UNIVAR SOLUTIONS INC., 10-Q filed on 8/7/2020
Quarterly Report
v3.20.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2020
Jul. 23, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
Document Transition Report false  
Entity File Number 001-37443  
Entity Registrant Name Univar Solutions Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 26-1251958  
Entity Address, Address Line One 3075 Highland Parkway, Suite 200  
Entity Address, City or Town Downers Grove,  
Entity Address, State or Province IL  
Entity Address, Postal Zip Code 60515  
City Area Code 331  
Local Phone Number 777-6000  
Title of 12(b) Security Common Stock ($0.01 par value)  
Trading Symbol UNVR  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   169,061,679
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001494319  
Current Fiscal Year End Date --12-31  
v3.20.2
Condensed Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net sales $ 2,009.2 $ 2,584.6 $ 4,220.4 $ 4,744.6
Cost of goods sold (exclusive of depreciation) 1,520.1 2,007.3 3,198.7 3,670.9
Operating expenses:        
Outbound freight and handling 80.7 95.4 172.2 178.3
Warehousing, selling and administrative 245.5 280.8 525.0 534.2
Other operating expenses, net 43.6 63.8 47.7 228.6
Depreciation 40.4 39.7 82.1 72.9
Amortization 14.8 18.6 30.6 33.0
Impairment charges 16.9 0.0 16.9 0.0
Total operating expenses 441.9 498.3 874.5 1,047.0
Operating income 47.2 79.0 147.2 26.7
Other (expense) income:        
Interest income 0.2 1.1 1.2 1.7
Interest expense (30.1) (39.0) (59.2) (73.8)
Loss on sale of business 0.0 0.0 (8.6) 0.0
Loss on extinguishment of debt 0.0 0.0 (1.8) (0.7)
Other expense, net (3.9) (5.6) (9.8) (11.7)
Total other expense (33.8) (43.5) (78.2) (84.5)
Income (loss) before income taxes 13.4 35.5 69.0 (57.8)
Income tax expense (benefit) 11.6 18.5 11.3 (4.8)
Net income (loss) from continuing operations 1.8 17.0 57.7 (53.0)
Net (loss) income from discontinued operations 0.0 (0.7) 0.0 5.4
Net income (loss) $ 1.8 $ 16.3 $ 57.7 $ (47.6)
Income (loss) per common share:        
Basic from continuing operations (in dollars per share) $ 0.01 $ 0.10 $ 0.34 $ (0.33)
Basic from discontinued operations (in dollars per share) 0 0 0 0.03
Basic income (loss) per common share (in dollars per share) 0.01 0.10 0.34 (0.30)
Diluted from continuing operations (in dollars per share) 0.01 0.10 0.34 (0.33)
Diluted from discontinued operations (in dollars per share) 0 0 0 0.03
Diluted income (loss) per common share (in dollars per share) $ 0.01 $ 0.10 $ 0.34 $ (0.30)
Weighted average common shares outstanding:        
Basic (in shares) 168.9 169.8 168.8 159.5
Diluted (in shares) 169.6 170.7 169.6 159.5
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 1.8 $ 16.3 $ 57.7 $ (47.6)
Other comprehensive (loss) income, net of tax:        
Impact due to adoption of ASUs [1] 0.0 0.0 0.0 (3.2)
Foreign currency translation 19.7 11.6 (74.4) 19.8
Pension and postretirement benefit adjustment 0.1 0.1 0.1 0.1
Derivative financial instruments (5.3) (15.9) (21.4) (24.2)
Total other comprehensive income (loss), net of tax 14.5 (4.2) (95.7) (7.5)
Comprehensive income (loss) $ 16.3 $ 12.1 $ (38.0) $ (55.1)
Accounting Standards Update [Extensible List]       us-gaap:AccountingStandardsUpdate201802Member
[1] Adjusted due to the adoption of Accounting Standards Update (“ASU”) 2018-02 “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” on January 1, 2019.
v3.20.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 547.4 $ 330.3
Trade accounts receivable, net of allowance for doubtful accounts of $20.6 and $12.9 at June 30, 2020 and December 31, 2019, respectively. 1,250.6 1,160.1
Inventories 755.1 796.0
Prepaid expenses and other current assets 175.0 167.2
Total current assets 2,728.1 2,453.6
Property, plant and equipment, net 1,101.5 1,152.4
Goodwill 2,263.2 2,280.8
Intangible assets, net 276.0 320.2
Deferred tax assets 21.6 21.3
Other assets 258.8 266.5
Total assets 6,649.2 6,494.8
Current liabilities:    
Short-term financing 0.9 0.7
Trade accounts payable 906.0 895.0
Current portion of long-term debt 27.0 25.0
Accrued compensation 81.1 103.6
Other accrued expenses 425.4 425.1
Total current liabilities 1,440.4 1,449.4
Long-term debt 2,902.1 2,688.8
Pension and other postretirement benefit liabilities 286.2 295.6
Deferred tax liabilities 51.8 56.3
Other long-term liabilities 265.5 271.9
Total liabilities 4,946.0 4,762.0
Stockholders’ equity:    
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of June 30, 2020 and December 31, 2019 0.0 0.0
Common stock, 2.0 billion shares authorized at $0.01 par value with 169.0 million and 168.7 million shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively 1.7 1.7
Additional paid-in capital 2,977.3 2,968.9
Accumulated deficit (800.8) (858.5)
Accumulated other comprehensive loss (475.0) (379.3)
Total stockholders’ equity 1,703.2 1,732.8
Total liabilities and stockholders’ equity $ 6,649.2 $ 6,494.8
v3.20.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 20.6 $ 12.9
Preferred stock, shares authorized (in shares) 200,000,000.0 200,000,000.0
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, share issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, shares authorized (in shares) 2,000,000,000.0 2,000,000,000.0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares issued (in shares) 169,000,000.0 168,700,000
Common stock, shares outstanding (in shares) 169,000,000.0 168,700,000
v3.20.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating activities:    
Net income (loss) $ 57.7 $ (47.6)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:    
Depreciation and amortization 112.7 105.9
Asset Impairment Charges 16.9 0.0
Amortization of deferred financing fees and debt discount 3.3 4.8
Amortization of pension credit from accumulated other comprehensive loss 0.1 0.1
Loss on sale of business 8.6 0.0
(Gain) loss on sale of property, plant and equipment (7.5) 1.5
Loss on extinguishment of debt 1.8 0.7
Deferred income taxes (4.5) (24.9)
Stock-based compensation expense 8.3 17.3
Other 1.8 1.5
Changes in operating assets and liabilities:    
Trade accounts receivable, net (111.1) (153.8)
Inventories 22.0 22.4
Prepaid expenses and other current assets (24.6) (27.2)
Trade accounts payable 30.3 10.4
Pensions and other postretirement benefit liabilities (8.1) (12.7)
Other, net (34.2) (78.9)
Net cash provided (used) by operating activities 73.5 (180.5)
Investing activities:    
Purchases of property, plant and equipment (45.0) (45.4)
Purchases of businesses, net of cash acquired 0.0 (1,155.5)
Proceeds from sale of property, plant and equipment 13.0 0.8
(Payments)/proceeds from sale of business (8.2) 640.0
Other (7.0) (1.3)
Net cash used by investing activities (47.2) (561.4)
Financing activities:    
Proceeds from issuance of long-term debt 0.0 947.0
Payments on long-term debt and finance lease obligations (189.3) (459.5)
Net proceeds under revolving credit facilities 384.4 248.8
Short-term financing, net 3.5 (6.9)
Taxes paid related to net share settlements of stock-based compensation awards (1.4) (2.8)
Stock option exercises 0.7 5.7
Other 0.7 0.6
Net cash provided by financing activities 198.6 732.9
Effect of exchange rate changes on cash and cash equivalents (7.8) (3.1)
Net increase (decrease) in cash and cash equivalents 217.1 (12.1)
Cash and cash equivalents at beginning of period 330.3 121.6
Cash and cash equivalents at end of period 547.4 109.5
Cash paid during the period for:    
Income taxes 20.2 22.9
Interest, net of capitalized interest 50.5 66.9
Non-cash activities:    
Fair value of common stock issued for acquisition of business 0.0 649.3
Additions of property, plant and equipment included in trade accounts payable and other accrued expenses 3.8 6.3
Additions of property, plant and equipment under a finance lease obligation 23.2 2.9
Additions of assets under an operating lease obligation $ 26.5 $ 8.9
v3.20.2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($)
shares in Millions, $ in Millions
Total
Common stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Impact due to adoption of ASU 2018-02 [1]       $ 3.2 $ (3.2)
Beginning balance (in shares) at Dec. 31, 2018   141.7      
Beginning balance at Dec. 31, 2018 $ 1,191.7 $ 1.4 $ 2,325.0 (761.5) (373.2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) (47.6)     (47.6)  
Foreign currency translation adjustment 19.8       19.8
Pension and other postretirement benefits adjustment (0.1)        
Derivative financial instruments, net of tax (24.2)       (24.2)
Common stock issued for the Nexeo acquisition (in shares)   27.9      
Common stock issued for the Nexeo acquisition 649.3 [2] $ 0.3 649.0    
Shares cancelled (in shares)   (1.5)      
Shares cancelled (35.5)   (35.5)    
Restricted stock units vested (in shares)   0.3      
Tax withholdings related to net share settlements of stock-based compensation awards (in shares)   (0.1)      
Tax withholdings related to net share settlements of stock-based compensation awards (2.8)   (2.8)    
Stock option exercises (in shares)   0.3      
Stock option exercises 5.7   5.7    
Stock-based compensation 17.3   17.3    
Employee stock purchase plan 0.6   0.6    
Other 0.1   0.1    
Ending balance (in shares) at Jun. 30, 2019   168.6      
Ending balance at Jun. 30, 2019 1,774.5 $ 1.7 2,959.4 (805.9) (380.7)
Beginning balance (in shares) at Mar. 31, 2019   169.7      
Beginning balance at Mar. 31, 2019 1,781.0 $ 1.7 2,978.0 (822.2) (376.5)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 16.3     16.3  
Foreign currency translation adjustment 11.6       11.6
Pension and other postretirement benefits adjustment (0.1)        
Derivative financial instruments, net of tax $ (15.9)       (15.9)
Shares cancelled (in shares) [2] (1.5)        
Shares cancelled [2] $ (35.5)        
Restricted stock units vested (in shares)   0.1      
Tax withholdings related to net share settlements of stock-based compensation awards (in shares)   0.0      
Tax withholdings related to net share settlements of stock-based compensation awards $ (0.8)   (0.8)    
Stock option exercises (in shares) 0.3        
Stock option exercises $ 5.7        
Stock-based compensation 11.3   11.3    
Employee stock purchase plan 0.6        
Other 0.1        
Ending balance (in shares) at Jun. 30, 2019   168.6      
Ending balance at Jun. 30, 2019 $ 1,774.5 $ 1.7 2,959.4 (805.9) (380.7)
Beginning balance (in shares) at Dec. 31, 2019 168.7 168.7      
Beginning balance at Dec. 31, 2019 $ 1,732.8 $ 1.7 2,968.9 (858.5) (379.3)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 57.7     57.7  
Foreign currency translation adjustment (74.4)       (74.4)
Pension and other postretirement benefits adjustment 0.1       0.1
Derivative financial instruments, net of tax (21.4)       (21.4)
Restricted stock units vested (in shares)   0.3      
Restricted stock units vested 0.0        
Tax withholdings related to net share settlements of stock-based compensation awards (in shares)   (0.1)      
Tax withholdings related to net share settlements of stock-based compensation awards (1.4)   (1.4)    
Stock option exercises (in shares)   0.1      
Stock option exercises 0.7   0.7    
Stock-based compensation 8.3   8.3    
Employee stock purchase plan 0.7        
Other $ 0.1        
Ending balance (in shares) at Jun. 30, 2020 169.0 169.0      
Ending balance at Jun. 30, 2020 $ 1,703.2 $ 1.7 2,977.3 (800.8) (475.0)
Beginning balance (in shares) at Mar. 31, 2020   168.9      
Beginning balance at Mar. 31, 2020 1,683.6 $ 1.7 2,974.0 (802.6) (489.5)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 1.8     1.8  
Foreign currency translation adjustment 19.7       19.7
Pension and other postretirement benefits adjustment 0.1        
Derivative financial instruments, net of tax (5.3)       (5.3)
Restricted stock units vested (in shares)   0.1      
Tax withholdings related to net share settlements of stock-based compensation awards (0.1)   (0.1)    
Stock-based compensation 2.6   2.6    
Employee stock purchase plan 0.7   0.7    
Other $ 0.1        
Ending balance (in shares) at Jun. 30, 2020 169.0 169.0      
Ending balance at Jun. 30, 2020 $ 1,703.2 $ 1.7 $ 2,977.3 $ (800.8) $ (475.0)
[1] Adjusted due to the adoption of ASU 2018-02 “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” on January 1, 2019.
[2] Refer to “Note 3: Business combinations” for more information.
v3.20.2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]        
Derivative financial instruments, tax expense (benefit) $ 2.3 $ 5.3 $ 9.3 $ 8.1
Foreign currency translation adjustment tax expense (benefit)     $ (4.7)  
Accounting Standards Update [Extensible List]       us-gaap:AccountingStandardsUpdate201802Member
v3.20.2
Nature of operations
6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of operations
1. Nature of operations
Headquartered in Downers Grove, Illinois, Univar Solutions Inc. (“Univar Solutions,” “Company,” “we,” “our” and “us”) is a leading global chemical and ingredient distributor and provider of value-added services to customers across a wide range of industries. The Company’s operations are structured into four reportable segments that represent the geographic areas under which the Company manages its business:
Univar Solutions USA (“USA”)
Univar Solutions Europe, the Middle East and Africa (“EMEA”)
Univar Solutions Canada (“Canada”)
Univar Solutions Latin America (“LATAM”)
LATAM includes certain developing businesses in Latin America (including Brazil and Mexico) and the Asia-Pacific region.
v3.20.2
Significant accounting policies
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Significant accounting policies
2. Significant accounting policies
Basis of presentation
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) as applicable to interim financial reporting. These condensed consolidated financial statements, in the Company’s opinion, include all adjustments consisting of normal recurring accruals necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, comprehensive income, cash flows and changes in stockholders’ equity. The results of operations for the periods presented are not necessarily indicative of the operating results that may be expected for the full year. The accompanying condensed consolidated financial statements of Univar Solutions includes the combined results of all directly and indirectly controlled companies, which have been adjusted to account for the elimination of intercompany balances and transactions.
On our condensed consolidated statements of cash flows for the six months ended June 30, 2019, the amounts included in “net proceeds under revolving credit facilities,” which were previously included in “proceeds from issuance of long-term debt,” are now presented separately to conform to the current year presentation.
The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates. These condensed consolidated financial statements and related footnotes are unaudited and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Recently adopted accounting pronouncements
On January 1, 2020, the Company adopted ASU 2016-13 “Financial Instruments - Credit Losses” (Topic 326), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. The transition to the new methodology did not have a significant financial impact and the Company did not recognize a cumulative-effect adjustment to the opening balance of accumulated deficit.
On January 1, 2020, the Company adopted ASU 2018-13 “Fair Value Measurement” (Topic 820), which modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures.
On January 1, 2020, the Company adopted ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software” (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a service contract hosting arrangement with those for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this guidance on a prospective basis.
Accounting pronouncements issued and not yet adopted
In August 2018, the FASB issued ASU 2018-14 “Compensation - Retirement Benefits - Defined Benefit Plans - General” (Subtopic 715-20), which amends the disclosure requirements related to defined benefit pension and other postretirement plans. The Company will adopt this guidance effective January 1, 2021 and is currently determining the impacts that will be reflected in financial statement disclosures.
In December 2019, the FASB issued ASU 2019-12 “Income Taxes” (Topic 740) – “Simplifying the Accounting for Income Taxes.” The Company will adopt this guidance effective January 1, 2021 and is currently determining the impacts of the guidance on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04 “Reference Rate Reform” (Topic 848) – “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform from currently referenced rates, such as LIBOR, to alternative rates. The ASU is effective beginning March 12, 2020 and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently determining the impacts of the guidance on our consolidated financial statements.
v3.20.2
Business combinations
6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Business combinations
3. Business combinations
2019 Acquisition
Acquisition of Nexeo Solutions
On February 28, 2019, the Company completed an acquisition of 100% of the equity interest of Nexeo Solutions, Inc. (“Nexeo”), a leading global chemicals and plastics distributor. The acquisition expanded and strengthened Univar Solutions’ presence in North America and provides expanded opportunities to create the largest North American sales force in chemical and ingredients distribution and the broadest product offering.
The total purchase price of the acquisition was $1,814.8 million, composed of $1,201.0 million of cash paid (net of cash acquired of $46.8 million) and $613.8 million of newly issued shares of Univar Solutions common stock, which represented approximately 26.4 million shares, based on Univar Solutions’ closing stock price of $23.29 on February 27, 2019. The final 26.4 million shares issued include the cancellation of 1.5 million shares in connection with the appraisal litigation settlement during the second quarter of 2019.
As of March 31, 2020, the Company updated the purchase price allocation to reflect final deferred income tax adjustments, resulting in a $7.0 million increase to goodwill. The accounting for this acquisition was complete as of March 31, 2020.
The final purchase price allocation is shown below:
(in millions)As of December 31, 2019Measurement Period AdjustmentsFinal
March 31, 2020
Trade accounts receivable, net$296.3  $—  $296.3  
Inventories150.2  —  150.2  
Prepaid expenses and other current assets65.4  (1.2) 64.2  
Assets held for sale888.2  —  888.2  
Property, plant and equipment, net262.3  —  262.3  
Goodwill555.7  7.0  562.7  
Intangible assets, net138.7  —  138.7  
Other assets37.4  (0.4) 37.0  
Trade accounts payable(137.7) —  (137.7) 
Other accrued expenses(145.8) 1.3  (144.5) 
Liabilities held for sale(221.5) —  (221.5) 
Deferred tax liabilities(4.2) (6.7) (10.9) 
Other long-term liabilities(70.2) —  (70.2) 
Purchase consideration, net of cash$1,814.8  $—  $1,814.8  
Assets and liabilities held for sale are related to the Nexeo plastics distribution business (“Nexeo Plastics”). Nexeo Plastics was not aligned with the Company’s strategic objectives and, on March 29, 2019, the business was sold for total net proceeds of $664.3 million. Refer to “Note 4: Discontinued operations and dispositions” for further information.
The Company recorded $562.7 million of goodwill, consisting of $547.1 million in the USA segment, $3.8 million in Canada and $11.8 million in LATAM. The goodwill is primarily attributable to expected synergies from combining operations. The Company expects approximately $76.0 million of goodwill to be deductible for income tax purposes.
The Company assumed 50.0 million warrants, equivalent to 25.0 million Nexeo shares, with an estimated aggregate fair value of $26.0 million at the February 28, 2019 closing date. The warrants were converted into the right to receive, upon exercise, the merger consideration consisting of approximately 7.6 million shares of Univar Solutions common stock plus cash. The warrants have an exercise price of $27.80 and will expire on June 9, 2021. The warrants are recorded as other accrued expenses within the condensed consolidated balance sheet. Refer to “Note 15: Fair value measurements” for more information.
v3.20.2
Discontinued operations
6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued operations and dispositions
4. Discontinued operations and dispositions
Discontinued operations
On March 29, 2019, the Company completed the sale of Nexeo Plastics to an affiliate of One Rock Capital Partners, LLC (“Buyer”) for total proceeds of $664.3 million (net of cash disposed of $2.4 million), including $26.7 million for a working capital adjustment. The Nexeo purchase price allocation is inclusive of these working capital adjustments. Refer to “Note 3: Business combinations” for more information.
In connection with the transaction, the Company entered into a Transition Services Agreement (TSA), a Warehouse Service Agreement (WSA) and Real Property Agreements with the Buyer which are designed to ensure and facilitate an orderly transfer of business operations and will terminate at various times, between six and twenty-four months and can be renewed with a maximum of two twelve-month periods. The income and expense for the services will be reported as other operating expenses, net in the condensed consolidated statements of operations. The Real Property Agreements will have a maximum tenure of three years. These arrangements do not constitute significant continuing involvement in Nexeo Plastics. 
The following table summarizes the operating results of Nexeo Plastics for the three and six months ended June 30, 2019, as presented in “Net (loss) income from discontinued operations” on the condensed consolidated statements of operations.
(in millions)Three months ended June 30, 2019Six months ended June 30, 2019
External sales$—  $156.9  
Cost of goods sold (exclusive of depreciation)—  136.7  
Outbound freight and handling—  3.5  
Warehousing, selling and administrative—  7.9  
Other expenses—  1.4  
Income from discontinued operations before income taxes$—  $7.4  
Income tax expense from discontinued operations (1)
0.7  2.0  
Net (loss) income from discontinued operations$(0.7) $5.4  
(1)The provision for income taxes for the three months ended June 30, 2019 includes an adjustment to the tax expense related to the one month operations reported as of March 31, 2019.
There were no significant non-cash operating activities from the Company’s discontinued operations related to Nexeo Plastics.
Dispositions
On December 31, 2019, the Company completed the sale of the Environmental Sciences business to affiliates of AEA Investors LP for total cash proceeds of $174.0 million (net of cash disposed of $0.7 million and $5.9 million of transaction expenses) plus a $5.0 million ($2.4 million present value) subordinated note receivable (the “Transaction”) and recorded a pre-tax gain on sale of $41.4 million. In the first quarter of 2020, we recorded a net working capital adjustment of $8.2 million, reducing the proceeds and the gain on sale recorded in the fourth quarter of 2019. The sale of the business did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements because the disposition did not represent a strategic shift, that has, or will have, a major effect on the Company's operations and financial results.
The following summarizes the income before income taxes attributable to the Environmental Sciences business:
(in millions)Three months ended June 30, 2019Six months ended June 30, 2019
Income before income taxes$12.5  $14.7  
v3.20.2
Revenue
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue
5. Revenue
The Company disaggregates revenues from contracts with customers by both geographic reportable segments and revenue contract types. Geographic reportable segmentation is pertinent to understanding Univar Solutions’ revenues, as it aligns to how the Company reviews the financial performance of its operations. Revenue contract types are differentiated by the type of good or service Univar Solutions offers customers, since the contractual terms necessary for revenue recognition are unique to each of the identified revenue contract types.
The following tables disaggregate external customer net sales by major stream:
USAEMEACanadaLATAMConsolidated
(in millions)Three months ended June 30, 2020
Chemical Distribution$1,097.1  $409.3  $172.0  $96.8  $1,775.2  
Crop Sciences—  —  147.4  —  147.4  
Services72.3  0.3  12.1  1.9  86.6  
Total external customer net sales$1,169.4  $409.6  $331.5  $98.7  $2,009.2  
USAEMEACanadaLATAMConsolidated
(in millions)Three months ended June 30, 2019
Chemical Distribution$1,515.6  $457.5  $225.1  $114.6  $2,312.8  
Crop Sciences—  —  167.1  —  167.1  
Services89.7  0.4  12.6  2.0  104.7  
Total external customer net sales$1,605.3  $457.9  $404.8  $116.6  $2,584.6  

USAEMEACanadaLATAMConsolidated
(in millions)Six months ended June 30, 2020
Chemical Distribution$2,367.6  $869.2  $380.3  $202.1  $3,819.2  
Crop Sciences—  —  211.8  —  211.8  
Services159.3  0.7  25.2  4.2  189.4  
Total external customer net sales$2,526.9  $869.9  $617.3  $206.3  $4,220.4  
USAEMEACanadaLATAMConsolidated
(in millions)Six months ended June 30, 2019
Chemical Distribution$2,763.1  $940.9  $436.8  $207.2  $4,348.0  
Crop Sciences—  —  217.6  —  217.6  
Services149.4  0.7  24.2  4.7  179.0  
Total external customer net sales$2,912.5  $941.6  $678.6  $211.9  $4,744.6  
Deferred revenue
Deferred revenues are recognized as a contract liability when customers provide Univar Solutions with consideration prior to the Company satisfying a performance obligation and are recognized in revenue when the performance obligations are met. Deferred revenues relate to revenues that are expected to be recognized within one year and are recorded within the other accrued expenses line items of the condensed consolidated balance sheets. Deferred revenues as of June 30, 2020 and December 31, 2019 were $7.9 million and $65.5 million, respectively.
Revenue recognized through the six months ended June 30, 2020 and June 30, 2019 from amounts included in contract liabilities at the beginning of the period were $64.4 million and $44.4 million, respectively.
v3.20.2
Other operating expenses, net
6 Months Ended
Jun. 30, 2020
Other Income and Expenses [Abstract]  
Other operating expenses, net
6. Other operating expenses, net
Other operating expenses, net consisted of the following:
 Three months ended
June 30,
Six months ended
June 30,
(in millions)2020201920202019
Acquisition and integration related expenses$14.3  $32.6  $31.8  $109.7  
Stock-based compensation expense2.6  11.3  8.3  17.3  
Restructuring charges6.3  0.5  8.8  0.6  
Other employee severance costs2.8  6.2  8.3  19.1  
Other facility closure costs0.1  —  2.0  —  
Saccharin legal settlement—  —  —  62.5  
Fair value adjustment for warrants18.8  1.8  (7.5) (2.6) 
(Gain) loss on sale of property, plant and equipment(2.2) 1.4  (7.5) 1.5  
Other0.9  10.0  3.5  20.5  
Total other operating expenses, net$43.6  $63.8  $47.7  $228.6  
v3.20.2
Restructuring charges
6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring charges
7. Restructuring charges
Restructuring charges relate to the implementation of several regional strategic initiatives aimed at streamlining the Company’s cost structure and improving its operations. These actions primarily resulted in workforce reductions and other facility rationalization costs. Restructuring charges are recorded in other operating expenses, net in the condensed consolidated statement of operations.
2020 Restructuring
During the first quarter of 2020, management approved a plan to implement a new structure designed to streamline and accelerate the opportunities between Canada and USA operations with the reporting structure in Canada condensed and realigned to report under the leadership in the USA for commercial, operations, human resources and finance. This change did not impact the Company's reportable segments. All restructuring actions under this program were complete as of June 30, 2020, except for final cash payments that will be made in the future.
During the second quarter of 2020, the Company initiated workforce reductions spanning across many job functions and locations in the USA and Other in order to align the Company's workforce with its anticipated business needs. The actions associated with this program are expected to be completed by the end of 2020. As a result of both of these plans, we recorded the following charges:
(in millions)Three months ended June 30, 2020Six months ended June 30, 2020Anticipated total costs
USA:
Employee termination costs$4.7  $4.7  $5.9  
Canada:
Employee termination costs$0.8  $3.1  $3.1  
Other:
Employee termination costs$0.8  $0.8  $0.8  
Total $6.3  $8.6  $9.8  
2018 Restructuring
During 2018, management approved a plan to consolidate departments. The actions associated with this program were substantially complete as of March 31, 2020, although cash payments will be made into the future. The following table presents a summary of the financial impacts of that plan:
(in millions)Three months ended March 31, 2020Cumulative costsAnticipated total costs
USA:
Employee termination costs$0.1  $5.6  $5.6  
Other exit costs—  0.1  0.1  
Total$0.1  $5.7  $5.7  
Other:
Employee termination costs$0.1  $1.3  $1.3  
Total:
Employee termination costs$0.2  $6.9  $6.9  
Other exit costs—  0.1  0.1  
Total$0.2  $7.0  $7.0  
The following table summarizes activity related to accrued liabilities associated with restructuring:
(in millions)January 1, 2020Charge to 
earnings
Cash
paid
June 30, 2020
Employee termination costs$3.7  $8.8  $(6.9) $5.6  
Facility exit costs1.9  —  (0.6) 1.3  
Other exit costs0.2  —  —  0.2  
Total$5.8  $8.8  $(7.5) $7.1  

(in millions)January 1, 2019Charge to 
earnings
Cash 
paid
December 31, 2019
Employee termination costs$4.2  $2.5  $(3.0) $3.7  
Facility exit costs5.0  0.1  (3.2) 1.9  
Other exit costs0.2  —  —  0.2  
Total$9.4  $2.6  $(6.2) $5.8  
Restructuring liabilities of $6.6 million and $5.3 million were classified as current in other accrued expenses in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. The long-term portion of restructuring liabilities of $0.5 million were recorded in other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, and primarily consists of facility exit costs that are expected to be paid within the next five years.
The cost information above does not contain any estimates for programs that may be developed and implemented in future periods. While the Company believes the recorded restructuring liabilities are adequate, revisions to current estimates may be recorded in future periods based on new information as it becomes available.
v3.20.2
Other expense, net
6 Months Ended
Jun. 30, 2020
Other Income and Expenses [Abstract]  
Other expense, net
8. Other expense, net
Other expense, net consisted of the following:
 Three months ended
June 30,
Six months ended
June 30,
(in millions)2020201920202019
Foreign currency transactions$(5.6) $(2.1) $(6.4) $(2.8) 
Foreign currency denominated loans revaluation(0.4) (4.7) (0.2) 0.5  
Undesignated foreign currency derivative instruments (1)
2.1  4.3  0.1  (5.6) 
Undesignated swap contracts (1)
(1.2) (3.0) (6.0) (2.8) 
Non-operating retirement benefits (2)
2.1  0.6  4.3  1.2  
Debt refinancing costs—  —  (0.1) —  
Other(0.9) (0.7) (1.5) (2.2) 
Total other expense, net$(3.9) $(5.6) $(9.8) $(11.7) 
(1)Refer to “Note 16: Derivatives” for more information.
(2)Refer to “Note 9: Employee benefit plans” for more information.
v3.20.2
Employee benefit plans
6 Months Ended
Jun. 30, 2020
Postemployment Benefits [Abstract]  
Employee benefit plans
9. Employee benefit plans
The following table summarizes the components of net periodic (benefit) cost recognized in the condensed consolidated statements of operations:
Domestic - Defined Benefit Pension PlansForeign - Defined Benefit Pension Plans
 Three months ended
June 30,
Six months ended
June 30,
Three months ended
June 30,
Six months ended
June 30,
(in millions)20202019202020192020201920202019
Service cost (1)
$—  $—  $—  $—  $0.4  $0.6  $0.9  $1.2  
Interest cost (2)
5.8  6.8  11.6  13.6  3.0  3.9  6.1  7.8  
Expected return on plan assets (2)
(7.2) (6.3) (14.3) (12.6) (3.8) (5.1) (7.8) (10.1) 
Prior service cost (2)
—  —  —  —  0.1  0.1  0.1  0.1  
Net periodic (benefit) cost$(1.4) $0.5  $(2.7) $1.0  $(0.3) $(0.5) $(0.7) $(1.0) 
(1)Service cost is included in warehouse, selling and administrative expenses.
(2)These amounts are included in other expense, net.
v3.20.2
Income taxes
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income taxes
10. Income taxes
The income tax expense (benefit) and effective income tax rate for the three and six months ended June 30, 2020 and 2019 were as follows:
Three months ended June 30,Six months ended June 30,
(dollars in millions)2020201920202019
Income tax expense (benefit)$11.6  $18.5  $11.3  $(4.8) 
Effective income tax rate86.6 %52.1 %16.4 %8.3 %
Discrete tax benefits of $4.6 million and $13.5 million are included in the $11.6 million and $11.3 million income tax expense for the three and six months ended June 30, 2020, primarily attributable to the impairment of unrealizable assets and benefits from provisions under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which was enacted on March 27, 2020. The Company’s effective income tax rate without discrete items was 32.1%, higher than the US federal statutory rate of 21.0%, primarily due to the impact of the higher tax rates in foreign jurisdictions, non-deductible expenses and US state income taxes.
Discrete tax benefits of $3.8 million and $14.0 million are included in the $18.5 million income tax expense and $4.8 million income tax benefit for the three and six months ended June 30, 2019, substantially attributable to the indirect effects of the Nexeo Plastics sale. The Company’s effective income tax rate without discrete items was 52.3%, higher than the US federal statutory rate of 21.0%, primarily due to the impact of non-deductible Nexeo related acquisition and integration
costs, along with state taxes, foreign rate differential, non-deductible compensation and other expenses, and an increase in the valuation allowance on certain income tax attributes.
v3.20.2
Earnings per share
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Earnings per share
11. Earnings per share
The following table presents the basic and diluted earnings per share computations:
 Three months ended June 30,Six months ended June 30,
(in millions, except per share data)