ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

Quarterly report pursuant to Section 13 or 15(d)

Note 20 - Operating Segment Information

v3.22.2.2
Note 20 - Operating Segment Information
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements Ìý
Segment Reporting Disclosure [Text Block]

20. OPERATING SEGMENT INFORMATIONÌý

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We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have three operating segments, which are also our reportable segments: Polyurethanes, Performance Products andÌýAdvanced Materials. We have organized our business and derived our operating segments around differences in product lines. Beginning in the third quarter of 2022, the results of our Textile Effects Business are reported as discontinued operations in our condensed consolidated financial statements for all periods presented. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Sale of Textile Effects Business.â€�

Ìý

The major products of each reportable operating segment are as follows:

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Segment

ÌýÌýÌýÌý

Products

Polyurethanes

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MDI, polyols, TPU and other polyurethane-related products

PerformanceÌýProducts

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Specialty amines, ethyleneamines, maleic anhydride and technology licenses

Advanced Materials

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Specialty resin compounds; cross-linking, matting, and curing and toughening agents; epoxy, acrylic and polyurethane-based formulations; specialty nitrile latex, alkyd resins and carbon nano materials

Ìý

Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use adjusted EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The adjusted EBITDA of operating segments excludes items that principally apply to our Company as a whole. The following schedule includes revenues and adjusted EBITDA for each of our reportable operating segments (dollars in millions). We have revised our prior yearÌýpresentation below to reconcile total reportable segmentsâ€� adjusted EBITDA to income from continuing operations before income taxes, in addition to net income, andÌýremoved “corporate and other costs, netâ€� from the total reportable segmentsâ€� adjusted EBITDA and included such amounts in the reconciliation to income from continuing operations before income taxes. Additionally, we have revised our prior yearÌýpresentation of total reportable segmentsâ€� revenues,Ìýin which we removed intersegment eliminations from the total reportable segmentsâ€� revenues.Ìý

Ìý

Ìý Ìý

Three months

 Ìý Ìý

Nine months

 Ìý
Ìý Ìý

ended

 Ìý Ìý

ended

 Ìý
Ìý Ìý

September 30,

 Ìý Ìý

September 30,

 Ìý
Ìý Ìý

2022

 Ìý Ìý

2021

 Ìý Ìý

2022

 Ìý Ìý

2021

 Ìý

Revenues:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Polyurethanes

 Ìý $ 1,257 Ìý Ìý $ 1,403 Ìý Ìý $ 3,996 Ìý Ìý $ 3,626 Ìý

Performance Products

 Ìý Ìý 434 Ìý Ìý Ìý 399 Ìý Ìý Ìý 1,406 Ìý Ìý Ìý 1,075 Ìý

Advanced Materials

 Ìý Ìý 328 Ìý Ìý Ìý 304 Ìý Ìý Ìý 999 Ìý Ìý Ìý 881 Ìý

Total reportable segments� revenue

 Ìý Ìý 2,019 Ìý Ìý Ìý 2,106 Ìý Ìý Ìý 6,401 Ìý Ìý Ìý 5,582 Ìý

Intersegment eliminations

 Ìý Ìý (8 ) Ìý Ìý (9 ) Ìý Ìý (28 ) Ìý Ìý (24 )

Total

 Ìý $ 2,011 Ìý Ìý $ 2,097 Ìý Ìý $ 6,373 Ìý Ìý $ 5,558 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Segment adjusted EBITDA(1):

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Polyurethanes

 Ìý $ 138 Ìý Ìý $ 246 Ìý Ìý $ 591 Ìý Ìý $ 661 Ìý

Performance Products

 Ìý Ìý 110 Ìý Ìý Ìý 103 Ìý Ìý Ìý 408 Ìý Ìý Ìý 254 Ìý

Advanced Materials

 Ìý Ìý 58 Ìý Ìý Ìý 48 Ìý Ìý Ìý 192 Ìý Ìý Ìý 150 Ìý

Total reportable segments� adjusted EBITDA

 Ìý Ìý 306 Ìý Ìý Ìý 397 Ìý Ìý Ìý 1,191 Ìý Ìý Ìý 1,065 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Reconciliation of total reportable segments� adjusted EBITDA to income from continuing operations before income taxes:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Interest expense, net—continuing operations

 Ìý Ìý (16 ) Ìý Ìý (15 ) Ìý Ìý (46 ) Ìý Ìý (52 )

Depreciation and amortization—continuing operations

 Ìý Ìý (72 ) Ìý Ìý (68 ) Ìý Ìý (207 ) Ìý Ìý (205 )

Corporate and other costs, net(2)

 Ìý Ìý (35 ) Ìý Ìý (48 ) Ìý Ìý (123 ) Ìý Ìý (146 )

Net income attributable to noncontrolling interests

 Ìý Ìý 15 Ìý Ìý Ìý 16 Ìý Ìý Ìý 46 Ìý Ìý Ìý 49 Ìý

Other adjustments:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Business acquisition and integration expenses and purchase accounting inventory adjustments

 Ìý Ìý (1 ) Ìý Ìý (5 ) Ìý Ìý (11 ) Ìý Ìý (19 )

Fair value adjustments to Venator investment, net

 Ìý Ìý (7 ) Ìý Ìý (3 ) Ìý Ìý (9 ) Ìý Ìý (28 )

Loss on early extinguishment of debt

 Ìý Ìý â€� Ìý Ìý Ìý â€� Ìý Ìý Ìý â€� Ìý Ìý Ìý (27 )

Certain legal and other settlements and related expenses

 Ìý Ìý (1 ) Ìý Ìý â€� Ìý Ìý Ìý (15 ) Ìý Ìý (10 )

Costs associated with the Albemarle Settlement, net

 Ìý Ìý (1 ) Ìý Ìý â€� Ìý Ìý Ìý (3 ) Ìý Ìý â€� Ìý

(Loss) gain on sale of business/assets

 Ìý Ìý (16 ) Ìý Ìý â€� Ìý Ìý Ìý (27 ) Ìý Ìý 30 Ìý

Income from transition services arrangements

 Ìý Ìý â€� Ìý Ìý Ìý 2 Ìý Ìý Ìý 2 Ìý Ìý Ìý 6 Ìý

Certain nonrecurring information technology project implementation costs

 Ìý Ìý (1 ) Ìý Ìý (2 ) Ìý Ìý (4 ) Ìý Ìý (6 )

Amortization of pension and postretirement actuarial losses

 Ìý Ìý (10 ) Ìý Ìý (19 ) Ìý Ìý (32 ) Ìý Ìý (56 )

Plant incident remediation (costs) credits

 Ìý Ìý (1 ) Ìý Ìý (2 ) Ìý Ìý 4 Ìý Ìý Ìý (3 )

Restructuring, impairment and plant closing and transition costs(3)

 Ìý Ìý (14 ) Ìý Ìý â€� Ìý Ìý Ìý (44 ) Ìý Ìý (36 )

Income from continuing operations before income taxes

 Ìý Ìý 146 Ìý Ìý Ìý 253 Ìý Ìý Ìý 722 Ìý Ìý Ìý 562 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Income tax expense—continuing operations

 Ìý Ìý (30 ) Ìý Ìý (34 ) Ìý Ìý (155 ) Ìý Ìý (101 )

(Loss) income from discontinued operations

 Ìý Ìý (1 ) Ìý Ìý 6 Ìý Ìý Ìý 30 Ìý Ìý Ìý 36 Ìý

Net income

 Ìý $ 115 Ìý Ìý $ 225 Ìý Ìý $ 597 Ìý Ìý $ 497 Ìý

Ìý

�

Ìý Ìý

Three months

 Ìý Ìý

Nine months

 Ìý
Ìý Ìý

ended

 Ìý Ìý

ended

 Ìý
Ìý Ìý

September 30,

 Ìý Ìý

September 30,

 Ìý
Ìý Ìý

2022

 Ìý Ìý

2021

 Ìý Ìý

2022

 Ìý Ìý

2021

 Ìý

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Segment adjusted EBITDA(1):

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Polyurethanes

 Ìý $ 138 Ìý Ìý $ 246 Ìý Ìý $ 591 Ìý Ìý $ 661 Ìý

Performance Products

 Ìý Ìý 110 Ìý Ìý Ìý 103 Ìý Ìý Ìý 408 Ìý Ìý Ìý 254 Ìý

Advanced Materials

 Ìý Ìý 58 Ìý Ìý Ìý 48 Ìý Ìý Ìý 192 Ìý Ìý Ìý 150 Ìý

Total reportable segments� adjusted EBITDA

 Ìý Ìý 306 Ìý Ìý Ìý 397 Ìý Ìý Ìý 1,191 Ìý Ìý Ìý 1,065 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Reconciliation of total reportable segments� adjusted EBITDA to income from continuing operations before income taxes:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Interest expense, net—continuing operations

 Ìý Ìý (16 ) Ìý Ìý (15 ) Ìý Ìý (46 ) Ìý Ìý (52 )

Depreciation and amortization—continuing operations

 Ìý Ìý (72 ) Ìý Ìý (68 ) Ìý Ìý (207 ) Ìý Ìý (205 )

Corporate and other costs, net(2)

 Ìý Ìý (36 ) Ìý Ìý (47 ) Ìý Ìý (119 ) Ìý Ìý (140 )

Net income attributable to noncontrolling interests

 Ìý Ìý 15 Ìý Ìý Ìý 16 Ìý Ìý Ìý 46 Ìý Ìý Ìý 49 Ìý

Other adjustments:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Business acquisition and integration expenses and purchase accounting inventory adjustments

 Ìý Ìý (1 ) Ìý Ìý (5 ) Ìý Ìý (11 ) Ìý Ìý (19 )

Fair value adjustments to Venator investment, net

 Ìý Ìý (7 ) Ìý Ìý (3 ) Ìý Ìý (9 ) Ìý Ìý (28 )

Loss on early extinguishment of debt

 Ìý Ìý â€� Ìý Ìý Ìý â€� Ìý Ìý Ìý â€� Ìý Ìý Ìý (27 )

Certain legal and other settlements and related expenses

 Ìý Ìý (1 ) Ìý Ìý â€� Ìý Ìý Ìý (15 ) Ìý Ìý (10 )

Costs associated with the Albemarle Settlement, net

 Ìý Ìý (1 ) Ìý Ìý â€� Ìý Ìý Ìý (3 ) Ìý Ìý â€� Ìý

(Loss) gain on sale of business/assets

 Ìý Ìý (16 ) Ìý Ìý â€� Ìý Ìý Ìý (27 ) Ìý Ìý 30 Ìý

Income from transition services arrangements

 Ìý Ìý â€� Ìý Ìý Ìý 2 Ìý Ìý Ìý 2 Ìý Ìý Ìý 6 Ìý

Certain nonrecurring information technology project implementation costs

 Ìý Ìý (1 ) Ìý Ìý (2 ) Ìý Ìý (4 ) Ìý Ìý (6 )

Amortization of pension and postretirement actuarial losses

 Ìý Ìý (10 ) Ìý Ìý (19 ) Ìý Ìý (32 ) Ìý Ìý (58 )

Plant incident remediation (costs) credits

 Ìý Ìý (1 ) Ìý Ìý (2 ) Ìý Ìý 4 Ìý Ìý Ìý (3 )

Restructuring, impairment and plant closing and transition costs(3)

 Ìý Ìý (14 ) Ìý Ìý â€� Ìý Ìý Ìý (44 ) Ìý Ìý (36 )

Income from continuing operations before income taxes

 Ìý Ìý 145 Ìý Ìý Ìý 254 Ìý Ìý Ìý 726 Ìý Ìý Ìý 566 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Income tax expense—continuing operations

 Ìý Ìý (30 ) Ìý Ìý (35 ) Ìý Ìý (156 ) Ìý Ìý (102 )

(Loss) income from discontinued operations

 Ìý Ìý (1 ) Ìý Ìý 6 Ìý Ìý Ìý 30 Ìý Ìý Ìý 36 Ìý

Net income

 Ìý $ 114 Ìý Ìý $ 225 Ìý Ìý $ 600 Ìý Ìý $ 500 Ìý

Ìý

(1)

We use segment adjusted EBITDA as the measure of each segment’s profit or loss. We believe that segment adjusted EBITDA more accurately reflects what the chief operating decision maker uses to make decisions about resources to be allocated to the segments and assess their financial performance. Segment adjusted EBITDA is defined as netÌýincome of ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation or ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests, certain Corporate and other items and income from discontinued operations, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments;Ìý(b) fair value adjustments to Venator investment, net; (c) loss on early extinguishment of debt; (d) certain legal and other settlements and related expenses; (e) costs associated with the Albemarle Settlement, net; (f) (loss) gain on sale of business/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation credits (costs); and (k) restructuring, impairment, plant closing and transition costs.

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(2) Corporate and other costs, net includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets.

Ìý

(3)

Includes costs associated with transition activities related primarily to our Corporate program to optimize our global approach to leverage shared services capabilities.

Ìý

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