Business Segments

9 Months Ended

Sep. 30, 2019

Segment Reporting Measurement Disclosures [Abstract]

Segment Reporting Disclosure [Text Block]

Note 4 – Business Segments

The Company’s reportable segments reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated and the manner by which the Company assesses its performance. During the third quarter of 2019 and in connection with the Combination, the Company reorganized its executive management team to align with its new business structure, which reflects the method by which the Company assesses its performance and allocates its resources. The Company’s new reportable segment structure includes four segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); (iii) Asia/Pacific; and (iv) Global Specialty Businesses. The three geographic segments are composed of the net sales and operations in each respective region, excluding net sales and operations managed globally by the Global Specialty Businesses segment, which includes the Company’s container, metal finishing, mining, offshore, specialty coatings and specialty grease businesses. All prior period information for legacy Quaker has been recast to reflect these four segments as the Company’s new reportable segments. Prior to the Company’s re-segmentation during the third quarter of 2019, the Company’s historical reportable segments were four geographic regions: (i) North America; (ii) EMEA; (iii) Asia/Pacific; and (iv) South America.

Though the Company changed its reportable segments in the third quarter of 2019, the calculation of the reportable segments’ measures of earnings remains otherwise generally consistent with past practices. Segment operating earnings for the Company’s reportable segments are comprised of net sales less COGS and selling, general and administrative expenses (“SG&A”) directly related to the respective segment’s product sales. Operating expenses not directly attributable to the net sales of each respective segment are excluded from segment operating earnings, which includes certain corporate and administrative costs, Combination and other acquisition-related expenses, restructuring and related activities and COGS related to acquired Houghton inventory sold, which was adjusted to fair value as a part of purchase accounting. Other items not specifically identified with the Company’s reportable segments include interest expense, net and other income (expense), net.

The following table presents information about the performance of the Company’s reportable segments for the three and nine months ended September 30, 2019 and 2018:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2019		2018		2019		2018
Net sales
	Americas	$	116,710	$	77,374	$	260,682	$	225,115
	EMEA		82,468		51,346		184,280		164,753
	Asia/Pacific		74,266		49,928		165,234		143,388
	Global Specialty Businesses		51,686		43,374		132,013		122,783
Total net sales		$	325,130	$	222,022	$	742,209	$	656,039
Segment operating earnings
	Americas	$	23,880	$	16,998	$	52,235	$	47,877
	EMEA		13,370		8,592		31,232		28,102
	Asia/Pacific		20,404		14,012		45,375		39,631
	Global Specialty Businesses		14,983		12,215		36,100		33,224
Total segment operating earnings			72,637		51,817		164,942		148,834
Combination and other acquisition-related expenses			(14,702)		(2,904)		(23,789)		(12,404)
Restructuring and related activities			(24,045)		—		(24,045)		—
Fair value step up of Houghton inventory sold			(10,214)		—		(10,214)		—
Non-operating and administrative expenses			(29,123)		(22,064)		(68,266)		(63,044)
Depreciation of corporate assets and amortization			(9,055)		(1,930)		(12,770)		(5,673)
Operating (loss) income			(14,502)		24,919		25,858		67,713
Other income (expense), net			203		(523)		(389)		(631)
Interest expense, net			(6,102)		(989)		(7,611)		(3,223)
(Loss) income before taxes and equity in net income of
	associated companies	$	(20,401)	$	23,407	$	17,858	$	63,859

Inter-segment revenues for the three and nine months ended September 30, 2019 were $2.1 million and $4.8 million for Americas, $5.3 million and $15.4 million for EMEA, less than $0.1 million and $0.1 million for Asia/Pacific, and $1.4 million and $4.1 million for Global Specialty Businesses, respectively. Inter-segment revenues for the three and nine months ended September 30, 2018 were $2.4 million and $6.5 million for Americas, $4.5 million and $16.8 million for EMEA, less than $0.1 million and $0.5 million for Asia/Pacific, and $1.2 million and $3.7 million for Global Specialty Businesses, respectively. However, all inter-segment transactions have been eliminated from each reportable segment’s net sales and earnings for all periods presented above.