Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2016 | Aug. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Nexeo Solutions, Inc. | |
Entity Central Index Key | 1,604,416 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 89,286,936 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Non-Current Liabilities | ||
Long-term debt and capital lease obligations, less current portion, net | $ 780.6 | $ 854.4 |
Successor | ||
Current Assets | ||
Cash and cash equivalents | 38.6 | 0.2 |
Accounts and notes receivable (net of allowance for doubtful accounts of $0.1 million and $3.8 million, respectively) | 475.9 | |
Inventories | 321.5 | |
Other current assets | 21.8 | |
Total current assets | 857.8 | |
Non-Current Assets | ||
Property, plant and equipment, net | 339.1 | |
Goodwill | 693.4 | 0 |
Deferred income taxes | 1.6 | |
Other intangible assets, net of amortization | 216.2 | |
Other non-current assets | 9.9 | |
Total non-current assets | 1,260.2 | |
Total Assets | 2,118 | |
Current Liabilities | ||
Short-term borrowings and current portion of long-term debt and capital lease obligations | 50 | |
Accounts payable | 313.6 | |
Accrued expenses and other liabilities | 47.9 | |
Income taxes payable | 1.3 | |
Total current liabilities | 412.8 | |
Non-Current Liabilities | ||
Long-term debt and capital lease obligations, less current portion, net | 780.6 | |
Deferred income taxes | 39.8 | |
Due to related party pursuant to contingent consideration obligations | 142.2 | |
Other non-current liabilities | 5.4 | |
Total non-current liabilities | 968 | |
Total Liabilities | 1,380.8 | |
Commitments and contingencies (see Note 13) | ||
Equity | ||
Preferred stock, $0.0001 par value (1,000,000 shares authorized, none issued and outstanding as of June 30, 2016) | 0 | |
Common stock, $0.0001 par value (300,000,000 shares authorized, 89,222,418 shares issued and outstanding as of June 30, 2016) | 0 | |
Additional paid-in capital | 757.7 | |
Accumulated deficit | (18.3) | |
Accumulated other comprehensive loss | (2.2) | |
Total equity | 737.2 | |
Total Liabilities and Equity | 2,118 | |
Successor | Series A membership interest | ||
Equity | ||
Membership interest | 0 | |
Successor | Series B membership interest | ||
Equity | ||
Membership interest | $ 0 | |
Predecessor | ||
Current Assets | ||
Cash and cash equivalents | 127.7 | |
Accounts and notes receivable (net of allowance for doubtful accounts of $0.1 million and $3.8 million, respectively) | 508.7 | |
Inventories | 325.1 | |
Other current assets | 22 | |
Total current assets | 983.5 | |
Non-Current Assets | ||
Property, plant and equipment, net | 231.2 | |
Goodwill | 373.7 | |
Deferred income taxes | 0.3 | |
Other intangible assets, net of amortization | 111.4 | |
Other non-current assets | 8.8 | |
Total non-current assets | 725.4 | |
Total Assets | 1,708.9 | |
Current Liabilities | ||
Short-term borrowings and current portion of long-term debt and capital lease obligations | 72.4 | |
Accounts payable | 326.6 | |
Accrued expenses and other liabilities | 63.9 | |
Income taxes payable | 2.5 | |
Total current liabilities | 465.4 | |
Non-Current Liabilities | ||
Long-term debt and capital lease obligations, less current portion, net | 854.4 | |
Deferred income taxes | 91.5 | |
Due to related party pursuant to contingent consideration obligations | 0 | |
Other non-current liabilities | 12.6 | |
Total non-current liabilities | 958.5 | |
Total Liabilities | 1,423.9 | |
Commitments and contingencies (see Note 13) | ||
Equity | ||
Preferred stock, $0.0001 par value (1,000,000 shares authorized, none issued and outstanding as of June 30, 2016) | 0 | |
Common stock, $0.0001 par value (300,000,000 shares authorized, 89,222,418 shares issued and outstanding as of June 30, 2016) | 0 | |
Additional paid-in capital | 0 | |
Accumulated deficit | (162.9) | |
Accumulated other comprehensive loss | (47.6) | |
Total equity | 285 | |
Total Liabilities and Equity | 1,708.9 | |
Predecessor | Series A membership interest | ||
Equity | ||
Membership interest | 490.4 | |
Total equity | 490.4 | |
Predecessor | Series B membership interest | ||
Equity | ||
Membership interest | 5.1 | |
Total equity | $ 5.1 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) $ in Millions | Jun. 30, 2016USD ($)$ / sharesshares |
Preferred shares authorized (in shares) | 1,000,000 |
Preferred shares issued (in shares) | 0 |
Preferred shares outstanding (in shares) | 0 |
Shares authorized (in shares) | 300,000,000 |
Shares issued (in shares) | 89,222,418 |
Shares outstanding (in shares) | 89,222,418 |
Successor | |
Allowance for doubtful accounts | $ | $ 0.1 |
Preferred stock, par value (USD per share) | $ / shares | $ 0.000001 |
Preferred shares authorized (in shares) | 1,000,000 |
Preferred shares issued (in shares) | 0 |
Preferred shares outstanding (in shares) | 0 |
Common stock, par value (USD per share) | $ / shares | $ 0.000001 |
Shares authorized (in shares) | 300,000,000 |
Shares issued (in shares) | 89,222,418 |
Shares outstanding (in shares) | 89,222,418 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | ||||||
Sales and operating revenues | $ 214.3 | $ 214.3 | ||||
Cost of sales and operating expenses | 195.5 | 195.5 | ||||
Gross profit | 18.8 | 18.8 | ||||
Selling, general and administrative expenses | 19.1 | 19.2 | ||||
Transaction related costs | 15.9 | 18 | ||||
Change in fair value of contingent consideration obligations | (2.3) | (2.3) | ||||
Operating income (loss) | (13.9) | (16.1) | ||||
Other income | 0 | 0 | ||||
Interest income (expense) | ||||||
Interest income | 0.3 | 0.9 | ||||
Interest expense | (3.2) | (3.2) | ||||
Income from continuing operations before income taxes | (16.8) | (18.4) | ||||
Income tax expense (benefit) | (1.3) | (1.3) | ||||
Net income (loss) from continuing operations | (15.5) | (17.1) | ||||
Net income (loss) from discontinued operations, net of tax | 0 | 0 | ||||
Net income (loss) | $ (15.5) | $ (17.1) | ||||
Net loss per share available to common shareholders | ||||||
Basic and diluted (USD per share) | $ (0.45) | $ (0.81) | ||||
Weighted average number of common shares outstanding | ||||||
Basic and diluted (in shares) | 34,072,056 | 21,241,897 | ||||
Predecessor | ||||||
Sales and operating revenues | $ 650.2 | $ 988.8 | $ 2,340.1 | $ 3,019.3 | ||
Cost of sales and operating expenses | 574.8 | 877.5 | 2,068.2 | 2,716.8 | ||
Gross profit | 75.4 | 111.3 | 271.9 | 302.5 | ||
Selling, general and administrative expenses | 57.5 | 82.9 | 208.9 | 248.5 | ||
Transaction related costs | 26.1 | 0 | 33.4 | 0.1 | ||
Change in fair value of contingent consideration obligations | 0 | 0 | 0 | 0 | ||
Operating income (loss) | (8.2) | 28.4 | 29.6 | 53.9 | ||
Other income | 0.3 | 8.4 | 2.9 | 9.1 | ||
Interest income (expense) | ||||||
Interest income | 0 | 0 | 0.1 | 0.1 | ||
Interest expense | (11.2) | (16.2) | (42.3) | (48.9) | ||
Income from continuing operations before income taxes | (19.1) | 20.6 | (9.7) | 14.2 | ||
Income tax expense (benefit) | 1.1 | 1.8 | 4.2 | 2.7 | ||
Net income (loss) from continuing operations | (20.2) | 18.8 | (13.9) | 11.5 | ||
Net income (loss) from discontinued operations, net of tax | 0 | 0 | 0.1 | (0.8) | ||
Net income (loss) | $ (20.2) | $ 18.8 | $ (13.8) | $ 10.7 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Successor | |||||||
Net income (loss) | $ (15.5) | $ (17.1) | |||||
Unrealized foreign currency translation gain (loss), net of tax | (2.2) | (2.2) | |||||
Unrealized gain on interest rate hedges, net of tax | 0 | 0 | |||||
Other comprehensive income (loss), net of tax | (2.2) | (2.2) | |||||
Total comprehensive income (loss), net of tax | (17.7) | (19.3) | |||||
Comprehensive loss attributable to noncontrolling interest, net of tax | 0 | 0 | |||||
Total comprehensive income (loss) attributable to Predecessor and Successor, net of tax | [1] | $ (17.7) | $ (19.3) | ||||
Predecessor | |||||||
Net income (loss) | $ (20.2) | $ 18.8 | $ (13.8) | $ 10.7 | |||
Unrealized foreign currency translation gain (loss), net of tax | (3.4) | 5.3 | (4) | (19.6) | |||
Unrealized gain on interest rate hedges, net of tax | 0.1 | 0 | 0.3 | 0.1 | |||
Other comprehensive income (loss), net of tax | (3.3) | 5.3 | (3.7) | (19.5) | |||
Total comprehensive income (loss), net of tax | (23.5) | 24.1 | (17.5) | (8.8) | |||
Comprehensive loss attributable to noncontrolling interest, net of tax | 0 | 0 | 0 | 0.1 | |||
Total comprehensive income (loss) attributable to Predecessor and Successor, net of tax | [1] | $ (23.5) | $ 24.1 | $ (17.5) | $ (8.7) | ||
[1] | The tax effects for each component presented are not material. |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Series A Membership Interest | Series B membership interest |
Beginning balance, Predecessor (Predecessor) at Sep. 30, 2015 | $ 285 | $ (162.9) | $ (47.6) | $ 490.4 | $ 5.1 | ||
Beginning balance, Successor (shares) (Successor) at Sep. 30, 2015 | 14,853,927 | ||||||
Beginning balance, Successor (Successor) at Sep. 30, 2015 | 5 | $ 0 | $ 6.2 | (1.2) | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Reclassification of shares previously subject to redemption (in shares) | Successor | 14,168 | ||||||
Reclassification of shares previously subject to redemption | Successor | 0.1 | 0.1 | |||||
Comprehensive loss: | |||||||
Net loss | Successor | (0.1) | (0.1) | |||||
Ending balance, Successor (shares) (Successor) at Dec. 31, 2015 | 14,868,095 | ||||||
Ending balance, Successor (Successor) at Dec. 31, 2015 | 5 | 6.3 | (1.3) | ||||
Beginning balance, Predecessor (Predecessor) at Sep. 30, 2015 | 285 | (162.9) | (47.6) | 490.4 | 5.1 | ||
Beginning balance, Successor (shares) (Successor) at Sep. 30, 2015 | 14,853,927 | ||||||
Beginning balance, Successor (Successor) at Sep. 30, 2015 | 5 | $ 0 | 6.2 | (1.2) | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Repurchases of membership units | Predecessor | (0.1) | (0.1) | |||||
Equity-based compensation | Predecessor | 2.7 | 2.7 | |||||
Comprehensive loss: | |||||||
Net loss | Predecessor | (13.8) | (13.8) | |||||
Other comprehensive loss | Predecessor | (3.7) | (3.7) | |||||
Balance at June 8, 2016, Predecessor (Predecessor) at Jun. 08, 2016 | $ 270.1 | (176.7) | (51.3) | 490.4 | 7.7 | ||
Ending balance, Successor (shares) at Jun. 08, 2016 | 62,531,250 | ||||||
Beginning balance, Predecessor (Predecessor) at Sep. 30, 2015 | $ 285 | (162.9) | (47.6) | 490.4 | 5.1 | ||
Beginning balance, Successor (shares) (Successor) at Sep. 30, 2015 | 14,853,927 | ||||||
Beginning balance, Successor (Successor) at Sep. 30, 2015 | 5 | $ 0 | 6.2 | (1.2) | 0 | ||
Comprehensive loss: | |||||||
Net loss | Successor | (17.1) | ||||||
Other comprehensive loss | Successor | (2.2) | ||||||
Balance at June 8, 2016, Predecessor (Successor) at Jun. 30, 2016 | $ 737.2 | ||||||
Ending balance, Successor (shares) (Successor) at Jun. 30, 2016 | 89,222,418 | 89,222,418 | |||||
Ending balance, Successor (shares) at Jun. 30, 2016 | 89,222,418 | ||||||
Ending balance, Successor (Successor) at Jun. 30, 2016 | $ 737.2 | $ 0 | 757.7 | (18.3) | (2.2) | ||
Beginning balance, Successor (shares) (Successor) at Dec. 31, 2015 | 14,868,095 | ||||||
Beginning balance, Successor (Successor) at Dec. 31, 2015 | 5 | 6.3 | (1.3) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Reclassification of shares previously subject to redemption (in shares) | Successor | 150,231 | ||||||
Reclassification of shares previously subject to redemption | Successor | 1.5 | 1.5 | |||||
Comprehensive loss: | |||||||
Net loss | Successor | (1.5) | (1.5) | |||||
Ending balance, Successor (shares) (Successor) at Mar. 31, 2016 | 15,018,326 | ||||||
Ending balance, Successor (Successor) at Mar. 31, 2016 | 5 | 7.8 | (2.8) | ||||
Comprehensive loss: | |||||||
Net loss | Predecessor | (20.2) | ||||||
Other comprehensive loss | Predecessor | (3.3) | ||||||
Balance at June 8, 2016, Predecessor (Predecessor) at Jun. 08, 2016 | $ 270.1 | (176.7) | (51.3) | $ 490.4 | $ 7.7 | ||
Ending balance, Successor (shares) at Jun. 08, 2016 | 62,531,250 | ||||||
Beginning balance, Successor (shares) (Successor) at Mar. 31, 2016 | 15,018,326 | ||||||
Beginning balance, Successor (Successor) at Mar. 31, 2016 | $ 5 | 7.8 | (2.8) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Equity-based compensation | Successor | 0.3 | 0.3 | |||||
Reclassification of shares previously subject to redemption (in shares) | Successor | 47,512,924 | ||||||
Reclassification of shares previously subject to redemption | Successor | 475.2 | 475.2 | |||||
Redeemed shares (in shares) | Successor | (29,793,320) | ||||||
Redeemed shares | Successor | (298.5) | (298.5) | |||||
Warrant conversion (in shares) | Successor | 2,240,000 | ||||||
Private placement shares issued May 23, 2016 (in shares) | Successor | 23,492,306 | ||||||
Private placement shares issued May 23, 2016 | Successor | 234.9 | 234.9 | |||||
Shares issued to Selling Equityholders (in shares) | Successor | 27,673,604 | ||||||
Shares issued to Selling Equityholders | Successor | 276.7 | 276.7 | |||||
Fair value equity contribution from Sponsor in the form of Founder Shares transferred to Selling Equityholders | Successor | 30.2 | 30.2 | |||||
Shares issued for advisory services and deferred underwriting fees (in shares) | Successor | 3,078,578 | ||||||
Shares issued for advisory services and deferred underwriting fees | Successor | 30.8 | 30.8 | |||||
Fair value equity contribution from Sponsor in the form of Founder Shares transferred to directors for services rendered | Successor | 0.3 | 0.3 | |||||
Comprehensive loss: | |||||||
Net loss | Successor | (15.5) | (15.5) | |||||
Other comprehensive loss | Successor | (2.2) | (2.2) | |||||
Balance at June 8, 2016, Predecessor (Successor) at Jun. 30, 2016 | $ 737.2 | ||||||
Ending balance, Successor (shares) (Successor) at Jun. 30, 2016 | 89,222,418 | 89,222,418 | |||||
Ending balance, Successor (shares) at Jun. 30, 2016 | 89,222,418 | ||||||
Ending balance, Successor (Successor) at Jun. 30, 2016 | $ 737.2 | $ 0 | $ 757.7 | $ (18.3) | $ (2.2) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 8 Months Ended | 9 Months Ended | |
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | |||
Net income (loss) from continuing operations | $ (17.1) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 4.3 | ||
Debt issuance costs and original issue discount amortization | (0.4) | ||
Non-cash transaction costs | 12.8 | ||
Provision for bad debt | 0.1 | ||
Inventory impairment | 0 | ||
Deferred income taxes | (1.9) | ||
Equity-based compensation charges | 0.3 | ||
Change in fair value of contingent consideration obligations | (2.3) | ||
Gain on sale of property and equipment | 0 | ||
Gain on debt extinguishment, net | 0 | ||
Changes in operating assets and liabilities: | |||
Accounts and notes receivable | (6) | ||
Inventories | 7 | ||
Other current assets | 2.8 | ||
Accounts payable | (27.3) | ||
Related party payable | 0 | ||
Accrued expenses and other liabilities | (2.6) | ||
Changes in other operating assets and liabilities, net | 0.3 | ||
Net cash provided by (used in) operating activities from continuing operations | (30) | ||
Net cash provided by (used in) operating activities from discontinued operations | 0 | ||
Net cash provided by (used in) operating activities | (30) | ||
Cash flows from investing activities | |||
Additions to property and equipment | (1.4) | ||
Proceeds from the disposal of property and equipment | 0 | ||
Proceeds withdrawn from trust account | 501.1 | ||
Cash consideration paid for Business Combination, net of cash acquired | (360.6) | ||
Net cash provided by (used in) investing activities | 139.1 | ||
Cash flows from financing activities | |||
Proceeds from issuance of common stock | 234.9 | ||
Redemption of common stock | (298.5) | ||
Proceeds from Sponsor convertible note and Sponsor promissory note | 0.7 | ||
Repayment of Sponsor convertible notes and Sponsor promissory note | (1) | ||
Repurchases of membership units | 0 | ||
Tax distributions associated with membership interests | 0 | ||
Purchase of additional equity interest in Nexeo Plaschem | 0 | ||
Proceeds from short-term debt | 4.9 | ||
Repayment of short-term debt | (1.7) | ||
Proceeds from issuance of long-term debt | 823.6 | ||
Repayment of long-term debt and capital lease obligations | (41) | ||
Repayment of Predecessor long-term debt | (767.3) | ||
Cash paid for debt issuance costs | (25.3) | ||
Net cash used in financing activities | (70.7) | ||
Effect of exchange rate changes on cash and cash equivalents | 0 | ||
Increase (decrease) in cash and cash equivalents | 38.4 | ||
Cash and cash equivalents at the beginning of the period | $ 0.2 | 0.2 | |
Cash and cash equivalents at the end of the period | 38.6 | ||
Supplemental disclosure of cash flow information: | |||
Cash paid during the period for interest | 7.2 | ||
Cash paid during the period for taxes | 1.5 | ||
Supplemental disclosure of non-cash operating activities: | |||
Non-cash payment of deferred underwriting fees | 18.3 | ||
Supplemental disclosure of cash flow information: | |||
Non-cash capital expenditures, including capital leases | 1.2 | ||
Predecessor | |||
Net income (loss) from continuing operations | (13.9) | $ 11.5 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 37.7 | 39.6 | |
Debt issuance costs and original issue discount amortization | 6.1 | 6.5 | |
Non-cash transaction costs | 0 | 0 | |
Provision for bad debt | 1.2 | 0.3 | |
Inventory impairment | 0 | 1.6 | |
Deferred income taxes | 1.1 | 2 | |
Equity-based compensation charges | 2.7 | 0.9 | |
Change in fair value of contingent consideration obligations | 0 | 0 | |
Gain on sale of property and equipment | (2) | (1) | |
Gain on debt extinguishment, net | (0.6) | 0 | |
Changes in operating assets and liabilities: | |||
Accounts and notes receivable | 34.4 | 77.3 | |
Inventories | 8.4 | 10.9 | |
Other current assets | (4.1) | 6.5 | |
Accounts payable | 13.4 | (63.2) | |
Related party payable | (0.3) | (1.6) | |
Accrued expenses and other liabilities | (9.7) | 4 | |
Changes in other operating assets and liabilities, net | (4.9) | (1.7) | |
Net cash provided by (used in) operating activities from continuing operations | 69.5 | 93.6 | |
Net cash provided by (used in) operating activities from discontinued operations | 0.1 | (0.6) | |
Net cash provided by (used in) operating activities | 69.6 | 93 | |
Cash flows from investing activities | |||
Additions to property and equipment | (14.2) | (27.3) | |
Proceeds from the disposal of property and equipment | 2.4 | 2.3 | |
Proceeds withdrawn from trust account | 0 | 0 | |
Cash consideration paid for Business Combination, net of cash acquired | 0 | 0 | |
Net cash provided by (used in) investing activities | (11.8) | (25) | |
Cash flows from financing activities | |||
Proceeds from issuance of common stock | 0 | 0 | |
Redemption of common stock | 0 | 0 | |
Proceeds from Sponsor convertible note and Sponsor promissory note | 0 | 0 | |
Repayment of Sponsor convertible notes and Sponsor promissory note | 0 | 0 | |
Repurchases of membership units | (0.1) | 0 | |
Tax distributions associated with membership interests | 0 | (0.1) | |
Purchase of additional equity interest in Nexeo Plaschem | 0 | (34.3) | |
Proceeds from short-term debt | 20.9 | 36.9 | |
Repayment of short-term debt | (17.1) | (47.6) | |
Proceeds from issuance of long-term debt | 292.1 | 494.3 | |
Repayment of long-term debt and capital lease obligations | (417.3) | (514.6) | |
Repayment of Predecessor long-term debt | 0 | 0 | |
Cash paid for debt issuance costs | 0 | 0 | |
Net cash used in financing activities | (121.5) | (65.4) | |
Effect of exchange rate changes on cash and cash equivalents | 0.3 | (1.8) | |
Increase (decrease) in cash and cash equivalents | (63.4) | 0.8 | |
Cash and cash equivalents at the beginning of the period | 127.7 | $ 127.7 | 88.2 |
Cash and cash equivalents at the end of the period | 64.3 | 89 | |
Supplemental disclosure of cash flow information: | |||
Cash paid during the period for interest | 32.9 | 39.6 | |
Cash paid during the period for taxes | 3.4 | 4 | |
Supplemental disclosure of non-cash operating activities: | |||
Non-cash payment of deferred underwriting fees | 0 | 0 | |
Supplemental disclosure of cash flow information: | |||
Non-cash capital expenditures, including capital leases | $ 16.5 | $ 2.3 |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | 9 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Nature of Operations | Basis of Presentation and Nature of Operations Basis of Presentation Nexeo Solutions, Inc. (together with its subsidiaries, the “Company”) is the result of the business combination between WLRH and Holdings. WLRH was incorporated in Delaware on March 24, 2014 and was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. WLRH completed its IPO in June 2014, raising approximately $500.0 million in cash proceeds. WLRH neither engaged in any operations nor generated any revenue prior to the Business Combination. On the Closing Date, WLRH and Holdings consummated the Business Combination, pursuant to the Merger Agreement. In connection with the closing of the Business Combination, WLRH changed its name from “WL Ross Holding Corp.” to “Nexeo Solutions, Inc.” and changed the ticker symbol for its common stock on NASDAQ from “WLRH” to “NXEO”. WLRH was identified as the acquirer for accounting purposes and Holdings was identified as the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for the periods prior to the Closing Date. WLRH, which includes Holdings for periods subsequent to the Business Combination, was subsequently renamed Nexeo Solutions, Inc. and is the “Successor” for periods after the Closing Date. The acquisition was accounted for as a business combination using the acquisition method of accounting and the Successor financial statements reflect a new basis of accounting for the assets and liabilities of Holdings that is based on the fair value of net assets acquired and liabilities assumed. See Note 3 for further discussion of the Business Combination. As a result of the application of the acquisition method of accounting as of the Closing Date, the condensed consolidated financial statements for the Predecessor period and for the Successor period are presented on a different basis and are, therefore, not comparable. On the Closing Date, the Company’s Board of Directors approved a change in WLRH’s fiscal year-end from December 31 to September 30. As a result of this change and the Business Combination, the condensed consolidated financial statements presented within this 10-Q include the transition period from October 1, 2015 through June 30, 2016. The Successor periods in the condensed consolidated financial statements as of June 30, 2016 and for the three and nine months ended June 30, 2016 includes 22 days (June 9, 2016 through June 30, 2016) of the combined operating results, as well as the full three and nine months ended June 30, 2016 of WLRH’s operating results, which reflect its financial activity including transaction costs and equity structure changes in preparation of the consummation of the Business Combination. Operating results during the three and nine months ended June 30, 2015 for WLRH were not significant or meaningful and therefore are not presented in the condensed consolidated statements of operations. Operating results for the Predecessor for the three and nine months ended June 30, 2015 are presented as they are reflective of the ongoing operations of the acquired business. The Predecessor periods in the condensed consolidated financial statements represent the operating results of Holdings and its subsidiaries prior to the Business Combination. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the SEC. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as disclosed herein) considered necessary for a fair statement have been included. Results of operations for the periods presented herein are not necessarily indicative of results to be expected for the fiscal year ending 2016. Financial data presented herein should be read in conjunction with the information included in or incorporated by reference into the Company’s Form 8-K filed on June 15, 2016 and Form 8-K/A filed on June 15, 2016. The consolidated financial data as of September 30, 2015 presented in these unaudited condensed consolidated financial statements were derived from the Predecessor’s audited consolidated financial statements, but do not include all disclosures required by U.S. GAAP. Nature of Operations The Company is a global distributor of chemicals products in North America and Asia and plastics products in North America, EMEA and Asia. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. The Company also provides environmental services, including waste collection, recovery and arrangement for disposal services and recycling in North America, primarily in the U.S., through its Environmental Services line of business. The Predecessor was a distributor of composites products in North America until July 1, 2014, when these operations were sold and as a result, activity associated with these operations is reflected as discontinued operations for all periods presented. The Company connects a network of approximately 1,300 suppliers with a diverse base of approximately 27,500 customers. The Company offers its customers products used in a broad cross-section of end markets including household, industrial and institutional, lubricants, performance coatings (including architectural coatings, adhesives, sealants and elastomers), automotive, healthcare, personal care, oil and gas and construction. The Company distributes approximately 23,000 products into over 80 countries through a supply chain consisting of approximately 170 owned, leased or third-party warehouses, rail terminals and tank terminals globally. The Company has a private fleet of over 1,000 units, including tractors and trailers, primarily located in North America. The Company currently employs approximately 2,550 employees globally. |
Significant Accounting Policies
Significant Accounting Policies and Recent Accounting Pronouncements | 9 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Significant Accounting Policies and Recent Accounting Pronouncements Significant Accounting Policies The Predecessor’s significant accounting policies are substantially the same as those of the Company presented below. Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and all wholly-owned subsidiaries in which it maintains control. Significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates, Risks, and Uncertainties The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include: • the fair value of assets acquired and liabilities assumed in a business combination; • the assessment of recoverability of long lived assets, including property and equipment, goodwill and intangible assets, income taxes, reserves and environmental remediation; • the estimated useful lives of intangible and depreciable assets; • the grant date fair value of equity-based awards; • the recognition, measurement and valuation of current and deferred income taxes; • the recognition and measurement of contingent consideration related to the TRA liability; and • the recognition and measurement of contingent consideration related to the Deferred Cash Consideration. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. The Company’s financial instruments exposed to concentration of credit risk consist primarily of cash and cash equivalents. Although the Company deposits cash with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risks. No single customer accounted for more than 10.0% of revenues for any line of business, or on a consolidated basis, for each of the periods reported. The Company has two suppliers that each account for between 10% and 13% of consolidated purchases for the Successor and Predecessor periods in the current fiscal year. In the prior fiscal periods presented, the Predecessor had one supplier that accounted for approximately 13% of consolidated purchases. Cash and Cash Equivalents All highly liquid temporary investments with original maturities of three months or less are considered to be cash equivalents. Accounts and Notes Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded net of discounts and allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and generally does not require collateral from its customers. The Company’s accounts receivable in the U.S. and Canada are collateral under the New Credit Facilities. The Company records an allowance for doubtful accounts as a best estimate of the amount of probable credit losses for accounts receivable. On a recurring basis, the Company reviews this allowance and considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a receivable is reasonably assured. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Receivables are charged off against the allowance for doubtful accounts when it is probable a receivable will not be recovered. Certain customers of Nexeo Plaschem are allowed to remit payment during a period of time ranging from 30 days up to nine months . These notes receivables, which are supported by banknotes issued by large banks in China on behalf of these customers, are included in Accounts and notes receivable on the Company's condensed consolidated balance sheets and totaled $7.0 million at June 30, 2016 for the Successor and $4.5 million at September 30, 2015 for the Predecessor, respectively. The allowance for doubtful accounts was $ 0.1 million at June 30, 2016 for the Successor and $ 3.8 million at September 30, 2015 for the Predecessor. Bad debt expense, a component of Selling, general and administrative expenses in the condensed consolidated statements of operations, totaled $ 0.1 million for the three and nine months ended June 30, 2016 for the Successor, $ 0.1 million and $ 1.2 million for the periods from April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and net recoveries of $0.4 million and expenses of $ 0.3 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Inventories Inventories are carried at the lower of cost or market using the weighted average cost method. The Company’s inventories in the U.S. and Canada are collateral under the New Credit Facilities. Goodwill and Intangibles The Company had goodwill of $693.4 million at June 30, 2016 associated with the Business Combination. The Predecessor had goodwill of $373.7 million at September 30, 2015 resulting from previous acquisitions. The purchase consideration of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The estimated fair values are determined after review and consideration of relevant information including discounted cash flows, quoted market prices and estimates made by management. To the extent that the purchase consideration exceeds the fair value of the net identifiable tangible and intangible assets acquired, such excess is allocated to goodwill. The Company had other intangible assets, net of amortization, of $216.2 million at June 30, 2016 consisting of customer relationships and the trade name. These intangible assets are amortized on a straight-line basis over their estimated useful lives, including customer relationships which are amortized over 12 years and the trade name is amortized over four years. The Predecessor had other intangible assets, net of amortization, of $111.4 million at September 30, 2015 consisting of leasehold improvements, customer-related intangibles, supplier-related intangibles, non-compete agreements and certain trademarks and trade names. Property, Plant and Equipment Property, plant and equipment includes plants and buildings, machinery and equipment and software and computer equipment. Property, plant and equipment acquired or constructed in the normal course of business are initially recorded at cost. Property and equipment acquired in business combinations are initially recorded at their estimated fair value. Property, plant and equipment are depreciated by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their economic useful life or their lease term. The range of useful lives used to depreciate property, plant and equipment is as follows: Successor Predecessor Estimated Useful Estimated Useful Plants and buildings 5-35 5-35 Machinery and equipment 2-30 2-30 Software and computer equipment 3-10 3-10 Repairs and maintenance expenditures that do not extend the useful life of the asset are charged to expense as incurred. Major expenditures for replacements and significant improvements that increase asset values or extend useful lives are capitalized. The carrying amounts of assets that are sold or retired and the related accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected in the condensed consolidated statements of operations. Leases The Company leases certain property, plant and equipment in the ordinary course of business. The leases are classified as either capital leases or operating leases. Assets under capital leases are included in Property, plant and equipment, net in the condensed consolidated balance sheets and are depreciated over the lesser of the lease term or the useful life of the assets. Capital lease obligations are included in Short-term borrowings, current portion of long-term debt and capital lease obligations and Long-term debt and capital lease obligations, less current portion, net in the condensed consolidated balance sheets. Generally, lease payments under capital leases are recognized as interest expense and a reduction of the capital lease obligations. Lease payments under operating leases are recognized as an expense in the condensed consolidated statements of operations on a straight-line basis over the lease term. Impairment of Goodwill and Other Long-lived Assets Goodwill. Goodwill is tested for impairment annually as of March 31 and whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is reviewed for impairment at the reporting unit level, which is defined as operating segments or groupings of businesses one level below the operating segment level. The Company’s operating segments are the same as the reporting units used in its goodwill impairment test. Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit, determined using a market approach if market prices are available or alternatively, a discounted cash flow model, with its carrying value. The annual evaluation of goodwill requires the use of estimates about future operating results, valuation multiples and discount rates of each reporting unit to determine their estimated fair value. Changes in these assumptions can materially affect these estimates. Once an impairment of goodwill has been recorded, it cannot be reversed. No goodwill impairment was recognized during any of the periods presented. Other Long-Lived Assets. Property, plant and equipment and other intangibles with definite lives are tested for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable. When an impairment test is performed and the undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition and other economic factors. Debt Issuance Costs Costs associated with the revolving credit facility are recorded as debt issuance costs, which are included in Other non-current assets in the condensed consolidated balance sheets and are being amortized as interest expense over the contractual lives of the related agreements. Costs associated with non-revolving debt facilities are recorded as a reduction of the long-term debt, and are amortized as interest expense over the contractual lives of the related agreements. See Notes 4 and 7. Commitments, Contingencies and Environmental Costs Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Gain contingencies are not recorded until management determines it is certain that the future event will become or is realized. Liabilities for environmental remediation costs are recognized when environmental assessments or remediation are probable and the associated costs can be reasonably estimated. Generally, the timing of these provisions coincides with the commitment to a formal plan of action or, if earlier, the divestment or closure of the relevant sites. The amount recognized reflects management’s best estimate of the expenditures expected to be required. Actual environmental expenditures that relate to current or future revenues are expensed or capitalized as appropriate. Actual expenditures that relate to an existing condition caused by past operations and that do not impact future earnings are expensed. Ashland agreed to retain known environmental remediation liabilities and other environmental remediation liabilities for releases of hazardous materials occurring prior to March 31, 2011, which Ashland received notice prior to March 31, 2016. See Note 13. Earnings or Loss per Share of Successor Basic EPS which excludes dilution, is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common shares and the proceeds from such activities, if any, were used to acquire shares of common stock at the average market price during the reporting period. During a net loss period, the assumed exercise of in-the-money stock options and unvested stock has an anti-dilutive effect, and therefore such potential shares are excluded from the diluted EPS computation. Per share information is based on the weighted average number of common shares outstanding during each period for the basic computation and, if dilutive, the weighted average number of potential common shares resulting from the assumed conversion of outstanding stock options, unvested stock and unvested stock units for the diluted computation. For both the three and nine months ended June 30, 2016 , there were 12,476,250 Founder Shares that were not included in the computation because market conditions were not yet satisfied and 1,547,500 PSU awards that were not included in the computation of diluted shares outstanding because performance targets and/or market conditions were not yet met for these awards. Diluted shares outstanding also did not include 25,012,500 shares based on the exercise of 50,025,000 outstanding out-of-the-money warrants as their impact on the Company’s net loss is anti-dilutive for both the three and nine months ended June 30, 2016 . The Predecessor was organized as a limited liability company, therefore EPS for the predecessor periods was not applicable. Concentrations of Credit Risk All of the Company’s financial instruments involve elements of credit and market risk. The most significant portion of this credit risk relates to nonperformance by counterparties. To manage counterparty risk associated with financial instruments, the Company selects and monitors counterparties based on its assessment of their financial strength and on credit ratings, if available. Foreign Currency The reporting currency of the Company is the U.S. dollar. With few exceptions, the local currency is the functional currency for the Company's foreign subsidiaries. In consolidating the results of operations, income and expense accounts are translated into U.S. dollars at average exchange rates in effect during the period and asset and liability accounts are translated at period-end exchange rates. Translation gains or losses are recorded in the foreign currency translation component in Accumulated other comprehensive income (loss) in shareholders’ equity and are included in net earnings only upon sale or liquidation of the underlying foreign subsidiary or affiliated company. Transactions undertaken in currencies other than the functional currency of a subsidiary are translated using the exchange rate in effect as of the transaction date and give rise to foreign currency transaction gains and losses. Foreign currency transaction gains and losses are recorded as a component of Selling, general and administrative expenses . Net foreign currency transaction losses from various currencies were $ 0.4 million for the three and nine months ended June 30, 2016 for the Successor. Net foreign currency transaction losses were $ 1.3 million and $ 1.6 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and $ 0.3 million and $ 0.9 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Revenue Recognition Revenues are recognized when persuasive evidence of an arrangement exists, products are shipped and title is transferred or services are provided to customers, the sales price is fixed or determinable and collectability is reasonably assured. Revenue for product sales is recognized at the time title and risk of loss transfer to the customer, based on the terms of the sale. For products delivered under the Company’s standard shipping terms, title and risk of loss transfer when the product is delivered to the customer’s delivery site. For sales transactions designated Freight on Board shipping point, the customer assumes risk of loss and title transfers at the time of shipment. Deferred revenues may result from (i) delivery delays for products delivered under the Company’s standard shipping terms or (ii) from other arrangements with its customers. Sales are reported net of tax assessed by qualifying governmental authorities. The Company is generally the primary obligor in sales transactions with its customers, retains inventory risk during transit and assumes credit risk for amounts billed to its customers. Accordingly, the Company recognizes revenue primarily based on the gross amount billed to its customers. In sales transactions where the Company is not the primary obligor and does not retain inventory risk, the Company recognizes revenue on a net basis by recognizing only the commission the Company retains from such sales and including that commission in sales and operating revenues in the condensed consolidated statements of operations. Consistent with industry standards, the Company may offer volume-based rebates to large customers if the customer purchases a specified volume with the Company over a specified time period. The determination of these rebates at an interim date involves management judgment. As a result, the Company’s revenues may be affected if a customer earns a rebate toward the end of a year that the Company had not expected or if its estimate of customer purchases are less than expected. The Company has the experience and access to relevant information that the Company believes are necessary to reasonably estimate the amounts of such deductions from gross revenues. The Company regularly reviews the information related to these estimates and adjusts its reserves accordingly if and when actual experience differs from previous estimates. The Company recognizes the rebate obligation as a reduction of revenue based on its estimate of the total volume of purchases from a given customer over the specified period of time. Customer rebates totaled $ 0.6 million for the three and nine months ended June 30, 2016 for the Successor. Customer rebates totaled $ 1.1 million and $ 4.0 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor and $ 1.1 million and $ 3.9 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Customer rebates due to customers were $3.6 million at June 30, 2016 for the Successor and $ 4.0 million at September 30, 2015 for the Predecessor. These payables are included in Accrued expenses and other liabilities in the condensed consolidated balance sheets. Supplier Rebates Certain of the Company's vendor arrangements provide for purchase incentives based on the Company achieving a specified volume of purchases. The Company records the volume-based purchase incentives as a reduction of inventory costs (and related cost of sales) based on its purchases to date and its estimates of purchases for the remainder of the calendar year. The Company receives these incentives in the form of rebates that are payable only when the Company's purchases equal or exceed the relevant calendar year target. Supplier rebates are recorded as a reduction of inventory costs and accrued as part of cost of sales for products sold based on progress towards earning the supplier rebates, taking into consideration cumulative purchases of inventory to date and projected purchases through the end of the applicable calendar year. Supplier rebates totaled $0.5 million for the three and nine months ended June 30, 2016 for the Successor. Supplier rebates totaled $ 1.8 million and $ 6.5 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and $ 3.4 million and $ 11.2 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Supplier rebates due to the Company were $ 2.4 million at June 30, 2016 for the Successor and $3.4 million at September 30, 2015 for the Predecessor. These receivables are included in Accounts and notes receivable in the condensed consolidated balance sheets. Shipping and Handling All shipping and handling amounts billed to customers are included in revenues. Costs incurred related to the shipping and handling of products are included in cost of sales. Expense Recognition Cost of sales include material and production costs, as well as the costs of inbound and outbound freight, purchasing and receiving, inspection, warehousing, internal transfers and all other distribution network costs. Selling, general and administrative expenses include sales and marketing costs, advertising, research and development, customer support, environmental remediation and administrative costs. Because products and services are generally sold without any extended warranties, liabilities for product warranties are not significant. There were no material advertising expenses for each of the three and nine months ended June 30, 2016 for the Successor. Advertising expenses totaled $ 0.5 million and $ 1.3 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and $ 0.4 million and $ 1.7 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. There were no material research and development expenses incurred during any of the periods presented. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The provision for income taxes includes income taxes paid, currently payable or receivable, and those deferred. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of the net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Predecessor was organized as a limited liability company and was taxed as a partnership for U.S. income tax purposes. As such, with the exception of a limited number of state and local jurisdictions, the Predecessor was not subject to U.S. income taxes. Accordingly, the members of the Predecessor reported their share of the Predecessor’s taxable income on their respective U.S. federal tax returns. The Predecessor’s sole active U.S. corporate subsidiary, Sub Holding, was subject to tax at the entity level in the U.S. The net earnings for financial statement purposes differed from taxable income reportable by the Predecessor to the members as a result of differences between the tax basis and financial reporting basis of certain assets and liabilities and other factors. The Predecessor was required to make quarterly distributions to members to fund their tax obligations, if any, attributable to the Predecessor’s taxable income. In some jurisdictions, the Predecessor made such distributions in the form of tax payments paid directly to the taxing authority on behalf of its members. Controlled foreign corporations are subject to tax at the entity level in their respective jurisdictions. Due to related party pursuant to Contingent Consideration Obligations As described in Note 3, as part of the consideration for the Business Combination, the Company entered into the TRA and agreed to pay the Deferred Cash Consideration pursuant to the Merger Agreement. The Company’s obligation for these contingent consideration amounts was initially measured at fair value as of the Closing Date. The Company’s contingent consideration liabilities are required to be recorded at fair value as of the end of each reporting period with any changes in fair value recorded in operating income. Changes in the estimates and inputs used in determining the fair value of the contingent consideration could have a material impact on the amounts recognized. Share-Based Compensation The Company accounts for share-based compensation expense for equity instruments granted in exchange for employee and director services. Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the vesting period of the equity award grant. The Company’s PSU awards contain both market and performance-based conditions. At the grant date, market conditions are incorporated into the fair value measurement using a Monte Carlo simulation model under the assumptions that performance-based conditions are met and not met. The Company then determines the probability that performance-based conditions will be met and incorporates this into the grant date fair value of the award. The compensation cost for the PSU awards is amortized over the vesting period on a straight-line basis, net of estimated forfeitures. Forfeiture rates are estimated based on consideration of historical forfeitures of the Predecessor’s actual forfeitures of its share-based compensation awards and a peer group of companies. Recent Accounting Pronouncements Adopted In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and an entity should apply existing guidance in Topic 718, Compensation-Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The Company adopted these amendments on January 1, 2016, which did not have a material impact on the Company’s financial position or results of operations. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement for an acquirer to retrospectively adjust provisional amounts recorded in a business combination to reflect new information about the facts and circumstances that existed as of the acquisition date and that, if known, would have affected measurement or recognition of amounts initially recognized. The amendment requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The Company adopted this standard during the three months ended June 30, 2016. Any future adjustments to the amounts initially recognized for assets and liabilities acquired as a result of the Business Combination will be recognized in the period in which they are identified. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This ASU requires an entity to classify all deferred tax assets and liabilities as noncurrent. These amendments are effective for fiscal years beginning after December 15, 2016 and interim periods within those years and early adoption is permitted. The Company adopted this standard during the three months ended June 30, 2016 on a prospective basis and its adoption did not have a material impact on the Company’s financial position or results of operations, or on the Predecessor’s financial position or results of operations for the periods presented. In April and August 2015, the FASB issued ASU No. 2015-03 and ASU No. 2015-15, “Interest-Imputation of Interest,” respectively, to simplify the presentation of debt issuance costs. These amendments require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The FASB clarified that debt issuance costs related to line-of-credit arrangements can be presented as an asset and amortized over the term of the arrangement. The Company adopted these amendments on January 1, 2016 on a retrospective basis. As a result, the Predecessor financial statements have been adjusted to reclassify $9.1 million of debt issuance costs from Other non-current assets and into Long-term debt and capital lease obligations, less current portion, net on the condensed consolidated balance sheets as of September 30, 2015. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and require that revenue be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-9 for all entities by one year. These amendments will be effective in annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that reporting period. The Company is in the process of evaluating the provisions of this ASU and assessing the potential effect on the Company’s financial position or results of operations. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in this ASU require an entity to measure inventory at the lower of cost or net realizable value, whereas guidance previously required an assessment of market value of inventory, with different possibilities as to determining market value. This ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years and early adoption is permitted. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have a material effect on the Company’s financial position or results of operations. In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Rec |
Business Combination
Business Combination | 9 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination On June 9, 2016, the Company consummated the Business Combination pursuant to the Merger Agreement, whereby WLRH acquired Holdings (including the portion of Holdings held by Blocker) through a series of two mergers. As a result of the transactions contemplated by the Merger Agreement, Holdings and Blocker became wholly-owned subsidiaries of WLRH. The estimated purchase consideration for the Business Combination was as follows: Cash $ 424.9 Less: cash acquired (64.3 ) Equity (1) 276.7 Founder Shares transferred to Selling Equityholders (1) 30.2 Contingent consideration - Fair value of Deferred Cash Consideration 49.6 Contingent consideration - Fair value of TRA 94.9 Total purchase consideration (2) $ 812.0 (1) See Note 11. (2) In addition to the total purchase consideration above, the Company assumed the outstanding indebtedness of the Predecessor, including related accrued interest through the Closing Date, totaling $774.3 million . The proceeds of the New Credit Facilities were used to repay such indebtedness and accrued interest immediately following the consummation of the Business Combination. The total purchase consideration described above is preliminary and subject to finalization of fair value assessment for the contingent consideration liabilities. Additionally, the total purchase consideration is subject to completion of the final working capital adjustment, which is expected to be completed within 75 days after the Closing Date. Contingent Consideration - Deferred Cash Consideration The contingent consideration associated with the Deferred Cash Consideration will be an amount in cash equal to the prevailing price of the Company’s common stock at the time that the Company pays such deferred cash payment multiplied by the number of Excess Shares. Certain circumstances require the Company to pay all or a portion of the Deferred Cash Consideration to the Selling Equityholders, where such cash amount is calculated as set forth in the Merger Agreement, including (i) where the volume weighted average trading price of the Company’s common stock for any period of 20 trading days in any 30 trading day period exceeds $15.00 per share, and (ii) if any Excess Shares remain on June 30, 2021. In such circumstances, the Company alternatively has the option to conduct offerings of common stock at least equal to the number of any remaining Excess Shares at that time, and remit the gross proceeds thereof (less any underwriting discounts and commissions) to the Selling Equityholders. However, to the extent the number of shares issued in such offerings does not equal the full amount of Excess Shares remaining at the time of the offering, the Company’s obligations with respect to any remaining Excess Shares, including the obligation to continue to complete any necessary additional offerings, shall continue. In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model. Contingent Consideration - TRA Concurrent with the completion of the Business Combination, the Company incurred the liability for the contingent consideration related to the TRA, which reflects amounts owed to the Selling Equityholders. This liability generally provides for the payment by the Company to the Selling Equityholders of 85% of the net cash savings, if any, in U.S. federal, state and local income taxes that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing Date as a result of (i) certain increases in tax basis resulting from the Company Merger, (ii) certain tax attributes of Holdings existing prior to the Mergers, (iii) net operating losses and certain other tax attributes of Blocker available to the Company as a result of the Blocker Merger and (iv) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, payments the Company makes under the TRA. The Company will retain the benefit of the remaining 15% of the net cash savings, if any. The Company estimated the fair value of the TRA liability based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. The estimated fair value of the TRA liability as of the Closing Date was $94.9 million . The undiscounted cash flows associated with the TRA liability were estimated to be between $190.0 million and $230.0 million over the time period during which the tax benefits are expected to be realized, currently estimated at over 20 years . The amount and timing of any payments due under the TRA will vary depending upon a number of factors, including the amount and timing of the taxable income the Company generates in the future and the U.S. federal, state and local income tax rates then applicable. In addition, payments made under the TRA will give rise to additional tax benefits for the Company and therefore to additional potential payments due under the TRA. The term of the TRA commenced upon the consummation of the Mergers and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless the Company exercises its right to terminate the TRA early. If the Company elects to terminate the TRA early, its obligations under the TRA would accelerate and it generally would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by it under the TRA, calculated in accordance with certain valuation assumptions set forth in the TRA. The liabilities related to the Deferred Cash Consideration and the TRA are included in Due to related party pursuant to contingent consideration obligations on the Company’s condensed consolidated balance sheets. Preliminary Purchase Consideration Allocation The Business Combination is accounted for under the acquisition method, which requires the Company to perform an allocation of the purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase consideration over the estimated fair values is recorded as goodwill. The following table summarizes the Company’s preliminary allocation of the purchase consideration to assets acquired and liabilities assumed at the acquisition date: Preliminary Purchase Consideration Allocation Accounts receivable $ 470.0 Inventory 328.5 Other current assets 24.5 Property, plant and equipment 339.5 Customer-related intangible 197.0 Trade name 20.5 Other non-current assets 3.3 Deferred tax assets 1.2 Goodwill 695.6 Total assets acquired 2,080.1 Short-term borrowings and current portion of capital leases 40.6 Accounts payable 338.0 Other current liabilities 52.7 Long-term portion of capital leases 23.0 Long-term debt 767.3 Deferred tax liability 41.3 Other non-current liabilities 5.2 Total liabilities assumed 1,268.1 Net assets acquired $ 812.0 The total purchase consideration and the related purchase consideration allocation above are preliminary as the Company has not yet completed all the necessary fair value assessments, including the assessments of property, plant and equipment, intangibles, contingent consideration and the related tax impacts on these items. Any changes within the measurement period in the estimated fair values of the assets acquired and liabilities assumed and the working capital adjustments may change the amount of the purchase consideration allocable to goodwill. The fair value and related tax impact assessments are to be completed within twelve months of the Closing Date, and could have a material impact on the components of the total purchase consideration and the purchase consideration allocation. Transaction costs incurred by the Company associated with the Business Combination were $15.9 million and $18.0 million for the three and nine months ended June 30, 2016 for the Successor, respectively. The Company also incurred a total of $25.3 million of debt issuance costs related to the New Credit Facilities in connection with the consummation of the Business Combination. Transaction costs incurred by the Predecessor associated with the Business Combination were $26.1 million and $33.4 million for the period from April 1, 2016 through June 8, 2016 and the period from October 1, 2015 through June 8, 2016, respectively. A summary and description of the acquired assets and assumed liabilities fair valued in conjunction with applying the acquisition method of accounting follows: Accounts Receivable Accounts receivable consists of receivables related to the customers of the acquired business, as well as various other miscellaneous receivables. The accounts receivable and other miscellaneous receivables were recorded at their approximate fair value based on expected collections of the Predecessor. Accordingly, accounts receivable included a fair value adjustment of $4.2 million to reduce gross receivables to their net value after consideration of expected uncollectable amounts at the Closing Date. Inventory Inventory consists primarily of finished products to be distributed to the acquired business’s customers. The fair value of inventory was established through application of the income approach, using estimates of selling prices and costs such as selling and marketing expenses to be incurred in order to dispose of the finished products and arriving at the future profitability that is expected to be generated once the inventory is sold (net realizable value). The inventory fair value step up of $13.8 million will be recognized in income as the inventory is sold, which is expected to be within two months of the Closing Date. The Company recognized $6.9 million of the inventory fair value step up during the three months ended June 30, 2016, which is included in Cost of sales and operating expenses in the condensed consolidated statement of operations. Other Current Assets Other current assets consist primarily of prepaid expenses, which did not have a fair value adjustment as part of acquisition accounting since their carrying value approximated fair value. Property, Plant and Equipment Property, plant and equipment consists primarily of: 42 owned distribution locations in the United States, Puerto Rico and Canada; 11 leased locations in the United States, Canada, Puerto Rico, Mexico, Europe and China (excluding third-party operated warehouses); office equipment and other similar assets used in the Predecessor's operations. The preliminary allocation of the purchase consideration for property, plant and equipment was based on the fair market value of such assets determined using the cost approach. The cost approach consisted of estimating the fixed assets’ replacement cost less all forms of depreciation. The fair value of land was determined using the comparable sales approach. The fair value adjustment to property, plant and equipment was $107.3 million . Customer-Related Intangible Customer relationships were valued through the application of the income approach. Under this approach, revenue, operating expenses and other costs associated with existing customers were estimated in order to derive cash flows attributable to the existing customer relationships. The resulting estimated cash flows were then discounted to present value to arrive at the fair value of existing customer relationships as of the valuation date. The value associated with customer relationships will be amortized on a straight-line basis over a 12 -year period, which represents the approximate point in the projection period in which a majority of the asset’s cash flows are expected to be realized based on assumed attrition rates. The Company recognized $197.0 million for these intangible assets as part of the preliminary purchase consideration allocation. Trade Name The Nexeo trade name was valued through application of the income approach, involving the estimation of likely future sales and an estimated royalty rate reflective of the rate that a market participant would pay to use the Nexeo name. The fair value of this asset will be amortized on a straight-line basis over a period of four years, estimated based on the period in which the Company expects a market participant would use the name prior to rebranding and the length of time the name would be expected to maintain recognition and value in the marketplace. The Company recognized $20.5 million for this intangible asset as part of the preliminary purchase consideration allocation. Other non-current assets Other non-current assets acquired represents certain long-term deposits, which did not have a fair value adjustment as part of acquisition accounting since their carrying value approximated fair value. Goodwill Goodwill represents the excess of the total purchase consideration over the fair value of the underlying net assets acquired, largely arising from the workforce and extensive efficient distribution network that has been established by the acquired business. Of the total amount of goodwill recognized as part of the preliminary purchase consideration allocation above, the Company expects approximately $284.6 million to be deductible for tax purposes. Short-term borrowings and current portion of capital leases. Short-term borrowings and current portion of capital leases includes short term borrowings of Nexeo Plaschem and the current portion of capital leases, which did not have a fair value adjustment as part of acquisition accounting since their carrying value approximated fair value. Accounts Payable Accounts payable represent short-term obligations owed to the vendors of the acquired business, which were assumed in the Business Combination. These obligations did not have a fair value adjustment as part of acquisition accounting since their carrying value approximated fair value. Other Current Liabilities Other current liabilities represent primarily accrued expenses, including accrued payroll, accrued interest on long-term debt, certain accrued taxes and various other liabilities arising out of the normal operations of the acquired business. The majority of these liabilities did not have a fair value adjustment because their carrying value approximated fair value. However, no fair value was recognized for certain recorded liabilities that did not meet the definition of a liability under the acquisition method of accounting. Long-term Portion of Capital Leases The long-term portion of capital leases includes the non-current portion of capital leases for machinery and equipment, which did not have a fair value adjustment as part of acquisition accounting since their carrying value approximated fair value. Long-term Debt Long-term debt represents the outstanding principal balance at the Closing Date of the Predecessor Term Loan Facility and the Notes which did not have a fair value adjustment as part of acquisition accounting since the carrying value approximated fair value. Deferred Taxes Deferred tax assets and liabilities are attributable to the difference between the estimated fair values allocated to inventory, property, plant and equipment and identified intangibles acquired for financial reporting purposes and the amounts determined for tax reporting purposes and give rise to temporary differences. The deferred tax assets and liabilities will reverse in future periods or have reversed as the related tangible and intangible assets are amortized, acquired inventory is sold, or if goodwill is impaired. Impact of the Business Combination on the Company’s Consolidated Financial Information For the three and nine months ended June 30, 2016 , the Company’s consolidated sales and operating revenues and net loss include $214.3 million and $1.4 million , respectively, related to the operations of the acquired business since the closing date of the Business Combination. Consolidated Pro Forma Financial Information The consolidated pro forma results presented below include the effects of the Business Combination as if they had occurred as of the beginning of the previous fiscal year, or October 1, 2014. The consolidated pro forma results reflect certain adjustments related to this acquisition, primarily the amortization expense associated with estimates for the acquired intangible assets, inventory adjustments to fair value, depreciation expense based on the new fair value of property, plant and equipment, transaction costs, interest expense and income taxes. The consolidated pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the Business Combination been completed on October 1, 2014. Three Months Ended June 30, 2016 Nine Months Ended Three Months Ended Nine Months Ended Sales and operating revenues $ 864.5 $ 2,554.4 $ 988.8 $ 3,019.3 Operating income (loss) 21.4 54.8 24.6 (28.1 ) Net income (loss) from continuing operations 6.6 14.9 13.8 (35.7 ) Net income (loss) 6.6 15.0 13.8 (36.4 ) Basic and diluted net income (loss) per share 0.09 0.19 0.18 (0.47 ) For all periods presented above, the basic and diluted net income (loss) per share amounts were computed using weighted average shares outstanding of 76,746,168 , which assumes all shares issued as a result of the Business Combination would have been issued on October 1, 2014. There were 12,476,250 Founder Shares not included in the basic or diluted computations because market conditions are assumed to be not satisfied. Additionally, 1,547,500 PSU awards were not included in the computation of diluted shares outstanding because performance targets and/or market conditions are assumed not to have been met for these awards. Diluted shares outstanding also did not include 25,012,500 shares based on the exercise of 50,025,000 warrants because the warrants were out-of-the-money and their impact on the pro forma net income (loss) for all periods presented. |
Certain Balance Sheet Informati
Certain Balance Sheet Information | 9 Months Ended |
Jun. 30, 2016 | |
Certain Balance Sheet Information [Abstract] | |
Certain Balance Sheet Information | Certain Balance Sheet Information Cash and Cash Equivalents Cash and cash equivalents were $38.6 million as of June 30, 2016 for the Successor and $127.7 million as of September 30, 2015 for the Predecessor. These amounts included the following: Successor Predecessor June 30, 2016 September 30, 2015 Cash held by foreign subsidiaries $ 35.4 $ 54.1 Non-U.S. dollar denominated currency held by foreign subsidiaries $ 33.0 $ 45.0 Currency denominated in RMB $ 8.9 $ 4.7 Non-U.S. dollar denominated currency held by foreign subsidiaries was primarily in euros and RMB. While the RMB is convertible into U.S. dollars, foreign exchange transactions are subject to approvals from SAFE. The Company does not anticipate any significant adverse impact to overall liquidity from restrictions on cash and cash equivalents. Inventories Inventories at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Finished products $ 317.2 $ 320.9 Supplies 4.3 4.2 Total $ 321.5 $ 325.1 The Company’s inventories in the U.S. and Canada are collateral under the New Credit Facilities. Other Non-Current Assets Other non-current assets at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Debt issuance costs of revolving credit facilities $ 6.7 $ 5.4 Other 3.2 3.4 Total $ 9.9 $ 8.8 In connection with the New Credit Facilities, the Company incurred debt issuance costs of $25.3 million during the nine months ended June 30, 2016 . Of these, $6.8 million related to the New ABL Facility and were recorded in Other non-current assets on the condensed consolidated balance sheet. The remaining $18.5 million of debt issuance costs related to the New Term Loan Facility and were recorded as a reduction of the debt. See Note 7. Amortization of debt issuance costs related to the New ABL Facility recorded in Interest expense in the condensed consolidated income statements was $0.1 million for the three and nine months ended June 30, 2016 for the Successor. In connection with the Business Combination, debt issuance costs totaling $9.3 million , associated with the Predecessor were derecognized as part of the purchase consideration allocation. Amortization of debt issuance costs related to the Predecessor ABL Facility recorded in interest expense were $0.6 million and $2.1 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and $0.8 million and $2.3 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Investments and Cash Previously Held in Trust Prior to the Business Combination, the Company held in a trust account securities which the Company had the ability and intent to hold until maturity. Held-to-maturity treasury securities were recorded at amortized cost and adjusted for the amortization of the original discount. During the nine months ended June 30, 2016 , the Company recognized $0.6 million of amortization related to the original discount, which was recorded in Interest income in the condensed consolidated income statement. As part of the Business Combination, the Company withdrew all proceeds from the trust account. |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Land $ 55.7 $ 41.2 Plants and buildings 93.7 78.3 Machinery and equipment (1) 135.2 167.8 Software and computer equipment 43.5 68.8 Construction in progress 14.0 12.9 Total 342.1 369.0 Less accumulated depreciation (3.0 ) (137.8 ) Property, plant and equipment, net $ 339.1 $ 231.2 (1) Includes $25.1 million and $13.1 million , respectively, related to equipment acquired under capital leases. In connection with the Business Combination, property, plant and equipment of the Predecessor was adjusted to fair market value. See Note 3. Depreciation expense recognized on the property, plant and equipment described above was as follows: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Depreciation expense 3.0 3.0 7.5 27.1 9.2 27.8 Equipment Lease In May 2015, the Predecessor entered into the Ryder Lease for transportation equipment. The Ryder Lease covers the rental of 202 tractors, which replaced a significant portion of the Company’s private fleet of tractors and has a term of seven years. The Ryder Lease is accounted for as a capital lease and requires minimum annual payments of approximately $5.5 million per year. The Company is permitted to terminate the lease of an individual tractor on the anniversary of its delivery date, provided that certain conditions are met. In the event the Company terminates the lease of an individual tractor in accordance with the terms of the Ryder Lease, the Company may elect to purchase the individual tractor at a predetermined residual value or return the tractor to Ryder, subject to an adjustment based on the then-current market value of the individual tractor. Facility Lease The Company is currently in discussions with the Illinois Tollway Authority regarding the sale of one of the Company’s facilities under an eminent domain proceeding numbered Illinois State Tollway Authority v. Nexeo Solutions, LLC, Case No. 15 L 50521, Parcel No. WA-12-012. The sale is expected to be finalized during fiscal year 2017. The Company does not expect to record a loss in connection with this transaction. In March 2016, in connection with the relocation of the operations currently managed at the facility described above, the Predecessor entered into a lease agreement for a new facility in Montgomery, Illinois. The lease has a term of 15 years , with annual payments beginning at $1.1 million per year and annual escalations of 2.5% per year. The lease agreement includes three renewal options of five years each. The lease term is expected to begin in November 2016. This lease agreement will be accounted for as a capital lease. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other Intangibles Goodwill The following is a progression of Successor goodwill by reportable segment: Successor Chemicals Plastics Other Total Balance September 30, 2015 $ — $ — $ — $ — Business Combination 335.3 295.0 65.3 695.6 Foreign currency translation (0.1 ) (2.1 ) — (2.2 ) Balance at June 30, 2016 $ 335.2 $ 292.9 $ 65.3 $ 693.4 Goodwill by reportable segment as of September 30, 2015 for the Predecessor was $269.7 million for Chemicals, $91.5 million for Plastics and $12.5 million for Other. Goodwill amounts by reportable segment at June 30, 2016 are based on the preliminary purchase consideration allocation of the Business Combination, which is based on preliminary valuations performed to determine the fair value of the acquired assets and assumed liabilities as of the Closing Date. Accordingly, the amounts allocated to goodwill are subject to adjustments to reflect the completion of the fair value assessments related to the Business Combination, which are expected to be completed within twelve months of the Closing Date. These final valuations could have a material impact on total goodwill and goodwill by reportable segment. See Note 3. Goodwill Impairment Test Goodwill is tested for impairment annually as of March 31 and whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is reviewed for impairment at the reporting unit level, or operating segment, for the Company. Significant management judgment is required in the estimates and assumptions made for purposes of the Company’s goodwill impairment testing. If actual results differ from these estimates and assumptions or market conditions materially change, the analysis could be negatively impacted and could result in an impairment charge in future periods. Other Intangible Assets Definite-lived intangible assets at June 30, 2016 and September 30, 2015 consisted of the following: Successor June 30, 2016 Estimated Gross Accumulated Net Customer-related 12 $ 197.0 $ (1.0 ) $ 196.0 Trade name 4 20.5 (0.3 ) 20.2 Total $ 217.5 $ (1.3 ) $ 216.2 Predecessor September 30, 2015 Estimated Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer-related 5-14 $ 121.3 $ (33.6 ) $ 87.7 Supplier-related 10 17.0 (2.6 ) 14.4 Leasehold interest 1-20 2.1 (1.3 ) 0.8 Non-compete agreements 3-5 10.0 (4.5 ) 5.5 Trademarks and trade names 2-6 6.2 (3.2 ) 3.0 Total $ 156.6 $ (45.2 ) $ 111.4 Amortization expense recognized on the intangible assets described above was as follows: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Amortization expense $ 1.3 $ 1.3 $ 2.8 $ 10.6 $ 3.9 $ 11.8 Expected amortization expense for the years ending September 30, 2017 through 2021 is $21.5 million , $21.5 million , $21.5 million , $19.9 million , and $16.4 million , respectively. Other intangible assets at June 30, 2016 are based on the preliminary purchase consideration allocation of the Business Combination, which is based on preliminary valuations performed to determine the fair value of the acquired assets and assumed liabilities as of the Closing Date. The amounts allocated to other intangible assets are preliminary and therefore subject to adjustments to reflect the completion of the fair value assessments related to the Business Combination, which are expected to be completed within twelve months of the Closing Date. These final valuations could have a material impact on other intangible assets. See Note 3. |
Debt
Debt | 9 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations at June 30, 2016 and September 30, 2015 are summarized below: Successor Predecessor June 30, 2016 September 30, 2015 Short-term borrowings $ 41.0 $ 34.9 Current portion of long-term debt and capital lease obligations 9.0 37.5 Total short-term borrowings and current portion of long-term debt and capital lease obligations, net $ 50.0 $ 72.4 Long-term debt outstanding at June 30, 2016 and September 30, 2015 is summarized below: Successor Predecessor June 30, 2016 September 30, 2015 New ABL Facility $ 131.1 $ — New Term Loan Facility 655.0 — Predecessor ABL Facility — 85.5 Predecessor Term Loan Facility — 647.2 Notes — 159.2 Capital lease obligations (1) 25.2 12.7 Total long-term debt 811.3 904.6 Less: unamortized debt discount (2) (3.3 ) (3.6 ) Less: debt issuance costs (3) (18.4 ) (9.1 ) Less: current portion of long-term debt and capital lease obligations (9.0 ) (37.5 ) Long-term debt and capital lease obligations, less current portion, net $ 780.6 $ 854.4 (1) Capital lease obligations exclude executory costs and interest payments associated with the underlying leases. See “Capital Lease Obligations” below. (2) At June 30, 2016 , included $3.3 million of unamortized debt discount related to the New Term Loan Facility for the Successor. At September 30, 2015 , included $1.9 million of unamortized debt discount related to the Predecessor’s Term Loan Facility, with the remainder related to the Notes. Debt discount is amortized to interest expense over the life of the respective instruments using the effective interest rate method. (3) See discussion below under New Term Loan Facility and Debt Issuance Cost Amortization and Note 2 related to the adoption of ASU 2015-03 and ASU 2015-15. Short-Term Borrowings Short-term borrowings are associated with the Company’s operations in China and are summarized below: Facility Limit Outstanding Borrowings Balance Weighted Average Interest Rate on Borrowings Outstanding LOC and Bankers’ Acceptance Bills Remaining Availability June 30, 2016 - Successor Bank of America - China (1) $ 28.8 $ 27.2 3.7% $ — $ 1.6 Bank of Communications - China (2) 22.6 13.8 5.3% 8.5 0.3 Total $ 51.4 $ 41.0 $ 8.5 $ 1.9 September 30, 2015 - Predecessor Bank of America - China $ 23.8 $ 23.0 3.5% $ — $ 0.8 Bank of Communications - China 23.6 11.9 6.1% 7.1 4.6 Total $ 47.4 $ 34.9 $ 7.1 $ 5.4 (1) The borrowing limit of this facility is denominated in U.S. dollars. This line of credit is secured by a standby letter of credit drawn on the New ABL Facility covering at least 110% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. (2) The borrowing limit of this facility is denominated in RMB. This line of credit is secured by a standby letter of credit drawn on the New ABL Facility covering at least 100% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. In addition to the above lines of credit, Nexeo Plaschem has an arrangement through which it makes borrowings on a short-term basis, usually six months, by using its line of credit with the bank or by pledging the proceeds of its notes receivable. The borrowings under this arrangement are used to fund Nexeo Plaschem’s working capital requirements. At June 30, 2016 and September 30, 2015, there were no outstanding borrowings, no notes receivable pledged and no outstanding bankers’ acceptance bills issued to suppliers under this arrangement. Nexeo Plaschem has another similar arrangement whereby it is able to pledge proceeds from its notes receivable in exchange for bankers’ acceptance bills issued to suppliers. No notes receivable were pledged under this arrangement at June 30, 2016 and September 30, 2015. Long-Term Debt New ABL Facility On June 9, 2016, the ABL Borrowers entered into the New ABL Facility which provides for revolving credit financing including a U.S. Tranche of up to $505.0 million and a Canadian Tranche of up to the U.S. dollar equivalent of $40.0 million , and a FILO Tranche up to $30.0 million . Under the New ABL Facility, up to $50.0 million in the case of the U.S. Tranche and $10.0 million in the case of the Canadian Tranche may be short-term borrowings upon same-day notice, referred to as swingline loans. The New ABL Facility is unconditionally guaranteed, jointly and severally, by Holdings and its wholly-owned subsidiary, Sub Holding. Additionally, Solutions, Holdings and Sub Holding are also co-borrowers under the U.S. Tranche and the FILO Tranche of the New ABL Facility on a joint and several basis, and Nexeo Solutions Canada Corp. is the borrower under the Canadian Tranche. The New ABL Facility matures on June 9, 2021. Provided no default or event of default then exists or would arise therefrom, the ABL Borrowers have the option, at the beginning of each quarter, to request that the New ABL Facility be increased by an aggregate amount, when included with any incremental borrowings issued under the New Term Loan Facility, not to exceed $175.0 million . The New ABL Facility includes a letter of credit sub-facility, which permits up to $200.0 million of letters of credit under the U.S. Tranche (which may be denominated in U.S. dollars, euros or other currencies approved by the administrative agent and the issuing bank) and up to the U.S. dollar equivalent of $10.0 million of letters of credit under the Canadian Tranche (which may be denominated in CAD only). The New ABL Facility also contains a FILO Tranche which can be used by any non-Canadian foreign subsidiary for loans or letters of credit up to an aggregate amount not to exceed $30.0 million . Obligations under the New ABL Facility are also secured by a first priority lien on inventory and accounts receivable of the ABL Borrowers and a second priority lien on outstanding equity interests of Holdings and certain of its subsidiaries. The amount of available credit changes every month, depending on the amount of eligible receivables and inventory the ABL Borrowers have available to serve as collateral. In general, the facility is limited to the lesser of (i) the aggregate commitment or (ii) the sum of (a) 90% of eligible accounts receivable, as defined, and (b) 85% of the orderly liquidation value of the eligible inventory and (c) 100% of cash and cash equivalents held in blocked accounts, as defined, maintained by the ABL Agent, for each ABL Borrower. Available credit for the U.S. and Canadian Tranches are calculated separately, and the borrowing base components are subject to customary reserves and eligibility criteria. Borrowings under the U.S. Tranche and the Canadian Tranche of the New ABL Facility bear interest, at the ABL Borrowers’ option, at either an alternate base rate or Canadian prime rate, as applicable, plus an applicable margin (ranging from 0.25% to 0.75% pursuant to a grid based on average excess availability) or LIBOR or Canadian BA rate (as defined therein), as applicable, plus an applicable margin (ranging from 1.25% to 1.75% pursuant to a grid based on average excess availability). Loans under the FILO Tranche, within the New ABL Facility, bear interest at an alternate base rate plus an applicable margin (ranging from 1.00% to 1.50% pursuant to a grid based on average excess availability) or LIBOR plus an applicable margin (ranging from 2.00% to 2.50% pursuant to a grid based on average excess availability). In addition to paying interest on outstanding principal amounts under the New ABL Facility, the ABL Borrowers are required to pay a commitment fee in respect of the unutilized commitments, which commitment fee is 0.250% or 0.375% per annum and is determined based on average utilization of the New ABL Facility (increasing when utilization is low and decreasing when utilization is high). The ABL Borrowers are required to pay customary letters of credit fees. The New ABL Facility requires that if the sum of (i) excess availability, as defined (for the ABL Borrowers) and (ii) the amount by which the then-current borrowing base exceeds the aggregate commitments under the New ABL Facility (for the ABL Borrowers) is less than the greater of (a) $40.25 million and (b) 10.0% of the Line Cap (as defined in the New ABL Facility), the ABL Borrowers shall comply with a minimum fixed charge coverage ratio of at least 1.0 to 1.0 . In addition, the New ABL Facility contains negative covenants that restrict Holdings and its subsidiaries, including the ABL Borrowers from, among other things, incurring additional debt, granting liens, entering into guarantees, entering into certain mergers, making certain loans and investments, disposing of assets, prepaying certain debt, declaring dividends, modifying certain material agreements or changing the business it conducts. The New ABL Facility also contains certain customary representations and warranties, affirmative covenants and events of default, including among other things payment defaults, breach of representations and warranties, covenant defaults, cross-defaults and cross-acceleration to certain indebtedness, certain events of bankruptcy, certain events under the Employee Retirement Income Security Act of 1974, as amended from time to time, material judgments, actual or asserted failure of any guaranty or security document supporting the New ABL Facility to be in full force and effect, and change of control. If such an event of default occurs, the lenders under the New ABL Facility are entitled to take various actions, including the acceleration of amounts due under the New ABL Facility and all actions permitted to be taken by a secured creditor. The weighted average interest rate on borrowings under the New ABL Facility was 2.6% at June 30, 2016 . Solutions had the U.S. dollar equivalent of $73.7 million in outstanding letters of credit under the New ABL Facility at June 30, 2016 . The collective credit availability under the U.S. and Canadian Tranches of the New ABL Facility was $125.2 million at June 30, 2016 . There was no availability under the FILO Tranche at June 30, 2016 . The ABL Borrowers’ accounts receivable and inventory in the U.S. and Canada are collateral under the New ABL Facility. These accounts receivable and inventory totaled $601.1 million in the aggregate as of June 30, 2016 for the Successor. Fees paid to the lenders in connection with the New ABL Facility totaled $6.8 million and were recorded as debt issuance costs in Other non-current assets on the condensed consolidated balance sheets to be amortized as interest expense over the remaining term of the New ABL Facility. See Note 4. As of June 30, 2016 , the ABL Borrowers were in compliance with the covenants of the New ABL Facility. New Term Loan Facility On June 9, 2016, Neon Finance Company LLC (which was subsequently merged with and into Solutions) entered into a New Term Loan Facility that provides secured debt financing in an aggregate principal amount of up to $655.0 million and the right, at Solutions’ option, to request additional tranches of term loans in an aggregate principal amount, when included with any incremental borrowings issued under the New ABL Facility, of up to $175.0 million , plus unlimited additional amounts such that the aggregate principal amount of indebtedness outstanding at any one time does not cause the consolidated net senior secured leverage ratio, calculated on a pro forma basis, to exceed 4.1 to 1.0. Availability of such additional tranches of term loans are subject to the absence of any default, and among other things, the receipt of commitments by existing or additional financial institutions. Borrowings under the New Term Loan Facility bear interest at the borrower’s option at either (i) LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, which shall be no less than 1.0% , plus an applicable margin of 4.25% or (ii) a base rate determined by reference to the highest of (a) the prime commercial lending rate published by Bank of America, N.A. as its "prime rate," (b) the federal funds effective rate plus 0.50% and (c) a one-month LIBOR rate plus 1.0% , plus an applicable margin of 3.25% . Commencing with the quarter ending September 30, 2016, Solutions is required to make scheduled quarterly payments in an aggregate annual amount equal to 1.0% of the aggregate principal amount of the initial term loans made on the Closing Date of the Mergers, with the balance due at maturity. The New Term Loan Facility matures on June 9, 2023. The interest rate for the New Term Loan Facility was 5.25% at June 30, 2016 . Proceeds of $651.7 million , net of discount of $3.3 million were received in connection with the New Term Loan Facility. Additionally, the New Term Loan Facility agreement requires Solutions to make early principal payments on an annual basis, commencing with the fiscal year ended September 30, 2017, if cash flows for the year, as defined in the agreement, exceed certain levels specified in the agreement. Solutions generally has the right to prepay loans in whole or in-part, without incurring any penalties for early payment. Solutions is not required to make an early principal payment for the fiscal year ended September 30, 2016 . The New Term Loan Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict Holdings’ ability and the ability of its subsidiaries to incur additional indebtedness, pay dividends on its capital stock or redeem, repurchase or retire its capital stock or other indebtedness, make investments, loans and acquisitions, create restrictions on the payment of dividends or other amounts to the Company from its restricted subsidiaries, engage in transactions with its affiliates, sell assets, including capital stock of its subsidiaries, alter the business it conducts, consolidate or merge, incur liens. The credit agreement governing the New Term Loan Facility does not require Solutions to comply with any financial maintenance covenants and contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default. As of June 30, 2016 , Solutions was in compliance with the covenants of the New Term Loan Facility. Obligations under the New Term Loan Facility are secured by a first priority lien on outstanding equity interests of Holdings and certain subsidiaries and a second priority lien on accounts receivables and inventory that are subject to the New ABL Facility first priority lien. Fees paid to the lenders in connection with the New Term Loan Facility totaled $18.5 million and were recorded as a reduction of the debt balance to be amortized as interest expense over the remaining term of the New Term Loan Facility. Redemption of Predecessor 8.375% Senior Subordinated Notes due 2018 On June 9, 2016, all of the approximately $149.7 million principal amount of the Notes outstanding were redeemed at a redemption price equal to 100% of the principal amount. The Issuers and the guarantors under the Notes were released from their respective obligations under the Notes and the Indenture (as defined in the Merger Agreement) governing the Notes. During the second quarter of fiscal year 2016, the Predecessor acquired $9.5 million in aggregate principal amount of its Notes for $8.7 million in cash and recorded a gain on early extinguishment of $0.6 million , inclusive of the write-off of related debt issuance costs and original issue discount which was recorded in Other income in the condensed consolidated statement of operations. Debt issuance costs totaling $1.4 million were derecognized as part of the purchase consideration allocation. Predecessor ABL Facility On June 9, 2016, the Predecessor’s $540.0 million multicurrency ABL Facility was terminated. There was no outstanding balance at the time of termination. Solutions provided notice to the administrative agent and settled all remaining commitments under the facility. Accordingly, the administrative agent released the credit parties from their respective obligations under the facility, effective June 9, 2016. Predecessor debt issuance costs totaling $3.3 million were derecognized as part of the purchase consideration allocation. The weighted average interest rate on borrowings under the Predecessor ABL Facility was 1.8% at September 30, 2015 . At September 30, 2015 , the Predecessor had $67.4 million in outstanding letters of credit under the Predecessor ABL Facility. Collective credit availability under the U.S. and Canadian tranches of the Predecessor ABL Facility was $321.4 million at September 30, 2015 . Predecessor Term Loan Facility On June 9, 2016, the principal outstanding balance of $617.5 million related to all three tranches of the term loans under the Credit Agreement was paid and the facility was terminated. Accordingly, the administrative agent released the credit parties from their respective obligations and all other commitments under the facility, effective June 9, 2016. Related debt issuance costs totaling $4.6 million were derecognized as part of the purchase consideration allocation. Debt Issuance Cost Amortization Amortization expense included in interest expense related to debt issuance costs of the New Term Loan Facility was $0.1 million for the three and nine months ended June 30, 2016 for the Successor, $0.8 million and $3.0 million for the periods April 1, 2016 through June 8, 2016 and from October 1, 2015 through June 8, 2016 for the Predecessor, respectively, and $1.0 million and $3.1 million for the three and nine months ended June 30, 2015 for the Predecessor, respectively. Capital Lease Obligations The capital lease obligation balance of $25.2 million as of June 30, 2016 is primarily associated with tractors delivered under the Ryder Lease. See Note 5. This obligation excludes future executory costs payments of $2.1 million per year, for aggregate executory costs of $13.2 million , as well as decreasing annual interest payments ranging from $1.0 million to $0.3 million , for aggregate interest payments totaling $4.7 million . |
Derivatives
Derivatives | 9 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Prior to the Business Combination, the Predecessor was a party to interest rate swap agreements of varying expiration dates through March 2017, to help manage the exposure to interest rate risk related to the variable-rate Predecessor Term Loan Facility. As a result of the Business Combination, the Predecessor Term Loan Facility was extinguished, the related swap agreements were terminated and an early termination payment penalty of $0.3 million was paid in the Successor period and recorded in Transaction related costs in the condensed consolidated statements of operations. No new swaps have been entered into. The interest rate swaps were accounted for as cash flow hedges. Accordingly, gains or losses resulting from changes in the fair value of the swaps were recorded in other comprehensive income to the extent that the swaps are effective as hedges. Gains and losses resulting from changes in the fair value applicable to the ineffective portion, if any, were reflected in income. Gains and losses recorded in other comprehensive income were reclassified into and recognized in income when the interest expense on the Predecessor Term Loan Facility was recognized. Gains and losses net of reclassifications into income related to the Predecessor’s interest rate swaps were as follows: Predecessor Recorded to April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended Realized loss Interest expense $ 0.1 $ 0.3 $ 0.1 $ 0.4 Unrealized gain Other comprehensive income $ 0.1 $ 0.3 $ — $ 0.1 See Note 9 for additional information on the fair value of the Predecessor’s derivative instruments. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The accounting standard for fair value measurements establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is as follows: ● Level 1—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. ● Level 2—Other inputs that are directly or indirectly observable in the marketplace. ● Level 3—Unobservable inputs that are supported by little or no market activity. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial instruments The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable and short-term borrowings approximate their fair value due to the short-term maturity of those instruments. The carrying values of borrowings outstanding under the New Credit Facilities approximate fair value at June 30, 2016 primarily due to their variable interest rate. The estimated fair value of these instruments is classified by the Company as a Level 3 measurement within the fair value hierarchy due to the varying interest rate parameters as outlined in the respective loan agreements. The carrying values of borrowings under the Predecessor Credit Facilities approximated fair value at September 30, 2015 primarily due to their variable interest rate. The estimated fair value of the Predecessor Notes was $149.2 million at September 30, 2015 , including accrued interest of $1.1 million . The estimated fair value of the Notes was classified by the Predecessor as a Level 3 measurement within the fair value hierarchy. The estimated fair value of these instruments was calculated based upon a pricing model using the estimated yield calculated from interpolated treasury and implied yields to quoted price as inputs. The Predecessor’s relative credit standing was one of the inputs to the valuation. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis In addition to the financial instruments that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a non-recurring basis as required by U.S. GAAP, such as a result of impairment charges or as part of a business combination. See Note 3 for further discussion of the Business Combination. These fair value measurements were classified as Level 3 within the fair value hierarchy. Assets and Liabilities Measured at Fair Value on a Recurring Basis The preliminary fair value of the contingent consideration related to the Deferred Cash Consideration as discussed in Note 3 was $49.6 million at the Closing Date. The fair value of the contingent consideration related to the Deferred Cash Consideration was $46.7 million as of June 30, 2016 . The measurement of the contingent consideration related to the Deferred Cash Consideration is classified by the Company as a Level 3 measurement within the fair value hierarchy. In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model with the market price of the Company’s common stock at each valuation date being the most important input to this model. An increase in the market price of the Company’s common stock has the same directional effect on the value of the liability related to the Deferred Cash Consideration. The preliminary fair value of the liability for the contingent consideration related to the TRA as discussed in Note 3 was $94.9 million at the Closing Date . The fair value of the liability for the contingent consideration related to the TRA was $95.5 million as of June 30, 2016 . The liability for the contingent consideration related to the TRA is classified by the Company as a Level 3 measurement within the fair value hierarchy. The Company estimates the fair value of the liability for the contingent consideration related to the TRA based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. Key inputs to the valuation are prevailing tax rates and market interest rates impacting the discount rate. An increase in the discount rate has the opposite directional effect on the value of the liability related to the TRA. An increase in prevailing tax rates has the same directional effect on the value of the liability related to the TRA. The fair value measurements of the contingent consideration above at the Closing Date are preliminary. Any changes within the measurement period in the estimated fair values of these liabilities may change the amount of the purchase price allocable to goodwill. Any subsequent changes in the fair value of the contingent consideration from their initial fair value recognition at the Closing Date will be recognized as a component of Operating income (loss) in the condensed consolidated statements of operations. Changes in the estimates and inputs used in determining the fair value of the contingent consideration could have a material impact on the amounts recognized as a component of Operating income (loss) in future periods. Prior to the Business Combination, the Predecessor was a party to interest rate swap agreements of varying expiration dates through March 2017 to help manage the Predecessor’s exposure to interest rate risk related to its variable-rate Predecessor Term Loan Facility. As a result of the Business Combination, the Predecessor Term Loan Facility was extinguished, the related swap agreements were terminated and an early termination payment of $0.3 million was made and recorded in Transaction related costs in the condensed consolidated statements of operations. No new swaps have been put in place to manage interest rate exposure associated with the New Term Loan Facility. At September 30, 2015 , the Predecessor recorded $0.4 million in Accrued expenses and other liabilities and $0.1 million in Other non-current liabilities in the condensed consolidated balance sheet related to these instruments. During the three and nine months ended June 30, 2016 and 2015 , the Company and the Predecessor did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements. |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | Share-based Compensation Successor On June 8, 2016, the Company’s shareholders approved the 2016 LTIP, with an effective date of March 30, 2016, covering approximately a ten -year period. No awards may be granted after March 20, 2026. The 2016 LTIP permits the grant of up to 9,000,000 shares of common stock for various types of awards to employees, directors and consultants of the Company or its subsidiaries, including incentive and non-incentive stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, stock awards, conversion awards and performance awards. Vesting conditions of awards under the 2016 LTIP are determined by the Compensation Committee of the Board of Directors of the Company, including treatment upon the occurrence of a change of control of the Company. Upon a change of control, the Compensation Committee has the discretion to remove forfeiture restrictions, accelerate vesting, require recipients of awards to surrender the awards for cash consideration, cancel unvested awards without payment of consideration, cause any surviving entity to assume and continue any outstanding awards, or make other such adjustments as the Compensation Committee deems appropriate to reflect such change of control. If any change is made to the Company’s capitalization, appropriate adjustments will be made by the Compensation Committee as to the number and price of shares awarded under the 2016 LTIP, the securities covered by such awards, the aggregate number of shares of common stock of the Company available for the issuance of awards under the 2016 LTIP, and the maximum annual per person compensation limits on share-based awards under the 2016 LTIP. Other than in connection with a change in capitalization or other transaction where an adjustment is permitted or required under the terms of the 2016 LTIP, the Compensation Committee is prohibited from making any adjustment or approving any amendment that reduces or would have the effect of reducing the exercise price of a stock option or stock appreciation right previously granted under the 2016 LTIP unless the Company’s shareholders have approved such adjustment or amendment. In each calendar year during any part of which the 2016 LTIP is in effect, an employee may not receive awards under the plan in excess of 1,000,000 shares of common stock, or a value of greater than $12.0 million if an award is to be paid in cash or if settlement is not based on shares of common stock, in each case, multiplied by the number of full or partial calendar years in any performance period established with respect to an award, if applicable. A non-employee member of the Board of Directors of the Company may not be granted awards with a cumulative value of greater than $1.0 million during any calendar year for services rendered in their capacity as a director. This limit does not apply to grants made to a non-employee director for other reasons not related to their services as a director. During the three and nine months ended June 30, 2016 , the Company granted 1,547,500 PSUs to certain officers and employees. The performance aspect of the PSUs vest on June 30, 2019, entitling the recipient to receive a certain number of shares of the Company’s common stock, based on the Company’s achievement of the performance goals included in the PSUs. Depending on the performance of the Company’s common stock during the approximate three year performance period, a recipient of the award is entitled to receive a number of common shares equal to a percentage, ranging from 0% to 200% , of the initial award granted, with a 35% total shareholder return entitling the recipient to receive 100% of the award granted. As a result, the Company may issue up to 3,095,000 shares related to these awards. If the Company’s total shareholder return for the performance period is negative, then the number of units ultimately awarded is based on the Company’s achievement of its cumulative Adjusted EBITDA target, as defined by the PSU agreement, during the performance period. If total shareholder return is between negative 15% and 0% , a recipient is entitled to receive a number of shares of stock between 70% and 50% of the number of PSUs granted. If the cumulative Adjusted EBTIDA target is not met, or the total shareholder return is less than negative 15% , no shares of the Company’s common stock will be issued. The Company used the Monte Carlo simulation model to estimate the fair value of the PSU awards at the grant date, considering the probability of satisfying the various performance criteria. The resulting grant date fair value is recognized as expense on a straight-line basis from the grant date through the end of the performance period. The assumptions used in the Monte Carlo simulation model for PSUs included an expected stock price volatility of 35% based on a peer group of similar companies, an expected dividend yield of 0% , an expected term of approximately three years , and a risk-free interest rate of 0.92% . The following table summarizes PSU activity during the nine months ended June 30, 2016 : Units Average Grant Date Fair Value Per Unit Unvested PSUs at September 30, 2015 — $ — Grants 1,547,500 9.13 Vested — — Forfeited/Canceled — — Unvested PSUs at June 30, 2016 1,547,500 $ 9.13 The Company recognized compensation cost of $0.3 million as a component of Selling, general and administrative expenses on the condensed consolidated statements of operations for the three and nine months ended June 30, 2016 for the Successor related to the PSUs. As of June 30, 2016 , the outstanding PSUs had a weighted-average remaining contract life of three years . As of June 30, 2016 , there was $13.2 million of total unrecognized compensation cost related to non-vested PSUs. Defined Contribution Plans Qualifying employees of the Predecessor were eligible to participate in the Solutions 401(k) Plan. The 401(k) Plan was a defined contribution plan designed to allow employees to make tax deferred contributions as well as company contributions, designed to assist employees of the Predecessor and its affiliates in providing for their retirement. The Predecessor matched 100% of employee contributions up to 4.0% . The Predecessor made an additional contribution to the 401(k) Plan of 1.5% , 3.0% , or 4.5% , based upon years of service of one to ten years, eleven to twenty years and twenty-one years or more, respectively. A version of the 401(k) Plan was also available for qualifying employees of the Predecessor in its foreign subsidiaries. These plans are unchanged as a result of the Business Combination. The following summarizes contributions to the plans described above: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Contributions recorded as a component of cost of sales and operating expenses $ 0.2 $ 0.2 $ 0.8 $ 2.7 $ 1.0 $ 3.0 Contributions recorded as a component of selling, general and administrative expenses 0.4 0.4 1.5 4.8 1.6 5.1 Total contributions $ 0.6 $ 0.6 $ 2.3 $ 7.5 $ 2.6 $ 8.1 Predecessor Equity Plan The Predecessor previously issued unregistered Series B units in Holdings to directors and certain officers and employees of the Predecessor. The units issued were initially unvested, and with respect to units issued to certain officers and employees, 50% of the Series B units would vest 20% annually over a five year period (“Time-Based Units”) and 50% of the Series B units would vest in accordance with a performance-based schedule that was divided into five separate and equal twelve month periods (“Performance-Based Units”). The Board of Directors of the Predecessor established EBITDA-based performance targets for purposes of determining vesting of the Performance-Based Units. Further, all Performance-Based Units would automatically vest upon a liquidity event of the Predecessor, provided the award holder remained employed with the Predecessor or its subsidiaries through the date of the liquidity event. Immediately prior to and in connection with the closing of the Business Combination, certain Series B units vested, including 368,136 units granted to Directors, and as a result, the Predecessor recognized $2.0 million of expense related to Performance-Based Units during the period from April 1, 2016 to June 8, 2016, which is included in Transaction related costs in the condensed consolidated statement of operations. The Predecessor recognized an additional $0.1 million and $0.7 million of compensation expense as a component of Selling, general and administrative expenses in the condensed consolidated statements of operations related to the Time-Based Units during the period from April 1, 2016 through June 8, 2016 and the period from October 1, 2015 through June 8, 2016, respectively. All vested and unvested Series B units of the Predecessor in existence as of the closing of the Business Combination were exchanged for equity interests of New Holdco, which received a portion of the consideration paid to the Selling Equityholders in the Company Merger in exchange for such Series B Units. The following table summarizes Series B unit activity during the period from October 1, 2015 through June 8, 2016: Units Average Grant Outstanding at September 30, 2015 38,466,624 $ 0.28 Granted 1,028,571 0.16 Forfeited/Canceled (1,597,000 ) 0.25 Outstanding at June 8, 2016 37,898,195 $ 0.22 The following table summarizes non-vested Series B unit activity during the period from October 1, 2015 through June 8, 2016: Units Average Grant Nonvested at September 30, 2015 23,116,625 $ 0.26 Granted 1,028,571 0.16 Vested (19,871,696 ) 0.16 Forfeited (1,345,000 ) 0.23 Nonvested at June 8, 2016 2,928,500 $ 0.26 |
Equity
Equity | 9 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Equity | Equity Common Stock The authorized common stock of the Company consists of 300,000,000 shares. Holders of the Company’s common stock are entitled to one vote for each share of common stock. As of June 30, 2016 , there were 89,222,418 shares of common stock issued and outstanding and warrants to purchase 25,012,500 shares of common stock at a strike price of $11.50 . Prior to the completion of the Business Combination, the Company had 62,531,250 shares of common stock issued and outstanding, consisting of 50,025,000 shares originally sold as part of units issued in the Company’s IPO, consummated on June 11, 2014, and 12,506,250 shares of Founder Shares that were issued to Sponsor prior to the IPO. All of the 50,025,000 shares of common stock sold as part of the units in the IPO contained a redemption feature which allowed for the redemption of such shares. These redemption provisions generally required the Company to classify these shares outside of permanent equity, except for certain provisions related to ordinary liquidations involving the redemption and liquidation of all of the Company’s equity instruments that allowed the Company to classify a certain amount related to these shares as permanent equity at each reporting period. At March 31, 2016, 47,512,924 of the 50,025,000 public shares with a value of $475.2 million were classified outside of permanent equity at their redemption value. On June 9, 2016, in connection with the completion of the Business Combination, 47,512,924 shares were reclassified into equity and 29,793,320 shares were redeemed at $10.02 per share. Additionally, the Company issued (i) 27,673,604 new shares of common stock at $10.00 per share to the Selling Equityholders as consideration, (ii) 23,492,306 new shares of common stock at a price of $10.00 per share in private placements with eligible purchasers, (iii) 3,078,578 new shares of common stock to settle the payment of an aggregate of $30.8 million in fees and disbursements outstanding and due to certain of WLRH’s advisors in connection with services and work performed by the advisors, including shares issued to pay the liability of $18.3 million for deferred underwriting fees due upon the completion of a Business Combination from the original IPO and (iv) 2,240,000 new shares of common stock in exchange for 22,400,000 warrants to purchase shares of common stock privately placed to Sponsor at the time of the IPO. In connection with the completion of the Business Combination, the Sponsor (on behalf of the Company) transferred 30,000 original Founder Shares to the Company’s prior independent directors (“Director Founder Shares”) in connection with services previously rendered to the Company and 3,554,240 Founder Shares with a fair value of $30.2 million to the Selling Equityholders. The fair value of the Founder Shares transferred to the Company’s prior independent directors was recorded as an equity contribution and a transaction related costs for the three months ended June 30, 2016. The fair value of the Founder Shares transferred to the directors and Selling Equityholders was estimated using a Monte Carlo simulation model. The 3,554,240 of Founder Shares that were transferred to the Selling Equityholders was a component of the Business Combination purchase consideration and was recorded by the Company as an equity contribution and included in the purchase consideration. See Note 3. In connection with the consummation of the Business Combination, the Founder Shares other than the Director Founder Shares became subject to forfeiture on the tenth anniversary of the Closing Date unless: • with respect to 50% of such Founder Shares, the last sale price of the Company’s common stock as quoted on NASDAQ equals or exceeds $12.50 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; and • with respect to the remaining 50% of such Founder Shares, the last sale price of the Company’s common stock equals or exceeds $15.00 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; or • the post-combination company completes a liquidation, merger, stock exchange or other similar transaction that results in all or substantially all of its shareholders having the right to exchange their shares of common stock for consideration in cash, securities or other property or any transaction involving a consolidation, merger, proxy contest, tender offer or similar transaction in which the post-combination company is the surviving entity which results in a change in the majority of the Company’s board of directors or management team or the Company’s post-combination shareholders immediately prior to such transaction ceasing to own a majority of the surviving entity immediately after such transaction. Such Founder Shares other than the Director Founder Shares will not participate in dividends or other distributions with respect to the shares prior to these targets being met, whereupon the Founder Shares shall be entitled to all dividends and distributions paid on the common stock after the Business Combination as if they had been holders of record entitled to receive distributions on the applicable record date. Preferred Stock The authorized preferred stock of the Company consists of 1,000,000 shares. As of June 30, 2016 , there were no shares of preferred stock issued and outstanding. The Company’s amended and restated certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able, without shareholder approval, to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the Common Stock and could have anti-takeover effects. The ability of the Board of Directors to issue preferred stock without shareholder approval could have the effect of delaying, deferring or preventing a change of control of the Company. Offering Costs Offering costs associated with the IPO, consummated on June 11, 2014, consisting principally of professional and registration fees incurred of $28.5 million (including $27.5 million in underwriters’ fees) were charged to shareholders’ equity upon the completion of the IPO. The Company paid upfront underwriting fees of approximately 1.84% ( $9.2 million ) of the per unit offering price to the underwriters at the close of the IPO with an additional fee of 3.66% ( $18.3 million ) of the gross offering proceeds payable upon the Company’s completion of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. These deferred underwriting costs were paid with the issuance of common stock in connection with the Business Combination. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share A reconciliation of the numerators and denominators of the basic and diluted per share computation follows. No such computation is necessary for the Predecessor periods as the Predecessor was organized as a limited liability company and did not have publicly traded shares. Successor Three Months Ended Nine Months Ended Basic: Net loss $ (15.5 ) $ (17.1 ) Weighted average number of common shares outstanding during the period 34,072,056 21,241,897 Net loss per common share - basic $ (0.45 ) $ (0.81 ) Diluted: Net loss $ (15.5 ) $ (17.1 ) Denominator for diluted earnings per share: Weighted average number of common shares outstanding during the period 34,072,056 21,241,897 Incremental common shares attributable to outstanding dilutive options and unvested restricted shares — — Denominator for diluted earnings per common share 34,072,056 21,241,897 Net loss per common share - diluted $ (0.45 ) $ (0.81 ) The calculation for weighted average shares reflects shares outstanding over the reporting period based on the actual number of days the shares were outstanding. A large number of shares were issued in connection with the Business Combination on the Closing Date and the weighted average shares outstanding only incorporates these shares from that date through June 30, 2016, or 22 days. For the three and nine months ended June 30, 2016 , there were 12,476,250 Founder Shares excluded from the basic and diluted computations commencing on the Closing Date because such shares were subject to forfeiture, 1,547,500 PSU awards which were not included in the computation of diluted shares outstanding because performance targets and/or market conditions were not yet met for these awards. Diluted shares outstanding also did not include 25,012,500 shares based on the exercise of 50,025,000 warrants because the warrants were out-of-the-money and their impact on the Company’s net loss is anti-dilutive for both the three and nine months ended June 30, 2016 . |
Commitments, Contingencies and
Commitments, Contingencies and Litigation | 9 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Litigation | Commitments, Contingencies and Litigation Environmental Remediation Due to the nature of its business, the Company is subject to various laws and regulations pertaining to the environment and to the sale, transportation and disposal of chemicals and hazardous materials. These laws pertain to, among other things, air and water, the management of solid and hazardous wastes, transportation and human health and safety. On March 31, 2011, Holdings purchased certain assets of the global distribution business (the “Distribution Business”) from Ashland (the “Ashland Distribution Acquisition”), evidenced by the ADA Purchase Agreement. In the ADA Purchase Agreement, Ashland agreed to retain all known environmental remediation liabilities (“Retained Specified Remediation Liabilities”) and other environmental remediation liabilities unknown at the closing of the Ashland Distribution Acquisition related to the Distribution Business for which Ashland receives notice prior to the fifth anniversary of the closing (“Other Retained Remediation Liabilities”) (collectively “Retained Remediation Liabilities”). Ashland’s liability for Retained Remediation Liabilities is not subject to any claim thresholds or deductibles other than expenses the Predecessor incurs arising out of the Other Retained Remediation Liabilities; if the Predecessor incurs expenses arising out of Other Retained Remediation Liabilities for which Ashland received notice prior to March 31, 2016, Ashland’s indemnification obligation is subject to an individual claim threshold of $0.2 million and an aggregate claim deductible of $5.0 million . Ashland’s indemnification obligation for the Retained Remediation Liabilities is subject to an aggregate ceiling of $75.0 million . Ashland’s indemnification obligations resulting from its breach of any representation, warranty or covenant related to environmental matters (other than for liabilities relating to taxes or the breach of any fundamental representation or warranty) are generally limited by an individual claim threshold of $0.2 million , an aggregate claim deductible of $18.6 million and a ceiling of $93.0 million . Collectively, Ashland’s indemnification obligations resulting from or relating to the Retained Remediation Liabilities, retained litigation liabilities, and the breach of Ashland’s representations, warranties and covenants contained in the ADA Purchase Agreement (other than for liabilities relating to taxes or the breach of any fundamental representation or warranty) is subject to an aggregate ceiling of $139.5 million , and Ashland’s total indemnification obligation under the ADA Purchase Agreement (other than for liabilities relating to taxes or any retained indebtedness) is subject to an aggregate ceiling in the amount of the purchase price for the Distribution Business net assets. Ashland’s indemnification obligations under the ADA Purchase Agreement as described above terminated as of March 31, 2016, other than for Retained Specified Remediation Liabilities and for Other Retained Remediation liabilities reported to Ashland prior to March 31, 2016 for which Ashland retains liability pursuant to the ADA Purchase Agreement. As a result, any environmental remediation liabilities reported to the Company after March 31, 2016 and not arising out of a Retained Remediation Liability will be liabilities of the Company. In July 2014, Ashland filed a lawsuit numbered Ashland Inc. v. Nexeo Solutions, LLC , Case No. N14C-07-243 JTV CCLD, in the Superior Court for the State of Delaware in and for New Castle County. In the suit, Ashland seeks a declaration that, pursuant to the ADA Purchase Agreement, Solutions is obligated to indemnify Ashland for losses Ashland incurs pertaining to Other Retained Remediation Liabilities, up to the amount of the aggregate $5.0 million deductible applicable expenses incurred by Solutions, whether or not Solutions incurs any expenses or obtains any indemnity from Ashland. Ashland further alleges that Solutions has breached duties related to the ADA Purchase Agreement by not having so indemnified Ashland for amounts Ashland has incurred for Other Retained Remediation Liabilities at sites where Ashland disposed of wastes prior to the Ashland Distribution Acquisition, and on that basis seeks unspecified compensatory damages, costs and attorney’s fees. The Company disagrees with Ashland’s construction of the ADA Purchase Agreement and is vigorously defending the lawsuit. The Company does not currently have any environmental or remediation reserves for matters covered by the ADA Purchase Agreement. However, if the Company had incurred expenses related to Other Retained Remediation Liabilities, the Company would have been responsible for the first $5.0 million in aggregate expenses relating thereto prior to receiving any indemnification from Ashland. Ashland’s indemnification obligations for Other Retained Remediation Liabilities ended on March 31, 2016 and, as of that date, the Company had not incurred any expenses related to Other Retained Remediation Liabilities. In addition, if any Retained Remediation Liability ultimately exceeds the liability ceilings described above, the Company would be responsible for such excess amounts. In either of these scenarios, the Company would be required to either expense the cost of the liabilities or take an appropriate environmental or remediation reserve. The Company could also be required to take remediation or environmental reserves for remediation or other environmental liabilities reported after March 31, 2016 related to facilities acquired in the Ashland Distribution Acquisition; for remediation of spills or releases caused by the Company’s operations including those related to the Company’s Environmental Services line of business; and for remediation or other environmental liabilities related to facilities acquired from parties other than Ashland (i.e., acquisitions made by the Predecessor after the Ashland Distribution Acquisition). The Company’s reserves will be subject to numerous uncertainties that affect its ability to accurately estimate its costs, or its share of costs if multiple parties are responsible. These uncertainties involve the legal, regulatory and enforcement parameters governing environmental assessment and remediation, the nature and extent of contamination, the extent of required remediation efforts, the choice of remediation methodology, availability of insurance coverage and, in the case of sites with multiple responsible parties, the number and financial strength of other potentially responsible parties. Other Legal Proceedings The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities, including product liability claims. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company. Other Contingencies In June 2014, the Predecessor self-disclosed to the California DTSC that an inventory of its Fairfield facility had revealed potential violations of the Resource Conservation and Recovery Act and the California Health and Safety Code. Although no formal proceeding has been initiated, the Company expects the DTSC to seek payment of fines or other penalties for non-compliance. The Company does not expect the amount of any such fine or other penalty to have a material adverse effect on its business, financial position or results of operations. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions FPA Subscription Agreement On May 23, 2016, the Company entered into a Subscription Agreement (the “FPA Subscription Agreement”) with Sponsor and First Pacific Advisors, LLC (“FPA”), on behalf of certain clients pursuant to which FPA agreed to purchase 18,260,000 shares of the Company’s common stock on a private placement basis in connection with the Business Combination. Sponsor Subscription Agreement On June 6, 2016, the Company entered into a Subscription Agreement with Sponsor, pursuant to which Sponsor agreed to purchase 1,000,000 shares of common stock on a private placement basis for $10 per share in connection with the Business Combination. Wilbur L. Ross, Jr. is a manager of Sponsor. PWPI and PWIMF Commitment Agreements On June 6, 2016, the Company entered into a Commitment Agreement with Sponsor and Park West Investors Master Fund, Ltd. (“PWIMF”) and a second Commitment Agreement with Sponsor and Park West Partners International, Ltd. (“PWPI”) (such agreements collectively, the “PW Commitment Agreements”), pursuant to which PWIMF and PWPI agreed to purchase from redeeming shareholders and withdraw from redemption an aggregate of 3,000,000 public shares of common stock. FPA Commitment Agreement On June 6, 2016, the Company entered into a Commitment Agreement (the “FPA Commitment Agreement”) with Sponsor and FPA, pursuant to which FPA agreed not to redeem 2,094,727 public shares of common stock of the Company currently owned by FPA in connection with the closing of the Business Combination. Sponsor Convertible Notes and Promissory Note On March 31, 2016, the Company issued the March 2016 promissory note to Sponsor pursuant to which the Company could borrow up to $750,000 . The March 2016 promissory note was interest bearing at 5% per annum and was due and payable on the first to occur of (1) the consummation of Business Combination or (2) June 11, 2016 (or such later date as would have been approved by the Company’s shareholders by amendment of the Company’s charter to complete the Business Combination). Sponsor loaned the Company $0.2 million to cover expenses related to daily operations. In connection with the consummation of the Business Combination, the March 2016 promissory note balance of $0.2 million , including unpaid interest, was paid in full. On January 5, 2016, the Company issued a convertible promissory note, referred to as the “January 2016 convertible note” to Sponsor pursuant to which the Company borrowed $0.4 million from Sponsor for operating expenses. The January 2016 convertible note was interest bearing at 5% per annum and was due and payable on June 11, 2016. At the option of Sponsor, any amounts outstanding under the January 2016 convertible note could have been converted into warrants to purchase shares of common stock at a conversion price of $0.50 per warrant. Each warrant would have entitled Sponsor to purchase one-half of one share of the Company’s common stock at an exercise price of $5.75 per half share ( $11.50 per whole share). Each warrant would have contained other terms identical to the terms contained in the private placement warrants previously issued to Sponsor. Through March 31, 2016, the Company incurred an insignificant amount of interest expense which, under the terms of the January 2016 convertible note, was added to the principal amount. In connection with the consummation of the Business Combination, the January 2016 convertible note balance of $0.4 million , including unpaid interest, was paid in full. On March 26, 2015, the Company issued a convertible promissory note, referred to as the “March 2015 convertible note”, to Sponsor pursuant to which, on April 16, 2015, the Company borrowed $0.3 million from Sponsor for operating expenses. The March 2015 convertible note was interest bearing at 5% per annum and was due and payable on June 11, 2016. At the option of Sponsor, any amounts outstanding under the March 2015 convertible note could have been converted into warrants to purchase shares of the Company’s common stock at a conversion price of $0.60 per warrant. Each warrant would have entitled Sponsor to purchase one-half of one share of the Company’s common stock at an exercise price of $5.75 per half share ( $11.50 per whole share). Each such warrant would have contained other terms identical to the terms contained in the private placement warrants previously issued to Sponsor. Through March 31, 2016, the Company incurred $14 thousand of interest expense which under the terms of the March 2015 convertible note was added to the principal amount. In connection with the consummation of the Business Combination, the March 2015 convertible note balance of $0.3 million , including unpaid interest, was paid in full. Director Founder Shares In connection with the consummation of the Business Combination, certain directors of the Company were paid 10,000 Founder Shares each by Sponsor (on behalf of the Company) for past service on the Company’s board of directors. These shares were paid in lieu of cash board fees because the Company was not permitted to pay board fees directly to its directors pursuant to the underwriting agreement the Company entered into with the underwriters at the time of the IPO. The value of these shares is included in Transaction related costs on the Company’s condensed consolidated statement of operations. Administrative Service Agreement The Company had an agreement to pay $10 thousand a month for office space, administrative services and secretarial support to WL Ross & Co. LLC, an affiliate of the Sponsor. On March 26, 2015, Sponsor irrevocably and unconditionally waived the $10 thousand per month payment obligations of the Company for office space, administrative services and secretarial support for the year beginning on January 1, 2015 to December 31, 2015. On January 13, 2016, Sponsor irrevocably and unconditionally waived the $10 thousand per month payment obligations for the period beginning on January 1, 2016 and ending on December 31, 2016. This agreement was terminated prior to the completion of the Business Combination. Contingent Consideration Obligations Pursuant to the TRA and the Merger Agreement Subsequent to the Business Combination, TPG beneficially owns approximately 35% of the Company’s common stock, including Founder Shares, and is considered a related party of the Successor. In connection with the Business Combination, TPG became a party to the TRA and obtained the right to receive the Deferred Cash Consideration pursuant to the Merger Agreement. The fair value of these contingent consideration liabilities was $142.2 million as of June 30, 2016, and is recorded in Due to related party pursuant to contingent consideration obligations on the Company’s condensed consolidated balance sheet. See Note 3 and Note 9. Predecessor - Letter Agreement for Chairman’s Services On January 16, 2012, the Predecessor and Dan F. Smith, a member of the Predecessor Board of Directors, entered into a Letter Agreement for Chairman’s Services (together with subsequent extensions, the “Letter Agreement”). In connection with the closing of the Business Combination, the parties agreed to terminate the Letter Agreement and their rights and obligations thereunder. The termination of the Letter Agreement entitled Mr. Smith to a fee of $0.2 million in cash, which is included in Transaction related costs on the Company’s condensed consolidated statement of operations. Predecessor - Other Agreements with TPG The Predecessor entered into a management services agreement with TPG, the indirect majority owner of the Predecessor, pursuant to which it provided the Predecessor with ongoing management, advisory, specialized operational and consulting services. The fees incurred in connection with this agreement were recorded in Selling, general and administrative expenses in the condensed consolidated statements of operations. Pursuant to the management services agreement, the Predecessor also paid TPG fees in connection with consulting services it provided in relation to certain corporate transactions. TPG received reimbursements for out-of-pocket expenses incurred by TPG in connection with these transactions. These fees were recorded in Selling, general and administrative expenses in the condensed consolidated statements of operations. As a result of the Business Combination on the Closing Date, TPG and the Predecessor terminated the management services agreement and their rights and obligations thereunder. Pursuant to the management services agreement, the Predecessor paid TPG a success fee of $9.9 million relating to the closing of the Business Combination determined in accordance with the terms of the management services agreement. This fee was recorded in Transaction related costs of the Predecessor during the period from April 1, 2016 through June 8, 2016 in the condensed consolidated statement of operations. The table below summarizes activity recorded during the respective periods related to the items described above: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended Sales to TPG related entities $ 0.3 $ 0.3 $ 1.3 $ 3.1 $ 1.6 $ 7.1 Amounts included in Selling, general and administrative expenses Management fees to TPG $ — $ — $ 0.5 $ 2.1 $ 1.1 $ 2.5 Consulting fees to TPG $ — $ — $ 0.2 $ 0.4 $ 0.2 $ 0.7 Amounts included in Transaction related costs Fee paid in connection with the Business Combination $ — $ — $ 9.9 $ 9.9 $ — $ — There were no purchases from TPG related entities in the Successor or Predecessor periods. TPG related entities owed the Company $0.4 million at June 30, 2016 for the Successor and $0.3 million at September 30, 2015 for the Predecessor which were included in Accounts and notes receivable in the Company’s condensed consolidated balance sheets. Predecessor - Consulting Services Agreement The Predecessor had a strategic consulting services agreement with Steven B. Schwarzwaelder, a member of the Board of Directors of the Predecessor, under which it paid an annual fee of $0.175 million . The Predecessor recorded less than $0.1 million for each respective period April 1 through June 8, 2016 and October 1, 2015 through June 8, 2016, as well as the three and nine months ended June 30, 2015 related to this agreement. This fee was recorded in Selling, general and administrative expenses in the condensed consolidated statements of operations. As a result of the Business Combination, the parties terminated the consulting services agreement and their rights and obligations thereunder. |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company and its two active U.S. corporate subsidiaries, Blocker and Sub Holding, are incorporated in the U.S. and as such are subject to U.S. income taxes. The Company and Blocker will file a consolidated U.S. Federal income tax return and both will file various state returns. Sub Holding will file a separate U.S. Federal income tax return and various state tax returns. The Company’s controlled foreign corporations are subject to taxation at the entity level in their respective jurisdictions. Income tax benefit for the three months ended June 30, 2016 for the Successor was $1.3 million . The tax benefit for the three months ended June 30, 2016 for the Successor reflects an effective tax rate of a benefit of 7.7% . Income tax benefit for the nine months ended June 30, 2016 for the Successor was $1.3 million . The tax benefit for the nine months ended June 30, 2016 for the Successor reflects an effective tax rate of a benefit of 7.1% . Holdings is organized as a limited liability company and is taxed as a partnership for U.S. income tax purposes. As such, with the exception of a limited number of state and local jurisdictions, Holdings is not subject to U.S. income taxes. Accordingly, Blocker and the Selling Equityholders (other than the holders of equity interests in Blocker) will report their share of Holdings’ taxable income earned prior to the Closing Date on their respective U.S. federal tax returns. Holdings and its subsidiaries made tax distributions of approximately $0.1 million to, or on behalf of, the Selling Equityholders during the three and nine months ended June 30, 2015 . Income tax expense for the period from April 1, 2016 through June 8, 2016 for the Predecessor was $1.1 million on a pre-tax loss of $19.1 million compared to $1.8 million on pre-tax income of $20.6 million for the three months ended June 30, 2015 for the Predecessor. The current period tax expense was attributable to income tax expense on profitable foreign operations, primarily Puerto Rico and EMEA. The prior period tax expense was largely attributed to foreign income tax expense on profitable foreign operations. Income tax expense for the period from October 1, 2015 through June 8, 2016 for the Predecessor was $4.2 million on a pre-tax loss of $9.7 million compared to $2.7 million on pre-tax income of $14.2 million for the nine months ended June 30, 2015 for the Predecessor. The current period tax expense was attributable to income tax expense on profitable foreign operations, primarily Canada, EMEA, Puerto Rico and Mexico. The prior period expense was largely attributed to foreign income tax expense on profitable foreign operations. For all periods, the Company computed the provision for income taxes based on the actual year-to-date effective tax rate by applying the discrete method. Use of the annual effective tax rate, which relies on accurate projections by legal entity of income earned and taxed in foreign jurisdictions, as well as accurate projections by legal entity of permanent and temporary differences, was not considered a reliable estimate for purposes of calculating year-to-date income tax expense. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As a result of the adoption of ASU 2015-17, deferred tax assets and liabilities and any related valuation allowances are classified as noncurrent on a prospective basis. See Note 2. At June 30, 2016 for the Successor and September 30, 2015 for the Predecessor, the valuation allowance was $4.2 million and $3.6 million , respectively, primarily relating to Nexeo Plaschem operations. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon management’s expectations at June 30, 2016 , management believes it is more likely than not that it will realize the majority of its deferred tax assets. Uncertain Tax Positions U.S. GAAP prescribes a recognition threshold and measurement attribute for the accounting and financial statement disclosure of tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires the Company to recognize in the financial statements each tax position that meets the more likely than not criteria, measured as the amount of benefit that has a greater than 50% likelihood of being realized. Differences between the amount of tax benefits taken or expected to be taken in the income tax returns and the amount of tax benefits recognized in the financial statements represent the Company’s unrecognized income tax benefits, which are recorded as a liability, with the long-term portion included in Other non-current liabilities and the current portion included in Accrued expenses and other liabilities on the Company’s condensed consolidated balance sheet. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense in the condensed consolidated statements of operations. There was an insignificant amount of interest and penalties recognized during all periods. As of June 30, 2016 for the Successor and September 30, 2015 for the Predecessor, the Company had $1.2 million and $1.1 million , respectively, related to uncertain tax positions, including related accrued interest and penalties. The Company believes it is reasonably possible that within the next 12 months unrecognized tax benefits may decrease by up to $0.6 million as a result of the expiration of certain statute of limitations periods and anticipated settlements. The Company or one of its subsidiaries files income tax returns in various state and foreign jurisdictions. Within the U.S., the Company is subject to federal and state income tax examination by tax authorities for periods after December 2011. With respect to countries outside of the U.S., with certain exceptions, the Company’s foreign subsidiaries are subject to income tax audits for years after 2010. |
Segment and Geographic Data
Segment and Geographic Data | 9 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment and Geographic Data | Segment and Geographic Data The Company operates through three lines of business, or operating segments: Chemicals, Plastics and Environmental Services, that market to different sets of customers operating in an array of industries, with various end markets and customer segments within those industries. For segment presentation and disclosure purposes, the Chemicals and Plastics lines of business constitute separate reportable segments while the Environmental Services line of business, which does not meet the materiality threshold for separate disclosure and the historical composites products sales in Asia are combined in an “Other” segment. Each line of business represents unique products and suppliers, and each line of business focuses on specific end markets within its industry based on a variety of factors, including supplier or customer opportunities, expected growth and prevailing economic conditions. Across the Chemicals and Plastics lines of business there are numerous industry segments, end markets and sub markets that the Company may choose to focus on. These end markets may change from year to year depending on the underlying market economics, supplier focus, expected profitability and the Company’s strategic agenda. The Chemicals, Plastics and Environmental Services lines of business compete with national, regional and local companies throughout North America. Additionally, the Chemicals and Plastics lines of business compete with other distribution companies in Asia. The Plastics line of business also competes with other distribution companies in EMEA. Competition within each line of business is based primarily on the diversity of the product portfolio, service offerings, reliability of supply, technical support and price. The accounting policies used to account for transactions in each of the lines of business are the same as those used to account for transactions at the corporate level. The Chemicals and Plastics lines of business are distribution businesses, while the Environmental Services line of business provides hazardous and non-hazardous waste collection, recovery, recycling and arrangement for disposal services. A brief description of each line of business follows: Chemicals . The Chemicals line of business distributes specialty and industrial chemicals, additives and solvents to industrial users via rail cars, bulk tanker trucks and as packaged goods in trucks. The Company’s chemical products are distributed in more than 50 countries worldwide, primarily in North America and Asia. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. While the Chemicals line of business serves multiple end markets, key end markets within the industrial space including household, industrial and institutional, performance coatings (including architectural coatings, adhesives, sealants and elastomers), lubricants, oil and gas and personal care. Plastics . The Plastics line of business distributes a broad product line consisting of commodity polymer products and prime engineering resins to plastics processors engaged in blow molding, extrusion, injection molding and rotation molding via rail car, bulk truck, truckload boxes and less-than truckload quantities. The Company’s plastics products are distributed in more than 50 countries worldwide, primarily in North America, EMEA and Asia. The Plastics line of business serves a broad cross section of industrial segments, with a current focus on the healthcare and automotive end markets. Other . The Environmental Services line of business, in connection with certain waste disposal service companies, provides customers with comprehensive hazardous and non-hazardous waste collection, recovery and arrangement for disposal services or recycling in North America, primarily in the U.S. These environmental services are offered through the Company’s network of distribution facilities which are used as transfer facilities. The Other segment also includes historical composites products sales in Asia. The Chief Executive Officer is the Chief Operating Decision Maker. The Chief Operating Decision Maker reviews operating results in order to make decisions, assess performance and allocate resources to each line of business. In order to maintain the focus on line of business performance, certain expenses are excluded from the line of business results utilized by the Company’s Chief Operating Decision Maker in evaluating line of business performance. These expenses include depreciation and amortization, selling, general and administrative expense, corporate items such as transaction related costs, interest and income tax expense. These items are separately delineated to reconcile to reported net income. Intersegment revenues were insignificant. Certain assets are aggregated at the line of business level. The assets attributable to the Company’s lines of business, that are reviewed by the Chief Operating Decision Maker, consist of trade accounts receivable, inventories, goodwill and any specific assets that are otherwise directly associated with a line of business. The Company’s inventory of packaging materials and containers are generally not allocated to a line of business and are included in unallocated assets. Summarized financial information relating to the Company’s lines of business is as follows. The Successor periods in the summarized financial information for the three and nine months ended June 30, 2016 includes 22 days (June 9, 2016 through June 30, 2016) of the combined operating results, as well as the full three and nine months ended June 30, 2016 of WLRH’s operating results, which consisted primarily of transaction related costs. Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Sales and operating revenues Chemicals $ 94.2 $ 94.2 $ 298.7 $ 1,066.4 $ 482.6 $ 1,503.9 Plastics 109.9 109.9 329.8 1,192.2 477.4 1,429.6 Other 10.2 10.2 21.7 81.5 28.8 85.8 Total sales and operating revenues $ 214.3 $ 214.3 $ 650.2 $ 2,340.1 $ 988.8 $ 3,019.3 Gross profit Chemicals $ 9.6 $ 9.6 $ 38.8 $ 136.2 $ 59.9 $ 168.1 Plastics 6.7 6.7 32.2 117.6 44.8 113.3 Other 2.5 2.5 4.4 18.1 6.6 21.1 Total gross profit $ 18.8 $ 18.8 $ 75.4 $ 271.9 $ 111.3 $ 302.5 Selling, general & administrative expenses $ 19.1 $ 19.2 $ 57.5 $ 208.9 $ 82.9 $ 248.5 Transaction related costs 15.9 18.0 26.1 33.4 — 0.1 Change in fair value related to contingent consideration (2.3 ) (2.3 ) — — — — Total operating income (loss) (13.9 ) (16.1 ) (8.2 ) 29.6 28.4 53.9 Other income — — 0.3 2.9 8.4 9.1 Interest income (expense) Interest income 0.3 0.9 — 0.1 — 0.1 Interest expense (3.2 ) (3.2 ) (11.2 ) (42.3 ) (16.2 ) (48.9 ) Income (loss) from continuing operations before income taxes $ (16.8 ) $ (18.4 ) $ (19.1 ) $ (9.7 ) $ 20.6 $ 14.2 Successor Predecessor June 30, 2016 September 30, 2015 IDENTIFIABLE ASSETS Chemicals $ 667.2 $ 696.9 Plastics 726.9 530.2 Other 91.3 35.1 Total identifiable assets by segment 1,485.4 1,262.2 Unallocated assets 632.6 446.7 Total assets $ 2,118.0 $ 1,708.9 Goodwill amounts by reportable segment at June 30, 2016 are based on the preliminary purchase consideration allocation of the Business Combination, which is based on preliminary valuations performed to determine the fair value of the acquired assets and assumed liabilities as of the Closing Date. Accordingly, the amounts allocated to goodwill are subject to adjustments that could have a material impact on total goodwill and goodwill by reportable segment. See Note 3. Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale, are presented below: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended June 30, 2015 North America $ 174.4 $ 174.4 $ 535.9 $ 1,917.2 $ 816.2 $ 2,507.5 EMEA 29.3 29.3 78.8 291.9 129.7 374.1 Asia 10.6 10.6 35.5 131.0 42.9 137.7 Total $ 214.3 $ 214.3 $ 650.2 $ 2,340.1 $ 988.8 $ 3,019.3 |
Significant Accounting Polici24
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and all wholly-owned subsidiaries in which it maintains control. Significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates, Risks, and Uncertainties | Use of Estimates, Risks, and Uncertainties The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include: • the fair value of assets acquired and liabilities assumed in a business combination; • the assessment of recoverability of long lived assets, including property and equipment, goodwill and intangible assets, income taxes, reserves and environmental remediation; • the estimated useful lives of intangible and depreciable assets; • the grant date fair value of equity-based awards; • the recognition, measurement and valuation of current and deferred income taxes; • the recognition and measurement of contingent consideration related to the TRA liability; and • the recognition and measurement of contingent consideration related to the Deferred Cash Consideration. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. The Company’s financial instruments exposed to concentration of credit risk consist primarily of cash and cash equivalents. Although the Company deposits cash with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risks. |
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid temporary investments with original maturities of three months or less are considered to be cash equivalents. |
Accounts and Notes Receivable and Allowance for Doubtful Accounts | Accounts and Notes Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded net of discounts and allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and generally does not require collateral from its customers. The Company’s accounts receivable in the U.S. and Canada are collateral under the New Credit Facilities. The Company records an allowance for doubtful accounts as a best estimate of the amount of probable credit losses for accounts receivable. On a recurring basis, the Company reviews this allowance and considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a receivable is reasonably assured. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Receivables are charged off against the allowance for doubtful accounts when it is probable a receivable will not be recovered. |
Inventories | Inventories Inventories are carried at the lower of cost or market using the weighted average cost method. The Company’s inventories in the U.S. and Canada are collateral under the New Credit Facilities. |
Goodwill and Intangibles | Goodwill and Intangibles The Company had goodwill of $693.4 million at June 30, 2016 associated with the Business Combination. The Predecessor had goodwill of $373.7 million at September 30, 2015 resulting from previous acquisitions. The purchase consideration of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The estimated fair values are determined after review and consideration of relevant information including discounted cash flows, quoted market prices and estimates made by management. To the extent that the purchase consideration exceeds the fair value of the net identifiable tangible and intangible assets acquired, such excess is allocated to goodwill. The Company had other intangible assets, net of amortization, of $216.2 million at June 30, 2016 consisting of customer relationships and the trade name. These intangible assets are amortized on a straight-line basis over their estimated useful lives, including customer relationships which are amortized over 12 years and the trade name is amortized over four years. The Predecessor had other intangible assets, net of amortization, of $111.4 million at September 30, 2015 consisting of leasehold improvements, customer-related intangibles, supplier-related intangibles, non-compete agreements and certain trademarks and trade names. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment includes plants and buildings, machinery and equipment and software and computer equipment. Property, plant and equipment acquired or constructed in the normal course of business are initially recorded at cost. Property and equipment acquired in business combinations are initially recorded at their estimated fair value. Property, plant and equipment are depreciated by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their economic useful life or their lease term. The range of useful lives used to depreciate property, plant and equipment is as follows: Successor Predecessor Estimated Useful Estimated Useful Plants and buildings 5-35 5-35 Machinery and equipment 2-30 2-30 Software and computer equipment 3-10 3-10 Repairs and maintenance expenditures that do not extend the useful life of the asset are charged to expense as incurred. Major expenditures for replacements and significant improvements that increase asset values or extend useful lives are capitalized. The carrying amounts of assets that are sold or retired and the related accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected in the condensed consolidated statements of operations. |
Leases | Leases The Company leases certain property, plant and equipment in the ordinary course of business. The leases are classified as either capital leases or operating leases. Assets under capital leases are included in Property, plant and equipment, net in the condensed consolidated balance sheets and are depreciated over the lesser of the lease term or the useful life of the assets. Capital lease obligations are included in Short-term borrowings, current portion of long-term debt and capital lease obligations and Long-term debt and capital lease obligations, less current portion, net in the condensed consolidated balance sheets. Generally, lease payments under capital leases are recognized as interest expense and a reduction of the capital lease obligations. Lease payments under operating leases are recognized as an expense in the condensed consolidated statements of operations on a straight-line basis over the lease term. |
Impairment of Goodwill and Other Long-lived Assets | Impairment of Goodwill and Other Long-lived Assets Goodwill. Goodwill is tested for impairment annually as of March 31 and whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is reviewed for impairment at the reporting unit level, which is defined as operating segments or groupings of businesses one level below the operating segment level. The Company’s operating segments are the same as the reporting units used in its goodwill impairment test. Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit, determined using a market approach if market prices are available or alternatively, a discounted cash flow model, with its carrying value. The annual evaluation of goodwill requires the use of estimates about future operating results, valuation multiples and discount rates of each reporting unit to determine their estimated fair value. Changes in these assumptions can materially affect these estimates. Once an impairment of goodwill has been recorded, it cannot be reversed. No goodwill impairment was recognized during any of the periods presented. Other Long-Lived Assets. Property, plant and equipment and other intangibles with definite lives are tested for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable. When an impairment test is performed and the undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition and other economic factors. |
Debt Issuance Costs | Debt Issuance Costs Costs associated with the revolving credit facility are recorded as debt issuance costs, which are included in Other non-current assets in the condensed consolidated balance sheets and are being amortized as interest expense over the contractual lives of the related agreements. Costs associated with non-revolving debt facilities are recorded as a reduction of the long-term debt, and are amortized as interest expense over the contractual lives of the related agreements. |
Commitments, Contingencies and Environmental Costs | Commitments, Contingencies and Environmental Costs Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Gain contingencies are not recorded until management determines it is certain that the future event will become or is realized. Liabilities for environmental remediation costs are recognized when environmental assessments or remediation are probable and the associated costs can be reasonably estimated. Generally, the timing of these provisions coincides with the commitment to a formal plan of action or, if earlier, the divestment or closure of the relevant sites. The amount recognized reflects management’s best estimate of the expenditures expected to be required. Actual environmental expenditures that relate to current or future revenues are expensed or capitalized as appropriate. Actual expenditures that relate to an existing condition caused by past operations and that do not impact future earnings are expensed. |
Earnings per Share | Earnings or Loss per Share of Successor Basic EPS which excludes dilution, is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common shares and the proceeds from such activities, if any, were used to acquire shares of common stock at the average market price during the reporting period. During a net loss period, the assumed exercise of in-the-money stock options and unvested stock has an anti-dilutive effect, and therefore such potential shares are excluded from the diluted EPS computation. Per share information is based on the weighted average number of common shares outstanding during each period for the basic computation and, if dilutive, the weighted average number of potential common shares resulting from the assumed conversion of outstanding stock options, unvested stock and unvested stock units for the diluted computation. |
Concentration of Credit Risk | Concentrations of Credit Risk All of the Company’s financial instruments involve elements of credit and market risk. The most significant portion of this credit risk relates to nonperformance by counterparties. To manage counterparty risk associated with financial instruments, the Company selects and monitors counterparties based on its assessment of their financial strength and on credit ratings, if available. |
Foreign Currency | Foreign Currency The reporting currency of the Company is the U.S. dollar. With few exceptions, the local currency is the functional currency for the Company's foreign subsidiaries. In consolidating the results of operations, income and expense accounts are translated into U.S. dollars at average exchange rates in effect during the period and asset and liability accounts are translated at period-end exchange rates. Translation gains or losses are recorded in the foreign currency translation component in Accumulated other comprehensive income (loss) in shareholders’ equity and are included in net earnings only upon sale or liquidation of the underlying foreign subsidiary or affiliated company. |
Revenue Recognition | Revenue Recognition Revenues are recognized when persuasive evidence of an arrangement exists, products are shipped and title is transferred or services are provided to customers, the sales price is fixed or determinable and collectability is reasonably assured. Revenue for product sales is recognized at the time title and risk of loss transfer to the customer, based on the terms of the sale. For products delivered under the Company’s standard shipping terms, title and risk of loss transfer when the product is delivered to the customer’s delivery site. For sales transactions designated Freight on Board shipping point, the customer assumes risk of loss and title transfers at the time of shipment. Deferred revenues may result from (i) delivery delays for products delivered under the Company’s standard shipping terms or (ii) from other arrangements with its customers. Sales are reported net of tax assessed by qualifying governmental authorities. The Company is generally the primary obligor in sales transactions with its customers, retains inventory risk during transit and assumes credit risk for amounts billed to its customers. Accordingly, the Company recognizes revenue primarily based on the gross amount billed to its customers. In sales transactions where the Company is not the primary obligor and does not retain inventory risk, the Company recognizes revenue on a net basis by recognizing only the commission the Company retains from such sales and including that commission in sales and operating revenues in the condensed consolidated statements of operations. Consistent with industry standards, the Company may offer volume-based rebates to large customers if the customer purchases a specified volume with the Company over a specified time period. The determination of these rebates at an interim date involves management judgment. As a result, the Company’s revenues may be affected if a customer earns a rebate toward the end of a year that the Company had not expected or if its estimate of customer purchases are less than expected. The Company has the experience and access to relevant information that the Company believes are necessary to reasonably estimate the amounts of such deductions from gross revenues. The Company regularly reviews the information related to these estimates and adjusts its reserves accordingly if and when actual experience differs from previous estimates. The Company recognizes the rebate obligation as a reduction of revenue based on its estimate of the total volume of purchases from a given customer over the specified period of time. |
Supplier Rebates | Supplier Rebates Certain of the Company's vendor arrangements provide for purchase incentives based on the Company achieving a specified volume of purchases. The Company records the volume-based purchase incentives as a reduction of inventory costs (and related cost of sales) based on its purchases to date and its estimates of purchases for the remainder of the calendar year. The Company receives these incentives in the form of rebates that are payable only when the Company's purchases equal or exceed the relevant calendar year target. Supplier rebates are recorded as a reduction of inventory costs and accrued as part of cost of sales for products sold based on progress towards earning the supplier rebates, taking into consideration cumulative purchases of inventory to date and projected purchases through the end of the applicable calendar year. |
Shipping and Handling | Shipping and Handling All shipping and handling amounts billed to customers are included in revenues. Costs incurred related to the shipping and handling of products are included in cost of sales. |
Expense Recognition | Expense Recognition Cost of sales include material and production costs, as well as the costs of inbound and outbound freight, purchasing and receiving, inspection, warehousing, internal transfers and all other distribution network costs. Selling, general and administrative expenses include sales and marketing costs, advertising, research and development, customer support, environmental remediation and administrative costs. Because products and services are generally sold without any extended warranties, liabilities for product warranties are not significant. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The provision for income taxes includes income taxes paid, currently payable or receivable, and those deferred. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of the net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Predecessor was organized as a limited liability company and was taxed as a partnership for U.S. income tax purposes. As such, with the exception of a limited number of state and local jurisdictions, the Predecessor was not subject to U.S. income taxes. Accordingly, the members of the Predecessor reported their share of the Predecessor’s taxable income on their respective U.S. federal tax returns. The Predecessor’s sole active U.S. corporate subsidiary, Sub Holding, was subject to tax at the entity level in the U.S. The net earnings for financial statement purposes differed from taxable income reportable by the Predecessor to the members as a result of differences between the tax basis and financial reporting basis of certain assets and liabilities and other factors. The Predecessor was required to make quarterly distributions to members to fund their tax obligations, if any, attributable to the Predecessor’s taxable income. In some jurisdictions, the Predecessor made such distributions in the form of tax payments paid directly to the taxing authority on behalf of its members. Controlled foreign corporations are subject to tax at the entity level in their respective jurisdictions. Due to related party pursuant to Contingent Consideration Obligations As described in Note 3, as part of the consideration for the Business Combination, the Company entered into the TRA and agreed to pay the Deferred Cash Consideration pursuant to the Merger Agreement. The Company’s obligation for these contingent consideration amounts was initially measured at fair value as of the Closing Date. The Company’s contingent consideration liabilities are required to be recorded at fair value as of the end of each reporting period with any changes in fair value recorded in operating income. Changes in the estimates and inputs used in determining the fair value of the contingent consideration could have a material impact on the amounts recognized. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based compensation expense for equity instruments granted in exchange for employee and director services. Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the vesting period of the equity award grant. The Company’s PSU awards contain both market and performance-based conditions. At the grant date, market conditions are incorporated into the fair value measurement using a Monte Carlo simulation model under the assumptions that performance-based conditions are met and not met. The Company then determines the probability that performance-based conditions will be met and incorporates this into the grant date fair value of the award. The compensation cost for the PSU awards is amortized over the vesting period on a straight-line basis, net of estimated forfeitures. Forfeiture rates are estimated based on consideration of historical forfeitures of the Predecessor’s actual forfeitures of its share-based compensation awards and a peer group of companies. |
Recent Accounting Pronouncements Adopted and New Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Adopted In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and an entity should apply existing guidance in Topic 718, Compensation-Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The Company adopted these amendments on January 1, 2016, which did not have a material impact on the Company’s financial position or results of operations. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement for an acquirer to retrospectively adjust provisional amounts recorded in a business combination to reflect new information about the facts and circumstances that existed as of the acquisition date and that, if known, would have affected measurement or recognition of amounts initially recognized. The amendment requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The Company adopted this standard during the three months ended June 30, 2016. Any future adjustments to the amounts initially recognized for assets and liabilities acquired as a result of the Business Combination will be recognized in the period in which they are identified. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This ASU requires an entity to classify all deferred tax assets and liabilities as noncurrent. These amendments are effective for fiscal years beginning after December 15, 2016 and interim periods within those years and early adoption is permitted. The Company adopted this standard during the three months ended June 30, 2016 on a prospective basis and its adoption did not have a material impact on the Company’s financial position or results of operations, or on the Predecessor’s financial position or results of operations for the periods presented. In April and August 2015, the FASB issued ASU No. 2015-03 and ASU No. 2015-15, “Interest-Imputation of Interest,” respectively, to simplify the presentation of debt issuance costs. These amendments require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The FASB clarified that debt issuance costs related to line-of-credit arrangements can be presented as an asset and amortized over the term of the arrangement. The Company adopted these amendments on January 1, 2016 on a retrospective basis. As a result, the Predecessor financial statements have been adjusted to reclassify $9.1 million of debt issuance costs from Other non-current assets and into Long-term debt and capital lease obligations, less current portion, net on the condensed consolidated balance sheets as of September 30, 2015. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and require that revenue be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-9 for all entities by one year. These amendments will be effective in annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that reporting period. The Company is in the process of evaluating the provisions of this ASU and assessing the potential effect on the Company’s financial position or results of operations. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in this ASU require an entity to measure inventory at the lower of cost or net realizable value, whereas guidance previously required an assessment of market value of inventory, with different possibilities as to determining market value. This ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years and early adoption is permitted. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have a material effect on the Company’s financial position or results of operations. In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU (i) requires all equity investments in unconsolidated entities other than those measured using the equity method of accounting, to be measured at fair value through earnings; (ii) when the fair value option has been elected for financial liabilities, requires that changes in fair value due to instrument specific credit risk be recognized separately in other comprehensive income and accumulated gains and losses due to these changes and will be reclassified from accumulated other comprehensive income to earnings if the liability is settled before maturity; and (iii) amends certain fair value disclosure provisions related to financial instruments carried at amortized cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted. The Company is in the process of evaluating the provisions of the ASU and assessing the potential effect on the Company’s financial position or results of operations. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires all leases with terms greater than 12 months, whether finance or operating, to be recorded on the balance sheet, reflecting a liability to make lease payments and a right-to-use asset representing the right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change from current GAAP. These amendments are effective for the reporting periods beginning after December 15, 2018 with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the potential effects of this standard and believes it may have a significant impact on its consolidated financial statements due, in part, to its substantial number of operating lease obligations. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance simplifies several aspects of accounting for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. This ASU is effective for interim and annual reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the provisions of this ASU and assessing the potential effect on the Company’s financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Forward-looking information will now be used to better inform credit loss estimates. The amendments in this ASU are effective for fiscal years beginning December 15, 2020 including interim periods within those years. Early adoption is permitted. The Company is currently in the process of evaluating the provisions of this ASU, and assessing the potential effect on the Company’s financial position or results of operations. |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The estimated purchase consideration for the Business Combination was as follows: Cash $ 424.9 Less: cash acquired (64.3 ) Equity (1) 276.7 Founder Shares transferred to Selling Equityholders (1) 30.2 Contingent consideration - Fair value of Deferred Cash Consideration 49.6 Contingent consideration - Fair value of TRA 94.9 Total purchase consideration (2) $ 812.0 (1) See Note 11. (2) In addition to the total purchase consideration above, the Company assumed the outstanding indebtedness of the Predecessor, including related accrued interest through the Closing Date, totaling $774.3 million . The proceeds of the New Credit Facilities were used to repay such indebtedness and accrued interest immediately following the consummation of the Business Combination. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the Company’s preliminary allocation of the purchase consideration to assets acquired and liabilities assumed at the acquisition date: Preliminary Purchase Consideration Allocation Accounts receivable $ 470.0 Inventory 328.5 Other current assets 24.5 Property, plant and equipment 339.5 Customer-related intangible 197.0 Trade name 20.5 Other non-current assets 3.3 Deferred tax assets 1.2 Goodwill 695.6 Total assets acquired 2,080.1 Short-term borrowings and current portion of capital leases 40.6 Accounts payable 338.0 Other current liabilities 52.7 Long-term portion of capital leases 23.0 Long-term debt 767.3 Deferred tax liability 41.3 Other non-current liabilities 5.2 Total liabilities assumed 1,268.1 Net assets acquired $ 812.0 |
Schedule of unaudited consolidated pro forma financial information | The consolidated pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the Business Combination been completed on October 1, 2014. Three Months Ended June 30, 2016 Nine Months Ended Three Months Ended Nine Months Ended Sales and operating revenues $ 864.5 $ 2,554.4 $ 988.8 $ 3,019.3 Operating income (loss) 21.4 54.8 24.6 (28.1 ) Net income (loss) from continuing operations 6.6 14.9 13.8 (35.7 ) Net income (loss) 6.6 15.0 13.8 (36.4 ) Basic and diluted net income (loss) per share 0.09 0.19 0.18 (0.47 ) |
Certain Balance Sheet Informa26
Certain Balance Sheet Information (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Certain Balance Sheet Information [Abstract] | |
Schedule of Cash and Cash Equivalents | These amounts included the following: Successor Predecessor June 30, 2016 September 30, 2015 Cash held by foreign subsidiaries $ 35.4 $ 54.1 Non-U.S. dollar denominated currency held by foreign subsidiaries $ 33.0 $ 45.0 Currency denominated in RMB $ 8.9 $ 4.7 |
Summary of Inventories | Inventories at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Finished products $ 317.2 $ 320.9 Supplies 4.3 4.2 Total $ 321.5 $ 325.1 |
Schedule of Other Non-Current Assets | Other non-current assets at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Debt issuance costs of revolving credit facilities $ 6.7 $ 5.4 Other 3.2 3.4 Total $ 9.9 $ 8.8 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | Property, plant and equipment at June 30, 2016 and September 30, 2015 consisted of the following: Successor Predecessor June 30, 2016 September 30, 2015 Land $ 55.7 $ 41.2 Plants and buildings 93.7 78.3 Machinery and equipment (1) 135.2 167.8 Software and computer equipment 43.5 68.8 Construction in progress 14.0 12.9 Total 342.1 369.0 Less accumulated depreciation (3.0 ) (137.8 ) Property, plant and equipment, net $ 339.1 $ 231.2 (1) Includes $25.1 million and $13.1 million , respectively, related to equipment acquired under capital leases. In connection with the Business Combination, property, plant and equipment of the Predecessor was adjusted to fair market value. See Note 3. Depreciation expense recognized on the property, plant and equipment described above was as follows: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Depreciation expense 3.0 3.0 7.5 27.1 9.2 27.8 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Progression of Goodwill by Reportable Segment | The following is a progression of Successor goodwill by reportable segment: Successor Chemicals Plastics Other Total Balance September 30, 2015 $ — $ — $ — $ — Business Combination 335.3 295.0 65.3 695.6 Foreign currency translation (0.1 ) (2.1 ) — (2.2 ) Balance at June 30, 2016 $ 335.2 $ 292.9 $ 65.3 $ 693.4 |
Schedule of Finite-Lived Intangible Assets | Definite-lived intangible assets at June 30, 2016 and September 30, 2015 consisted of the following: Successor June 30, 2016 Estimated Gross Accumulated Net Customer-related 12 $ 197.0 $ (1.0 ) $ 196.0 Trade name 4 20.5 (0.3 ) 20.2 Total $ 217.5 $ (1.3 ) $ 216.2 Predecessor September 30, 2015 Estimated Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer-related 5-14 $ 121.3 $ (33.6 ) $ 87.7 Supplier-related 10 17.0 (2.6 ) 14.4 Leasehold interest 1-20 2.1 (1.3 ) 0.8 Non-compete agreements 3-5 10.0 (4.5 ) 5.5 Trademarks and trade names 2-6 6.2 (3.2 ) 3.0 Total $ 156.6 $ (45.2 ) $ 111.4 |
Schedule of Amortization Expense | Amortization expense recognized on the intangible assets described above was as follows: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Amortization expense $ 1.3 $ 1.3 $ 2.8 $ 10.6 $ 3.9 $ 11.8 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations | Short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations at June 30, 2016 and September 30, 2015 are summarized below: Successor Predecessor June 30, 2016 September 30, 2015 Short-term borrowings $ 41.0 $ 34.9 Current portion of long-term debt and capital lease obligations 9.0 37.5 Total short-term borrowings and current portion of long-term debt and capital lease obligations, net $ 50.0 $ 72.4 |
Summary of long-term debt outstanding | Long-term debt outstanding at June 30, 2016 and September 30, 2015 is summarized below: Successor Predecessor June 30, 2016 September 30, 2015 New ABL Facility $ 131.1 $ — New Term Loan Facility 655.0 — Predecessor ABL Facility — 85.5 Predecessor Term Loan Facility — 647.2 Notes — 159.2 Capital lease obligations (1) 25.2 12.7 Total long-term debt 811.3 904.6 Less: unamortized debt discount (2) (3.3 ) (3.6 ) Less: debt issuance costs (3) (18.4 ) (9.1 ) Less: current portion of long-term debt and capital lease obligations (9.0 ) (37.5 ) Long-term debt and capital lease obligations, less current portion, net $ 780.6 $ 854.4 (1) Capital lease obligations exclude executory costs and interest payments associated with the underlying leases. See “Capital Lease Obligations” below. (2) At June 30, 2016 , included $3.3 million of unamortized debt discount related to the New Term Loan Facility for the Successor. At September 30, 2015 , included $1.9 million of unamortized debt discount related to the Predecessor’s Term Loan Facility, with the remainder related to the Notes. Debt discount is amortized to interest expense over the life of the respective instruments using the effective interest rate method. (3) See discussion below under New Term Loan Facility and Debt Issuance Cost Amortization and Note 2 related to the adoption of ASU 2015-03 and ASU 2015-15. |
Short-term borrowings associated with operations in China | Short-term borrowings are associated with the Company’s operations in China and are summarized below: Facility Limit Outstanding Borrowings Balance Weighted Average Interest Rate on Borrowings Outstanding LOC and Bankers’ Acceptance Bills Remaining Availability June 30, 2016 - Successor Bank of America - China (1) $ 28.8 $ 27.2 3.7% $ — $ 1.6 Bank of Communications - China (2) 22.6 13.8 5.3% 8.5 0.3 Total $ 51.4 $ 41.0 $ 8.5 $ 1.9 September 30, 2015 - Predecessor Bank of America - China $ 23.8 $ 23.0 3.5% $ — $ 0.8 Bank of Communications - China 23.6 11.9 6.1% 7.1 4.6 Total $ 47.4 $ 34.9 $ 7.1 $ 5.4 (1) The borrowing limit of this facility is denominated in U.S. dollars. This line of credit is secured by a standby letter of credit drawn on the New ABL Facility covering at least 110% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. (2) The borrowing limit of this facility is denominated in RMB. This line of credit is secured by a standby letter of credit drawn on the New ABL Facility covering at least 100% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. |
Derivatives Derivatives (Tables
Derivatives Derivatives (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments, Gain (Loss) | Gains and losses net of reclassifications into income related to the Predecessor’s interest rate swaps were as follows: Predecessor Recorded to April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended Realized loss Interest expense $ 0.1 $ 0.3 $ 0.1 $ 0.4 Unrealized gain Other comprehensive income $ 0.1 $ 0.3 $ — $ 0.1 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Retirement Plan Contributions | The following summarizes contributions to the plans described above: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Contributions recorded as a component of cost of sales and operating expenses $ 0.2 $ 0.2 $ 0.8 $ 2.7 $ 1.0 $ 3.0 Contributions recorded as a component of selling, general and administrative expenses 0.4 0.4 1.5 4.8 1.6 5.1 Total contributions $ 0.6 $ 0.6 $ 2.3 $ 7.5 $ 2.6 $ 8.1 |
Summary of Equity Plan Activity | The following table summarizes Series B unit activity during the period from October 1, 2015 through June 8, 2016: Units Average Grant Outstanding at September 30, 2015 38,466,624 $ 0.28 Granted 1,028,571 0.16 Forfeited/Canceled (1,597,000 ) 0.25 Outstanding at June 8, 2016 37,898,195 $ 0.22 |
Summary of Non-Vested Equity Plan Units | The following table summarizes non-vested Series B unit activity during the period from October 1, 2015 through June 8, 2016: Units Average Grant Nonvested at September 30, 2015 23,116,625 $ 0.26 Granted 1,028,571 0.16 Vested (19,871,696 ) 0.16 Forfeited (1,345,000 ) 0.23 Nonvested at June 8, 2016 2,928,500 $ 0.26 |
Performance Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation Activity | The following table summarizes PSU activity during the nine months ended June 30, 2016 : Units Average Grant Date Fair Value Per Unit Unvested PSUs at September 30, 2015 — $ — Grants 1,547,500 9.13 Vested — — Forfeited/Canceled — — Unvested PSUs at June 30, 2016 1,547,500 $ 9.13 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | A reconciliation of the numerators and denominators of the basic and diluted per share computation follows. No such computation is necessary for the Predecessor periods as the Predecessor was organized as a limited liability company and did not have publicly traded shares. Successor Three Months Ended Nine Months Ended Basic: Net loss $ (15.5 ) $ (17.1 ) Weighted average number of common shares outstanding during the period 34,072,056 21,241,897 Net loss per common share - basic $ (0.45 ) $ (0.81 ) Diluted: Net loss $ (15.5 ) $ (17.1 ) Denominator for diluted earnings per share: Weighted average number of common shares outstanding during the period 34,072,056 21,241,897 Incremental common shares attributable to outstanding dilutive options and unvested restricted shares — — Denominator for diluted earnings per common share 34,072,056 21,241,897 Net loss per common share - diluted $ (0.45 ) $ (0.81 ) |
Related Party Activity (Tables)
Related Party Activity (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The table below summarizes activity recorded during the respective periods related to the items described above: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended Sales to TPG related entities $ 0.3 $ 0.3 $ 1.3 $ 3.1 $ 1.6 $ 7.1 Amounts included in Selling, general and administrative expenses Management fees to TPG $ — $ — $ 0.5 $ 2.1 $ 1.1 $ 2.5 Consulting fees to TPG $ — $ — $ 0.2 $ 0.4 $ 0.2 $ 0.7 Amounts included in Transaction related costs Fee paid in connection with the Business Combination $ — $ — $ 9.9 $ 9.9 $ — $ — |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Summary of financial information | Summarized financial information relating to the Company’s lines of business is as follows. The Successor periods in the summarized financial information for the three and nine months ended June 30, 2016 includes 22 days (June 9, 2016 through June 30, 2016) of the combined operating results, as well as the full three and nine months ended June 30, 2016 of WLRH’s operating results, which consisted primarily of transaction related costs. Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2015 Sales and operating revenues Chemicals $ 94.2 $ 94.2 $ 298.7 $ 1,066.4 $ 482.6 $ 1,503.9 Plastics 109.9 109.9 329.8 1,192.2 477.4 1,429.6 Other 10.2 10.2 21.7 81.5 28.8 85.8 Total sales and operating revenues $ 214.3 $ 214.3 $ 650.2 $ 2,340.1 $ 988.8 $ 3,019.3 Gross profit Chemicals $ 9.6 $ 9.6 $ 38.8 $ 136.2 $ 59.9 $ 168.1 Plastics 6.7 6.7 32.2 117.6 44.8 113.3 Other 2.5 2.5 4.4 18.1 6.6 21.1 Total gross profit $ 18.8 $ 18.8 $ 75.4 $ 271.9 $ 111.3 $ 302.5 Selling, general & administrative expenses $ 19.1 $ 19.2 $ 57.5 $ 208.9 $ 82.9 $ 248.5 Transaction related costs 15.9 18.0 26.1 33.4 — 0.1 Change in fair value related to contingent consideration (2.3 ) (2.3 ) — — — — Total operating income (loss) (13.9 ) (16.1 ) (8.2 ) 29.6 28.4 53.9 Other income — — 0.3 2.9 8.4 9.1 Interest income (expense) Interest income 0.3 0.9 — 0.1 — 0.1 Interest expense (3.2 ) (3.2 ) (11.2 ) (42.3 ) (16.2 ) (48.9 ) Income (loss) from continuing operations before income taxes $ (16.8 ) $ (18.4 ) $ (19.1 ) $ (9.7 ) $ 20.6 $ 14.2 Successor Predecessor June 30, 2016 September 30, 2015 IDENTIFIABLE ASSETS Chemicals $ 667.2 $ 696.9 Plastics 726.9 530.2 Other 91.3 35.1 Total identifiable assets by segment 1,485.4 1,262.2 Unallocated assets 632.6 446.7 Total assets $ 2,118.0 $ 1,708.9 |
Schedule of revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale, are presented below: Successor Predecessor Three Months Ended Nine Months Ended April 1 Through June 8, 2016 October 1, 2015 Through June 8, 2016 Three Months Ended Nine Months Ended June 30, 2015 North America $ 174.4 $ 174.4 $ 535.9 $ 1,917.2 $ 816.2 $ 2,507.5 EMEA 29.3 29.3 78.8 291.9 129.7 374.1 Asia 10.6 10.6 35.5 131.0 42.9 137.7 Total $ 214.3 $ 214.3 $ 650.2 $ 2,340.1 $ 988.8 $ 3,019.3 |
Basis of Presentation and Nat35
Basis of Presentation and Nature of Operations (Details) product in Thousands, fleet_unit in Thousands, $ in Millions | 1 Months Ended | 9 Months Ended |
Jun. 30, 2014USD ($) | Jun. 30, 2016employeecustomerdistributioncenterfleet_unitproductcountrysupplier | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Proceeds from issuance initial public offering | $ | $ 500 | |
Number of suppliers | supplier | 1,300 | |
Number of customers served | customer | 27,500 | |
Number of products | product | 23 | |
Number of countries products distributed in (more than) | country | 80 | |
Number of distribution centers | distributioncenter | 170 | |
Number of units in private fleet | fleet_unit | 1 | |
Number of employees | employee | 2,550 |
Significant Accounting Polici36
Significant Accounting Policies and Recent Accounting Pronouncements (Details) | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)supplier | Jun. 30, 2015USD ($)supplier | Sep. 30, 2015USD ($) | |
Accounting Policies [Line Items] | |||||||
Concentration risk, number of suppliers | supplier | 2 | 1 | |||||
Threshold period past due for review of collectability | 90 days | ||||||
Goodwill impairment | $ 0 | ||||||
Minimum | Certain Nexeo Plaschem Customers | |||||||
Accounting Policies [Line Items] | |||||||
Threshold period for customers to remit payment | 30 days | ||||||
Maximum | Certain Nexeo Plaschem Customers | |||||||
Accounting Policies [Line Items] | |||||||
Threshold period for customers to remit payment | 9 months | ||||||
Successor | |||||||
Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 10.00% | ||||||
Accounts and notes receivable, net | $ 475,900,000 | $ 475,900,000 | |||||
Allowance for doubtful accounts | 100,000 | 100,000 | |||||
Debt expense | 100,000 | 100,000 | |||||
Goodwill | 693,400,000 | 693,400,000 | $ 0 | ||||
Finite-lived intangible assets | 216,200,000 | 216,200,000 | |||||
Goodwill impairment | 0 | ||||||
Net foreign currency transaction losses | (400,000) | ||||||
Customer rebates | 600,000 | ||||||
Customer rebates payable | 3,600,000 | 3,600,000 | |||||
Suppliers rebates | 500,000 | ||||||
Advertising expense | 0 | 0 | |||||
Research and development expense | 0 | 0 | |||||
Successor | Certain Nexeo Plaschem Customers | |||||||
Accounting Policies [Line Items] | |||||||
Accounts and notes receivable, net | 7,000,000 | $ 7,000,000 | |||||
Successor | Plants and buildings | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 5 years | ||||||
Successor | Plants and buildings | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 35 years | ||||||
Successor | Machinery and equipment | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 2 years | ||||||
Successor | Machinery and equipment | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 30 years | ||||||
Successor | Software and computer equipment | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 3 years | ||||||
Successor | Software and computer equipment | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 10 years | ||||||
Predecessor | |||||||
Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 13.00% | 13.00% | |||||
Accounts and notes receivable, net | 508,700,000 | ||||||
Allowance for doubtful accounts | 3,800,000 | ||||||
Debt expense | $ 100,000 | $ 400,000 | $ 1,200,000 | $ 300,000 | |||
Goodwill | 373,700,000 | ||||||
Finite-lived intangible assets | 111,400,000 | ||||||
Goodwill impairment | 0 | 0 | 0 | 0 | |||
Net foreign currency transaction losses | (1,300,000) | (300,000) | (1,600,000) | (900,000) | |||
Customer rebates | 1,100,000 | 1,100,000 | 4,000,000 | 3,900,000 | |||
Customer rebates payable | 4,000,000 | ||||||
Suppliers rebates | 1,800,000 | 3,400,000 | 6,500,000 | $ 11,200,000 | |||
Supplier rebates due to company | $ 2,400,000 | $ 2,400,000 | 3,400,000 | ||||
Advertising expense | 500,000 | 400,000 | 1,300,000 | 1,700,000 | |||
Research and development expense | $ 0 | $ 0 | $ 0 | $ 0 | |||
Predecessor | Certain Nexeo Plaschem Customers | |||||||
Accounting Policies [Line Items] | |||||||
Accounts and notes receivable, net | $ 4,500,000 | ||||||
Predecessor | Plants and buildings | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 5 years | ||||||
Predecessor | Plants and buildings | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 35 years | ||||||
Predecessor | Machinery and equipment | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 2 years | ||||||
Predecessor | Machinery and equipment | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 30 years | ||||||
Predecessor | Software and computer equipment | Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 3 years | ||||||
Predecessor | Software and computer equipment | Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Property, plant and equipment, useful life (years) | 10 years |
Significant Accounting Polici37
Significant Accounting Policies and Recent Accounting Pronouncements - Antidilutive Shares (Details) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2016shares | Jun. 30, 2016shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Warrants (in shares) | 50,025,000 | 50,025,000 |
Founders Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 12,476,250 | 12,476,250 |
Performance Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,547,500 | 1,547,500 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 25,012,500 | 25,012,500 |
Significant Accounting Polici38
Significant Accounting Policies and Recent Accounting Pronouncements - Recent Accounting Pronouncements Adopted (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred finance costs | $ 18.4 | $ 9.1 |
Long-term Debt | Predecessor | Accounting Standards Update 2015-03 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred finance costs | 9.1 | |
Other Noncurrent Assets | Predecessor | Accounting Standards Update 2015-03 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred finance costs | $ (9.1) |
Business Combination - Narrativ
Business Combination - Narrative (Details) | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 09, 2016USD ($)locationmerger | Jun. 30, 2016USD ($)day$ / sharesshares | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Jun. 11, 2014USD ($) |
Business Acquisition [Line Items] | ||||||||||
Transaction related costs | $ 18,300,000 | $ 28,500,000 | ||||||||
Warrants outstanding (in shares) | shares | 50,025,000 | 50,025,000 | 50,025,000 | 50,025,000 | ||||||
Nexeo Solutions Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of mergers | merger | 2 | |||||||||
Working capital adjustment period | 75 days | |||||||||
Payment by the Company to Selling Equityholders of percentage of net cash tax savings | 85.00% | |||||||||
Percentage of net cash tax savings retained by the Company | 15.00% | |||||||||
Contingent consideration - Fair value of TRA | $ 95,500,000 | $ 94,900,000 | ||||||||
Expected Benefit period of TRA | 20 years | |||||||||
Accounts receivable fair value adjustment | $ 4,200,000 | $ 4,200,000 | $ 4,200,000 | $ 4,200,000 | ||||||
Inventory fair value step up | 6,900,000 | 13,800,000 | ||||||||
Inventory sell-off period | 2 months | |||||||||
Number of real estate properties | location | 42 | |||||||||
Number of leased locations | location | 11 | |||||||||
Property, plant and equipment fair value adjustment | $ 107,300,000 | |||||||||
Expected tax deductible goodwill amount | $ 284,600,000 | 284,600,000 | 284,600,000 | 284,600,000 | ||||||
Net loss | 214,300,000 | $ 1,400,000 | ||||||||
Weighted average number of shares outstanding, basic and diluted (in shares) | shares | 76,746,168 | |||||||||
Nexeo Solutions Inc. | Minimum | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Undiscounted cash flows associated with the TRA liability | 190,000,000 | 190,000,000 | 190,000,000 | $ 190,000,000 | ||||||
Nexeo Solutions Inc. | Maximum | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Undiscounted cash flows associated with the TRA liability | $ 230,000,000 | $ 230,000,000 | $ 230,000,000 | $ 230,000,000 | ||||||
Nexeo Solutions Inc. | Selling Equityholders | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of trading days to meet condition | day | 20 | |||||||||
Number of consecutive trading days | 30 days | |||||||||
Share price (USD per share) | $ / shares | $ 15 | $ 15 | $ 15 | $ 15 | ||||||
Founders Shares | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | shares | 12,476,250 | 12,476,250 | ||||||||
Performance Shares | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | shares | 1,547,500 | 1,547,500 | ||||||||
Warrant | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | shares | 25,012,500 | 25,012,500 | ||||||||
Customer-related intangible | Nexeo Solutions Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Intangible asset, amortization period (years) | 12 years | 12 years | ||||||||
Finite-lived intangible assets | $ 197,000,000 | |||||||||
Trade names | Nexeo Solutions Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Intangible asset, amortization period (years) | 4 years | 4 years | ||||||||
Finite-lived intangible assets | $ 20,500,000 | |||||||||
Successor | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Transaction related costs | $ 15,900,000 | $ 18,000,000 | ||||||||
Transaction related costs | $ 25,300,000 | $ 25,300,000 | 25,300,000 | 25,300,000 | ||||||
Successor | Nexeo Solutions Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Transaction related costs | 15,900,000 | 18,000,000 | ||||||||
Predecessor | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Transaction related costs | $ 26,100,000 | $ 0 | $ 33,400,000 | $ 100,000 | ||||||
Predecessor | Nexeo Solutions Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Transaction related costs | $ 26,100,000 | $ 33,400,000 | ||||||||
Transaction related costs | $ 9,300,000 | $ 9,300,000 | $ 9,300,000 | $ 9,300,000 |
Business Combination - Purchase
Business Combination - Purchase Consideration (Details) - Nexeo Solutions Inc. - USD ($) $ in Millions | Jun. 30, 2016 | Jun. 09, 2016 |
Business Acquisition [Line Items] | ||
Cash | $ 424.9 | |
Less: cash acquired | (64.3) | |
Equity | 276.7 | |
Founder Shares transferred to Selling Equityholders | 30.2 | |
Contingent consideration - Fair value of Deferred Cash Consideration | $ 46.7 | 49.6 |
Contingent consideration - Fair value of TRA | $ 95.5 | 94.9 |
Total purchase consideration | 812 | |
Assumed liabilities | $ 774.3 |
Business Combination - Purcha41
Business Combination - Purchase Price Allocation (Details) - Nexeo Solutions Inc. $ in Millions | Jun. 09, 2016USD ($) |
Business Acquisition [Line Items] | |
Accounts receivable | $ 470 |
Inventory | 328.5 |
Other current assets | 24.5 |
Property, plant and equipment | 339.5 |
Other non-current assets | 3.3 |
Deferred tax assets | 1.2 |
Goodwill | 695.6 |
Total assets acquired | 2,080.1 |
Short-term borrowings and current portion of capital leases | 40.6 |
Accounts payable | 338 |
Other current liabilities | 52.7 |
Long-term portion of capital leases | 23 |
Long-term debt | 767.3 |
Deferred tax liability | 41.3 |
Other non-current liabilities | 5.2 |
Total liabilities assumed | 1,268.1 |
Net assets acquired | 812 |
Customer-related intangible | |
Business Acquisition [Line Items] | |
Finite-lived intangible assets | 197 |
Trade name | |
Business Acquisition [Line Items] | |
Finite-lived intangible assets | $ 20.5 |
Business Combination - Pro Form
Business Combination - Pro Forma Operating Results (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Business Combinations [Abstract] | ||||
Sales and operating revenues | $ 864.5 | $ 988.8 | $ 2,554.4 | $ 3,019.3 |
Operating income (loss) | 21.4 | 24.6 | 54.8 | (28.1) |
Net income (loss) from continuing operations | 6.6 | 13.8 | 14.9 | (35.7) |
Net income (loss) | $ 6.6 | $ 13.8 | $ 15 | $ (36.4) |
Basic and diluted net income (loss) per share (USD per share) | $ 0.09 | $ 0.18 | $ 0.19 | $ (0.47) |
Certain Balance Sheet Informa43
Certain Balance Sheet Information - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Jun. 08, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 |
Successor | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 38.6 | $ 0.2 | |||
Successor | China | RMB | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | 8.9 | ||||
Successor | Subsidiaries | Outside of the United States | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | 35.4 | ||||
Successor | Subsidiaries | Outside of the United States | Currencies other than U.S. dollar | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 33 | ||||
Predecessor | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 64.3 | 127.7 | $ 89 | $ 88.2 | |
Predecessor | China | RMB | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | 4.7 | ||||
Predecessor | Subsidiaries | Outside of the United States | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | 54.1 | ||||
Predecessor | Subsidiaries | Outside of the United States | Currencies other than U.S. dollar | |||||
Cash and Cash Equivalents [Line Items] | |||||
Cash and cash equivalents | $ 45 |
Certain Balance Sheet Informa44
Certain Balance Sheet Information - Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Successor | ||
Summary of Inventories | ||
Finished products | $ 317.2 | |
Supplies | 4.3 | |
Total | $ 321.5 | |
Predecessor | ||
Summary of Inventories | ||
Finished products | $ 320.9 | |
Supplies | 4.2 | |
Total | $ 325.1 |
Certain Balance Sheet Informa45
Certain Balance Sheet Information - Other Non-Current Assets (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Successor | ||
Other Non-current Assets [Line Items] | ||
Debt issuance costs of revolving credit facilities | $ 6.7 | |
Other | 3.2 | |
Total | $ 9.9 | |
Predecessor | ||
Other Non-current Assets [Line Items] | ||
Debt issuance costs of revolving credit facilities | $ 5.4 | |
Other | 3.4 | |
Total | $ 8.8 |
Certain Balance Sheet Informa46
Certain Balance Sheet Information - Narrative (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 09, 2016 | Jun. 11, 2014 | |
Line of Credit Facility [Line Items] | ||||||||
Debt issuance cost | $ 18.3 | $ 28.5 | ||||||
Amortization of debt discount | $ 0.6 | |||||||
New ABL Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt issuance cost | $ 6.8 | 6.8 | ||||||
New Term Loan Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt issuance cost | 18.5 | 18.5 | ||||||
Successor | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt issuance cost | 25.3 | 25.3 | ||||||
Successor | New ABL Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of financing costs | 0.1 | 0.1 | ||||||
Successor | New Term Loan Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of financing costs | 0.1 | 0.1 | ||||||
Predecessor | New ABL Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of financing costs | $ 0.6 | $ 0.8 | $ 2.1 | $ 2.3 | ||||
Predecessor | New Term Loan Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Amortization of financing costs | $ 0.8 | $ 1 | $ 3 | $ 3.1 | ||||
Business Acquisition | Predecessor | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt issuance cost | $ 9.3 | $ 9.3 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Equipment acquired under capital leases | $ 25.1 | $ 13.1 |
Successor | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 342.1 | |
Less accumulated depreciation | (3) | |
Property, plant and equipment, net | 339.1 | |
Successor | Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 55.7 | |
Successor | Plants and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 93.7 | |
Successor | Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 135.2 | |
Successor | Software and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 43.5 | |
Successor | Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 14 | |
Predecessor | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 369 | |
Less accumulated depreciation | (137.8) | |
Property, plant and equipment, net | 231.2 | |
Predecessor | Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 41.2 | |
Predecessor | Plants and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 78.3 | |
Predecessor | Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 167.8 | |
Predecessor | Software and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 68.8 | |
Predecessor | Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 12.9 |
Property, Plant and Equipment48
Property, Plant and Equipment - Depreciation Expense (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Depreciation | $ 3 | $ 3 | ||||
Predecessor | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Depreciation | $ 7.5 | $ 9.2 | $ 27.1 | $ 27.8 |
Property, Plant and Equipment49
Property, Plant and Equipment - Additional Information (Details) $ in Millions | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2016lease_renewal_option | May 31, 2015USD ($)tractor | Jun. 30, 2016USD ($)facility | |
Property, Plant and Equipment [Line Items] | |||
Number of facilities for sale | facility | 1 | ||
2015 Ryder Lease | Ryder | |||
Property, Plant and Equipment [Line Items] | |||
Number of rental units covered in lease (in tractors) | tractor | 202 | ||
Capital leases, term | 7 years | ||
Minimum annual payments | $ 5.5 | ||
New Facility Lease | |||
Property, Plant and Equipment [Line Items] | |||
Lease term, years | 15 years | ||
Future rental payments | $ 1.1 | ||
Annual rent escalation, percent | 2.50% | ||
Number of lease renewal options | lease_renewal_option | 3 | ||
Lease renewal term, years | 5 years |
Goodwill and Other Intangible50
Goodwill and Other Intangibles - Goodwill by Reportable Segment (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2016USD ($) | |
Successor | |
Goodwill | |
Balance at September 30, 2015 | $ 0 |
Business Combination | 695.6 |
Foreign currency translation | (2.2) |
Balance at June 8, 2016 | 693.4 |
Successor | Chemicals | |
Goodwill | |
Balance at September 30, 2015 | 0 |
Business Combination | 335.3 |
Foreign currency translation | (0.1) |
Balance at June 8, 2016 | 335.2 |
Successor | Plastics | |
Goodwill | |
Balance at September 30, 2015 | 0 |
Business Combination | 295 |
Foreign currency translation | (2.1) |
Balance at June 8, 2016 | 292.9 |
Successor | Other | |
Goodwill | |
Balance at September 30, 2015 | 0 |
Business Combination | 65.3 |
Foreign currency translation | 0 |
Balance at June 8, 2016 | 65.3 |
Predecessor | |
Goodwill | |
Balance at September 30, 2015 | 373.7 |
Predecessor | Chemicals | |
Goodwill | |
Balance at September 30, 2015 | 269.7 |
Predecessor | Plastics | |
Goodwill | |
Balance at September 30, 2015 | 91.5 |
Predecessor | Other | |
Goodwill | |
Balance at September 30, 2015 | $ 12.5 |
Goodwill and Other Intangible51
Goodwill and Other Intangibles - Definite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Successor | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 217.5 | |
Accumulated Amortization | (1.3) | |
Net Carrying Amount | $ 216.2 | |
Successor | Customer-related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 12 years | |
Gross Carrying Amount | $ 197 | |
Accumulated Amortization | (1) | |
Net Carrying Amount | $ 196 | |
Successor | Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 4 years | |
Gross Carrying Amount | $ 20.5 | |
Accumulated Amortization | (0.3) | |
Net Carrying Amount | $ 20.2 | |
Predecessor | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 156.6 | |
Accumulated Amortization | (45.2) | |
Net Carrying Amount | 111.4 | |
Predecessor | Customer-related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 121.3 | |
Accumulated Amortization | (33.6) | |
Net Carrying Amount | $ 87.7 | |
Predecessor | Customer-related | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 5 years | |
Predecessor | Customer-related | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 14 years | |
Predecessor | Supplier-related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 10 years | |
Gross Carrying Amount | $ 17 | |
Accumulated Amortization | (2.6) | |
Net Carrying Amount | 14.4 | |
Predecessor | Leasehold interest | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2.1 | |
Accumulated Amortization | (1.3) | |
Net Carrying Amount | $ 0.8 | |
Predecessor | Leasehold interest | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 1 year | |
Predecessor | Leasehold interest | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 20 years | |
Predecessor | Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 10 | |
Accumulated Amortization | (4.5) | |
Net Carrying Amount | $ 5.5 | |
Predecessor | Non-compete agreements | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 3 years | |
Predecessor | Non-compete agreements | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 5 years | |
Predecessor | Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6.2 | |
Accumulated Amortization | (3.2) | |
Net Carrying Amount | $ 3 | |
Predecessor | Trademarks and trade names | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 2 years | |
Predecessor | Trademarks and trade names | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life (years) | 6 years |
Goodwill and Other Intangible52
Goodwill and Other Intangibles - Amortization Expense (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Expected amortization expense, 2017 | $ 21.5 | $ 21.5 | ||||
Expected amortization expense, 2018 | 21.5 | 21.5 | ||||
Expected amortization expense, 2019 | 21.5 | 21.5 | ||||
Expected amortization expense, 2020 | 19.9 | 19.9 | ||||
Expected amortization expense, 2021 | 16.4 | 16.4 | ||||
Successor | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization expense | $ 1.3 | $ 1.3 | ||||
Predecessor | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization expense | $ 2.8 | $ 3.9 | $ 10.6 | $ 11.8 |
Debt - Summary of Short-Term De
Debt - Summary of Short-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Short-term Debt [Line Items] | ||
Current portion of long-term debt and capital lease obligations | $ 9 | $ 37.5 |
Successor | ||
Short-term Debt [Line Items] | ||
Short-term borrowings | 41 | |
Current portion of long-term debt and capital lease obligations | 9 | |
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net | $ 50 | |
Predecessor | ||
Short-term Debt [Line Items] | ||
Short-term borrowings | 34.9 | |
Current portion of long-term debt and capital lease obligations | 37.5 | |
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net | $ 72.4 |
Debt - Long-Term Debt Outstandi
Debt - Long-Term Debt Outstanding (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Long-term debt | ||
Total long-term debt | $ 811.3 | $ 904.6 |
Less: unamortized debt discount | (3.3) | (3.6) |
Less: debt issuance costs | (18.4) | (9.1) |
Less: current portion of long-term debt and capital lease obligations | (9) | (37.5) |
Long-term debt and capital lease obligations, less current portion, net | 780.6 | 854.4 |
Predecessor ABL Facility | ||
Long-term debt | ||
Total long-term debt | 0 | 85.5 |
Predecessor Term Loan Facility | ||
Long-term debt | ||
Total long-term debt | 0 | 647.2 |
Less: unamortized debt discount | (1.9) | |
Notes | ||
Long-term debt | ||
Total long-term debt | 0 | 159.2 |
Capital lease obligations | ||
Long-term debt | ||
Total long-term debt | 25.2 | 12.7 |
New ABL Facility | ||
Long-term debt | ||
Total long-term debt | 131.1 | 0 |
New Term Loan Facility | ||
Long-term debt | ||
Total long-term debt | 655 | $ 0 |
Less: unamortized debt discount | (3.3) | |
Successor | ||
Long-term debt | ||
Less: current portion of long-term debt and capital lease obligations | (9) | |
Long-term debt and capital lease obligations, less current portion, net | 780.6 | |
Successor | New Term Loan Facility | ||
Long-term debt | ||
Less: unamortized debt discount | $ (3.3) |
Debt - Short-term Borrowings As
Debt - Short-term Borrowings Associated with Operations in China (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Successor | Nexeo Plaschem | ||
Debt Instrument [Line Items] | ||
Facility Limit | $ 51.4 | |
Outstanding Borrowings Balance | 41 | |
Remaining Availability | 1.9 | |
Successor | Nexeo Plaschem | Bank of America - China | ||
Debt Instrument [Line Items] | ||
Facility Limit | 28.8 | |
Outstanding Borrowings Balance | $ 27.2 | |
Weighted Average Interest Rate on Borrowings | 3.70% | |
Remaining Availability | $ 1.6 | |
Successor | Nexeo Plaschem | Bank of Communications - China | ||
Debt Instrument [Line Items] | ||
Facility Limit | 22.6 | |
Outstanding Borrowings Balance | $ 13.8 | |
Weighted Average Interest Rate on Borrowings | 5.30% | |
Remaining Availability | $ 0.3 | |
Successor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | 8.5 | |
Successor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | Bank of America - China | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | 0 | |
Successor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | Bank of Communications - China | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | $ 8.5 | |
Predecessor | Nexeo Plaschem | ||
Debt Instrument [Line Items] | ||
Facility Limit | $ 47.4 | |
Outstanding Borrowings Balance | 34.9 | |
Remaining Availability | 5.4 | |
Predecessor | Nexeo Plaschem | Bank of America - China | ||
Debt Instrument [Line Items] | ||
Facility Limit | 23.8 | |
Outstanding Borrowings Balance | $ 23 | |
Weighted Average Interest Rate on Borrowings | 3.50% | |
Remaining Availability | $ 0.8 | |
Predecessor | Nexeo Plaschem | Bank of Communications - China | ||
Debt Instrument [Line Items] | ||
Facility Limit | 23.6 | |
Outstanding Borrowings Balance | $ 11.9 | |
Weighted Average Interest Rate on Borrowings | 6.10% | |
Remaining Availability | $ 4.6 | |
Predecessor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | 7.1 | |
Predecessor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | Bank of America - China | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | 0 | |
Predecessor | Outstanding LOC and Bankers’ Acceptance Bills | Nexeo Plaschem | Bank of Communications - China | ||
Debt Instrument [Line Items] | ||
Outstanding LOC and Bankers’ Acceptance Bills | 7.1 | |
Asset Based Loan [Member] | Nexeo Plaschem | Bank of America - China | ||
Debt Instrument [Line Items] | ||
Line of credit facility collateral coverage | 110.00% | |
Asset Based Loan [Member] | Nexeo Plaschem | Bank of Communications - China | ||
Debt Instrument [Line Items] | ||
Line of credit facility collateral coverage | 100.00% | |
Asset Based Loan [Member] | Predecessor | ||
Debt Instrument [Line Items] | ||
Remaining Availability | $ 321.4 |
Debt - Short Term Borrowings Na
Debt - Short Term Borrowings Narrative (Details) - Nexeo Plaschem - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Short-term Debt [Line Items] | ||
Pledged receivables | $ 0 | $ 0 |
Notes Receivable | ||
Short-term Debt [Line Items] | ||
Pledged receivables | 0 | 0 |
Bankers Acceptance | ||
Short-term Debt [Line Items] | ||
Pledged receivables | 0 | 0 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 0 | $ 0 |
Debt - Long-Term Debt Narrative
Debt - Long-Term Debt Narrative (Details) | Jun. 09, 2016USD ($)tranche | Jun. 30, 2016USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 11, 2014USD ($) |
Long-term debt | |||||||||||
Eligible accounts receivable for monthly credit | 90.00% | ||||||||||
Eligible inventory for monthly credit | 85.00% | ||||||||||
Cash and cash equivalents held in blocked accounts | 100.00% | ||||||||||
Debt issuance cost | $ 18,300,000 | $ 28,500,000 | |||||||||
Debt instrument, unamortized discount | $ 3,300,000 | $ 3,300,000 | $ 3,300,000 | $ 3,600,000 | |||||||
Long-term debt | 811,300,000 | 811,300,000 | 811,300,000 | 904,600,000 | |||||||
Ryder | 2015 Ryder Lease | |||||||||||
Long-term debt | |||||||||||
Capital lease, future annual executory costs | 2,100,000 | 2,100,000 | 2,100,000 | ||||||||
Capital lease, aggregate executory costs | 13,200,000 | 13,200,000 | 13,200,000 | ||||||||
Capital lease, aggregate future interest payments | 4,700,000 | 4,700,000 | 4,700,000 | ||||||||
Ryder | 2015 Ryder Lease | Minimum | |||||||||||
Long-term debt | |||||||||||
Annual interest payments | 300,000 | 300,000 | 300,000 | ||||||||
Ryder | 2015 Ryder Lease | Maximum | |||||||||||
Long-term debt | |||||||||||
Annual interest payments | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||
Predecessor ABL Facility | |||||||||||
Long-term debt | |||||||||||
Long-term debt | 0 | 0 | 0 | 85,500,000 | |||||||
Predecessor Term Loan Facility | |||||||||||
Long-term debt | |||||||||||
Debt instrument, unamortized discount | 1,900,000 | ||||||||||
Long-term debt | 0 | 0 | 0 | 647,200,000 | |||||||
Notes | |||||||||||
Long-term debt | |||||||||||
Repurchase amount | $ 9,500,000 | ||||||||||
Cash payments for repurchase of debt | 8,700,000 | ||||||||||
Gain on repurchase of debt instrument | $ 600,000 | ||||||||||
Long-term debt | 0 | 0 | 0 | 159,200,000 | |||||||
Capital lease obligations | |||||||||||
Long-term debt | |||||||||||
Long-term debt | 25,200,000 | 25,200,000 | 25,200,000 | 12,700,000 | |||||||
New ABL Facility | |||||||||||
Long-term debt | |||||||||||
Line of credit facility excess availability | $ 40,250,000 | $ 40,250,000 | $ 40,250,000 | ||||||||
Line of credit facility, capacity | 10.00% | ||||||||||
Fixed charge coverage ratio | 1 | 1 | 1 | ||||||||
Weighted average rate of interest | 2.60% | 2.60% | 2.60% | ||||||||
Outstanding letters of credit | $ 73,700,000 | $ 73,700,000 | $ 73,700,000 | ||||||||
Debt issuance cost | 6,800,000 | 6,800,000 | 6,800,000 | ||||||||
Long-term debt | $ 131,100,000 | 131,100,000 | 131,100,000 | $ 0 | |||||||
New ABL Facility | Minimum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 0.25% | ||||||||||
Line of credit facility, commitment fee | 0.25% | ||||||||||
New ABL Facility | Maximum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 0.75% | ||||||||||
Line of credit facility, commitment fee | 0.375% | ||||||||||
New ABL Facility | LIBOR or Canadian BA Rate | Minimum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 1.25% | ||||||||||
New ABL Facility | LIBOR or Canadian BA Rate | Maximum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 1.75% | ||||||||||
New ABL Facility | US Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 505,000,000 | ||||||||||
New ABL Facility | US Tranche | Swingline Loan | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 50,000,000 | ||||||||||
New ABL Facility | Canadian Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 40,000,000 | ||||||||||
New ABL Facility | Canadian Tranche | Swingline Loan | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 10,000,000 | ||||||||||
New ABL Facility | FILO Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 30,000,000 | ||||||||||
Remaining availability | $ 0 | 0 | 0 | ||||||||
New ABL Facility | FILO Tranche | Minimum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 1.00% | ||||||||||
New ABL Facility | FILO Tranche | Maximum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 1.50% | ||||||||||
New ABL Facility | FILO Tranche | LIBOR | Minimum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 2.00% | ||||||||||
New ABL Facility | FILO Tranche | LIBOR | Maximum | |||||||||||
Long-term debt | |||||||||||
Basis spread | 2.50% | ||||||||||
New ABL Facility | U.S. and Canadian Tranches | |||||||||||
Long-term debt | |||||||||||
Remaining availability | $ 125,200,000 | 125,200,000 | 125,200,000 | ||||||||
New Term Loan Facility | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 655,000,000 | ||||||||||
Line of credit facility, increase in maximum borrowing capacity | $ 175,000,000 | ||||||||||
Basis spread | 4.25% | ||||||||||
Debt issuance cost | $ 18,500,000 | $ 18,500,000 | $ 18,500,000 | ||||||||
Net leverage ratio of available amount | 4.1 | ||||||||||
Interest rate for term loan facility | 1.00% | 5.25% | 5.25% | 5.25% | |||||||
Percentage of aggregate annual amount to be paid every quarter | 1.00% | ||||||||||
Proceeds from lines of credit | $ 651,700,000 | ||||||||||
Debt instrument, unamortized discount | 3,300,000 | $ 3,300,000 | $ 3,300,000 | ||||||||
Long-term debt | $ 655,000,000 | 655,000,000 | 655,000,000 | $ 0 | |||||||
New Term Loan Facility | LIBOR | |||||||||||
Long-term debt | |||||||||||
Basis spread | 1.00% | ||||||||||
New Term Loan Facility | Federal Funds Effective Rate | |||||||||||
Long-term debt | |||||||||||
Basis spread | 0.50% | ||||||||||
New Term Loan Facility | One Month London Interbank Offered Rate | |||||||||||
Long-term debt | |||||||||||
Basis spread | 3.25% | ||||||||||
Letter of Credit | US Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 200,000,000 | 200,000,000 | 200,000,000 | ||||||||
Letter of Credit | Canadian Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||
Letter of Credit | FILO Tranche | |||||||||||
Long-term debt | |||||||||||
Line of credit facility, maximum borrowing capacity | 30,000,000 | 30,000,000 | 30,000,000 | ||||||||
Successor | |||||||||||
Long-term debt | |||||||||||
Debt issuance cost | 25,300,000 | 25,300,000 | 25,300,000 | ||||||||
Successor | New ABL Facility | |||||||||||
Long-term debt | |||||||||||
Amount as collateral to the banking institution | 601,100,000 | 601,100,000 | 601,100,000 | ||||||||
Amortization of financing costs | 100,000 | 100,000 | |||||||||
Successor | New Term Loan Facility | |||||||||||
Long-term debt | |||||||||||
Debt instrument, unamortized discount | 3,300,000 | 3,300,000 | 3,300,000 | ||||||||
Amortization of financing costs | 100,000 | 100,000 | |||||||||
Predecessor | Predecessor ABL Facility | |||||||||||
Long-term debt | |||||||||||
Weighted average rate of interest | 1.80% | ||||||||||
Outstanding letters of credit | $ 67,400,000 | ||||||||||
Remaining availability | $ 321,400,000 | ||||||||||
Debt issuance cost | (3,300,000) | (3,300,000) | (3,300,000) | ||||||||
Terminated line of credit amount | $ 540,000,000 | ||||||||||
Line of credit facility outstanding amount | 0 | ||||||||||
Predecessor | Predecessor Term Loan Facility | |||||||||||
Long-term debt | |||||||||||
Debt issuance cost | (4,600,000) | (4,600,000) | (4,600,000) | ||||||||
Terminated line of credit amount | $ 617,500,000 | ||||||||||
Number of tranches | tranche | 3 | ||||||||||
Predecessor | Notes | |||||||||||
Long-term debt | |||||||||||
Debt issuance cost | $ (1,400,000) | $ (1,400,000) | $ (1,400,000) | ||||||||
Repurchase amount | $ 149,700,000 | ||||||||||
Redemption price | 100.00% | ||||||||||
Predecessor | New ABL Facility | |||||||||||
Long-term debt | |||||||||||
Amortization of financing costs | $ 600,000 | $ 800,000 | $ 2,100,000 | $ 2,300,000 | |||||||
Predecessor | New Term Loan Facility | |||||||||||
Long-term debt | |||||||||||
Amortization of financing costs | $ 800,000 | $ 1,000,000 | $ 3,000,000 | $ 3,100,000 |
Derivatives (Details)
Derivatives (Details) $ in Millions | 1 Months Ended |
Jun. 30, 2016USD ($)derivative | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Early termination penalty | $ | $ 0.3 |
Number of new derivatives | derivative | 0 |
Derivatives - Gain (Loss) of In
Derivatives - Gain (Loss) of Interest Rate Swaps (Details) - Predecessor - Interest Rate Swap - Designated as Hedging Instrument - Cash Flow Hedging - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended |
Jun. 08, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2015 | |
Other comprehensive income | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized gain | $ 0.1 | $ 0 | $ 0.3 | $ 0.1 |
Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized loss | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.4 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Jun. 09, 2016 | Jun. 30, 2016 | Sep. 30, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Early termination penalty | $ 0.3 | |||
Level 2 | Recurring | Interest Rate Swap | Accrued Expenses and Other Liabilities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Fair value of interest rate swaps | $ 0.4 | |||
Level 2 | Recurring | Interest Rate Swap | Other Non Current Liability | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Fair value of interest rate swaps | 0.1 | |||
Level 3 | Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Estimated fair value of notes | 149.2 | |||
Accrued interest | $ 1.1 | |||
Nexeo Solutions Inc. | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Contingent consideration - Fair value of Deferred Cash Consideration | $ 46.7 | $ 49.6 | ||
Contingent consideration - Fair value of TRA | $ 95.5 | $ 94.9 |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2016 |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant | 3,095,000 | 3,095,000 | |
PSU's granted (in units) | 1,547,500 | ||
Performance period | 3 years | ||
Stockholder return | 35.00% | 35.00% | |
Entitled percentage of common shares to recipient with a 35% stockholder return | 100.00% | 100.00% | |
Minimum stockholder return for awards to be awarded | 15.00% | 15.00% | |
Volatility rate | 35.00% | ||
Expected dividend yield | $ 0 | ||
Expected term | 3 years | ||
Risk-free interest rate | 0.92% | ||
Performance Shares | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Entitled percentage of common shares to recipient | 0.00% | 0.00% | |
Performance Shares | Minimum | Negative 15 to 0 Return | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Entitled percentage of common shares to recipient | 50.00% | 50.00% | |
Stockholder return | (15.00%) | (15.00%) | |
Performance Shares | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Entitled percentage of common shares to recipient | 200.00% | 200.00% | |
Performance Shares | Maximum | Negative 15 to 0 Return | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Entitled percentage of common shares to recipient | 70.00% | 70.00% | |
Stockholder return | 0.00% | 0.00% | |
2016 LTIP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Effective period of plan | 10 years | ||
Number of shares available for grant | 9,000,000 | ||
Maximum number of shares per calendar year employees are allowed to receive (in shares) | 1,000,000 | 1,000,000 | |
Maximum value of award employee may receive per calendar year | $ 12,000,000 | $ 12,000,000 | |
2016 LTIP | Non-Employee Board Member | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum value of award employee may receive per calendar year | $ 1,000,000 | $ 1,000,000 | |
2016 LTIP | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
PSU's granted (in units) | 1,547,500 |
Share-based Compensation - PSU
Share-based Compensation - PSU Activity (Details) $ / shares in Units, $ in Millions | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares |
Performance Shares | |||
Non-Vested Equity Plan Units | |||
Outstanding at the beginning of the period (in units) | shares | 0 | ||
Granted (in units) | shares | 1,547,500 | ||
Vested (in units) | shares | 0 | ||
Forfeited (in units) | shares | 0 | ||
Outstanding at the end of the period (in units) | shares | 1,547,500 | 1,547,500 | 1,547,500 |
Non-Vested Equity Plan, Average Grant Date Fair Value Per Unit | |||
Outstanding at the beginning of the period (in usd per unit) | $ / shares | $ 0 | ||
Granted (in usd per unit) | $ / shares | 9.13 | ||
Vested (in usd per unit) | $ / shares | 0 | ||
Forfeited (in usd per unit) | $ / shares | 0 | ||
Outstanding at the end of the period (in usd per unit) | $ / shares | $ 9.13 | $ 9.13 | $ 9.13 |
Weighted average remaining contractual term | 3 years | ||
Unrecognized compensation cost related to non-vested performance share units | $ | $ 13.2 | $ 13.2 | $ 13.2 |
Selling, general and administrative expenses | |||
Non-Vested Equity Plan, Average Grant Date Fair Value Per Unit | |||
Compensation cost | $ | $ 0.3 | $ 0.3 |
Share-based Compensation - Defi
Share-based Compensation - Defined Contribution Plans (Details) | 9 Months Ended |
Jun. 30, 2016 | |
Defined Contribution Plan Disclosure [Line Items] | |
Company matching contribution of employee contributions up to 4% (as a percent) | 100.00% |
Portion of employee contribution eligible for company match, percentage of pay | 4.00% |
Service of one to 10 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Company contribution percentage based on years of service | 1.50% |
Service of 11 to 20 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Company contribution percentage based on years of service | 3.00% |
Service of 21 years and over | |
Defined Contribution Plan Disclosure [Line Items] | |
Company contribution percentage based on years of service | 4.50% |
Service period | 21 years |
Minimum | Service of one to 10 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Service period | 1 year |
Minimum | Service of 11 to 20 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Service period | 11 years |
Maximum | Service of one to 10 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Service period | 10 years |
Maximum | Service of 11 to 20 years | |
Defined Contribution Plan Disclosure [Line Items] | |
Service period | 20 years |
Share-based Compensation - Cost
Share-based Compensation - Cost of Defined Contribution Plan (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | $ 0.6 | $ 0.6 | ||||
Successor | Cost of Sales and Operating Expense | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | 0.2 | 0.2 | ||||
Successor | Selling, general and administrative expenses | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | $ 0.4 | $ 0.4 | ||||
Predecessor | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | $ 2.3 | $ 2.6 | $ 7.5 | $ 8.1 | ||
Predecessor | Cost of Sales and Operating Expense | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | 0.8 | 1 | 2.7 | 3 | ||
Predecessor | Selling, general and administrative expenses | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Contributions | $ 1.5 | $ 1.6 | $ 4.8 | $ 5.1 |
Share-based Compensation - Rest
Share-based Compensation - Restricted Equity Plan Narrative (Details) $ in Millions | Jun. 08, 2016shares | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)vesting_installmentshares |
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares vested in period (in shares) | shares | 0 | ||||
Series B Membership Interest | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares vested in period (in shares) | shares | 368,136 | ||||
Predecessor | Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Recognized expense related to Performance-Based Units | $ 2 | ||||
Predecessor | Series B Membership Interest | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of units vesting by term of employment | 50.00% | ||||
Percentage of units vesting annually | 20.00% | ||||
Vesting period | 5 years | ||||
Percentage of units vesting by performance basis | 50.00% | ||||
Number of twelve-month vesting periods | vesting_installment | 5 | ||||
Selling, general and administrative expenses | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation cost | $ 0.3 | $ 0.3 | |||
Selling, general and administrative expenses | Predecessor | Time Based Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation cost | $ 0.1 | $ 0.7 |
Share-based Compensation - Re66
Share-based Compensation - Restricted Equity Plan Activity (Details) - Predecessor - Restricted Equity Units | 8 Months Ended |
Jun. 08, 2016$ / sharesshares | |
Equity Plan activity, units | |
Outstanding at beginning of period (in units) | shares | 38,466,624 |
Granted (in units) | shares | 1,028,571 |
Forfeited/Canceled (in units) | shares | (1,597,000) |
Outstanding at end of period (in units) | shares | 37,898,195 |
Average Grant Date Fair Value Per Unit | |
Outstanding at beginning of period (in usd per unit) | $ / shares | $ 0.28 |
Granted (in usd per unit) | $ / shares | 0.16 |
Forfeited/Canceled (in usd per unit) | $ / shares | 0.25 |
Outstanding at end of period (in usd per unit) | $ / shares | $ 0.22 |
Non-Vested Equity Plan Units | |
Outstanding at the beginning of the period (in units) | shares | 23,116,625 |
Granted (in units) | shares | 1,028,571 |
Vested (in units) | shares | (19,871,696) |
Forfeited (in units) | shares | (1,345,000) |
Outstanding at the end of the period (in units) | shares | 2,928,500 |
Non-Vested Equity Plan, Average Grant Date Fair Value Per Unit | |
Outstanding at the beginning of the period (in usd per unit) | $ / shares | $ 0.26 |
Granted (in usd per unit) | $ / shares | 0.16 |
Vested (in usd per unit) | $ / shares | 0.16 |
Forfeited (in usd per unit) | $ / shares | 0.23 |
Outstanding at the end of the period (in usd per unit) | $ / shares | $ 0.26 |
Equity (Details)
Equity (Details) | 9 Months Ended | |
Jun. 30, 2016vote$ / sharesshares | Jun. 08, 2016shares | |
Equity [Abstract] | ||
Shares authorized (in shares) | 300,000,000 | |
Number of votes per each share | vote | 1 | |
Shares issued (in shares) | 89,222,418 | 62,531,250 |
Shares outstanding (in shares) | 89,222,418 | 62,531,250 |
Common stock to be purchased through warrants (in shares) | 25,012,500 | |
Strike price of warrants (USD per share) | $ / shares | $ 11.50 |
Equity - Narrative 2 (Details)
Equity - Narrative 2 (Details) $ / shares in Units, $ in Millions | Jun. 30, 2016day$ / sharesshares | Jun. 09, 2016USD ($)$ / sharesshares | Jun. 11, 2014USD ($)shares | Jun. 08, 2016shares | Mar. 31, 2016USD ($)shares |
Class of Stock [Line Items] | |||||
Shares issued (in shares) | 89,222,418 | 62,531,250 | |||
Shares outstanding (in shares) | 89,222,418 | 62,531,250 | |||
Shares issued (in shares) | 50,025,000 | 50,025,000 | |||
Temporary equity, shares outstanding (in shares) | 47,512,924 | ||||
Temporary equity value | $ | $ 475.2 | ||||
Reclassifications of temporary to permanent equity (in shares) | 47,512,924 | ||||
Stock redeemed (in shares) | 29,793,320 | ||||
Temporary equity, redemption price (USD per share) | $ / shares | $ 10.02 | ||||
New shares issued (in shares) | 2,240,000 | ||||
Shares issued for advisory services and deferred underwriting fees | $ | $ 30.8 | ||||
Debt issuance cost | $ | $ 18.3 | $ 28.5 | |||
Warrants called (in shares) | 22,400,000 | ||||
Founders Shares | |||||
Class of Stock [Line Items] | |||||
Shares issued (in shares) | 12,506,250 | ||||
Shares transferred to Selling Equityholders (in shares) | 3,554,240 | ||||
Founder Shares transferred to Selling Equityholders | $ | $ 30.2 | ||||
Percentage of shares subject to condition one | 50.00% | ||||
Sale price equals or exceeds, condition one (USD per share) | $ / shares | $ 12.50 | ||||
Number of trading days to meet condition one | day | 20 | ||||
Number of consecutive trading days | 30 days | ||||
Percentage of shares subject to condition two | 50.00% | ||||
Sale price equals or exceeds, condition two (USD per share) | $ / shares | $ 15 | ||||
Directors Founders Shares | |||||
Class of Stock [Line Items] | |||||
Shares in lieu of payment (in shares) | 30,000 | ||||
IPO | |||||
Class of Stock [Line Items] | |||||
Number of IPO shares (in shares) | 50,025,000 | ||||
Selling Equityholders | |||||
Class of Stock [Line Items] | |||||
New shares issued (in shares) | 27,673,604 | ||||
Shares issued (USD per share) | $ / shares | $ 10 | ||||
Shares in lieu of payment (in shares) | 3,078,578 | ||||
Selling Equityholders | Private Placement | |||||
Class of Stock [Line Items] | |||||
New shares issued (in shares) | 23,492,306 | ||||
Shares issued (USD per share) | $ / shares | $ 10 |
Equity - Narrative 3 (Details)
Equity - Narrative 3 (Details) | Jun. 30, 2016shares |
Equity [Abstract] | |
Preferred shares authorized (in shares) | 1,000,000 |
Preferred shares issued (in shares) | 0 |
Preferred shares outstanding (in shares) | 0 |
Equity - Narrative 4 (Details)
Equity - Narrative 4 (Details) - USD ($) $ in Millions | Jun. 09, 2016 | Jun. 11, 2014 |
Equity [Abstract] | ||
Debt issuance cost | $ 18.3 | $ 28.5 |
Deferred underwriting fees | $ 27.5 | |
Underwriter fee paid | 3.66% | 1.84% |
Underwriting expense | $ 9.2 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Diluted: | ||
Incorporation period of shares related to business combination | 22 days | |
Successor | ||
Basic: | ||
Net loss | $ (15.5) | $ (17.1) |
Weighted average number of common shares outstanding during the period (in shares) | 34,072,056 | 21,241,897 |
Net loss per common share - basic (USD per share) | $ (0.45) | $ (0.81) |
Diluted: | ||
Net loss | $ (15.5) | $ (17.1) |
Weighted average number of common shares outstanding during the period (in shares) | 34,072,056 | 21,241,897 |
Incremental common shares attributable to outstanding dilutive options and unvested restricted shares (in shares) | 0 | 0 |
Denominator for diluted earnings per common share (in shares) | 34,072,056 | 21,241,897 |
Net loss per common share - diluted (USD per share) | $ (0.45) | $ (0.81) |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2016shares | Jun. 30, 2016shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Warrants (in shares) | 50,025,000 | 50,025,000 |
Founders Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 12,476,250 | 12,476,250 |
Performance Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,547,500 | 1,547,500 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 25,012,500 | 25,012,500 |
Commitments, Contingencies an73
Commitments, Contingencies and Litigation (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended |
Jul. 31, 2014 | Jun. 30, 2016 | |
Ashland | ||
Environmental Remediation | ||
Total indemnification obligation under the purchase agreement (other than for liabilities relating to taxes or any retained indebtedness) | $ 139.5 | |
Company responsible for aggregate expenses prior to the receipt of any indemnification from Ashland | 5 | |
Ashland | Other Retained Remediation Liabilities | ||
Environmental Remediation | ||
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant individual claim threshold | 0.2 | |
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant aggregate claim deductible | 5 | |
Ashland | Retained Remediation Liabilities | ||
Environmental Remediation | ||
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant ceiling amount | 75 | |
Ashland | Breach of representation, warranty or covenant, related to environmental matters | ||
Environmental Remediation | ||
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant individual claim threshold | 0.2 | |
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant aggregate claim deductible | 18.6 | |
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant ceiling amount | $ 93 | |
Pending Litigation | Ashland v.s. Nexeo | Other Retained Remediation Liabilities | ||
Environmental Remediation | ||
Remediation indemnification obligation resulting from breach of any representation, warranty or covenant aggregate claim deductible | $ 5 |
Related Party Transactions - Ot
Related Party Transactions - Other TPG Agreements (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2015 | |
Successor | TPG | |||||||
Related Party Transaction [Line Items] | |||||||
Fee paid in connection with the Business Combination | $ 0 | $ 0 | |||||
Amount due from TPG related entities | 400 | 400 | |||||
Expenses from transactions with related party | 0 | 0 | |||||
Predecessor | TPG | |||||||
Related Party Transaction [Line Items] | |||||||
Fee paid in connection with the Business Combination | $ 9,900 | $ 0 | $ 9,900 | $ 0 | |||
Amount due from TPG related entities | $ 300 | ||||||
Expenses from transactions with related party | $ 200 | $ 200 | $ 400 | $ 700 | |||
Predecessor | Steven B. Schwarzwaelder, a member of the board of directors | |||||||
Related Party Transaction [Line Items] | |||||||
Amount deducted to calculate quarterly management fee | $ 175 | ||||||
Expenses from transactions with related party | $ 100 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) | Jun. 09, 2016 | Jun. 06, 2016 | May 23, 2016 | Mar. 31, 2016 | Jan. 05, 2016 | Mar. 26, 2015 | Jun. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jan. 13, 2016 |
Related Party Transaction [Line Items] | ||||||||||
Exercise price (USD per share) | $ 11.50 | $ 11.50 | ||||||||
PWPI and PWIMF Commitment Agreements | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stock repurchased (in shares) | 3,000,000 | |||||||||
FPA Commitment Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Unredeemable shares per agreement (in shares) | 2,094,727 | |||||||||
Administrative Service Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party amounts forgiven | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | ||||||
Letter Agreement for Chairman’s Services | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party costs | 200,000 | |||||||||
Sponsor | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party, line of credit available | $ 750,000 | $ 750,000 | ||||||||
Stated interest rate | 5.00% | |||||||||
Due to related party | 200,000 | 200,000 | ||||||||
Repayments of related party debt | $ 200,000 | |||||||||
Sponsor | January 2016 Convertible Note | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stated interest rate | 5.00% | |||||||||
Due to related party | $ 400,000 | |||||||||
Repayments of related party debt | 400,000 | |||||||||
Convertible number of shares | 0.5 | |||||||||
Conversion price (USD per share) | $ 0.50 | |||||||||
Exercise price for half a share (USD per half share) | 5.75 | |||||||||
Exercise price (USD per share) | $ 11.50 | |||||||||
Sponsor | March 2015 Convertible Note | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stated interest rate | 5.00% | |||||||||
Due to related party | $ 300,000 | |||||||||
Repayments of related party debt | $ 300,000 | |||||||||
Convertible number of shares | 0.5 | |||||||||
Conversion price (USD per share) | $ 0.60 | |||||||||
Exercise price for half a share (USD per half share) | 5.75 | |||||||||
Exercise price (USD per share) | $ 11.50 | |||||||||
Interest expense | $ 14,000 | |||||||||
TPG | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership interest by related party | 35.00% | |||||||||
Due to related party pursuant to contingent consideration obligations | $ 142,200,000 | $ 142,200,000 | ||||||||
Private Placement | FPA Subscription Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Number of shares issued in transaction (in shares) | 18,260,000 | |||||||||
Private Placement | Sponsor Subscription Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Number of shares issued in transaction (in shares) | 1,000,000 | |||||||||
Sale of stock, price per share (USD per share) | $ 10 | |||||||||
Directors Founders Shares | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Shares in lieu of payment (in shares) | 10,000 |
Related Party Transactions - Re
Related Party Transactions - Related Party Activity (Details) - TPG - USD ($) | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | ||||||
Related Party Transaction [Line Items] | ||||||
Sales to TPG related entities | $ 300,000 | $ 300,000 | ||||
Management fees to TPG | 0 | 0 | ||||
Consulting fees to TPG | 0 | 0 | ||||
Fee paid in connection with the Business Combination | 0 | 0 | ||||
Purchases from related party | $ 0 | $ 0 | ||||
Predecessor | ||||||
Related Party Transaction [Line Items] | ||||||
Sales to TPG related entities | $ 1,300,000 | $ 1,600,000 | $ 3,100,000 | $ 7,100,000 | ||
Management fees to TPG | 500,000 | 1,100,000 | 2,100,000 | 2,500,000 | ||
Consulting fees to TPG | 200,000 | 200,000 | 400,000 | 700,000 | ||
Fee paid in connection with the Business Combination | 9,900,000 | 0 | 9,900,000 | 0 | ||
Purchases from related party | $ 0 | $ 0 | $ 0 | $ 0 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)subsidiary | Jun. 30, 2015USD ($) | Jun. 08, 2016USD ($) | Jun. 30, 2016USD ($)subsidiary | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Operating Loss Carryforwards [Line Items] | |||||||
Number of active subsidiaries | subsidiary | 2 | 2 | |||||
Unrecognized tax benefits potential decrease | $ 0.6 | $ 0.6 | |||||
Successor | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Income tax expense (benefit) | $ (1.3) | $ (1.3) | |||||
Effective income tax rate | 7.70% | 7.10% | |||||
Tax distributions associated with membership interests | $ 0 | ||||||
Pre-tax (loss) | $ (16.8) | (18.4) | |||||
Valuation allowance | 4.2 | 4.2 | |||||
Interest and penalties | $ 1.2 | $ 1.2 | |||||
Predecessor | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Income tax expense (benefit) | $ 1.1 | $ 1.8 | $ 4.2 | $ 2.7 | |||
Tax distributions associated with membership interests | 0 | (0.1) | |||||
Pre-tax (loss) | $ (19.1) | $ 20.6 | $ (9.7) | $ 14.2 | |||
Valuation allowance | $ 3.6 | ||||||
Interest and penalties | $ 1.1 |
Segment and Geographic Data - N
Segment and Geographic Data - Narrative (Details) | 9 Months Ended |
Jun. 30, 2016countrysegment | |
Segment and Geographic Data | |
Number of operating segments | segment | 3 |
Number of countries products distributed in (more than) | 80 |
Chemicals | |
Segment and Geographic Data | |
Number of countries products distributed in (more than) | 50 |
Plastics | |
Segment and Geographic Data | |
Number of countries products distributed in (more than) | 50 |
Segment and Geographic Data - S
Segment and Geographic Data - Summarized Financial Information (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2015 | |
Successor | |||||||
Summarized financial information | |||||||
Sales and operating revenues | $ 214.3 | $ 214.3 | |||||
Gross profit | 18.8 | 18.8 | |||||
Selling, general & administrative expenses | 19.1 | 19.2 | |||||
Transaction related costs | 15.9 | 18 | |||||
Change in fair value of contingent consideration obligations | (2.3) | (2.3) | |||||
Operating income (loss) | (13.9) | (16.1) | |||||
Other income | 0 | 0 | |||||
Interest income | 0.3 | 0.9 | |||||
Interest expense | (3.2) | (3.2) | |||||
Income from continuing operations before income taxes | (16.8) | (18.4) | |||||
Segment assets | |||||||
Assets | 2,118 | 2,118 | |||||
Successor | Operating Segments | |||||||
Segment assets | |||||||
Assets | 1,485.4 | 1,485.4 | |||||
Successor | Corporate, Non-Segment | |||||||
Segment assets | |||||||
Assets | 632.6 | 632.6 | |||||
Successor | Chemicals | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 94.2 | 94.2 | |||||
Gross profit | 9.6 | 9.6 | |||||
Segment assets | |||||||
Assets | 667.2 | 667.2 | |||||
Successor | Plastics | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 109.9 | 109.9 | |||||
Gross profit | 6.7 | 6.7 | |||||
Segment assets | |||||||
Assets | 726.9 | 726.9 | |||||
Successor | Other | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 10.2 | 10.2 | |||||
Gross profit | 2.5 | 2.5 | |||||
Segment assets | |||||||
Assets | $ 91.3 | $ 91.3 | |||||
Predecessor | |||||||
Summarized financial information | |||||||
Sales and operating revenues | $ 650.2 | $ 988.8 | $ 2,340.1 | $ 3,019.3 | |||
Gross profit | 75.4 | 111.3 | 271.9 | 302.5 | |||
Selling, general & administrative expenses | 57.5 | 82.9 | 208.9 | 248.5 | |||
Transaction related costs | 26.1 | 0 | 33.4 | 0.1 | |||
Change in fair value of contingent consideration obligations | 0 | 0 | 0 | 0 | |||
Operating income (loss) | (8.2) | 28.4 | 29.6 | 53.9 | |||
Other income | 0.3 | 8.4 | 2.9 | 9.1 | |||
Interest income | 0 | 0 | 0.1 | 0.1 | |||
Interest expense | (11.2) | (16.2) | (42.3) | (48.9) | |||
Income from continuing operations before income taxes | (19.1) | 20.6 | (9.7) | 14.2 | |||
Segment assets | |||||||
Assets | $ 1,708.9 | ||||||
Predecessor | Operating Segments | |||||||
Segment assets | |||||||
Assets | 1,262.2 | ||||||
Predecessor | Corporate, Non-Segment | |||||||
Segment assets | |||||||
Assets | 446.7 | ||||||
Predecessor | Chemicals | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 298.7 | 482.6 | 1,066.4 | 1,503.9 | |||
Gross profit | 38.8 | 59.9 | 136.2 | 168.1 | |||
Segment assets | |||||||
Assets | 696.9 | ||||||
Predecessor | Plastics | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 329.8 | 477.4 | 1,192.2 | 1,429.6 | |||
Gross profit | 32.2 | 44.8 | 117.6 | 113.3 | |||
Segment assets | |||||||
Assets | 530.2 | ||||||
Predecessor | Other | Operating Segments | |||||||
Summarized financial information | |||||||
Sales and operating revenues | 21.7 | 28.8 | 81.5 | 85.8 | |||
Gross profit | $ 4.4 | $ 6.6 | $ 18.1 | $ 21.1 | |||
Segment assets | |||||||
Assets | $ 35.1 |
Segment and Geographic Data - R
Segment and Geographic Data - Revenues by Geographic Location (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Successor | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | $ 214.3 | $ 214.3 | ||||
Successor | North America | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | 174.4 | 174.4 | ||||
Successor | EMEA | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | 29.3 | 29.3 | ||||
Successor | Asia | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | $ 10.6 | $ 10.6 | ||||
Predecessor | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | $ 650.2 | $ 988.8 | $ 2,340.1 | $ 3,019.3 | ||
Predecessor | North America | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | 535.9 | 816.2 | 1,917.2 | 2,507.5 | ||
Predecessor | EMEA | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | 78.8 | 129.7 | 291.9 | 374.1 | ||
Predecessor | Asia | ||||||
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale | ||||||
Revenues | $ 35.5 | $ 42.9 | $ 131 | $ 137.7 |