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Divestitures | 6 Months Ended
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Jun. 30, 2021
Discontinued Operations and Disposal Groups [Abstract] |
Segment divestitures | 3. Divestitures: Performance Materials Divestiture On December 14, 2020, the Company completed the sale of its Performance Materials business for $650,000. In the fourth quarter of 2020, the Performance Materials business met the criteria set forth in Accounting Standards Codification 205-20, Presentation of Financial Statements - Discontinued Operations (“ASC 205-20”), as the sale represented a strategic shift that had a major effect on the Company’s operations and financial results. As a result, the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2020 reflect the Performance Materials business as a discontinued operation. The divested business historically represented a reportable segment of the Company, including certain Australian operations that were historically reported in the Performance Chemicals reportable segment. The following table summarizes the results of discontinued operations related to the Performance Materials divestiture:
| Three Months Ended June 30, 2020 |  | Six Months Ended June 30, 2020
Sales | $ | 105,995 |  |  | $ | 173,886 |
Cost of goods sold | 76,818 |  |  | 128,405 |
Selling, general and administrative expenses | 8,342 |  |  | 17,627 |
Other operating (income) expense, net | (168) |  |  | 12,706 |
Operating income | 21,003 |  |  | 15,148 |
Interest expense, net (1) | 3,784 |  |  | 8,916 |
Other expense, net | 1,077 |  |  | 165 |
Income from discontinued operations before income tax | 16,142 |  |  | 6,067 |
Provision for income taxes | 7,790 |  |  | 3,505 |
Income from discontinued operations, net of tax | $ | 8,352 |  |  | $ | 2,562 |
(1)The closing of the transaction triggered the Company’s obligation to provide partial repayment under its Amended and Restated Term Loan Credit Agreement, dated May 4, 2016 and its New Term Loan Credit Agreement, dated as of July 22, 2020. As such, interest expense has been allocated to discontinued operations on the basis of the Company’s mandatory repayment of $275,787 of the Sen ior Secured Term Loan Facility due February 2027 and its mandatory repayment of $188,722 of the new Senior Secured Term Loan Facility due February 2027. During the three months ended June 30, 2021, the Company incurred transaction costs of $84 and stock-based compensation expense of $630, and an associated tax benefit of $192 related to the Performance Materials divestiture which is included in loss from discontinued operations, net of tax. During the six months ended June 30, 2021, the Company incurred transaction costs of $1,530 and stock-based compensation expense of $1,283, and an associated tax benefit of $706 related to the Performance Materials divestiture which is included in loss from discontinued operations, net of tax. Net income attributable to the noncontrolling interest related to the Perf ormance Materials business, net of tax was $71 and $122 for the three and six months ended June 30, 2020. Net income attributable to Ecovyst Inc., related to the Performance Materials business, net of tax was $8,281 and $2,440 for the three and six months ended June 30, 2020. Upon the close of the transaction, the Company entered into a Transition Services Agreement with the buyer pursuant to which the buyer is receiving certain services to provide for the orderly transition of various functions and processes after the closing of the transaction. The services under the Transition Services Agreement include information technology, accounting, tax, financial services, human resources, facilities, and other admi nistrative support services. These services are provided for a period of nine months, with three 30-day extensions available. The Company billed $1,401 and $3,061 under the Transition Services Agreement to the buyer during the three and six months ended June 30, 2021, respectively. Those billings are included in selling, general and administrative expenses on the condensed consolidated financial statements for the three and six months ended June 30, 2021. Performance Chemicals Divestiture On February 28, 2021, the Company entered into a definitive agreement to sell its Performance Chemicals business to Sparta Aggregator L.P., a partnership established by Koch Minerals & Trading, LLC and Cerberus Capital Management, L.P., for $1,100,000, subject to certain adjustments including indebtedness, cash, working capital and transaction expenses. The Company completed the sale of the Performance Chemicals business effective on August 1, 2021. In the first quarter of 2021, the Performance Chemicals business met the discontinued operations criteria set forth in ASC 205-20, as the sale represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, the Company’s condensed consolidated financial statements for all periods presented reflect the Performance Chemicals business as a discontinued operation. The Performance Chemicals business historically represented a reportable segment of the Company. The disposal group was tested for recoverability as of each of the balance sheet dates since meeting the discontinued operations criteria, and the Company recognized an expected disposal loss of approximately $13,990 and $109,584 during the three and six months ended June 30, 2021. The expected disposal loss is included in net loss from discontinued operations, net of tax on the condensed consolidated statements of income. In the condensed consolidated balance sheet as of June 30, 2021, the Company recorded the disposal loss to goodwill and a valuation allowance of approximately $75,080 and $34,504, respectively, included in long-term assets held for sale. Completion of the sale may be for amounts that could vary from the current estimate. The Company’s estimate of fair value will be evaluated and recognized each reporting period until the divestiture is complete. The following table summarizes the results of discontinued operations related to Performance Chemicals for the periods presented:
| Three months ended June 30, | Six months ended June 30,
| 2021 |  | 2020 | 2021 |  | 2020
Sales | $ | 170,374 |  |  | $ | 140,034 |  | $ | 334,897 |  |  | $ | 311,218 |
Cost of goods sold | 118,785 |  |  | 111,245 |  | 244,638 |  |  | 247,838 |
Selling, general and administrative expenses | 11,490 |  |  | 9,998 |  | 23,206 |  |  | 21,731 |
Other operating expense, net | 11,850 |  |  | 8,462 |  | 29,330 |  |  | 14,079 |
Impairment of assets held for sale | 13,990 |  |  | — |  | 109,584 |  |  | — |
Operating income (loss) | 14,259 |  |  | 10,329 |  | (71,861) |  |  | 27,570 |
Equity in net (income) from affiliated companies | (48) |  |  | (24) |  | (86) |  |  | (79) |
Interest expense, net (1) | 5,599 |  |  | 3,353 |  | 8,814 |  |  | 7,380 |
Other (income) expense, net | (840) |  |  | 320 |  | (6,363) |  |  | (3,434) |
Income (loss) income from discontinued operations before income tax | 9,548 |  |  | 6,680 |  | (74,226) |  |  | 23,703 |
Provision for income taxes | 2,507 |  |  | 33,102 |  | 6,918 |  |  | 40,479 |
Income (loss) income from discontinued operations, net of tax | $ | 7,041 |  |  | $ | (26,422) |  | $ | (81,144) |  |  | $ | (16,776) |
(1)Upon the close of the transaction, the Company used a portion of the net proceeds to repay a portion of its outstanding debt amounting to $526,363. Prior to the Company’s debt refinancing in June 2021, the Company’s outstanding term loan facilities had mandatory repayment provisions. As a result, interest expense has been allocated to discontinued operations on the basis of the Company’s total repayment of $526,363. Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $140 and $250 for the three months ended June 30, 2021 and 2020, respectively. Net income (loss) income attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $6,901 and $(26,672) for the three months ended June 30, 2021 and 2020, respectively. Net income attributable to the noncontrolling interest related to the Performance Chemicals business, net of tax was $257 and $485 for the six months ended June 30, 2021 and 2020, respectively. Net (loss) income attributable to Ecovyst Inc., related to the Performance Chemicals business, net of tax was $(81,401) and $(17,261) for the six months ended June 30, 2021 and 2020, respectively. The following table summarizes the assets and liabilities of discontinued operations related to the Performance Chemicals divestiture as of June 30, 2021 and December 31, 2020.
|  | June 30, 2021 |  | December 31, 2020
ASSETS |  |  |  |
Cash and cash equivalents |  | $ | 17,603 |  |  | $ | 21,520 |
Accounts receivables, net |  | 93,413 |  |  | 86,961 |
Inventories, net |  | 69,697 |  |  | 74,647 |
Prepaid and other current assets |  | 18,500 |  |  | 20,879 |
Current assets held for sale |  | $ | 199,213 |  |  | $ | 204,007 |
Investments in affiliated companies |  | $ | 261 |  |  | $ | 324 |
Property, plant and equipment, net |  | 394,461 |  |  | 391,524 |
Goodwill |  | 250,626 |  |  | 326,173 |
Other intangible assets, net |  | 383,842 |  |  | 388,857 |
Right-of-use lease assets |  | 20,823 |  |  | 19,296 |
Other long-term assets |  | 19,984 |  |  | 23,269 |
Valuation allowance |  | (34,504) |  |  | — |
Long-term assets held for sale |  | $ | 1,035,493 |  |  | $ | 1,149,443 |
LIABILITIES |  |  |  |
Accounts payable |  | $ | 65,749 |  |  | $ | 74,754 |
Operating lease liabilities—current |  | 6,544 |  |  | 8,479 |
Accrued liabilities |  | 22,043 |  |  | 28,336 |
Current liabilities held for sale |  | $ | 94,336 |  |  | $ | 111,569 |
Deferred income taxes |  | $ | 60,109 |  |  | $ | 50,232 |
Operating lease liabilities—noncurrent |  | 10,308 |  |  | 10,047 |
Other long-term liabilities |  | 56,698 |  |  | 95,271 |
Long-term liabilities held for sale |  | $ | 127,115 |  |  | $ | 155,550 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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