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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):  February 6, 2019
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 February 6, 2019, Nexeo Solutions, Inc. (the “Company”) announced its consolidated financial results for the quarter ended December 31, 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. First Quarter Fiscal Year 2019 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: February 6, 2019
 





EXHIBIT INDEX
 
Exhibit
 
Description
 
Press Release
 
 
 
 
Nexeo Solutions, Inc. First Quarter Fiscal Year 2019 Earnings Presentation



Exhibit
EXHIBIT 99.1

Nexeo Solutions Reports First Quarter Fiscal Year 2019 Financial Results


First Quarter 2019 Highlights (Versus First Quarter 2018)
Revenue growth of 1%, with continued strong commercial execution in a mixed pricing market environment
Net income for the quarter was $16.2 million, or $0.21 per diluted share. Adjusted net income was $9.8 million, or $0.13 per diluted share
Gross profit of $98.7 million and adjusted EBITDA of $40.4 million was the second best first fiscal quarter performance in Company history
Net leverage of 3.9x, decreased from 4.4x in prior year


THE WOODLANDS, Texas - February 6, 2019 - Nexeo Solutions, Inc. (NASDAQ:NXEO) (the "Company" or "Nexeo Solutions"), today announced its consolidated financial results for the three months ended December 31, 2018.

David Bradley, President and Chief Executive Officer of Nexeo Solutions stated, "I’m proud to report that we posted our second best first quarter gross profit and adjusted EBITDA in Nexeo’s history. While our first quarter performance reflects some deflationary and macroeconomic headwinds, we remain focused on continued execution of our strategic priorities in any environment. The merger with Univar is on track to close and by combining the best of the best, Univar Solutions will be well-positioned strategically and financially to deliver increased value to our shareholders and worldwide industry partners."

Sales and operating revenues were $935.8 million and $929.6 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The increase in revenues was attributable to an increase in average selling prices of 4.0% primarily due to increased specialty products sales in North America. The increase was partially offset by a 3.8% volume decrease, as well as, approximately $8.8 million which was a result of weakening exchange rates of various currencies versus the USD as compared to the same period in the prior fiscal year.

Gross profit was $98.7 million and $106.9 million for the three months ended December 31, 2018 and December 31, 2017, respectively. Gross profit decreased due to lower volumes as discussed above and a deflationary environment at the end of the current period, which caused margin compression and contributed to lower demand as customers actively reduced inventory levels in anticipation of lower product prices. Approximately $0.8 million of the decrease in gross profit was due to the weakening of exchange rates of various currencies versus the USD compared to the same period in the prior fiscal year.

The Company reported net income of $16.2 million and $26.5 million for the three months ended December 31, 2018 and December 31, 2017, respectively. Adjusted EBITDA was $40.4 million and $44.2 million for the three months ended December 31, 2018 and December 31, 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


First Quarter 2019 Performance

The results of the Company's operating performance are described below and, unless otherwise indicated, are a comparison of the three months ended December 31, 2018 with the three months ended December 31, 2017.
 
Three Months Ended December 31,
 
 
Period Over Period
 
2018
 
2017
 
 
$ Change
 
% Change
Chemicals
 

 
 
 
 
 

 
 
Sales and operating revenues
$
438.5

 
$
431.9

 
 
$
6.6

 
1.5
 %
Gross profit
53.5

 
58.4

 
 
(4.9
)
 
(8.4
)%
Plastics
 

 
 
 
 
 
 
 
Sales and operating revenues
456.1

 
462.2

 
 
(6.1
)
 
(1.3
)%
Gross profit
38.7

 
41.9

 
 
(3.2
)
 
(7.6
)%
Other
 

 
 
 
 
 
 
 
Sales and operating revenues
41.2

 
35.5

 
 
5.7

 
16.1
 %
Gross profit
6.5

 
6.6

 
 
(0.1
)
 
(1.5
)%
Consolidated
 

 
 
 
 
 
 
 
Sales and operating revenues
935.8

 
929.6

 
 
6.2

 
0.7
 %
Gross profit
98.7

 
106.9

 
 
(8.2
)
 
(7.7
)%
 

Segment Highlights

Chemicals - Sales and operating revenues for the Chemicals line of business were $438.5 million and $431.9 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The revenue increase was attributable to a 5.1% increase in average selling prices largely due to stronger product mix and increased specialty demand. This increase was partially offset by a decrease in volumes of 3.4% due to lower demand in the oil and gas end market and lower consumer demand caused by the rapid deflationary environment experienced at the end of the current period.

Gross profit was $53.5 million and $58.4 million for the three months ended December 31, 2018 and December 31, 2017, respectively. Gross profit decreased due to the loosening of prior product supply constraints leading to lower customer demand and the deflationary environment, which caused margin compression and contributed to customers actively reducing inventory levels in anticipation of lower product prices.

Plastics - Sales and operating revenues for the Plastics line of business were $456.1 million and $462.2 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The revenue decrease is driven by $7.6 million associated with the weakening exchange rates of various currencies versus USD compared to the same period in the prior fiscal year, as well as a decrease in volumes of 4.3% due to lower demand in EMEA and Asia. The decrease in revenues was partially offset by an increase in average selling prices of 3.1% resulting from stronger product mix in North America.

Gross profit was $38.7 million and $41.9 million for the three months ended December 31, 2018 and December 31, 2017, respectively. Gross profit decreased primarily due to a deflationary environment at the end of the current period, which caused price compression. This was partially offset by a favorable shift in product mix in North America. Approximately $0.7 million of the decrease in gross profit was due to 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 $41.2 million and $35.5 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The increase in revenues was due to growth in on-site services and an increase in waste services to existing customers.

Gross profit was $6.5 million and $6.6 million for the three months ended December 31, 2018 and December 31, 2017, respectively. The decrease was primarily due to the shift in product mix for the current period.



EXHIBIT 99.1



Nexeo Solutions to Hold Earnings Conference Call

The Company will hold a conference call to discuss its first quarter fiscal year 2019 earnings on Thursday, February 7, 2019 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:    7192068

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 February 7, 2019, beginning at 12:00 p.m. CT (1:00 p.m. ET), through February 14, 2019. The phone number for the conference call replay is +1.855.859.2056 (Domestic) or +1.404.537.3406 (International). The access passcode is 7192068. 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 was derived based on methodologies other than in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company’s management has included this measure because they believe it is indicative of the Company’s operating performance, is used by investors and analysts to evaluate the Company and can facilitate comparisons across periods. As presented by the Company’s management, this measure 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
Condensed Consolidated Balance Sheets
(Unaudited, in millions, except share amounts and par value)
 
December 31, 2018
 
September 30, 2018
Current Assets
 
 
 
Cash and cash equivalents
$
54.6

 
$
58.9

Accounts and notes receivable (net of allowance for doubtful accounts of $3.9 million and $4.2 million, respectively)
549.5

 
607.8

Inventories
360.5

 
338.8

Income taxes receivable
6.4

 
5.9

Other current assets
16.9

 
17.3

Total current assets
987.9

 
1,028.7

 
 
 
 
Non-Current Assets
 

 
 

Property, plant and equipment, net
279.1

 
284.9

Goodwill
697.6

 
699.9

Other intangible assets, net of amortization
204.0

 
211.6

Deferred income taxes
1.5

 
2.3

Other non-current assets
9.0

 
16.2

Total non-current assets
1,191.2

 
1,214.9

Total Assets
$
2,179.1

 
$
2,243.6

 
 
 
 
Current Liabilities
 
 
 
Short-term borrowings, current portion of long-term debt and capital lease obligations
$
49.3

 
$
47.7

Accounts payable
308.1

 
380.1

Accrued expenses and other liabilities
38.8

 
67.2

Due to related party pursuant to contingent consideration obligations
14.5

 
14.7

Income taxes payable
2.7

 
2.9

Total current liabilities
413.4

 
512.6

 
 
 
 
Non-Current Liabilities
 

 
 

Long-term debt and capital lease obligations, less current portion, net
805.1

 
752.4

Deferred income taxes
29.0

 
30.7

Due to related party pursuant to contingent consideration obligations
100.1

 
122.8

Other non-current liabilities
12.0

 
10.6

Total non-current liabilities
946.2

 
916.5

Total Liabilities
1,359.6

 
1,429.1

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity
 

 
 

Preferred stock, $0.0001 par value (1,000,000 shares authorized, none issued and outstanding as of December 31, 2018 and September 30, 2018)

 

Common stock, $0.0001 par value (300,000,000 shares authorized; 89,755,231 shares issued and 89,698,331 shares outstanding as of December 31, 2018 and 89,747,062 shares issued and 89,727,546 shares outstanding as of September 30, 2018)

 

Additional paid-in capital
773.3

 
771.5

Retained earnings
50.4

 
34.2

Accumulated other comprehensive income (loss)
(3.6
)
 
9.0

Treasury stock, at cost: 56,900 and 19,516 shares as of December 31, 2018 and September 30, 2018
(0.6
)
 
(0.2
)
Total equity
819.5

 
814.5

Total Liabilities and Equity
$
2,179.1

 
$
2,243.6






EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, in millions, except share amounts and par value)
 
 
 
Three Months Ended December 31,
 
 
2018
 
2017
Sales and operating revenues
 
$
935.8

 
$
929.6

Cost of sales and operating expenses
 
837.1

 
822.7

Gross profit
 
98.7

 
106.9

Selling, general and administrative expenses
 
79.8

 
84.8

Transaction related costs
 
8.2

 
0.1

Change in fair value of contingent consideration obligations
 
(22.9
)
 
(18.6
)
Operating income
 
33.6

 
40.6

Other income, net
 
0.1

 
0.1

Interest income (expense)
 
 
 
 
Interest income
 
0.2

 
0.1

Interest expense
 
(13.5
)
 
(13.0
)
Net income before income taxes
 
20.4

 
27.8

Income tax expense
 
4.2

 
1.3

Net income
 
$
16.2

 
$
26.5

 
 
 
 
 
Net income per share available to common stockholders
 
 
 
 
    Basic
 
$
0.21

 
$
0.35

    Diluted
 
$
0.21

 
$
0.34

Weighted average number of common shares outstanding
 
 
 
 
    Basic
 
76,945,078

 
76,793,518

    Diluted
 
77,094,430

 
77,139,236

 





EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)
 
Three Months Ended December 31,
 
2018
 
2017
Cash flows from operations
 

 
 
Net income
$
16.2

 
$
26.5

Adjustments to reconcile to cash flows from operations:
 

 
 
Depreciation and amortization
17.2

 
19.5

Debt issuance costs amortization, debt issuance costs write-offs and original issue discount amortization
1.2

 
1.1

Provision for bad debt
(0.2
)
 
0.3

Deferred income taxes
1.6

 
(1.8
)
Equity-based compensation expense
1.8

 
1.7

Change in fair value of contingent consideration obligations
(22.9
)
 
(18.6
)
Changes in assets and liabilities:
 

 
 
Accounts and notes receivable
55.8

 
36.9

Inventories
(23.1
)
 
(50.5
)
Other current assets
(0.3
)
 
(1.6
)
Accounts payable
(70.7
)
 
(60.8
)
Accrued expenses and other liabilities
(26.4
)
 
(12.6
)
Changes in other operating assets and liabilities, net
(0.4
)
 
0.7

Net cash used in operating activities
(50.2
)
 
(59.2
)
Cash flows from investing activities
 

 
 
Additions to property and equipment
(4.8
)
 
(4.1
)
Proceeds from the disposal of property and equipment

 
0.6

Cash paid for asset acquisitions
(1.7
)
 

Net cash used in investing activities
(6.5
)
 
(3.5
)
Cash flows from financing activities
 
 
 
Cash paid to TPG related to TRA

 
(4.2
)
Proceeds from short-term debt
29.6

 
27.9

Repayments of short-term debt
(28.0
)
 
(31.6
)
Proceeds from issuance of long-term debt
252.7

 
231.7

Repayments of long-term debt and capital lease obligations
(200.7
)
 
(172.9
)
Payment of debt issuance costs

 
(0.8
)
Net cash provided by financing activities
53.6

 
50.1

Effect of exchange rate changes on cash and cash equivalents
(1.2
)
 
0.1

Decrease in cash and cash equivalents
(4.3
)
 
(12.5
)
Cash and cash equivalents at the beginning of the period
58.9

 
53.9

Cash and cash equivalents at the end of the period
$
54.6

 
$
41.4

Supplemental disclosure of cash flow information:
 

 
 
Cash paid during the period for interest
$
12.4

 
$
14.0

Cash paid during the period for taxes (net of refunds)
$
3.0

 
$
1.6

Supplemental disclosure of non-cash investing activities:
 
 
 
Non-cash capital expenditures
$
1.9

 
$
1.4

 



EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Segment Information
(Unaudited, in millions)
 
Three Months Ended December 31,
 
2018
 
2017
Chemicals
 

 
 
Sales and operating revenues
$
438.5

 
$
431.9

Gross profit
53.5

 
58.4

Plastics
 

 
 
Sales and operating revenues
456.1

 
462.2

Gross profit
38.7

 
41.9

Other
 

 
 
Sales and operating revenues
41.2

 
35.5

Gross profit
6.5

 
6.6

Consolidated
 

 
 
Sales and operating revenues
935.8

 
929.6

Gross profit
98.7

 
106.9

 






EXHIBIT 99.1

Nexeo Solutions, Inc. and Subsidiaries
Adjusted Net Income Reconciliation
(Unaudited, in millions except per share data)
 
 
Three Months Ended December 31, 2018
 
Three Months Ended December 31, 2017
 
 
Amount
 
Per Share
 
Amount
 
Per Share
Net income
 
$
16.2

 
$
0.21

 
$
26.5

 
$
0.34

Change in fair value related to contingent consideration obligations
 
(22.9
)
 
(0.30
)
 
(18.6
)
 
(0.24
)
Management add-backs (1)
 
2.6

 
0.03

 
1.3

 
0.02

Transaction related costs (2)
 
8.2

 
0.11

 
0.1

 

Tax impact
 
5.7

 
0.07

 
3.1

 
0.04

Adjusted net income
 
$
9.8

 
$
0.13

* 
$
12.4

 
$
0.16

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, potential acquisitions and other business combination related items


Nexeo Solutions, Inc. and Subsidiaries
Adjusted EBITDA Reconciliation
(Unaudited, in millions)
 
Three Months Ended December 31,
 
2018
 
2017
Net income
$
16.2

 
$
26.5

Interest expense, net
13.3

 
12.9

Income tax expense
4.2

 
1.3

Depreciation and amortization
17.2

 
19.5

Other operating expenses, net (1)
(10.5
)
 
(16.0
)
Adjusted EBITDA
$
40.4

 
$
44.2


(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 December 31,
 
2018
 
2017
Management add-backs (1)
$
2.6

 
$
1.3

Change in fair value related to contingent consideration obligations
(22.9
)
 
(18.6
)
Foreign exchange gains, net (2)
(0.2
)
 
(0.5
)
Compensation expense related to management equity plan (non-cash)
1.8

 
1.7

Transaction related costs (3)
8.2

 
0.1

Other operating expenses, net
$
(10.5
)
 
$
(16.0
)
 
(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, potential acquisitions and other business combination related items


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EXHIBIT 99.2 FIRST QUARTER FISCAL YEAR 2019 Earnings Conference Call & Presentation February 7, 2019 at 9:00 a.m. CT (10:00 a.m. ET) 1


 
EXHIBIT 99.2 First Quarter Fiscal Year 2019 Welcome to Nexeo’s Earnings Conference Call and Presentation February 7, 2019 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: 7192068 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 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 pending Univar Merger. 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 Business Update . Revenue growth of 1%, with continued Trending Twelve Months Growth Performance strong commercial execution in a ($ in millions, Unaudited) mixed pricing market environment Gross Profit $451.9 . First fiscal quarter net income of $16.2 $420.9 million, or $0.21 per diluted share  Adjusted* net income was $9.8 million, +7% or $0.13 per diluted share Q1-FY18 Q1-FY19 . Gross profit of $99 million and adjusted* Adjusted* EBITDA EBITDA of $40 million for the quarter $205.2  Second best first fiscal quarter $195.0 performance in Nexeo’s history +5% *Non-GAAP financial measure; See appendix slides for reconciliation to the most comparable GAAP financial measure Q1-FY18 Q1-FY19 6


 
EXHIBIT 99.2 Ross Crane Chief Financial Officer


 
EXHIBIT 99.2 Fiscal First Quarter 2019 Highlights Consolidated ($ in millions) Three Months Three Months Ended Ended Variance Consolidated Dec-31-2018 Dec-31-2017 Sales and operating revenues $ 935.8 $ 929.6 1% . Volume down 4% Gross profit 98.7 106.9 (8)% . Average selling prices up 4% Gross profit margin 10.5% 11.5% - 100 bps Chemicals ($ in millions) Three Months Three Months Ended Ended Variance Chemicals Dec-31-2018 Dec-31-2017 Sales and operating revenues $ 438.5 $ 431.9 2% . Volume down 3% Gross profit 53.5 58.4 (8)% . Average selling prices up 5% Gross profit margin 12.2% 13.5% - 130 bps Plastics ($ in millions) Three Months Three Months Ended Ended Variance Plastics Dec-31-2018 Dec-31-2017 Sales and operating revenues $ 456.1 $ 462.2 (1)% . Volume down 4% Gross profit 38.7 41.9 (8)% . Average selling prices up 3% Gross profit margin 8.5% 9.1% - 60 bps 8


 
EXHIBIT 99.2 Fiscal First Quarter 2019 Consolidated Results ($ in millions) Three Months Ended Three Months Ended Dec-31-2018 Dec-31-2017 Variance Q1-FY19 Q1-FY18 $% Sales and operating revenues $ 935.8 $ 929.6 $ 6.2 1% Cost of sales and operating expenses 837.1 822.7 14.4 2% Gross profit 98.7 106.9 (8.2) (8)% SG&A 79.8 84.8 (5.0) (6)% Transaction related costs 8.2 0.1 8.1 8,100% Change in fair value related to contingent consideration (22.9) (18.6) (4.3) (23)% obligations Operating income 33.6 40.6 (7.0) (17)% Other income, net 0.1 0.1 0.0 0% Interest expense, net (13.3) (12.9) (0.4) (3)% Net income before income taxes 20.4 27.8 (7.4) (27)% Income tax expense 4.2 1.3 2.9 223% Net income $ 16.2 $ 26.5 $ (10.3) (39)% Adjusted* EBITDA $ 40.4 $ 44.2 $ (3.8) (9)% Adjusted* EBITDA % of sales 4.3% 4.8% Conversion Ratio** 40.9% 41.3% *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 9


 
EXHIBIT 99.2 Key Balance Sheet Metrics ($ in millions) Total Debt (1) Cash $901.0 $58.9 $54.6 $854.4 $800.1 $41.4 Q1-FY18 Q4-FY18 Q1-FY19 Q1-FY18 Q4-FY18 Q1-FY19 Net Debt (1)(2) Working Capital (4) $859.6 $549.8 $548.6 $799.8 $484.6 $741.2 14.6% 13.6% 12.0% Leverage (3) 4.4x 3.5x 3.9x Q1-FY18 Q4-FY18 Q1-FY19 Q1-FY18 Q4-FY18 Q1-FY19 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) 10


 
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  November 16, 2018, Univar and Nexeo announced that the waiting period under the HSR Act had expired  February 27, 2019, Univar Special Meeting for stockholder vote  Nexeo's key stockholders, TPG and First Pacific, have provided consent for the proposed transaction 12


 
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 76.9 million Diluted - Average Common Shares Outstanding 77.1 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 16


 
EXHIBIT 99.2 Trending Twelve Months Consolidated Results ($ in millions, except per share data) Twelve Months Ended Twelve Months Ended Dec-31-2018 Dec-31-2017 Variance Q1-2019 Q1-2018 $% Sales and operating revenues $ 4,040.4 $ 3,771.7 $ 268.7 7% Cost of sales and operating expenses 3,588.5 3,350.8 237.7 7% Gross profit 451.9 420.9 31.0 7% SG&A 347.6 323.2 24.4 8% Transaction related costs 10.9 1.2 9.7 808% Change in fair value related to contingent consideration 3.2 (13.0) 16.2 125% obligations Operating income 90.2 109.5 (19.3) (18)% Other income, net 1.0 6.0 (5.0) (83)% Interest expense, net (52.5) (51.8) (0.7) (1)% Net income before income taxes 38.7 63.7 (25.0) (39)% Income tax expense 19.6 14.5 5.1 35% Net income $ 19.1 $ 49.2 $ (30.1) (61)% Adjusted* EBITDA $ 205.2 $ 195.0 $ 10.2 5% Adjusted* EBITDA % of sales 5.1% 5.2% Conversion Ratio** 45.4% 46.3% 32.9% *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 17


 
EXHIBIT 99.2 Fiscal First Quarter 2019 Financial Results In millions (except per share data) Three Months Ended Three Months EndedVariance Twelve Months Ended Twelve Months Ended Variance Dec-31-2018 Dec-31-2017 $ % Dec-31-2018 Dec-31-2017 $ % Sales and operating revenues Chemicals $ 438.5 $ 431.9 $ 6.6 1.5 %$ 1,911.1 $ 1,746.7 $ 164.4 9.4 % Plastics 456.1 462.2 (6.1) (1.3)% 1,973.9 1,891.4 82.5 4.4 % Other 41.2 35.5 5.7 16.1 % 155.4 133.6 21.8 16.3 % Total sales and operating revenues 935.8 929.6 6.2 0.7 % 4,040.4 3,771.7 268.7 7.1 % Gross profit Chemicals 53.5 58.4 (4.9) (8.4)% 243.1 221.3 21.8 9.9 % Margin 12.2% 13.5%(130) bps 12.7% 12.7% 0 bps Plastics 38.7 41.9 (3.2) (7.6)% 183.2 173.1 10.1 5.8 % Margin 8.5% 9.1%(60) bps 9.3% 9.2% 10 bps Other 6.5 6.6 (0.1) (1.5)% 25.6 26.5 (0.9) (3.4)% Margin 15.8% 18.6%(280) bps 16.5% 19.8% (330) bps Total gross profit 98.7 106.9 (8.2) (7.7)% 451.9 420.9 31.0 7.4 % Total gross profit margin 10.5% 11.5%(100) bps 11.2% 11.2% 0 bps SG&A 79.8 84.8 (5.0) (5.9)% 347.6 323.2 24.4 7.5 % Transaction related costs 8.2 0.1 8.1 8100.0 % 10.9 1.2 9.7 808.3 % Change in fair value related to contingent consideration obligations (22.9) (18.6) (4.3) (23.1)% 3.2 (13.0) 16.2 124.6 % Operating income 33.6 40.6 (7.0) (17.2)% 90.2 109.5 (19.3) (17.6)% Other income, net 0.1 0.1 0.0 0.0 % 1.0 6.0 (5.0) (83.3)% Interest expense, net (13.3) (12.9) (0.4) (3.1)% (52.5) (51.8) (0.7) (1.4)% Net income before income taxes 20.4 27.8 (7.4) (26.6)% 38.7 63.7 (25.0) (39.2)% Income tax expense 4.2 1.3 2.9 223.1 % 19.6 14.5 5.1 35.2 % Net income $ 16.2 $ 26.5 $ (10.3) (38.9)%$ 19.1 $ 49.2 $ (30.1) (61.2)% Adjusted* EBITDA$ 40.4 $ 44.2 $ (3.8) (8.6)%$ 205.2 $ 195.0 $ 10.2 5.2 % Adjusted* EBITDA % of sales 4.3% 4.8% 5.1% 5.2% Conversion Ratio** 40.9% 41.3% NA 45.4% 46.3% 32.9 % *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 18


 
EXHIBIT 99.2 Non-GAAP Reconciliation Nexeo Solutions, Inc. and Subsidiaries Adjusted Net Income Reconciliation ($ in millions, Unaudited) Q1-FY18 Q1-FY19 Per Per Amount Share Amount Share Net income $ 26.5 $ 0.34 $ 16.2 $ 0.21 Change in fair value related to contingent consideration obligations (18.6) (0.24) (22.9) (0.30) Management add-backs (1) 1.3 0.02 2.6 0.03 Transaction related costs (2) 0.1 0.00 8.2 0.11 Estimated net tax impact 3.1 0.04 5.7 0.07 Adjusted net income $ 12.4 $ 0.16 $ 9.8 $ 0.13* 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 19


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Quarterly Adjusted EBITDA Reconciliation ($ in millions, Unaudited) Q1-FY18 Q2-FY18 Q3-FY18 Q4-FY18 Q1-FY19 Net income (loss) $ 26.5 $ 0.4 $ 17.5 $ (15.0) $ 16.2 Interest expense, net 12.9 12.6 13.3 13.3 13.3 Income tax expense 1.3 4.6 9.7 1.1 4.2 Depreciation and amortization 19.5 19.6 18.5 17.3 17.2 Other operating expenses, net (1) (16.0) 16.5 (1.4) 36.8 (10.5) Adjusted EBITDA $ 44.2 $ 53.7 $ 57.6 $ 53.5 $ 40.4 (1) See Non-GAAP Reconciliation: Quarterly – Other Operating Expenses, Net 20


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries TTM Adjusted EBITDA Reconciliation ($ in millions, Unaudited) Trending Twelve Months Ending 12/31/2017 03/31/2018 06/30/2018 09/30/2018 12/31/2018 Net income $ 49.2 $ 50.7 $ 58.0 $ 29.4 $ 19.1 Interest expense, net 51.8 52.0 51.8 52.1 52.5 Income tax expense 14.5 18.3 22.1 16.7 19.6 Depreciation and amortization 75.8 77.6 77.2 74.9 72.6 Other operating expenses, net (1) 3.7 4.4 (0.9) 35.9 41.4 Adjusted EBITDA $ 195.0 $ 203.0 $ 208.2 $ 209.0 $ 205.2 (1) See Non-GAAP Reconciliation: Trailing Twelve Months Ending - Other Operating Expenses, Net 21


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Quarterly Other Operating Expenses, Net ($ in millions, Unaudited) Q1-FY18 Q2-FY18 Q3-FY18 Q4-FY18 Q1-FY19 Management add-backs (1) $ 1.3 $ 2.6 $ 4.5 $ 9.0 $ 2.6 Change in fair value related to contingent consideration obligations (18.6) 12.6 (8.7) 22.2 (22.9) Foreign exchange (gains) losses, net (2) (0.5) (0.5) 1.0 1.1 (0.2) Compensation expense related to management equity plan (non-cash) 1.7 1.8 1.8 1.8 1.8 Transaction related costs (3) 0.1 - - 2.7 8.2 Other operating expenses, net $ (16.0) $ 16.5 $ (1.4) $ 36.8 $ (10.5) (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 22


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries TTM Other Operating Expenses, Net ($ in millions, Unaudited) Trending Twelve Months Ending 12/31/2017 03/31/2018 06/30/2018 09/30/2018 12/31/2018 Management add-backs (1) $ 9.4 $ 8.6 $ 10.9 $ 17.4 $ 18.7 Change in fair value related to contingent consideration obligations (13.0) (10.4) (18.3) 7.5 3.2 Foreign exchange (gains) losses, net (2) (0.7) (2.0) (0.6) 1.1 1.4 Compensation expense related to management equity plan (non-cash) 5.8 6.3 6.6 7.1 7.2 Inventory step up 1.0 1.0 (0.2) - - Transaction related costs (3) 1.2 0.9 0.7 2.8 10.9 Other operating expenses, net $ 3.7 $ 4.4 $ (0.9) $ 35.9 $ 41.4 (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 23


 
EXHIBIT 99.2 Non-GAAP Reconciliation (continued) Nexeo Solutions, Inc. and Subsidiaries Net Debt Reconciliation ($ in millions, Unaudited) Q1-FY18 Q4-FY18 Q1-FY19 Long-term debt and capital lease obligations, less $ 852.6 $ 752.4 $ 805.1 current portion, net Short-term borrowings and current portion of long-term 48.4 47.7 49.3 debt and capital lease obligations Total Debt 901.0 800.1 854.4 Cash and cash equivalents (41.4) (58.9) (54.6) Net Debt $ 859.6 $ 741.2 $ 799.8 24


 
EXHIBIT 99.2 NEXEO SOLUTIONS, INC.