Ecovyst (ECVT) - 2020 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements for PQ Group Holdings Inc., including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes. Key financial highlights for Q1 2020 include a significant decrease in net income attributable to the company, a comprehensive loss, and an increase in total debt, while cash and cash equivalents improved. The notes provide context on business operations, accounting policies, segment performance, and the initial impact of COVID-19 Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | Change (YoY) | | :--------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Sales | $361,598 | $359,221 | +0.7% | | Cost of goods sold | $272,999 | $278,311 | -1.9% | | Gross profit | $88,599 | $80,910 | +9.5% | | Operating income | $23,359 | $29,463 | -20.8% | | Income before income taxes and noncontrolling interest | $1,936 | $5,888 | -67.1% | | Net income | $509 | $3,441 | -85.2% | | Net income attributable to PQ Group Holdings Inc. | $224 | $3,151 | -92.9% | | Basic income per share | $0 | $0.02 | -100% | | Diluted income per share | $0 | $0.02 | -100% | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :------------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net income | $509 | $3,441 | | Other comprehensive income (loss), net of tax: | | | | Pension and postretirement benefits | $(15) | $(30) | | Net loss from hedging activities | $(529) | $(1,552) | | Foreign currency translation | $(46,355) | $7,167 | | Total other comprehensive income (loss) | $(46,899) | $5,585 | | Comprehensive income (loss) | $(46,390) | $9,026 | | Comprehensive income (loss) attributable to PQ Group Holdings Inc. | $(43,187) | $8,421 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | Change | | :------------------------------------ | :------------------------------ | :------------------------------- | :----- | | Cash and cash equivalents | $107,667 | $72,284 | +$35,383 | | Total current assets | $611,083 | $568,591 | +$42,492 | | Total assets | $4,296,871 | $4,320,845 | -$23,974 | | Total current liabilities | $246,354 | $269,468 | -$23,114 | | Long-term debt, excluding current portion | $1,961,687 | $1,899,196 | +$62,491 | | Total liabilities | $2,555,731 | $2,535,527 | +$20,204 | | Total equity | $1,741,140 | $1,785,318 | -$44,178 | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity | Equity Component | Balance, Dec 31, 2019 (in thousands) | Net Income (in thousands) | Other Comprehensive Income (in thousands) | Repurchases of Common Shares (in thousands) | Stock Compensation Expense (in thousands) | Balance, March 31, 2020 (in thousands) | | :--------------------------------- | :----------------------------------- | :------------------------ | :---------------------------------------- | :------------------------------------------ | :---------------------------------------- | :------------------------------------- | | Common stock | $1,369 | — | — | — | — | $1,373 | | Additional paid-in capital | $1,696,899 | — | — | — | $5,920 | $1,702,996 | | Retained earnings | $103,013 | $224 | — | — | — | $103,237 | | Treasury stock, at cost | $(6,483) | — | — | $(3,889) | — | $(10,372) | | Accumulated other comprehensive income (loss) | $(15,348) | — | $(43,411) | — | — | $(58,759) | | Noncontrolling interest | $5,868 | $285 | $(3,488) | — | — | $2,665 | | Total | $1,785,318 | $509 | $(46,899) | $(3,889) | $5,920 | $1,741,140 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | Change (YoY) | | :---------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Net cash provided by operating activities | $4,531 | $26,838 | -$22,307 | | Net cash used in investing activities | $(22,198) | $(29,267) | +$7,069 | | Net cash provided by (used in) financing activities | $58,301 | $(2,552) | +$60,853 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | $(4,263) | $(660) | -$3,603 | | Net change in cash, cash equivalents and restricted cash | $36,371 | $(5,641) | +$42,012 | | Cash, cash equivalents and restricted cash at end of period | $110,288 | $54,085 | +$56,203 | Notes to Condensed Consolidated Financial Statements Note 1. Background and Basis of Presentation - PQ Group Holdings Inc. operates four specialty businesses: Refining Services, Catalysts, Performance Materials, and Performance Chemicals, providing inorganic products and services globally[24] - The Performance Materials and Refining Services segments experience seasonal fluctuations, with lower sales and profit in Q1 and Q4 for Performance Materials (due to warmer weather for highway striping) and higher demand for gasoline products in summer months for Refining Services. This seasonality leads to higher working capital requirements in Q1 and Q2[24] - The COVID-19 pandemic did not have a material adverse impact on the company's results of operations for the three months ended March 31, 2020, though the company continues to monitor its effects[26] Note 2. New Accounting Standards - Adopted new FASB guidance on expected credit losses (effective Jan 1, 2020) with no material impact[27] - Adopted new FASB guidance modifying fair value measurement disclosures (effective Jan 1, 2020) with no impact on disclosures as no Level 3 assets/liabilities or transfers occurred[30] - Adopted new FASB guidance eliminating the second step of the goodwill impairment test (effective Jan 1, 2020), applying it prospectively[30] - Evaluating new FASB guidance to simplify income tax accounting, effective for fiscal years beginning after December 15, 2020[31] Note 3. Revenue from Contracts with Customers Disaggregated Sales by Segment and End Use (Three Months Ended March 31, 2020 vs 2019) | End Use | Refining Services (2020) | Catalysts (2020) | Performance Materials (2020) | Performance Chemicals (2020) | Total (2020) | Refining Services (2019) | Catalysts (2019) | Performance Materials (2019) | Performance Chemicals (2019) | Total (2019) | | :-------------------------------- | :----------------------- | :--------------- | :--------------------------- | :--------------------------- | :----------- | :----------------------- | :--------------- | :--------------------------- | :--------------------------- | :----------- | | Industrial & process chemicals | $19,359 | $47 | $12,123 | $59,833 | $91,362 | $18,402 | $276 | $13,028 | $59,652 | $91,358 | | Fuels & emission control | $55,710 | — | $40 | — | $55,750 | $57,690 | — | — | — | $57,690 | | Packaging & engineered plastics | $10,734 | $24,817 | $17,471 | $14,275 | $67,297 | $12,689 | $15,590 | $17,382 | $14,730 | $60,391 | | Highway safety & construction | — | — | $32,643 | $20,190 | $52,833 | — | — | $27,360 | $21,938 | $49,298 | | Consumer products | — | — | — | $64,026 | $64,026 | — | — | — | $68,509 | $68,509 | | Natural resources | $14,887 | — | $3,292 | $15,955 | $34,134 | $17,063 | — | $3,319 | $15,633 | $36,015 | | Total Sales (after eliminations) | $99,765 | $24,817 | $65,515 | $171,501 | $361,598 | $104,957 | $15,590 | $61,041 | $177,633 | $359,221 | - The company recognized $1,269 thousand in revenue from a contract liability related to the sale of a sulfate salts product line during Q1 2020, with $5,175 thousand remaining as deferred revenue[39] Note 4. Fair Value Measurements - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[44] Fair Value Measurements (March 31, 2020 vs December 31, 2019) | Asset/Liability | March 31, 2020 (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | December 31, 2019 (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :--------------------------- | :---------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Assets: | | | | | | | | | | Derivative contracts | $10,604 | — | $10,604 | — | $3,928 | — | $3,928 | — | | Restoration plan assets | $3,435 | $3,435 | — | — | $4,199 | $4,199 | — | — | | Total Assets | $14,039 | $3,435 | $10,604 | — | $8,127 | $4,199 | $3,928 | — | | Liabilities: | | | | | | | | | | Derivative contracts | $5,217 | — | $5,217 | — | $12,415 | — | $12,415 | — | - Restoration plan assets are valued using Level 1 inputs (quoted prices in active markets) and include stock and fixed income mutual funds held in a Rabbi trust[47] - Derivative contracts (interest rate caps, natural gas swaps, cross-currency swaps) are fair valued using Level 2 inputs, with credit valuation adjustments based on credit default swaps[48] Note 5. Stockholders' Equity Components of Other Comprehensive Income (Loss), Net of Tax (Three Months Ended March 31, 2020 vs 2019) | Component | 2020 After-tax amount (in thousands) | 2019 After-tax amount (in thousands) | | :---------------------------------------- | :----------------------------------- | :----------------------------------- | | Defined benefit and other postretirement plans, net | $(15) | $(30) | | Net loss from hedging activities | $(529) | $(1,552) | | Foreign currency translation | $(46,355) | $7,167 | | Total Other Comprehensive Income (Loss) | $(46,899) | $5,585 | - The accumulated other comprehensive loss increased from $(15,348) thousand at December 31, 2019, to $(58,759) thousand at March 31, 2020, primarily due to a $(42,867) thousand foreign currency translation loss before reclassifications[52] - The Board of Directors authorized a $50 million stock repurchase program in March 2020, valid until March 2022. By March 31, 2020, the company repurchased 211,700 shares for $2,059 thousand, with $47,941 thousand remaining[57] Note 6. Asset Swap Transaction - On February 19, 2020, the company entered into a non-cash asset swap, exchanging its ThermoDrop® product line assets for a beads business (inventory, production equipment, two manufacturing facilities) from a thermoplastic producer[58] - A preliminary loss on disposal of $9,907 thousand was recognized during Q1 2020, included in other operating expense, net[61] - The acquisition of the beads business resulted in the recognition of $5,764 thousand in goodwill, assigned to the Performance Materials segment, aimed at expanding geographic footprint and achieving synergies[61] Note 7. Goodwill Goodwill Carrying Amount by Segment (March 31, 2020 vs December 31, 2019) | Segment | Balance as of Dec 31, 2019 (in thousands) | Goodwill Recognized (in thousands) | Foreign Exchange Impact (in thousands) | Balance as of March 31, 2020 (in thousands) | | :---------------------- | :---------------------------------------- | :------------------------- | :------------------------------------- | :---------------------------------------- | | Refining Services | $311,892 | — | — | $311,892 | | Catalysts | $78,611 | — | $(1,438) | $77,173 | | Performance Materials | $275,919 | $5,764 | $(1,745) | $279,938 | | Performance Chemicals | $593,383 | — | $(13,652) | $579,731 | | Total | $1,259,805 | $5,764 | $(16,835) | $1,248,734 | Note 8. Other Operating Expense, Net Other Operating Expense, Net (Three Months Ended March 31, 2020 vs 2019) | Expense Type | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Amortization expense | $8,637 | $8,664 | | Transaction and other related costs | $1,869 | — | | Restructuring and other related costs | $1,989 | — | | Net loss on asset disposals | $9,420 | $820 | | Other, net | $27 | $1,255 | | Total Other Operating Expense, Net | $21,942 | $10,739 | - The net loss on asset disposals of $9,420 thousand in Q1 2020 includes a $9,907 thousand loss from the asset swap and a $672 thousand gain from the sale of interest in the Quaker Holdings joint venture[65] Note 9. Inventories, Net Inventories, Net (March 31, 2020 vs December 31, 2019) | Inventory Type | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Finished products and work in process | $217,426 | $222,940 | | Raw materials | $47,616 | $58,005 | | Total Inventories, Net | $265,042 | $280,945 | Note 10. Investments in Affiliated Companies - The company accounts for investments in affiliated companies under the equity method, including 50% ownership in PQ Silicates Ltd., Zeolyst International, and Zeolyst C.V[67] - In March 2020, the company sold its 49% interest in the Quaker Holdings joint venture, receiving a liquidating dividend of $729 thousand and $1,032 thousand from the sale of shares[69] Summarized Combined Investments Information (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :----------------- | :----------------------------------------------- | :----------------------------------------------- | | Sales | $71,207 | $68,094 | | Gross profit | $31,139 | $19,414 | | Operating income | $21,009 | $9,207 | | Net income | $20,035 | $9,240 | Note 11. Property, Plant and Equipment Property, Plant and Equipment, Net (March 31, 2020 vs December 31, 2019) | Asset Type | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------- | | Land | $176,502 | $183,117 | | Buildings | $220,898 | $221,449 | | Machinery and equipment | $1,226,748 | $1,236,531 | | Construction in progress | $76,375 | $82,687 | | Less: accumulated depreciation | $(552,644) | $(537,014) | | Total Property, Plant and Equipment, Net | $1,147,879 | $1,186,770 | - Depreciation expense was $33,501 thousand for the three months ended March 31, 2020, compared to $33,154 thousand for the same period in 2019[70] Note 12. Long-term Debt Long-term Debt Summary (March 31, 2020 vs December 31, 2019) | Debt Type | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :---------------------------------------------------- | :------------------------------ | :------------------------------- | | Term Loan Facility | $947,497 | $947,497 | | 6.75% Senior Secured Notes due 2022 | $625,000 | $625,000 | | 5.75% Senior Unsecured Notes due 2025 | $295,000 | $295,000 | | ABL Facility | $63,989 | — | | Other | $65,283 | $64,629 | | Total debt | $1,996,769 | $1,932,126 | | Less: current portion | $(8,489) | $(7,766) | | Total long-term debt, excluding current portion | $1,961,687 | $1,899,196 | - The Term Loan Facility was amended in Q1 2020 to reduce interest rates (LIBOR plus 2.25%) and extend maturity to February 7, 2027, resulting in $2,188 thousand of new financing costs and $325 thousand of written-off deferred financing costs/original issue discount as debt extinguishment costs[76] - The ABL Facility was amended on March 20, 2020, increasing revolving loan commitments by $50 million to $250 million, reducing interest rates, and extending maturity to March 20, 2025[77] Note 13. Financial Instruments - The company uses interest rate derivatives (caps), commodity derivatives (natural gas swaps), and foreign currency derivatives (cross-currency interest rate swaps) to manage market risks, not for speculation[78] - Natural gas swaps are designated as cash flow hedges, with gains/losses recorded in OCI and reclassified to cost of goods sold when inventory is sold. As of March 31, 2020, 3.1 million MMBTU notional quantity remains through December 2021[81] - Interest rate cap agreements are cash flow hedges, with gains/losses recorded in OCI and reclassified to interest expense. In Q1 2020, the company restructured $500 million notional variable-rate debt interest rate cap agreements to lower the cap rate to 0.84% (from 2.50%) through July 2022, incurring an additional $900 thousand premium[81] Fair Values of Derivative Instruments (March 31, 2020 vs December 31, 2019) | Derivative Type | Balance Sheet Location | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--------------------------------- | :--------------------------------------- | :------------------------------ | :------------------------------- | | Derivative Assets: | | | | | Cross-currency interest rate swaps | Prepaid and other current assets | $5,234 | $3,928 | | Cross-currency interest rate swaps | Other long-term assets | $5,370 | — | | Total Derivative Assets | | $10,604 | $3,928 | | Derivative Liabilities: | | | | | Natural gas swaps | Accrued liabilities | $995 | $813 | | Interest rate caps | Accrued liabilities | $1,073 | $420 | | Natural gas swaps | Other long-term liabilities | $386 | $226 | | Interest rate caps | Other long-term liabilities | $2,763 | $2,822 | | Cross-currency swaps | Other long-term liabilities | — | $8,134 | | Total Derivative Liabilities | | $5,217 | $12,415 | Note 14. Income Taxes Effective Income Tax Rate (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--------------------- | :-------------------------------- | :-------------------------------- | | Provision for income taxes | $1,427 | $2,447 | | Effective tax rate | 73.7% | 41.6% | - The effective tax rate for Q1 2020 was 73.7%, up from 41.6% in Q1 2019, mainly due to permanent differences from foreign currency exchange gain/loss, GILTI impacts, discrete tax impacts of the asset swap, pre-tax losses with no associated tax benefit, and state taxes[89] - The company elected to treat taxes incurred from GILTI provisions as a current-period expense and uses the tax law ordering approach for assessing deferred tax assets[92] Note 15. Benefit Plans Defined Benefit Pension Plans - Net Periodic Expense (Benefit) (Three Months Ended March 31, 2020 vs 2019) | Component | U.S. 2020 (in thousands) | U.S. 2019 (in thousands) | Foreign 2020 (in thousands) | Foreign 2019 (in thousands) | | :--------------------------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | | Service cost | $192 | $219 | $997 | $806 | | Interest cost | $2,152 | $2,507 | $707 | $833 | | Expected return on plan assets | $(3,331) | $(2,757) | $(810) | $(603) | | Amortization of net loss | — | — | $41 | — | | Amortization of prior service cost | — | — | $6 | — | | Net periodic expense (benefit) | $(987) | $(31) | $941 | $1,036 | Supplemental Retirement Plans - Net Periodic Expense (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | Interest cost | $86 | $121 | | Net periodic expense | $86 | $121 | Other Postretirement Benefit Plans - Net Periodic Expense (Benefit) (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :--------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Service cost | — | $3 | | Interest cost | $24 | $38 | | Amortization of prior service credit | $(58) | $(33) | | Amortization of net gain | $(7) | $(8) | | Net periodic expense (benefit) | $(41) | — | Note 16. Commitments and Contingent Liabilities - The company faces environmental impact risks in chemical manufacturing and is subject to various lawsuits and claims (personal injury, product liability, waste disposal)[97] - Management believes existing accruals are adequate and that these matters will not materially adversely affect the company's consolidated financial position, results of operations, or liquidity[97] Note 17. Reportable Segments Segment Sales (Three Months Ended March 31, 2020 vs 2019) | Segment | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | Change (YoY) | | :---------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Refining Services | $100,690 | $105,844 | -4.8% | | Catalysts | $24,864 | $15,866 | +56.7% | | Performance Materials | $65,569 | $61,089 | +7.3% | | Performance Chemicals | $174,279 | $180,462 | -3.4% | | Total Sales (after eliminations) | $361,598 | $359,221 | +0.7% | Segment Adjusted EBITDA (Three Months Ended March 31, 2020 vs 2019) | Segment | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | Change (YoY) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Refining Services | $37,183 | $39,731 | -6.4% | | Catalysts | $22,667 | $18,127 | +25.0% | | Performance Materials | $13,507 | $10,515 | +28.4% | | Performance Chemicals | $40,474 | $42,673 | -5.2% | | Total Segment Adjusted EBITDA | $113,831 | $111,046 | +2.5% | - Adjusted EBITDA for the Zeolyst Joint Venture (included in Catalysts segment) was $13,725 thousand in Q1 2020, up from $8,357 thousand in Q1 2019, driven by increased equity in net income and joint venture depreciation, amortization, and interest[100] Note 18. Stock-Based Compensation - Total stock-based compensation expense for Q1 2020 was $5,920 thousand, up from $3,400 thousand in Q1 2019[109] - In Q1 2020, the company granted 1,144,072 restricted stock units (service-based vesting) and 456,311 performance stock units (50% financial target, 50% TSR goal over three years)[105] - Unrecognized compensation cost for nonvested restricted stock units and performance stock units was $31,661 thousand and $13,709 thousand, respectively, as of March 31, 2020, to be recognized over weighted-average periods of 2.04 and 2.4 years[109] Stock-Based Compensation Activity (Three Months Ended March 31, 2020) | Award Type | Nonvested as of Dec 31, 2019 (Number of Units) | Granted (Number of Units) | Vested (Number of Units) | Forfeited (Number of Units) | Nonvested as of March 31, 2020 (Number of Units) | | :-------------------- | :--------------------------------------------- | :------------------------ | :----------------------- | :-------------------------- | :----------------------------------------------- | | Restricted Stock Units | 1,628,436 | 1,144,072 | (431,755) | (77,848) | 2,262,905 | | Performance Stock Units | 550,676 | 456,311 | — | (31,069) | 975,918 | Note 19. Earnings per Share Earnings Per Share (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to PQ Group Holdings Inc. | $224 | $3,151 | | Weighted average shares outstanding – Basic | 135,240,897 | 133,946,308 | | Weighted average shares outstanding – Diluted | 136,086,082 | 134,894,354 | | Basic income per share | $0 | $0.02 | | Diluted income per share | $0 | $0.02 | - Anti-dilutive awards, including restricted stock awards, stock options with performance-only targets not yet achieved, and other anti-dilutive stock options, were excluded from diluted EPS calculations[115] Note 20. Supplemental Cash Flow Information Supplemental Cash Flow Information (Three Months Ended March 31, 2020 vs 2019) | Metric | Three months ended March 31, 2020 (in thousands) | Three months ended March 31, 2019 (in thousands) | | :---------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Cash paid for income taxes, net of refunds | $10,346 | $4,387 | | Cash paid for interest | $19,973 | $23,740 | | Capital expenditures acquired on account but unpaid | $11,660 | $15,391 | | Right-of-use assets obtained for new lease liabilities | $1,850 | $508 | Reconciliation of Cash, Cash Equivalents and Restricted Cash (March 31, 2020 vs 2019) | Metric | March 31, 2020 (in thousands) | March 31, 2019 (in thousands) | | :---------------------------------------------------------------------------------------------------- | :------------------------------ | :------------------------------ | | Cash and cash equivalents | $107,667 | $52,341 | | Restricted cash included in prepaid and other current assets | $2,621 | $1,744 | | Total cash, cash equivalents and restricted cash shown in condensed consolidated statements of cash flows | $110,288 | $54,085 | Note 21. Subsequent Events - No additional items to disclose from subsequent events evaluation since the balance sheet date[119] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2020, compared to the prior year. It highlights the slight increase in sales but a significant decrease in net income, largely influenced by an asset swap loss, debt extinguishment costs, and foreign currency impacts. The discussion also details the anticipated near-term effects of the COVID-19 pandemic on demand, operations, and liquidity, as well as segment-specific performance and key financial metrics like Adjusted EBITDA and Adjusted Net Income Forward-looking Statements - The report contains forward-looking statements regarding future events, financial results, business strategy, and financial needs, identified by words like "believe," "may," "will," "estimate," "continue," "anticipate," "intend," and "expect"[122] - Key risks and uncertainties include the impact of the COVID-19 pandemic, local business risks, general economic conditions, exchange rate fluctuations, legal and regulatory compliance, technological changes, raw material prices, competition, customer non-payment, seasonal fluctuations, and substantial indebtedness[122][124] - The company does not undertake any obligation to publicly update forward-looking statements after the Form 10-Q filing date[124] Overview - PQ Group Holdings Inc. is a leading global provider of specialty catalysts, materials, chemicals, and services, with products predominantly inorganic and contributing to environmental sustainability[125] - The company operates through four reporting segments: Refining Services, Catalysts (including Zeolyst Joint Venture), Performance Materials, and Performance Chemicals[125] - Each segment serves distinct markets: Refining Services (sulfuric acid recycling), Catalysts (silica catalysts, zeolites for emission control), Performance Materials (transportation reflective safety markings), and Performance Chemicals (sodium silicates for industrial and consumer uses)[125] Impact of COVID-19 on our Business and Results - The COVID-19 pandemic did not materially impact businesses in Q1 2020, but near-term demand is expected to decrease for certain products due to ongoing restrictions[129] - Anticipated demand impacts include reduced sulfuric acid demand in Refining Services, weaker demand for engineered glass materials and highway safety products outside the U.S. in Performance Materials, and lower demand for sodium silicate in industrial applications and consumer products in Performance Chemicals[129][130] - Manufacturing operations continue as essential businesses, but limited and temporary shutdowns/slowdowns, production delays due to employee absenteeism, and minor raw material disruptions have occurred[131] - To strengthen liquidity, the company drew $64.0 million on its revolving credit facility, resulting in $107.7 million cash and $236.3 million total available liquidity as of March 31, 2020[132] - The Term Loan Facility and ABL Facility were amended to reduce interest rates and extend maturities, with no significant debt maturities before November 2022. The CARES Act had no material impact on Q1 2020 financial statements[132][133] Stock Repurchase Program - A $50.0 million share repurchase program was authorized by the Board of Directors on March 12, 2020, valid for 24 months[136] - As of March 31, 2020, 211,700 shares were repurchased for $2.1 million at an average price of $9.73, with $47.9 million remaining available under the program[136] Key Performance Indicators - Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures used for evaluating operating performance, business planning, and competitive comparison[137] - Adjusted EBITDA is defined as EBITDA adjusted for non-operating income/expense, certain non-cash/nonrecurring items, and the company's 50% share of Zeolyst Joint Venture's depreciation, amortization, and interest[137] - Adjusted Net Income is defined as net income attributable to PQ Group Holdings adjusted for non-operating income/expense and certain non-cash/nonrecurring items[137] Key Factors and Trends Affecting Operating Results and Financial Condition Sales - Sales in Refining Services and Catalysts segments have grown due to expansion into new end applications (emission control, polymer, refining catalysts) and supply share gains[138] - Performance Materials and Performance Chemicals segments have historically stable demand, with growth from new applications (personal care, consumer cleaning) and highway safety spending[138] - The COVID-19 pandemic is expected to decrease near-term demand for certain products, primarily in Refining Services and Performance Chemicals, and to a lesser extent in Catalysts and Performance Materials[138] Cost of Goods Sold - Cost of goods sold comprises variable product costs (raw materials, energy, packaging), fixed manufacturing expenses, depreciation, and freight[140] - Refining Services contracts often include take-or-pay volume protection and quarterly price adjustments for commodity inputs, labor, and natural gas, covering over 90% of 2019 sales[140] - Approximately 50% of North American silicate sales (Performance Chemicals) include raw material pass-through clauses, with a 3-9 month time lag for price changes[140] - The company hedges natural gas price exposure in the U.S. and makes forward purchases in various regions to mitigate volatility[140] Joint Ventures - Investments in equity joint ventures, including the largest, Zeolyst Joint Venture, are accounted for under the equity method[141] - The Zeolyst Joint Venture produces high-performance, specialty, zeolite-based catalysts for emission control, refining, petrochemical, and broader chemicals industries[141] Seasonality - Performance Materials segment experiences lower sales and profit in Q1 and Q4 due to highway striping projects occurring in warmer weather[142] - Refining Services segment experiences seasonal fluctuations due to higher gasoline demand in summer months[142] - Seasonality results in higher working capital requirements in the first and second quarters, potentially affecting liquidity and cash flows[142] Foreign Currency - Approximately 40% of the company's sales are in currencies other than the U.S. dollar, leading to exposure to foreign currency translation gains and losses[143] - Significant exchange rate exposure exists for the Euro, British pound, Canadian dollar, Brazilian real, and Mexican peso[143] Results of Operations (Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019) Highlights - Sales increased by $2.4 million to $361.6 million, primarily due to higher sales volumes, partially offset by lower sulfur pricing pass-through and unfavorable foreign currency translation[146] - Gross profit increased by $7.7 million to $88.6 million, mainly due to increased sales volumes, partially offset by unfavorable foreign currency translation[147] - Operating income decreased by $6.0 million to $23.4 million, driven by a loss from an asset swap arrangement, partially offset by increased gross profit[148] - Equity in net income of affiliated companies increased by $6.3 million to $8.4 million, primarily due to higher earnings from the Zeolyst Joint Venture[149] Sales Sales by Segment (Three Months Ended March 31, 2020 vs 2019) | Segment | 2020 Sales (in millions) | 2019 Sales (in millions) | Change ($M) | Change (%) | | :---------------------- | :----------------------- | :----------------------- | :---------- | :--------- | | Refining Services | $100.7 | $105.8 | $(5.1) | (4.8)% | | Catalysts | $24.9 | $15.9 | $9.0 | 56.6% | | Performance Materials | $65.5 | $61.1 | $4.4 | 7.2% | | Performance Chemicals | $174.3 | $180.5 | $(6.2) | (3.4)% | | Total Sales | $361.6 | $359.2 | $2.4 | 0.7% | - Refining Services sales decreased by $5.1 million (4.8%) due to lower average selling prices from the pass-through of lower sulfur pricing, partially offset by increased sales volumes[152] - Catalysts sales increased by $9.0 million (56.6%) due to higher customer demand for polyolefin catalysts and timing of methyl methacrylate catalyst orders[152] - Performance Materials sales increased by $4.4 million (7.2%) due to increased demand for North American highway safety products, favorable weather, and price increases, partially offset by unfavorable foreign currency translation[153][155] - Performance Chemicals sales decreased by $6.2 million (3.4%) due to lower sales volumes in consumer products and unfavorable foreign currency translation, partially offset by higher average selling prices and favorable mix[155] Gross Profit Gross Profit (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :----------- | :----------------- | :----------------- | :---------- | :--------- | | Gross profit | $88.6 | $80.9 | $7.7 | 9.5% | - The increase in gross profit was primarily due to increased sales volumes ($14.4 million) and favorable manufacturing costs ($4.1 million), partially offset by unfavorable product mix ($5.7 million), customer pricing ($3.8 million), and foreign currency translation ($1.2 million)[156] Selling, General and Administrative Expenses Selling, General and Administrative Expenses (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :----------------------------------------- | :----------------- | :----------------- | :---------- | :--------- | | Selling, general and administrative expenses | $43.3 | $40.7 | $2.6 | 6.4% | - The increase in SG&A expenses was primarily due to an increase in stock compensation expense[157] Other Operating Expense, Net Other Operating Expense, Net (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :---------- | :--------- | | Other operating expense, net | $21.9 | $10.8 | $11.1 | 102.8% | - The increase was due to a loss incurred from an asset swap arrangement and increased transaction-related costs[158] Equity in Net Income of Affiliated Companies Equity in Net Income of Affiliated Companies (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :----------------------------------------- | :----------------- | :----------------- | :---------- | :--------- | | Equity in net (income) from affiliated companies | $(8.4) | $(2.1) | $(6.3) | 300.0% | - The increase was primarily due to $6.3 million of higher earnings from the Zeolyst Joint Venture, driven by increased sales of emission control catalysts[159] Interest Expense, Net Interest Expense, Net (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :-------------------- | :----------------- | :----------------- | :---------- | :--------- | | Interest expense, net | $24.5 | $28.6 | $(4.1) | (14.3)% | - The decrease in interest expense was due to lower average debt balances, mainly from prior year prepayments on the Term Loan Facility[160] Debt Extinguishment Costs Debt Extinguishment Costs (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :------------------------ | :----------------- | :----------------- | :---------- | :--------- | | Debt extinguishment costs | $2.5 | — | $2.5 | — | - Debt extinguishment costs of $2.5 million in Q1 2020 resulted from amending the senior secured term loan facility, including $2.2 million in new financing fees and $0.3 million write-off of unamortized deferred financing costs and original issue discount[161] Other Expense, Net Other (Income) Expense, Net (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :------------------------ | :----------------- | :----------------- | :---------- | :--------- | | Other (income) expense, net | $2.9 | $(3.0) | $5.9 | (196.7)% | - The change was primarily due to $3.3 million of foreign currency losses in Q1 2020, compared to $2.7 million of foreign currency gains in Q1 2019, driven by fluctuations in non-permanent intercompany debt[163] Provision for Income Taxes Provision for Income Taxes (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :------------------------ | :----------------- | :----------------- | :---------- | :--------- | | Provision for income taxes | $1.4 | $2.4 | $(1.0) | (41.7)% | | Effective tax rate | 73.7% | 41.6% | | | - The effective tax rate increased to 73.7% in Q1 2020 from 41.6% in Q1 2019, primarily due to income shifts in jurisdictions with differing rates, GILTI impacts, foreign exchange gains/losses, discrete tax impacts from the asset swap, pre-tax losses with no associated tax benefit, and state taxes[164] Net Income Attributable to PQ Group Holdings Net Income Attributable to PQ Group Holdings Inc. (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :----------------------------------------- | :----------------- | :----------------- | :---------- | :--------- | | Net income attributable to PQ Group Holdings Inc. | $0.2 | $3.2 | $(3.0) | (93.8)% | - The significant decrease in net income attributable to PQ Group Holdings Inc. was due to the combined effects of increased other operating expenses, debt extinguishment costs, foreign currency losses, partially offset by higher gross profit and equity in net income from affiliates[165] Adjusted EBITDA (by segment) Total Adjusted EBITDA (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------- | :--------- | | Total Adjusted EBITDA | $103.1 | $101.0 | $2.1 | 2.1% | Segment Adjusted EBITDA (Three Months Ended March 31, 2020 vs 2019) | Segment | 2020 (in millions) | 2019 (in millions) | Change ($M) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------- | :--------- | | Refining Services | $37.2 | $39.7 | $(2.5) | (6.3)% | | Catalysts | $22.7 | $18.1 | $4.6 | 25.4% | | Performance Materials | $13.5 | $10.5 | $3.0 | 28.6% | | Performance Chemicals | $40.5 | $42.7 | $(2.2) | (5.2)% | | Total Segment Adjusted EBITDA | $113.8 | $111.0 | $2.8 | 2.5% | - Refining Services Adjusted EBITDA decreased due to higher raw material usage and production costs[169] - Catalysts Adjusted EBITDA increased due to higher customer demand for polyolefin, methyl methacrylate, and pressure products catalyst groups, partially offset by unfavorable inventory absorption[169] - Performance Materials Adjusted EBITDA increased due to increased demand for North American highway safety products and favorable weather conditions[169] - Performance Chemicals Adjusted EBITDA decreased due to lower volumes sold to the consumer products end use and the strengthening of the U.S. dollar[169] Adjusted Net Income Adjusted Net Income (Three Months Ended March 31, 2020 vs 2019) | Metric | 2020 After-tax (in millions) | 2019 After-tax (in millions) | Change ($M) | | :-------------------------------- | :--------------------------- | :--------------------------- | :---------- | | Net income attributable to PQ Group Holdings Inc. | $0.2 | $3.2 | $(3.0) | | Amortization of investment in affiliate step-up | $1.1 | $1.6 | $(0.5) | | Debt extinguishment costs | $1.6 | — | $1.6 | | Net loss on asset disposals | $7.1 | $0.5 | $6.6 | | Foreign currency exchange loss (gain) | $1.0 | $(2.0) | $3.0 | | LIFO expense | $(0.2) | $6.5 | $(6.7) | | Transaction and other related costs | $1.3 | $0.1 | $1.2 | | Equity-based compensation | $3.8 | $2.2 | $1.6 | | Restructuring, integration and business optimization expenses | $1.3 | $0.5 | $0.8 | | Defined benefit pension plan (benefit) cost | $(0.1) | $0.6 | $(0.7) | | Other | $0.7 | $0.6 | $0.1 | | Impact of non-cash GILTI tax | $3.9 | $3.7 | $0.2 | | Adjusted Net Income | $21.7 | $17.5 | $4.2 | - The non-cash GILTI tax impact is excluded from core operations as it does not affect cash taxes (due to available U.S. NOLs) and foreign tax credits are expected to offset GILTI impacts once NOLs are exhausted[177][179] Financial Condition, Liquidity and Capital Resources Cash Flow Net Cash Flow Summary (Three Months Ended March 31, 2020 vs 2019) | Cash Flow Activity | 2020 (in millions) | 2019 (in millions) | Change ($M) | | :---------------------------------------------------- | :----------------- | :----------------- | :---------- | | Net cash provided by operating activities | $4.5 | $26.8 | $(22.3) | | Net cash used in investing activities | $(22.1) | $(29.2) | $7.1 | | Net cash provided by (used in) financing activities | $58.2 | $(2.5) | $60.7 | | Net change in cash, cash equivalents and restricted cash | $36.4 | $(5.6) | $42.0 | - The decrease in operating cash flow was primarily due to unfavorable working capital changes, including higher accounts receivable and prepaid assets, and lower accrued liabilities[186] - Investing activities included $28.1 million in capital expenditures in Q1 2020 (down from $33.6 million in Q1 2019) and $2.4 million from the sale of a non-core asset[186] - Financing activities were significantly boosted by $64.7 million in net borrowings under revolving credit facilities in Q1 2020[186] Debt Total Debt (March 31, 2020 vs December 31, 2019) | Debt Type | March 31, 2020 (in millions) | December 31, 2019 (in millions) | | :---------------------------------------------------- | :--------------------------- | :------------------------------ | | Term Loan Facility | $947.5 | $947.5 | | 6.75% Senior Secured Notes due 2022 | $625.0 | $625.0 | | 5.75% Senior Unsecured Notes due 2025 | $295.0 | $295.0 | | ABL Facility | $64.0 | — | | Other | $65.3 | $64.6 | | Total debt | $1,996.8 | $1,932.1 | - Net debt as of March 31, 2020, was $1,889.1 million, including cash and cash equivalents of $107.7 million[188] - The company had $128.6 million available under its ABL revolving credit facility and was in compliance with all debt covenants as of March 31, 2020[180] - Interest rate caps are in place on $1.0 billion of notional variable debt at a 3.00% cap rate through July 2020, and on $500.0 million at a 0.84% cap rate from July 2020 through July 2022[180] Capital Expenditures Capital Expenditures (Three Months Ended March 31, 2020 vs 2019) | Type | 2020 (in millions) | 2019 (in millions) | Change ($M) | | :--------------------------- | :----------------- | :----------------- | :---------- | | Maintenance capital expenditures | $12.9 | $18.5 | $(5.6) | | Growth capital expenditures | $3.8 | $6.7 | $(2.9) | | Total capital expenditures | $16.7 | $25.2 | $(8.5) | - Maintenance capital expenditures decreased due to fewer plant maintenance projects, and growth capital expenditures decreased due to reduced spending on production facility capacity enhancement[190] Pension Funding - Cash contributions to defined benefit pension and other post-retirement plans were $3.2 million in Q1 2020, compared to $3.4 million in Q1 2019[191] Off-Balance Sheet Arrangements - The company had $18.8 million of outstanding letters of credit on its ABL Facility as of March 31, 2020[192] Contractual Obligations - No significant changes to contractual obligations since December 31, 2019, except for amendments to the Term Loan Facility and ABL Facility[192] - The Term Loan Facility amendment is anticipated to reduce annual interest payments by $2.4 million at current interest rates[192] Critical Accounting Policies and Estimates - No material changes in critical accounting policies and estimates from those described in the Annual Report on Form 10-K[193] - Goodwill and indefinite-lived intangible assets are tested for impairment annually (October 1) or more frequently if circumstances change[195] - As of October 1, 2019, the fair values of all four reporting units (Refining Services, Catalysts, Performance Materials, Performance Chemicals) exceeded their carrying amounts by 179%, 67%, 27%, and 18% respectively[195] - Management believes fair values still exceed carrying values as of March 31, 2020, but will continue to monitor for potential future impairments, especially given the impact of the COVID-19 pandemic on economic growth, customer demand, and supply chains[195] Goodwill and Intangible Assets - Goodwill and indefinite-lived intangible assets are tested for impairment annually (October 1) using a combination of market and discounted cash flow approaches[195] - Key assumptions for fair value estimation include operating margin/revenue growth rates, weighted average cost of capital, perpetual growth rate, and market multiples[195] - As of October 1, 2019, fair values exceeded carrying amounts for Refining Services (179%), Catalysts (67%), Performance Materials (27%), and Performance Chemicals (18%)[195] - No interim goodwill or intangible asset impairment assessments were considered necessary at March 31, 2020, but the company will continue to monitor for potential future impacts from the COVID-19 pandemic[195] Accounting Standards Not Yet Adopted - For accounting standards not yet adopted, refer to Note 2 of the condensed consolidated financial statements[196] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company manages market risks related to foreign currency, interest rates, commodity prices, and credit through hedging activities, which are regularly reviewed by the audit committee. No material changes in overall market risk were reported from the Annual Report on Form 10-K, except for further restructuring of interest rate cap agreements in Q1 2020 to lower the cap rate on a portion of its variable-rate debt - Major market risk exposures include foreign currency exchange rate risk, interest rate risk, commodity price risk, and credit risk[197] - The audit committee regularly reviews foreign exchange, interest rate, and commodity hedging activity and monitors compliance with the hedging policy, avoiding speculative use of financial instruments[197] - No material changes in market risks were reported from the Annual Report on Form 10-K, other than the interest rate risk adjustments[197] Interest Rate Risk - In February and March 2020, the company restructured $500.0 million notional interest rate cap agreements (effective July 31, 2020, through July 31, 2022) to lower the interest cap rate to 0.84% (from 2.50%)[198] - These restructurings involved additional premiums of $0.1 million (February) and $0.9 million (March), bringing the total cumulative annuitized premium to $4.4 million to be paid through July 31, 2022[198] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, assessed the effectiveness of the company's disclosure controls and procedures as of March 31, 2020, concluding they were effective at a reasonable assurance level. The shift to remote work due to the COVID-19 pandemic has not materially impacted the internal control over financial reporting, with appropriate resources provided to personnel - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[199][201] - The shift to remote work for most office and management personnel due to COVID-19 has not materially affected internal control over financial reporting, and appropriate resources have been provided[202] Evaluation of Disclosure Controls and Procedures - Disclosure controls and procedures are designed to ensure timely recording, processing, summarizing, and reporting of information required under the Exchange Act[201] - Based on evaluation, the CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[201] Changes in Internal Control Over Financial Reporting - The shift to remote work for most office and management personnel due to the COVID-19 pandemic has not materially affected the company's internal control over financial reporting[202] - No other material changes in internal control over financial reporting occurred during the quarter ended March 31, 2020[202] PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is involved in various legal claims and proceedings typical of its business, including those related to personal injury, product liability, and environmental matters. Management believes that no current litigation is likely to have a material adverse effect on the company's financial position, results of operations, or liquidity - The company is subject to various legal claims and proceedings, including personal injury, product liability, waste disposal, and environmental matters, arising in the normal course of business[205] - Management believes no pending litigation is likely to have a material adverse effect on the business, consolidated financial position, results of operations, or liquidity[205] ITEM 1A. RISK FACTORS The COVID-19 pandemic presents significant and rapidly evolving risks to the company's operations, including potential decreases in product demand (especially in Refining Services and Performance Chemicals), disruptions in raw material supply, and production delays due to employee absenteeism or facility shutdowns. The full extent and duration of these impacts remain uncertain - The COVID-19 pandemic may adversely affect the company's operations, with unpredictable future negative effects, and the longer it persists, the more material the ultimate effects are likely to be[206] - Expected near-term impacts include decreased demand for products in Refining Services (reduced sulfuric acid demand due to lower gasoline demand) and Performance Chemicals (lower sodium silicate demand, decline in consumer spending)[206] - Disruptions in raw material availability (e.g., glass cullet suppliers suspending operations) and production delays due to employee absenteeism or potential facility shutdowns are also risks[206] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS In Q1 2020, the company purchased common stock from employees to cover tax withholding obligations and initiated a new $50 million share repurchase program, under which it repurchased $2.1 million worth of shares by March 31, 2020 Common Stock Purchases (Three Months Ended March 31, 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Shares Purchased Under Publicly Announced Plans or Programs | Maximum Value Remaining Under Plans (in thousands) | | :--------------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------- | :------------------------------------------------- | | January 1, 2020 - January 31, 2020 | 109,564 | $16.70 | N/A | N/A | | February 1, 2020 - February 29, 2020 | — | — | N/A | N/A | | March 1, 2020 - March 31, 2020 | 211,700 | $9.73 | 211,700 | $47,941 | - Shares purchased in January were from employees to satisfy income tax withholding obligations related to restricted stock vesting[209] - The March repurchases were part of a $50 million share repurchase program authorized on March 12, 2020, with $47.9 million remaining as of March 31, 2020[209] ITEM 6. EXHIBITS This section lists the exhibits accompanying the Quarterly Report on Form 10-Q, including key amendment agreements for credit facilities, stock incentive plan documents, required certifications from executive officers, and financial statements formatted in Inline XBRL - Exhibits include the First Amendment Agreement to the ABL Credit Agreement (March 20, 2020), Form of Performance Stock Unit Award Agreement, and the Amended and Restated 2017 Omnibus Incentive Plan[211] - Certifications from the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act) are included[211] - The report includes Inline XBRL formatted financial statements and document/entity information[211] SIGNATURES The Quarterly Report on Form 10-Q was officially signed on May 11, 2020, by Michael Crews, Executive Vice President and Chief Financial Officer of PQ Group Holdings Inc - The report was signed on May 11, 2020, by Michael Crews, Executive Vice President and Chief Financial Officer of PQ Group Holdings Inc[216]