31, 2021 $ 5,810 2022 21,494 2023 18,714 2024 14,610 2025 12,246 Thereafter 36,293 Total undiscounted operating lease liabilities 109,167 Present value discount (12,414) Foreign currency and other (34) Total discounted operating lease liabilities $ 96,719 December 31, 2020 (In thousands) 2021 $ 21,098 2022 15,992 2023 14,309 2024 10,668 2025 8,605 Thereafter 26,988 Total undiscounted operating lease liabilities 97,660 Present value discount (11,474) Foreign currency and other 11 Total discounted operating lease liabilities $ 86,197 |
Schedule of finance lease, liability, maturity | The following tables show the undiscounted cash flows for the finance lease liabilities. September 30, 2021 (In thousands) October 1, 2021 through December 31, 2021 $ 631 2022 964 2023 1,142 2024 1,142 2025 18 Thereafter 3 Total undiscounted finance lease liabilities 3,900 Present value discount (301) Foreign currency and other (4) Total discounted finance lease liabilities $ 3,595 December 31, 2020 (In thousands) 2021 $ 232 2022 232 2023 232 2024 232 2025 — Thereafter — Total undiscounted finance lease liabilities 928 Present value discount (92) Foreign currency and other (1) Total discounted finance lease liabilities $ 835 |
Changes in the aggregate carrying amount of ARO liability | The changes in the aggregate carrying amount of our asset retirement obligations (“ARO”) are as follows: Nine Months Ended September 30, 2021 2020 (In thousands) Beginning balance $ 6,332 $ 6,523 Additional accruals 316 119 Accretion expense 310 257 Obligations settled (707) (344) Foreign currency translation (309) 246 Ending balance $ 5,942 $ 6,801 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Retirement Benefits [Abstract] | |
Components of net periodic benefit cost | The components of net periodic benefit cost related to pension benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans (In thousands) Service cost $ — $ 513 $ 48 $ 443 $ — $ 1,538 $ 143 $ 1,327 Interest cost 1,398 311 1,665 419 4,193 933 4,965 1,259 Expected return on plan assets (2,485) (852) (2,303) (675) (7,455) (2,554) (6,908) (2,057) Amortization of prior service cost — 5 — 4 — 14 — 13 Amortization of net actuarial loss 605 262 408 253 1,815 786 1,223 758 Net periodic benefit (income) cost $ (482) $ 239 $ (182) $ 444 $ (1,447) $ 717 $ (577) $ 1,300 The components of net periodic benefit cost related to other post-retirement benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 U.S. Plans U.S. Plans U.S. Plans U.S. Plans (In thousands) Service cost $ 85 $ 85 $ 255 $ 255 Interest cost 163 195 488 585 Amortization of prior service cost (438) (438) (1,313) (1,313) Amortization of net actuarial loss 243 213 728 638 Net periodic benefit cost $ 53 $ 55 $ 158 $ 165 |
Industry Segments and Foreign_2
Industry Segments and Foreign Operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Sales revenue for primary product lines | The following table summarizes our operating results by segment. We do not have sales between segments. Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 297,089 $ 229,799 $ 526,888 $ 198,540 $ 174,898 $ 373,438 Cost of goods sold 206,766 153,431 360,197 163,544 141,140 304,684 Gross profit 90,323 76,368 166,691 34,996 33,758 68,754 Operating expenses: Research and development 7,835 2,543 10,378 7,234 2,220 9,454 Selling, general, and administrative 25,860 19,067 44,927 19,112 16,173 35,285 Depreciation and amortization 12,794 18,880 31,674 13,042 18,271 31,313 (Gain) loss on disposal of fixed assets 12 168 180 698 (1,225) (527) Impairment of goodwill — — — — 400,000 400,000 Operating income (loss) $ 43,822 $ 35,710 79,532 $ (5,090) $ (401,681) (406,771) Other income 808 259 Loss on extinguishment of debt — (848) Earnings of unconsolidated joint venture 89 81 Interest expense, net (9,989) (13,527) Income (loss) before income taxes $ 70,440 $ (420,806) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 816,685 $ 641,097 $ 1,457,782 $ 642,772 $ 513,614 $ 1,156,386 Cost of goods sold 564,941 450,592 1,015,533 481,200 394,188 875,388 Gross profit 251,744 190,505 442,249 161,572 119,426 280,998 Operating expenses: Research and development 21,921 7,700 29,621 22,056 8,102 30,158 Selling, general, and administrative 65,654 54,589 120,243 70,074 52,671 122,745 Depreciation and amortization 38,394 56,553 94,947 39,337 54,491 93,828 (Gain) loss on disposal of fixed assets 126 400 526 508 (542) (34) Impairment of goodwill — — — — 400,000 400,000 Operating income (loss) $ 125,649 $ 71,263 196,912 $ 29,597 $ (395,296) (365,699) Other income (expense) (877) 837 Disposition and exit of business activities — 175,189 Loss on extinguishment of debt — (14,943) Earnings of unconsolidated joint venture 344 310 Interest expense, net (31,353) (44,454) Income (loss) before income taxes $ 165,026 $ (248,760) |
Schedule of assets by segment | The following table presents long-lived assets including goodwill and total assets. September 30, 2021 December 31, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) Property, plant, and equipment, net $ 520,796 $ 408,685 $ 929,481 $ 523,067 $ 419,636 $ 942,703 Investment in unconsolidated joint venture $ 12,050 $ — $ 12,050 $ 12,723 $ — $ 12,723 Goodwill $ — $ 373,303 $ 373,303 $ — $ 375,061 $ 375,061 Total assets $ 1,230,473 $ 1,378,836 $ 2,609,309 $ 1,104,954 $ 1,356,003 $ 2,460,957 |
Schedule of goodwill | Changes in goodwill from January 1, 2021 through September 30, 2021 were as follows: Chemical (In thousands) Balance at January 1, 2021 $ 375,061 Foreign currency translation (1,758) Balance at September 30, 2021 $ 373,303 (b) Revenue by Geography |
Summary of revenue by geographic region | Following is a summary of revenue by geographic region: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 124,399 $ 93,472 $ 217,871 $ 77,586 $ 69,559 $ 147,145 Germany 36,541 15,461 52,002 21,388 11,390 32,778 All other countries 136,149 120,866 257,015 99,566 93,949 193,515 $ 297,089 $ 229,799 $ 526,888 $ 198,540 $ 174,898 $ 373,438 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 317,594 $ 248,497 $ 566,091 $ 235,289 $ 214,684 $ 449,973 Germany 98,211 43,887 142,098 69,256 32,610 101,866 All other countries 400,880 348,713 749,593 338,227 266,320 604,547 $ 816,685 $ 641,097 $ 1,457,782 $ 642,772 $ 513,614 $ 1,156,386 |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Summary of carrying amounts of assets and liabilities | The following table summarizes the carrying amounts of assets and liabilities as of September 30, 2021 and December 31, 2020 for KFPC before intercompany eliminations. September 30, 2021 December 31, 2020 (In thousands) Cash and cash equivalents $ 5,918 $ 3,097 Other current assets 19,607 17,304 Property, plant, and equipment, net 144,472 150,838 Intangible assets 7,485 7,959 Long-term operating lease assets, net 6,978 7,178 Other long-term assets 5,734 5,187 Total assets $ 190,194 $ 191,563 Current portion of long-term debt $ 73,718 $ 72,156 Current liabilities 8,494 5,209 Long-term debt — 17,559 Deferred income taxes 699 661 Long-term operating lease liabilities 6,401 6,700 Total liabilities $ 89,312 $ 102,285 |
General (Details)
General (Details) | 9 Months Ended | ||
Sep. 30, 2021segment$ / shares | Sep. 27, 2021$ / shares | Dec. 31, 2020$ / shares | |
Accounting Policies [Abstract] | |||
Number of operating segments | segment | 2 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
KFPC | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of investment in joint venture | 50.00% | ||
Styrenic Block Copolymer Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of investment in joint venture | 50.00% | ||
Merger Agreement | |||
Business Acquisition [Line Items] | |||
Merger, conversion price per share outstanding (in dollars per share) | $ 46.50 |
New Accounting Pronouncements (
New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Accounting Changes and Error Corrections [Abstract] | ||
Operating lease, right-of-use asset | $ 95,100 | $ 84,042 |
Total discounted operating lease liabilities | $ 96,719 | $ 86,197 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Contract liabilities | $ 164,204,000 | $ 164,204,000 | $ 175,511,000 | ||
Revenue | 526,888,000 | $ 373,438,000 | 1,457,782,000 | $ 1,156,386,000 | |
Amortization of deferred income | 10,821,000 | 8,460,000 | |||
Liability, revenue recognized | 0 | 4,200,000 | |||
Contract receivables | 260,081,000 | 260,081,000 | $ 179,805,000 | ||
Polymer | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 297,089,000 | 198,540,000 | 816,685,000 | 642,772,000 | |
Polymer | Performance Products | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 180,671,000 | 117,353,000 | 485,770,000 | 354,452,000 | |
Polymer | Specialty Polymers | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 110,673,000 | 78,629,000 | 308,481,000 | 232,851,000 | |
Liability, revenue recognized | 9,700,000 | ||||
Effect of exchange rate differences on cash | 1,900,000 | ||||
Polymer | Specialty Polymers | Cariflex | |||||
Disaggregation of Revenue [Line Items] | |||||
Amortization of deferred income | 2,400,000 | 300,000 | 10,000,000 | 7,500,000 | |
Liability, revenue recognized | 152,700,000 | ||||
Polymer | Cariflex | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 0 | 0 | 0 | 36,930,000 | |
Polymer | Isoprene Rubber | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 5,261,000 | 1,833,000 | 21,191,000 | 17,436,000 | |
Polymer | Isoprene Rubber | IRSA | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 5,300,000 | 1,800,000 | 21,200,000 | 17,400,000 | |
Polymer | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 484,000 | 725,000 | 1,243,000 | 1,103,000 | |
Chemical | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 229,799,000 | 174,898,000 | 641,097,000 | 513,614,000 | |
Chemical | Adhesives | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 82,239,000 | 63,901,000 | 228,295,000 | 189,789,000 | |
Chemical | Performance Chemicals | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 131,300,000 | 99,919,000 | 368,639,000 | 295,509,000 | |
Chemical | Tires | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | $ 16,260,000 | $ 11,078,000 | $ 44,163,000 | $ 28,316,000 |
Revenue Recognition - Obligatio
Revenue Recognition - Obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | Sep. 30, 2021 |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation | 1 year |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation | 9 years |
Disposition and Exit of Busin_2
Disposition and Exit of Business Activities - Narrative (Details) $ in Thousands, € in Millions | Mar. 06, 2020USD ($) | Mar. 06, 2020EUR (€) | Sep. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Gain on disposition | $ 0 | $ 0 | $ 0 | $ 175,189 | ||||
Contract liabilities | 164,204 | 164,204 | $ 175,511 | |||||
Secured Debt | Euro Tranche | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Extinguishment of debt | $ 166,800 | € 145 | ||||||
Term Loan | Secured Debt | USD Tranche | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Extinguishment of debt | 290,000 | |||||||
Cariflex | Disposed of by Sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Consideration | 530,000 | |||||||
Incremental working capital | 5,800 | $ 4,900 | $ 4,900 | |||||
Contractual capital contributions | 25,300 | |||||||
Preliminary working capital adjustment | $ 900 | |||||||
Gain on disposition | $ 175,200 | |||||||
Contract liabilities | $ 180,600 | |||||||
Performance obligation, optional extension period | 5 years | 5 years | ||||||
Cash proceeds (payments) from disposition and exit of business activities | $ 509,600 | |||||||
Cariflex | Disposed of by Sale | Other payables and accruals | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Contract liabilities | 22,400 | |||||||
Cariflex | Disposed of by Sale | Deferred Income | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Contract liabilities | $ 158,200 |
Disposition and Exit of Busin_3
Disposition and Exit of Business Activities - Obligations (Details) | Mar. 06, 2020 |
Cariflex | Disposed of by Sale | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Performance obligation | 5 years |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | ||||
Award requisite service period | 3 years | |||
Share-based compensation expense | $ 2.6 | $ 2.3 | $ 8.1 | $ 7 |
Detail of Certain Balance She_3
Detail of Certain Balance Sheet Accounts - Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventories of products: | ||
Finished products | $ 300,738 | $ 240,021 |
Work in progress | 3,140 | 3,074 |
Raw materials | 115,023 | 84,039 |
Inventories of products, gross | 418,901 | 327,134 |
Inventory reserves | (6,908) | (8,249) |
Total inventories of products, net | 411,993 | 318,885 |
Other payables and accruals: | ||
Employee related | 48,494 | 52,145 |
Short-term operating lease liabilities | 18,825 | 18,299 |
Interest payable | 12,912 | 3,873 |
Capital project accruals | 5,912 | 1,149 |
Customer related | 10,958 | 10,484 |
Short-term deferred income | 26,765 | 24,182 |
Income tax payable | 44,850 | 26,367 |
Utilities payable | 3,705 | 2,886 |
Property and other taxes | 2,515 | 1,303 |
Other | 28,270 | 26,676 |
Total other payables and accruals | 203,206 | 167,364 |
Other long-term liabilities: | ||
Pension and other post-retirement benefits | 117,890 | 133,634 |
Long-term tax liability | 18,359 | 19,530 |
Other | 15,748 | 15,402 |
Total other long-term liabilities | 151,997 | 168,566 |
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 629,353 | 624,804 |
Less accumulated amortization | 359,505 | 330,070 |
Intangible assets, net of accumulated amortization | 269,848 | 294,734 |
Contractual agreements | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 263,075 | 265,375 |
Less accumulated amortization | 126,267 | 110,811 |
Technology | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 146,113 | 147,011 |
Less accumulated amortization | 79,113 | 74,693 |
Customer relationships | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 60,402 | 60,623 |
Less accumulated amortization | 41,210 | 40,205 |
Tradenames/trademarks | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 84,379 | 83,519 |
Less accumulated amortization | 57,943 | 53,951 |
Software | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 75,384 | 68,276 |
Less accumulated amortization | $ 54,972 | $ 50,410 |
Detail of Certain Balance She_4
Detail of Certain Balance Sheet Accounts - Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 725,915 | $ 1,063,958 | $ 649,002 | $ 789,428 |
Other comprehensive income (loss) before reclassifications | (5,994) | (280) | ||
Amounts reclassified to (income) expense from accumulated other comprehensive loss | 66,636 | |||
Other comprehensive income (loss), net of tax | (4,912) | (1,492) | (5,994) | 66,356 |
Ending balance | 778,764 | 662,790 | 778,764 | 662,790 |
Cumulative Foreign Currency Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 73,575 | (29,389) | ||
Other comprehensive income (loss) before reclassifications | (21,402) | 14,136 | ||
Amounts reclassified to (income) expense from accumulated other comprehensive loss | 66,533 | |||
Other comprehensive income (loss), net of tax | (21,402) | 80,669 | ||
Ending balance | 52,173 | 51,280 | 52,173 | 51,280 |
Cash Flow Hedges, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 0 | (2,389) | ||
Other comprehensive income (loss) before reclassifications | 0 | 1,387 | ||
Amounts reclassified to (income) expense from accumulated other comprehensive loss | 1,002 | |||
Other comprehensive income (loss), net of tax | 0 | 2,389 | ||
Ending balance | 0 | 0 | 0 | 0 |
Net Investment Hedges, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (13,156) | 13,624 | ||
Other comprehensive income (loss) before reclassifications | 15,408 | (14,089) | ||
Amounts reclassified to (income) expense from accumulated other comprehensive loss | (899) | |||
Other comprehensive income (loss), net of tax | 15,408 | (14,988) | ||
Ending balance | 2,252 | (1,364) | 2,252 | (1,364) |
Benefit Plans Liability, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (98,284) | (87,641) | ||
Other comprehensive income (loss) before reclassifications | 0 | (1,714) | ||
Amounts reclassified to (income) expense from accumulated other comprehensive loss | 0 | |||
Other comprehensive income (loss), net of tax | 0 | (1,714) | ||
Ending balance | (98,284) | (89,355) | (98,284) | (89,355) |
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (38,947) | (37,947) | (37,865) | (105,795) |
Ending balance | $ (43,859) | $ (39,439) | $ (43,859) | $ (39,439) |
Earnings Per Share ("EPS") (Det
Earnings Per Share ("EPS") (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 07, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net Income (Loss) Attributable to Kraton, Basic: | |||||
As reported | $ 53,024 | $ (403,794) | $ 122,664 | $ (203,676) | |
Amounts allocated to unvested restricted shares | 0 | 963 | (54) | 691 | |
Amounts available to common stockholders | 53,024 | (402,831) | 122,610 | (202,985) | |
Net Income Attributable to Kraton, Diluted: | |||||
Amounts allocated to unvested restricted shares | 0 | (963) | 54 | (691) | |
Amounts reallocated to unvested restricted shares | 0 | 963 | (53) | 691 | |
Amounts available to stockholders and assumed conversions | $ 53,024 | $ (402,831) | $ 122,611 | $ (202,985) | |
Weighted Average Shares Outstanding, Basic: | |||||
As reported (in shares) | 32,148,000 | 31,863,000 | 32,089,000 | 31,836,000 | |
Amounts allocated to unvested restricted shares (in shares) | 0 | (76,000) | (14,000) | (108,000) | |
Amounts available to common stockholders (in shares) | 32,148,000 | 31,787,000 | 32,075,000 | 31,728,000 | |
Weighted Average Shares Outstanding, Diluted: | |||||
Amounts allocated to unvested restricted shares (in shares) | 0 | (76,000) | (14,000) | (108,000) | |
Non participating share units (in shares) | 473,000 | 0 | 475,000 | 0 | |
Stock options added under the treasury stock method (in shares) | 71,000 | 0 | 60,000 | 0 | |
Amounts available to stockholders and assumed conversions (in shares) | 32,692,000 | 31,787,000 | 32,610,000 | 31,728,000 | |
Earnings per share, basic (in dollars per share) | $ 1.65 | $ (12.67) | $ 3.82 | $ (6.40) | |
Earnings per share, diluted (in dollars per share) | $ 1.62 | $ (12.67) | $ 3.76 | $ (6.40) | |
Stock repurchased during period (in shares) | 311,152 | 0 | |||
Stock repurchased during period (in dollars per share) | $ 32.14 | ||||
Stock repurchased during period | $ 10,000 | ||||
Restricted Stock | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 493,187 | 454,366 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) $ in Thousands, $ in Millions | Sep. 30, 2021USD ($) | Sep. 30, 2021TWD ($) | Dec. 31, 2020USD ($) | May 31, 2018 |
Debt Instrument [Line Items] | ||||
Total debt | $ 911,000 | $ 950,093 | ||
Debt Issuance Costs | (10,618) | (12,230) | ||
Total | 900,382 | 937,863 | ||
Finance lease obligations | 3,595 | 835 | ||
Less current portion of total debt | 74,923 | 72,347 | ||
Long-term debt, noncurrent maturities | 836,077 | 877,746 | ||
Long-term debt | 825,459 | 865,516 | ||
KFPC Revolving Facilities | ||||
Debt Instrument [Line Items] | ||||
Total debt | 56,000 | $ 1,600 | 37,003 | |
Debt Issuance Costs | 0 | 0 | ||
Total | 55,988 | 37,003 | ||
ABL Facility | ||||
Debt Instrument [Line Items] | ||||
Total debt | 0 | 0 | ||
Debt Issuance Costs | 0 | 0 | ||
Total | 0 | 0 | ||
KFPC Loan Agreement | ||||
Debt Instrument [Line Items] | ||||
Total debt | 17,730 | $ 494 | 52,730 | |
Debt Issuance Costs | 0 | (18) | ||
Total | 17,730 | 52,712 | ||
Term Loan | Euro Tranche | ||||
Debt Instrument [Line Items] | ||||
Total debt | 98,303 | 104,159 | ||
Debt Issuance Costs | (779) | (996) | ||
Total | $ 97,524 | 103,163 | ||
Senior Notes | 4.25% Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument interest rate | 4.25% | 4.25% | ||
Total debt | $ 400,000 | 400,000 | ||
Debt Issuance Costs | (6,139) | (6,995) | ||
Total | $ 393,861 | 393,005 | ||
Senior Notes | 5.25% Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument interest rate | 5.25% | 5.25% | 5.25% | |
Total debt | $ 335,384 | 355,366 | ||
Debt Issuance Costs | (3,700) | (4,221) | ||
Total | $ 331,684 | $ 351,145 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Term Loan Facility (Details) - Term Loan - Secured Debt - Euro Tranche | Mar. 06, 2020 |
Debt Instrument [Line Items] | |
Line of credit facility, fixed interest rate | 2.79% |
EURIBOR | |
Debt Instrument [Line Items] | |
Percentage added to basis | 2.00% |
Long-Term Debt - Senior Notes (
Long-Term Debt - Senior Notes (Details) - Senior Notes | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2018EUR (€) | May 31, 2018 |
Europe | ||||
Debt Instrument [Line Items] | ||||
Face amount | € | € 290,000,000 | |||
4.25% Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument interest rate | 4.25% | |||
Face amount | $ 400,000,000 | |||
5.25% Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument interest rate | 5.25% | 5.25% | ||
Face amount | $ 335,400,000 |
Long-Term Debt - ABL Facility (
Long-Term Debt - ABL Facility (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Jan. 31, 2016 |
Debt Instrument [Line Items] | |||
Outstanding amount | $ 911,000,000 | $ 950,093,000 | |
ABL Facility | |||
Debt Instrument [Line Items] | |||
Outstanding amount | 0 | $ 0 | |
Revolving Credit Facility | ABL Facility | |||
Debt Instrument [Line Items] | |||
Credit facility, borrowing capacity | $ 300,000,000 | ||
Right of maximum additional commitments | $ 100,000,000 | ||
Outstanding amount | 0 | ||
Revolving Credit Facility | ABL Facility | Nederland | |||
Debt Instrument [Line Items] | |||
Right of maximum additional commitments | $ 100,000,000 |
Long-Term Debt - KFPC Debt (Det
Long-Term Debt - KFPC Debt (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021USD ($)facility | Sep. 30, 2021TWD ($)facility | Dec. 31, 2020USD ($) | |
Debt Instrument [Line Items] | |||
Outstanding amount | $ | $ 911,000 | $ 950,093 | |
KFPC Revolving Facilities | |||
Debt Instrument [Line Items] | |||
Outstanding amount | 56,000 | $ 1,600,000,000 | 37,003 |
KFPC Loan Agreement | |||
Debt Instrument [Line Items] | |||
Outstanding amount | $ 17,730 | $ 494,000,000 | $ 52,730 |
Interest rate during period | 1.80% | ||
Number of debt instruments | facility | 4 | 4 | |
Credit facility, borrowing capacity | $ 89,800 | $ 2,500,000,000 |
Long-Term Debt - Debt Issuance
Long-Term Debt - Debt Issuance Costs (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | ||
Net debt issuance cost | $ 12,500 | |
Debt issuance costs | 10,600 | |
Amortization of debt issuance costs | 1,893 | $ 2,426 |
ABL Facility | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 1,900 | |
ABL Facility | Other current assets | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 500 |
Long-Term Debt - Remaining Prin
Long-Term Debt - Remaining Principal Payments on Outstanding Total Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
October 1, 2021 through September 30, 2022 | $ 74,923 | |
October 1, 2022 through September 30, 2023 | 993 | |
October 1, 2023 through September 30, 2024 | 1,094 | |
October 1, 2024 through September 30, 2025 | 98,599 | |
October 1, 2025 through September 30, 2026 | 735,391 | |
Thereafter | 0 | |
Total debt | $ 911,000 | $ 950,093 |
Fair Value Measurements, Fina_3
Fair Value Measurements, Financial Instruments, and Credit Risk - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements at Reporting Date Using - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | $ 2,814 | $ 2,235 |
Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Retirement plan asset – noncurrent | 2,828 | 2,454 |
Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | (14) | (219) |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | 2,828 | 2,454 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Retirement plan asset – noncurrent | 2,828 | 2,454 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | (14) | (219) |
Significant Other Observable Inputs (Level 2) | Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Retirement plan asset – noncurrent | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | $ (14) | $ (219) |
Fair Value Measurements, Fina_4
Fair Value Measurements, Financial Instruments, and Credit Risk - Carrying Values and Approximate Fair Values of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Carrying Value | KFPC Revolving Facilities | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 55,988 | $ 37,003 |
Carrying Value | ABL Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 0 |
Carrying Value | KFPC Loan Agreement | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 17,730 | 52,730 |
Carrying Value | Finance lease obligations | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 3,595 | 835 |
Carrying Value | Significant Other Observable Inputs (Level 2) | Term Loan | Euro Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 98,303 | 104,159 |
Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 4.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 400,000 | 400,000 |
Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 5.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 335,384 | 355,366 |
Fair Value | KFPC Revolving Facilities | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 55,988 | 37,003 |
Fair Value | ABL Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 0 |
Fair Value | KFPC Loan Agreement | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 17,730 | 52,730 |
Fair Value | Finance lease obligations | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 3,595 | 835 |
Fair Value | Significant Other Observable Inputs (Level 2) | Term Loan | Euro Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 98,242 | 103,574 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 4.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 415,784 | 409,880 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 5.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 345,288 | $ 367,886 |
Fair Value Measurements, Fina_5
Fair Value Measurements, Financial Instruments, and Credit Risk - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2018EUR (€) | Jan. 03, 2017USD ($) | |
Derivative [Line Items] | ||||||
Notional amount | $ 925.4 | |||||
Europe | ||||||
Derivative [Line Items] | ||||||
Mark to market gain recorded in accumulated other comprehensive gain (loss) | $ 8.7 | $ (14.8) | $ 20 | $ (14.6) | ||
Europe | Senior Notes | ||||||
Derivative [Line Items] | ||||||
Face amount | € | € 290,000,000 | |||||
Interest Rate Swap | ||||||
Derivative [Line Items] | ||||||
Loss on interest rate swaps | 1.3 | |||||
Foreign Currency Hedges | ||||||
Derivative [Line Items] | ||||||
Aggregate gain (loss) on settlement of hedges | $ (0.2) | $ (0.1) | $ (2.4) | $ 0.5 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (15,234) | $ 18,189 | $ (36,876) | $ 48,082 | |
Tax rate differed from U.S. corporate statutory tax rate | 21.00% | ||||
Valuation allowance for deferred tax assets | 37,900 | $ 37,900 | $ 39,500 | ||
Unrecognized tax benefits | $ 9,100 | 9,100 | $ 8,800 | ||
Increase (decrease) in unrecognized tax benefits | $ 300 | $ (2,500) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate, Amount (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Income taxes at the statutory rate | $ (14,792) | $ 88,370 | $ (34,655) | $ 52,240 |
State taxes, net of federal benefit | (934) | 266 | (2,317) | 530 |
Foreign tax rate differential | (921) | (240) | (1,566) | (7,539) |
Permanent differences | 800 | (928) | (773) | (4,846) |
Cariflex disposition | 0 | 18,912 | 0 | 22,652 |
Dutch transfer of assets | 0 | 0 | 0 | 65,527 |
Tax credits | 0 | 157 | 800 | 800 |
Uncertain tax positions | (129) | (209) | (490) | 2,698 |
Valuation allowance | 580 | (139) | 1,614 | 282 |
Goodwill impairment | 0 | (84,000) | 0 | (84,000) |
Return to provision adjustments | 162 | (4,000) | 511 | (262) |
Income tax benefit (expense) | $ (15,234) | $ 18,189 | $ (36,876) | $ 48,082 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands, R$ in Millions | Sep. 30, 2021BRL (R$) | Sep. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Loss Contingencies [Line Items] | ||||||
Operating lease, discount rate, percent | 3.66% | 3.66% | ||||
Finance lease, discount rate, percent | 4.78% | 4.78% | ||||
Tax credits generated from purchase of certain goods | R$ 10.2 | $ 1,900 | ||||
Asset Retirement Obligation | $ 5,942 | $ 6,332 | $ 6,801 | $ 6,523 | ||
Europe | ||||||
Loss Contingencies [Line Items] | ||||||
Asset Retirement Obligation | $ 300 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Lease cost | $ 6,056 | $ 6,035 | $ 18,138 | $ 18,463 |
Variable lease cost | 99 | 759 | 415 | 813 |
Operating lease expense | 6,155 | 6,794 | 18,553 | 19,276 |
Lease amortization | 186 | 177 | 765 | 533 |
Lease interest | 50 | 13 | 125 | 40 |
Finance lease expense | $ 236 | $ 190 | $ 890 | $ 573 |
Commitments and Contingencies_3
Commitments and Contingencies - Leased Assets Class (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Operating Lease] | ||
Operating Lease Liability | $ 96,719 | $ 86,197 |
Weighted Average in Months | 52 months 12 days | |
Finance Lease | ||
Finance Lease Liability | $ 3,595 | $ 835 |
Weighted Average in Months | 64 months | |
Railcars | ||
Operating Lease] | ||
Average Months Remaining on the Lease | 41 months | |
Weighted Average in Months | 10 months 15 days | |
Buildings | ||
Operating Lease] | ||
Average Months Remaining on the Lease | 43 months | |
Weighted Average in Months | 18 months 9 days | |
Equipment | ||
Operating Lease] | ||
Average Months Remaining on the Lease | 30 months | |
Weighted Average in Months | 5 months 21 days | |
Finance Lease | ||
Average Months Remaining on the Lease | 64 months | |
Weighted Average in Months | 64 months | |
Land | ||
Operating Lease] | ||
Average Months Remaining on the Lease | 235 months | |
Weighted Average in Months | 16 months 15 days | |
Other | ||
Operating Lease] | ||
Average Months Remaining on the Lease | 25 months | |
Weighted Average in Months | 1 month 12 days | |
Operating Lease, Concentration Risk | Operating Lease Liability | Railcars | ||
Operating Lease] | ||
Percentage | 25.60% | |
Operating Lease, Concentration Risk | Operating Lease Liability | Buildings | ||
Operating Lease] | ||
Percentage | 42.80% | |
Operating Lease, Concentration Risk | Operating Lease Liability | Equipment | ||
Operating Lease] | ||
Percentage | 19.10% | |
Operating Lease, Concentration Risk | Operating Lease Liability | Land | ||
Operating Lease] | ||
Percentage | 7.00% | |
Operating Lease, Concentration Risk | Operating Lease Liability | Other | ||
Operating Lease] | ||
Percentage | 5.50% | |
Finance Lease, Concentration Risk | Finance lease obligations | Equipment | ||
Operating Lease] | ||
Percentage | 100.00% | |
Polymer | ||
Operating Lease] | ||
Operating Lease Liability | $ 40,753 | |
Finance Lease | ||
Finance Lease Liability | 694 | |
Polymer | Railcars | ||
Operating Lease] | ||
Operating Lease Liability | 2,052 | |
Polymer | Buildings | ||
Operating Lease] | ||
Operating Lease Liability | 29,925 | |
Polymer | Equipment | ||
Operating Lease] | ||
Operating Lease Liability | 1,441 | |
Finance Lease | ||
Finance Lease Liability | 694 | |
Polymer | Land | ||
Operating Lease] | ||
Operating Lease Liability | 6,756 | |
Polymer | Other | ||
Operating Lease] | ||
Operating Lease Liability | 579 | |
Chemical | ||
Operating Lease] | ||
Operating Lease Liability | 55,966 | |
Finance Lease | ||
Finance Lease Liability | 2,901 | |
Chemical | Railcars | ||
Operating Lease] | ||
Operating Lease Liability | 22,697 | |
Chemical | Buildings | ||
Operating Lease] | ||
Operating Lease Liability | 11,500 | |
Chemical | Equipment | ||
Operating Lease] | ||
Operating Lease Liability | 16,993 | |
Finance Lease | ||
Finance Lease Liability | 2,901 | |
Chemical | Land | ||
Operating Lease] | ||
Operating Lease Liability | 41 | |
Chemical | Other | ||
Operating Lease] | ||
Operating Lease Liability | $ 4,735 |
Commitments and Contingencies_4
Commitments and Contingencies - Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
October 1, 2021 through December 31, 2021 | $ 5,810 | |
2022 | 21,494 | $ 21,098 |
2023 | 18,714 | 15,992 |
2024 | 14,610 | 14,309 |
2025 | 12,246 | 10,668 |
Thereafter | 36,293 | |
2025 | 8,605 | |
Thereafter | 26,988 | |
Total undiscounted operating lease liabilities | 109,167 | 97,660 |
Present value discount | (12,414) | (11,474) |
Foreign currency and other | (34) | 11 |
Total discounted operating lease liabilities | $ 96,719 | $ 86,197 |
Commitments and Contingencies_5
Commitments and Contingencies - Finance Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
October 1, 2021 through December 31, 2021 | $ 631 | |
2022 | 964 | $ 232 |
2023 | 1,142 | 232 |
2024 | 1,142 | 232 |
2025 | 18 | 232 |
Thereafter | 3 | |
2025 | 0 | |
Thereafter | 0 | |
Total undiscounted finance lease liabilities | 3,900 | 928 |
Present value discount | (301) | (92) |
Foreign currency and other | (4) | (1) |
Total discounted finance lease liabilities | $ 3,595 | $ 835 |
Commitments and Contingencies_6
Commitments and Contingencies - Changes in Aggregate Carrying Amount of Asset Retirement Obligation Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Beginning balance | $ 6,332 | $ 6,523 |
Additional accruals | 316 | 119 |
Accretion expense | 310 | 257 |
Obligations settled | (707) | (344) |
Foreign currency translation | (309) | 246 |
Ending balance | $ 5,942 | $ 6,801 |
Employee Benefits - Components
Employee Benefits - Components of Net Periodic Benefit Cost Related to U.S Pension Benefits (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0 | $ 48 | $ 0 | $ 143 |
Interest cost | 1,398 | 1,665 | 4,193 | 4,965 |
Expected return on plan assets | (2,485) | (2,303) | (7,455) | (6,908) |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 605 | 408 | 1,815 | 1,223 |
Net periodic benefit (income) cost | (482) | (182) | (1,447) | (577) |
Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 513 | 443 | 1,538 | 1,327 |
Interest cost | 311 | 419 | 933 | 1,259 |
Expected return on plan assets | (852) | (675) | (2,554) | (2,057) |
Amortization of prior service cost | 5 | 4 | 14 | 13 |
Amortization of net actuarial loss | 262 | 253 | 786 | 758 |
Net periodic benefit (income) cost | $ 239 | $ 444 | $ 717 | $ 1,300 |
Employee Benefits - Additional
Employee Benefits - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | $ 12.8 | $ 5.9 |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | $ 0.7 | $ 1 |
Employee Benefits - Component_2
Employee Benefits - Components of Net Periodic Cost Related to Other Post-Retirement Benefits (Details) - Other Postretirement Benefits Plan - U.S. Plans - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 85 | $ 85 | $ 255 | $ 255 |
Interest cost | 163 | 195 | 488 | 585 |
Amortization of prior service cost | (438) | (438) | (1,313) | (1,313) |
Amortization of net actuarial loss | 243 | 213 | 728 | 638 |
Net periodic benefit (income) cost | $ 53 | $ 55 | $ 158 | $ 165 |
Industry Segments and Foreign_3
Industry Segments and Foreign Operations - Additional Information (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | |
Segment Reporting [Abstract] | ||
Number of operating segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 61,884 | $ 54,138 |
Chemical | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 28,700 | 26,900 |
Polymer | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 33,200 | $ 27,300 |
Industry Segments and Foreign_4
Industry Segments and Foreign Operations - Sales Revenue by Product Groups (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 526,888 | $ 373,438 | $ 1,457,782 | $ 1,156,386 |
Cost of goods sold | 360,197 | 304,684 | 1,015,533 | 875,388 |
Gross profit | 166,691 | 68,754 | 442,249 | 280,998 |
Operating expenses: | ||||
Research and development | 10,378 | 9,454 | 29,621 | 30,158 |
Selling, general, and administrative | 44,927 | 35,285 | 120,243 | 122,745 |
Depreciation and amortization | 31,674 | 31,313 | 94,947 | 93,828 |
(Gain) loss on disposal of fixed assets | 180 | (527) | 526 | (34) |
Impairment of goodwill | 0 | 400,000 | 0 | 400,000 |
Operating income (loss) | 79,532 | (406,771) | 196,912 | (365,699) |
Other income (expense) | 808 | 259 | (877) | 837 |
Disposition and exit of business activities | 0 | 0 | 0 | 175,189 |
Loss on extinguishment of debt | 0 | (848) | 0 | (14,943) |
Earnings of unconsolidated joint venture | 89 | 81 | 344 | 310 |
Interest expense, net | (9,989) | (13,527) | (31,353) | (44,454) |
Income (loss) before income taxes | 70,440 | (420,806) | 165,026 | (248,760) |
Polymer | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 297,089 | 198,540 | 816,685 | 642,772 |
Cost of goods sold | 206,766 | 163,544 | 564,941 | 481,200 |
Gross profit | 90,323 | 34,996 | 251,744 | 161,572 |
Operating expenses: | ||||
Research and development | 7,835 | 7,234 | 21,921 | 22,056 |
Selling, general, and administrative | 25,860 | 19,112 | 65,654 | 70,074 |
Depreciation and amortization | 12,794 | 13,042 | 38,394 | 39,337 |
(Gain) loss on disposal of fixed assets | 12 | 698 | 126 | 508 |
Impairment of goodwill | 0 | 0 | 0 | 0 |
Operating income (loss) | 43,822 | (5,090) | 125,649 | 29,597 |
Chemical | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 229,799 | 174,898 | 641,097 | 513,614 |
Cost of goods sold | 153,431 | 141,140 | 450,592 | 394,188 |
Gross profit | 76,368 | 33,758 | 190,505 | 119,426 |
Operating expenses: | ||||
Research and development | 2,543 | 2,220 | 7,700 | 8,102 |
Selling, general, and administrative | 19,067 | 16,173 | 54,589 | 52,671 |
Depreciation and amortization | 18,880 | 18,271 | 56,553 | 54,491 |
(Gain) loss on disposal of fixed assets | 168 | (1,225) | 400 | (542) |
Impairment of goodwill | 0 | 400,000 | 0 | 400,000 |
Operating income (loss) | $ 35,710 | $ (401,681) | $ 71,263 | $ (395,296) |
Industry Segments and Foreign_5
Industry Segments and Foreign Operations - Long-lived Assets Including Goodwill and Total Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | $ 929,481 | $ 942,703 |
Investment in unconsolidated joint venture | 12,050 | 12,723 |
Goodwill | 373,303 | 375,061 |
Total assets | 2,609,309 | 2,460,957 |
Polymer | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | 520,796 | 523,067 |
Investment in unconsolidated joint venture | 12,050 | 12,723 |
Goodwill | 0 | 0 |
Total assets | 1,230,473 | 1,104,954 |
Chemical | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | 408,685 | 419,636 |
Investment in unconsolidated joint venture | 0 | 0 |
Goodwill | 373,303 | 375,061 |
Total assets | $ 1,378,836 | $ 1,356,003 |
Industry Segments and Foreign_6
Industry Segments and Foreign Operations - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Goodwill [Roll Forward] | |
Balance at January 1, 2021 | $ 375,061 |
Balance at September 30, 2021 | 373,303 |
Polymer | |
Goodwill [Roll Forward] | |
Balance at January 1, 2021 | 0 |
Balance at September 30, 2021 | 0 |
Chemical | |
Goodwill [Roll Forward] | |
Balance at January 1, 2021 | 375,061 |
Foreign currency translation | (1,758) |
Balance at September 30, 2021 | $ 373,303 |
Industry Segments and Foreign_7
Industry Segments and Foreign Operations - Sales Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | $ 526,888 | $ 373,438 | $ 1,457,782 | $ 1,156,386 |
United States | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 217,871 | 147,145 | 566,091 | 449,973 |
Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 52,002 | 32,778 | 142,098 | 101,866 |
All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 257,015 | 193,515 | 749,593 | 604,547 |
Polymer | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 297,089 | 198,540 | 816,685 | 642,772 |
Polymer | United States | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 124,399 | 77,586 | 317,594 | 235,289 |
Polymer | Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 36,541 | 21,388 | 98,211 | 69,256 |
Polymer | All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 136,149 | 99,566 | 400,880 | 338,227 |
Chemical | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 229,799 | 174,898 | 641,097 | 513,614 |
Chemical | United States | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 93,472 | 69,559 | 248,497 | 214,684 |
Chemical | Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 15,461 | 11,390 | 43,887 | 32,610 |
Chemical | All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | $ 120,866 | $ 93,949 | $ 348,713 | $ 266,320 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Variable Interest Entity, Primary Beneficiary | KFPC | |||||
Related Party Transaction [Line Items] | |||||
Outstanding payables | $ 0.5 | $ 0.5 | $ 2.3 | ||
Variable interest entity, ownership percentage | 50.00% | ||||
Purchases from related party | $ 15.8 | $ 10.7 | $ 40.2 | $ 36.4 | |
Styrenic Block Copolymer Joint Venture | |||||
Related Party Transaction [Line Items] | |||||
Percentage of equity investment | 50.00% | 50.00% | |||
Outstanding payables | $ 14.1 | $ 14.1 | $ 14.8 | ||
Related party liability | $ 6.3 | $ 6.1 | $ 21.7 | $ 20.9 |
Variable Interest Entity - Addi
Variable Interest Entity - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021USD ($)kt | Sep. 30, 2021kt | |
KFPC | ||
Variable Interest Entity [Line Items] | ||
Dividends, Cash | $ | $ 0.2 | |
KFPC | Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Variable interest entity, ownership percentage | 50.00% | |
Minimum purchase commitment of plant production (as a percent) | 80.00% | 80.00% |
Joint venture | Taiwan | Formosa Petrochemical Corporation | ||
Variable Interest Entity [Line Items] | ||
Capacity of HSBC plant | kt | 30 | 30 |
Variable Interest Entity - Summ
Variable Interest Entity - Summary of Carrying Amounts of Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Noncontrolling Interest [Line Items] | ||
Cash and cash equivalents | $ 90,196 | $ 85,901 |
Other current assets | 17,843 | 15,338 |
Property, plant, and equipment, net | 929,481 | 942,703 |
Intangible assets | 269,848 | 294,734 |
Long-term operating lease assets, net | 95,100 | 84,042 |
Other long-term assets | 20,113 | 21,770 |
Total assets | 2,609,309 | 2,460,957 |
Current portion of long-term debt | 74,923 | 72,347 |
Current liabilities | 514,056 | 433,087 |
Long-term debt | 900,382 | 937,863 |
Deferred income taxes | 123,700 | 125,559 |
Long-term operating lease liabilities | 77,894 | 67,898 |
Total liabilities | 1,830,545 | 1,811,955 |
KFPC | ||
Noncontrolling Interest [Line Items] | ||
Cash and cash equivalents | 5,918 | 3,097 |
Other current assets | 19,607 | 17,304 |
Property, plant, and equipment, net | 144,472 | 150,838 |
Intangible assets | 7,485 | 7,959 |
Long-term operating lease assets, net | 6,978 | 7,178 |
Other long-term assets | 5,734 | 5,187 |
Total assets | 190,194 | 191,563 |
Current portion of long-term debt | 73,718 | 72,156 |
Current liabilities | 8,494 | 5,209 |
Long-term debt | 0 | 17,559 |
Deferred income taxes | 699 | 661 |
Long-term operating lease liabilities | 6,401 | 6,700 |
Total liabilities | $ 89,312 | $ 102,285 |