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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 5, 2018
NEXEO SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
001-36477
 
46-5188282
(State or other jurisdiction of
 
(Commission File Number)
 
(IRS Employer Identification
incorporation)
 
 
 
No.)
3 Waterway Square Place, Suite 1000
 
 
The Woodlands, Texas
 
77380
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:  (281) 297-0700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 2.02 Results of Operations and Financial Condition
 
On December 5, 2018, Nexeo Solutions, Inc. (the “Company”) announced its consolidated financial results for the quarter ended September 30, 2018. Copies of the Company’s press release and related presentation are furnished herewith as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein. The press release and presentation contain certain non-GAAP financial information. Reconciliations of such information to GAAP financial measures are included in the press release and presentation.

The information in this Current Report, including Exhibit 99.1 and Exhibit 99.2, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and it will not be incorporated by reference into any registration statement or other document filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such a filing.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits 
EXHIBIT
 
DESCRIPTION
 
 
 
 
Press Release
 
 
 
 
Nexeo Solutions, Inc. Fourth Quarter Fiscal Year 2018 Earnings Presentation






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
NEXEO SOLUTIONS, INC
 
 
 
 
 
By:
/s/ Michael B. Farnell, Jr.
 
 
Michael B. Farnell, Jr.
 
 
Executive Vice President and Chief Administrative Officer
 
 
 
 
Dated: December 6, 2018
 





EXHIBIT INDEX
 
Exhibit
 
Description
 
Press Release
 
 
 
 
Nexeo Solutions, Inc. Fourth Quarter Fiscal Year 2018 Earnings Presentation



Exhibit
EXHIBIT 99.1

Nexeo Solutions Reports Fourth Quarter and Fiscal Year 2018 Financial Results


Fiscal Year 2018 Highlights (Versus Fiscal Year 2017)
Revenue growth of 11%, driven by specialty growth and disciplined price execution in an inflationary environment
Net income for the year was $29.4 million, or $0.38 per diluted share. Adjusted net income was $57.0 million, or $0.74 per diluted share
Record full year gross profit of $460.1 million increased 15.5% from prior year
Record full year adjusted EBITDA of $209.0 million increased 13.2% from prior year
Net leverage of 3.5x, a decrease from 4.3x last year and 3.9x last quarter


THE WOODLANDS, Texas - December 5, 2018 - Nexeo Solutions, Inc. (NASDAQ:NXEO) (the "Company" or "Nexeo Solutions"), today announced its consolidated financial results for the three months and twelve months ended September 30, 2018.

David Bradley, President and Chief Executive Officer of Nexeo Solutions stated, "Through the determination and resolve of our team, this year we achieved record levels of profitability. We have once again demonstrated the power of our business model, underpinned by our centralized operating platform, to deliver differential results. We believe the pending merger with Univar will demonstrate our system's scalability and power, enabling the combined entity to deliver industry-leading growth."

Sales and operating revenues were $1,017.2 million and $981.7 million for the three months ended September 30, 2018 and September 30, 2017, respectively. The increase in revenues was primarily attributable to an increase in average selling prices of 13.1% across all segments in all regions largely due to an inflationary pricing environment and a shift in portfolio mix to products with higher average selling prices. The increase was partially offset by an 8.7% decrease in volumes as well as a decrease of approximately $5.3 million resulting from the weakening of exchange rates of various currencies versus the USD as compared to the same period in the prior fiscal year.

Gross profit was $117.3 million and $109.1 million for the three months ended September 30, 2018 and September 30, 2017, respectively. Gross profit increased primarily due to a favorable shift in product mix and continued specialty supplier growth. The increase in gross profit was partially offset by a decrease of approximately $0.5 million resulting from the weakening of exchange rates of various currencies versus the USD compared to the same period in the prior fiscal year.

The Company reported a net loss of $15.0 million for the three months ended September 30, 2018 and net income of $13.6 million for the three months ended September 30, 2017. Adjusted EBITDA was $53.5 million and $52.7 million for the three months ended September 30, 2018 and September 30, 2017, respectively. For a description of adjusted EBITDA and a reconciliation to its most comparable GAAP financial measure, please read "Non-GAAP Financial Measures".



EXHIBIT 99.1


Fourth Quarter 2018 Performance

The results of the Company's operating performance are described below and, unless otherwise indicated, are a comparison of the three months ended September 30, 2018 with the three months ended September 30, 2017.
 
Three Months Ended September 30,
 
 
Period Over Period
 
2018
 
2017
 
 
$ Change
 
% Change
Chemicals
 

 
 
 
 
 

 
 
Sales and operating revenues
$
489.9

 
$
455.9

 
 
$
34.0

 
7.5
 %
Gross profit
62.7

 
58.0

 
 
4.7

 
8.1
 %
Plastics
 

 
 
 
 
 
 
 
Sales and operating revenues
488.3

 
491.3

 
 
(3.0
)
 
(0.6
)%
Gross profit
47.9

 
42.3

 
 
5.6

 
13.2
 %
Other
 

 
 
 
 
 
 
 
Sales and operating revenues
39.0

 
34.5

 
 
4.5

 
13.0
 %
Gross profit
6.7

 
8.8

 
 
(2.1
)
 
(23.9
)%
Consolidated
 

 
 
 
 
 
 
 
Sales and operating revenues
1,017.2

 
981.7

 
 
35.5

 
3.6
 %
Gross profit
117.3

 
109.1

 
 
8.2

 
7.5
 %
 

Segment Highlights

Chemicals - Sales and operating revenues for the Chemicals line of business were $489.9 million and $455.9 million for the three months ended September 30, 2018 and September 30, 2017, respectively. The revenue increase was primarily attributable to a 13.9% increase in average selling prices largely as a result of an inflationary pricing environment and increased specialty product mix. This increase was partially offset by a decrease in volumes of 5.7% due to lower demand and specialty product supply constraints. Disciplined commercial execution to balance price and volume resulted in the lower volumes, but yielded higher average selling prices.
Gross profit was $62.7 million and $58.0 million for the three months ended September 30, 2018 and September 30, 2017, respectively. Gross profit increased from a favorable shift in product mix, the addition of new specialty suppliers and strong commercial execution.

Plastics - Sales and operating revenues for the Plastics line of business were $488.3 million and $491.3 million for the three months ended September 30, 2018 and September 30, 2017, respectively. The revenue decrease was due to a decrease in volumes of 12.4% from the shedding of low margin business in North America and EMEA, as well as a decrease of approximately $4.3 million resulting from the weakening exchange rates of various currencies versus the USD compared to the same period in the prior fiscal year. This decrease was partially offset by an increase in average selling price of 13.4% attributable to an inflationary pricing environment.
Gross profit was $47.9 million and $42.3 million for the three months ended September 30, 2018 and September 30, 2017, respectively. Gross profit increased primarily due to a favorable shift in product mix and strong commercial execution. The increase in gross profit was partially offset by a decrease of approximately $0.4 million resulting from the weakening of exchange rates of various currencies versus the USD compared to the same period in the prior fiscal year.

Other - Sales and operating revenues for the Other segment were $39.0 million and $34.5 million for the three months ended September 30, 2018 and September 30, 2017, respectively. The increase in revenues was primarily due to growth in onsite services to existing customers.
Gross profit was $6.7 million and $8.8 million for the three months ended September 30, 2018 and September 30, 2017, respectively. The decrease was primarily due to a shift in service mix to lower margin business compared to the same period in the prior fiscal year.




EXHIBIT 99.1

Nexeo Solutions to Hold Earnings Conference Call

The Company will hold a conference call to discuss its fourth quarter and fiscal year 2018 earnings on Thursday, December 6, 2018 at 9:00 a.m. CT (10:00 a.m. ET). To participate in the conference call by telephone, please call one of the following telephone numbers and reference the below access passcode 10 minutes prior to the scheduled start time:

Domestic:    +1.844.412.1004
International:    +1.216.562.0451
Passcode:    2695293

The conference call and presentation will also be broadcast live via the Internet. You may listen by accessing the Investor Relations section of the Company's website at www.nexeosolutions.com. You should connect to the website at least 15 minutes prior to the conference call to register, download and install any necessary audio software to ensure a successful user experience.

If you are unable to participate, a replay of the conference call will be available on December 6, 2018, beginning at 12:00 p.m. CT (1:00 p.m. ET), through December 13, 2018. The phone number for the conference call replay is +1.855.859.2056 (Domestic) or +1.404.537.3406 (International). The access passcode is 2695293. Additionally, the recorded conference call will be accessible through the Investor Relations section of the Company’s website at www.nexeosolutions.com.

All individuals listening to the conference call or the replay are reminded that all conference call material is copyrighted by the Company and cannot be recorded or rebroadcast without the Company's express written consent.




EXHIBIT 99.1

Non-GAAP Financial Measures
Adjusted EBITDA and adjusted net income were derived based on methodologies other than in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company’s management has included these measures because they believe they are indicative of the Company’s operating performance, are used by investors and analysts to evaluate the Company and can facilitate comparisons across periods. As presented by the Company’s management, these measures may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and adjusted net income should be considered in addition to, not as a substitute for, financial measures presented in accordance with GAAP. Moreover, certain non-GAAP financial measures as presented for financial reporting purposes herein may differ from similarly titled measures in the applicable covenants in our credit facilities.
The Company evaluates performance on the basis of adjusted EBITDA, which it defines as its consolidated net income (loss), plus the sum of interest expense, net of interest income, income tax expense (benefit), depreciation, amortization, other operating expenses, net (which primarily consists of acquisition and integration-related expenses, employee stock-based compensation expense and other restructuring and transformational expenses), impairment charges, loss on extinguishment of debt and other income (expense), net, gains and losses on foreign currency transactions, debt refinancing costs and other non-operating activity. Management believes that adjusted EBITDA is indicative of the Company’s operating performance and that it is used by investors and analysts to evaluate companies with similar capital structures. The Company believes that adjusted EBITDA is an important indicator of operating performance because:
adjusted EBITDA excludes the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization;
the Company uses adjusted EBITDA in setting performance incentive targets;
the Company considers gains (losses) on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations; and
other significant one-time items, while periodically affecting the Company's results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of its results.
The Company evaluates performance on the basis of adjusted net income, which it defines as its consolidated net income (loss), plus the change in fair value of contingent consideration obligation net of tax impact. Contingent consideration is comprised of two components, the Deferred Cash Consideration and the Tax Receivable Agreement ("TRA"), which have a non-cash impact and can change significantly quarter to quarter dependent on key valuation inputs. 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 a significant input to this model. Unobservable inputs to the valuation are the expected volatility during the applicable period as well as a marketability discount to reflect the illiquidity of the Excess Shares given their terms. 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. Management believes that adjusted net income is indicative of the Company’s operating performance and that it is used by investors and analysts to evaluate companies with similar capital structures. The Company believes that adjusted net income is an important indicator of operating performance because:
adjusted net income excludes the effects of the change in fair value of contingent consideration obligation net of tax impact, which have a non-cash impact and can change significantly quarter to quarter dependent on key valuation inputs.
A reconciliation of adjusted EBITDA and adjusted net income to net income (loss) from continuing operations for Nexeo Solutions, Inc. and Subsidiaries, the most comparable GAAP financial measure, is included at the end of this release.

About Nexeo Solutions, Inc.
Nexeo Solutions is a leading global chemicals and plastics distributor, representing products from world-class producers to a diverse customer base. From product specification to sustainable solutions, the Company goes beyond traditional logistics to provide value-added services across many industries, including chemicals manufacturing, oil and gas, coatings, personal care, healthcare, automotive and 3D printing. The Company leverages a centralized technology platform to identify efficiencies and create solutions to unlock value for suppliers and customers. Learn more at www.nexeosolutions.com.




EXHIBIT 99.1

Forward-Looking Statements
This press release contains statements related to the Company’s future plans and expectations and, as such, includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those statements that are based upon management’s current plans and expectations as opposed to historical and current facts and are often identified in this press release by use of words including but not limited to "may," "believe," "will," "project," "expect," "estimate," "anticipate," and "plan." Although the forward-looking statements contained in this press release reflect management’s current assumptions based upon information currently available to management and based upon that which management believes to be reasonable assumptions, the Company cannot be certain that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause the Company’s actual results, performance prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the Company’s ability to achieve projected cost savings; consolidation of the Company’s competitors; increased costs of products the Company purchases and its ability to pass on cost increases to its customers; disruptions to the supply of chemicals and plastics that the Company distributes or in the operations of the Company’s customers; the Company’s significant working capital requirements and the risks associated with maintaining large inventories; any disruptions to the Company’s ERP system; the Company’s ability to meet the demands of the Company’s customers on a timely basis; risks and costs related with operating as a stand-alone company; risks related to the Company’s supplier and customer contracts; risks related to the Company’s substantial indebtedness; changes in state, federal or foreign laws affecting the industries in which we operate; the Company’s ability to comply with any new and existing environmental and other laws and regulations; and general business and economic trends in the United States and other countries, including uncertainty as to changes and trends. The Company's future results will depend upon various other risks and uncertainties, including the risks and uncertainties discussed in the Company's SEC filings, including in the sections entitled "Risk Factors" in such SEC filings.


FOR FURTHER INFORMATION PLEASE CONTACT
Investor Relations, Nexeo Solutions
Tel: +1.281.297.0856, Investor.Relations@nexeosolutions.com



EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions, except share amounts and par value)
 
September 30, 2018
 
September 30, 2017
Current Assets
 
 
 
Cash and cash equivalents
$
58.9

 
$
53.9

Accounts and notes receivable (net of allowance for doubtful accounts of $4.2 million and $2.2 million, respectively)
607.8

 
597.4

Inventories
338.8

 
315.5

Income taxes receivable
5.9

 
3.4

Other current assets
17.3

 
19.8

Total current assets
1,028.7

 
990.0

 
 
 
 
Non-Current Assets
 

 
 

Property, plant and equipment, net
284.9

 
316.1

Goodwill
699.9

 
703.0

Other intangible assets, net of amortization
211.6

 
231.5

Deferred income taxes
2.3

 
2.3

Other non-current assets
16.2

 
10.6

Total non-current assets
1,214.9

 
1,263.5

Total Assets
$
2,243.6

 
$
2,253.5

 
 
 
 
Current Liabilities
 
 
 
Short-term borrowings, current portion of long-term debt and capital lease obligations
$
47.7

 
$
51.1

Accounts payable
380.1

 
384.2

Accrued expenses and other liabilities
67.2

 
58.4

Due to related party pursuant to contingent consideration obligations
14.7

 
12.5

Income taxes payable
2.9

 
3.2

Total current liabilities
512.6

 
509.4

 
 
 
 
Non-Current Liabilities
 

 
 

Long-term debt and capital lease obligations, less current portion, net
752.4

 
794.0

Deferred income taxes
30.7

 
34.9

Due to related party pursuant to contingent consideration obligations
122.8

 
127.7

Other non-current liabilities
10.6

 
9.9

Total non-current liabilities
916.5

 
966.5

Total Liabilities
1,429.1

 
1,475.9

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity
 

 
 

Preferred stock, $0.0001 par value (1,000,000 shares authorized, none issued and outstanding as of September 30, 2018 and September 30, 2017)

 

Common stock, $0.0001 par value (300,000,000 shares authorized, 89,747,062 shares issued and 89,727,546 shares outstanding as of September 30, 2018 and 89,353,641 shares issued and 89,344,065 shares outstanding as of September 30, 2017)

 

Additional paid-in capital
771.5

 
764.4

Retained earnings
34.2

 
4.8

Accumulated other comprehensive income
9.0

 
8.5

Treasury stock, at cost: 19,516 and 9,576 shares as of September 30, 2018 and September 30, 2017
(0.2
)
 
(0.1
)
Total equity
814.5

 
777.6

Total Liabilities and Equity
$
2,243.6

 
$
2,253.5






EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations
(in millions, except share amounts and par value)
 
 
 
Fiscal Year Ended September 30,
 
 
2018
 
2017
Sales and operating revenues
 
$
4,034.2

 
$
3,636.9

Cost of sales and operating expenses
 
3,574.1

 
3,238.5

Gross profit
 
460.1

 
398.4

Selling, general and administrative expenses
 
352.6

 
312.9

Transaction related costs
 
2.8

 
1.9

Change in fair value of contingent consideration obligations
 
7.5

 
16.2

Operating income
 
97.2

 
67.4

Other income, net
 
1.0

 
8.3

Interest income (expense)
 
 

 
 

Interest income
 
0.5

 
0.3

Interest expense
 
(52.6
)
 
(51.1
)
Net income before income taxes
 
46.1

 
24.9

Income tax expense
 
16.7

 
10.5

Net income
 
$
29.4

 
$
14.4

 
 
 
 
 
Net income per share available to common stockholders
 
 
 
 
    Basic
 
$
0.38

 
$
0.19

    Diluted
 
$
0.38

 
$
0.19

Weighted average number of common shares outstanding
 
 
 
 
    Basic
 
76,803,187

 
76,752,752

    Diluted
 
76,909,547

 
76,839,810

 





EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in millions)
 
Fiscal Year Ended September 30,
 
2018
 
2017
Cash flows from operations
 

 
 
Net income
$
29.4

 
$
14.4

Adjustments to reconcile to cash flows from operations:
 

 
 
Depreciation and amortization
74.9

 
73.1

Debt issuance costs amortization, debt issuance costs write-offs and original issue discount amortization
4.5

 
4.1

Provision for bad debt
1.9

 
(0.2
)
Impairment charge due to natural disasters

 
1.5

Deferred income taxes
(6.9
)
 
2.2

Equity-based compensation expense
7.1

 
5.5

Change in fair value of contingent consideration obligations
7.5

 
16.2

(Gain) loss from sales of property and equipment
(0.5
)
 
0.2

Gain related to reimbursements of certain capital expenditures incurred

 
(8.1
)
Changes in assets and liabilities:
 

 
 
Accounts and notes receivable
(16.8
)
 
(101.9
)
Inventories
(25.8
)
 
14.4

Other current assets
2.0

 
5.6

Accounts payable
(2.0
)
 
43.7

Accrued expenses and other liabilities
12.3

 
6.1

Changes in other operating assets and liabilities, net
1.1

 
1.8

Net cash provided by operating activities
88.7

 
78.6

Cash flows from investing activities
 

 
 
Additions to property and equipment
(18.6
)
 
(27.6
)
Proceeds from the disposal of property and equipment
3.4

 
0.6

Proceeds from reimbursement for certain capital expenditures incurred

 
8.4

Cash paid for asset and business acquisitions
(11.0
)
 
(65.6
)
Net cash used in investing activities
(26.2
)
 
(84.2
)
Cash flows from financing activities
 
 
 
Cash paid to TPG related to TRA
(10.2
)
 

Proceeds from short-term debt
54.6

 
40.6

Repayments of short-term debt
(56.1
)
 
(39.3
)
Proceeds from issuance of long-term debt
690.6

 
773.8

Repayments of long-term debt and capital lease obligations
(735.5
)
 
(762.0
)
Payments of debt issuance costs
(0.8
)
 
(1.3
)
Net cash provided by (used in) financing activities
(57.4
)
 
11.8

Effect of exchange rate changes on cash and cash equivalents
(0.1
)
 
0.2

Increase in cash and cash equivalents
5.0

 
6.4

Cash and cash equivalents at the beginning of the period
53.9

 
47.5

Cash and cash equivalents at the end of the period
$
58.9

 
$
53.9

Supplemental disclosure of cash flow information:
 

 
 
Cash paid during the period for interest
$
48.2

 
$
46.1

Cash paid during the period for taxes (net of refunds)
$
20.9

 
$
6.9

Supplemental disclosure of non-cash investing activities:
 
 
 
Non-cash capital expenditures
$
1.8

 
$
17.3

Non-cash intangible assets acquired
$

 
$
3.7

Supplemental disclosure of non-cash financing activities:
 
 
 
Non-cash capital lease obligations, net
$
0.3

 
$
15.3

 



EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Segment Information
(in millions)
 
Fiscal Year Ended September 30,
 
2018
 
2017
Chemicals
 

 
 
Sales and operating revenues
$
1,904.5

 
$
1,667.2

Gross profit
248.0

 
205.6

Plastics
 

 
 
Sales and operating revenues
1,980.0

 
1,841.7

Gross profit
186.4

 
167.2

Other
 

 
 
Sales and operating revenues
149.7

 
128.0

Gross profit
25.7

 
25.6

Consolidated
 

 
 
Sales and operating revenues
4,034.2

 
3,636.9

Gross profit
460.1

 
398.4

 






EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Adjusted Net Income Reconciliation
(Unaudited, in millions except per share data)
 
 
Fiscal Year Ended September 30,
 
 
2018
 
2017
 
 
Amount
 
Per Share
 
Amount
 
Per Share
Net income
 
$
29.4

 
$
0.38

 
$
14.4

 
$
0.19

Change in fair value related to contingent consideration obligations
 
7.5

 
0.10

 
16.2

 
0.21

Management add-backs (1)
 
17.4

 
0.23

 
10.6

 
0.14

Transaction related costs (2)
 
2.8

 
0.04

 
1.9

 
0.02

Non-recurring tax adjustment
 
1.4

 
0.02

 

 

Estimated net tax impact
 
(1.5
)
 
(0.02
)
 
0.9

 
0.01

Adjusted net income
 
$
57.0

 
$
0.74

* 
$
44.0

 
$
0.57

Note: Per share amounts based on diluted shares
*Per share amount does not equal the total due to rounding
(1) 
Management adjustments associated with integration, restructuring, transformational activities and asset impairments
(2) 
Includes professional and transaction costs related to acquisitions and other business combination related items


Nexeo Solutions, Inc. and Subsidiaries
Adjusted EBITDA Reconciliation
(Unaudited, in millions)
 
Three Months Ended September 30,
 
Fiscal Year Ended September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
(15.0
)
 
$
13.6

 
$
29.4

 
$
14.4

Interest expense, net
13.3

 
13.0

 
52.1

 
50.8

Income tax expense
1.1

 
6.5

 
16.7

 
10.5

Depreciation and amortization
17.3

 
19.6

 
74.9

 
73.1

Other operating expenses, net (1)
36.8

 

 
35.9

 
35.8

Adjusted EBITDA
$
53.5

 
$
52.7

 
$
209.0

 
$
184.6

(1) 
See Other Operating Expenses, Net table for additional detail

Nexeo Solutions, Inc. and Subsidiaries
Other Operating Expenses, Net
(Unaudited, in millions)
 
Three Months Ended September 30,
 
Fiscal Year Ended September 30,
 
2018
 
2017
 
2018
 
2017
Management add-backs (1)
$
9.0

 
$
2.5

 
$
17.4

 
$
10.6

Change in fair value related to contingent consideration obligations
22.2

 
(3.6
)
 
7.5

 
16.2

Foreign exchange (gains) losses, net (2)
1.1

 
(0.6
)
 
1.1

 
0.6

Compensation expense related to management equity plan (non-cash)
1.8

 
1.3

 
7.1

 
5.5

Inventory step up

 
(0.2
)
 

 
1.0

Transaction related costs (3)
2.7

 
0.6

 
2.8

 
1.9

Other operating expenses, net
$
36.8

 
$

 
$
35.9

 
$
35.8

 
(1) 
Management adjustments associated with integration, restructuring, transformational activities and asset impairments
(2) 
Includes the impact of net realized and unrealized foreign exchange gains and losses related to transactions in currencies other than the functional currency of the respective legal entity for the purpose of evaluating the Company's performance and facilitating more meaningful comparisons of performance to other fiscal periods
(3) 
Includes professional and transaction costs related to acquisitions and other business combination related items


q420188kexhibit992
EXHIBIT 99.2 FOURTH QUARTER AND FISCAL YEAR 2018 Earnings Conference Call & Presentation December 6, 2018 at 9:00 a.m. CT (10:00 a.m. ET) 1


 
EXHIBIT 99.2 Fourth Quarter & Fiscal Year 2018 Welcome to Nexeo’s Earnings Conference Call and Presentation December 6, 2018 beginning at 9:00 a.m. CT (10:00 a.m. ET) …Please stand by, we will begin momentarily Dial-In Information Domestic: +1.844.412.1004 International: +1.216.562.0451 Passcode: 2695293 2


 
EXHIBIT 99.2 Agenda & Management Introductions INTRODUCTIONS AND SAFE HARBOR Michael Everett VP, Treasurer, FP&A, Investor Relations BUSINESS COMMENTARY David Bradley President & Chief Executive Officer FINANCIAL PERFORMANCE Ross Crane Executive VP & Chief Financial Officer CLOSING REMARKS David Bradley President & Chief Executive Officer Q&A 3


 
EXHIBIT 99.2 Non-GAAP Financial Measures & Safe Harbor Non-GAAP Financial Measures Certain financial measures presented herein, including EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, Conversion Ratio and Net Debt were derived based on methodologies other than in accordance with generally accepted accounting principles (GAAP). We have included these measures because we believe they are indicative of our operating performance, are used by investors and analysts to evaluate us and can facilitate comparisons across periods. As presented by us, these measures may not be comparable to similarly titled measures reported by other companies. EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, Conversion Ratio, free cash flow and Net Debt should be considered in addition to, not as substitutes for, financial measures presented in accordance with GAAP. For a reconciliation of EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, and Net Debt to the most comparable GAAP financial measure, see the appendix slides. Safe Harbor Forward Looking Statements: This presentation contains statements related to Nexeo Solutions, Inc.’s (“Nexeo” or the “Company”) future plans and expectations and, as such, includes “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are those statements that are based upon management’s current plans and expectations as opposed to historical and current facts. Although the forward-looking statements contained in this presentation reflect management’s current assumptions based upon information currently available to management and based upon that which management believes to be reasonable assumptions, the Company cannot be certain that actual results will be consistent with these forward-looking statements. These risks and uncertainties include, among other things: The Company’s ability to achieve projected cost savings, increased costs of products the Company purchases and its ability to pass on cost increases to its customers; and uncertainty regarding the proposed merger. The Company’s future results will depend upon various risks and uncertainties, including the risks and uncertainties discussed in the Company’s SEC filings, including in the sections entitled “Risk Factors” in such SEC filings. The Company does not intend to provide all information enclosed in this presentation on an ongoing basis. 4


 
EXHIBIT 99.2 David Bradley President & Chief Executive Officer


 
EXHIBIT 99.2 Pending Merger Accelerates Transformation & Growth . Pending merger creates true industry leader equipped to drive significant value to stakeholders . Leveraging best of the best from both companies to enhance service to customers and supplier partners . Combined company will leverage the capabilities of Nexeo’s proprietary operating platform . Transaction on track to close in the first calendar quarter of 2019  On November 16, 2018, Univar and Nexeo announced that the waiting period under the HSR Act had expired  Nexeo's key stockholders, TPG and First Pacific, have provided consent for the proposed transaction 6


 
EXHIBIT 99.2 Fiscal Year 2018 Business Update . Revenue growth of 11%, driven by Growth Performance specialty growth and disciplined price Year-Over-Year ($ in millions, Unaudited) execution in an inflationary environment Gross Profit Adjusted* EBITDA $460.1 . Fiscal year net income of $29.4 million, $209.0 or $0.38 per diluted share $184.6  Adjusted* net income was $57 million, or $398.4 $0.74 per diluted share +16% +13% . Record gross profit and adjusted* EBITDA FY-2017 FY-2018 FY-2017 FY-2018 . Seventeen new specialty supplier Cumulative Supplier Authorizations authorizations, nearly doubling last year’s number of awards 34 announcements made since January 2016 13 . Free cash flow(1) generation of $74 million, a 23% increase from last year 21 . Net leverage reduction to 3.5x, down from 4.3x last year Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 Chemicals Plastics (1) Free cash flow defined as net cash provided by operating activities from continuing operations less Capex, net of proceeds from asset disposal *Non-GAAP financial measure; See appendix slides for reconciliation to the most comparable GAAP financial measure 7


 
EXHIBIT 99.2 Ross Crane Chief Financial Officer


 
EXHIBIT 99.2 Fiscal Fourth Quarter 2018 Highlights Consolidated ($ in millions) Three Months Three Months Ended Ended Variance Consolidated Sep-30-2018 Sep-30-2017 Sales and operating revenues $ 1,017.2 $ 981.7 4% . Volume down 9% Gross profit 117.3 109.1 8% . Average selling prices up 13% Gross profit margin 11.5% 11.1% + 40 bps Chemicals ($ in millions) Three Months Three Months Ended Ended Variance Chemicals Sep-30-2018 Sep-30-2017 Sales and operating revenues $ 489.9 $ 455.9 8% . Volume down 6% Gross profit 62.7 58.0 8% . Average selling prices up 14% Gross profit margin 12.8% 12.7% + 10 bps Plastics ($ in millions) Three Months Three Months Ended Ended Variance Plastics Sep-30-2018 Sep-30-2017 Sales and operating revenues $ 488.3 $ 491.3 (1)% . Volume down 12% Gross profit 47.9 42.3 13% . Average selling prices up 13% Gross profit margin 9.8% 8.6% + 120 bps 9


 
EXHIBIT 99.2 Fiscal Fourth Quarter 2018 Consolidated Results ($ in millions) Three Months Ended Three Months Ended Sep-30-2018 Sep-30-2017 Variance Q4-FY18 Q4-FY17 $% Sales and operating revenues $ 1,017.2 $ 981.7 $ 35.5 4% Cost of sales and operating expenses 899.9 872.6 27.3 3% Gross profit 117.3 109.1 8.2 8% SG&A 93.1 79.0 14.1 18% Transaction related costs 2.7 0.6 2.1 350% Change in fair value related to contingent consideration 22.2 (3.6) 25.8 717% obligations Operating income (loss) (0.7) 33.1 (33.8) (102)% Other income, net 0.1 - 0.1 NA Interest expense, net (13.3) (13.0) (0.3) (2)% Net income (loss) before income taxes (13.9) 20.1 (34.0) (169)% Income tax expense 1.1 6.5 (5.4) (83)% Net income (loss) $ (15.0) $ 13.6 $ (28.6) (210)% Adjusted* EBITDA $ 53.5 $ 52.7 $ 0.8 2% Adjusted* EBITDA % of sales 5.3% 5.4% Conversion Ratio** 45.6% 48.3% 9.8% Adjusted(1) Conversion Ratio** 51.1% 48.3% 87.8% (1) Q4-FY18 excludes $6.4 million of incremental variable incentives (actuals less forecast) *Non-GAAP financial measure; See appendix slides for reconciliation to the most comparable GAAP financial measure **Non-GAAP financial measure; Calculated as adjusted* EBITDA divided by gross profit 10


 
EXHIBIT 99.2 Fiscal Year 2018 Consolidated Results ($ in millions, except per share data) Twelve Months Ended Twelve Months Ended Sep-30-2018 Sep-30-2017 Variance FY-2018 FY-2017 $% Sales and operating revenues $ 4,034.2 $ 3,636.9 $ 397.3 11% Cost of sales and operating expenses 3,574.1 3,238.5 335.6 10% Gross profit 460.1 398.4 61.7 16% SG&A 352.6 312.9 39.7 13% Transaction related costs 2.8 1.9 0.9 47% Change in fair value related to contingent consideration 7.5 16.2 (8.7) (54)% obligations Operating income 97.2 67.4 29.8 44% Other income, net 1.0 8.3 (7.3) (88)% Interest expense, net (52.1) (50.8) (1.3) (3)% Net income before income taxes 46.1 24.9 21.2 85% Income tax expense 16.7 10.5 6.2 59% Net income $ 29.4 $ 14.4 $ 15.0 104% Adjusted* net income $ 57.0 $ 44.0 $ 13.0 30% Adjusted* EPS $ 0.74 $ 0.57 $ 0.17 30% Adjusted* EBITDA $ 209.0 $ 184.6 $ 24.4 13% Adjusted* EBITDA % of sales 5.2% 5.1% Conversion Ratio** 45.4% 46.3% 39.5% Adjusted(1) Conversion Ratio** 47.9% 45.0% 67.1% (1) FY-2018 excludes $11.6 million of incremental variable incentives (actuals less forecast) and FY-2017 excludes $5.4 million gain related to Franklin Park eminent domain reimbursement *Non-GAAP financial measure; See appendix slides for reconciliation to the most comparable GAAP financial measure **Non-GAAP financial measure; Calculated as adjusted* EBITDA divided by gross profit 11


 
EXHIBIT 99.2 SG&A Expense Summary . Year-over-year increase predominantly driven by pending merger related items and accelerated incentives expense resulting from exceptional profit growth SG&A Bridge ($ in millions, Unaudited) $353 Univar Merger Costs $9 Univar Merger Ultra Chem Integration Costs $4 Incremental Ultra Chem Variable Incentives Integration Above Forecast Incremental $12 Variable Incentives Above Forecast $4 $328 $3 Additional D&A Other $8 Additional Headcount $313 FY-2017 FY-2018 Normalized FY-2018 Run-Rate 12


 
EXHIBIT 99.2 Key Balance Sheet Metrics ($ in millions) Total Debt (1) Cash $58.9 $845.1 $854.2 $53.9 $800.1 $43.8 Q4-FY17 Q3-FY18 Q4-FY18 Q4-FY17 Q3-FY18 Q4-FY18 Net Debt (1)(2) Working Capital (4) $546.7 $810.4 $791.2 $484.6 $741.2 $457.8 13.7% Leverage (3) 4.3x 3.9x 3.5x 12.6% 12.0% Q4-FY17 Q3-FY18 Q4-FY18 Q4-FY17 Q3-FY18 Q4-FY18 WC WC % TTM Sales (1) Total debt and Net Debt include unamortized debt issuance costs in accordance with the adoption of ASU No. 2015-03 and ASU No. 2015-15 (2) Net Debt is a non-GAAP financial measure and is defined as long-term debt and capital lease obligations, net of discount and deferred financing costs, plus short-term borrowings and current portion of long-term debt and capital lease obligations less cash and cash equivalents; See appendix slides for a reconciliation of Net Debt to the most comparable GAAP financial measure (3) Leverage is calculated as Net Debt divided by trailing twelve month adjusted* EBITDA from continuing operations; See appendix slides for a reconciliation of Net Debt and adjusted* EBITDA to the most comparable GAAP financial measure (4) Working capital is calculated as (Accounts receivable + Inventory) less (Accounts payable + Accrued expenses and other liabilities + Current due to related party pursuant to contingent consideration obligations) 13


 
EXHIBIT 99.2 David Bradley President & Chief Executive Officer


 
EXHIBIT 99.2 Proven Track Record Adjusted* EBITDA and % Margin (1) Adjusted* EBITDA $209 Adjusted* EBITDA % Margin(1) $185 $177 $174 5.2% 5.1% 5.1% $150 $152 4.5% $122 3.7% 3.4% 3.3% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Source: Company Management; Company Filings; Bloomberg *Non-GAAP financial measures; See appendix slides for reconciliation to the most comparable GAAP financial measure (1) Margin defined as adjusted* EBITDA divided by sales and operating revenues 15


 
EXHIBIT 99.2 To ask a question live over the phone, please press * then the number 1 on your telephone keypad to queue our operator If your question has been answered or you wish to remove yourself from the queue, please press #


 
EXHIBIT 99.2


 
EXHIBIT 99.2


 
EXHIBIT 99.2 Capital Structure Summary Shares Used For Share Basic and Fully Diluted EPS Calculation Count Basic - Average Common Shares Outstanding 76.8 million Diluted - Average Common Shares Outstanding 76.9 million Shares Excluded From Share Basic and Fully Diluted EPS Calculation Count Founder Shares (1) 12.5 million Warrants (2) 5.8 million* Excess Shares (3) (Deferred Cash Consideration) 5.2 million Note: For a complete description of the Founder Shares, Warrants and Deferred Cash Consideration, see the Company’s (i) Final prospectus related to the Registration Statement on Form S-3/A filed on 08/30/16, (ii) Current Report on Form 8-K filed with the SEC on 06/15/16, and (iii) Current Report on Form 8-K filed with the SEC on 03/22/16 (1) Founder Shares Vesting and Forfeiture: The Founder Shares vest as follows: (i) 50% of the Founder Shares vest on the first day that the last sale price of the Company’s Common Stock equals or exceeds $12.50 per share for any 20 trading days within any 30 trading day period; and (ii) the remaining 50% of the Founder Shares vest on the first day that the last sale price of the Company’s common stock equals or exceeds $15.00 per share for any 20 trading days within any 30 trading day period; If none of the above vesting requirements are met, the Founder Shares will be forfeited on 06/09/26 (2) Warrants: 50,025,000 warrants are outstanding and have an exercise price of $5.75 per half share of common stock (25,012,500 shares of common stock issuable); Warrants expire 06/09/21 (3) Excess Shares: Deferred Cash Consideration due to TPG and its affiliates in connection with the Business Combination. Triggering events for payment are earlier of (i) date when volume weighted average trading price of the Company’s common stock exceeds $15.00 per share for any 20 trading days in any 30 trading day period or (ii) June 30, 2021. The Company may satisfy payment of the Deferred Cash Consideration with existing cash funds or the issuance of common shares. The amount is calculated at the time of payment as the prevailing price of the Company’s common stock multiplied by the number of Excess Shares *Assumes cashless exercise and stock price of $15.00 per share; Full cash exercise would require $288 million from warrant holders 19


 
EXHIBIT 99.2 Fiscal Fourth Quarter 2018 Financial Results In millions (except per share data) Three Months Ended Three Months EndedVariance Twelve Months Ended Twelve Months Ended Variance Sep-30-2018 Sep-30-2017 $ % Sep-30-2018 Sep-30-2017 $ % Sales and operating revenues Chemicals $ 489.9 $ 455.9 $ 34.0 7.5 %$ 1,904.5 $ 1,667.2 $ 237.3 14.2 % Plastics 488.3 491.3 (3.0) (0.6)% 1,980.0 1,841.7 138.3 7.5 % Other 39.0 34.5 4.5 13.0 % 149.7 128.0 21.7 17.0 % Total sales and operating revenues 1,017.2 981.7 35.5 3.6 % 4,034.2 3,636.9 397.3 10.9 % Gross profit Chemicals 62.7 58.0 4.7 8.1 % 248.0 205.6 42.4 20.6 % Margin 12.8% 12.7%10 bps 13.0% 12.3% 70 bps Plastics 47.9 42.3 5.6 13.2 % 186.4 167.2 19.2 11.5 % Margin 9.8% 8.6%120 bps 9.4% 9.1% 30 bps Other 6.7 8.8 (2.1) (23.9)% 25.7 25.6 0.1 0.4 % Margin 17.2% 25.5%(830) bps 17.2% 20.0% (280) bps Total gross profit 117.3 109.1 8.2 7.5 % 460.1 398.4 61.7 15.5 % Total gross profit margin 11.5% 11.1%40 bps 11.4% 11.0% 40 bps SG&A 93.1 79.0 14.1 17.8 % 352.6 312.9 39.7 12.7 % Transaction related costs 2.7 0.6 2.1 350.0 % 2.8 1.9 0.9 47.4 % Change in fair value related to contingent consideration obligations 22.2 (3.6) 25.8 716.7 % 7.5 16.2 (8.7) (53.7)% Operating income (loss) (0.7) 33.1 (33.8) (102.1)% 97.2 67.4 29.8 44.2 % Other income, net 0.1 - 0.1 NA 1.0 8.3 (7.3) (88.0)% Interest expense, net (13.3) (13.0) (0.3) (2.3)% (52.1) (50.8) (1.3) (2.6)% Net income (loss) before income taxes (13.9) 20.1 (34.0) (169.2)% 46.1 24.9 21.2 85.1 % Income tax expense 1.1 6.5 (5.4) (83.1)% 16.7 10.5 6.2 59.0 % Net income (loss)$ (15.0) $ 13.6 $ (28.6) (210.3)%$ 29.4 $ 14.4 $ 15.0 104.2 % Fully diluted earnings per share $ 0.38 $ 0.19 $ 0.19 100.0 % Adjusted* net income $ 57.0 $ 44.0 $ 13.0 29.5 % Adjusted* fully diluted earnings per share $ 0.74 $ 0.57 $ 0.17 29.8 % Adjusted* EBITDA$ 53.5 $ 52.7 $ 0.8 1.5 %$ 209.0 $ 184.6 $ 24.4 13.2 % Adjusted* EBITDA % of sales 5.3% 5.4% 5.2% 5.1% Conversion Ratio** 45.6% 48.3% 9.8 % 45.4% 46.3% 39.5 % *Non-GAAP financial measure; See appendix slides for reconciliation to the most comparable GAAP financial measure **Non-GAAP financial measure; Calculated as adjusted* EBITDA divided by gross profit 20


 
EXHIBIT 99.2 Non-GAAP Reconciliation Nexeo Solutions, Inc. and Subsidiaries Adjusted Net Income Reconciliation ($ in millions, Unaudited) FY-2017 FY-2018 Per Per Amount Share Amount Share Net income $ 14.4 $ 0.19 $ 29.4 $ 0.38 Change in fair value related to contingent consideration obligations 16.2 0.21 7.5 0.10 Management add-backs (1) 10.6 0.14 17.4 0.23 Transaction related costs (2) 1.9 0.02 2.8 0.04 Non-recurring tax adjustment -- 1.40.02 Estimated net tax impact 0.9 0.01 (1.5) (0.02) Adjusted net income $ 44.0 $ 0.57 $ 57.0 $ 0.74* Note: Per share amounts based on diluted shares *Per share amounts do not equal the total due to rounding (1) Management adjustments associated with integration, restructuring, transformational activities and asset impairments (2) Includes professional and transaction costs related to acquisitions and other business combination related items 21


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Quarterly Adjusted EBITDA Reconciliation ($ in millions, Unaudited) Q4-FY17 Q1-FY18 Q2-FY18 Q3-FY18 Q4-FY18 Net income (loss) $ 13.6 $ 26.5 $ 0.4 $ 17.5 $ (15.0) Interest expense, net 13.0 12.9 12.6 13.3 13.3 Income tax expense 6.5 1.3 4.6 9.7 1.1 Depreciation and amortization 19.6 19.5 19.6 18.5 17.3 Other operating expenses, net (1) - (16.0) 16.5 (1.4) 36.8 Adjusted EBITDA $ 52.7 $ 44.2 $ 53.7 $ 57.6 $ 53.5 (1) See Non-GAAP Reconciliation: Quarterly – Other Operating Expenses, Net 22


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries TTM Adjusted EBITDA Reconciliation ($ in millions, Unaudited) Trailing Twelve Months Ending 09/30/2017 12/31/2017 03/31/2018 06/30/2018 09/30/2018 Net income $ 14.4 $ 49.2 $ 50.7 $ 58.0 $ 29.4 Interest expense, net 50.8 51.8 52.0 51.8 52.1 Income tax expense 10.5 14.5 18.3 22.1 16.7 Depreciation and amortization 73.1 75.8 77.6 77.2 74.9 Other operating expenses, net (1) 35.8 3.7 4.4 (0.9) 35.9 Adjusted EBITDA $ 184.6 $ 195.0 $ 203.0 $ 208.2 $ 209.0 (1) See Non-GAAP Reconciliation: Trailing Twelve Months Ending - Other Operating Expenses, Net 23


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Quarterly Other Operating Expenses, Net ($ in millions, Unaudited) Q4-FY17 Q1-FY18 Q2-FY18 Q3-FY18 Q4-FY18 Management add-backs (1) $ 2.5 $ 1.3 $ 2.6 $ 4.5 $ 9.0 Change in fair value related to contingent consideration obligations (3.6) (18.6) 12.6 (8.7) 22.2 Foreign exchange (gains) losses, net (2) (0.6) (0.5) (0.5) 1.0 1.1 Compensation expense related to management equity plan (non-cash) 1.3 1.7 1.8 1.8 1.8 Inventory step up (0.2)---- Transaction related costs (3) 0.6 0.1 - - 2.7 Other operating expenses, net $ - $ (16.0) $ 16.5 $ (1.4) $ 36.8 (1) Management adjustments associated with integration, restructuring, transformational activities and asset impairments (2) Includes the impact of net realized and unrealized foreign exchange gains and losses related to transactions in currencies other than the functional currency of the respective legal entity for the purpose of evaluating the Company’s performance and facilitating more meaningful comparisons of performance to other fiscal periods (3) Includes professional and transaction costs related to acquisitions and other business combination related items 24


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries TTM Other Operating Expenses, Net ($ in millions, Unaudited) Trailing Twelve Months Ending 09/30/2017 12/31/2017 03/31/2018 06/30/2018 09/30/2018 Management add-backs (1) $ 10.6 $ 9.4 $ 8.6 $ 10.9 $ 17.4 Change in fair value related to contingent consideration obligations 16.2 (13.0) (10.4) (18.3) 7.5 Foreign exchange (gains) losses, net (2) 0.6 (0.7) (2.0) (0.6) 1.1 Compensation expense related to management equity plan (non-cash) 5.5 5.8 6.3 6.6 7.1 Inventory step up 1.0 1.0 1.0 (0.2) - Transaction related costs (3) 1.9 1.2 0.9 0.7 2.8 Other operating expenses, net $ 35.8 $ 3.7 $ 4.4 $ (0.9) $ 35.9 (1) Management adjustments associated with integration, restructuring, transformational activities and asset impairments (2) Includes the impact of net realized and unrealized foreign exchange gains and losses related to transactions in currencies other than the functional currency of the respective legal entity for the purpose of evaluating the Company’s performance and facilitating more meaningful comparisons of performance to other fiscal periods (3) Includes professional and transaction costs related to acquisitions and other business combination related items 25


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Net Debt Reconciliation ($ in millions, Unaudited) Q4-FY17 Q3-FY18 Q4-FY18 Long-term debt and capital lease obligations, less $ 794.0 $ 806.7 $ 752.4 current portion, net Short-term borrowings and current portion of long-term 51.1 47.5 47.7 debt and capital lease obligations Total Debt 845.1 854.2 800.1 Cash and cash equivalents (53.9) (43.8) (58.9) Net Debt $ 791.2 $ 810.4 $ 741.2 26


 
EXHIBIT 99.2 NEXEO SOLUTIONS, INC.