What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 110 added, 40 removed, 354 unchanged (30% of the section changed)

1 unchanged sentence

Condensed Consolidated Statements of Operations

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions, except share and per share data)

20 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions)

8 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions, except share data)

42 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In millions)

8 unchanged sentences

Reclassification of actuarial gain from AOCI — ( 4.5 )

Other operating non-cash items, net — ( 0.5 )

Changes in operating assets and liabilities, net:

16 unchanged sentences

Dividends paid to shareholders ( 2.4 ) ( 2.5 )

Repurchase of common stock under Stock repurchase programs — ( 29.3 )

Repurchase of common stock ( 6.8 ) ( 49.5 )

Net cash provided by (used in) financing activities 23.5 ( 120.7 )

Increase in cash, cash equivalents and restricted cash 6.3 15.1

Increase (decrease) in cash, cash equivalents and restricted cash ( 2.6 ) 16.4

Cash, cash equivalents and restricted cash at the beginning of the period 40.2 63.4

15 unchanged sentences

Balance at March 31, 2024 58,307,933 85.3 ( 63.5 ) 74.0 443.1 ( 46.7 ) 492.2

Net income — — — — 20.5 — 20.5

Other comprehensive loss, net of tax — — — — — ( 9.4 ) ( 9.4 )

Dividends $ 0.04 per share — — — — ( 2.4 ) — ( 2.4 )

Share based compensation — — — 3.0 — — 3.0

Issuance of stock under equity compensation plans 48,688 — 0.8 ( 0.8 ) — — —

Balance at June 30, 2024 58,356,621 $ 85.3 $ ( 62.7 ) $ 76.2 $ 461.2 $ ( 56.1 ) $ 503.9

Balance at January 1, 2023 60,571,556 $ 85.3 $ ( 8.8 ) $ 76.4 $ 319.0 $ ( 12.5 ) $ 459.4

2 unchanged sentences

Dividends $ 0.02 per share — — — — ( 1.3 ) — ( 1.3 )

Share buyback ( 1,286,915 ) — ( 29.3 ) — — — ( 29.3 )

Repurchases of Common stock ( 1,286,915 ) — ( 29.3 ) — — — ( 29.3 )

Share based compensation — — — 2.1 — — 2.1

1 unchanged sentence

Balance at March 31, 2023 59,416,191 85.3 ( 35.2 ) 73.9 360.0 ( 23.0 ) 461.0

Net income — — — — 30.1 — 30.1

Other comprehensive loss, net of tax — — — — — ( 7.1 ) ( 7.1 )

Dividends $ 0.04 per share — — — — ( 2.4 ) — ( 2.4 )

Repurchases of Common stock ( 822,595 ) — ( 20.2 ) — — — ( 20.2 )

Share based compensation — — — 2.6 — — 2.6

Issuance of stock under equity compensation plans 47,250 — 1.4 ( 1.2 ) — — 0.2

Balance at June 30, 2023 58,640,846 $ 85.3 $ ( 54.0 ) $ 75.3 $ 387.7 $ ( 30.1 ) $ 464.2

See accompanying Notes to these Condensed Consolidated Financial Statements.

40 unchanged sentences

Early adoption is permitted.

We believe, the adoption of this ASU will not materially impact our Condensed Consolidated Financial Statements, however will require additional segment disclosures in Note K.

Financial Information by Segment.

We believe, the adoption of this ASU will not materially impact our Condensed Consolidated Financial Statements, however will require additional segment disclosures in future periods .

Accounts Receivable

Accounts receivable, net of allowance for credit losses, are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions)

2 unchanged sentences

Accounts receivable, net $ 272.2 $ 241.0

Accounts Receivable Factoring Facilities ― For the three months ended March 31, 2024, and 2023 the gross amount of receivables sold were $ 107.6 million and $ 68.9 million, respectively.

In the Condensed Consolidated Statements of Operations, the loss on receivables sold is reflected in Other expenses, net.

For the three months ended March 31, 2024 and 2023 the loss on receivables sold was approximately $ 1.1 million and less than $ 0.5 million.

Notes to the Condensed Consolidated Financial Statements—(continued)

Accounts Receivable Factoring Facilities ― For the three months ended June 30, 2024 and 2023 the gross amount of receivables sold were $ 110.8 million and $ 125.2 million, respectively.

For the six months ended June 30, 2024 and 2023 the gross amount of receivables sold were $ 218.4 million and $ 194.1 million, respectively.

In the Condensed Consolidated Statements of Operations, the loss on receivables sold is reflected in Other expenses, net.

For the three months ended June 30, 2024 and 2023 the loss on receivables sold was approximately $ 1.3 million and $ 1.3 million, respectively.

For the six months ended June 30, 2024 and 2023 the loss on receivables sold was approximately $ 2.4 million and $ 1.8 million , respectively.

Inventories, net of reserves, are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions)

5 unchanged sentences

Debt and other obligations are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions)

1 unchanged sentence

Deferred debt issuance costs - Term-Loan ( 0.8 ) ( 0.8 )

Current portion of China Term-Loan 3.4 —

Other short-term debt and obligations 168.0 134.7

6 unchanged sentences

Revolving credit facility

As of March 31, 2024, total capacity under our senior secured revolving credit facility (the “RCF”) and Ancillary facilities is € 300 million.

There were no borrowings under the RCF as of March 31, 2024 or December 31, 2023.

As of March 31, 2024 and December 31, 2023, availability under the RCF and Ancillary facilities is $ 192.6 million and $ 221.6 million, respectively.

Other Short-Term borrowings and Obligations

Other short-term debt and obligations are as follows:

March 31, 2024 December 31, 2023

As of June 30, 2024, total capacity under our senior secured revolving credit facility (the “RCF”) and Ancillary facilities is € 280 million ($ 299.8 million).

As of June 30, 2024 and December 31, 2023, availability under the RCF and Ancillary facilities is $ 157.4 million and $ 221.6 million, respectively.

There were no borrowings under the RCF as of June 30, 2024 or December 31, 2023.

Notes to the Condensed Consolidated Financial Statements—(continued)

Other Short-Term Debt and Obligations

June 30, 2024 December 31, 2023

(In millions)

7 unchanged sentences

Committed 23.3 20.1

China Working Capital Loan — 2.8

China Working Capital Loans

Qingdao (capacity $ 6.9 million)

Huaibei (capacity $ 21.4 million)

Total of Other Short-term Debt and Obligations $ 168.0 $ 134.7

3 unchanged sentences

Dollars $ 229.1 $ 236.5

Notes to the Condensed Consolidated Financial Statements—(continued)

As of March 31, 2024, we are in compliance with our debt covenants.

As of June 30, 2024, we are in compliance with our debt covenants.

For additional information relating to our debt, see “ Note J.

6 unchanged sentences

The market risk exposure is not hedged in a manner to completely eliminate the effects of changing market conditions on earnings or cash flow.

No significant concentration of credit risk existed as of March 31, 2024 or December 31, 2023.

No significant concentration of credit risk existed as of June 30, 2024 or December 31, 2023.

Fair value measurement

The following table summarizes outstanding financial instruments that are measured at fair value on a recurring basis:

March 31, 2024 December 31, 2023 Balance Sheet Classification

June 30, 2024 December 31, 2023 Balance Sheet Classification

Notional Amount Fair Value Notional Amount Fair Value

8 unchanged sentences

There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during 2024 or 2023.

Notes to the Condensed Consolidated Financial Statements—(continued)

The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented.

Short-term and Long-term debt are recorded at amortized cost in the Condensed Consolidated Balance Sheets.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Notional Amount Fair Value Notional Amount Fair Value

5 unchanged sentences

The Term-Loan and China Term-Loan in the table above are classified as Level 2.

At both March 31, 2024 and December 31, 2023, the fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.

Notes to the Condensed Consolidated Financial Statements—(continued)

At both June 30, 2024 and December 31, 2023, the fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments.

The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive income (loss) (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:

Effect of Financial Instruments

Three Months Ended Mar 31,

Three Months Ended Jun 30,

Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification

5 unchanged sentences

Total $ ( 2.0 ) $ ( 0.8 ) $ 0.4 $ 0.4

Effect of Financial Instruments

Six Months Ended June 30,

Gain (Loss) Recognized in AOCI Gain (Loss) Reclassified from AOCI to Income Income Statement Classification

2024 2023 2024 2023

(In millions)

Derivatives designated as hedges:

Cross currency swaps $ 0.8 $ ( 3.0 ) $ 0.8 $ 0.8 Interest and other financial expense, net

Interest rate swaps ( 4.1 ) ( 0.9 ) — — Interest and other financial expense, net

Total $ ( 3.3 ) $ ( 3.9 ) $ 0.8 $ 0.8

Our cross currency swaps and interest rate swaps are designated as cash flow hedges of principal and interest payments related to our Term-Loan and mature in September 2028.

2 unchanged sentences

Financial Instruments and Fair Value Measurement” , included in our Annual Report in Form 10-K for the year ended December 31, 2023, for additional information relating to our derivatives instruments.

Notes to the Condensed Consolidated Financial Statements—(continued)

Employee Benefit Plans

3 unchanged sentences

Net periodic defined benefit pension costs include the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions)

5 unchanged sentences

The amortization of actuarial (gain) losses, associated with the pension obligations recorded in prior years, in Accumulated other comprehensive income exceeding 10% of the defined benefit obligation are recorded ratably in the Condensed Consolidated Statements of Operations.

Notes to the Condensed Consolidated Financial Statements—(continued)

Accumulated Other Comprehensive Income (Loss)

9 unchanged sentences

Balance at March 31, 2024 ( 61.5 ) 15.6 ( 0.8 ) ( 46.7 )

Other comprehensive loss before reclassifications ( 7.8 ) ( 1.4 ) — ( 9.2 )

Income tax effects before reclassifications ( 0.5 ) 0.5 0.1 0.1

Amounts reclassified from AOCI — 0.4 — 0.4

Income tax effects on reclassifications — ( 0.2 ) — ( 0.2 )

Currency translation AOCI — ( 0.5 ) — ( 0.5 )

Balance at June 30, 2024 $ ( 69.8 ) $ 14.4 $ ( 0.7 ) $ ( 56.1 )

Notes to the Condensed Consolidated Financial Statements—(continued)

Currency Translation Adjustments Hedging Activities Adjustments Pension and Other Postretirement Benefit Liability Adjustment Total

(In millions)

Balance at January 1, 2023 $ ( 47.5 ) $ 24.4 $ 10.6 $ ( 12.5 )

5 unchanged sentences

Balance at March 31, 2023 ( 54.8 ) 22.6 9.2 ( 23.0 )

Other comprehensive income (loss) before reclassifications ( 5.1 ) ( 0.5 ) — ( 5.6 )

Income tax effects before reclassifications ( 0.1 ) 0.2 — 0.1

Amounts reclassified from AOCI — 0.4 ( 2.3 ) ( 1.9 )

Income tax effects on reclassifications — ( 0.2 ) 0.7 0.5

Currency translation AOCI — ( 0.3 ) 0.1 ( 0.2 )

Balance at June 30, 2023 $ ( 60.0 ) $ 22.2 $ 7.7 $ ( 30.1 )

Earnings Per Share

2 unchanged sentences

The following table reflects the income and share data used in the basic and diluted EPS computations:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions, except share and per share data)

11 unchanged sentences

Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Income tax expense for the three months ended March 31, 2024 and 2023 were $ 13.5 million and $ 18.3 million, respectively.

Income tax expense for the three months ended June 30, 2024 and 2023 was $ 9.1 million and $ 17.8 million, respectively.

Income tax expense for the six months ended June 30, 2024 and 2023 was $ 22.6 million and $ 36.1 million, respectively.

Notes to the Condensed Consolidated Financial Statements—(continued)

Our effective income tax rates were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Effective income tax rates 31.0 % 37.3 % 32.5 % 33.4 %

The change in our effective tax rate for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

The change in our effective tax rate for the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 was primarily attributable to changes in projected pre-tax income mix in countries with varying statutory tax rates.

Commitments and Contingencies

Commitments— In the second quarter of 2024, we invested in Alpha Carbone (“AC”), a French tire recycling company.

This partnership will enable AC to produce commercial volumes of tire pyrolysis oil and recovered carbon black.

In addition, we entered in a long-term supply agreement for the tire pyrolysis oil produced by AC.

The tire pyrolysis oil will be used to manufacture circular carbon black for tire and rubber goods customers.

We invested approximately $ 0.3 million (€ 0.3 million) in shares of AC and $ 0.7 million (€ 0.7 million) in a convertible bond.

We agreed to contribute an additional $ 6.4 million (€ 6.0 million) in convertible bonds to be paid in 12 installments through 2025.

Legal Proceedings— We are subject to various lawsuits and claims including, but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage.

5 unchanged sentences

The Company has pledged the majority of its assets (amongst others shares in affiliates, bank accounts and receivables) within the different regions in which it operates excluding China as collateral under its debt agreements.

As of March 31, 2024, the Company had guarantees totaling $ 32.2 million issued by various financial institutions.

As of June 30, 2024, the Company had guarantees totaling $ 26.9 million issued by various financial institutions.

Financial Information by Segment

11 unchanged sentences

Notes to the Condensed Consolidated Financial Statements—(continued)

Segment operating results for the three months ended March 31, 2024 and 2023 are as follows:

Segment operating results for the three months ended June 30, 2024 and 2023 are as follows:

Rubber Specialty Corporate Total

11 unchanged sentences

Adjusted EBITDA 57.4 29.9 — 87.3

Segment operating results for the six months ended June 30, 2024 and 2023:

Rubber Specialty Corporate Total

(In millions)

Net sales from external customers $ 643.5 $ 336.4 $ — $ 979.9

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 34.8 24.4 — 59.2

Equity in earnings of affiliated companies, net of tax 0.3 — — 0.3

Interest and other financial expense, net ( 24.9 ) ( 24.9 )

Adjusted EBITDA 104.5 55.9 — 160.4

Net sales from external customers $ 648.0 $ 311.5 $ — $ 959.5

Depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment 33.7 19.2 — 52.9

Excluding equity in earnings of affiliated companies, net of tax 0.3 — — 0.3

Interest and other financial expense, net ( 28.7 ) ( 28.7 )

Reclassification of actuarial losses from AOCI 4.5 4.5

Adjusted EBITDA 121.2 67.2 — 188.4

Notes to the Condensed Consolidated Financial Statements—(continued)

A reconciliation of Income before earnings in affiliated companies and income taxes to Adjusted EBITDA for each of the periods presented is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions)

7 unchanged sentences

Corporate charges include the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In millions)

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements