Discontinued Operations

3 Months Ended

Mar. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and updated each reporting period as appropriate.

Executing on our strategy to focus our growth investments on our three remaining segments, on May 16, 2021, we entered into an agreement to sell our Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. In the second quarter of 2021, the assets and liabilities of the segment were classified as held for sale, and the segment’s results were presented as discontinued operations. This change was applied on a retrospective basis. On March 17, 2022, the Department of Justice (DOJ) filed a complaint to enjoin the sale transaction. The parties are responding to the complaint and engaging with the DOJ in the normal course to address the DOJ’s antitrust concerns regarding a minor overlap in a narrow range of material used in certain commercial building applications. We believe that the sale is probable of closing and, as such, continue to present the segment’s results as discontinued operations as of March 31, 2022.

Financial results from discontinued operations:


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net sales	$	70.4	$	53.9
Cost of sales	52.4		43.1
Selling, general and administrative	4.6		4.4

Income from discontinued operations	$	13.4	$	6.4
Income tax provision	3.1		1.4
Income from discontinued operations, net of tax	$	10.3	$	5.0

Major classes of assets and liabilities to be transferred in the transaction:


(in millions)	March 31, 2022		December 31, 2021
Assets:
Accounts receivable, net	$	20.7	$	10.6
Inventories, net	10.9		8.2
Other current assets	0.8		0.6
Current assets held for sale (a)	32.4		19.4

Property, plant and equipment, net	28.8		28.3
Other assets	0.4		0.3
Intangible assets, net	1.2		1.2
Goodwill	171.3		171.3
Long-term assets held for sale (a)	201.7		201.1
Assets held for sale	$	234.1	$	220.5

Liabilities:
Accounts payable	$	28.9	$	27.0
Accrued liabilities	6.7		12.0
Current liabilities held for sale (a)	35.6		39.0

Long-term deferred tax liability	5.8		5.8
Other liabilities	0.1		0.1
Long-term liabilities held for sale (a)	5.9		5.9
Liabilities held for sale	$	41.5	$	44.9
(a) We reasonably expect to close on this transaction within one year and therefore have presented the assets and liabilities as current as of March 31, 2022.