Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38221 PQ Group Holdings Inc. Delaware 81-3406833 (State or other jurisdiction of incorporation or organization ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements for Q1 2019 show sales of **$359.2 million** and net income of **$3.2 million**, up from **$0.2 million** in Q1 2018 [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2019 sales slightly decreased to **$359.2 million**, while gross profit increased to **$80.9 million** and net income rose significantly to **$3.15 million** Financial Performance (Three months ended March 31) | Financial Metric | Three months ended March 31, 2019 (in thousands) | Three months ended March 31, 2018 (in thousands) | | :--- | :--- | :--- | | Sales | $359,221 | $366,197 | | Gross Profit | $80,910 | $78,121 | | Operating Income | $29,463 | $28,189 | | Net Income Attributable to PQ Group Holdings Inc. | $3,151 | $214 | | Diluted Income Per Share | $0.02 | $— | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$4.38 billion** as of March 31, 2019, with new lease guidance recognizing **$57.2 million** in right-of-use assets Balance Sheet Summary (as of) | Balance Sheet Item | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $52,341 | $57,854 | | Total current assets | $570,332 | $558,616 | | Total assets | $4,382,276 | $4,327,425 | | Long-term debt, excluding current portion | $2,103,070 | $2,106,720 | | Total liabilities | $2,707,004 | $2,663,280 | | Total equity | $1,675,272 | $1,664,145 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to **$26.8 million** in Q1 2019, while investing and financing activities used **$29.3 million** and **$2.6 million** respectively Cash Flow Activities (Three months ended March 31) | Cash Flow Activity | Three months ended March 31, 2019 (in thousands) | Three months ended March 31, 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,838 | $22,035 | | Net cash used in investing activities | ($29,267) | ($33,135) | | Net cash (used in) provided by financing activities | ($2,552) | $5,384 | | Net change in cash, cash equivalents and restricted cash | ($5,641) | ($7,227) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's reorganization into four segments and the adoption of new lease accounting standards, recognizing right-of-use assets and liabilities - Effective March 1, 2019, the company reorganized into **four independent business segments**: Refining Services, Catalysts, Performance Materials, and Performance Chemicals[27](index=27&type=chunk) - New lease guidance adopted January 1, 2019, led to recognition of **$60.7 million** in right-of-use lease assets and **$58.9 million** in lease liabilities[32](index=32&type=chunk) Segment Sales Performance (Q1) | Segment | Sales (Q1 2019, in thousands) | Sales (Q1 2018, in thousands) | | :--- | :--- | :--- | | Refining Services | $105,844 | $100,714 | | Catalysts | $15,866 | $16,473 | | Performance Materials | $61,089 | $62,742 | | Performance Chemicals | $180,462 | $189,963 | | **Total** | **$363,261** | **$369,892** | Segment Adjusted EBITDA (Q1) | Segment | Adjusted EBITDA (Q1 2019, in thousands) | Adjusted EBITDA (Q1 2018, in thousands) | | :--- | :--- | :--- | | Refining Services | $39,731 | $35,532 | | Catalysts | $18,127 | $22,889 | | Performance Materials | $10,515 | $12,058 | | Performance Chemicals | $42,673 | $45,094 | | **Total Segment Adjusted EBITDA** | **$111,046** | **$115,573** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2019 sales decreased by **1.9%** to **$359.2 million**, while gross profit increased by **3.6%** to **$80.9 million**, and total Adjusted EBITDA decreased by **6.4%** to **$101.0 million** - Sales decreased by **$7.0 million (1.9%)** to **$359.2 million** in Q1 2019, driven by lower volumes and unfavorable currency, partially offset by higher pricing[126](index=126&type=chunk)[131](index=131&type=chunk) - Gross profit increased by **$2.8 million (3.6%)** to **$80.9 million**, primarily due to favorable pricing and product mix[127](index=127&type=chunk)[135](index=135&type=chunk) - Equity in net income from affiliated companies decreased by **$9.8 million**, mainly due to lower earnings from the Zeolyst Joint Venture[129](index=129&type=chunk)[138](index=138&type=chunk) Segment Performance (Q1 2019 vs Q1 2018 Change) | Segment Performance | Q1 2019 vs Q1 2018 Change | | :--- | :--- | | **Sales** | | | Refining Services | ▲ 5.1% due to higher prices and favorable mix | | Catalysts | ▼ 3.6% due to lower volumes and unfavorable currency | | Performance Materials | ▼ 2.6% due to unfavorable currency and lower volumes | | Performance Chemicals | ▼ 5.0% due to unfavorable currency and lower volumes | | **Adjusted EBITDA** | | | Refining Services | ▲ 11.8% driven by contract renewals | | Catalysts | ▼ 21.0% from lower sales to fuels and emission control industries | | Performance Materials | ▼ 13.2% due to higher manufacturing costs in Europe | | Performance Chemicals | ▼ 5.3% due to lower volumes and stronger U.S. dollar | - Total available liquidity as of March 31, 2019, was **$222.5 million**, comprising **$52.3 million** in cash and **$170.2 million** from its asset-based lending facility[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risk exposures, including foreign currency, interest rate, commodity, and credit risks, since the 2018 Annual Report - No material changes in foreign exchange, interest rate, commodity, or credit risks have occurred since the 2018 Annual Report on Form 10-K[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were **effective** at a reasonable assurance level as of March 31, 2019[174](index=174&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[175](index=175&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any litigation expected to have a material adverse effect on its business operations - The company believes no pending litigation is likely to have a material adverse effect on its business[177](index=177&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2018 Annual Report on Form 10-K - No material changes have occurred to the risk factors described in the company's Annual Report on Form 10-K[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2019, **88,567** common shares were received from employees for tax withholding related to restricted stock unit vesting - In January 2019, **88,567** common shares were delivered by employees to satisfy tax withholding obligations from restricted stock unit vesting[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including award agreements, employment letters, and CEO/CFO certifications - Exhibits include CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, along with various employment and award agreements[181](index=181&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38221 | --- | --- | |----------------------------------------------------------------------------|---------------- ...