ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-1251958 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3075 Highland Parkway, Suite 200 Downers Grove, Illinois | 60515 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ý | Smaller reporting company | ¨ |
Part I. FINANCIAL INFORMATION | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | ||||
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||||
Item 1. | Financial Statements |
Three months ended March 31, | ||||||||||||
(in millions, except per share data) | Note | 2016 | 2015 | |||||||||
Net sales | $ | 1,999.0 | $ | 2,299.1 | ||||||||
Cost of goods sold (exclusive of depreciation) | 1,568.7 | 1,837.5 | ||||||||||
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Gross profit | 430.3 | 461.6 | ||||||||||
Operating expenses: | ||||||||||||
Outbound freight and handling | 71.3 | 84.5 | ||||||||||
Warehousing, selling and administrative | 224.9 | 231.4 | ||||||||||
Other operating expenses, net | 5 | 5.5 | 8.1 | |||||||||
Depreciation | 33.5 | 32.0 | ||||||||||
Amortization | 22.0 | 21.9 | ||||||||||
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Total operating expenses | 357.2 | 377.9 | ||||||||||
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Operating income | 73.1 | 83.7 | ||||||||||
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Other (expense) income: | ||||||||||||
Interest income | 0.9 | 1.2 | ||||||||||
Interest expense | (41.5) | (64.4) | ||||||||||
Other (expense) income, net | 7 | (13.4) | 6.8 | |||||||||
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Total other expense | (54.0) | (56.4) | ||||||||||
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Income before income taxes | 19.1 | 27.3 | ||||||||||
Income tax expense | 8 | 5.1 | 7.6 | |||||||||
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Net income | $ | 14.0 | $ | 19.7 | ||||||||
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Income per common share: | ||||||||||||
Basic | 9 | $ | 0.10 | $ | 0.20 | |||||||
Diluted | 9 | 0.10 | 0.20 | |||||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 9 | 137.6 | 99.9 | |||||||||
Diluted | 9 | 137.8 | 100.4 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
(in millions, except per share data) | Note | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Net sales | $ | 2,262.5 | $ | 2,510.1 | $ | 4,261.5 | $ | 4,809.2 | ||||||||||
Cost of goods sold (exclusive of depreciation) | 1,817.1 | 2,042.9 | 3,385.8 | 3,880.4 | ||||||||||||||
Gross profit | 445.4 | 467.2 | 875.7 | 928.8 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Outbound freight and handling | 73.3 | 81.5 | 144.6 | 166.0 | ||||||||||||||
Warehousing, selling and administrative | 223.9 | 217.1 | 448.8 | 448.5 | ||||||||||||||
Other operating expenses, net | 5 | 11.5 | 39.0 | 17.0 | 47.1 | |||||||||||||
Depreciation | 38.0 | 37.7 | 71.5 | 69.7 | ||||||||||||||
Amortization | 23.3 | 22.4 | 45.3 | 44.3 | ||||||||||||||
Total operating expenses | 370.0 | 397.7 | 727.2 | 775.6 | ||||||||||||||
Operating income | 75.4 | 69.5 | 148.5 | 153.2 | ||||||||||||||
Other (expense) income: | ||||||||||||||||||
Interest income | 1.0 | 1.5 | 1.9 | 2.7 | ||||||||||||||
Interest expense | (41.4 | ) | (64.6 | ) | (82.9 | ) | (129.0 | ) | ||||||||||
Loss on extinguishment of debt | — | (7.3 | ) | — | (7.3 | ) | ||||||||||||
Other income (expense), net | 7 | 5.7 | (12.1 | ) | (7.7 | ) | (5.3 | ) | ||||||||||
Total other expense | (34.7 | ) | (82.5 | ) | (88.7 | ) | (138.9 | ) | ||||||||||
Income before income taxes | 40.7 | (13.0 | ) | 59.8 | 14.3 | |||||||||||||
Income tax expense (benefit) | 8 | 0.9 | (0.6 | ) | 6.0 | 7.0 | ||||||||||||
Net income (loss) | $ | 39.8 | $ | (12.4 | ) | $ | 53.8 | $ | 7.3 | |||||||||
Income (loss) per common share: | ||||||||||||||||||
Basic | 9 | $ | 0.29 | $ | (0.12 | ) | $ | 0.39 | $ | 0.07 | ||||||||
Diluted | 9 | 0.29 | (0.12 | ) | 0.39 | 0.07 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 9 | 137.6 | 102.8 | 137.6 | 101.4 | |||||||||||||
Diluted | 9 | 138.1 | 102.8 | 138.0 | 102.0 |
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| Three months ended March 31, | ||||||||
(in millions) | Note | 2016 | 2015 | |||||||
Net income | $ | 14.0 | $ | 19.7 | ||||||
Other comprehensive income (loss), net of tax: | ||||||||||
Foreign currency translation | 10 | 69.1 | (118.0) | |||||||
Pension and other postretirement benefit adjustment | 10 | (1.8) | (1.8) | |||||||
Derivative financial instruments | 10 | — | (1.3) | |||||||
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Total other comprehensive income (loss), net of tax | 67.3 | (121.1) | ||||||||
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Comprehensive income (loss) | $ | 81.3 | $ | (101.4) | ||||||
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Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
(in millions) | Note | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income (loss) | $ | 39.8 | $ | (12.4 | ) | $ | 53.8 | $ | 7.3 | |||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||
Foreign currency translation | 10 | (2.4 | ) | 21.7 | 66.7 | (96.3 | ) | |||||||||||
Pension and other postretirement benefit adjustment | 10 | (1.2 | ) | (1.9 | ) | (3.0 | ) | (3.7 | ) | |||||||||
Derivative financial instruments | 10 | — | 5.0 | — | 3.7 | |||||||||||||
Total other comprehensive (loss) income, net of tax | (3.6 | ) | 24.8 | 63.7 | (96.3 | ) | ||||||||||||
Comprehensive income (loss) | $ | 36.2 | $ | 12.4 | $ | 117.5 | $ | (89.0 | ) |
(in millions, except per share data) | Note | March 31, 2016 | December 31, 2015 | |||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 222.1 | $ | 188.1 | ||||||||
Trade accounts receivable, net | 1,140.2 | 1,026.2 | ||||||||||
Inventories | 922.3 | 803.4 | ||||||||||
Prepaid expenses and other current assets | 162.2 | 178.6 | ||||||||||
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Total current assets | 2,446.8 | 2,196.3 | ||||||||||
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Property, plant and equipment, net | 12 | 1,093.0 | 1,082.5 | |||||||||
Goodwill | 1,796.7 | 1,745.1 | ||||||||||
Intangible assets, net | 12 | 523.8 | 518.9 | |||||||||
Deferred tax assets | 4.7 | 3.5 | ||||||||||
Other assets | 70.4 | 66.1 | ||||||||||
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Total assets | $ | 5,935.4 | $ | 5,612.4 | ||||||||
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Liabilities and stockholders’ equity | ||||||||||||
Current liabilities: | ||||||||||||
Short-term financing | 11 | $ | 29.4 | $ | 33.5 | |||||||
Trade accounts payable | 1,043.7 | 836.0 | ||||||||||
Current portion of long-term debt | 11 | 59.7 | 59.9 | |||||||||
Accrued compensation | 72.1 | 62.8 | ||||||||||
Other accrued expenses | 292.1 | �� | 301.3 | |||||||||
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Total current liabilities | 1,497.0 | 1,293.5 | ||||||||||
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Long-term debt | 11 | 3,101.8 | 3,057.4 | |||||||||
Pension and other postretirement benefit liabilities | 252.4 | 251.8 | ||||||||||
Deferred tax liabilities | 52.0 | 58.0 | ||||||||||
Other long-term liabilities | 131.9 | 135.0 | ||||||||||
Commitment and contingencies | 16 | — | — | |||||||||
Stockholders’ equity: | ||||||||||||
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of March 31, 2016 and December 31, 2015 | — | — | ||||||||||
Common stock, 2.0 billion shares authorized at $0.01 par value with 138.0 million shares issued and outstanding at March 31, 2016 and December 31, 2015 | 1.4 | 1.4 | ||||||||||
Additional paid-in capital | 2,227.0 | 2,224.7 | ||||||||||
Accumulated deficit | (971.0) | (985.0) | ||||||||||
Accumulated other comprehensive loss | 10 | (357.1) | (424.4) | |||||||||
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Total stockholders’ equity | 900.3 | 816.7 | ||||||||||
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Total liabilities and stockholders’ equity | $ | 5,935.4 | $ | 5,612.4 | ||||||||
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(in millions, except per share data) | Note | June 30, 2016 | December 31, 2015 | |||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 223.8 | $ | 188.1 | ||||||
Trade accounts receivable, net | 1,325.0 | 1,026.2 | ||||||||
Inventories | 801.7 | 803.4 | ||||||||
Prepaid expenses and other current assets | 153.2 | 178.6 | ||||||||
Total current assets | 2,503.7 | 2,196.3 | ||||||||
Property, plant and equipment, net | 12 | 1,069.7 | 1,082.5 | |||||||
Goodwill | 1,803.3 | 1,745.1 | ||||||||
Intangible assets, net | 12 | 500.0 | 518.9 | |||||||
Deferred tax assets | 3.3 | 3.5 | ||||||||
Other assets | 74.4 | 66.1 | ||||||||
Total assets | $ | 5,954.4 | $ | 5,612.4 | ||||||
Liabilities and stockholders’ equity | ||||||||||
Current liabilities: | ||||||||||
Short-term financing | 11 | $ | 30.5 | $ | 33.5 | |||||
Trade accounts payable | 1,100.8 | 836.0 | ||||||||
Current portion of long-term debt | 11 | 91.6 | 59.9 | |||||||
Accrued compensation | 59.1 | 62.8 | ||||||||
Other accrued expenses | 258.0 | 301.3 | ||||||||
Total current liabilities | 1,540.0 | 1,293.5 | ||||||||
Long-term debt | 11 | 3,039.4 | 3,057.4 | |||||||
Pension and other postretirement benefit liabilities | 249.5 | 251.8 | ||||||||
Deferred tax liabilities | 53.8 | 58.0 | ||||||||
Other long-term liabilities | 133.0 | 135.0 | ||||||||
Commitment and contingencies | 16 | — | — | |||||||
Stockholders’ equity: | ||||||||||
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of June 30, 2016 and December 31, 2015 | — | — | ||||||||
Common stock, 2.0 billion shares authorized at $0.01 par value with 137.9 million and 138.0 million shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 1.4 | 1.4 | ||||||||
Additional paid-in capital | 2,229.2 | 2,224.7 | ||||||||
Accumulated deficit | (931.2 | ) | (985.0 | ) | ||||||
Accumulated other comprehensive loss | 10 | (360.7 | ) | (424.4 | ) | |||||
Total stockholders’ equity | 938.7 | 816.7 | ||||||||
Total liabilities and stockholders’ equity | $ | 5,954.4 | $ | 5,612.4 |
Three months ended March 31, | ||||||||||||
(in millions) | Note | 2016 | 2015 | |||||||||
Operating activities: | ||||||||||||
Net income | $ | 14.0 | $ | 19.7 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 55.5 | 53.9 | ||||||||||
Amortization of deferred financing fees and debt discount | 2.0 | 4.2 | ||||||||||
Amortization of pension credit from accumulated other comprehensive loss | 10 | (3.0) | (3.0) | |||||||||
Deferred income taxes | (6.9) | 3.8 | ||||||||||
Stock-based compensation expense | 5 | 2.2 | 1.5 | |||||||||
Other | (0.3) | (0.8) | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Trade accounts receivable, net | (84.8) | (22.9) | ||||||||||
Inventories | (95.1) | (44.7) | ||||||||||
Prepaid expenses and other current assets | 19.9 | (15.3) | ||||||||||
Trade accounts payable | 181.0 | 99.8 | ||||||||||
Pensions and other postretirement benefit liabilities | (10.0) | (16.4) | ||||||||||
Other, net | (9.8) | 8.3 | ||||||||||
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Net cash provided by operating activities | 64.7 | 88.1 | ||||||||||
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Investing activities: | ||||||||||||
Purchases of property, plant and equipment | (23.5) | (31.9) | ||||||||||
Purchases of businesses, net of cash acquired | 15 | (53.3) | — | |||||||||
Proceeds from sale of property, plant and equipment | 0.9 | 1.7 | ||||||||||
Other | (1.3) | — | ||||||||||
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Net cash used by investing activities | (77.2) | (30.2) | ||||||||||
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Financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | 11 | 37.5 | — | |||||||||
Payments on long-term debt and capital lease obligations | 11 | (9.4) | (53.7) | |||||||||
Short-term financing, net | 11 | (10.4) | 3.4 | |||||||||
Other | 0.1 | 1.9 | ||||||||||
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Net cash provided by (used by) financing activities | 17.8 | (48.4) | ||||||||||
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Effect of exchange rate changes on cash and cash equivalents | 28.7 | (34.1) | ||||||||||
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Net increase (decrease) in cash and cash equivalents | 34.0 | (24.6) | ||||||||||
Cash and cash equivalents at beginning of period | 188.1 | 206.0 | ||||||||||
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Cash and cash equivalents at end of period | $ | 222.1 | $ | 181.4 | ||||||||
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Supplemental disclosure of cash flow information | ||||||||||||
Non-cash activities: | ||||||||||||
Additions of property, plant and equipment included in trade accounts payable and other accrued expenses | $ | 6.6 | $ | 9.4 | ||||||||
Additions of property, plant and equipment under a capital lease obligation | 2.3 | 11.3 |
Six months ended June 30, | ||||||||||
(in millions) | Note | 2016 | 2015 | |||||||
Operating activities: | ||||||||||
Net income | $ | 53.8 | $ | 7.3 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 116.8 | 114.0 | ||||||||
Amortization of deferred financing fees and debt discount | 4.0 | 8.0 | ||||||||
Amortization of pension credit from accumulated other comprehensive loss | 10 | (4.5 | ) | (6.0 | ) | |||||
Loss on extinguishment of debt | — | 7.3 | ||||||||
Deferred income taxes | (3.6 | ) | (1.8 | ) | ||||||
Stock-based compensation expense | 5 | 3.5 | 3.4 | |||||||
Other | (0.4 | ) | (0.6 | ) | ||||||
Changes in operating assets and liabilities: | ||||||||||
Trade accounts receivable, net | (274.1 | ) | (172.2 | ) | ||||||
Inventories | 18.3 | 8.3 | ||||||||
Prepaid expenses and other current assets | 27.7 | (2.0 | ) | |||||||
Trade accounts payable | 242.8 | 227.8 | ||||||||
Pensions and other postretirement benefit liabilities | (20.2 | ) | (31.0 | ) | ||||||
Other, net | (49.0 | ) | (53.9 | ) | ||||||
Net cash provided by operating activities | 115.1 | 108.6 | ||||||||
Investing activities: | ||||||||||
Purchases of property, plant and equipment | (45.2 | ) | (62.4 | ) | ||||||
Purchases of businesses, net of cash acquired | 15 | (54.8 | ) | (18.6 | ) | |||||
Proceeds from sale of property, plant and equipment | 2.9 | 5.0 | ||||||||
Other | (1.7 | ) | (5.5 | ) | ||||||
Net cash used by investing activities | (98.8 | ) | (81.5 | ) | ||||||
Financing activities: | ||||||||||
Proceeds from sale of common stock | — | 765.8 | ||||||||
Proceeds from issuance of long-term debt | 11 | 20.5 | — | |||||||
Payments on long-term debt and capital lease obligations | 11 | (17.3 | ) | (763.1 | ) | |||||
Short-term financing, net | 11 | (5.4 | ) | (11.2 | ) | |||||
Other | 1.0 | (1.9 | ) | |||||||
Net cash used by financing activities | (1.2 | ) | (10.4 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 20.6 | (25.7 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 35.7 | (9.0 | ) | |||||||
Cash and cash equivalents at beginning of period | 188.1 | 206.0 | ||||||||
Cash and cash equivalents at end of period | $ | 223.8 | $ | 197.0 | ||||||
Supplemental disclosure of cash flow information | ||||||||||
Non-cash activities: | ||||||||||
Additions of property, plant and equipment included in trade accounts payable and other accrued expenses | $ | 6.6 | $ | 11.7 | ||||||
Additions of property, plant and equipment under a capital lease obligation | 7.3 | 30.1 |
1. | Nature of operations |
Univar USA (“USA”)
Univar Canada (“Canada”)
Univar Europe, the Middle East and Africa (“EMEA”)
Rest of World (“Rest of World”)
2. | Basis of presentation |
3. | Recent accounting pronouncements |
4. | Employee benefit plans |
Defined Benefit Pension Plans | ||||||||||||||||
Domestic | Foreign | |||||||||||||||
Three months ended March 31, | Three months ended March 31, | |||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Service cost | $ | — | $ | — | $ | 0.6 | $ | 2.0 | ||||||||
Interest cost | 8.0 | 7.7 | 4.7 | 5.1 | ||||||||||||
Expected return on plan assets | (8.1) | (9.0) | (7.4) | (7.6) | ||||||||||||
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Net periodic benefit credit | $ | (0.1) | $ | (1.3) | $ | (2.1) | $ | (0.5) | ||||||||
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Other Postretirement Benefits | ||||||||
Three months ended March 31, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Interest cost | $ | 0.1 | $ | 0.1 | ||||
Prior service credits | (3.0) | (3.0) | ||||||
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Net periodic benefit credit | $ | (2.9) | $ | (2.9) | ||||
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Domestic - Defined Benefit Pension Plans | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest cost | 8.0 | 7.7 | 16.0 | 15.4 | ||||||||||||
Expected return on plan assets | (8.1 | ) | (8.9 | ) | (16.2 | ) | (17.9 | ) | ||||||||
Net periodic benefit credit | $ | (0.1 | ) | $ | (1.2 | ) | $ | (0.2 | ) | $ | (2.5 | ) |
Foreign - Defined Benefit Pension Plans | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Service cost | $ | 0.7 | $ | 2.1 | $ | 1.3 | $ | 4.1 | ||||||||
Interest cost | 4.7 | 5.1 | 9.4 | 10.2 | ||||||||||||
Expected return on plan assets | (7.5 | ) | (7.7 | ) | (14.9 | ) | (15.3 | ) | ||||||||
Net periodic benefit credit | $ | (2.1 | ) | $ | (0.5 | ) | $ | (4.2 | ) | $ | (1.0 | ) |
Other Postretirement Benefits | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Service cost | $ | — | $ | 0.1 | $ | — | $ | 0.1 | ||||||||
Interest cost | 0.1 | — | 0.2 | 0.1 | ||||||||||||
Prior service credits | (1.5 | ) | (3.0 | ) | (4.5 | ) | (6.0 | ) | ||||||||
Net periodic benefit credit | $ | (1.4 | ) | $ | (2.9 | ) | $ | (4.3 | ) | $ | (5.8 | ) |
5. | Other operating expenses, net |
Three months ended March 31, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Acquisition and integration related expenses | $ | 1.9 | $ | 0.4 | ||||
Stock-based compensation expense | 2.2 | 1.5 | ||||||
Redundancy and restructuring | 1.0 | 3.7 | ||||||
Advisory fees paid to CVC and CD&R(1) | — | 1.3 | ||||||
Other | 0.4 | 1.2 | ||||||
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Total other operating expenses, net | $ | 5.5 | $ | 8.1 | ||||
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Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Acquisition and integration related expenses | $ | 2.4 | $ | 1.0 | $ | 4.3 | $ | 1.4 | ||||||||
Stock-based compensation expense | 1.3 | 1.9 | 3.5 | 3.4 | ||||||||||||
Redundancy and restructuring | 5.5 | 12.5 | 6.5 | 16.2 | ||||||||||||
Advisory fees paid to CVC and CD&R(1) | — | 1.3 | — | 2.6 | ||||||||||||
Other (2) | 2.3 | 22.3 | 2.7 | 23.5 | ||||||||||||
Total other operating expenses, net | $ | 11.5 | $ | 39.0 | $ | 17.0 | $ | 47.1 |
(1) | Significant stockholders CVC Capital Partners (“CVC”) and Clayton, Dubilier & Rice, LLC (“CD&R”). |
(2) | In the three and six months ended June 30, 2015, other is inclusive of a contract termination fee of $26.2 million related to terminating consulting agreements between the Company and CVC and CD&R related to the initial public offering. |
6. | Redundancy and restructuring |
The following table presents cost information related to restructuring plans that have not been completed as of June 30, 2016 and does not contain any estimates for plans that may be developed and implemented in future periods.
(in millions) | USA | Canada | EMEA | ROW | Other | Total | ||||||||||||||||||
Anticipated total costs | ||||||||||||||||||||||||
Employee termination costs | $ | 16.7 | $ | 4.9 | $ | 24.6 | $ | 2.5 | $ | 5.8 | $ | 54.5 | ||||||||||||
Facility exit costs | 18.5 | — | 3.3 | 0.2 | — | 22.0 | ||||||||||||||||||
Other exit costs | 2.4 | — | 6.9 | 0.6 | 0.8 | 10.7 | ||||||||||||||||||
Total | $ | 37.6 | $ | 4.9 | $ | 34.8 | $ | 3.3 | $ | 6.6 | $ | 87.2 | ||||||||||||
Incurred to date costs | ||||||||||||||||||||||||
Inception of plans through June 30, 2016 | ||||||||||||||||||||||||
Employee termination costs | $ | 16.7 | $ | 4.9 | $ | 24.6 | $ | 2.5 | $ | 5.8 | $ | 54.5 | ||||||||||||
Facility exit costs | 18.5 | — | 3.3 | 0.2 | — | 22 | ||||||||||||||||||
Other exit costs | 1.7 | — | 6.8 | 0.6 | 0.8 | 9.9 | ||||||||||||||||||
Total | $ | 36.9 | $ | 4.9 | $ | 34.7 | $ | 3.3 | $ | 6.6 | $ | 86.4 | ||||||||||||
Inception of plans through December 31, 2015 | ||||||||||||||||||||||||
Employee termination costs | $ | 16.4 | $ | 4.1 | $ | 25.6 | $ | 2.0 | $ | 5.3 | $ | 53.4 | ||||||||||||
Facility exit costs | 14.0 | — | 3.1 | 0.2 | — | 17.3 | ||||||||||||||||||
Other exit costs | 1.7 | — | 6.7 | — | 0.8 | 9.2 | ||||||||||||||||||
Total | $ | 32.1 | $ | 4.1 | $ | 35.4 | $ | 2.2 | $ | 6.1 | $ | 79.9 |
(in millions) | January 1, 2016 | Charge to earnings | Cash paid | Non-cash and other | March 31, 2016 | |||||||||||||||
Employee termination costs | $ | 31.0 | $ | 0.2 | $ | (5.7) | $ | 0.8 | $ | 26.3 | ||||||||||
Facility exit costs | 15.5 | 0.8 | (2.0) | 0.1 | 14.4 | |||||||||||||||
Other exit costs | 0.1 | — | — | — | 0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 46.6 | $ | 1.0 | $ | (7.7) | $ | 0.9 | $ | 40.8 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(in millions) | January 1, 2015 | Charge to earnings | Cash paid | Non-cash and other | December 31, 2015 | |||||||||||||||
Employee termination costs | $ | 27.8 | $ | 28.3 | $ | (22.9) | $ | (2.2) | $ | 31.0 | ||||||||||
Facility exit costs | 20.4 | 2.4 | (7.2) | (0.1) | 15.5 | |||||||||||||||
Other exit costs | 0.3 | 3.0 | (3.2) | — | 0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 48.5 | $ | 33.7 | $ | (33.3) | $ | (2.3) | $ | 46.6 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(in millions) | January 1, 2016 | Charge to earnings | Cash paid | Non-cash and other | June 30, 2016 | |||||||||||||||
Employee termination costs | $ | 31.0 | $ | 1.1 | $ | (11.0 | ) | $ | 0.5 | $ | 21.6 | |||||||||
Facility exit costs | 15.5 | 4.7 | (4.1 | ) | 0.1 | 16.2 | ||||||||||||||
Other exit costs | 0.1 | 0.7 | (0.7 | ) | — | 0.1 | ||||||||||||||
Total | $ | 46.6 | $ | 6.5 | $ | (15.8 | ) | $ | 0.6 | $ | 37.9 |
(in millions) | January 1, 2015 | Charge to earnings | Cash paid | Non-cash and other | December 31, 2015 | |||||||||||||||
Employee termination costs | $ | 27.8 | $ | 28.3 | $ | (22.9 | ) | $ | (2.2 | ) | $ | 31.0 | ||||||||
Facility exit costs | 20.4 | 2.4 | (7.2 | ) | (0.1 | ) | 15.5 | |||||||||||||
Other exit costs | 0.3 | 3.0 | (3.2 | ) | — | 0.1 | ||||||||||||||
Total | $ | 48.5 | $ | 33.7 | $ | (33.3 | ) | $ | (2.3 | ) | $ | 46.6 |
7. | Other income (expense) |
Three months ended March 31, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Foreign currency transactions | $ | (2.7) | $ | (0.5) | ||||
Foreign currency denominated loans revaluation | (14.7) | 11.7 | ||||||
Undesignated foreign currency derivative instruments(1) | 1.9 | (2.5) | ||||||
Undesignated interest rate swap contracts(1) | 0.7 | — | ||||||
Ineffective portion of cash flow hedges(1) | — | (0.6) | ||||||
Other | 1.4 | (1.3) | ||||||
|
|
|
| |||||
Total other (expense) income, net | $ | (13.4) | $ | 6.8 | ||||
|
|
|
|
(1) Refer to “Note 14: Derivatives” for more information.
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Foreign currency transactions | $ | 0.3 | $ | 2.3 | $ | (2.4 | ) | $ | 1.8 | ||||||
Foreign currency denominated loans revaluation | 5.4 | (4.7 | ) | (9.3 | ) | 7.0 | |||||||||
Undesignated foreign currency derivative instruments (1) | (0.9 | ) | (1.6 | ) | 1.0 | (4.1 | ) | ||||||||
Undesignated interest rate swap contracts (1) | 1.5 | — | 2.2 | — | |||||||||||
Ineffective portion of cash flow hedges (1) | — | 0.2 | — | (0.4 | ) | ||||||||||
Loss due to discontinuance of cash flow hedges (1) | — | (7.5 | ) | — | (7.5 | ) | |||||||||
Other | (0.6 | ) | (0.8 | ) | 0.8 | (2.1 | ) | ||||||||
Total other income (expense), net | $ | 5.7 | $ | (12.1 | ) | $ | (7.7 | ) | $ | (5.3 | ) |
(1) | Refer to “Note 14: Derivatives” for more information. |
8. | Income taxes |
interest.
In September 2014, also relating to the Restructuring, the CRA issued the 2008 and 2009 Notice of Reassessments for federal corporate income tax liabilities of $11.9 million (Canadian) and $11.0 million (Canadian), respectively, and a departure tax liability of $9.0 million (Canadian). Likewise, in April 2015, the Company’s subsidiaries received the 2008 and 2009 Alberta Notice of Reassessments of $6.0 million (Canadian) and $5.8 million (Canadian), respectively. These Reassessments reflect the additional tax liability and interest relating to those tax years shouldthe initial assertion by the CRA be successful in its assertion of the GAAR relating to the Restructuring described above.
GAAR.
The Company strongly disagrees with the decision of the Tax Court of Canada and on June 30, 2016 filed its notice of appeal to the Canadian Federal Court of Appeal. The Company has not recorded any liabilities for these matters in its financial statements, as it believes it is more likely than not that the Company’s positionJudgment will be reversed on appeal and the Company's position sustained.
Litigation, of course, is subject to uncertainty, and there can be no assurance that Univar's appeal will be successful. Should the matter be resolved against Univar on appeal, the Company would have to record a one-time charge against earnings.
9. | Earnings per share |
Three months ended March 31, | ||||||||
(in millions, except per share data) | 2016 | 2015 | ||||||
Basic: | ||||||||
Net income | $ | 14.0 | $ | 19.7 | ||||
Weighted average common shares outstanding | 137.6 | 99.9 | ||||||
|
|
|
| |||||
Basic income per common share | $ | 0.10 | $ | 0.20 | ||||
|
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|
| |||||
Diluted: | ||||||||
Net income | $ | 14.0 | $ | 19.7 | ||||
Weighted average common shares outstanding | 137.6 | 99.9 | ||||||
Effect of dilutive securities: Stock compensation plans(1) | 0.2 | 0.5 | ||||||
|
|
|
| |||||
Weighted average common shares outstanding – diluted | 137.8 | 100.4 | ||||||
|
|
|
| |||||
Diluted income per common share | $ | 0.10 | $ | 0.20 | ||||
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic: | ||||||||||||||||
Net income (loss) | $ | 39.8 | $ | (12.4 | ) | $ | 53.8 | $ | 7.3 | |||||||
Weighted average common shares outstanding | 137.6 | 102.8 | 137.6 | 101.4 | ||||||||||||
Basic income (loss) per common share | $ | 0.29 | $ | (0.12 | ) | $ | 0.39 | $ | 0.07 | |||||||
Diluted: | ||||||||||||||||
Net income (loss) | $ | 39.8 | $ | (12.4 | ) | $ | 53.8 | $ | 7.3 | |||||||
Weighted average common shares outstanding | 137.6 | 102.8 | 137.6 | 101.4 | ||||||||||||
Effect of dilutive securities: Stock compensation plans (1) | 0.5 | — | 0.4 | 0.6 | ||||||||||||
Weighted average common shares outstanding – diluted | 138.1 | 102.8 | 138.0 | 102.0 | ||||||||||||
Diluted income (loss) per common share | $ | 0.29 | $ | (0.12 | ) | $ | 0.39 | $ | 0.07 |
(1) | Stock options to purchase |
10. | Accumulated other comprehensive loss |
(in millions) | Cash flow hedges | Defined benefit pension items | Currency translation items | Total | ||||||||||||
Balance as of December 31, 2015 | $ | — | $ | 3.0 | $ | (427.4) | $ | (424.4) | ||||||||
Other comprehensive income before reclassifications | — | — | 69.1 | 69.1 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | (1.8) | — | (1.8) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current period other comprehensive income (loss) | — | (1.8) | 69.1 | 67.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of March 31, 2016 | $ | — | $ | 1.2 | $ | (358.3) | $ | (357.1) | ||||||||
|
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|
|
|
|
|
| |||||||||
Balance as of December 31, 2014 | $ | (3.7) | $ | 10.3 | $ | (214.8) | $ | (208.2) | ||||||||
Other comprehensive loss before reclassifications | (2.3) | — | (118.0) | (120.3) | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 1.0 | (1.8) | — | (0.8) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current period other comprehensive losses(1) | (1.3) | (1.8) | (118.0) | (121.1) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of March 31, 2015 | $ | (5.0) | $ | 8.5 | $ | (332.8) | $ | (329.3) | ||||||||
|
|
|
|
|
|
|
|
(in millions) | Cash flow hedges | Defined benefit pension items | Currency translation items | Total | ||||||||||||
Balance as of December 31, 2015 | $ | — | $ | 3.0 | $ | (427.4 | ) | $ | (424.4 | ) | ||||||
Other comprehensive income before reclassifications | — | — | 66.7 | 66.7 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | (3.0 | ) | — | (3.0 | ) | ||||||||||
Net current period other comprehensive income (loss) | — | (3.0 | ) | 66.7 | 63.7 | |||||||||||
Balance as of June 30, 2016 | $ | — | $ | — | $ | (360.7 | ) | $ | (360.7 | ) | ||||||
Balance as of December 31, 2014 | $ | (3.7 | ) | $ | 10.3 | $ | (214.8 | ) | $ | (208.2 | ) | |||||
Other comprehensive loss before reclassifications | (3.0 | ) | — | (96.3 | ) | (99.3 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 6.7 | (3.7 | ) | — | 3.0 | |||||||||||
Net current period other comprehensive losses | 3.7 | (3.7 | ) | (96.3 | ) | (96.3 | ) | |||||||||
Balance as of June 30, 2015 | $ | — | $ | 6.6 | $ | (311.1 | ) | $ | (304.5 | ) |
(in millions) | Three months ended March 31, 2016(1) | Three months ended March 31, 2015(1) | Location of impact on | |||||||
Amortization of defined benefit pension items: | ||||||||||
Prior service credits | $ | (3.0) | $ | (3.0) | Warehousing, selling and administrative | |||||
Tax expense | 1.2 | 1.2 | Income tax expense | |||||||
|
|
|
| |||||||
Net of tax | (1.8) | (1.8) | ||||||||
Cash flow hedges: | ||||||||||
Interest rate swap contracts | — | 1.6 | Interest expense | |||||||
Tax benefit | — | (0.6) | Income tax expense | |||||||
|
|
|
| |||||||
Net of tax | — | 1.0 | ||||||||
|
|
|
| |||||||
Total reclassifications for the period | $ | — | $ | (0.8) | ||||||
|
|
|
|
(in millions) | Three months ended June 30, 2016 (1) | Three months ended June 30, 2015 (1) | Location of impact on statement of operations | |||||||
Amortization of defined benefit pension items: | ||||||||||
Prior service credits | $ | (1.5 | ) | $ | (3.0 | ) | Warehousing, selling and administrative | |||
Tax expense | 0.3 | 1.1 | Income tax expense | |||||||
Net of tax | (1.2 | ) | (1.9 | ) | ||||||
Cash flow hedges: | ||||||||||
Interest rate swap contracts | — | 1.5 | Interest expense | |||||||
Interest rate swap contracts - loss on due to discontinuance of hedge accounting | — | 7.5 | Other expense, net | |||||||
Tax benefit | — | (3.3 | ) | Income tax expense | ||||||
Net of tax | — | 5.7 | ||||||||
Total reclassifications for the period | $ | (1.2 | ) | $ | 3.8 |
(in millions) | Six months ended June 30, 2016 (1) | Six months ended June 30, 2015 (1) | Location of impact on statement of operations | |||||||
Amortization of defined benefit pension items: | �� | |||||||||
Prior service credits | $ | (4.5 | ) | $ | (6.0 | ) | Warehousing, selling and administrative | |||
Tax expense | 1.5 | 2.3 | Income tax expense | |||||||
Net of tax | (3.0 | ) | (3.7 | ) | ||||||
Cash flow hedges: | ||||||||||
Interest rate swap contracts | — | 3.1 | Interest expense | |||||||
Interest rate swap contracts - loss on due to discontinuance of hedge accounting | — | 7.5 | Other expense, net | |||||||
Tax benefit | — | (3.9 | ) | Income tax expense | ||||||
Net of tax | — | 6.7 | ||||||||
Total reclassifications for the period | $ | (3.0 | ) | $ | 3.0 |
(1) | Amounts in parentheses indicate credits to net income in the consolidated statement of operations. |
11. | Debt |
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Amounts drawn under credit facilities | $ | 14.5 | $ | 13.4 | ||||
Bank overdrafts | 14.9 | 20.1 | ||||||
|
|
|
| |||||
Total short-term financing | $ | 29.4 | $ | 33.5 | ||||
|
|
|
|
(in millions) | June 30, 2016 | December 31, 2015 | ||||||
Amounts drawn under credit facilities | $ | 12.7 | $ | 13.4 | ||||
Bank overdrafts | 17.8 | 20.1 | ||||||
Total short-term financing | $ | 30.5 | $ | 33.5 |
2015, respectively.
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Senior Term Loan Facilities: | ||||||||
Term B Loan due 2022, variable interest rate of 4.25% at March 31, 2016 and December 31, 2015 | $ | 2,039.8 | $ | 2,044.9 | ||||
Euro Tranche Term Loan due 2022, variable interest rate of 4.25% at March 31, 2016 and December 31, 2015 | 283.1 | 270.8 | ||||||
Asset Backed Loan (ABL) Facilities: | ||||||||
North American ABL Facility due 2020, variable interest rate of 2.00% and 2.13% at March 31, 2016 and December 31, 2015, respectively | 315.5 | 278.0 | ||||||
North American ABL Term Loan due 2018, variable interest rate of 3.38% and 3.36% at March 31, 2016 and December 31, 2015, respectively | 100.0 | 100.0 | ||||||
Unsecured Notes: | ||||||||
Unsecured Notes due 2023, fixed interest rate of 6.75% at March 31, 2016 and December 31, 2015 | 399.5 | 400.0 | ||||||
Capital lease obligations | 56.0 | 57.3 | ||||||
|
|
|
| |||||
Total long-term debt before discount | 3,193.9 | 3,151.0 | ||||||
Less: unamortized debt issuance costs and discount on debt | (32.4) | (33.7) | ||||||
|
|
|
| |||||
Total long-term debt | 3,161.5 | 3,117.3 | ||||||
Less: current maturities | (59.7) | (59.9) | ||||||
|
|
|
| |||||
Total long-term debt, excluding current maturities | $ | 3,101.8 | $ | 3,057.4 | ||||
|
|
|
|
(in millions) | June 30, 2016 | December 31, 2015 | ||||||
Senior Term Loan Facilities: | ||||||||
Term B Loan Due 2022, variable interest rate of 4.25% at June 30, 2016 and December 31, 2015 | $ | 2,034.6 | $ | 2,044.9 | ||||
Euro Tranche Term Loan Due 2022, variable interest rate of 4.25% at June 30, 2016 and December 31, 2015 | 275.6 | 270.8 | ||||||
Asset Backed Loan (ABL) Facilities: | ||||||||
North American ABL Facility Due 2020, variable interest rate of 2.08% and 2.13% at June 30, 2016 and December 31, 2015, respectively | 298.5 | 278.0 | ||||||
North American ABL Term Loan Due 2018, variable interest rate of 3.38% and 3.36% at June 30, 2016 and December 31, 2015, respectively | 100.0 | 100.0 | ||||||
Unsecured Notes: | ||||||||
Unsecured Notes due 2023, fixed interest rate of 6.75% at June 30, 2016 and December 31, 2015 | 399.5 | 400.0 | ||||||
Capital lease obligations | 53.9 | 57.3 | ||||||
Total long-term debt before discount | 3,162.1 | 3,151.0 | ||||||
Less: unamortized debt issuance costs and discount on debt | (31.1 | ) | (33.7 | ) | ||||
Total long-term debt | 3,131.0 | 3,117.3 | ||||||
Less: current maturities | (91.6 | ) | (59.9 | ) | ||||
Total long-term debt, excluding current maturities | $ | 3,039.4 | $ | 3,057.4 |
12. | Supplemental balance sheet information |
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Property, plant and equipment, at cost | $ | 1,872.1 | $ | 1,806.0 | ||||
Less: accumulated depreciation | (779.1) | (723.5) | ||||||
|
|
|
| |||||
Property, plant and equipment, net | $ | 1,093.0 | $ | 1,082.5 | ||||
|
|
|
|
(in millions) | June 30, 2016 | December 31, 2015 | ||||||
Property, plant and equipment, at cost | $ | 1,859.2 | $ | 1,806.0 | ||||
Less: accumulated depreciation | (789.5 | ) | (723.5 | ) | ||||
Property, plant and equipment, net | $ | 1,069.7 | $ | 1,082.5 |
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Capital lease assets, at cost | $ | 65.2 | $ | 63.5 | ||||
Less: accumulated depreciation | (10.0) | (7.5) | ||||||
|
|
|
| |||||
Capital lease assets, net | $ | 55.2 | $ | 56.0 | ||||
|
|
|
|
(in millions) | June 30, 2016 | December 31, 2015 | ||||||
Capital lease assets, at cost | $ | 62.7 | $ | 63.5 | ||||
Less: accumulated depreciation | (9.3 | ) | (7.5 | ) | ||||
Capital lease assets, net | $ | 53.4 | $ | 56.0 |
March 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
(in millions) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 949.4 | $ | (469.6) | $ | 479.8 | $ | 930.1 | $ | (446.6) | $ | 483.5 | ||||||||||||
Other | 186.0 | (142.0) | 44.0 | 170.5 | (135.1) | 35.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total intangible assets | $ | 1,135.4 | $ | (611.6) | $ | 523.8 | $ | 1,100.6 | $ | (581.7) | $ | 518.9 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
(in millions) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 948.1 | $ | (488.8 | ) | $ | 459.3 | $ | 930.1 | $ | (446.6 | ) | $ | 483.5 | ||||||||||
Other | 186.2 | (145.5 | ) | 40.7 | 170.5 | (135.1 | ) | 35.4 | ||||||||||||||||
Total intangible assets | $ | 1,134.3 | $ | (634.3 | ) | $ | 500.0 | $ | 1,100.6 | $ | (581.7 | ) | $ | 518.9 |
13. | Fair value measurements |
Level 2 | Level 3 | |||||||||||||||
(in millions) | March 31, 2016 | December 31, 2015 | March 31, 2016 | December 31, 2015 | ||||||||||||
Current assets: | ||||||||||||||||
Forward currency contracts | $ | 0.9 | $ | 0.2 | $ | — | $ | — | ||||||||
Current liabilities: | ||||||||||||||||
Forward currency contracts | 0.5 | 0.2 | — | — | ||||||||||||
Interest rate swap contracts | 4.5 | 5.3 | — | — | ||||||||||||
Noncurrent liabilities: | ||||||||||||||||
Interest rate swap contracts | 0.7 | 0.5 | — | |||||||||||||
Contingent consideration | — | — | 8.7 | 8.7 |
Level 2 | Level 3 | |||||||||||||||
(in millions) | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | ||||||||||||
Current assets: | ||||||||||||||||
Forward currency contracts | $ | 0.8 | $ | 0.2 | $ | — | $ | — | ||||||||
Current liabilities: | ||||||||||||||||
Forward currency contracts | 0.5 | 0.2 | — | — | ||||||||||||
Interest rate swap contracts | 3.7 | 5.3 | — | — | ||||||||||||
Contingent consideration | — | — | 3.0 | — | ||||||||||||
Noncurrent liabilities: | ||||||||||||||||
Interest rate swap contracts | — | 0.5 | — | — | ||||||||||||
Contingent consideration | — | — | 6.3 | 8.7 |
| ||||
| ||||
| ||||
| ||||
| ||||
(in millions) | Contingent consideration | |||
Fair value as of December 31, 2015 | $ | 8.7 | ||
Fair value adjustments | 0.5 | |||
Foreign currency | 0.1 | |||
Fair value as of June 30, 2016 | $ | 9.3 |
March 31, 2016 | December 31, 2015 | |||||||||||||||
(in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Financial liabilities: | ||||||||||||||||
Long-term debt including current portion (Level 2) | $ | 3,161.5 | $ | 3,160.4 | $ | 3,117.3 | $ | 3,056.5 |
June 30, 2016 | December 31, 2015 | |||||||||||||||
(in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Financial liabilities: | ||||||||||||||||
Long-term debt including current portion (Level 2) | $ | 3,131.0 | $ | 3,135.5 | $ | 3,117.3 | $ | 3,056.5 |
14. | Derivatives |
The decrease in notional amount is due to certain swaps maturing during the second quarter of 2016.
15. | Business combinations |
16. | Commitments and Contingencies |
historical insurance coverage. Univar USA is also a defendant in a small number of asbestos claims. As of March 31,June 30, 2016, there were fewer than 220260 asbestos-related claims for which the Company has liability for defense and indemnity pursuant to the indemnification obligation. Historically, the vast majority of the claims against both McKesson and Univar USA have been
District Attorney's office to discuss the matter, without response.
Three months ended March 31, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Environmental liabilities at beginning of period | $ | 113.2 | $ | 120.3 | ||||
Revised obligation estimates | 2.1 | 2.0 | ||||||
Environmental payments | (4.6) | (4.4) | ||||||
Foreign exchange | 0.1 | (0.6) | ||||||
|
|
|
| |||||
Environmental liabilities at end of period | $ | 110.8 | $ | 117.3 | ||||
|
|
|
|
Six months ended June 30, | ||||||||
(in millions) | 2016 | 2015 | ||||||
Environmental liabilities at beginning of period | $ | 113.2 | $ | 120.3 | ||||
Revised obligation estimates | 5.1 | 3.4 | ||||||
Environmental payments | (9.7 | ) | (8.2 | ) | ||||
Foreign exchange | (0.1 | ) | (0.3 | ) | ||||
Environmental liabilities at end of period | $ | 108.5 | $ | 115.2 |
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Eliminations | Consolidated | ||||||||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,187.5 | $ | 272.7 | $ | 437.4 | $ | 101.4 | $ | — | $ | 1,999.0 | ||||||||||||
Inter-segment | 26.9 | 2.3 | 1.4 | — | (30.6) | — | ||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
Total net sales | 1,214.4 | 275.0 | 438.8 | 101.4 | (30.6) | 1,999.0 | ||||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 951.5 | 224.4 | 342.6 | 80.8 | (30.6) | 1,568.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 262.9 | 50.6 | 96.2 | 20.6 | — | 430.3 | ||||||||||||||||||
Outbound freight and handling | 47.7 | 7.8 | 14.0 | 1.8 | — | 71.3 | ||||||||||||||||||
Warehousing, selling and administrative | 134.4 | 21.1 | 53.9 | 10.9 | 4.6 | 224.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Adjusted EBITDA | $ | 80.8 | $ | 21.7 | $ | 28.3 | $ | 7.9 | $ | (4.6) | $ | 134.1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Other operating expenses, net | 5.5 | |||||||||||||||||||||||
Depreciation | 33.5 | |||||||||||||||||||||||
Amortization | 22.0 | |||||||||||||||||||||||
Interest expense, net | 40.6 | |||||||||||||||||||||||
Other expense, net | 13.4 | |||||||||||||||||||||||
Income tax expense | 5.1 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Net income | $ | 14.0 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
Total assets | $ | 4,038.3 | $ | 1,942.5 | $ | 1,011.6 | $ | 243.4 | $ | (1,300.4) | $ | 5,935.4 |
(in millions) Three Months Ended March 31, 2015 Net sales: External customers Inter-segment Total net sales Cost of goods sold (exclusive of depreciation) Gross profit Outbound freight and handling Warehousing, selling and administrative Adjusted EBITDA Other operating expenses, net Depreciation Amortization Interest expense, net Other income, net Income tax expense Net income Total assets (as adjusted*) USA Canada EMEA Rest of
World Other/
Eliminations Consolidated $ 1,394.8 $ 293.2 $ 476.4 $ 134.7 $ — $ 2,299.1 27.5 1.9 0.7 — (30.1) — 1,422.3 295.1 477.1 134.7 (30.1) 2,299.1 1,140.5 241.8 375.3 110.0 (30.1) 1,873.5 281.8 53.3 101.8 24.7 — 461.6 56.0 9.9 16.2 2.4 — 84.5 133.2 22.9 58.4 14.2 2.7 231.4 $ 92.6 $ 20.5 $ 27.2 $ 8.1 $ (2.7) $ 145.7 8.1 32.0 21.9 63.2 (6.8) 7.6 $ 19.7 $ 4,144.1 $ 1,907.3 $ 991.6 $ 278.3 $ (1,413.1) $ 5,908.2
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Eliminations | Consolidated | ||||||||||||||||||
Three Months Ended June 30, 2016 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,212.8 | $ | 485.4 | $ | 459.9 | $ | 104.4 | $ | — | $ | 2,262.5 | ||||||||||||
Inter-segment | 25.0 | 1.7 | 1.0 | — | (27.7 | ) | — | |||||||||||||||||
Total net sales | 1,237.8 | 487.1 | 460.9 | 104.4 | (27.7 | ) | 2,262.5 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 974.7 | 426.5 | 357.8 | 85.8 | (27.7 | ) | 1,817.1 | |||||||||||||||||
Gross profit | 263.1 | 60.6 | 103.1 | 18.6 | — | 445.4 | ||||||||||||||||||
Outbound freight and handling | 48.2 | 8.4 | 14.8 | 1.9 | — | 73.3 | ||||||||||||||||||
Warehousing, selling and administrative | 131.7 | 20.7 | 55.3 | 12.5 | 3.7 | 223.9 | ||||||||||||||||||
Adjusted EBITDA | $ | 83.2 | $ | 31.5 | $ | 33.0 | $ | 4.2 | $ | (3.7 | ) | $ | 148.2 | |||||||||||
Other operating expenses, net | 11.5 | |||||||||||||||||||||||
Depreciation | 38.0 | |||||||||||||||||||||||
Amortization | 23.3 | |||||||||||||||||||||||
Interest expense, net | 40.4 | |||||||||||||||||||||||
Other income, net | (5.7 | ) | ||||||||||||||||||||||
Income tax expense | 0.9 | |||||||||||||||||||||||
Net income | $ | 39.8 | ||||||||||||||||||||||
Total assets | $ | 4,012.8 | $ | 1,997.8 | $ | 990.3 | $ | 242.7 | $ | (1,289.2 | ) | $ | 5,954.4 |
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Eliminations | Consolidated | ||||||||||||||||||
Three Months Ended June 30, 2015 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,389.4 | $ | 534.6 | $ | 467.4 | $ | 118.7 | $ | — | $ | 2,510.1 | ||||||||||||
Inter-segment | 22.0 | 2.2 | 1.1 | — | (25.3 | ) | — | |||||||||||||||||
Total net sales | 1,411.4 | 536.8 | 468.5 | 118.7 | (25.3 | ) | 2,510.1 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 1,127.2 | 473.8 | 369.9 | 97.3 | (25.3 | ) | 2,042.9 | |||||||||||||||||
Gross profit | 284.2 | 63.0 | 98.6 | 21.4 | — | 467.2 | ||||||||||||||||||
Outbound freight and handling | 53.5 | 10.9 | 14.9 | 2.2 | — | 81.5 | ||||||||||||||||||
Warehousing, selling and administrative | 120.6 | 21.7 | 56.6 | 13.0 | 5.2 | 217.1 | ||||||||||||||||||
Adjusted EBITDA | $ | 110.1 | $ | 30.4 | $ | 27.1 | $ | 6.2 | $ | (5.2 | ) | $ | 168.6 | |||||||||||
Other operating expenses, net | 39.0 | |||||||||||||||||||||||
Depreciation | 37.7 | |||||||||||||||||||||||
Amortization | 22.4 | |||||||||||||||||||||||
Interest expense, net | 63.1 | |||||||||||||||||||||||
Loss on extinguishment of debt | 7.3 | |||||||||||||||||||||||
Other expense, net | 12.1 | |||||||||||||||||||||||
Income tax benefit | (0.6 | ) | ||||||||||||||||||||||
Net loss | $ | (12.4 | ) | |||||||||||||||||||||
Total assets (as adjusted*) | $ | 4,208.5 | $ | 2,028.8 | $ | 1,057.5 | $ | 268.1 | $ | (1,484.2 | ) | $ | 6,078.7 |
* | Adjusted due to the adoption of ASU 2015-03 and ASU 2015-15. |
18. Subsequent events
On May 3, 2016, the Company issued a press release announcing the appointment of Stephen D. Newlin as the Company’s President and Chief Executive Officer, effective May 31, 2016. Mr. Newlin succeeds J. Erik Fyrwald who announced his resignation as President and Chief Executive Officer and a member of the Board of Directors on May 2, 2016 effective as of May 31, 2016 to accept a position with another company.
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Eliminations | Consolidated | ||||||||||||||||||
Six Months Ended June 30, 2016 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 2,400.3 | $ | 758.1 | $ | 897.3 | $ | 205.8 | $ | — | $ | 4,261.5 | ||||||||||||
Inter-segment | 51.9 | 4.0 | 2.4 | — | (58.3 | ) | — | |||||||||||||||||
Total net sales | 2,452.2 | 762.1 | 899.7 | 205.8 | (58.3 | ) | 4,261.5 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 1,926.2 | 650.9 | 700.4 | 166.6 | (58.3 | ) | 3,385.8 | |||||||||||||||||
Gross profit | 526.0 | 111.2 | 199.3 | 39.2 | — | 875.7 | ||||||||||||||||||
Outbound freight and handling | 95.9 | 16.2 | 28.8 | 3.7 | — | 144.6 | ||||||||||||||||||
Warehousing, selling and administrative | 266.1 | 41.8 | 109.2 | 23.4 | 8.3 | 448.8 | ||||||||||||||||||
Adjusted EBITDA | $ | 164.0 | $ | 53.2 | $ | 61.3 | $ | 12.1 | $ | (8.3 | ) | $ | 282.3 | |||||||||||
Other operating expenses, net | 17.0 | |||||||||||||||||||||||
Depreciation | 71.5 | |||||||||||||||||||||||
Amortization | 45.3 | |||||||||||||||||||||||
Interest expense, net | 81.0 | |||||||||||||||||||||||
Other expense, net | 7.7 | |||||||||||||||||||||||
Income tax expense | 6.0 | |||||||||||||||||||||||
Net income | $ | 53.8 | ||||||||||||||||||||||
Total assets | $ | 4,012.8 | $ | 1,997.8 | $ | 990.3 | $ | 242.7 | $ | (1,289.2 | ) | $ | 5,954.4 |
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Eliminations | Consolidated | ||||||||||||||||||
Six Months Ended June 30, 2015 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 2,784.2 | $ | 827.8 | $ | 943.8 | $ | 253.4 | $ | — | $ | 4,809.2 | ||||||||||||
Inter-segment | 49.5 | 4.1 | 1.8 | — | (55.4 | ) | — | |||||||||||||||||
Total net sales | 2,833.7 | 831.9 | 945.6 | 253.4 | (55.4 | ) | 4,809.2 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 2,267.7 | 715.6 | 745.2 | 207.3 | (55.4 | ) | 3,880.4 | |||||||||||||||||
Gross profit | 566.0 | 116.3 | 200.4 | 46.1 | — | 928.8 | ||||||||||||||||||
Outbound freight and handling | 109.5 | 20.8 | 31.1 | 4.6 | — | 166.0 | ||||||||||||||||||
Warehousing, selling and administrative | 253.8 | 44.6 | 115.0 | 27.2 | 7.9 | 448.5 | ||||||||||||||||||
Adjusted EBITDA | $ | 202.7 | $ | 50.9 | $ | 54.3 | $ | 14.3 | $ | (7.9 | ) | $ | 314.3 | |||||||||||
Other operating expenses, net | 47.1 | |||||||||||||||||||||||
Depreciation | 69.7 | |||||||||||||||||||||||
Amortization | 44.3 | |||||||||||||||||||||||
Interest expense, net | 126.3 | |||||||||||||||||||||||
Loss on extinguishment of debt | 7.3 | |||||||||||||||||||||||
Other expense, net | 5.3 | |||||||||||||||||||||||
Income tax expense | 7.0 | |||||||||||||||||||||||
Net income | $ | 7.3 | ||||||||||||||||||||||
Total assets (as adjusted*) | $ | 4,208.5 | $ | 2,028.8 | $ | 1,057.5 | $ | 268.1 | $ | (1,484.2 | ) | $ | 6,078.7 |
* | Adjusted due to the adoption of ASU 2015-03 and ASU 2015-15. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
we use Adjusted EBITDA in setting performance incentive targets;
we consider gains (losses) on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations; and
other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of our results.
Three Months Ended | Favorable (unfavorable) | % Change | Impact of currency* | |||||||||||||||||||||||||
(in millions) | March 31, 2016 | March 31, 2015 | ||||||||||||||||||||||||||
Net sales | $ | 1,999.0 | 100.0% | $ | 2,299.1 | 100.0% | $ | (300.1) | (13.1)% | (2.9)% | ||||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 1,568.7 | 78.5% | 1,837.5 | 79.9% | 268.8 | (14.6)% | 2.9% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Gross profit | 430.3 | 21.5% | 461.6 | 20.1% | (31.3) | (6.8)% | (2.9)% | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Outbound freight and handling | 71.3 | 3.6% | 84.5 | 3.7% | 13.2 | (15.6)% | 1.9% | |||||||||||||||||||||
Warehousing, selling and administrative | 224.9 | 11.3% | 231.4 | 10.1% | 6.5 | (2.8)% | 2.7% | |||||||||||||||||||||
Other operating expenses, net | 5.5 | 0.3% | 8.1 | 0.4% | 2.6 | (32.1)% | 3.7% | |||||||||||||||||||||
Depreciation | 33.5 | 1.7% | 32.0 | 1.4% | (1.5) | 4.7% | 2.2% | |||||||||||||||||||||
Amortization | 22.0 | 1.1% | 21.9 | 1.0% | (0.1) | 0.5% | 3.2% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total operating expenses | 357.2 | 17.9% | 377.9 | 16.4% | (20.7) | (5.5)% | 2.5% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Operating income | 73.1 | 3.7% | 83.7 | 3.6% | (10.6) | (12.7)% | (4.7)% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Other (expense) income: | ||||||||||||||||||||||||||||
Interest income | 0.9 | 0.0% | 1.2 | 0.1% | (0.3) | (25.0)% | (8.3)% | |||||||||||||||||||||
Interest expense | (41.5) | (2.1)% | (64.4) | (2.8)% | 22.9 | (35.6)% | 0.8% | |||||||||||||||||||||
Other (expense) income, net | (13.4) | (0.7)% | 6.8 | 0.3% | (20.2) | N/M | 1.5% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total other expense | (54.0) | (2.7)% | (56.4) | (2.5)% | 2.4 | (4.3)% | 0.9% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Income before income taxes | 19.1 | 1.0% | 27.3 | 1.2% | (8.2) | (30.0)% | (12.1)% | |||||||||||||||||||||
Income tax expense | 5.1 | 0.3% | 7.6 | 0.3% | 2.5 | (32.9)% | 9.2% | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Net income | $ | 14.0 | 0.7% | $ | 19.7 | 0.9% | (5.7) | (28.9)% | (13.2)% | |||||||||||||||||||
|
|
|
|
Three Months Ended | Favorable (unfavorable) | % Change | Impact of currency* | |||||||||||||||||||||
(in millions) | June 30, 2016 | June 30, 2015 | ||||||||||||||||||||||
Net sales | $ | 2,262.5 | 100.0 | % | $ | 2,510.1 | 100.0 | % | $ | (247.6 | ) | (9.9 | )% | (1.7 | )% | |||||||||
Cost of goods sold (exclusive of depreciation) | 1,817.1 | 80.3 | % | 2,042.9 | 81.4 | % | 225.8 | (11.1 | )% | 1.8 | % | |||||||||||||
Gross profit | 445.4 | 19.7 | % | 467.2 | 18.6 | % | (21.8 | ) | (4.7 | )% | (1.2 | )% | ||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Outbound freight and handling | 73.3 | 3.2 | % | 81.5 | 3.2 | % | 8.2 | (10.1 | )% | 0.5 | % | |||||||||||||
Warehousing, selling and administrative | 223.9 | 9.9 | % | 217.1 | 8.6 | % | (6.8 | ) | 3.1 | % | 0.9 | % | ||||||||||||
Other operating expenses, net | 11.5 | 0.5 | % | 39.0 | 1.6 | % | 27.5 | (70.5 | )% | 0.5 | % | |||||||||||||
Depreciation | 38.0 | 1.7 | % | 37.7 | 1.5 | % | (0.3 | ) | 0.8 | % | 1.6 | % | ||||||||||||
Amortization | 23.3 | 1.0 | % | 22.4 | 0.9 | % | (0.9 | ) | 4.0 | % | 1.8 | % | ||||||||||||
Total operating expenses | 370.0 | 16.4 | % | 397.7 | 15.8 | % | 27.7 | (7.0 | )% | 0.9 | % | |||||||||||||
Operating income | 75.4 | 3.3 | % | 69.5 | 2.8 | % | 5.9 | 8.5 | % | (2.4 | )% | |||||||||||||
Other (expense) income: | ||||||||||||||||||||||||
Interest income | 1.0 | 0.0 | % | 1.5 | 0.1 | % | (0.5 | ) | (33.3 | )% | — | % | ||||||||||||
Interest expense | (41.4 | ) | (1.8 | )% | (64.6 | ) | (2.6 | )% | 23.2 | (35.9 | )% | 0.3 | % | |||||||||||
Loss on extinguishment of debt | — | — | % | (7.3 | ) | (0.3 | )% | 7.3 | (100.0 | )% | — | % | ||||||||||||
Other income (expense), net | 5.7 | 0.3 | % | (12.1 | ) | (0.5 | )% | 17.8 | N/M | (5.0 | )% | |||||||||||||
Total other expense | (34.7 | ) | (1.5 | )% | (82.5 | ) | (3.3 | )% | 47.8 | (57.9 | )% | 1.0 | % | |||||||||||
Income (loss) before income taxes | 40.7 | 1.8 | % | (13.0 | ) | (0.5 | )% | 53.7 | N/M | (7.7 | )% | |||||||||||||
Income tax expense (benefit) | 0.9 | — | % | (0.6 | ) | — | % | (1.5 | ) | N/M | 50.0 | % | ||||||||||||
Net income (loss) | $ | 39.8 | 1.8 | % | $ | (12.4 | ) | (0.5 | )% | 52.2 | N/M | (5.6 | )% |
Net sales percentage change due to: | ||||||
Acquisitions | 1.8 | % | ||||
Reported sales volumes | (2.9 | |||||
Sales pricing and product mix | (7.1 | |||||
Foreign currency translation | (1.7 | |||||
Total | (9.9 | |||||
|
Gross profit percentage change due to: | ||||||
Acquisitions | 2.5 | % | ||||
Reported sales volumes | ( | )% | ||||
Sales pricing, product costs and other adjustments | (3.1 | )% | ||||
Foreign currency translation | ( | )% | ||||
Total | ( | )% |
useful lives of certain internally developed software in conjunction with reevaluating our overall information technology enhancement efforts.
acquisitions.
Income tax expense
recognized, and a decrease in the effect of flow-through entities.
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Elimin- ations(1) | Consolidated | ||||||||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,187.5 | $ | 272.7 | $ | 437.4 | $ | 101.4 | $ | — | $ | 1,999.0 | ||||||||||||
Inter-segment | 26.9 | 2.3 | 1.4 | — | (30.6) | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total net sales | 1,214.4 | 275.0 | 438.8 | 101.4 | (30.6) | 1,999.0 | ||||||||||||||||||
Cost of goods sold | 951.5 | 224.4 | 342.6 | 80.8 | (30.6) | 1,568.7 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Gross profit | 262.9 | 50.6 | 96.2 | 20.6 | — | 430.3 | ||||||||||||||||||
Outbound freight and handling | 47.7 | 7.8 | 14.0 | 1.8 | — | 71.3 | ||||||||||||||||||
Warehousing, selling and administrative (operating expenses) | 134.4 | 21.1 | 53.9 | 10.9 | 4.6 | 224.9 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Adjusted EBITDA | $ | 80.8 | $ | 21.7 | $ | 28.3 | $ | 7.9 | $ | (4.6) | $ | 134.1 | ||||||||||||
|
| |||||||||||||||||||||||
Other operating expenses, net | 5.5 | |||||||||||||||||||||||
Depreciation | 33.5 | |||||||||||||||||||||||
Amortization | 22.0 | |||||||||||||||||||||||
Interest expense, net | 40.6 | |||||||||||||||||||||||
Other expense, net | 13.4 | |||||||||||||||||||||||
Income tax expense | 5.1 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Net income | $ | 14.0 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Elimin- | Consolidated | ||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,394.8 | $ | 293.2 | $ | 476.4 | $ | 134.7 | $ | — | $ | 2,299.1 | ||||||||||||
Inter-segment | 27.5 | 1.9 | 0.7 | — | (30.1) | — | ||||||||||||||||||
|
| |||||||||||||||||||||||
Total net sales | 1,422.3 | 295.1 | 477.1 | 134.7 | (30.1) | 2,299.1 | ||||||||||||||||||
Cost of goods sold | 1,140.5 | 241.8 | 375.3 | 110.0 | (30.1) | 1,837.5 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Gross profit | 281.8 | 53.3 | 101.8 | 24.7 | — | 461.6 | ||||||||||||||||||
Outbound freight and handling | 56.0 | 9.9 | 16.2 | 2.4 | — | 84.5 | ||||||||||||||||||
Warehousing, selling and administrative (operating expenses) | 133.2 | 22.9 | 58.4 | 14.2 | 2.7 | 231.4 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Adjusted EBITDA | $ | 92.6 | $ | 20.5 | $ | 27.2 | $ | 8.1 | $ | (2.7) | $ | 145.7 | ||||||||||||
|
| |||||||||||||||||||||||
Other operating expenses, net | 8.1 | |||||||||||||||||||||||
Depreciation | 32.0 | |||||||||||||||||||||||
Amortization | 21.9 | |||||||||||||||||||||||
Interest expense, net | 63.2 | |||||||||||||||||||||||
Other income, net | (6.8) | |||||||||||||||||||||||
Income tax expense | 7.6 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Net income | $ | 19.7 | ||||||||||||||||||||||
|
|
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Elimin- ations(1) | Consolidated | ||||||||||||||||||
Three months ended June 30, 2016 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,212.8 | $ | 485.4 | $ | 459.9 | $ | 104.4 | $ | — | $ | 2,262.5 | ||||||||||||
Inter-segment | 25.0 | 1.7 | 1.0 | — | (27.7 | ) | — | |||||||||||||||||
Total net sales | 1,237.8 | 487.1 | 460.9 | 104.4 | (27.7 | ) | 2,262.5 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 974.7 | 426.5 | 357.8 | 85.8 | (27.7 | ) | 1,817.1 | |||||||||||||||||
Gross profit | 263.1 | 60.6 | 103.1 | 18.6 | — | 445.4 | ||||||||||||||||||
Outbound freight and handling | 48.2 | 8.4 | 14.8 | 1.9 | — | 73.3 | ||||||||||||||||||
Warehousing, selling and administrative (operating expenses) | 131.7 | 20.7 | 55.3 | 12.5 | 3.7 | 223.9 | ||||||||||||||||||
Adjusted EBITDA | $ | 83.2 | $ | 31.5 | $ | 33.0 | $ | 4.2 | $ | (3.7 | ) | $ | 148.2 | |||||||||||
Other operating expenses, net | 11.5 | |||||||||||||||||||||||
Depreciation | 38.0 | |||||||||||||||||||||||
Amortization | 23.3 | |||||||||||||||||||||||
Interest expense, net | 40.4 | |||||||||||||||||||||||
Other income, net | (5.7 | ) | ||||||||||||||||||||||
Income tax expense | 0.9 | |||||||||||||||||||||||
Net income | $ | 39.8 |
(in millions) | USA | Canada | EMEA | Rest of World | Other/ Elimin- ations(1) | Consolidated | ||||||||||||||||||
Three months ended June 30, 2015 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
External customers | $ | 1,389.4 | $ | 534.6 | $ | 467.4 | $ | 118.7 | $ | — | $ | 2,510.1 | ||||||||||||
Inter-segment | 22.0 | 2.2 | 1.1 | — | (25.3 | ) | — | |||||||||||||||||
Total net sales | 1,411.4 | 536.8 | 468.5 | 118.7 | (25.3 | ) | 2,510.1 | |||||||||||||||||
Cost of goods sold (exclusive of depreciation) | 1,127.2 | 473.8 | 369.9 | 97.3 | (25.3 | ) | 2,042.9 | |||||||||||||||||
Gross profit | 284.2 | 63.0 | 98.6 | 21.4 | — | 467.2 | ||||||||||||||||||
Outbound freight and handling | 53.5 | 10.9 | 14.9 | 2.2 | — | 81.5 | ||||||||||||||||||
Warehousing, selling and administrative (operating expenses) | 120.6 | 21.7 | 56.6 | 13.0 | 5.2 | 217.1 | ||||||||||||||||||
Adjusted EBITDA | $ | 110.1 | $ | 30.4 | $ | 27.1 | $ | 6.2 | $ | (5.2 | ) | $ | 168.6 | |||||||||||
Other operating expenses, net | 39.0 | |||||||||||||||||||||||
Depreciation | 37.7 | |||||||||||||||||||||||
Amortization | 22.4 | |||||||||||||||||||||||
Interest expense, net | 63.1 | |||||||||||||||||||||||
Loss on extinguishment of debt | 7.3 | |||||||||||||||||||||||
Other expense, net | 12.1 | |||||||||||||||||||||||
Income tax benefit | (0.6 | ) | ||||||||||||||||||||||
Net loss | $ | (12.4 | ) |
(1) | Other/Eliminations represents the elimination of intersegment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively. |
Net sales percentage change due to: Gross profit percentage change due to: Acquisitions Reported sales volumes Sales pricing and product mix Total margin maintenance efforts while experiencing a reduction in average selling prices. Net sales percentage change due to: Gross profit percentage change due to: Acquisitions Reported sales volumes Sales pricing and product mix Foreign currency translation Total The remaining $0.2 million decrease related to several insignificant components. Net sales percentage change due to: Gross profit percentage change due to: Acquisitions Reported sales volumes Sales pricing and product mix Foreign currency translation Total Net sales percentage change due to: Gross profit percentage change due to: Reported sales volumes Sales pricing and product mix Foreign currency translation Total profit decreased Net cash provided by operating activities Net cash used by investing activities Net cash provided by (used by) financing activities mix. did not contain any significant activity. 1.8% Acquisitions 3.1% (6.0)% Reported sales volumes (6.0)% (10.6)% Sales pricing, product costs and other adjustments (3.8)% (14.9)% Total (6.7)% Net sales percentage change due to: Gross profit percentage change due to: Acquisitions 2.0 % Acquisitions 3.0 % Reported sales volumes (4.4 )% Reported sales volumes (4.4 )% Sales pricing and product mix (10.3 )% Sales pricing, product costs and other adjustments (6.0 )% Total (12.7 )% Total (7.4 )% $1,187.5$1,212.8 million, a decrease of $207.3$176.6 million, or 14.9%12.7%, in the three months ended March 31,June 30, 2016. The increase in external net sales from acquisitions was primarily due to the July 2015 Chemical Associates, and November 2015 Weavertown, and March 2016 Bodine acquisitions. The decrease in external net sales from reported sales volumes was primarily due to a reduction in sales of upstream oil and gas products driven by reduced market demand. The reduction in external net sales from changes in sales pricing and product mix was primarily driven by lower average selling prices resulting from market driven deflationary pressures. Gross profit decreased $18.9$21.1 million, or 6.7%7.4%, to $262.9$263.1 million in the three months ended March 31,June 30, 2016. The increase in gross profit from acquisitions was primary due to the November 2015 Weavertown, March 2016 Bodine, and July 2015 Chemical Associates November 2015 Weavertown, and March 2016 Bodine acquisitions. Excluding the impact of volumes, gross profit decreased due to changes in sales pricing, product costs and other adjustments primarily due to market deflationary pressures.pressures resulting from sluggish industrial demand across several end markets. Gross margin increased from 20.2%20.5% in the three months ended March 31,June 30, 2015 to 22.1%21.7% during the three months ended March 31,June 30, 2016 primarily due to product mix.$8.3$5.3 million, or 14.8%9.9%, to $47.7$48.2 million in the three months ended March 31,June 30, 2016 primarily due to lower reported sales volumes as well asand lower diesel fuel costs. Operating expenses increased $1.2$11.1 million, or 0.9%9.2%, to $134.4$131.7 million in the three months ended March 31,June 30, 2016 primarily driven by $3.7$3.8 million of incremental expenses from our 2015 USA acquisitions, partially offset by$2.9 million of incremental expenses from environmental remediation, $1.5 million of a lower travel and entertainment expensesbenefit from the retiree medical plan resulting from focused expense reduction initiatives.the gain related to freezing the medical retiree plan now being completely amortized from accumulated other comprehensive income, $1.4 million of incremental bad debt expenses primarily related to oil and gas customers, and $1.1 million of incremental pension expenses primarily due to a decrease in expected return on plan assets. The remaining $1.0$0.4 million decreaseincrease related to several insignificant components. Operating expenses as a percentage of external sales increased from 9.5%8.7% in the three months ended March 31,June 30, 2015 to 11.3%10.9% in the three months ended March 31,June 30, 2016.$11.8$26.9 million, or 12.7%24.4%, to $80.8$83.2 million in the three months ended March 31,June 30, 2016. Acquisitions contributed $4.2$4.1 million of additional Adjusted EBITDA in the three months ended March 31,June 30, 2016. Adjusted EBITDA margin increaseddecreased from 6.6%7.9% in the three months ended March 31,June 30, 2015 to 6.8%6.9% in the three months ended March 31,June 30, 2016 primarily as a result of improved gross margin partially offset by higher operating expenses as a percentage of external net sales. 1.2% Acquisitions 2.6% (4.2)% Reported sales volumes (4.2)% 6.0% Sales pricing, product costs and other adjustments 6.7% (9.9)% Foreign currency translation (10.2)% (7.0)% Total (5.1)% Net sales percentage change due to: Gross profit percentage change due to: Acquisitions 3.1 % Acquisitions 5.2 % Reported sales volumes (6.7 )% Reported sales volumes (6.7 )% Sales pricing and product mix — % Sales pricing, product costs and other adjustments 2.8 % Foreign currency translation (5.6 )% Foreign currency translation (5.1 )% Total (9.2 )% Total (3.8 )% $272.7$485.4 million, a decrease of $20.5$49.2 million, or 7.0%9.2%, in the three months ended March 31,June 30, 2016. Foreign currency translation decreased external sales dollars as the US dollar strengthened against the Canadian dollar when comparing the three months ended March 31,June 30, 2016 to the three months ended March 31,June 30, 2015. On a constant currency basis, external sales dollars increased $8.4decreased $19.5 million or 2.9%3.6%. The increase in external net sales from acquisitions was due to the March 2016 Nexus Ag and October 2015 acquisition of Future/BlueStar.BlueStar acquisitions. The decrease in external net sales from reported sales volumes was primarily due to lower methanol sales driven by warmer weather conditions partially offset by increases in agricultural sales resulting from optimal weather conditions. The increase in external net sales from changes in sales pricingthe oil and product mix was primarily driven by higher average selling prices.gas end market within Western Canada. Gross profit decreased $2.7$2.4 million, or 5.1%3.8%, to $50.6$60.6 million in the three months ended March 31,June 30, 2016. The increase in gross profit from acquisitions was due to the acquisition ofBlueStar.BlueStar and March 2016 Nexus Ag acquisitions. Gross profit increased due to changes in sales pricing, product costs and other adjustments primarily due to a shift in product mix towards higher margin products and services during the three months ended March 31,June 30, 2016. Gross margin increased from 18.2%11.8% in the three months ended March 31,June 30, 2015 to 18.6%12.5% in the three months ended March 31,June 30, 2016.$2.1$2.5 million, or 21.2%22.9%, to $7.8$8.4 million primarily due to foreign currency translation, lower reported sales volumes as well as realization of cost efficiencies. Operating expenses decreased by $1.8$1.0 million, or 7.9%4.6%, to $21.1$20.7 million in the three months ended March 31,June 30, 2016, and decreased 0.1%increased as a percentage of external sales from 7.8% for the three months ended March 31, 2015. Acquisition contributed to additional operating expenses of $0.7 million4.1% in the three months ended March 31,June 30, 2015 to 4.3% in the three months ended June 30, 2016. Acquisitions contributed $0.9 million of additional operating expenses in the three months ended June 30, 2016. Foreign currency translation decreased operating expenses by 9.6%4.6% or $1.0 million. On a constant currency basis, operating expenses were flat at $21.7 million when comparing the three months ended June 30, 2016 to the three months ended June 30, 2015 as the impact of incremental expenses from acquisitions was offset by lower defined benefit pension expense resulting from the soft freeze of the Canadian pension plan in 2015.Net sales percentage change due to: Gross profit percentage change due to: Reported sales volumes 3.2 % Reported sales volumes 3.2 % Sales pricing and product mix (5.3 )% Sales pricing, product costs and other adjustments 0.7 % Foreign currency translation 0.5 % Foreign currency translation 0.7 % Total (1.6 )% Total 4.6 % Net sales percentage change due to: Gross profit percentage change due to: Reported sales volumes — % Reported sales volumes — % Sales pricing and product mix 1.0 % Sales pricing, product costs and other adjustments 0.5 % Foreign currency translation (13.0 )% Foreign currency translation (13.6 )% Total (12.0 )% Total (13.1 )% Six Months Ended % Change (in millions) June 30, 2016 June 30, 2015 Net sales $ 4,261.5 100.0 % $ 4,809.2 100.0 % $ (547.7 ) (11.4 )% (2.3 )% Cost of goods sold (exclusive of depreciation) 3,385.8 79.5 % 3,880.4 80.7 % 494.6 (12.7 )% 2.3 % Gross profit 875.7 20.5 % 928.8 19.3 % (53.1 ) (5.7 )% (2.0 )% Operating expenses: Outbound freight and handling 144.6 3.4 % 166.0 3.5 % 21.4 (12.9 )% 1.2 % Warehousing, selling and administrative 448.8 10.5 % 448.5 9.3 % (0.3 ) 0.1 % 0.2 % Other operating expenses, net 17.0 0.4 % 47.1 1.0 % 30.1 (63.9 )% 1.1 % Depreciation 71.5 1.7 % 69.7 1.4 % (1.8 ) 2.6 % 1.9 % Amortization 45.3 1.1 % 44.3 0.9 % (1.0 ) 2.3 % 2.5 % Total operating expenses 727.2 17.1 % 775.6 16.1 % 48.4 (6.2 )% 1.7 % Operating income 148.5 3.5 % 153.2 3.2 % (4.7 ) (3.1 )% (3.7 )% Other (expense) income: Interest income 1.9 0.0 % 2.7 0.1 % (0.8 ) (29.6 )% (3.7 )% Interest expense (82.9 ) (1.9 )% (129.0 ) (2.7 )% 46.1 (35.7 )% 0.5 % Loss on extinguishment of debt — — % (7.3 ) (0.2 )% 7.3 (100.0 )% — % Other expense, net (7.7 ) (0.2 )% (5.3 ) (0.1 )% (2.4 ) 45.3 % 13.2 % Total other expense (88.7 ) (2.1 )% (138.9 ) (2.9 )% 50.2 (36.1 )% 0.9 % Income before income taxes 59.8 1.4 % 14.3 0.3 % 45.5 318.2 % (30.1 )% Income tax expense 6.0 0.1 % 7.0 0.1 % 1.0 (14.3 )% 14.3 % Net income $ 53.8 1.3 % $ 7.3 0.2 % 46.5 637.0 % (45.2 )% Net sales percentage change due to: Acquisitions 1.6 % Reported sales volumes (4.5 )% Sales pricing and product mix (6.2 )% Foreign currency translation (2.3 )% Total (11.4 )% Gross profit percentage change due to: Acquisitions 2.4 % Reported sales volumes (4.5 )% Sales pricing, product costs and other adjustments (1.6 )% Foreign currency translation (2.0 )% Total (5.7 )% (in millions) USA Canada EMEA Consolidated Six months ended June 30, 2016 Net sales: External customers $ 2,400.3 $ 758.1 $ 897.3 $ 205.8 $ — $ 4,261.5 Inter-segment 51.9 4.0 2.4 — (58.3 ) — Total net sales 2,452.2 762.1 899.7 205.8 (58.3 ) 4,261.5 1,926.2 650.9 700.4 166.6 (58.3 ) 3,385.8 Gross profit 526.0 111.2 199.3 39.2 — 875.7 Outbound freight and handling 95.9 16.2 28.8 3.7 — 144.6 Warehousing, selling and administrative (operating expenses) 266.1 41.8 109.2 23.4 8.3 448.8 Adjusted EBITDA $ 164.0 $ 53.2 $ 61.3 $ 12.1 $ (8.3 ) $ 282.3 Other operating expenses, net 17.0 Depreciation 71.5 Amortization 45.3 Interest expense, net 81.0 Other expense, net 7.7 Income tax expense 6.0 Net income $ 53.8 (in millions) USA Canada EMEA Rest of
World Other/
Elimin-
ations(1) Consolidated Six months ended June 30, 2015 Net sales: External customers $ 2,784.2 $ 827.8 $ 943.8 $ 253.4 $ — $ 4,809.2 Inter-segment 49.5 4.1 1.8 — (55.4 ) — Total net sales 2,833.7 831.9 945.6 253.4 (55.4 ) 4,809.2 Cost of goods sold
(exclusive of depreciation) 2,267.7 715.6 745.2 207.3 (55.4 ) 3,880.4 Gross profit 566.0 116.3 200.4 46.1 — 928.8 Outbound freight and handling 109.5 20.8 31.1 4.6 — 166.0 Warehousing, selling and administrative (operating expenses) 253.8 44.6 115.0 27.2 7.9 448.5 Adjusted EBITDA $ 202.7 $ 50.9 $ 54.3 $ 14.3 $ (7.9 ) $ 314.3 Other operating expenses, net 47.1 Depreciation 69.7 Amortization 44.3 Interest expense, net 126.3 Loss on extinguishment of debt 7.3 Other expense, net 5.3 Income tax expense 7.0 Net income $ 7.3 (1) Other/Eliminations represents the elimination of intersegment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively. Net sales percentage change due to: Gross profit percentage change due to: Acquisitions 1.9 % Acquisitions 3.0 % Reported sales volumes (5.1 )% Reported sales volumes (5.1 )% Sales pricing and product mix (10.6 )% Sales pricing, product costs and other adjustments (5.0 )% Total (13.8 )% Total (7.1 )% Net sales percentage change due to: Gross profit percentage change due to: Acquisitions 2.5 % Acquisitions 4.2 % Reported sales volumes (5.5 )% Reported sales volumes (5.5 )% Sales pricing and product mix 1.7 % Sales pricing, product costs and other adjustments 4.3 % Foreign currency translation (7.1 )% Foreign currency translation (7.4 )% Total (8.4 )% Total (4.4 )% 1.7%0.9%, primarily due to increased personnel expenses of $2.0$3.8 million driven by annual compensation increases partially offset by lower pension expense of $1.6$3.2 million resulting from the soft freeze of the Canadian pension plan.$1.2$2.3 million, or 5.9%4.5%, to $21.7$53.2 million in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased Adjusted EBITDA by 11.2%8.3% or $2.3$4.2 million. On a constant currency basis, Adjusted EBITDA increased $3.5$6.5 million, or 17.1%12.8%, primarily due to increased externaldecreased cost of sales generating increased gross profit.profit and decreased outbound freight and handling expenses. Acquisitions contributed $0.6$2.6 million of additional Adjusted EBITDA in the threesix months ended March 31,June 30, 2016. Adjusted EBITDA margin increased from 6.1% in the six months ended June 30, 2015 to 7.0% in the threesix months ended March 31, 2015 to 8.0% in the three months ended March 31,June 30, 2016 primarily as a result of improved gross margin and lower outbound freight and handling expenses. 0.4% Acquisitions 0.2% (6.8)% Reported sales volumes (6.8)% 1.1% Sales pricing, product costs and other adjustments 3.8% (2.9)% Foreign currency translation (2.7)% (8.2)% Total (5.5)% Net sales percentage change due to: Gross profit percentage change due to: Acquisitions 0.2 % Acquisitions 0.2 % Reported sales volumes (1.9 )% Reported sales volumes (1.9 )% Sales pricing and product mix (2.0 )% Sales pricing, product costs and other adjustments 2.2 % Foreign currency translation (1.2 )% Foreign currency translation (1.0 )% Total (4.9 )% Total (0.5 )% $437.4$897.3 million, a decrease of $39.0$46.5 million, or 8.2%4.9%, in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased external sales dollars primarily resulting from the US dollar strengthening against the euro and British pound when comparing the three months ended March 31, 2016 to the three months ended March 31, 2015. The increase in external net sales from acquisitions was due to the December 2015 acquisition of Polymer Technology Limited. The decrease in external net sales from reported sales volumes was primarily due to the continuing impacts of restructuring initiatives focused on our product mix enrichment strategy. The increasedecrease in external net sales from changes in sales pricing and product mix was primarily driven by higherlower average selling prices. Foreign currency translation decreased external sales dollars primarily resulting from the US dollar strengthening against the euro and British pound when comparing the six months ended June 30, 2016 to the six months ended June 30, 2015. Gross profit decreased $5.6$1.1 million, or 5.5%0.5%, to $96.2$199.3 million in the threesix months ended March 31,June 30, 2016. Gross profit increased due to changes in sales pricing, product costs and other adjustments primarily due to higher gross marginsmargin from sales of pharmaceutical finished goods in certain end markets including personal care andaddition to sales of pharmaceutical ingredients as well as the continued impacts of our product and ingredients.mix enrichment strategy. Gross margin increased from 21.4%21.2% in the threesix months ended March 31,June 30, 2015 to 22.0%22.2% in the threesix months ended March 31,June 30, 2016 primarily due to the factors impacting gross profit discussed above.$2.2$2.3 million, or 13.6%7.4%, to $14.0$28.8 million primarily due to foreign currency translation and lower reported sales volumes.volumes, reduced common carrier costs, and lower lease expenses. Operating expenses decreased $4.5$5.8 million, or 7.7%5.0%, to $53.9$109.2 million in the threesix months ended March 31,June 30, 2016, and remained flat at 12.3%constant as a percentage of external sales forof 12.2% in the threesix months ended March 31,June 30, 2015 and the six months ended June 30, 2016. Foreign currency translation decreased operating expenses by 2.4%0.5% or $1.4$0.6 million. On a constant currency basis, operating expenses decreased $3.1$5.2 million, or 5.3%4.5%, which was primarily related to lower personnel expenses of $1.7 million driven by lower salaries and wages due to the 2015 restructuring activity as well as lower variable compensation expense, as well as resulting site restructure impacts in addition tolower bad debt expenses of $1.1 million driven by receiving payments on previously reserved aged receivables, and lower lease expense of $0.6$0.8 million due to certain operating leases being replaced by capital leases. The remaining $0.8$1.6 million decrease related to several insignificant components.$1.1$7.0 million, or 4.0%12.9%, to $28.3 $61.3million in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased Adjusted EBITDA by 3.7%2.4% or $1.0 $1.3million. On a constant currency basis, Adjusted EBITDA increased $2.1$8.3 million, or 7.7%15.3%, due to reductions in operating expenses and decreased outbound freight and handling expenses. Adjusted EBITDA margin increased from 5.7%5.8% in the threesix months ended March 31,June 30, 2015 to 6.5%6.8% in the threesix months ended March 31,June 30, 2016 primarily as a result of the increase in gross margin. (10.0)% Reported sales volumes (10.0)% 2.2% Sales pricing, product costs and other adjustments 14.1% (16.9)% Foreign currency translation (20.7)% (24.7)% Total (16.6)% Net sales percentage change due to: Gross profit percentage change due to: Reported sales volumes (5.2 )% Reported sales volumes (5.2 )% Sales pricing and product mix 1.5 % Sales pricing, product costs and other adjustments 7.6 % Foreign currency translation (15.1 )% Foreign currency translation (17.4 )% Total (18.8 )% Total (15.0 )% $101.4 $205.8million, a decrease of $33.3 $47.6million, or 24.7%18.8%, in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased external sales dollars when comparing the three months ended March 31, 2016 to the three months ended March 31, 2015 primarily due to the stronger US dollar strengthening againstposition in the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 for the Mexican peso and Brazilian real. The decrease in external net sales from reported sales volumes was primarily due to decreases in the Asia Pacific region partially offset by increases in Mexico and Brazil resulting from market penetration. The increase in external net sales from changes in sales pricing and product mix was primarily due to improvements in product mix within Brazil and the Asia Pacific region.Brazil. Gross$4.1$6.9 million, or 16.6%15.0%, to $20.6$39.2 million in the threesix months ended March 31,June 30, 2016. within Brazil, Mexico and the Asia Pacific region.services. Gross margin increased from 18.3%18.2% in the threesix months ended March 31,June 30, 2015 to 20.3%19.0% in the threesix months ended March 31,June 30, 2016 primarily due to the factors impacting gross profit discussed above.$0.6$0.9 million, or 25.0%19.6%, to $1.8$3.7 million in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased outbound freight and handling expenses by 16.7%15.2% or $0.4$0.7 million. On a constant currency basis, outbound freight and handling expenses decreased $0.2 million or 8.3%4.3%, which was primarily due to lower volumes as well as synergies resulting from the consolidation of warehouses from the D’Altomare acquisition. Operating expenses decreased $3.3$3.8 million, or 23.2%14.0%, to $10.9$23.4 million in the threesix months ended March 31,June 30, 2016 and increased as a percentage of external sales from 10.5% in the three months ended March 31, 2015 to 10.7% in the threesix months ended March 31,June 30, 2015 to 11.4% in the six months ended June 30, 2016. Foreign currency translation decreased operating expenses by 17.6%16.2% or $2.5$4.4 million. On constant currency basis, operating expenses decreased $0.8increased $0.6 million, or 2.2%, which related to several insignificant components.$0.2$2.2 million, or 2.5%15.4%, to $7.9$12.1 million in the threesix months ended March 31,June 30, 2016. Foreign currency translation decreased Adjusted EBITDA by 27.2%20.3% or $2.2$2.9 million. On a constant currency basis, Adjusted EBITDA increased $2.0$0.7 million, or 24.7%4.9%, primarily due to increased gross profit and reduced operatingdecreased outbound freight and handling expenses. Adjusted EBITDA margin increased from 6.0%5.6% in the threesix months ended March 31,June 30, 2015 to 7.8%5.9% in the threesix months ended March 31,June 30, 2016 primarily as a result of the increase in gross margin.March 31,June 30, 2016, we had $539.1$601.6 million available under our credit facilities. Three Months Ended March 31, 2016 March 31, 2015 $ 64.7 $ 88.1 (77.2 ) (30.2 ) 17.8 (48.4 ) Six months ended June 30, 2016 June 30, 2015 Net cash provided by operating activities $ 115.1 $ 108.6 Net cash used by investing activities (98.8 ) (81.5 ) Net cash used by financing activities (1.2 ) (10.4 ) decreased $23.4increased $6.5 million from $88.1$108.6 million for the threesix months ended March 31,June 30, 2015 to $64.7$115.1 million for the threesix months ended March 31,June 30, 2016.decreaseincrease in cash provided by operating activities was primarily due to a decrease$38.6 million increase in net income exclusive of $31.1 millionnon-cash items in the six months ended June 30, 2016, compared to the six months ended June 30, 2015. Refer to “Results of Operations” above for additional information.increasing sales asincreases in trade receivables during the six months ended June 30, 2016 compared to the prior quarter during the threesix months ended March 31, 2016June 30, 2015 driven by certain extensions of customer payment terms as opposed to decreasingwell as changes in sales during the three months ended March 31, 2015.decreaseremaining increase in cash provided by operating activities was also attributable to the decrease of $15.8$4.3 million in net income exclusive of non-cash items in the three months ended March 31, 2016, compared to the three months ended March 31, 2015. Refer to “Results of Operations” above for additional information.Another factor contributing to the decrease in cash provided by operating activities was the $18.1 million reduction in other, net which primarily consisted of a reduction of $5.2 million in payments of sales taxes driven by the timing of tax payments, a reduction of $5.1 million from changes in accrued interest driven by the reduction in interest expense and a reduction of $13.6 million in other payable primarily driven by payments for capitalized information technology projects.The above decreases were partially offset by a $35.2 million increase from changes in prepaid expenses and other current assets which primarily consisted of a $16.0 million increase from rebate collections as well as a $15.7 million increase from the change in income tax receivable. Another factor offsetting the decrease in cash flow from operations was the $6.4 million reduction in pensions and other postretirement benefit liabilities which was primarily driven by lower pension contributions in the three months ended March 31, 2016.$47.0$17.3 million from $30.2$81.5 million for the threesix months ended March 31,June 30, 2015 to $77.2$98.8 million for the threesix months ended March 31,June 30, 2016. The increase is primarily related to increased cash outflows for purchases of businesses, net of cash acquired of $53.3$36.2 million primarily driven by the March 2016 acquisitions of Bodine and Nexus AG.ThisAG, which was partially offset by the April 2015 acquisition of Key Chemical, Inc.$8.4$17.2 million. The reduction was driven by higher capital expenditures during the threesix months ended March 31,June 30, 2015 resulting from purchasing assetsseveral significant facility expansion projects as well as software support efficiency projects that replaced operating leases.were completed within the year ended December 31, 2015. The remaining increasedecrease in cash used by investing activities of $2.1$1.7 million did not contain any significant activity.Provided (Used)Used by Financing Activities provided (used) by financing activities increased $66.2 million from cash used by financing activities of $48.4decreased $9.2 million from $10.4 million for the threesix months ended March 31,June 30, 2015 to cash provided by financing activities of $17.8$1.2 million for the threesix months ended March 31,June 30, 2016. The increasedecrease in cash provided (used)used by financing activities was primarily due to the $44.3 million reduction in payments onprior year reductions of long-term debt and capital lease obligations primarily driven by our June 2015 and July 2015 debt refinancing activity as well asincluding a $69.5 million decrease in the increase of $37.5 million in proceeds from issuance of long term debt which resulted from additional borrowings on our ABL facilities, primarily drivenpayments of $650.0 million related to the Senior Subordinated Notes, and reductions in the short-term debt of $43.6 million. The prior year debt reductions were partially offset by current year reductions of debt including short-term debt payments of $16.8 million and a $0.5 million early payment on the long-term unsecured note. The decrease in cash used by financing activities was also attributable to a $20.5 million increase in the ABL facility balance due to increased working capital funding requirements.The increasesrequirements for the six months ended June 30, 2016. Also contributing to the decrease in the cash provided (used)used by financing activities balance was partially offset by a $13.8$5.8 million reductionincrease in cash flow from changes in short-term financing, net that was primarily driven by paying down bank overdrafts.prior year payments to reduce the outstanding amounts drawn under the credit facility.$1.8$0.7 million decrease in cash used by financing activities did not contain any significant activity.litigationLitigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth strategies and the industries in which we operate and including, without limitation, statements relating to our estimated or anticipated financial performance or results. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those reflected in forward-looking statements relating to our operations and business and the risks and uncertainties discussed in “Risk Factors.” Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include:●general economic conditions, particularly fluctuations in industrial production;●disruption in the supply of chemicals we distribute or our customers’ operations;●termination of contracts or relationships by customers or producers on short notice;●the price and availability of chemicals, or a decline in the demand for chemicals;●our ability to pass through cost increases to our customers;●our ability to meet customer demand for a product;●trends in oil and gas prices;●our ability to execute strategic investments, including pursuing acquisitions and/or dispositions, and successfully integrating and operating acquired companies;●challenges associated with international operations, including securing producers and personnel, compliance with foreign laws and changes in economic or political conditions;●our ability to effectively implement our strategies or achieve our business goals;●exposure to interest rate and currency fluctuations;●competitive pressures in the chemical distribution industry;●consolidation of our competitors;●our ability to implement and efficiently operate the systems needed to manage our operations;●the risks associated with security threats, including cybersecurity threats;●increases in transportation costs and changes in our relationship with third party carriers;●the risks associated with hazardous materials and related activities;●accidents, safety failures, environmental damage, product quality issues, major or systemic delivery failures involving our distribution network or the products we carry or adverse health effects or other harm related to the materials we blend, manage, handle, store, sell or transport;●evolving laws and regulations relating to hydraulic fracturing;●losses due to potential product liability claims and recalls and asbestos claims;●compliance with extensive environmental, health and safety laws, including laws relating to the investigation and remediation of contamination, that could require material expenditures or changes in our operations;●general regulatory and tax requirements;●operational risks for which we may not be adequately insured;●ongoing litigation and other legal and regulatory actions and risks, including asbestos claims;●potential impairment of goodwill;●inability to generate sufficient working capital;●loss of key personnel;●labor disruptions and other costs associated with the unionized portion of our workforce;●negative developments affecting our pension plans;●the impact of labeling regulations; and●our substantial indebtedness and the restrictions imposed by our debt instruments and indenture.Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. | Controls and Procedures |
1.Legal1. Legal Proceedings
1A.Risk1A. Risk Factors
2.Unregistered2. Unregistered Sales of Equity Securities and Use of Proceeds.
3.Defaults3. Defaults Upon Senior Securities.
4.Mine4. Mine Safety Disclosures.
Exhibit Number Offer Letter, dated April 19, 2016. by and between Univar Europe Limited and David Jukes., incorporated by reference to Exhibit 10.2 31.2* 32.1* 32.2* 101.1*6.Exhibits.6. Exhibits.Exhibit Description 10.1 DescriptionAmendment Agreement, dated as of April 18, 2016, by and between Univar Europe Limited and David Jukes, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-k of Univar Inc., filed April 19, 2016. 10.3 Employment Agreement, dated May 3, 2016, by and between Univar Inc. and Mr. Newlin, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-k of Univar Inc., filed May 3, 2016. 10.4* Employee Restricted Stock Unit Agreement, dated as of May 3, 2016, by and between Univar Inc. and Mr. Newlin, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-k of Univar Inc., filed May 3, 2016. 10.5 Resignation Agreement and Release, dated as of May 3, 2016, by and between Univar Inc. and Mr. Fyrwald, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-k of Univar Inc., filed May 3, 2016. 31.1* Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Interactive Data File By: /s/ J. Erik FyrwaldStephen D. Newlin J. Erik Fyrwald Director
By: | /s/ Carl J. Lukach | |
Carl J. Lukach Executive Vice President, Chief Financial Officer |
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