Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | PQ Group Holdings Inc. | |
Entity Central Index Key | 0001708035 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 135,732,810 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Sales | $ 359,221 | $ 366,197 |
Cost of goods sold | 278,311 | 288,076 |
Gross profit | 80,910 | 78,121 |
Selling, general and administrative expenses | 40,708 | 40,618 |
Other operating expense, net | 10,739 | 9,314 |
Operating income | 29,463 | 28,189 |
Equity in net (income) from affiliated companies | (2,064) | (11,852) |
Interest expense, net | 28,618 | 29,163 |
Debt extinguishment costs | 0 | 5,879 |
Other (income) expense, net | (2,979) | 4,972 |
Income before income taxes and noncontrolling interest | 5,888 | 27 |
Provision (benefit) for income taxes | 2,447 | (529) |
Net income | 3,441 | 556 |
Less: Net income attributable to the noncontrolling interest | 290 | 342 |
Net income attributable to PQ Group Holdings Inc. | $ 3,151 | $ 214 |
Net income per share: | ||
Basic income per share (usd per share) | $ 0.02 | $ 0 |
Diluted income per share (usd per share) | $ 0.02 | $ 0 |
Weighted average shares outstanding: | ||
Basic (shares) | 133,946,308 | 133,154,144 |
Diluted (shares) | 134,894,354 | 133,884,983 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 3,441 | $ 556 |
Other comprehensive income (loss), net of tax: | ||
Pension and postretirement benefits | (30) | (18) |
Net (loss) gain from hedging activities | (1,552) | 2,183 |
Foreign currency translation | 7,167 | 8,671 |
Total other comprehensive income | 5,585 | 10,836 |
Comprehensive income | 9,026 | 11,392 |
Less: Comprehensive income attributable to noncontrolling interests | 605 | 1,646 |
Comprehensive income attributable to PQ Group Holdings Inc. | $ 8,421 | $ 9,746 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 52,341 | $ 57,854 |
Receivables, net | 195,662 | 196,770 |
Inventories | 283,549 | 264,748 |
Prepaid and other current assets | 38,780 | 39,244 |
Total current assets | 570,332 | 558,616 |
Investments in affiliated companies | 464,128 | 468,211 |
Property, plant and equipment, net | 1,201,962 | 1,208,979 |
Goodwill | 1,257,034 | 1,254,929 |
Other intangible assets, net | 714,113 | 728,436 |
Right-of-use lease asset | 57,173 | 0 |
Other long-term assets | 117,534 | 108,254 |
Total assets | 4,382,276 | 4,327,425 |
LIABILITIES | ||
Notes payable and current maturities of long-term debt | 10,712 | 7,237 |
Accounts payable | 136,356 | 148,365 |
Operating lease liabilities—current | 14,482 | 0 |
Accrued liabilities | 101,259 | 100,009 |
Total current liabilities | 262,809 | 255,611 |
Long-term debt, excluding current portion | 2,103,070 | 2,106,720 |
Deferred income taxes | 197,552 | 196,124 |
Operating lease liabilities—noncurrent | 40,971 | 0 |
Other long-term liabilities | 102,602 | 104,825 |
Total liabilities | 2,707,004 | 2,663,280 |
Commitments and contingencies (Note 16) | ||
EQUITY | ||
Common stock ($0.01 par); authorized shares 450,000,000; issued shares 135,982,601 and 135,758,269 on March 31, 2019 and December 31, 2018, respectively; outstanding shares 135,727,810 and 135,592,045 on March 31, 2019 and December 31, 2018, respectively | 1,360 | 1,358 |
Preferred stock ($0.01 par); authorized shares 50,000,000; no shares issued or outstanding on March 31, 2019 and December 31, 2018 | 0 | 0 |
Additional paid-in capital | 1,678,316 | 1,674,703 |
Retained earnings | 26,625 | 25,523 |
Treasury stock, at cost; shares 254,791 and 166,224 on March 31, 2019 and December 31, 2018, respectively | (4,259) | (2,920) |
Accumulated other comprehensive loss | (31,960) | (39,104) |
Total PQ Group Holdings Inc. equity | 1,670,082 | 1,659,560 |
Noncontrolling interest | 5,190 | 4,585 |
Total equity | 1,675,272 | 1,664,145 |
Total liabilities and equity | $ 4,382,276 | $ 4,327,425 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 450,000,000 | 450,000,000 |
Common stock, shares issued (shares) | 135,982,601 | 135,758,269 |
Common stock, shares outstanding (shares) | 135,727,810 | 135,592,045 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Treasury stock (shares) | 254,791 | 166,224 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Treasury stock, at cost | Accumulated other comprehensive income (loss) | Non- controlling interest |
Beginning balance at Dec. 31, 2017 | $ 1,631,919 | $ 1,352 | $ 1,655,114 | $ (32,777) | $ 0 | $ 4,311 | $ 3,919 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 556 | 214 | 342 | ||||
Other comprehensive income | 10,836 | 9,532 | 1,304 | ||||
Repurchases of common shares | (58) | (58) | |||||
Stock compensation expense | 3,831 | 3,831 | |||||
Ending balance at Mar. 31, 2018 | 1,647,084 | 1,352 | 1,658,945 | (32,563) | (58) | 13,843 | 5,565 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cumulative effect adjustment from adoption of new accounting standards | 1,874 | ||||||
Cumulative effect adjustment from adoption of new accounting standards | Accounting Standards Update 2018-02 [Member] | (175) | (2,049) | 1,874 | ||||
Beginning balance, adjusted | 1,663,970 | 1,358 | 1,674,703 | 23,474 | (2,920) | (37,230) | 4,585 |
Beginning balance at Dec. 31, 2018 | 1,664,145 | 1,358 | 1,674,703 | 25,523 | (2,920) | (39,104) | 4,585 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 3,441 | 3,151 | 290 | ||||
Other comprehensive income | 5,585 | 5,270 | 315 | ||||
Repurchases of common shares | (1,339) | (1,339) | |||||
Stock compensation expense | 3,400 | 3,400 | |||||
Shares issued under equity incentive plan, net of forfeitures | 215 | 2 | 213 | ||||
Ending balance at Mar. 31, 2019 | $ 1,675,272 | $ 1,360 | $ 1,678,316 | $ 26,625 | $ (4,259) | $ (31,960) | $ 5,190 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 3,441 | $ 556 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 33,154 | 34,903 |
Amortization | 12,740 | 13,585 |
Amortization of inventory step-up | 0 | 1,603 |
Amortization of deferred financing costs and original issue discount | 1,401 | 1,559 |
Debt extinguishment costs | 0 | 3,755 |
Foreign currency exchange (gain) loss | (2,689) | 5,063 |
Pension and postretirement healthcare benefit expense | 1,176 | 816 |
Pension and postretirement healthcare benefit funding | (3,372) | (3,406) |
Deferred income tax provision (benefit) | 1,181 | (2,607) |
Net loss on asset disposals | 820 | 1,152 |
Stock compensation | 3,400 | 3,831 |
Equity in net (income) from affiliated companies | (2,064) | (11,852) |
Dividends received from affiliated companies | 5,000 | 10,819 |
Net interest income on swaps designated as net investment hedges | 3,890 | 0 |
Other, net | (3,644) | (2,928) |
Working capital changes that provided (used) cash: | ||
Receivables | 1,121 | (11,065) |
Inventories | (19,152) | (19,539) |
Prepaids and other current assets | 2,890 | (4,712) |
Accounts payable | (3,898) | (7,044) |
Accrued liabilities | (777) | 7,546 |
Net cash provided by operating activities | 26,838 | 22,035 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (33,627) | (33,344) |
Net interest proceeds on swaps designated as net investment hedges | 3,890 | 0 |
Other, net | 470 | 209 |
Net cash used in investing activities | (29,267) | (33,135) |
Cash flows from financing activities: | ||
Draw down of revolving credit facilities | 32,381 | 38,570 |
Repayments of revolving credit facilities | (28,888) | (32,109) |
Issuance of long-term debt | 0 | 1,267,000 |
Debt issuance costs | 0 | (6,395) |
Repayments of long-term debt | (5,000) | (1,261,624) |
Stock repurchases | 1,339 | 58 |
Other, net | 294 | 0 |
Net cash (used in) provided by financing activities | (2,552) | 5,384 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (660) | (1,511) |
Net change in cash, cash equivalents and restricted cash | (5,641) | (7,227) |
Cash, cash equivalents and restricted cash at beginning of period | 59,726 | 67,243 |
Cash, cash equivalents and restricted cash at end of period | $ 54,085 | $ 60,016 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | 1. Background and Basis of Presentation: Description of Business PQ Group Holdings Inc. and subsidiaries (the “Company” or “PQ Group Holdings”) is a leading integrated and innovative global provider of specialty catalysts, materials and chemicals, and services. The Company supports customers globally through its strategically located network of manufacturing facilities. The Company believes that its products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment. The Company has four uniquely positioned specialty businesses: Refining Services provides sulfuric acid recycling to the North American refining industry; Catalysts serves the global refining, petrochemical and emissions control industries; Performance Materials produces transportation reflective safety markings for roads and airports; and Performance Chemicals supplies diverse product end uses, including personal and industrial cleaning products, fuel-efficient tires, surface coatings, and food and beverage products. Effective March 1, 2019, the Company changed the structure of its internal organization to create the four independent businesses described above in order to promote increased visibility to business unit performance, optimize the Company’s product portfolio and create efficiencies. Previously, the Company had two reportable segments, namely the Environmental Catalysts and Services segment and the Performance Materials and Chemicals segment. Beginning with the quarter ended March 31, 2019, the segment results and disclosures included in the Company’s consolidated financial statements reflect the new segment structure for all periods presented. The changes to the Company’s segment structure affect only the manner in which the results of the Company’s reportable segments were previously reported; there are no changes to the Company’s consolidated balance sheet, statement of income or cash flows for the prior periods. For the purposes of the Company’s goodwill impairment testing, the four new operating segments align with the Company’s reporting units at which level goodwill has been assigned and historically tested for impairment. Seasonal changes and weather conditions typically affect the Company’s Performance Materials and Refining Services segments. In particular, the Company’s Performance Materials segment generally experiences lower sales and profit in the first and fourth quarters of the year because highway striping projects typically occur during warmer weather months. Additionally, the Company’s Refining Services segment typically experiences similar seasonal fluctuations as a result of higher demand for gasoline products in the summer months. As a result, working capital requirements tend to be higher in the first and second quarters of the year, which can adversely affect the Company’s liquidity and cash flows. Because of this seasonality associated with certain of the Company’s segments, results for any one quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full year. Basis of Presentation The condensed consolidated financial statements included herein are unaudited. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations for interim reporting. In the opinion of management, all adjustments of a normal and recurring nature necessary to state fairly the financial position and results of operations have been included. The results of operations are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Other than the update to our lease accounting policies described in Note 11 , the Company has continued to follow the accounting policies set forth in those consolidated financial statements. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Standards [Abstract] | |
New Accounting Standards | 2. New Accounting Standards: Recently Adopted Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance (with subsequent targeted amendments) that modifies the accounting for leases. Under the new guidance, a lessee will recognize right-of-use lease assets and lease liabilities for most leases (including those classified under existing GAAP as operating leases, which based on previous standards are not reflected on the balance sheet), but will recognize expenses in a manner that is generally consistent with existing practices. The new guidance also requires companies to provide expanded disclosures regarding leasing arrangements. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The new guidance must be adopted using a modified retrospective transition method. The Company adopted the new lease guidance effective January 1, 2019 as required using the modified retrospective transition method and applied the provisions of the guidance at the effective date with a cumulative-effect adjustment to the opening balance of retained earnings without adjusting the comparative periods presented. The new guidance provides practical expedients and allows for certain policy elections with regard to the Company’s lease population. The Company has elected the short term lease accounting policy and will not record right-of-use lease assets or lease liabilities for leases with an initial term of twelve months or less. Additionally, the Company has elected to utilize the portfolio approach to apply incremental borrowing rates to its leases. The Company has elected the package of practical expedients which provides the Company with the ability to bypass reassessment of the following for leases existing at the date of adoption: (1) whether any existing contracts are, or contain, leases; (2) the lease classification for any existing leases; and (3) initial direct costs for any existing leases. The Company also elected the land easement practical expedient to carry forward existing accounting treatment on existing land easements. Adoption of the new lease guidance resulted in the recognition of right-of-use lease assets of $60,726 , which included $57,832 of right-of-use lease assets related to lease commitments and $2,895 related to the reclassification of favorable lease contracts, and lease liabilities of $58,929 . The new guidance had no impact on the Company’s operating results or liquidity upon adoption. Disclosures related to the Company’s leases are included in Note 11 to these condensed consolidated financial statements. In February 2018, the FASB issued guidance which permits entities to make a one-time election to reclassify the residual (“stranded”) income tax effects included in accumulated other comprehensive income (“AOCI”) to beginning retained earnings as a result of tax reform legislation enacted by the U.S. government on December 22, 2017. The standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Prior to the enactment of the tax reform legislation on December 22, 2017, the Company had amounts recorded in AOCI related to its domestic pension, postretirement and supplementary benefit plans and cash flow hedging relationships that were based on pre-enactment tax rates, which were included in AOCI at the adoption date of the new guidance. The Company adopted the new guidance effective January 1, 2019 as required, and reclassified the income tax effects stranded in AOCI of $1,874 from AOCI to beginning retained earnings. In June 2018, the FASB issued guidance which conforms the accounting for the issuance of all share-based payments using the same accounting model. Previously, the accounting for share-based payments to non-employees was covered under a different framework than those made to employees. Under the new guidance, awards to both employees and non-employees will essentially follow the same model, with small variations related to determining the term assumption when valuing a non-employee award as well as a different expense attribution model for non-employee awards. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted the new guidance on January 1, 2019 as required, with no material impact on its consolidated financial statements upon adoption. Accounting Standards Not Yet Adopted In August 2018, the FASB issued guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance eliminates certain disclosure requirements, including the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the effects of a one-percentage point change in assumed health care cost trend rates. The guidance also requires additional disclosure of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The guidance is effective for fiscal years ending after December 15, 2020 with early adoption permitted, and is required to be applied on a retrospective basis to all periods presented. The Company will modify its benefit plan disclosures in accordance with the new guidance upon adoption, and the guidance will not have a material impact on its consolidated financial statements. In August 2018, the FASB issued guidance which modifies certain disclosure requirements over fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, including all interim periods within that fiscal year. The Company believes that the new guidance will not have a material impact on its consolidated financial statements. In January 2017, the FASB issued guidance which eliminates the second step from the traditional two-step goodwill impairment test. Under current guidance, an entity performed the first step of the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount; if an impairment loss was indicated, the entity computed the implied fair value of goodwill to determine whether an impairment loss existed, and if so, the amount to recognize. Under the new guidance, an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value (the Step 1 test), with no further testing required. Any impairment loss recognized is limited to the amount of goodwill allocated to the reporting unit. The new guidance is effective for public companies that are Securities and Exchange Commission (“SEC”) registrants for fiscal years beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company will apply the guidance prospectively to goodwill impairment tests subsequent to the adoption date. In June 2016, the FASB issued guidance that affects loans, trade receivables and any other financial assets that have the contractual right to receive cash. Under the new guidance, an entity is required to recognize expected credit losses rather than incurred losses for financial assets. The new guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company believes that the new guidance will not have a material impact on its consolidated financial statements. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | 3. Revenue from Contracts with Customers: Disaggregated Revenue The Company’s primary means of disaggregating revenues is by reportable segments, which can be found in Note 17 to these condensed consolidated financial statements. The Company’s portfolio of products are integrated into a variety of end uses, which are described in the table below. Key End Uses Key Products Industrial & process chemicals • Silicate precursors for the tire industry • Glass beads, or microspheres, for metal finishing end uses Fuels & emission control • Refinery catalysts • Emission control catalysts • Catalyst recycling services • Silicate for catalyst manufacturing Packaging & engineered plastics • Catalysts for high-density polyethlene and chemicals syntheses • Antiblocks for film packaging • Solid and hollow microspheres for composite plastics • Sulfur derivatives for nylon production Highway safety & construction • Reflective markings for roadways and airports • Silica gels for surface coatings Consumer products • Silica gels for edible oil and beer clarification • Precipitated silicas, silicates and zeolites for the dentifrice and dishwasher and laundry detergent applications Natural resources • Silicates for drilling muds • Hollow glass beads, or microspheres, for oil well cements • Silicates and alum for water treatment mining • Bleaching aids for paper The following tables disaggregate the Company’s sales, by segment and end use, for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 Refining Services Catalysts Performance Materials Performance Chemicals Total Industrial & process chemicals $ 18,402 $ 276 $ 13,028 $ 59,652 $ 91,358 Fuels & emission control (1) 57,690 — — — 57,690 Packaging & engineered plastics 12,689 15,590 17,382 14,730 60,391 Highway safety & construction (1) — — 27,360 21,938 49,298 Consumer products — — — 68,509 68,509 Natural resources 17,063 — 3,319 15,633 36,015 Total segment sales 105,844 15,866 61,089 180,462 363,261 Eliminations (887 ) (276 ) (48 ) (2,829 ) (4,040 ) Total $ 104,957 $ 15,590 $ 61,041 $ 177,633 $ 359,221 Three months ended March 31, 2018 Refining Services Catalysts Performance Materials Performance Chemicals Total Industrial & process chemicals $ 17,039 $ — $ 12,518 $ 65,636 $ 95,193 Fuels & emission control (1) 55,997 — — — 55,997 Packaging & engineered plastics 11,770 16,473 19,892 11,916 60,051 Highway safety & construction (1) — — 26,659 20,486 47,145 Consumer products — — — 76,730 76,730 Natural resources 15,908 — 3,673 15,195 34,776 Total segment sales 100,714 16,473 62,742 189,963 369,892 Eliminations (812 ) — (72 ) (2,811 ) (3,695 ) Total $ 99,902 $ 16,473 $ 62,670 $ 187,152 $ 366,197 (1) As described in Note 1 , the Company experiences seasonal sales fluctuations to customers in the fuels & emission control and highway safety & construction end uses. Contract Assets and Liabilities A contract asset is a right to consideration in exchange for goods that the Company has transferred to a customer when that right is conditional on something other than the passage of time. A contract liability exists when the Company receives consideration in advance of performance obligations. The Company has not recorded any contract assets or contract liabilities on its condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018 . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements: Fair values are based on quoted market prices when available. When market prices are not available, fair values are generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality. In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair values using methods, models and assumptions that management believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of management estimation and judgment that becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used. The Company’s financial assets and liabilities carried at fair value have been classified based upon a fair value hierarchy. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). The classification of an asset or a liability is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows: • Level 1—Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. • Level 2—Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves. • Level 3—Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 , and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. March 31, Quoted Prices in Significant Other Observable Inputs (Level 2) Significant Assets: Derivative contracts (Note 13) $ 27,994 $ — $ 27,994 $ — Restoration plan assets 4,422 4,422 — — Total $ 32,416 $ 4,422 $ 27,994 $ — Liabilities: Derivative contracts (Note 13) $ 2,892 $ — $ 2,892 $ — December 31, Quoted Prices in Significant Other Observable Inputs (Level 2) Significant Assets: Derivative contracts (Note 13) $ 20,768 $ — $ 20,768 $ — Restoration plan assets 4,244 4,244 — — Total $ 25,012 $ 4,244 $ 20,768 $ — Liabilities: Derivative contracts (Note 13) $ 2,026 $ — $ 2,026 $ — Restoration plan assets The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 15 to these condensed consolidated financial statements regarding defined supplementary retirement plans. The Company’s restoration plan assets are included in other long-term assets on its condensed consolidated balance sheets. Gains and losses related to these investments are included in other expense, net in the Company’s condensed consolidated statements of income. Unrealized gains and losses associated with the underlying stock and fixed income mutual funds were immaterial as of March 31, 2019 and December 31, 2018 , respectively. Derivative contracts Derivative assets and liabilities can be exchange-traded or traded over-the-counter (“OTC”). The Company generally values exchange-traded derivatives using models that calibrate to market transactions and eliminate timing differences between the closing price of the exchange-traded derivatives and their underlying instruments. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment. The Company has interest rate caps, natural gas swaps and cross currency swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset, the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company utilizes a default swap rate comparable to PQ Group Holdings. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | 5. Accumulated Other Comprehensive Income: The following tables present the tax effects of each component of other comprehensive income for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 2018 Pre-tax amount Tax benefit/(expense) After-tax amount Pre-tax amount Tax benefit/(expense) After-tax amount Defined benefit and other postretirement plans: Amortization and unrealized losses $ (40 ) $ 10 $ (30 ) $ (24 ) $ 6 $ (18 ) Benefit plans, net (40 ) 10 (30 ) (24 ) 6 (18 ) Net (loss) gain from hedging activities (2,070 ) 518 (1,552 ) 2,912 (729 ) 2,183 Foreign currency translation 9,282 (2,115 ) 7,167 10,114 (1,443 ) 8,671 Other comprehensive income $ 7,172 $ (1,587 ) $ 5,585 $ 13,002 $ (2,166 ) $ 10,836 The following table presents the change in accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2019 and 2018 : Defined benefit Net gain (loss) from hedging activities Foreign Total December 31, 2018 $ (546 ) $ 637 $ (39,195 ) $ (39,104 ) Other comprehensive income (loss) before reclassifications 1 (1,501 ) 6,852 5,352 Amounts reclassified from accumulated other comprehensive income (1) (31 ) (51 ) — (82 ) Net current period other comprehensive income (loss) (30 ) (1,552 ) 6,852 5,270 Cumulative adjustment from adoption of stranded OCI standard 1,684 190 — 1,874 March 31, 2019 $ 1,108 $ (725 ) $ (32,343 ) $ (31,960 ) December 31, 2017 $ 7,412 $ 967 $ (4,068 ) $ 4,311 Other comprehensive income (loss) before reclassifications (4 ) 2,178 7,367 9,541 Amounts reclassified from accumulated other comprehensive income (1) (14 ) 5 — (9 ) Net current period other comprehensive income (loss) (18 ) 2,183 7,367 9,532 March 31, 2018 $ 7,394 $ 3,150 $ 3,299 $ 13,843 (1) See the following table for details about these reclassifications. Amounts in parentheses indicate credits to profit/loss. The following table presents the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2019 and 2018 : Details about Accumulated Other Comprehensive Income (Loss) Components Amounts Reclassified from Accumulated Other Comprehensive Income(a) Affected Line Item in the Statements of Income Three months ended 2019 2018 Defined benefit and other postretirement plans Amortization of prior service credit $ (33 ) $ (19 ) (b) Amortization of net (gain) loss (8 ) 2 (b) (41 ) (17 ) Total before tax 10 3 Tax expense (benefit) $ (31 ) $ (14 ) Net of tax Net (gain) loss from hedging activities Interest rate caps $ 123 $ 35 Interest expense Natural gas swaps (191 ) (28 ) Cost of goods sold (68 ) 7 Total before tax 17 (2 ) Tax expense (benefit) $ (51 ) $ 5 Net of tax Total reclassifications for the period $ (82 ) $ (9 ) Net of tax (a) Amounts in parentheses indicate credits to profit/loss. (b) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost (see Note 15 to these condensed consolidated financial statements for additional details). |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 6. Goodwill: The change in the carrying amount of goodwill for the three months ended March 31, 2019 is summarized as follows: Refining Services Catalysts Performance Materials Performance Chemicals Total Balance as of December 31, 2018 $ 311,892 $ 77,759 $ 274,947 $ 590,331 $ 1,254,929 Foreign exchange impact — 693 418 994 2,105 Balance as of March 31, 2019 $ 311,892 $ 78,452 $ 275,365 $ 591,325 $ 1,257,034 |
Other Operating Expense, Net
Other Operating Expense, Net | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Other Operating Expense, Net | 7. Other Operating Expense, Net: A summary of other operating expense, net is as follows: Three months ended 2019 2018 Amortization expense $ 8,664 $ 8,949 Net loss on asset disposals (1) 820 1,152 Insurance recoveries (1) — (1,244 ) Environmental related costs 479 89 Other, net 776 368 $ 10,739 $ 9,314 (1) During the three months ended March 31, 2018 , the Company recognized $1,500 of insurance recoveries in its condensed consolidated statement of income related to the Company’s claim for losses sustained during Hurricane Harvey in August 2017. Of this amount, $1,244 was recorded as a gain in other operating expense, net, as reimbursement of expenses, $207 was recorded as a gain in net loss on asset disposals within other operating expense, net, for the Company’s previously recognized property losses, and $49 represented recoveries in excess of the Company’s property losses which was recorded as a non-operating gain in other expense, net, in the Company’s condensed consolidated statement of income. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 8. Inventories: Inventories are classified and valued as follows: March 31, December 31, Finished products and work in process $ 228,874 $ 206,188 Raw materials 54,675 58,560 $ 283,549 $ 264,748 Valued at lower of cost or market: LIFO basis $ 171,967 $ 160,863 Valued at lower of cost and net realizable value: FIFO or average cost basis 111,582 103,885 $ 283,549 $ 264,748 |
Investments in Affiliated Compa
Investments in Affiliated Companies | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Affiliated Companies | 9. Investments in Affiliated Companies: The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity basis as of March 31, 2019 are as follows: Company Country Percent PQ Silicates Ltd. Taiwan 50% Zeolyst International USA 50% Zeolyst C.V. Netherlands 50% Quaker Holdings South Africa 49% Asociacion para el Estudio de las Tecnologias de Equipamiento de Carreteras, S.A. (“Aetec”) Spain 20% Following is summarized information of the combined investments (1) : Three months ended 2019 2018 Sales $ 68,094 $ 88,576 Gross profit 19,414 35,522 Operating income 9,207 26,041 Net income 9,240 27,022 (1) Summarized information of the combined investments is presented at 100%; the Company’s share of the net assets and net income of affiliates is calculated based on the percent ownership specified in the table above. The Company’s investments in affiliated companies balance as of March 31, 2019 and December 31, 2018 includes net purchase accounting fair value adjustments of 255,508 and $ 258,066 , respectively, related to the series of transactions consummated on May 4, 2016 to reorganize and combine the businesses of PQ Holdings Inc. and Eco Services Operations LLC, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names. Consolidated equity in net income from affiliates is net of $2,558 and $1,658 of amortization expense related to purchase accounting fair value adjustments for the three months ended March 31, 2019 and 2018 , respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 10. Property, Plant and Equipment: A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows: March 31, December 31, Land $ 190,948 $ 190,772 Buildings 213,810 212,284 Machinery and equipment 1,140,732 1,125,117 Construction in progress 105,830 102,185 1,651,320 1,630,358 Less: accumulated depreciation (449,358 ) (421,379 ) $ 1,201,962 $ 1,208,979 Depreciation expense was $33,154 and $34,903 for the three months ended March 31, 2019 and 2018 , respectively. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 11. Leases: The Company has operating and finance lease agreements with remaining lease terms as of March 31, 2019 up to 28 years, including leases of land, buildings, railcars, vehicles, manufacturing equipment and general office equipment. Some leases include options to terminate or extend for one or more years. These options are incorporated in the Company’s lease term when it is reasonably certain that the option will be exercised. Some leases include options to purchase, which the Company assesses under the guidance to determine if these leases should be classified as finance lease agreements. When the Company enters into an arrangement, at inception, the Company determines if the arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance). The Company accounts for the lease and non-lease components based on the estimated standalone price of each component. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate and these are initially measured using the index or rate in effect at the commencement date. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company recognizes a right-of-use lease asset and lease liability at the lease commencement date based on the present value of the remaining lease payments over the lease term using the Company’s incremental borrowing rate. The Company is required to use the rate of interest that it would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. When the Company is unable to readily determine the discount rate implicit in the lease agreement, the Company utilizes its incremental borrowing rate over the relevant lease term. Short-term leases, which have an initial term of twelve months or less, are not recorded on the Company’s balance sheet. Lease expense for operating leases and financing leases is recognized on a straight-line basis over the lease term and is included in cost of goods sold or selling, general, and administrative expense on the condensed consolidated statements of income. The table below presents the operating and finance right-of-use lease assets and lease liabilities recognized on the condensed consolidated balance sheet as of March 31, 2019 : Classification March 31, Assets Operating lease assets Right-of-use lease assets $ 57,173 Finance lease assets Property, plant and equipment, net 1,632 Total leased assets $ 58,805 Liabilities Current: Operating lease liabilities Operating lease liabilities - current $ 14,482 Finance lease liabilities Accrued liabilities 162 Noncurrent: Operating lease liabilities Operating lease liabilities - noncurrent 40,971 Finance lease liabilities Other long-term liabilities 474 Total lease liabilities $ 56,089 The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2019 are as follows: March 31, Weighted average remaining lease term (in years): Operating leases 5.62 Finance leases 3.39 Weighted average discount rate: Operating leases 5.73 % Finance leases 4.67 % Maturities of lease liabilities as of March 31, 2019 are as follows: Operating Leases Finance Leases Total Remainder of 2019 $ 13,262 $ 152 $ 13,414 2020 14,492 202 14,694 2021 11,501 202 11,703 2022 8,366 124 8,490 2023 6,153 5 6,158 Thereafter 11,947 — 11,947 Total lease payments 65,721 685 66,406 Less: Interest (10,268 ) (49 ) (10,317 ) Present value of lease liabilities $ 55,453 $ 636 $ 56,089 At December 31, 2018 , future minimum payments under non-cancelable operating leases under previous lease guidance was as follows: Year Amount 2019 $ 18,457 2020 14,344 2021 11,432 2022 8,354 2023 6,198 Thereafter 17,477 $ 76,262 Operating lease costs of $4,679 are included in cost of goods sold and in selling, general and administrative expenses for the three months ended March 31, 2019 . Finance lease, short-term lease and variable lease costs for the three months ended March 31, 2019 were not material. Lease income is not material to the results of operations for the three months ended March 31, 2019 . The following table presents other information related to our operating and finance leases and the impact on the Company’s condensed consolidated statement of cash flows: Three months ended Cash paid for amounts included in the measurement of lease liabilities: Payments on operating leases included in operating cash flows $ 3,978 Interest payments under finance lease obligations included in operating cash flows $ 9 Principal payments under finance lease obligations included in financing cash flows $ 48 Right-of-use assets obtained in exchange for new lease liabilities (non-cash): Operating leases $ 508 Finance leases $ — |
Long-term Debt
Long-term Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | 12. Long-term Debt: The summary of long-term debt is as follows: March 31, December 31, 2018 Term Loan Facility $ 1,157,498 $ 1,157,498 6.75% Senior Secured Notes due 2022 625,000 625,000 5.75% Senior Unsecured Notes due 2025 295,000 300,000 ABL Facility 2,000 — Other 67,266 65,925 Total debt 2,146,764 2,148,423 Original issue discount (17,915 ) (18,584 ) Deferred financing costs (15,067 ) (15,882 ) Total debt, net of original issue discount and deferred financing costs 2,113,782 2,113,957 Less: current portion (10,712 ) (7,237 ) Total long-term debt, excluding current portion $ 2,103,070 $ 2,106,720 The fair value of a financial instrument is defined 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. As of March 31, 2019 and December 31, 2018 , the fair value of the term loan facility and senior secured and unsecured notes was $ 2,077,276 and $ 2,010,023 , respectively. The fair value is classified as Level 2 based upon the fair value hierarchy (see Note 4 to these condensed consolidated financial statements for further information on fair value measurements). |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | 13. Financial Instruments: The Company uses (1) interest rate related derivative instruments to manage its exposure to changes in interest rates on its variable-rate debt instruments, (2) commodity derivatives to manage its exposure to commodity price fluctuations, and (3) foreign currency related derivative instruments to manage its foreign currency exposure to its net investments in certain foreign operations. The Company does not speculate using derivative instruments. By using derivative financial instruments to hedge exposures to changes in interest rates, commodity prices and foreign currency, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is an asset, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is a liability, the Company owes the counterparty and therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high quality counterparties. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates, currency exchange rates or commodity prices. The market risk associated with the Company’s derivative instruments is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. Use of Derivative Financial Instruments to Manage Commodity Price Risk. The Company is exposed to risks in energy costs due to fluctuations in energy prices, particularly natural gas. The Company has a hedging program in the United States which allows the Company to mitigate exposure to natural gas volatility with natural gas swap agreements. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices of comparable contracts. The respective current and non-current liabilities are recorded in accrued liabilities and other long-term liabilities and the respective current and non-current assets are recorded in prepaid and other current assets and other long-term assets, as applicable, in the Company’s consolidated balance sheet. As the derivatives are designated and qualify as cash flow hedges, the gains or losses on the natural gas swaps are recorded in stockholders’ equity as a component of other comprehensive income (loss) (“OCI”), net of tax. Reclassifications of the gains and losses on natural gas hedges into earnings are recorded in production costs and subsequently charged to cost of goods sold in the condensed consolidated statements of income in the period in which the associated inventory is sold. As of March 31, 2019 , the Company’s natural gas swaps had a remaining notional quantity of 3.3 million MMBTU to mitigate commodity price volatility through December 2021. Use of Derivative Financial Instruments to Manage Interest Rate Risk. The Company is exposed to fluctuations in interest rates on its senior secured credit facilities. Changes in interest rates will not affect the market value of such debt but will affect the Company’s interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on debt obligations through interest rate cap agreements. The Company records these agreements at fair value as assets or liabilities in its consolidated balance sheet. As the derivatives are designated and qualify as cash flow hedges, the gains or losses on the interest rate cap agreements are recorded in stockholders’ equity as a component of OCI, net of tax. Reclassifications of the gains and losses on the interest rate cap agreements into earnings are recorded as part of interest expense in the condensed consolidated statements of income as the Company makes its interest payments on the hedged portion of its senior secured credit facilities. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices. In July 2016, the Company entered into interest rate cap agreements, paying a premium of $1,551 to mitigate interest rate volatility from July 2016 through July 2020 by employing varying cap rates, ranging from 1.50% to 3.00% , on $1,000,000 of notional variable-rate debt. The cap rate currently in effect at March 31, 2019 is 2.50% . In November 2018, the Company entered into additional interest rate cap agreements to mitigate interest rate volatility from July 2020 through July 2022, with a cap rate of 3.50% on $500,000 of notional variable-rate debt. Use of Derivative Financial Instruments to Manage Foreign Currency Risk. The Company is exposed to risks related to its net investments in foreign operations due to fluctuations in foreign currency exchange rates, particularly between the United States dollar and the Euro. In February 2018, the Company entered into multiple cross currency interest rate swap arrangements with an aggregate notional amount of €280,000 ( $314,112 as of March 31, 2019 ) to hedge this exposure on the net investments of certain of its Euro-denominated subsidiaries. The Company records these swap agreements at fair value as assets or liabilities in its consolidated balance sheet. As the derivatives are designated and qualify as net investment hedges, changes in the fair value of the swaps attributable to changes in the spot exchange rates are recognized in cumulative translation adjustment (“CTA”) within OCI and are held there until the hedged net investments are sold or substantially liquidated. Changes in the fair value of the swaps attributable to the cross currency basis spread are excluded from the assessment of hedge effectiveness and are recorded in current period earnings. Upon such sale or liquidation, the amount recognized in CTA is reclassified to earnings and reported in the same line item as the gain or loss on the liquidation of the net investments. The fair values of derivative instruments held as of March 31, 2019 and December 31, 2018 are shown below: Balance sheet location March 31, 2019 December 31, 2018 Derivative assets: Derivatives designated as cash flow hedges: Natural gas swaps Prepaid and other current assets $ 88 $ 21 Interest rate caps Prepaid and other current assets 442 $ 1,358 Interest rate caps Other long-term assets 68 546 598 1,925 Derivatives designed as net investment hedges: Cross currency swaps Prepaid and other current assets 7,224 5,499 Cross currency swaps Other long-term assets 20,172 13,344 27,396 18,843 Total derivative assets $ 27,994 $ 20,768 Derivative liabilities: Derivatives designated as cash flow hedges: Natural gas swaps Accrued liabilities $ — $ 36 Natural gas swaps Other long-term liabilities 72 148 Interest rate caps Other long-term liabilities 2,820 1,842 Total derivative liabilities $ 2,892 $ 2,026 The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on accumulated other comprehensive income (“AOCI”) for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 2018 Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Interest rate caps Interest (expense) income $ (2,373 ) $ (123 ) $ 2,852 $ (35 ) Natural gas swaps Cost of goods sold 371 191 53 28 $ (2,002 ) $ 68 $ 2,905 $ (7 ) The following table shows the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018 : Location and amount of gain (loss) recognized in income on cash flow hedging relationships Three months ended March 31, 2019 2018 Cost of goods sold Interest (expense) income Cost of goods sold Interest (expense) income Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded (278,311 ) (28,618 ) (288,076 ) (29,163 ) The effects of cash flow hedging: Gain (loss) on cash flow hedging relationships: Interest contracts: Amount of gain (loss) reclassified from AOCI into income — (123 ) — (35 ) Commodity contracts: Amount of gain (loss) reclassified from AOCI into income 191 — 28 — The following table shows the effect of the Company’s net investment hedges on AOCI and the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018 : Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) reclassified from AOCI into income Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Three months ended Three months ended Three months ended 2019 2018 2019 2018 2019 2018 Cross currency swaps $ 8,553 $ (9,276 ) Gain (loss) on sale of subsidiary $ — $ — Interest (expense) income $ 1,446 $ 1,167 The amount of unrealized losses in AOCI that are expected to be reclassified to the condensed consolidated statement of income over the next twelve months is $ 591 as of March 31, 2019 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes: The effective income tax rate for the three months ended March 31, 2019 was 41.6% compared to (1,959.3)% for the three months ended March 31, 2018 . The Company’s effective income tax rate has fluctuated primarily because of changes in income mix (including the effect of loss companies), the impact of including foreign earnings in U.S. taxable income and changes in foreign exchange gains and losses, which create permanent differences in certain jurisdictions. The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2019 was mainly due to the tax effect of permanent differences related to foreign currency exchange gain or loss, inclusion of foreign earnings in the U.S. as a result of recently enacted tax law, pre-tax losses with no associated tax benefit, prior year tax refunds not previously accrued for and state taxes. The difference between the U.S. federal statutory income tax rate and the Company’s effective income tax rate for the three months ended March 31, 2018 was mainly due to the tax effect of repatriating foreign earnings back to the United States as dividends offset by lower tax rates in foreign jurisdictions as compared to the U.S. tax rate, foreign withholdings taxes, state taxes and non-deductible transaction costs. The Tax Cuts and Jobs Act of 2017 (“TCJA”) enacted certain provisions that became effective on January 1, 2018. These provisions include, but are not limited to, the new Global Intangible Low-Taxed Income (“GILTI”) tax rules. Due to the complexity of the new GILTI tax, the Company is continuing to evaluate the GILTI provision of the TCJA and its impact on the financial statements, which remains uncertain. Per guidance issued by the FASB, the Company is permitted to make an accounting policy election to either (1) treat the taxes incurred as a result of the GILTI provision as a current-period expense when incurred or (2) factor such amounts into its measurement of deferred taxes. At this time, the Company is electing to treat any tax expense incurred as a result of GILTI as a current-period expense. Additionally, in regards to GILTI’s impact in assessing the ability to realize deferred tax assets, the Company has made a policy election to use the tax law ordering approach. With respect to operating results for the three months ended March 31, 2019 , the Company has continued to incorporate an estimate of the GILTI income inclusion when estimating annual effective tax rate used for U.S. GAAP purposes. The Company expects this amount to be included in its 2019 U.S. taxable income. However, the estimated 2019 GILTI income inclusion may change materially as the Company continues to evaluate future legislative or administrative guidance that is put forth, any updates to assumptions and figures used for the current estimate, or as a result of future changes to the Company’s current structure and business. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Benefit Plans | 15. Benefit Plans: The following information is provided for (1) the Company-sponsored defined benefit pension plans covering employees in the U.S. and certain employees at its foreign subsidiaries, (2) the Company-sponsored unfunded plans to provide certain health care benefits to retired employees in the U.S. and Canada, and (3) the Company’s defined benefit supplementary retirement plans which provide benefits for certain U.S. employees in excess of qualified plan limitations. Components of net periodic expense (benefit) are as follows: Defined Benefit Pension Plans U.S. Foreign Three months ended Three months ended 2019 2018 2019 2018 Service cost $ 219 $ 310 $ 806 $ 887 Interest cost 2,507 2,372 833 1,505 Expected return on plan assets (2,757 ) (3,174 ) (603 ) (1,319 ) Amortization of net loss — — — 13 Net periodic expense (benefit) $ (31 ) $ (492 ) $ 1,036 $ 1,086 Supplemental Retirement Plans Three months ended 2019 2018 Interest cost $ 121 $ 110 Net periodic expense $ 121 $ 110 Other Postretirement Benefit Plans Three months ended 2019 2018 Service cost $ 3 $ 6 Interest cost 38 38 Amortization of prior service credit (33 ) (19 ) Amortization of net gain (8 ) (11 ) Net periodic expense $ — $ 14 |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 16. Commitments and Contingent Liabilities: There is a risk of environmental impact in chemical manufacturing operations. The Company’s environmental policies and practices are designed to comply with existing laws and regulations and to minimize the possibility of significant environmental impact. The Company is also subject to various other lawsuits and claims with respect to matters such as governmental regulations, labor and other actions arising out of the normal course of business. While management believes that the liabilities resulting from such lawsuits and claims are not probable or reasonably estimable, certain accruals have been reflected in the Company’s condensed consolidated financial statements. When these matters are ultimately concluded and determined, the Company believes that there will be no material adverse effect on its consolidated financial position, results of operations or liquidity. |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Reportable Segments | 17. Reportable Segments: Summarized financial information for the Company’s reportable segments is shown in the following table: Three months ended 2019 2018 Sales: Refining Services $ 105,844 $ 100,714 Catalysts (1) 15,866 16,473 Performance Materials 61,089 62,742 Performance Chemicals 180,462 189,963 Eliminations (2) (4,040 ) (3,695 ) Total $ 359,221 $ 366,197 Segment Adjusted EBITDA: (3) Refining Services $ 39,731 $ 35,532 Catalysts (4) 18,127 22,889 Performance Materials 10,515 12,058 Performance Chemicals 42,673 45,094 Total Segment Adjusted EBITDA (5) $ 111,046 $ 115,573 (1) Excludes the Company’s proportionate share of sales from the Zeolyst International and Zeolyst C.V. joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 9 to these condensed consolidated financial statements for further information). The proportionate share of sales is $29,478 and $38,349 for the three months ended March 31, 2019 and 2018 , respectively. (2) The Company eliminates intersegment sales when reconciling to the Company’s condensed consolidated statements of income. (3) The Company defines Adjusted EBITDA as EBITDA adjusted for certain items as noted in the reconciliation below. Management evaluates the performance of its segments and allocates resources based on several factors, of which the primary measure is Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income as an indicator of the Company’s operating performance. Adjusted EBITDA as defined by the Company may not be comparable with EBITDA or Adjusted EBITDA as defined by other companies. (4) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $8,357 for the three months ended March 31, 2019 , which includes $2,036 of equity in net income plus $2,558 of amortization of investment in affiliate step-up and $3,763 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $16,807 for the three months ended March 31, 2018 , which includes $11,826 of equity in net income plus $1,658 of amortization of investment in affiliate step-up and $3,323 of joint venture depreciation, amortization and interest. (5) Total Segment Adjusted EBITDA differs from the Company’s consolidated Adjusted EBITDA due to unallocated corporate expenses. A reconciliation of net income attributable to PQ Group Holdings to Segment Adjusted EBITDA is as follows: Three months ended 2019 2018 Reconciliation of net income attributable to PQ Group Holdings Inc. to Segment Adjusted EBITDA Net income attributable to PQ Group Holdings Inc. $ 3,151 $ 214 Provision (benefit) for income taxes 2,447 (529 ) Interest expense, net 28,618 29,163 Depreciation and amortization 45,894 48,488 Segment EBITDA 80,110 77,336 Unallocated corporate expenses 10,005 7,688 Joint venture depreciation, amortization and interest 3,763 3,323 Amortization of investment in affiliate step-up 2,558 1,658 Amortization of inventory step-up — 1,603 Debt extinguishment costs — 5,879 Net loss on asset disposals 820 1,152 Foreign currency exchange (gain) loss (2,689 ) 5,063 LIFO expense 10,158 4,926 Transaction and other related costs 80 428 Equity-based compensation 3,400 3,831 Restructuring, integration and business optimization expenses 732 1,079 Defined benefit pension plan cost 993 550 Other 1,116 1,057 Segment Adjusted EBITDA $ 111,046 $ 115,573 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 18. Stock-Based Compensation: The Company is authorized to issue shares for common stock awards to employees, directors and affiliates of the Company in connection with the PQ Group Holdings Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”). During the three months ended March 31, 2019 , the Company granted 1,196,141 restricted stock units and 539,431 performance stock units at target under the 2017 Plan as part of its equity incentive compensation program. Each restricted stock unit provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the three months ended March 31, 2019 , require approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees. The performance stock units granted during the three months ended March 31, 2019 provide the recipients with the right to receive shares of common stock dependent on the achievement of two Company-specific financial performance targets and the provision of service through the vesting date. Achievement of the metrics is measured based on the average levels of achievement across the three-year period from January 1, 2019 through December 31, 2021. Depending on the Company’s performance against the pre-determined thresholds for achievement, each performance stock unit award holder is eligible to earn a percentage of the target number of shares granted to the holder, ranging from zero to 200% . The performance stock units, to the extend earned, will vest on the date the Company’s compensation and governance committee certifies the achievement of the performance metrics for the three -year period ending December 31, 2021, which will not occur later than March 1, 2022. The value of the restricted stock units granted during the three months ended March 31, 2019 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards. Compensation expense related to the restricted stock units is recognized on a straight-line basis over the respective vesting period. The value of the performance stock units granted during the three months ended March 31, 2019 was measured on the same basis as that of the restricted stock units, and based on the target number of shares granted; because the performance vesting conditions affect the ability of the recipients to vest in the awards, they are not factored into the fair value measure of the award. Compensation expense related to the performance stock units is recognized ratably over the requisite service period, and the Company must assess the probability that the performance conditions will be met each reporting period, and the level at which they are estimated to be attained. Should the probability assessment change during a given reporting period, the total compensation cost (both recognized and unrecognized) will be adjusted to reflect the revised assessment. The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the three months ended March 31, 2019 : Restricted Stock Units Performance Stock Units Number of Weighted Average Grant Date Fair Value (per share) Number of Weighted Average Grant Date Fair Value (per share) Nonvested as of December 31, 2018 998,786 $ 16.83 — $ — Granted 1,196,141 $ 15.41 539,431 $ 15.41 Vested (6,037 ) $ 16.54 — $ — Nonvested as of March 31, 2019 2,188,890 $ 16.06 539,431 $ 15.41 Total stock-based compensation expense for all of the Company’s equity incentive awards for the three months ended March 31, 2019 and 2018 was $3,400 and $3,831 , respectively. With the new grants of restricted stock units and performance stock units during the three months ended March 31, 2019 , unrecognized compensation cost at March 31, 2019 related to nonvested awards was $ 29,715 and $ 8,159 for restricted stock units and performance stock units, respectively. The weighted-average period over which these costs are expected to be recognized at March 31, 2019 is 2.09 years for the restricted stock units and 2.92 years for the performance stock units. At March 31, 2019 , 3,666,886 shares of common stock were available for issuance under the 2017 Plan, after giving effect to the new grants as well as other minor activity during the three months ended March 31, 2019 . Activity related to the Company’s stock options and restricted stock awards was not material for the three months ended March 31, 2019 . |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 19. Earnings per Share: Basic earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding during the period for the computation of basic earnings per share excludes restricted stock awards that have legally been issued but are nonvested during the period, as the sale of these shares is prohibited pending satisfaction of certain vesting conditions by the award recipients in order to earn the rights to the shares. Diluted earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common and potential common shares outstanding during the period, if dilutive. Potential common shares reflect (1) unvested restricted stock awards and restricted stock units with service vesting conditions, (2) performance stock units with vesting conditions considered probable of achievement and (3) options to purchase common stock, all of which have been included in the diluted earnings per share calculation using the treasury stock method. The reconciliation from basic to diluted weighted average shares outstanding is as follows: Three months ended 2019 2018 Weighted average shares outstanding – Basic 133,946,308 133,154,144 Dilutive effect of unvested common shares and restricted stock units with service conditions, performance stock units considered probable of vesting and assumed stock option exercises and conversions 948,046 730,839 Weighted average shares outstanding – Diluted 134,894,354 133,884,983 Basic and diluted earnings per share are calculated as follows: Three months ended 2019 2018 Numerator: Net income attributable to PQ Group Holdings Inc. $ 3,151 $ 214 Denominator: Weighted average shares outstanding – Basic 133,946,308 133,154,144 Weighted average shares outstanding – Diluted 134,894,354 133,884,983 Net income per share: Basic income per share $ 0.02 $ — Diluted income per share $ 0.02 $ — The table below presents the details of the Company’s weighted average equity-based awards outstanding during each respective period that were excluded from the calculation of diluted earnings per share: Three months ended 2019 2018 Restricted stock awards with performance only targets not yet achieved 1,639,514 1,751,022 Stock options with performance only targets not yet achieved 586,253 586,253 Anti-dilutive restricted stock awards, restricted stock units and performance stock units — — Anti-dilutive stock options 863,063 621,747 Restricted stock awards and stock options with performance only vesting conditions were not included in the dilution calculation, as the performance targets have not been achieved nor were probable of achievement as of the end of the respective periods. On a weighted average basis, options to purchase 621,747 shares of common stock at $16.97 per share for the three months ended March 31, 2019 and 2018 , and 241,316 shares of common stock at $17.50 per share for the three months ended March 31, 2019 were excluded from the computation of diluted earnings per share for the respective periods, because the combination of the options’ exercise price and remaining unamortized stock-based compensation expense was greater than the average market price of the common shares. The 621,747 stock options expire on October 2, 2027 while the 241,316 stock options expire on August 9, 2028. All of the options were outstanding as of March 31, 2019 . Anti-dilutive awards are not included in the dilution calculation, as their inclusion would have the effect of increasing diluted income per share. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | 20. Supplemental Cash Flow Information: The following table presents supplemental cash flow information for the Company: Three months ended 2019 2018 Cash paid during the period for: Income taxes, net of refunds $ 4,387 $ 4,433 Interest (1) 23,740 16,557 Non-cash investing activity (2) : Capital expenditures acquired on account but unpaid as of the period end 15,391 10,680 (1) Excludes capitalized interest and $3,890 of net interest proceeds on swaps designated as net investment hedges, which are included within cash flows from investing activities in the Company’s condensed consolidated statements of cash flows. (2) For the supplemental non-cash information on lease liabilities arising from obtaining right-of-use lease assets, see Note 11 to these condensed consolidated financial statements for additional details. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets as of March 31, 2019 and 2018 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the three months then ended: March 31, 2019 2018 Cash and cash equivalents $ 52,341 $ 58,834 Restricted cash included in prepaid and other current assets 1,744 1,182 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 54,085 $ 60,016 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 21. Subsequent Events: The Company has evaluated subsequent events since the balance sheet date and determined that there are no additional items to disclose. |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements included herein are unaudited. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations for interim reporting. In the opinion of management, all adjustments of a normal and recurring nature necessary to state fairly the financial position and results of operations have been included. The results of operations are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Other than the update to our lease accounting policies described in Note 11 , the Company has continued to follow the accounting policies set forth in those consolidated financial statements. |
Recently Issued Accounting Standards | Recently Adopted Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance (with subsequent targeted amendments) that modifies the accounting for leases. Under the new guidance, a lessee will recognize right-of-use lease assets and lease liabilities for most leases (including those classified under existing GAAP as operating leases, which based on previous standards are not reflected on the balance sheet), but will recognize expenses in a manner that is generally consistent with existing practices. The new guidance also requires companies to provide expanded disclosures regarding leasing arrangements. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The new guidance must be adopted using a modified retrospective transition method. The Company adopted the new lease guidance effective January 1, 2019 as required using the modified retrospective transition method and applied the provisions of the guidance at the effective date with a cumulative-effect adjustment to the opening balance of retained earnings without adjusting the comparative periods presented. The new guidance provides practical expedients and allows for certain policy elections with regard to the Company’s lease population. The Company has elected the short term lease accounting policy and will not record right-of-use lease assets or lease liabilities for leases with an initial term of twelve months or less. Additionally, the Company has elected to utilize the portfolio approach to apply incremental borrowing rates to its leases. The Company has elected the package of practical expedients which provides the Company with the ability to bypass reassessment of the following for leases existing at the date of adoption: (1) whether any existing contracts are, or contain, leases; (2) the lease classification for any existing leases; and (3) initial direct costs for any existing leases. The Company also elected the land easement practical expedient to carry forward existing accounting treatment on existing land easements. Adoption of the new lease guidance resulted in the recognition of right-of-use lease assets of $60,726 , which included $57,832 of right-of-use lease assets related to lease commitments and $2,895 related to the reclassification of favorable lease contracts, and lease liabilities of $58,929 . The new guidance had no impact on the Company’s operating results or liquidity upon adoption. Disclosures related to the Company’s leases are included in Note 11 to these condensed consolidated financial statements. In February 2018, the FASB issued guidance which permits entities to make a one-time election to reclassify the residual (“stranded”) income tax effects included in accumulated other comprehensive income (“AOCI”) to beginning retained earnings as a result of tax reform legislation enacted by the U.S. government on December 22, 2017. The standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Prior to the enactment of the tax reform legislation on December 22, 2017, the Company had amounts recorded in AOCI related to its domestic pension, postretirement and supplementary benefit plans and cash flow hedging relationships that were based on pre-enactment tax rates, which were included in AOCI at the adoption date of the new guidance. The Company adopted the new guidance effective January 1, 2019 as required, and reclassified the income tax effects stranded in AOCI of $1,874 from AOCI to beginning retained earnings. In June 2018, the FASB issued guidance which conforms the accounting for the issuance of all share-based payments using the same accounting model. Previously, the accounting for share-based payments to non-employees was covered under a different framework than those made to employees. Under the new guidance, awards to both employees and non-employees will essentially follow the same model, with small variations related to determining the term assumption when valuing a non-employee award as well as a different expense attribution model for non-employee awards. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company adopted the new guidance on January 1, 2019 as required, with no material impact on its consolidated financial statements upon adoption. Accounting Standards Not Yet Adopted In August 2018, the FASB issued guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance eliminates certain disclosure requirements, including the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the effects of a one-percentage point change in assumed health care cost trend rates. The guidance also requires additional disclosure of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The guidance is effective for fiscal years ending after December 15, 2020 with early adoption permitted, and is required to be applied on a retrospective basis to all periods presented. The Company will modify its benefit plan disclosures in accordance with the new guidance upon adoption, and the guidance will not have a material impact on its consolidated financial statements. In August 2018, the FASB issued guidance which modifies certain disclosure requirements over fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, including all interim periods within that fiscal year. The Company believes that the new guidance will not have a material impact on its consolidated financial statements. In January 2017, the FASB issued guidance which eliminates the second step from the traditional two-step goodwill impairment test. Under current guidance, an entity performed the first step of the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount; if an impairment loss was indicated, the entity computed the implied fair value of goodwill to determine whether an impairment loss existed, and if so, the amount to recognize. Under the new guidance, an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value (the Step 1 test), with no further testing required. Any impairment loss recognized is limited to the amount of goodwill allocated to the reporting unit. The new guidance is effective for public companies that are Securities and Exchange Commission (“SEC”) registrants for fiscal years beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company will apply the guidance prospectively to goodwill impairment tests subsequent to the adoption date. In June 2016, the FASB issued guidance that affects loans, trade receivables and any other financial assets that have the contractual right to receive cash. Under the new guidance, an entity is required to recognize expected credit losses rather than incurred losses for financial assets. The new guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company believes that the new guidance will not have a material impact on its consolidated financial statements. |
Fair Value Measurement | Restoration plan assets The fair values of the Company’s restoration plan assets are determined through quoted prices in active markets. Restoration plan assets are assets held in a Rabbi trust to fund the obligations of the Company’s defined benefit supplementary retirement plans and include various stock and fixed income mutual funds. See Note 15 to these condensed consolidated financial statements regarding defined supplementary retirement plans. The Company’s restoration plan assets are included in other long-term assets on its condensed consolidated balance sheets. Gains and losses related to these investments are included in other expense, net in the Company’s condensed consolidated statements of income. Unrealized gains and losses associated with the underlying stock and fixed income mutual funds were immaterial as of March 31, 2019 and December 31, 2018 , respectively. Derivative contracts Derivative assets and liabilities can be exchange-traded or traded over-the-counter (“OTC”). The Company generally values exchange-traded derivatives using models that calibrate to market transactions and eliminate timing differences between the closing price of the exchange-traded derivatives and their underlying instruments. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in, the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, forward curves, measures of volatility, and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as forward contracts, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment. The Company has interest rate caps, natural gas swaps and cross currency swaps that are fair valued using Level 2 inputs. In addition, the Company applies a credit valuation adjustment to reflect credit risk which is calculated based on credit default swaps. To the extent that the Company’s net exposure under a specific master agreement is an asset, the Company utilizes the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company utilizes a default swap rate comparable to PQ Group Holdings. The credit valuation adjustment is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. |
Leases | 11. Leases: The Company has operating and finance lease agreements with remaining lease terms as of March 31, 2019 up to 28 years, including leases of land, buildings, railcars, vehicles, manufacturing equipment and general office equipment. Some leases include options to terminate or extend for one or more years. These options are incorporated in the Company’s lease term when it is reasonably certain that the option will be exercised. Some leases include options to purchase, which the Company assesses under the guidance to determine if these leases should be classified as finance lease agreements. When the Company enters into an arrangement, at inception, the Company determines if the arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance). The Company accounts for the lease and non-lease components based on the estimated standalone price of each component. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate and these are initially measured using the index or rate in effect at the commencement date. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company recognizes a right-of-use lease asset and lease liability at the lease commencement date based on the present value of the remaining lease payments over the lease term using the Company’s incremental borrowing rate. The Company is required to use the rate of interest that it would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. When the Company is unable to readily determine the discount rate implicit in the lease agreement, the Company utilizes its incremental borrowing rate over the relevant lease term. Short-term leases, which have an initial term of twelve months or less, are not recorded on the Company’s balance sheet. Lease expense for operating leases and financing leases is recognized on a straight-line basis over the lease term and is included in cost of goods sold or selling, general, and administrative expense on the condensed consolidated statements of income. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The Company’s portfolio of products are integrated into a variety of end uses, which are described in the table below. Key End Uses Key Products Industrial & process chemicals • Silicate precursors for the tire industry • Glass beads, or microspheres, for metal finishing end uses Fuels & emission control • Refinery catalysts • Emission control catalysts • Catalyst recycling services • Silicate for catalyst manufacturing Packaging & engineered plastics • Catalysts for high-density polyethlene and chemicals syntheses • Antiblocks for film packaging • Solid and hollow microspheres for composite plastics • Sulfur derivatives for nylon production Highway safety & construction • Reflective markings for roadways and airports • Silica gels for surface coatings Consumer products • Silica gels for edible oil and beer clarification • Precipitated silicas, silicates and zeolites for the dentifrice and dishwasher and laundry detergent applications Natural resources • Silicates for drilling muds • Hollow glass beads, or microspheres, for oil well cements • Silicates and alum for water treatment mining • Bleaching aids for paper The following tables disaggregate the Company’s sales, by segment and end use, for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 Refining Services Catalysts Performance Materials Performance Chemicals Total Industrial & process chemicals $ 18,402 $ 276 $ 13,028 $ 59,652 $ 91,358 Fuels & emission control (1) 57,690 — — — 57,690 Packaging & engineered plastics 12,689 15,590 17,382 14,730 60,391 Highway safety & construction (1) — — 27,360 21,938 49,298 Consumer products — — — 68,509 68,509 Natural resources 17,063 — 3,319 15,633 36,015 Total segment sales 105,844 15,866 61,089 180,462 363,261 Eliminations (887 ) (276 ) (48 ) (2,829 ) (4,040 ) Total $ 104,957 $ 15,590 $ 61,041 $ 177,633 $ 359,221 Three months ended March 31, 2018 Refining Services Catalysts Performance Materials Performance Chemicals Total Industrial & process chemicals $ 17,039 $ — $ 12,518 $ 65,636 $ 95,193 Fuels & emission control (1) 55,997 — — — 55,997 Packaging & engineered plastics 11,770 16,473 19,892 11,916 60,051 Highway safety & construction (1) — — 26,659 20,486 47,145 Consumer products — — — 76,730 76,730 Natural resources 15,908 — 3,673 15,195 34,776 Total segment sales 100,714 16,473 62,742 189,963 369,892 Eliminations (812 ) — (72 ) (2,811 ) (3,695 ) Total $ 99,902 $ 16,473 $ 62,670 $ 187,152 $ 366,197 (1) As described in Note 1 , the Company experiences seasonal sales fluctuations to customers in the fuels & emission control and highway safety & construction end uses. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring | The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 , and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. March 31, Quoted Prices in Significant Other Observable Inputs (Level 2) Significant Assets: Derivative contracts (Note 13) $ 27,994 $ — $ 27,994 $ — Restoration plan assets 4,422 4,422 — — Total $ 32,416 $ 4,422 $ 27,994 $ — Liabilities: Derivative contracts (Note 13) $ 2,892 $ — $ 2,892 $ — December 31, Quoted Prices in Significant Other Observable Inputs (Level 2) Significant Assets: Derivative contracts (Note 13) $ 20,768 $ — $ 20,768 $ — Restoration plan assets 4,244 4,244 — — Total $ 25,012 $ 4,244 $ 20,768 $ — Liabilities: Derivative contracts (Note 13) $ 2,026 $ — $ 2,026 $ — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables present the tax effects of each component of other comprehensive income for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 2018 Pre-tax amount Tax benefit/(expense) After-tax amount Pre-tax amount Tax benefit/(expense) After-tax amount Defined benefit and other postretirement plans: Amortization and unrealized losses $ (40 ) $ 10 $ (30 ) $ (24 ) $ 6 $ (18 ) Benefit plans, net (40 ) 10 (30 ) (24 ) 6 (18 ) Net (loss) gain from hedging activities (2,070 ) 518 (1,552 ) 2,912 (729 ) 2,183 Foreign currency translation 9,282 (2,115 ) 7,167 10,114 (1,443 ) 8,671 Other comprehensive income $ 7,172 $ (1,587 ) $ 5,585 $ 13,002 $ (2,166 ) $ 10,836 The following table presents the change in accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2019 and 2018 : Defined benefit Net gain (loss) from hedging activities Foreign Total December 31, 2018 $ (546 ) $ 637 $ (39,195 ) $ (39,104 ) Other comprehensive income (loss) before reclassifications 1 (1,501 ) 6,852 5,352 Amounts reclassified from accumulated other comprehensive income (1) (31 ) (51 ) — (82 ) Net current period other comprehensive income (loss) (30 ) (1,552 ) 6,852 5,270 Cumulative adjustment from adoption of stranded OCI standard 1,684 190 — 1,874 March 31, 2019 $ 1,108 $ (725 ) $ (32,343 ) $ (31,960 ) December 31, 2017 $ 7,412 $ 967 $ (4,068 ) $ 4,311 Other comprehensive income (loss) before reclassifications (4 ) 2,178 7,367 9,541 Amounts reclassified from accumulated other comprehensive income (1) (14 ) 5 — (9 ) Net current period other comprehensive income (loss) (18 ) 2,183 7,367 9,532 March 31, 2018 $ 7,394 $ 3,150 $ 3,299 $ 13,843 (1) See the following table for details about these reclassifications. Amounts in parentheses indicate credits to profit/loss. |
Reclassification out of Accumulated Other Comprehensive Income | The following table presents the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2019 and 2018 : Details about Accumulated Other Comprehensive Income (Loss) Components Amounts Reclassified from Accumulated Other Comprehensive Income(a) Affected Line Item in the Statements of Income Three months ended 2019 2018 Defined benefit and other postretirement plans Amortization of prior service credit $ (33 ) $ (19 ) (b) Amortization of net (gain) loss (8 ) 2 (b) (41 ) (17 ) Total before tax 10 3 Tax expense (benefit) $ (31 ) $ (14 ) Net of tax Net (gain) loss from hedging activities Interest rate caps $ 123 $ 35 Interest expense Natural gas swaps (191 ) (28 ) Cost of goods sold (68 ) 7 Total before tax 17 (2 ) Tax expense (benefit) $ (51 ) $ 5 Net of tax Total reclassifications for the period $ (82 ) $ (9 ) Net of tax (a) Amounts in parentheses indicate credits to profit/loss. (b) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost (see Note 15 to these condensed consolidated financial statements for additional details). |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The change in the carrying amount of goodwill for the three months ended March 31, 2019 is summarized as follows: Refining Services Catalysts Performance Materials Performance Chemicals Total Balance as of December 31, 2018 $ 311,892 $ 77,759 $ 274,947 $ 590,331 $ 1,254,929 Foreign exchange impact — 693 418 994 2,105 Balance as of March 31, 2019 $ 311,892 $ 78,452 $ 275,365 $ 591,325 $ 1,257,034 |
Other Operating Expense, Net (T
Other Operating Expense, Net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | A summary of other operating expense, net is as follows: Three months ended 2019 2018 Amortization expense $ 8,664 $ 8,949 Net loss on asset disposals (1) 820 1,152 Insurance recoveries (1) — (1,244 ) Environmental related costs 479 89 Other, net 776 368 $ 10,739 $ 9,314 (1) During the three months ended March 31, 2018 , the Company recognized $1,500 of insurance recoveries in its condensed consolidated statement of income related to the Company’s claim for losses sustained during Hurricane Harvey in August 2017. Of this amount, $1,244 was recorded as a gain in other operating expense, net, as reimbursement of expenses, $207 was recorded as a gain in net loss on asset disposals within other operating expense, net, for the Company’s previously recognized property losses, and $49 represented recoveries in excess of the Company’s property losses which was recorded as a non-operating gain in other expense, net, in the Company’s condensed consolidated statement of income. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories are classified and valued as follows: March 31, December 31, Finished products and work in process $ 228,874 $ 206,188 Raw materials 54,675 58,560 $ 283,549 $ 264,748 Valued at lower of cost or market: LIFO basis $ 171,967 $ 160,863 Valued at lower of cost and net realizable value: FIFO or average cost basis 111,582 103,885 $ 283,549 $ 264,748 |
Investments in Affiliated Com_2
Investments in Affiliated Companies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity basis as of March 31, 2019 are as follows: Company Country Percent PQ Silicates Ltd. Taiwan 50% Zeolyst International USA 50% Zeolyst C.V. Netherlands 50% Quaker Holdings South Africa 49% Asociacion para el Estudio de las Tecnologias de Equipamiento de Carreteras, S.A. (“Aetec”) Spain 20% Following is summarized information of the combined investments (1) : Three months ended 2019 2018 Sales $ 68,094 $ 88,576 Gross profit 19,414 35,522 Operating income 9,207 26,041 Net income 9,240 27,022 (1) Summarized information of the combined investments is presented at 100%; the Company’s share of the net assets and net income of affiliates is calculated based on the percent ownership specified in the table above. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | A summary of property, plant and equipment, at cost, and related accumulated depreciation is as follows: March 31, December 31, Land $ 190,948 $ 190,772 Buildings 213,810 212,284 Machinery and equipment 1,140,732 1,125,117 Construction in progress 105,830 102,185 1,651,320 1,630,358 Less: accumulated depreciation (449,358 ) (421,379 ) $ 1,201,962 $ 1,208,979 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Right-of-Use Lease Assets and Lease Liabilities | The table below presents the operating and finance right-of-use lease assets and lease liabilities recognized on the condensed consolidated balance sheet as of March 31, 2019 : Classification March 31, Assets Operating lease assets Right-of-use lease assets $ 57,173 Finance lease assets Property, plant and equipment, net 1,632 Total leased assets $ 58,805 Liabilities Current: Operating lease liabilities Operating lease liabilities - current $ 14,482 Finance lease liabilities Accrued liabilities 162 Noncurrent: Operating lease liabilities Operating lease liabilities - noncurrent 40,971 Finance lease liabilities Other long-term liabilities 474 Total lease liabilities $ 56,089 |
Weighted Average Remaining Lease Term and Discount Rate | The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2019 are as follows: March 31, Weighted average remaining lease term (in years): Operating leases 5.62 Finance leases 3.39 Weighted average discount rate: Operating leases 5.73 % Finance leases 4.67 % |
Maturities of Lease Liabilities | Maturities of lease liabilities as of March 31, 2019 are as follows: Operating Leases Finance Leases Total Remainder of 2019 $ 13,262 $ 152 $ 13,414 2020 14,492 202 14,694 2021 11,501 202 11,703 2022 8,366 124 8,490 2023 6,153 5 6,158 Thereafter 11,947 — 11,947 Total lease payments 65,721 685 66,406 Less: Interest (10,268 ) (49 ) (10,317 ) Present value of lease liabilities $ 55,453 $ 636 $ 56,089 |
Schedule of Future Minimum Rental Payments for Operating Leases | At December 31, 2018 , future minimum payments under non-cancelable operating leases under previous lease guidance was as follows: Year Amount 2019 $ 18,457 2020 14,344 2021 11,432 2022 8,354 2023 6,198 Thereafter 17,477 $ 76,262 |
Cash Flow Information Related to Leases | The following table presents other information related to our operating and finance leases and the impact on the Company’s condensed consolidated statement of cash flows: Three months ended Cash paid for amounts included in the measurement of lease liabilities: Payments on operating leases included in operating cash flows $ 3,978 Interest payments under finance lease obligations included in operating cash flows $ 9 Principal payments under finance lease obligations included in financing cash flows $ 48 Right-of-use assets obtained in exchange for new lease liabilities (non-cash): Operating leases $ 508 Finance leases $ — |
Long-term Debt (Tables)
Long-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The summary of long-term debt is as follows: March 31, December 31, 2018 Term Loan Facility $ 1,157,498 $ 1,157,498 6.75% Senior Secured Notes due 2022 625,000 625,000 5.75% Senior Unsecured Notes due 2025 295,000 300,000 ABL Facility 2,000 — Other 67,266 65,925 Total debt 2,146,764 2,148,423 Original issue discount (17,915 ) (18,584 ) Deferred financing costs (15,067 ) (15,882 ) Total debt, net of original issue discount and deferred financing costs 2,113,782 2,113,957 Less: current portion (10,712 ) (7,237 ) Total long-term debt, excluding current portion $ 2,103,070 $ 2,106,720 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivatives Held | The fair values of derivative instruments held as of March 31, 2019 and December 31, 2018 are shown below: Balance sheet location March 31, 2019 December 31, 2018 Derivative assets: Derivatives designated as cash flow hedges: Natural gas swaps Prepaid and other current assets $ 88 $ 21 Interest rate caps Prepaid and other current assets 442 $ 1,358 Interest rate caps Other long-term assets 68 546 598 1,925 Derivatives designed as net investment hedges: Cross currency swaps Prepaid and other current assets 7,224 5,499 Cross currency swaps Other long-term assets 20,172 13,344 27,396 18,843 Total derivative assets $ 27,994 $ 20,768 Derivative liabilities: Derivatives designated as cash flow hedges: Natural gas swaps Accrued liabilities $ — $ 36 Natural gas swaps Other long-term liabilities 72 148 Interest rate caps Other long-term liabilities 2,820 1,842 Total derivative liabilities $ 2,892 $ 2,026 |
Effect of Derivative Instruments Designated as Hedges on Other Comprehensive Income | The following table shows the effect of the Company’s derivative instruments designated as cash flow hedges on accumulated other comprehensive income (“AOCI”) for the three months ended March 31, 2019 and 2018 : Three months ended March 31, 2019 2018 Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Amount of gain (loss) recognized in OCI on derivatives Amount of gain (loss) reclassified from AOCI into income Interest rate caps Interest (expense) income $ (2,373 ) $ (123 ) $ 2,852 $ (35 ) Natural gas swaps Cost of goods sold 371 191 53 28 $ (2,002 ) $ 68 $ 2,905 $ (7 ) |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table shows the effect of the Company’s cash flow hedge accounting on the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018 : Location and amount of gain (loss) recognized in income on cash flow hedging relationships Three months ended March 31, 2019 2018 Cost of goods sold Interest (expense) income Cost of goods sold Interest (expense) income Total amounts of income and expense line items presented in the statement of income in which the effects of cash flow hedges are recorded (278,311 ) (28,618 ) (288,076 ) (29,163 ) The effects of cash flow hedging: Gain (loss) on cash flow hedging relationships: Interest contracts: Amount of gain (loss) reclassified from AOCI into income — (123 ) — (35 ) Commodity contracts: Amount of gain (loss) reclassified from AOCI into income 191 — 28 — |
Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) | The following table shows the effect of the Company’s net investment hedges on AOCI and the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018 : Amount of gain (loss) recognized in OCI on derivative Location of gain (loss) reclassified from AOCI into income Amount of gain (loss) reclassified from AOCI into income Location of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) Three months ended Three months ended Three months ended 2019 2018 2019 2018 2019 2018 Cross currency swaps $ 8,553 $ (9,276 ) Gain (loss) on sale of subsidiary $ — $ — Interest (expense) income $ 1,446 $ 1,167 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Defined Benefit Pension Plans | |
Defined Benefit Plan Disclosure | |
Components of Net Periodic Expense | Components of net periodic expense (benefit) are as follows: Defined Benefit Pension Plans U.S. Foreign Three months ended Three months ended 2019 2018 2019 2018 Service cost $ 219 $ 310 $ 806 $ 887 Interest cost 2,507 2,372 833 1,505 Expected return on plan assets (2,757 ) (3,174 ) (603 ) (1,319 ) Amortization of net loss — — — 13 Net periodic expense (benefit) $ (31 ) $ (492 ) $ 1,036 $ 1,086 |
Supplemental Retirement Plans | |
Defined Benefit Plan Disclosure | |
Components of Net Periodic Expense | Supplemental Retirement Plans Three months ended 2019 2018 Interest cost $ 121 $ 110 Net periodic expense $ 121 $ 110 |
Other Postretirement Benefits Plans | |
Defined Benefit Plan Disclosure | |
Components of Net Periodic Expense | Other Postretirement Benefit Plans Three months ended 2019 2018 Service cost $ 3 $ 6 Interest cost 38 38 Amortization of prior service credit (33 ) (19 ) Amortization of net gain (8 ) (11 ) Net periodic expense $ — $ 14 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Reportable Segments to Consolidated | Summarized financial information for the Company’s reportable segments is shown in the following table: Three months ended 2019 2018 Sales: Refining Services $ 105,844 $ 100,714 Catalysts (1) 15,866 16,473 Performance Materials 61,089 62,742 Performance Chemicals 180,462 189,963 Eliminations (2) (4,040 ) (3,695 ) Total $ 359,221 $ 366,197 Segment Adjusted EBITDA: (3) Refining Services $ 39,731 $ 35,532 Catalysts (4) 18,127 22,889 Performance Materials 10,515 12,058 Performance Chemicals 42,673 45,094 Total Segment Adjusted EBITDA (5) $ 111,046 $ 115,573 (1) Excludes the Company’s proportionate share of sales from the Zeolyst International and Zeolyst C.V. joint ventures (collectively, the “Zeolyst Joint Venture”) accounted for using the equity method (see Note 9 to these condensed consolidated financial statements for further information). The proportionate share of sales is $29,478 and $38,349 for the three months ended March 31, 2019 and 2018 , respectively. (2) The Company eliminates intersegment sales when reconciling to the Company’s condensed consolidated statements of income. (3) The Company defines Adjusted EBITDA as EBITDA adjusted for certain items as noted in the reconciliation below. Management evaluates the performance of its segments and allocates resources based on several factors, of which the primary measure is Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income as an indicator of the Company’s operating performance. Adjusted EBITDA as defined by the Company may not be comparable with EBITDA or Adjusted EBITDA as defined by other companies. (4) The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $8,357 for the three months ended March 31, 2019 , which includes $2,036 of equity in net income plus $2,558 of amortization of investment in affiliate step-up and $3,763 of joint venture depreciation, amortization and interest. The Adjusted EBITDA from the Zeolyst Joint Venture included in the Catalysts segment is $16,807 for the three months ended March 31, 2018 , which includes $11,826 of equity in net income plus $1,658 of amortization of investment in affiliate step-up and $3,323 of joint venture depreciation, amortization and interest. (5) Total Segment Adjusted EBITDA differs from the Company’s consolidated Adjusted EBITDA due to unallocated corporate expenses. |
Reconciliation of Net Income to Segment Adjusted EBITDA | A reconciliation of net income attributable to PQ Group Holdings to Segment Adjusted EBITDA is as follows: Three months ended 2019 2018 Reconciliation of net income attributable to PQ Group Holdings Inc. to Segment Adjusted EBITDA Net income attributable to PQ Group Holdings Inc. $ 3,151 $ 214 Provision (benefit) for income taxes 2,447 (529 ) Interest expense, net 28,618 29,163 Depreciation and amortization 45,894 48,488 Segment EBITDA 80,110 77,336 Unallocated corporate expenses 10,005 7,688 Joint venture depreciation, amortization and interest 3,763 3,323 Amortization of investment in affiliate step-up 2,558 1,658 Amortization of inventory step-up — 1,603 Debt extinguishment costs — 5,879 Net loss on asset disposals 820 1,152 Foreign currency exchange (gain) loss (2,689 ) 5,063 LIFO expense 10,158 4,926 Transaction and other related costs 80 428 Equity-based compensation 3,400 3,831 Restructuring, integration and business optimization expenses 732 1,079 Defined benefit pension plan cost 993 550 Other 1,116 1,057 Segment Adjusted EBITDA $ 111,046 $ 115,573 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | The following table summarizes the activity for the Company’s restricted stock units and performance stock units for the three months ended March 31, 2019 : Restricted Stock Units Performance Stock Units Number of Weighted Average Grant Date Fair Value (per share) Number of Weighted Average Grant Date Fair Value (per share) Nonvested as of December 31, 2018 998,786 $ 16.83 — $ — Granted 1,196,141 $ 15.41 539,431 $ 15.41 Vested (6,037 ) $ 16.54 — $ — Nonvested as of March 31, 2019 2,188,890 $ 16.06 539,431 $ 15.41 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of from Basic to Diluted Weighted Average Number of Shares Outstanding | The reconciliation from basic to diluted weighted average shares outstanding is as follows: Three months ended 2019 2018 Weighted average shares outstanding – Basic 133,946,308 133,154,144 Dilutive effect of unvested common shares and restricted stock units with service conditions, performance stock units considered probable of vesting and assumed stock option exercises and conversions 948,046 730,839 Weighted average shares outstanding – Diluted 134,894,354 133,884,983 |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share are calculated as follows: Three months ended 2019 2018 Numerator: Net income attributable to PQ Group Holdings Inc. $ 3,151 $ 214 Denominator: Weighted average shares outstanding – Basic 133,946,308 133,154,144 Weighted average shares outstanding – Diluted 134,894,354 133,884,983 Net income per share: Basic income per share $ 0.02 $ — Diluted income per share $ 0.02 $ — |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The table below presents the details of the Company’s weighted average equity-based awards outstanding during each respective period that were excluded from the calculation of diluted earnings per share: Three months ended 2019 2018 Restricted stock awards with performance only targets not yet achieved 1,639,514 1,751,022 Stock options with performance only targets not yet achieved 586,253 586,253 Anti-dilutive restricted stock awards, restricted stock units and performance stock units — — Anti-dilutive stock options 863,063 621,747 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | The following table presents supplemental cash flow information for the Company: Three months ended 2019 2018 Cash paid during the period for: Income taxes, net of refunds $ 4,387 $ 4,433 Interest (1) 23,740 16,557 Non-cash investing activity (2) : Capital expenditures acquired on account but unpaid as of the period end 15,391 10,680 (1) Excludes capitalized interest and $3,890 of net interest proceeds on swaps designated as net investment hedges, which are included within cash flows from investing activities in the Company’s condensed consolidated statements of cash flows. (2) For the supplemental non-cash information on lease liabilities arising from obtaining right-of-use lease assets, see Note 11 to these condensed consolidated financial statements for additional details. |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets as of March 31, 2019 and 2018 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the three months then ended: March 31, 2019 2018 Cash and cash equivalents $ 52,341 $ 58,834 Restricted cash included in prepaid and other current assets 1,744 1,182 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 54,085 $ 60,016 |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets as of March 31, 2019 and 2018 to the total of the same amounts shown in the condensed consolidated statements of cash flows for the three months then ended: March 31, 2019 2018 Cash and cash equivalents $ 52,341 $ 58,834 Restricted cash included in prepaid and other current assets 1,744 1,182 Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows $ 54,085 $ 60,016 |
Background and Basis of Prese_3
Background and Basis of Presentation (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reportable segments | 4 | 2 |
Number of operating segments | 4 | 2 |
Number of reporting units | 4 | 4 |
New Accounting Standards (Detai
New Accounting Standards (Details) - Accounting Standards Update 2016-02 $ in Thousands | Jan. 01, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Operating and finance leases, right-of-use asset | $ 60,726 |
Operating and finance leases, right-of-use asset, lease commitments | 57,832 |
Operating and finance lease, right-of-use asset, favorable lease agreement intangible asset reclassification | 2,895 |
Operating and finance lease, liability | $ 58,929 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue | ||
Document Period End Date | Mar. 31, 2019 | |
Sales | $ 359,221 | $ 366,197 |
Refining Services | ||
Disaggregation of Revenue | ||
Sales | 104,957 | 99,902 |
Catalysts | ||
Disaggregation of Revenue | ||
Sales | 15,590 | 16,473 |
Performance Materials | ||
Disaggregation of Revenue | ||
Sales | 61,041 | 62,670 |
Performance Chemicals | ||
Disaggregation of Revenue | ||
Sales | 177,633 | 187,152 |
Operating segments | ||
Disaggregation of Revenue | ||
Sales | 363,261 | 369,892 |
Operating segments | Industrial & process chemicals | ||
Disaggregation of Revenue | ||
Sales | 91,358 | 95,193 |
Operating segments | Fuels & emission control | ||
Disaggregation of Revenue | ||
Sales | 57,690 | 55,997 |
Operating segments | Packaging & engineered plastics | ||
Disaggregation of Revenue | ||
Sales | 60,391 | 60,051 |
Operating segments | Highway safety & construction | ||
Disaggregation of Revenue | ||
Sales | 49,298 | 47,145 |
Operating segments | Consumer products | ||
Disaggregation of Revenue | ||
Sales | 68,509 | 76,730 |
Operating segments | Natural resources | ||
Disaggregation of Revenue | ||
Sales | 36,015 | 34,776 |
Operating segments | Refining Services | ||
Disaggregation of Revenue | ||
Sales | 105,844 | 100,714 |
Operating segments | Refining Services | Industrial & process chemicals | ||
Disaggregation of Revenue | ||
Sales | 18,402 | 17,039 |
Operating segments | Refining Services | Fuels & emission control | ||
Disaggregation of Revenue | ||
Sales | 57,690 | 55,997 |
Operating segments | Refining Services | Packaging & engineered plastics | ||
Disaggregation of Revenue | ||
Sales | 12,689 | 11,770 |
Operating segments | Refining Services | Highway safety & construction | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Refining Services | Consumer products | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Refining Services | Natural resources | ||
Disaggregation of Revenue | ||
Sales | 17,063 | 15,908 |
Operating segments | Catalysts | ||
Disaggregation of Revenue | ||
Sales | 15,866 | 16,473 |
Operating segments | Catalysts | Industrial & process chemicals | ||
Disaggregation of Revenue | ||
Sales | 276 | 0 |
Operating segments | Catalysts | Fuels & emission control | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Catalysts | Packaging & engineered plastics | ||
Disaggregation of Revenue | ||
Sales | 15,590 | 16,473 |
Operating segments | Catalysts | Highway safety & construction | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Catalysts | Consumer products | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Catalysts | Natural resources | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Performance Materials | ||
Disaggregation of Revenue | ||
Sales | 61,089 | 62,742 |
Operating segments | Performance Materials | Industrial & process chemicals | ||
Disaggregation of Revenue | ||
Sales | 13,028 | 12,518 |
Operating segments | Performance Materials | Fuels & emission control | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Performance Materials | Packaging & engineered plastics | ||
Disaggregation of Revenue | ||
Sales | 17,382 | 19,892 |
Operating segments | Performance Materials | Highway safety & construction | ||
Disaggregation of Revenue | ||
Sales | 27,360 | 26,659 |
Operating segments | Performance Materials | Consumer products | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Performance Materials | Natural resources | ||
Disaggregation of Revenue | ||
Sales | 3,319 | 3,673 |
Operating segments | Performance Chemicals | ||
Disaggregation of Revenue | ||
Sales | 180,462 | 189,963 |
Operating segments | Performance Chemicals | Industrial & process chemicals | ||
Disaggregation of Revenue | ||
Sales | 59,652 | 65,636 |
Operating segments | Performance Chemicals | Fuels & emission control | ||
Disaggregation of Revenue | ||
Sales | 0 | 0 |
Operating segments | Performance Chemicals | Packaging & engineered plastics | ||
Disaggregation of Revenue | ||
Sales | 14,730 | 11,916 |
Operating segments | Performance Chemicals | Highway safety & construction | ||
Disaggregation of Revenue | ||
Sales | 21,938 | 20,486 |
Operating segments | Performance Chemicals | Consumer products | ||
Disaggregation of Revenue | ||
Sales | 68,509 | 76,730 |
Operating segments | Performance Chemicals | Natural resources | ||
Disaggregation of Revenue | ||
Sales | 15,633 | 15,195 |
Inter-segment sales eliminations | ||
Disaggregation of Revenue | ||
Sales | (4,040) | (3,695) |
Inter-segment sales eliminations | Refining Services | ||
Disaggregation of Revenue | ||
Sales | (887) | (812) |
Inter-segment sales eliminations | Catalysts | ||
Disaggregation of Revenue | ||
Sales | (276) | 0 |
Inter-segment sales eliminations | Performance Materials | ||
Disaggregation of Revenue | ||
Sales | (48) | (72) |
Inter-segment sales eliminations | Performance Chemicals | ||
Disaggregation of Revenue | ||
Sales | $ (2,829) | $ (2,811) |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Derivative contracts (Note 13) | $ 27,994 | $ 20,768 |
Restoration plan assets | 4,422 | 4,244 |
Total | 32,416 | 25,012 |
Liabilities: | ||
Derivative contracts (Note 13) | 2,892 | 2,026 |
Quoted Prices in Active Markets (Level 1) | ||
Assets: | ||
Derivative contracts (Note 13) | 0 | 0 |
Restoration plan assets | 4,422 | 4,244 |
Total | 4,422 | 4,244 |
Liabilities: | ||
Derivative contracts (Note 13) | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Derivative contracts (Note 13) | 27,994 | 20,768 |
Restoration plan assets | 0 | 0 |
Total | 27,994 | 20,768 |
Liabilities: | ||
Derivative contracts (Note 13) | 2,892 | 2,026 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Derivative contracts (Note 13) | 0 | 0 |
Restoration plan assets | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Derivative contracts (Note 13) | $ 0 | $ 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Pre-tax and After-tax Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
After-tax amount | ||
Pre-tax amount | $ 7,172 | $ 13,002 |
Tax benefit/(expense) | (1,587) | (2,166) |
Total other comprehensive income | 5,585 | 10,836 |
Defined benefit and other postretirement plans: | ||
After-tax amount | ||
Pre-tax amount | (40) | (24) |
Tax benefit/(expense) | 10 | 6 |
Total other comprehensive income | (30) | (18) |
Net gain (loss) from hedging activities | ||
After-tax amount | ||
Pre-tax amount | (2,070) | 2,912 |
Tax benefit/(expense) | 518 | (729) |
Total other comprehensive income | (1,552) | 2,183 |
Foreign currency translation | ||
After-tax amount | ||
Pre-tax amount | 9,282 | 10,114 |
Tax benefit/(expense) | (2,115) | (1,443) |
Total other comprehensive income | $ 7,167 | $ 8,671 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Change by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | |||
Beginning balance | $ 1,664,145 | $ 1,631,919 | |
Amounts reclassified from accumulated other comprehensive income | (82) | (9) | |
Total other comprehensive income | 5,585 | 10,836 | |
Ending balance | $ 1,675,272 | 1,647,084 | |
Document Period End Date | Mar. 31, 2019 | ||
Total | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | |||
Beginning balance | $ (39,104) | 4,311 | |
Other comprehensive income (loss) before reclassifications | 5,352 | 9,541 | |
Amounts reclassified from accumulated other comprehensive income | (82) | (9) | |
Cumulative effect adjustment from adoption of new accounting standards | $ 1,874 | ||
Total other comprehensive income | 5,270 | 9,532 | |
Ending balance | (31,960) | 13,843 | |
Defined benefit and other postretirement plans | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | |||
Beginning balance | (546) | 7,412 | |
Other comprehensive income (loss) before reclassifications | 1 | (4) | |
Amounts reclassified from accumulated other comprehensive income | (31) | (14) | |
Cumulative effect adjustment from adoption of new accounting standards | 1,684 | ||
Total other comprehensive income | (30) | (18) | |
Ending balance | 1,108 | 7,394 | |
Net gain (loss) from hedging activities | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | |||
Beginning balance | 637 | 967 | |
Other comprehensive income (loss) before reclassifications | (1,501) | 2,178 | |
Amounts reclassified from accumulated other comprehensive income | (51) | 5 | |
Cumulative effect adjustment from adoption of new accounting standards | 190 | ||
Total other comprehensive income | (1,552) | 2,183 | |
Ending balance | (725) | 3,150 | |
Foreign currency translation | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax | |||
Beginning balance | (39,195) | (4,068) | |
Other comprehensive income (loss) before reclassifications | 6,852 | 7,367 | |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | |
Cumulative effect adjustment from adoption of new accounting standards | $ 0 | ||
Total other comprehensive income | 6,852 | 7,367 | |
Ending balance | $ (32,343) | $ 3,299 |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Income - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Reclassification, net | $ (82) | $ (9) |
Interest expense, net | 28,618 | 29,163 |
Cost of goods sold | 278,311 | 288,076 |
Income (loss) before income taxes and noncontrolling interest | (5,888) | (27) |
Tax expense (benefit) | 2,447 | (529) |
Net loss | (3,441) | (556) |
Defined benefit and other postretirement plans | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Reclassification, before tax | (41) | (17) |
Reclassification, tax | 10 | 3 |
Reclassification, net | (31) | (14) |
Amortization of prior service credit | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Reclassification, before tax | (33) | (19) |
Amortization of net (gain) loss | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Reclassification, before tax | (8) | 2 |
Net gain (loss) from hedging activities | Amount of gain (loss) reclassified from AOCI into income | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income (loss) before income taxes and noncontrolling interest | (68) | 7 |
Tax expense (benefit) | 17 | (2) |
Net loss | (51) | 5 |
Net gain (loss) from hedging activities | Amount of gain (loss) reclassified from AOCI into income | Interest rate caps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest expense, net | 123 | 35 |
Net gain (loss) from hedging activities | Amount of gain (loss) reclassified from AOCI into income | Natural gas swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of goods sold | $ (191) | $ (28) |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill | |
Beginning balance | $ 1,254,929 |
Foreign exchange impact | 2,105 |
Ending balance | 1,257,034 |
Refining Services | |
Goodwill | |
Beginning balance | 311,892 |
Foreign exchange impact | 0 |
Ending balance | 311,892 |
Catalysts | |
Goodwill | |
Beginning balance | 77,759 |
Foreign exchange impact | 693 |
Ending balance | 78,452 |
Performance Materials | |
Goodwill | |
Beginning balance | 274,947 |
Foreign exchange impact | 418 |
Ending balance | 275,365 |
Performance Chemicals | |
Goodwill | |
Beginning balance | 590,331 |
Foreign exchange impact | 994 |
Ending balance | $ 591,325 |
Other Operating Expense, Net (D
Other Operating Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | ||
Amortization expense | $ 8,664 | $ 8,949 |
Net loss on asset disposals | 820 | 1,152 |
Insurance recoveries | 0 | (1,244) |
Environmental related costs | 479 | 89 |
Other, net | 776 | 368 |
Other operating expense, net | 10,739 | 9,314 |
Total gain related to insurance recoveries | $ 1,500 | |
Insurance recoveries recorded as gain on asset disposals | 207 | |
Insurance recoveries recorded as non-operating income | $ 49 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory, Net | ||
Finished products and work in process | $ 228,874 | $ 206,188 |
Raw materials | 54,675 | 58,560 |
Inventory, Net | 283,549 | 264,748 |
Valued at lower of cost or market: | ||
LIFO basis | 171,967 | 160,863 |
FIFO or average cost basis | 111,582 | 103,885 |
Inventory, Net | $ 283,549 | $ 264,748 |
Investments in Affiliated Com_3
Investments in Affiliated Companies - Ownership Percentage (Details) | Mar. 31, 2019 |
PQ Silicates Ltd. | |
Schedule of Equity Method Investments | |
Ownership percentage | 50.00% |
Zeolyst International | |
Schedule of Equity Method Investments | |
Ownership percentage | 50.00% |
Zeolyst C.V. | |
Schedule of Equity Method Investments | |
Ownership percentage | 50.00% |
Quaker Holdings | |
Schedule of Equity Method Investments | |
Ownership percentage | 49.00% |
Asociacion para el Estudio de las Tecnologias de Equipamiento de Carreteras, S.A. (“Aetec”) | |
Schedule of Equity Method Investments | |
Ownership percentage | 20.00% |
Investments in Affiliated Com_4
Investments in Affiliated Companies - Summarized Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Equity Method Investment, Summarized Financial Information | ||
Sales | $ 68,094 | $ 88,576 |
Gross profit | 19,414 | 35,522 |
Operating income | 9,207 | 26,041 |
Net income | $ 9,240 | $ 27,022 |
Investments in Affiliated Com_5
Investments in Affiliated Companies - Narratives (Details) - Business Combination - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Business Acquisition | |||
Net purchase accounting fair value adjustments | $ 255,508 | $ 258,066 | |
Amortization of investment in affiliate step-up | $ 2,558 | $ 1,658 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 1,651,320 | $ 1,630,358 |
Less: accumulated depreciation | (449,358) | (421,379) |
Property, plant and equipment, net | 1,201,962 | 1,208,979 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 190,948 | 190,772 |
Buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 213,810 | 212,284 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 1,140,732 | 1,125,117 |
Construction in progress | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 105,830 | $ 102,185 |
Property, Plant and Equipment -
Property, Plant and Equipment - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 33,154 | $ 34,903 |
Leases - Narratives (Details)
Leases - Narratives (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases | |
Operating lease costs | $ 4,679 |
Maximum | |
Leases | |
Remaining lease term (in years) | 28 years |
Leases - Right-of-Use Lease Ass
Leases - Right-of-Use Lease Assets and Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Operating lease assets | $ 57,173 | $ 0 |
Finance lease assets | 1,632 | |
Total leased assets | 58,805 | |
Current: | ||
Operating lease liabilities | 14,482 | 0 |
Finance lease liabilities | 162 | |
Noncurrent: | ||
Operating lease liabilities | 40,971 | $ 0 |
Finance lease liabilities | 474 | |
Total lease liabilities | $ 56,089 |
Leases - Remaining Average Weig
Leases - Remaining Average Weighted Average Lease Term and Discount Rate (Details) | Mar. 31, 2019 |
Weighted average remaining lease term (in years): | |
Operating leases | 5 years 7 months 13 days |
Finance leases | 3 years 4 months 20 days |
Weighted average discount rate: | |
Operating leases | 5.73% |
Finance leases | 4.67% |
Leases - Lease Maturity Schedul
Leases - Lease Maturity Schedule - ASC 842 (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Lease Maturity | |
Remainder of 2019 | $ 13,414 |
2020 | 14,694 |
2021 | 11,703 |
2022 | 8,490 |
2023 | 6,158 |
Thereafter | 11,947 |
Total lease payments | 66,406 |
Less: Interest | (10,317) |
Present value of lease liabilities | 56,089 |
Operating Leases | |
Lease Maturity | |
Remainder of 2019 | 13,262 |
2020 | 14,492 |
2021 | 11,501 |
2022 | 8,366 |
2023 | 6,153 |
Thereafter | 11,947 |
Total lease payments | 65,721 |
Less: Interest | (10,268) |
Present value of lease liabilities | 55,453 |
Finance Leases | |
Lease Maturity | |
Remainder of 2019 | 152 |
2020 | 202 |
2021 | 202 |
2022 | 124 |
2023 | 5 |
Thereafter | 0 |
Total lease payments | 685 |
Less: Interest | (49) |
Present value of lease liabilities | $ 636 |
Leases - Lease Maturity Sched_2
Leases - Lease Maturity Schedule - ASC 840 (Details) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 18,457 |
2020 | 14,344 |
2021 | 11,432 |
2022 | 8,354 |
2023 | 6,198 |
Thereafter | 17,477 |
Total | $ 76,262 |
Leases - Other Lease Informatio
Leases - Other Lease Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: [Abstract] | |
Payments on operating leases included in operating cash flows | $ 3,978 |
Interest payments under finance lease obligations included in operating cash flows | 9 |
Principal payments under finance lease obligations included in financing cash flows | 48 |
Right-of-use assets obtained in exchange for new lease liabilities (non-cash): | |
Operating leases | 508 |
Finance leases | $ 0 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument | ||
Total debt | $ 2,146,764 | $ 2,148,423 |
Original issue discount | (17,915) | (18,584) |
Deferred financing costs | (15,067) | (15,882) |
Total debt, net of original issue discount and deferred financing costs | 2,113,782 | 2,113,957 |
Less: current portion | (10,712) | (7,237) |
Total long-term debt, excluding current portion | 2,103,070 | 2,106,720 |
Term Loan Facility | ||
Debt Instrument | ||
Total debt | 1,157,498 | 1,157,498 |
Senior Notes | 6.75% Senior Secured Notes due 2022 | ||
Debt Instrument | ||
Total debt | 625,000 | 625,000 |
Senior Notes | 5.75% Senior Unsecured Notes due 2025 | ||
Debt Instrument | ||
Total debt | 295,000 | 300,000 |
Line of Credit | ||
Debt Instrument | ||
Total debt | 2,000 | 0 |
Other | ||
Debt Instrument | ||
Total debt | $ 67,266 | $ 65,925 |
Long-term Debt - Narratives (De
Long-term Debt - Narratives (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Term Loan And Senior Notes | ||
Debt Instrument | ||
Long-term debt, fair value | $ 2,077,276 | $ 2,010,023 |
Financial Instruments - Narrati
Financial Instruments - Narratives (Details) € in Thousands, $ in Thousands, MMBTU in Millions | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2016USD ($) | Mar. 31, 2019USD ($)MMBTU | Nov. 13, 2018USD ($) | Feb. 28, 2018EUR (€) | |
Derivative | ||||
Amount of derivative loss expected to be transferred from OCI | $ 591 | |||
Natural gas swaps | ||||
Derivative | ||||
Derivative, notional quantity (in MMBTU) | MMBTU | 3.3 | |||
July 2016 interest rate cap | ||||
Derivative | ||||
Premium paid to acquire derivative instrument | $ 1,551 | |||
Derivative, cap interest rate | 2.50% | |||
Derivative, notional amount | $ 1,000,000 | |||
July 2016 interest rate cap | Minimum | ||||
Derivative | ||||
Derivative, cap interest rate | 1.50% | |||
July 2016 interest rate cap | Maximum | ||||
Derivative | ||||
Derivative, cap interest rate | 3.00% | |||
November 2018 interest rate cap | ||||
Derivative | ||||
Derivative, cap interest rate | 3.50% | |||
Derivative, notional amount | $ 500,000 | |||
Currency swap | ||||
Derivative | ||||
Derivative, notional amount | $ 314,112 | € 280,000 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value (Details) - Derivatives designated as hedging instrument - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Derivative assets: | ||
Total derivative assets | $ 27,994 | $ 20,768 |
Derivative liabilities: | ||
Total derivative liabilities | 2,892 | 2,026 |
Cash Flow Hedging | ||
Derivative assets: | ||
Total derivative assets | 598 | 1,925 |
Cash Flow Hedging | Prepaid and other current assets | Natural gas swaps | ||
Derivative assets: | ||
Total derivative assets | 88 | 21 |
Cash Flow Hedging | Prepaid and other current assets | Interest rate caps | ||
Derivative assets: | ||
Total derivative assets | 442 | 1,358 |
Cash Flow Hedging | Other long-term assets | Interest rate caps | ||
Derivative assets: | ||
Total derivative assets | 68 | 546 |
Cash Flow Hedging | Accrued liabilities | Natural gas swaps | ||
Derivative liabilities: | ||
Total derivative liabilities | 0 | 36 |
Cash Flow Hedging | Other long-term liabilities | Natural gas swaps | ||
Derivative liabilities: | ||
Total derivative liabilities | 72 | 148 |
Cash Flow Hedging | Other long-term liabilities | Interest rate caps | ||
Derivative liabilities: | ||
Total derivative liabilities | 2,820 | 1,842 |
Net Investment Hedging | ||
Derivative assets: | ||
Total derivative assets | 27,396 | 18,843 |
Net Investment Hedging | Prepaid and other current assets | Cross currency swaps | ||
Derivative assets: | ||
Total derivative assets | 7,224 | 5,499 |
Net Investment Hedging | Other long-term assets | Cross currency swaps | ||
Derivative assets: | ||
Total derivative assets | $ 20,172 | $ 13,344 |
Financial Instruments - Effect
Financial Instruments - Effect on Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Amount of gain (loss) recognized in OCI on derivatives | ||
Amount of gain (loss) recognized in OCI on derivatives | $ (2,002) | $ 2,905 |
Amount of gain (loss) reclassified from AOCI into income | ||
Amount of gain (loss) reclassified from AOCI into income | 68 | (7) |
Interest rate caps | ||
Amount of gain (loss) recognized in OCI on derivatives | ||
Amount of gain (loss) recognized in OCI on derivatives | (2,373) | 2,852 |
Interest rate caps | Interest expense | ||
Amount of gain (loss) reclassified from AOCI into income | ||
Amount of gain (loss) reclassified from AOCI into income | (123) | (35) |
Natural gas swaps | ||
Amount of gain (loss) recognized in OCI on derivatives | ||
Amount of gain (loss) recognized in OCI on derivatives | 371 | 53 |
Natural gas swaps | Cost of goods sold | ||
Amount of gain (loss) reclassified from AOCI into income | ||
Amount of gain (loss) reclassified from AOCI into income | $ 191 | $ 28 |
Financial Instruments - Cash Fl
Financial Instruments - Cash Flow Hedge Impact on Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative | ||
Cost of goods sold | $ (278,311) | $ (288,076) |
Interest (expense) income | (28,618) | (29,163) |
Gain (loss) on cash flow hedging relationships | Amount of gain (loss) reclassified from AOCI into income | ||
Derivative | ||
Cost of goods sold | 191 | 28 |
Interest (expense) income | $ (123) | $ (35) |
Financial Instruments - Net Inv
Financial Instruments - Net Investment Hedge Impact on AOCI (Details) - Cross currency swaps - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative | ||
Amount of gain (loss) recognized in OCI on derivative | $ 8,553 | $ (9,276) |
Gain (loss) on sale of subsidiary | ||
Derivative | ||
Amount of gain (loss) reclassified from AOCI into income | 0 | 0 |
Interest (expense) income | ||
Derivative | ||
Amount of gain (loss) recognized in income on derivative (amount excluded from effectiveness testing) | $ 1,446 | $ 1,167 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 41.60% | (1959.30%) |
Benefit Plans - Net Periodic Pe
Benefit Plans - Net Periodic Pension Expense Benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Defined Benefit Pension Plans | U.S. | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | ||
Service cost | $ 219 | $ 310 |
Interest cost | 2,507 | 2,372 |
Expected return on plan assets | (2,757) | (3,174) |
Amortization of net (gain) loss | 0 | 0 |
Net periodic expense (benefit) | (31) | (492) |
Defined Benefit Pension Plans | Foreign | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | ||
Service cost | 806 | 887 |
Interest cost | 833 | 1,505 |
Expected return on plan assets | (603) | (1,319) |
Amortization of net (gain) loss | 0 | 13 |
Net periodic expense (benefit) | 1,036 | 1,086 |
Supplemental Retirement Plans | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | ||
Interest cost | 121 | 110 |
Net periodic expense (benefit) | 121 | 110 |
Other Postretirement Benefits Plans | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | ||
Service cost | 3 | 6 |
Interest cost | 38 | 38 |
Amortization of prior service credit | (33) | (19) |
Amortization of net (gain) loss | (8) | (11) |
Net periodic expense (benefit) | $ 0 | $ 14 |
Reportable Segments - Summary
Reportable Segments - Summary Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting, Revenue Reconciling Item | ||
Sales | $ 359,221 | $ 366,197 |
Equity in net income from affiliated companies | 2,064 | 11,852 |
Refining Services | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 104,957 | 99,902 |
Catalysts | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 15,590 | 16,473 |
Catalysts | Zeolyst Joint Venture | ||
Segment Reporting, Revenue Reconciling Item | ||
Segment Adjusted EBITDA | 8,357 | 16,807 |
Equity in net income from affiliated companies | 2,036 | 11,826 |
Amortization of investment in affiliate step-up | 2,558 | 1,658 |
Joint venture depreciation, amortization and interest | 3,763 | 3,323 |
Performance Materials | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 61,041 | 62,670 |
Performance Chemicals | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 177,633 | 187,152 |
Operating segments | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 363,261 | 369,892 |
Segment Adjusted EBITDA | 111,046 | 115,573 |
Operating segments | Refining Services | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 105,844 | 100,714 |
Segment Adjusted EBITDA | 39,731 | 35,532 |
Operating segments | Catalysts | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 15,866 | 16,473 |
Segment Adjusted EBITDA | 18,127 | 22,889 |
Operating segments | Catalysts | Zeolyst Joint Venture | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 29,478 | 38,349 |
Operating segments | Performance Materials | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 61,089 | 62,742 |
Segment Adjusted EBITDA | 10,515 | 12,058 |
Operating segments | Performance Chemicals | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | 180,462 | 189,963 |
Segment Adjusted EBITDA | 42,673 | 45,094 |
Eliminations | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | (4,040) | (3,695) |
Eliminations | Refining Services | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | (887) | (812) |
Eliminations | Catalysts | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | (276) | 0 |
Eliminations | Performance Materials | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | (48) | (72) |
Eliminations | Performance Chemicals | ||
Segment Reporting, Revenue Reconciling Item | ||
Sales | $ (2,829) | $ (2,811) |
Reportable Segments - Reconcil
Reportable Segments - Reconciliation of Net Loss to Adjusted EBITA (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Net income attributable to PQ Group Holdings Inc. | $ 3,151 | $ 214 |
Provision (benefit) for income taxes | 2,447 | (529) |
Interest expense, net | 28,618 | 29,163 |
Depreciation and amortization | 45,894 | 48,488 |
Segment EBITDA | 80,110 | 77,336 |
Debt extinguishment costs | 0 | 5,879 |
Net loss on asset disposals | 820 | 1,152 |
Foreign currency exchange (gain) loss | (2,689) | 5,063 |
Corporate, non-segment | ||
Segment Reporting Information | ||
Unallocated corporate expenses | 10,005 | 7,688 |
Segment reconciling items | ||
Segment Reporting Information | ||
Joint venture depreciation, amortization and interest | 3,763 | 3,323 |
Amortization of investment in affiliate step-up | 2,558 | 1,658 |
Amortization of inventory step-up | 0 | 1,603 |
Debt extinguishment costs | 0 | 5,879 |
Net loss on asset disposals | 820 | 1,152 |
Foreign currency exchange (gain) loss | (2,689) | 5,063 |
LIFO expense | 10,158 | 4,926 |
Transaction and other related costs | 80 | 428 |
Equity-based and other non-cash compensation | 3,400 | 3,831 |
Restructuring, integration and business optimization expenses | 732 | 1,079 |
Defined benefit pension plan cost | 993 | 550 |
Other | 1,116 | 1,057 |
Operating segments | ||
Segment Reporting Information | ||
Segment Adjusted EBITDA | $ 111,046 | $ 115,573 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 3,400 | $ 3,831 |
Number of shares available for grant | 3,666,886 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized share-based compensation expense | $ 29,715 | |
Unrecognized share-based compensation expense, period for recognition | 2 years 1 month 2 days | |
Restricted Stock Units (RSUs) | Director | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 1 year | |
Restricted Stock Units (RSUs) | Employee | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Performance Stock Units (PSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Unrecognized share-based compensation expense | $ 8,159 | |
Unrecognized share-based compensation expense, period for recognition | 2 years 11 months 1 day | |
Performance Stock Units (PSUs) | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting percentage | 0.00% | |
Performance Stock Units (PSUs) | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting percentage | 200.00% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of RSU and PSU Activity (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 2,188,890 | 998,786 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 16.06 | $ 16.83 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,196,141 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 15.41 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (6,037) | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 16.54 | |
Performance Stock Units (PSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 539,431 | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 15.41 | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 539,431 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 15.41 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 0 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 0 |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation from Basic to Diluted Weighted Average Shares Outstanding (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding – Basic (shares) | 133,946,308 | 133,154,144 |
Dilutive effect of unvested common shares and restricted stock units with service conditions and assumed stock option exercises and conversions (shares) | 948,046 | 730,839 |
Weighted average shares outstanding – Diluted (shares) | 134,894,354 | 133,884,983 |
Earnings per Share - Reconcil_2
Earnings per Share - Reconciliation of Net Income (Loss) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net income attributable to PQ Group Holdings Inc. | $ 3,151 | $ 214 |
Denominator: | ||
Weighted average shares outstanding – Basic (shares) | 133,946,308 | 133,154,144 |
Weighted average shares outstanding – Diluted (shares) | 134,894,354 | 133,884,983 |
Net income per share: | ||
Basic income per share (usd per share) | $ 0.02 | $ 0 |
Diluted income per share (usd per share) | $ 0.02 | $ 0 |
Earnings per Share - Anti-dilut
Earnings per Share - Anti-dilutive Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Restricted stock awards with performance only targets not yet achieved | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive (shares) | 1,639,514 | 1,751,022 |
Stock options with performance only targets not yet achieved | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive (shares) | 586,253 | 586,253 |
Anti-dilutive restricted stock awards, restricted stock units and performance stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive (shares) | 0 | 0 |
Anti-dilutive stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive (shares) | 863,063 | 621,747 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash paid during the period for: | ||
Income taxes, net of refunds | $ 4,387 | $ 4,433 |
Interest(1) | 23,740 | 16,557 |
Non-cash investing activity(2): | ||
Capital expenditures acquired on account but unpaid as of the period end | $ 15,391 | $ 10,680 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Cash and Restricted Cash Reconciliation (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 52,341 | $ 57,854 | $ 58,834 | |
Restricted cash included in prepaid and other current assets | 1,744 | 1,182 | ||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ 54,085 | $ 59,726 | $ 60,016 | $ 67,243 |