Annual report pursuant to Section 13 and 15(d)

Reportable Segments

v3.24.0.1
Reportable Segments
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Reportable Segments
13. Reportable Segments:
The Company has organized its business around two operating segments based on the review of discrete financial results for each of the operating segments by the CODM, for performance assessment and resource allocation purposes. Each of the Company’s operating segments represents a reportable segment under GAAP. The Company’s reportable segments are organized based on the nature and economic characteristics of the Company’s products. The Company’s two reportable segments are as follows: (1) Ecoservices provides sulfuric acid recycling to the North American refining industry for the production of alkylate and provides on-purpose virgin sulfuric acid for water treatment, mining, and industrial applications; and (2) Advanced Materials & Catalysts serves the polymers and engineered plastics and the global refining, petrochemical and emissions control industries.
The Advanced Materials & Catalysts segment includes equity in net income from Zeolyst International and Zeolyst C.V. (collectively, the “Zeolyst Joint Venture”), each of which are 50/50 joint ventures with CRI Zeolites Inc. (a wholly-owned subsidiary of Royal Dutch Shell). The Zeolyst Joint Venture is accounted for using the equity method in the Company’s consolidated financial statements (see Note 10 to these consolidated financial statements for further information). Company management evaluates the Advanced Materials & Catalysts segment’s performance, including the Zeolyst Joint Venture, on a proportionate consolidation basis. Accordingly, the revenues and expenses used to compute the Advanced Materials & Catalysts segment’s adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”) include the Zeolyst Joint Venture’s results of operations on a proportionate basis based on the Company’s 50% ownership level. Since the Company uses the equity method of accounting for the Zeolyst Joint Venture, these items are eliminated when reconciling to the Company’s consolidated results of operations.
The Company’s management evaluates the operating results of each reportable segment based upon Adjusted EBITDA. Adjusted EBITDA consists of EBITDA, which is a measure defined as net income before interest, income taxes, depreciation and amortization (each of which is included in the Company’s consolidated statements of income), and adjusted for certain items as discussed below. Corporate overhead costs are not included in segment results as they relate to corporate-based responsibilities and decisions and are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.
Summarized financial information for the Company’s reportable segments is shown in the following table:
Years ended
December 31,
2023 2022 2021
Sales:
Ecoservices $ 584,845  $ 702,472  $ 500,513 
Advanced Materials & Catalysts(1)
106,273  117,687  110,688 
Total $ 691,118  $ 820,159  $ 611,201 
Adjusted EBITDA:(2)
Ecoservices $ 199,966  $ 227,760  $ 177,672 
Advanced Materials & Catalysts(3)
81,892  77,978  88,028 
Adjusted EBITDA from reportable segments $ 281,858  $ 305,738  $ 265,700 
(1)Excludes the Company’s proportionate share of sales from the Zeolyst Joint Venture accounted for using the equity method. The proportionate share of sales excluded is $156,481, $132,588 and $131,332 for the years ended December 31, 2023, 2022 and 2021, respectively.
(2)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.
(3)     The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $50,490 for the year ended December 31, 2023, which includes $30,695 of equity in net income plus $6,403 of amortization of investment in affiliate step-up plus $13,392 of joint venture depreciation, amortization and interest.
The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $50,331 for the year ended December 31, 2022, which includes $27,931 of equity in net income plus $6,403 of amortization of investment in affiliate step-up plus $15,997 of joint venture depreciation, amortization and interest.
The Adjusted EBITDA from the Zeolyst Joint Venture included in the Advanced Materials & Catalysts segment is $49,872 for the year ended December 31, 2021, which includes $27,827 of equity in net income plus $6,480 of amortization of investment in affiliate step-up plus $15,565 of joint venture depreciation, amortization and interest.
A reconciliation of income from continuing operations before income taxes to Adjusted EBITDA from reportable segments is as follows:
Years ended
December 31,
2023 2022 2021
Reconciliation of income from continuing operations before income taxes to Adjusted EBITDA from reportable segments
Income from continuing operations before income taxes $ 81,939  $ 94,735  $ 13,941 
Interest expense, net 44,730  37,217  36,990 
Depreciation and amortization 84,598  79,163  79,741 
Unallocated corporate expenses 21,990  29,042  38,089 
Joint venture depreciation, amortization and interest 13,392  15,997  15,565 
Amortization of investment in affiliate step-up 6,403  6,402  6,480 
Debt extinguishment costs —  —  26,902 
Net loss on asset disposals 4,137  3,594  5,666 
Foreign currency exchange loss (gain) (1,340) 1,388  4,716 
LIFO benefit 3,473  (165) (1,931)
Transaction and other related costs 2,954  6,988  2,009 
Equity-based compensation 16,031  20,632  31,838 
Restructuring, integration and business optimization expenses 2,655  11,566  3,866 
Other 896  (821) 1,828 
Adjusted EBITDA from reportable segments $ 281,858  $ 305,738  $ 265,700 
The Company’s consolidated results include equity in net income from affiliated companies of $30,624, $27,725 and $27,737 for the years ended December 31, 2023, 2022, and 2021, respectively. This is primarily comprised of equity in net income of $30,695, $27,931 and $27,827 in the Advanced Materials & Catalysts segment from the Zeolyst Joint Venture for the years ended December 31, 2023, 2022 and 2021, respectively. The Company’s equity in net income from affiliated companies in the consolidated results includes amortization expense related to purchase accounting fair value adjustments associated with the Zeolyst Joint Venture as a result of a prior business combination.
Capital expenditures for the Company’s reportable segments are shown in the following table:
  Years ended
December 31,
  2023 2022 2021
Capital expenditures:    
Ecoservices $ 53,705  $ 47,770  $ 43,561 
Advanced Materials & Catalysts(1)
8,441  8,194  15,997 
Corporate(2)
3,189  2,906  487 
Capital expenditures per the consolidated statements of cash flows $ 65,335  $ 58,870  $ 60,045 
(1)    Excludes the Company’s proportionate share of capital expenditures from the Zeolyst Joint Venture.
(2)    Includes corporate capital expenditures, the cash impact from changes in capital expenditures in accounts payable and capitalized interest.
Total assets by segment are not disclosed by the Company because the information is not prepared or used by the CODM to assess performance and to allocate resources.
Sales by geographic area are presented in the following table. Sales are attributed to countries based upon location of products shipped.
Years ended
December 31,
2023 2022 2021
Sales(1):
   
United States $ 649,652  $ 774,119  $ 571,587 
Foreign countries 41,466  46,040  39,614 
Total $ 691,118  $ 820,159  $ 611,201 
(1)    Except for the United States, no sales in an individual country exceeded 10% of the Company’s total sales.
The Company sold products through its Ecoservices and Advanced Materials & Catalysts segments to single customer, which accounted for 13.2%, 12.3% and 12.6% of the Company’s total sales as of December 31, 2023, 2022, and 2021 respectively.
Long-lived assets by geographic area is presented in the following table. Long-lived assets includes property, plant and equipment, net and right-of-use lease assets.

December 31,
2023 2022
Long-lived assets:    
United States $ 575,536  $ 587,726 
Foreign countries 25,649  25,428 
Total $ 601,185  $ 613,154