UNIVAR SOLUTIONS INC., 10-Q filed on 5/11/2020
Quarterly Report
v3.20.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2020
Apr. 27, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 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 ($0.01 par value)  
Trading Symbol UNVR  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   168,900,947
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Central Index Key 0001494319  
Current Fiscal Year End Date --12-31  
v3.20.1
Condensed Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Statement [Abstract]    
Net sales $ 2,211.2 $ 2,160.0
Cost of goods sold (exclusive of depreciation) 1,678.6 1,663.6
Operating expenses:    
Outbound freight and handling 91.5 82.9
Warehousing, selling and administrative 279.5 253.4
Other operating expenses, net 4.1 164.8
Depreciation 41.7 33.2
Amortization 15.8 14.4
Total operating expenses 432.6 548.7
Operating income (loss) 100.0 (52.3)
Other (expense) income:    
Interest income 1.0 0.6
Interest expense (29.1) (34.8)
Loss on sale of business (8.6) 0.0
Loss on extinguishment of debt (1.8) (0.7)
Other expense, net (5.9) (6.1)
Total other expense (44.4) (41.0)
Income (loss) before income taxes 55.6 (93.3)
Income tax benefit (0.3) (23.3)
Net income (loss) from continuing operations 55.9 (70.0)
Net income from discontinued operations 0.0 6.1
Net income (loss) $ 55.9 $ (63.9)
Income (loss) per common share:    
Basic from continuing operations (in dollars per share) $ 0.33 $ (0.47)
Basic from discontinued operations (in dollars per share) 0 0.04
Basic income (loss) per common share (in dollars per share) 0.33 (0.43)
Diluted from continuing operations (in dollars per share) 0.33 (0.47)
Diluted from discontinued operations (in dollars per share) 0 0.04
Diluted income (loss) per common share (in dollars per share) $ 0.33 $ (0.43)
Weighted average common shares outstanding:    
Basic (in shares) 168.8 149.2
Diluted (in shares) 169.7 149.2
v3.20.1
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Condensed Statement of Income Captions [Line Items]    
Net income (loss) $ 55.9 $ (63.9)
Other comprehensive (loss) income, net of tax:    
Foreign currency translation (94.1) 8.2
Derivative financial instruments (16.1) (8.3)
Total other comprehensive loss, net of tax (110.2) (3.3)
Comprehensive loss $ (54.3) (67.2)
Impact due to adoption of ASU 2018-02    
Other comprehensive (loss) income, net of tax:    
Impact due to adoption of ASUs [1]   $ (3.2)
[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.
v3.20.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 379.7 $ 330.3
Trade accounts receivable, net of allowance for doubtful accounts of $17.4 and $12.9 at March 31, 2020 and December 31, 2019, respectively. 1,383.8 1,160.1
Inventories 817.2 796.0
Prepaid expenses and other current assets 206.6 167.2
Total current assets 2,787.3 2,453.6
Property, plant and equipment, net 1,120.7 1,152.4
Goodwill 2,249.0 2,280.8
Intangible assets, net 301.7 320.2
Deferred tax assets 19.2 21.3
Other assets 261.1 266.5
Total assets 6,739.0 6,494.8
Current liabilities:    
Short-term financing 1.1 0.7
Trade accounts payable 1,027.2 895.0
Current portion of long-term debt 26.9 25.0
Accrued compensation 95.9 103.6
Other accrued expenses 439.8 425.1
Total current liabilities 1,590.9 1,449.4
Long-term debt 2,860.8 2,688.8
Pension and other postretirement benefit liabilities 286.6 295.6
Deferred tax liabilities 53.4 56.3
Other long-term liabilities 263.7 271.9
Total liabilities 5,055.4 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 March 31, 2020 and December 31, 2019 0.0 0.0
Common stock, 2.0 billion shares authorized at $0.01 par value with 168.9 million and 168.7 million shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively 1.7 1.7
Additional paid-in capital 2,974.0 2,968.9
Accumulated deficit (802.6) (858.5)
Accumulated other comprehensive loss (489.5) (379.3)
Total stockholders’ equity 1,683.6 1,732.8
Total liabilities and stockholders’ equity $ 6,739.0 $ 6,494.8
v3.20.1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 17.4 $ 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) 168,900,000 168,700,000
Common stock, shares outstanding (in shares) 168,900,000 168,700,000
v3.20.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Operating activities:    
Net income (loss) $ 55.9 $ (63.9)
Adjustments to reconcile net income (loss) to net cash used by operating activities:    
Depreciation and amortization 57.5 47.6
Amortization of deferred financing fees and debt discount 1.6 1.8
Loss on sale of business 8.6 0.0
(Gain) loss on sale of property, plant and equipment (5.3) 0.1
Loss on extinguishment of debt 1.8 0.7
Deferred income taxes (3.5) (28.2)
Stock-based compensation expense 5.7 6.0
Other 0.0 0.4
Changes in operating assets and liabilities:    
Trade accounts receivable, net (259.4) (86.6)
Inventories (50.5) (42.9)
Prepaid expenses and other current assets (58.3) (4.2)
Trade accounts payable 165.3 37.3
Pensions and other postretirement benefit liabilities (5.3) (3.3)
Other, net 7.7 11.7
Net cash used by operating activities (78.2) (123.5)
Investing activities:    
Purchases of property, plant and equipment (24.1) (16.5)
Purchases of businesses, net of cash acquired 0.0 (1,165.5)
Proceeds from sale of property, plant and equipment 7.6 0.7
(Payments)/proceeds from sale of business (8.2) 650.0
Other (6.2) (1.3)
Net cash used by investing activities (30.9) (532.6)
Financing activities:    
Proceeds from issuance of long-term debt 0.0 947.0
Payments on long-term debt and finance lease obligations (180.6) (4.6)
Net proceeds under revolving credit facilities 345.9 394.4
Short-term financing, net 6.3 (4.3)
Taxes paid related to net share settlements of stock-based compensation awards (1.3) (2.0)
Stock option exercises 0.7 0.0
Net cash provided by financing activities 171.0 1,330.5
Effect of exchange rate changes on cash and cash equivalents (12.5) (8.0)
Net increase in cash and cash equivalents 49.4 666.4
Cash and cash equivalents at beginning of period 330.3 121.6
Cash and cash equivalents at end of period 379.7 788.0
Cash paid during the period for:    
Income taxes 9.8 9.9
Interest, net of capitalized interest 18.0 40.3
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 4.8 12.4
Additions of property, plant and equipment under a finance lease obligation 18.0 1.8
Additions of assets under an operating lease obligation $ 17.5 $ 2.9
v3.20.1
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
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) (63.9)     (63.9)  
Foreign currency translation adjustment 8.2       8.2
Derivative financial instruments, net of tax (8.3)       (8.3)
Common stock issued for the Nexeo acquisition (in shares) [1]   27.9      
Common stock issued for the Nexeo acquisition [1] 649.3 $ 0.3 649.0    
Restricted stock units vested (in shares)   0.2      
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 (2.0)   (2.0)    
Stock-based compensation 6.0   6.0    
Ending balance (in shares) at Mar. 31, 2019   169.7      
Ending balance at Mar. 31, 2019 $ 1,781.0 $ 1.7 2,978.0 (822.2) (376.5)
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) 55.9     55.9  
Foreign currency translation adjustment (94.1)       (94.1)
Derivative financial instruments, net of tax (16.1)       (16.1)
Restricted stock units vested (in shares)   0.2      
Restricted stock units vested 0.0 $ 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 (1.3)   (1.3)    
Stock option exercises (in shares)   0.1      
Stock option exercises 0.7   0.7    
Stock-based compensation $ 5.7   5.7    
Ending balance (in shares) at Mar. 31, 2020 168.9 168.9      
Ending balance at Mar. 31, 2020 $ 1,683.6 $ 1.7 $ 2,974.0 $ (802.6) $ (489.5)
[1] Refer to “Note 3: Business combinations” for more information.
v3.20.1
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]    
Foreign currency translation adjustment tax expense (benefit) $ (4.7)  
Derivative financial instrument tax expense (benefit) $ 7.0 $ 2.8
v3.20.1
Nature of operations
3 Months Ended
Mar. 31, 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.
v3.20.1
Significant accounting policies
3 Months Ended
Mar. 31, 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 three months ended March 31, 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.
v3.20.1
Business combinations
3 Months Ended
Mar. 31, 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 expands and strengthens 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 the final deferred income taxes adjustments. The adjustments to these balances resulted in a $7.0 million increase to goodwill. The accounting for this acquisition is complete as of March 31, 2020.
The final purchase price allocation and measurement period adjustments are 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 long-term liabilities within the condensed consolidated balance sheet. Refer to “Note 15: Fair value measurements” for more information.
v3.20.1
Discontinued operations
3 Months Ended
Mar. 31, 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 period from March 1, 2019 to March 31, 2019, as presented in “Net income from discontinued operations” on the condensed consolidated statements of operations.
(in millions)Three months ended March 31, 2019
External sales$156.9  
Cost of goods sold (exclusive of depreciation)136.7  
Outbound freight and handling3.5  
Warehousing, selling and administrative7.9  
Other expenses1.4  
Income from discontinued operations before income taxes  $7.4  
Income tax expense from discontinued operations  1.3  
Net income from discontinued operations  $6.1  
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 March 31, 2019
Income before income taxes  $2.2  
v3.20.1
Revenue
3 Months Ended
Mar. 31, 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 March 31, 2020
Chemical Distribution$1,270.5  $459.9  $208.3  $105.3  $2,044.0  
Crop Sciences—  —  64.4  —  64.4  
Services87.0  0.4  13.1  2.3  102.8  
Total external customer net sales$1,357.5  $460.3  $285.8  $107.6  $2,211.2  

USAEMEACanadaLATAMConsolidated
(in millions)Three months ended March 31, 2019
Chemical Distribution$1,247.5  $483.4  $211.7  $92.6  $2,035.2  
Crop Sciences—  —  50.5  —  50.5  
Services59.7  0.3  11.6  2.7  74.3  
Total external customer net sales$1,307.2  $483.7  $273.8  $95.3  $2,160.0  
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. The following table provides information pertaining to the deferred revenue balance and account activity:
(in millions)
Deferred revenue as of January 1, 2020
$65.5  
Deferred revenue as of March 31, 2020
43.0  
Revenue recognized that was included in the deferred revenue balance at the beginning of the period63.9  
The deferred revenue balances are all expected to have a duration of one year or less and are recorded within the other accrued expenses line item of the condensed consolidated balance sheets.
v3.20.1
Other operating expenses, net
3 Months Ended
Mar. 31, 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
March 31,
(in millions)20202019
Acquisition and integration related expenses$17.5  $77.1  
Stock-based compensation expense5.7  6.0  
Restructuring charges2.5  0.1  
Other employee severance costs5.5  12.9  
Other facility closure costs1.9  —  
Saccharin legal settlement—  62.5  
Fair value adjustment for warrants(26.3) (4.4) 
(Gain) loss on sale of property, plant and equipment(5.3) 0.1  
Other2.6  10.5  
Total other operating expenses, net$4.1  $164.8  
v3.20.1
Restructuring charges
3 Months Ended
Mar. 31, 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 2020, management approved a plan to implement a new structure designed to streamline and accelerate the opportunities between the Canadian and United States operations. The reporting structure in Canada was condensed and realigned to report under the leadership in the United States for commercial, operations, human resources and finance. The actions associated with this program are expected to be completed by the end of the second quarter of 2020. As a result, we recorded the following charges:
(in millions)Three months ended March 31, 2020Anticipated total costs
Canada:
Employee termination costs$2.3  $3.4  
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
Non-cash 
and other
March 31, 2020
Employee termination costs$3.7  $2.5  $(2.9) $(0.1) $3.2  
Facility exit costs1.9  —  (0.5) —  1.4  
Other exit costs0.2  —  —  —  0.2  
Total$5.8  $2.5  $(3.4) $(0.1) $4.8  

(in millions)January 1, 2019Charge to 
earnings
Cash 
paid
Non-cash 
and other
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 $4.3 million and $5.3 million were classified as current in other accrued expenses in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. The long-term portion of restructuring liabilities of $0.5 million were recorded in other long-term liabilities in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, and primarily consists of facility exit costs that are expected to be paid within the next five years.
The cost information above does not contain any estimates for programs that may be developed and implemented in future periods. While the Company believes the recorded restructuring liabilities are adequate, revisions to current estimates may be recorded in future periods based on new information as it becomes available.
v3.20.1
Other (expense) income, net
3 Months Ended
Mar. 31, 2020
Other Income and Expenses [Abstract]  
Other expense, net
8. Other expense, net
Other expense, net consisted of the following:
 Three months ended
March 31,
(in millions)20202019
Foreign currency transactions$(0.8) $(0.7) 
Foreign currency denominated loans revaluation0.2  5.2  
Undesignated foreign currency derivative instruments (1)
(2.0) (9.9) 
Undesignated swap contracts (1)
(4.8) 0.2  
Non-operating retirement benefits (2)
2.2  0.6  
Debt refinancing costs(0.1) —  
Other(0.6) (1.5) 
Total other expense  $(5.9) $(6.1) 
(1)Refer to “Note 16: Derivatives” for more information.
(2)Refer to “Note 9: Employee benefit plans” for more information.
v3.20.1
Employee benefit plans
3 Months Ended
Mar. 31, 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
March 31,
Three months ended
March 31,
(in millions)2020201920202019
Service cost (1)
$—  $—  $0.5  $0.6  
Interest cost (2)
5.8  6.8  3.1  3.9  
Expected return on plan assets (2)
(7.1) (6.3) (4.0) (5.0) 
Net periodic (benefit) cost$(1.3) $0.5  $(0.4) $(0.5) 
(1)Service cost is included in warehouse, selling and administrative expenses.
(2)These amounts are included in other expense, net.
v3.20.1
Income taxes
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income taxes
10. Income taxes
The income tax benefit and effective income tax rate for the three months ended March 31, 2020 and 2019 were as follows:
Three months ended March 31,
(dollars in millions)20202019
Income tax benefit$0.3  $23.3  
Effective income tax rate(0.5)%25.0 %
A discrete tax benefit of $9.0 million was included in the $0.3 million tax benefit, primarily attributable to the utilization of previously disallowed US interest expense driven by the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The Company’s effective income tax rate without discrete items was 30.0%, 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.
For the prior year quarter, a discrete tax benefit of $10.2 million, substantially attributable to the indirect effects of the Nexeo Plastics sale, was included in the $23.3 million tax benefit. The Company’s effective income tax rate without discrete items was 42.6%, higher than the US federal statutory rate of 21.0%. This is primarily due to the impact of the 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.
v3.20.1
Earnings per share
3 Months Ended
Mar. 31, 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 March 31,
(in millions, except per share data)20202019
Numerator:
Net income (loss) from continuing operations $55.9  $(70.0) 
Net income from discontinued operations  —  6.1  
Net income (loss) $55.9  $(63.9) 
Denominator:
Weighted average common shares outstanding – basic168.8  149.2  
Effect of dilutive securities: stock compensation plans0.9  —  
Weighted average common shares outstanding – diluted169.7  149.2  
Basic:
Basic income (loss) per common share from continuing operations $0.33  $(0.47) 
Basic income per common share from discontinued operations  —  0.04  
Basic income (loss) per common share $0.33  $(0.43) 
Diluted:
Diluted income (loss) per common share from continuing operations $0.33  $(0.47) 
Diluted income per common share from discontinued operations  —  0.04  
Diluted income (loss) per common share $0.33  $(0.43) 
The shares that were not included in the computation of diluted earnings per share for those periods because their inclusion would be anti-dilutive were as follows:
 Three months ended March 31,
(in millions, common shares)20202019
Stock options  3.9  2.8  
Restricted stock  1.2  0.7  
Warrants  7.6  0.8  
v3.20.1
Accumulated other comprehensive loss
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Accumulated other comprehensive loss
12. Accumulated other comprehensive loss
The following tables present the changes in accumulated other comprehensive loss by component, net of tax:
(in millions)Cash flow hedgesDefined
benefit
pension items
Currency
translation
items
Total
Balance as of December 31, 2019$(15.4) $(1.0) $(362.9) $(379.3) 
Other comprehensive loss before reclassifications(11.1) —  (94.1) (105.2) 
Amounts reclassified from accumulated other comprehensive loss(5.0) —  —  (5.0) 
Net current period other comprehensive loss  $(16.1) $—  $(94.1) $(110.2) 
Balance as of March 31, 2020$(31.5) $(1.0) $(457.0) $(489.5) 
Balance as of December 31, 2018$8.9  $(1.1) $(381.0) $(373.2) 
Impact due to adoption of ASU 2018-02 (1)
1.5  —  (4.7) (3.2) 
Other comprehensive (loss) income before reclassifications(5.5) —  8.2  2.7  
Amounts reclassified from accumulated other comprehensive loss(2.8) —  —  (2.8) 
Net current period other comprehensive (loss) income$(6.8) $—  $3.5  $(3.3) 
Balance as of March 31, 2019$2.1  $(1.1) $(377.5) $(376.5) 
(1)Adjusted due to the adoption of ASU 2018-02 “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” on January 1, 2019.
The following is a summary of the amounts reclassified from accumulated other comprehensive loss to net income (loss):
Three months ended March 31,Location of impact on
  statement of operations  
(in millions)
2020 (1)
2019 (1)
Cash flow hedges:
Interest rate swap contracts$0.9  $(3.8) Interest expense
Cross-currency swap contracts(8.1) —  Interest expense and other expense, net
Tax expense2.2  1.0  Income tax benefit
Total reclassifications for the period, net of tax$(5.0) $(2.8) 
(1)Amounts in parentheses indicate credits to net income (loss) in the condensed consolidated statement of operations.
v3.20.1
Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt
13. Debt
Short-term financing
Short-term financing consisted of the following:

(in millions)March 31, 2020December 31, 2019
Amounts drawn under credit facilities$0.5  $0.5  
Bank overdrafts0.6  0.2  
Total short-term financing$1.1  $0.7  
As of March 31, 2020 and December 31, 2019, the Company had $152.1 million and $158.5 million in outstanding letters of credit, respectively.
Long-term debt
Long-term debt consisted of the following:

(in millions)March 31, 2020December 31, 2019
Senior Term Loan Facilities:
Term B-3 Loan due 2024, variable interest rate of 3.70% and 4.05% at March 31, 2020 and December 31, 2019, respectively
$1,264.1  $1,438.0  
Term B-5 Loan due 2026, variable interest rate of 3.45% and 3.80% at March 31, 2020 and December 31, 2019, respectively
399.0  400.0  
Asset Backed Loan (ABL) Facilities:
North American ABL Facility due 2024, variable interest rate of 2.00% and 5.25% at March 31, 2020 and December 31, 2019, respectively
478.4  200.0  
Canadian ABL Term Loan due 2022, variable interest rate of 3.33% and 4.31% at March 31, 2020 and December 31, 2019, respectively
120.9  130.9  
Euro ABL Facility due 2023, variable interest rate of 1.75% at March 31, 2020
66.2  —  
Senior Unsecured Notes:
Senior Unsecured Notes due 2027, fixed interest rate of 5.13% at March 31, 2020 and December 31, 2019
500.0  500.0  
Finance lease obligations82.4  71.2  
Total long-term debt before discount$2,911.0  $2,740.1  
Less: unamortized debt issuance costs and discount on debt(23.3) (26.3) 
Total long-term debt$2,887.7  $2,713.8  
Less: current maturities(26.9) (25.0) 
Total long-term debt, excluding current maturities$2,860.8  $2,688.8  
The weighted average interest rate on long-term debt was 3.72% and 4.25% as of March 31, 2020 and December 31, 2019, respectively.
On January 7, 2020, using the proceeds from the sale of the Environmental Sciences business, the Company repaid $174.0 million of the Term B-3 Loan due 2024. As a result of the prepayment, the Company recognized a loss on extinguishment of debt of $1.8 million during the three months ended March 31, 2020.
Other Information
March 31, 2020December 31, 2019
(in millions)Carrying amountFair valueCarrying amountFair value
Fair value of debt$2,887.7  $2,683.7  $2,713.8  $2,770.7  
The fair values of debt were based on current market quotes for similar borrowings and credit risk adjusted for liquidity, margins and amortization, as necessary and are classified as level 2 in the fair value hierarchy.
v3.20.1
Supplemental balance sheet information
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Supplemental balance sheet information
14. Supplemental balance sheet information
Allowance for doubtful accounts
The allowance for doubtful accounts reflects the Company's current estimate of credit losses expected to be incurred over the life of the trade accounts receivables. Collectability of the trade accounts receivable balance is assessed on an ongoing basis and determined based on the delinquency of customer accounts, the financial condition of individual customers, past collections experience and future economic expectations. The change in the allowance for doubtful accounts is as follows:
(in millions)Three months ended March 31, 2020
Beginning balance, January 1, 2020$12.9  
Provision for credit losses5.6  
Write-offs(0.5) 
Recoveries0.2  
Foreign exchange(0.8) 
Ending balance, March 31, 2020$17.4  
Property, plant and equipment, net
(in millions)March 31, 2020December 31, 2019
Property, plant and equipment, at cost$2,174.7  $2,190.3  
Less: accumulated depreciation(1,054.0) (1,037.9) 
Property, plant and equipment, net$1,120.7  $1,152.4  
Goodwill
The following is a summary of the activity in goodwill by segment.
(in millions)USAEMEACanadaLATAMTotal
Balance, January 1, 2020$1,802.3  $8.4  $441.1  $29.0  $2,280.8  
Purchase price adjustments7.0  —  —  —  7.0  
Other adjustments—  —  —  (0.5) (0.5) 
Foreign exchange—  (0.8) (33.6) (3.9) (38.3) 
Balance, March 31, 2020$1,809.3  $7.6  $407.5  $24.6  $2,249.0  
Intangible assets, net
 March 31, 2020December 31, 2019
(in millions)GrossAccumulated
Amortization
NetGross