Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

6. Segment Information

The Company and its subsidiaries operate in the business of pigment manufacturing and related products in three geographic segments – United States, European and Asian.

United States – This segment represents products manufactured at our facility located in Corpus Christi, Texas. The segment manufactures HITOX, BARTEX, HALTEX, OPTILOAD and TIOPREM which is sold primarily in North, Central and South America. Sales of this segment, which includes intercompany purchases of ALUPREM from our European operation, represented approximately 69% and 68% of our consolidated sales for the years ended December 31, 2015 and 2014, respectively.

European – This segment represents products manufactured at the Company’s wholly-owned operation, TPT, located in the Netherlands. TPT manufactures ALUPREM and BARYPREM which is sold primarily in Europe. Sales of this segment, which include intercompany purchases HITOX and TIOPREM from our Asian operation, represented approximately 23% and 22% of our consolidated sales for the years ended December 31, 2015 and 2014, respectively. Intercompany sales of ALUPREM between the TPT and the U.S. operation are eliminated in consolidation represented 33% and 44% of this segments total sales for the years ended December 31, 2015 and 2014, respectively.

Asian – This segment represents products manufactured at the Company’s wholly-owned operation, TMM, located in Malaysia. TMM manufactures HITOX and TIOPREM which is sold primarily in Asia. Sales of this segment represented approximately 8% and 10% of our consolidated sales for the years ended December 31, 2015 and 2014, respectively. Intercompany sales of HITOX, TIOPREM and SR between the TMM and the U.S. and European operations are eliminated in consolidation represented 68% and 61% of this segments total sales for the years ended December 31, 2015 and 2014, respectively .

The accounting policies of the segments are the same as those described in the Summary of Significant Policies (See Note 1). Product sales of inventory between the U.S., European and Asian operations are based on inter-company pricing, which includes an inter-company profit margin. The segment profit (loss),included in the table below, from each location is reflective of these inter-company prices, as is inventory at the Corpus Christi location prior to elimination adjustments. Such presentation is consistent with the internal reporting reviewed by the Company’s chief operating decision maker. The elimination entries include an adjustment to the cost of sales resulting from the adjustment to ending inventory to eliminate inter-company profit, and the reversal of a similar adjustment from a prior period. To the extent there are net increases/declines period over period in Corpus Christi inventories that include an inter-company component, the net effect of these adjustments can decrease/increase location profit.

Our chief operating decision maker, or CODM, regularly reviews financial information about our segments in order to allocate resources and evaluate performance. Our CODM assesses segment performance based on Segment sales and Segment Adjusted EBITDA which we define as net income (loss) before depreciation and amortization, interest expense, bad debt expense, foreign currency gains and losses, income taxes, and other items which management does not believe reflect the underlying performance of the segment.

For the year ended December 31, 2015, the U.S. operations received approximately 25% of its total third party sales revenue from a single customer. The European operations received approximately 28% of its total third party sales revenue from two customers (16% and 12%), and the Asian operations received approximately 34% of its total third party sales revenue from three customers customer (12%, 11% and 11%). For the year ended December 31, 2014, the U.S. operations received approximately 34% of its total third party sales revenue from a single customer. The European operations received approximately 33% of its total third party sales revenue from two customers (17% and 16%), and the Asian operations received approximately 25% of its total third party sales revenue from a single customer.

Sales from the subsidiary to the parent company are based upon profit margins which represent competitive pricing of similar products. Intercompany sales consisted of ALUPREM, SR, HITOX and TIOPREM.

The Company's principal products, ALUPREM and HITOX, accounted for approximately 36% and 28%, respectively, of net consolidated sales in 2015 and approximately 39% and 28%, respectively in 2014.

The Company sells its products to customers located in more than 60 countries. Sales to external customers are attributed to geographic area based on country of distribution. Sales to customers located in the U.S. represented approximately 59% and 58% for the years ended December 31, 2015 and 2014, respectively.

For the year ended December 31, 2015 and 2014, sales to customers in Germany represented approximately 23% and 25%, respectively, of our total foreign sales.

Approximately 12% of the Company's employees are represented by an in-house collective bargaining agreement during 2015 as compared to approximately 20% in 2014.

A summary of the Company’s manufacturing operations by geographic segment is presented below:

(In thousands)		United States (Corpus Christi)		European (TPT)		Asian (TMM)		Inter-Company Eliminations		Consolidated
As of and for the years ended:
December 31, 2015
Net Sales:
Customer sales	$	25,646		8,619		2,794	$	-	$	37,059
Intercompany sales		37		4,309		5,832		(10,178)		-
Total Net Sales	$	25,683	$	12,928	$	8,626	$	(10,178)	$	37,059
Share based compensation	$	133	$	-	$	-	$	-	$	133
Depreciation	$	1,011	$	1,174	$	678	$	-	$	2,863
Interest expense	$	13	$	25	$	170	$	-	$	208
Income tax (benefit) expense	$	(318)	$	(69)	$	681	$	16	$	310
Location profit (loss)	$	(760)	$	(225)	$	(5,437)	$	58	$	(6,364)
Capital expenditures	$	1,335	$	4,676	$	6	$	-	$	6,017
Location long-lived assets	$	5,904	$	10,618	$	950	$	-	$	17,472
Location assets	$	15,982	$	13,190	$	7,536	$	-	$	36,708
December 31, 2014
Net Sales:
Customer sales	$	31,777	$	10,154	$	4,799	$	-	$	46,730
Intercompany sales		111		7,977		7,445		(15,533)		-
Total Net Sales	$	31,888	$	18,131	$	12,244	$	(15,533)	$	46,730
Share based compensation	$	128	$	-	$	-	$	-	$	128
Depreciation	$	980	$	1,310	$	1,155	$	-	$	3,445
Interest expense	$	34	$	55	$	265	$	-	$	354
Income tax (benefit) expense	$	120	$	468	$	(737)	$	(38)	$	(187)
Location profit (loss)	$	(41)	$	1,620	$	(2,188)	$	55	$	(554)
Capital expenditures	$	804	$	1,199	$	61	$	-	$	2,064
Location long-lived assets	$	5,627	$	7,894	$	5,368	$	-	$	18,889
Location assets	$	19,564	$	10,393	$	18,169	$	-	$	48,126

Following is a summary of the adjusted EBITDA by segment and consolidated for the years ended December 31, 2015 and 2014.

(In thousands)		United States (Corpus Christi)		European (TPT)		Asian (TMM)		Inter-Company Eliminations		Consolidated
As of and for the years ended:
December 31, 2015
Net Loss	$	(760)	$	(225)	$	(5,437)	$	58	$	(6,364)
Adjustments:
Depreciation and amortization		1,011		1,174		678		-		2,863
Interest expense, net		13		25		170		-		208
Bad debt expense		-		254		43		-		297
(Gain)/loss on foreign currency exchange rate		(149)		52		234		-		137
Income tax (benefit) expense		(318)		(69)		681		16		310
Non-cash inventory impairment		393		20		1,336		-		1,749
Non-Cash loss on disposal/impairment of assets		48		-		2,902		-		2,950
Adjusted EBITDA	$	238	$	1,231	$	607	$	74	$	2,150
December 31, 2014
Net Loss	$	(41)	$	1,620	$	(2,188)	$	55	$	(554)
Adjustments:
Depreciation and amortization		980		1,310		1,155		-		3,445
Interest expense		34		55		265		-		354
Bad debt expense		-		(27)						(27)
(Gain)/loss on foreign currency exchange rate		(182)		59		9		-		(114)
Income tax (benefit) expense		120		468		(737)		(38)		(187)
Non-cash inventory impairment		-		-		-		-		-
Non-cash loss on disposal/impairment of assets		-		-		2,140		-		2,140
Adjusted EBITDA	$	911	$	3,485	$	644	$	17	$	5,057