Business Segments

12 Months Ended

Dec. 31, 2019

Segment Disclosures [Abstract]

Segment Reporting Disclosure [Text Block]

Note 4 – Business Segments

The Company’s operating segments, which are consistent with its 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 and the chief operating decision maker assess 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 chief operating decision maker of 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, specialty grease and Norman Hay 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 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 charges 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 expense, net.

The following tables present information about the performance of the Company’s reportable segments for the years ended December 31, 2019, 2018 and 2017:

		2019		2018		2017
Net sales
	Americas	$	392,121	$	297,601	$	283,460
	EMEA		285,570		216,984		208,522
	Asia/Pacific		247,839		192,502		181,134
	Global Specialty Businesses		207,973		160,433		146,966
Total net sales		$	1,133,503	$	867,520	$	820,082

		2019		2018		2017
Segment operating earnings
	Americas	$	78,268	$	62,686	$	56,088
	EMEA		47,388		36,119		34,431
	Asia/Pacific		67,573		53,739		46,330
	Global Specialty Businesses		58,475		42,931		39,553
Total segment operating earnings			251,704		195,475		176,402
Combination and other acquisition-related expenses			(35,477)		(16,661)		(29,938)
Restructuring and related charges			(26,678)		—		—
Fair value step up of inventory sold			(11,714)		—		—
Non-operating and administrative expenses			(104,572)		(83,515)		(76,231)
Depreciation of corporate assets and amortization			(27,129)		(7,518)		(7,489)
Operating income			46,134		87,781		62,744
Other expense, net			(254)		(642)		(718)
Interest expense, net			(16,976)		(4,041)		(1,358)
Income before taxes and equity in net income of
	associated companies	$	28,904	$	83,098	$	60,668

The following tables present information regarding the Company’s reportable segments’ assets and long-lived assets, including certain identifiable assets as well as an allocation of shared assets, of December 31, 2019, 2018 and 2017:

		2019		2018		2017
Segment assets
	Americas	$	926,122	$	180,037	$	189,645
	EMEA		688,663		149,984		167,243
	Asia/Pacific		685,476		205,424		190,633
	Global Specialty Businesses		550,055		174,220		174,605
	Total segment assets	$	2,850,316	$	709,665	$	722,126

		2019		2018		2017
Segment long-lived assets
	Americas	$	139,170	$	60,745	$	66,380
	EMEA		56,108		23,383		24,795
	Asia/Pacific		126,166		26,217		24,876
	Global Specialty Businesses		69,184		26,949		26,392
	Total segment long-lived assets	$	390,628	$	137,294	$	142,443

The following tables present information regarding the Company’s reportable segments’ capital expenditures and depreciation for identifiable assets for the years ended December 31, 2019, 2018 and 2017:

		2019		2018		2017
Capital expenditures
	Americas	$	6,404	$	3,401	$	3,685
	EMEA		3,263		2,081		3,936
	Asia/Pacific		3,857		6,059		2,458
	Global Specialty Businesses		2,021		1,345		793
	Total segment capital expenditures	$	15,545	$	12,886	$	10,872

		2019		2018		2017
Depreciation
	Americas	$	7,500	$	4,225	$	4,395
	EMEA		4,560		3,434		3,368
	Asia/Pacific		3,458		2,552		2,669
	Global Specialty Businesses		2,248		1,985		2,045
	Total segment depreciation	$	17,766	$	12,196	$	12,477

During the years ended December 31, 2019, 2018 and 2017, the Company had approximately $719.8 million, $534.6 million and $513.1 million of net sales, respectively, attributable to non-U.S. operations. As of December 31, 2019, 2018 and 2017, the Company had approximately $174.4 million, $60.8 million and $61.8 million of long-lived assets, respectively, attributable to non-U.S. operations.

Inter-segment revenue for the years ended December 31, 2019, 2018 and 2017 was $7.3 million, $8.3 million and $9.4 million for Americas, $20.3 million, $21.9 million and $20.8 million for EMEA, $0.2 million, $0.5 million and $1.5 million for Asia/Pacific and $5.4 million, $5.3 million and $4.4 million for Global Specialty Businesses, respectively. However, all inter-segment transactions have been eliminated from each reportable operating segment’s net sales and earnings for all periods presented in the above tables.