| Segments |
The Company’s products and operations are managed and reported in two operating segments: Fire Safety and Oil Additives.
The Company’s Fire Safety segment produces a range of firefighting products, and offers a range of associated equipment and services, across fire retardant and firefighting foam applications.
The Company’s Oil Additives segment develops, manufactures, blends, markets and supplies a range of high-quality lubricant additives used in the production of organophosphate insecticides, flotation chemicals, pharmaceutical cleaning applications and developing battery technology.
Interest income, interest expense, other income (expense) and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance by the chief operating decision-maker (“CODM”). The corporate category is not considered to be a segment. The CODM is the Chief Executive Officer (“CEO”).
The Company’s CODM uses net sales and adjusted EBITDA to assess the ongoing performance of the Company’s business segments and to allocate resources. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual items may include acquisition and integration related costs, management fees and other non-recurring items. In addition, management uses adjusted EBITDA for business planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to net income (loss), the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP. The following table presents net sales and Adjusted EBITDA for each reportable segment for the three months and nine months ended September 30, 2021 and 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Segment Net Sales by Product Line: |
|
|
|
|
|
|
|
|
|
|
|
|
Fire safety |
|
$ |
172,445 |
|
|
$ |
151,083 |
|
|
$ |
237,256 |
|
|
$ |
213,916 |
|
Oil additives |
|
|
22,969 |
|
|
|
23,176 |
|
|
|
79,204 |
|
|
|
69,842 |
|
Total net sales as reported |
|
$ |
195,414 |
|
|
$ |
174,259 |
|
|
$ |
316,460 |
|
|
$ |
283,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Fire Safety |
|
$ |
97,854 |
|
|
$ |
86,640 |
|
|
$ |
116,680 |
|
|
$ |
102,805 |
|
Oil additives |
|
|
2,496 |
|
|
|
5,591 |
|
|
|
17,919 |
|
|
|
17,236 |
|
Total adjusted EBITDA |
|
$ |
100,350 |
|
|
$ |
92,231 |
|
|
$ |
134,599 |
|
|
$ |
120,041 |
|
See below for a reconciliation of total reportable segment profit (loss), to consolidated net income (loss) before income taxes (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
82,413 |
|
|
$ |
(2,002 |
) |
|
$ |
80,411 |
|
Other income (expense) |
|
|
(8,415 |
) |
|
|
(1,350 |
) |
|
|
(9,765 |
) |
Net income (loss) before income taxes |
|
$ |
73,998 |
|
|
$ |
(3,352 |
) |
|
$ |
70,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
74,818 |
|
|
$ |
1,136 |
|
|
$ |
75,954 |
|
Other income (expense) |
|
|
(7,879 |
) |
|
|
1,521 |
|
|
|
(6,358 |
) |
Net income (loss) before income taxes |
|
$ |
66,939 |
|
|
$ |
2,657 |
|
|
$ |
69,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
68,568 |
|
|
$ |
4,569 |
|
|
$ |
73,137 |
|
Other income (expense) |
|
|
(26,130 |
) |
|
|
(4,224 |
) |
|
|
(30,354 |
) |
Net income (loss) before income taxes |
|
$ |
42,438 |
|
|
$ |
345 |
|
|
$ |
42,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
67,711 |
|
|
$ |
4,449 |
|
|
$ |
72,160 |
|
Other income (expense) |
|
|
(30,178 |
) |
|
|
(197 |
) |
|
|
(30,375 |
) |
Net income (loss) before income taxes |
|
$ |
37,533 |
|
|
$ |
4,252 |
|
|
$ |
41,785 |
|
See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from net income (loss), the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
Net income (loss) |
|
$ |
53,819 |
|
|
$ |
(1,810 |
) |
|
$ |
52,009 |
|
Income tax (benefit) expense |
|
|
20,179 |
|
|
|
(1,542 |
) |
|
|
18,637 |
|
(Loss) income before income taxes |
|
|
73,998 |
|
|
|
(3,352 |
) |
|
|
70,646 |
|
Depreciation and amortization |
|
|
10,754 |
|
|
|
4,458 |
|
|
|
15,212 |
|
Interest and financing expense |
|
|
7,795 |
|
|
|
270 |
|
|
|
8,065 |
|
Restructuring charges |
|
|
3,855 |
|
|
— |
|
|
|
3,855 |
|
Loss on contingent earnout |
|
— |
|
|
— |
|
|
|
— |
|
Management fees |
|
|
313 |
|
|
— |
|
|
|
313 |
|
Deferred future payments |
|
|
625 |
|
|
— |
|
|
|
625 |
|
Unrealized foreign currency loss |
|
|
514 |
|
|
|
1,120 |
|
|
|
1,634 |
|
Adjusted EBITDA |
|
$ |
97,854 |
|
|
$ |
2,496 |
|
|
$ |
100,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
Net income (loss) |
|
$ |
51,453 |
|
|
$ |
1,177 |
|
|
$ |
52,630 |
|
Income tax expense |
|
|
15,486 |
|
|
|
1,480 |
|
|
|
16,966 |
|
Income before income taxes |
|
|
66,939 |
|
|
|
2,657 |
|
|
|
69,596 |
|
Depreciation and amortization |
|
|
10,263 |
|
|
|
4,329 |
|
|
|
14,592 |
|
Interest and financing expense |
|
|
8,363 |
|
|
|
881 |
|
|
|
9,244 |
|
Restructuring charges |
|
|
418 |
|
|
|
27 |
|
|
|
445 |
|
Management fees |
|
|
344 |
|
|
— |
|
|
|
344 |
|
Deferred future payments |
|
|
625 |
|
|
— |
|
|
|
625 |
|
Unrealized foreign currency gain |
|
|
(312 |
) |
|
|
(2,303 |
) |
|
|
(2,615 |
) |
Adjusted EBITDA |
|
$ |
86,640 |
|
|
$ |
5,591 |
|
|
$ |
92,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
Net income (loss) |
|
$ |
30,402 |
|
|
$ |
(770 |
) |
|
$ |
29,632 |
|
Income tax expense |
|
|
12,036 |
|
|
|
1,115 |
|
|
|
13,151 |
|
Income before income taxes |
|
|
42,438 |
|
|
|
345 |
|
|
|
42,783 |
|
Depreciation and amortization |
|
|
32,283 |
|
|
|
13,310 |
|
|
|
45,593 |
|
Interest and financing expense |
|
|
22,368 |
|
|
|
1,583 |
|
|
|
23,951 |
|
Restructuring charges |
|
|
12,805 |
|
|
— |
|
|
|
12,805 |
|
Loss on contingent earnout |
|
|
2,763 |
|
|
— |
|
|
|
2,763 |
|
Management fees |
|
|
937 |
|
|
— |
|
|
|
937 |
|
Deferred future payments |
|
|
1,875 |
|
|
— |
|
|
|
1,875 |
|
Unrealized foreign currency loss |
|
|
1,211 |
|
|
|
2,681 |
|
|
|
3,892 |
|
Adjusted EBITDA |
|
$ |
116,680 |
|
|
$ |
17,919 |
|
|
$ |
134,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
Fire Safety |
|
|
Oil Additives |
|
|
Total |
|
Net income |
|
$ |
27,771 |
|
|
$ |
2,772 |
|
|
$ |
30,543 |
|
Income tax expense |
|
|
9,762 |
|
|
|
1,480 |
|
|
|
11,242 |
|
Income before income taxes |
|
|
37,533 |
|
|
|
4,252 |
|
|
|
41,785 |
|
Depreciation and amortization |
|
|
30,673 |
|
|
|
12,698 |
|
|
|
43,371 |
|
Interest and financing expense |
|
|
30,982 |
|
|
|
2,512 |
|
|
|
33,494 |
|
Restructuring charges |
|
|
651 |
|
|
|
39 |
|
|
|
690 |
|
Management fees |
|
|
969 |
|
|
— |
|
|
|
969 |
|
Deferred future payments |
|
|
2,500 |
|
|
— |
|
|
|
2,500 |
|
Unrealized foreign currency gain |
|
|
(503 |
) |
|
|
(2,265 |
) |
|
|
(2,768 |
) |
Adjusted EBITDA |
|
$ |
102,805 |
|
|
$ |
17,236 |
|
|
$ |
120,041 |
|
Net Sales by geographical region is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
United States |
|
$ |
154,896 |
|
|
$ |
156,692 |
|
|
$ |
251,999 |
|
|
$ |
246,675 |
|
Canada |
|
|
18,124 |
|
|
|
2,879 |
|
|
|
21,800 |
|
|
|
5,551 |
|
Germany |
|
|
5,889 |
|
|
|
5,427 |
|
|
|
18,802 |
|
|
|
13,922 |
|
Other foreign countries |
|
|
16,505 |
|
|
|
9,261 |
|
|
|
23,859 |
|
|
|
17,610 |
|
Total net sales |
|
$ |
195,414 |
|
|
$ |
174,259 |
|
|
$ |
316,460 |
|
|
$ |
283,758 |
|
Property, plant and equipment, net by geographical area consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
United States |
|
$ |
29,761 |
|
|
$ |
29,155 |
|
Canada |
|
|
3,271 |
|
|
|
3,403 |
|
Germany |
|
|
11,781 |
|
|
|
13,487 |
|
Other foreign countries |
|
|
3,683 |
|
|
|
2,190 |
|
Total property, plant and equipment, net |
|
$ |
48,496 |
|
|
$ |
48,235 |
|
|