10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended December 31, 2018

or 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from                 to             

Commission File Number: 001-36477

NEXEO SOLUTIONS, INC.

(Exact name of registrant as specified in its charter) 

Delaware	46-5188282
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3 Waterway Square Place, Suite 1000 The Woodlands, Texas	77380
(Address of principal executive offices)	(Zip Code)

 

(281) 297-0700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer o	Accelerated filer   x
Non-accelerated filer   o	Smaller reporting company  o
	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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  ý

As of February 1, 2019, there were 89,698,331 shares of the Company’s common stock outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Forward-Looking Statements		6
Item 1. Financial Statements (unaudited)		7
	Condensed Consolidated Balance Sheets	7
	Condensed Consolidated Statements of Operations	8
	Condensed Consolidated Statements of Comprehensive Income	9
	Condensed Consolidated Statements of Equity	10
	Condensed Consolidated Statements of Cash Flows	11
	Notes to Condensed Consolidated Financial Statements	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3. Quantitative and Qualitative Disclosures About Market Risk		49
Item 4. Controls and Procedures		51
PART II—OTHER INFORMATION		52
Item 1. Legal Proceedings		52
Item 1A. Risk Factors		53
Item 2. Unregistered Sales of Equity Securities And Use of Proceeds		53
Item 3. Defaults Upon Senior Securities		53
Item 4. Mine Safety Disclosures		53
Item 5. Other Information		53
Item 6. Exhibits		54

2

Glossary

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.

2016 LTIP	The Nexeo Solutions, Inc. 2016 Long Term Incentive Plan
ABL Borrowers	Holdings, Sub Holding and Solutions together with Nexeo Solutions Canada Corporation
ABL Facility	The asset-based credit facility pursuant to that certain asset-based credit agreement by and among the ABL Borrowers, Bank of America, N.A., as administrative agent and the lenders party thereto and the other parties thereto
ASC	The FASB Accounting Standards Codification
ASU	Accounting Standards Update issued by the FASB
Blocker	TPG Accolade Delaware, L.P.
Blocker Merger	The merger of Blocker Merger Sub into Blocker on June 9, 2016, immediately following the Company Merger, with Blocker continuing as the surviving entity
Blocker Merger Sub	Neon Acquisition Company LLC, which was a wholly-owned subsidiary of WLRH at the time of the Blocker Merger
Business Combination	The business combination between WLRH and Holdings pursuant to the Merger Agreement, which was consummated on the Closing Date
CAD	Canadian dollar
Canadian Tranche	Canadian tranche of the ABL Facility
Closing Date	June 9, 2016
Company / Nexeo	Nexeo Solutions, Inc. (f/k/a WL Ross Holding Corp.) and its consolidated subsidiaries
Company Merger	The merger of Company Merger Sub with and into Holdings consummated on June 9, 2016, with Holdings continuing as the surviving entity
Company Merger Sub	Neon Holding Company LLC, which was a wholly-owned subsidiary of WLRH at the time of the Company Merger
Credit Facilities	The ABL Facility and the Term Loan Facility, collectively
Deferred Cash Consideration	The deferred payment to be made in cash to the Selling Equityholders pursuant to the Merger Agreement, where such deferred cash payments will generally be in an amount equal to the Company’s prevailing stock price at the time that the Company pays such deferred cash payments multiplied by the number of Excess Shares or as otherwise set forth in the Merger Agreement
DTSC	California Department of Toxic Substances Control
EBITDA	Earnings before interest, tax, depreciation and amortization
EMEA	Europe, Middle East and Africa
ERP	Enterprise resource planning
Excess Shares	The 5,178,642 shares of Company common stock used to calculate the Deferred Cash Consideration payable to the Selling Equityholders pursuant to the Merger Agreement
Exchange Act	U.S. Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FILO Tranche	$30.0 million tranche within the ABL Facility for non-Canadian foreign subsidiaries to issue loans and letters of credit
Founder Shares	The 12,506,250 shares of Company common stock issued to the Sponsor at the time of the IPO
GDP	Gross domestic product
Holdings	Nexeo Solutions Holdings, LLC
HSR Act	Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
IPO	The initial public offering of WLRH, consummated on June 11, 2014
Merger Agreement	Agreement and Plan of Merger, as amended, by and among WLRH, Blocker Merger Sub, Company Merger Sub, Holdings, Blocker, and Nexeo Holdco, LLC dated as of March 21, 2016
Mergers	The Company Merger and the Blocker Merger, collectively

3

Merger Sub I	Pilates Merger Sub I Corp, a Delaware corporation and direct wholly owned Subsidiary of Univar
Merger Sub II	Pilates Merger Sub II Corp, a Delaware corporation and direct wholly owned Subsidiary of Univar
Montgomery Lease	The Company’s leased facility in Montgomery, Illinois commencing in the first fiscal quarter of 2017
NASDAQ	NASDAQ Stock Market
NYSE	New York Stock Exchange
Peso	Mexican peso
Predecessor	Holdings and its subsidiaries for the periods prior to the Closing Date
PSLRA	U.S. Private Securities Litigation Reform Act of 1995
PSU	Performance share unit issued under the 2016 LTIP
RCRA	U.S. Resource Conservation and Recovery Act
RMB	Chinese renminbi
RSU	Restricted stock unit issued under the 2016 LTIP
Ryder	Ryder Truck Rental, Inc.
Ryder Lease	Lease agreement entered into by and between the Predecessor and Ryder in May 2015 for certain transportation equipment
SAFE	People’s Republic of China State Administration of Foreign Exchange
SEC	U.S. Securities and Exchange Commission
Secured Net Leverage Ratio	The ratio of Consolidated Total Indebtedness divided by EBITDA (terms as defined in the Term Loan Facility agreement)
Securities Act	U.S. Securities Act of 1933, as amended
Selling Equityholders	The holders of equity interests in Holdings (other than Blocker) and the holders of equity interests in Blocker, in each case, as of the time immediately prior to the Business Combination
Solutions	Nexeo Solutions, LLC
Sponsor	WL Ross Sponsor LLC, the sponsor entity of WLRH prior to the Business Combination.
Sub Holding	Nexeo Solutions Sub Holding Corp.
Tax Act	The comprehensive tax legislation enacted by the U.S. government on December 22, 2017, commonly referred to as the Tax Cuts and Jobs Act.
Term Loan Facility	Term loan credit facility pursuant to that certain credit agreement by and among Holdings, Solutions, Sub Holding, Bank of America, N.A., as administrative and collateral agent, the other agents party thereto and the lenders party thereto
TLB Amendment No. 2	The amendment to the Term Loan Facility dated December 19, 2017
TPG	TPG Capital, L.P. together with its affiliates, including TPG Accolade
TPG Accolade	TPG Accolade, L.P.
TPG Restricted Stock Grants	Restricted stock agreements entered into between TPG and certain of the Company’s officers and employees
TRA	The Tax Receivable Agreement entered into in connection with the Business Combination, by and between the Company and the Selling Equityholders, dated as of June 9, 2016
TRA Holders	Nexeo Holdco, LLC, TPG VI, Nexeo I, LP., TPG VI Nexeo II, L.P. and TPG VI FOF Nexeo L.P.
TRA Termination Agreement	The TRA Termination Agreement included as Exhibit 10.1 to the Form 8-K filed with the SEC on September 18, 2018.
Ultra Chem Acquisition	The April 3, 2017 acquisition of the equity interests of the Mexico City, Mexico based chemicals distribution business of the Ultra Chem Group pursuant to the Ultra Chem Stock Purchase Agreement
Ultra Chem Group	The Mexico City, Mexico based chemicals distribution business of Ultra Chem, S. de R.L. de C.V. and its related entities

4

Ultra Chem Stock Purchase Agreement	The Stock Purchase Agreement dated March 9, 2017 related to the purchase of the equity interests of Ultra Chem Group
Univar	Univar, Inc.
Univar Merger Agreement	Agreement and Plan of Merger by and among Nexeo, Univar, Merger Sub I and Merger Sub II dated as of September 17, 2018 providing for the acquisition of Nexeo by Univar.
U.S.	United States of America
USD	U.S. Dollar
U.S. GAAP	U.S. Generally accepted accounting principles
U.S. Tranche	U.S. Tranche of the ABL Facility
WLRH	WL Ross Holding Corp.

5

Forward-Looking Statements

Certain information and statements contained in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the PSLRA codified at Section 27A of the Securities Act, and Section 21E of the Exchange Act. This statement is included for purposes of complying with the safe harbor provisions of the PSLRA. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “may,” “will,” “could,” “would” and similar expressions. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks, including cybersecurity risks, or uncertainties, and we urge you not to place undue reliance on any forward-looking statements, which reflect management’s current expectations and assumptions about future events, and which are based on currently available information as to the timing and outcome of future events. Certain forward-looking statements are included in this Quarterly Report on Form 10-Q, principally in the section captioned “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018.

These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Unless otherwise indicated or the context otherwise requires, comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results.

Our future results will depend upon various other risks and uncertainties, including those described in the section captioned “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement.

6

PART I

Item 1. Financial Statements

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 (see Note 14)
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

 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

7

Nexeo Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in millions, except share amounts and per share data) 

	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

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

8

Nexeo Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, in millions) 

	Three Months Ended December 31,
	2018			2017
Net income	$	16.2		$	26.5
Unrealized foreign currency translation gain (loss), net of tax (1)	(6.9		)	1.1
Unrealized gain (loss) on interest rate hedges, net of tax (2)	(5.7		)	1.9
Other comprehensive income (loss), net of tax	(12.6		)	3.0
Total comprehensive income, net of tax	$	3.6		$	29.5

⁽¹⁾ Tax effects are not material.

⁽²⁾  Tax impact of the unrealized gains and losses related to the interest rate swaps was $2.0 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

9

Nexeo Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited, in millions, except share amounts)

	Common Stock				Treasury Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount		Shares	Amount
Balance at September 30, 2018	89,727,546		$	—	19,516	$	(0.2	)	$	771.5	$	34.2	$	9.0		$	814.5
Vesting of restricted stock units	8,169		—		—	—			—		—		—			—
Shares associated with employee tax withholding for vesting of certain equity awards	(37,384	)	—		37,384	(0.4		)	—		—		—			(0.4		)
Equity-based compensation	—		—		—	—			1.8		—		—			1.8
Comprehensive income (loss):
Net income	—		—		—	—			—		16.2		—			16.2
Other comprehensive loss	—		—		—	—			—		—		(12.6		)	(12.6		)
Balance at December 31, 2018	89,698,331		$	—	56,900	$	(0.6	)	$	773.3	$	50.4	$	(3.6	)	$	819.5

	Common Stock				Treasury Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
	Shares		Amount		Shares	Amount
Balance at September 30, 2017	89,344,065		$	—	9,576	$	(0.1	)	$	764.4	$	4.8	$	8.5	$	777.6
Issuance of restricted stock	415,867		—		—	—			—		—		—		—
Vesting of restricted stock units	8,162		—		—	—			—		—		—		—
Forfeiture of restricted stock award	(24,008	)	—		—	—			—		—		—		—
Shares associated with employee tax withholding for vesting of certain equity awards	(2,777	)	—		2,777	—			—		—		—		—
Equity-based compensation	—		—		—	—			1.7		—		—		1.7
Comprehensive income:
Net income	—		—		—	—			—		26.5		—		26.5
Other comprehensive income	—		—		—	—			—		—		3.0		3.0
Balance at December 31, 2017	89,741,309		$	—	12,353	$	(0.1	)	$	766.1	$	31.3	$	11.5	$	808.8

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

10

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

 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

11

Nexeo Solutions, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited, in millions, except per share amounts)

1. Basis of Presentation and Nature of Operations

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as disclosed herein) considered necessary for a fair statement have been included. Results of operations for the three months ended December 31, 2018 are not necessarily indicative of results to be expected for the fiscal year ending September 30, 2019. Quarterly financial data should be read in conjunction with the consolidated financial statements and accompanying notes for the fiscal year ended September 30, 2018 included in the Company's Annual Report on Form 10-K filed with the SEC on December 6, 2018.

The consolidated financial data as of September 30, 2018 presented in these unaudited condensed consolidated financial statements were derived from the Company’s audited consolidated financial statements, but do not include all disclosures required by U.S. GAAP.

Nature of Operations

The Company is a global materials distributor for chemicals products in North America and Asia and for plastics products in North America, EMEA and Asia. In North America, primarily in the U.S., the Company provides on-site and off-site hazardous and non-hazardous environmental services, including waste collection, transportation, recovery, disposal arrangement and recycling services. The Company offers its customers products used in a broad cross-section of end markets including household, industrial and institutional, lubricants, performance coatings (including architectural coatings, adhesives, sealants and elastomers), automotive, healthcare, personal care, oil and gas and construction. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development.

2. Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU supersede the revenue recognition requirements in Topic 605, Revenue Recognition and require that revenue be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. These amendments are effective for annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. The Company adopted this standard on October 1, 2018. For disclosures related to the adoption of this guidance, see Note 3.

In August 2016 the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  This ASU made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. The Company adopted this standard as of October 1, 2018 and it did not have a material effect on the Company’s financial position or results of operations.

12

New Accounting Pronouncements Not Yet Adopted

The Company continues the evaluation of the potential effects on its financial position or results of operations of the accounting pronouncements disclosed in its consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018, including ASU 2016-02, Leases. The Company is in the process of evaluating the potential effects of ASU 2016-02 and is formulating its implementation plan, including potential changes to accounting systems, policies and internal controls to support the adoption of the new guidance.

3. Revenue

On October 1, 2018, the Company adopted the new revenue standard and there were no adjustments recorded in connection with the adoption.

The Company generally disaggregates revenues from contracts with customers by its operating segments. Reportable segmentation reflects how the Company reviews the financial performance of its operations. The Company also disaggregates revenues by geography and for its Chemicals and Plastics operating segments, by product type. Disaggregation by geography and product type provides information relevant to understanding underlying economic and regional trends.

The following table disaggregates external customer net sales by geography:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
U.S.	$	393.4	$	262.4	$	41.0	$	696.8
Canada	23.0		21.9		0.2		45.1
Other North America	17.5		12.3		—		29.8
EMEA	—		120.0		—		120.0
Asia	4.6		39.5		—		44.1
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

The following table disaggregates external customer net sales by specialties, non-specialties and environmental services:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
Specialty	$	136.5	$	218.9	$	—	$	355.4
Non-Specialty	302.0		237.2		—		539.2
Environmental Services	—		—		41.2		41.2
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

Revenue is recognized when performance obligations are satisfied, which generally occurs when goods or services are transferred to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Payment terms and conditions may vary by regions where the Company operates; however, the term between invoicing and when payment is due is less than one year. As of December 31, 2018, none of the Company’s contracts contained a significant financing component.

The Company is generally the primary obligor in sales transactions with its customers and recognizes revenue primarily based on the gross amount billed to the customer. In sales transactions where the Company is not the primary obligor, it recognizes revenue on a net basis by recognizing only the commission retained from such sales and including that commission in sales and operating revenues in the condensed consolidated statements of operations.

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Consistent with industry standards, the Company may offer volume-based rebates to large customers if the customer purchases a specified volume with the Company over a specified time period. The Company utilizes its experience and access to relevant information to reasonably estimate the amounts of such deductions from gross revenues and regularly reviews the estimates and adjusts accordingly if and when actual experience differs from estimates.

Sales are reported net of tax assessed by governmental authorities. Shipping and handling activities are considered fulfillment costs, and the related amounts billed to customers are included in revenues.

Specialty

The Company classifies the products it sells as specialty products when the products have specified applications, are not easily duplicated and innovation is the main catalyst for product change. These products present higher costs to customers to make a change, have longer sales cycles and may include value added services that are critical to customer purchasing decisions.

Non-Specialty

Products which are not specifically classified as specialty products by the Company are classified as non-specialty products. Typically, attributes of non-specialty products include ease of product change, shorter sales cycles and increased market availability of substitute products. With some exceptions in the Plastics line of business, these attributes generally cause customers of non-specialty products to be more price sensitive.

Environmental Services

The Company generates revenue from environmental services as they are performed and the underlying economic value is transferred to customers. The Company’s environmental services provided to customers are related to waste management services, including on-site services on customer premises and offsite. These services include the collection, recycling and arrangement for disposal of both hazardous and non-hazardous waste products.

Costs to Obtain or Fulfill Contracts with Customers

The Company does not incur significant costs to obtain contracts and therefore none have been capitalized.

Deferred Revenue

While the Company typically bills the customer when products are transferred into the control of the customer, the Company occasionally collects revenues from customers in bill and hold or other similar arrangements or when customers have provided the Company with consideration prior to the Company satisfying a performance obligation.  The Company recognizes these prepayments as deferred revenues and the balances as of December 31, 2018 and September 30, 2018 were not material.

4. Acquisitions

Merger Agreement with Univar

On September 17, 2018, Nexeo and Univar entered into the Univar Merger Agreement providing for the acquisition of Nexeo by Univar.

Subject to the terms and conditions set forth in the Univar Merger Agreement, holders of Nexeo’s common stock will receive (A) the Cash Consideration, described below, and (B) 0.305 of a share of Univar common stock (referred to as the "Stock Consideration").

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The “Cash Consideration” will be $3.29 per share, subject to reduction by up to $0.41 per share based on the closing price of Univar common stock on the day prior to the closing of the proposed transaction. The Cash Consideration will be reduced on a linear basis between $3.29 per share and $2.88 per share to the extent that the closing price of Univar common stock is between $25.34 and $22.18. If the closing price of Univar common stock is $22.18 per share or lower, the Cash Consideration will be $2.88 per share. If the closing price of Univar common stock on is $25.34 per share or higher, the Cash Consideration will be $3.29 per share.

The Univar Merger Agreement and the proposed transaction were approved unanimously by the Board of Directors of both Nexeo and Univar and are subject to review by the SEC and regulatory agencies in the U.S. and other jurisdictions. The Univar Merger Agreement is also subject to a number of conditions, including, among other things and as further described in the Univar Merger Agreement: (i) the adoption by Nexeo’s stockholders of the Univar Merger Agreement, (ii) the approval by Univar’s stockholders of the issuance of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (iii) the receipt of other required regulatory approvals, (iv) the absence of any law or governmental order prohibiting the proposed transaction, (v) the effectiveness of Univar's registration statement (which occurred on January 29, 2019) and the approval for listing on the NYSE of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (vi) no material adverse effect on Nexeo's and Univar's operations having occurred since the signing of the Univar Merger Agreement and (vii) the termination of the TRA. There can be no assurance that the conditions to the completion of the proposed transaction will be satisfied or waived or that the proposed transaction will be completed. On November 16, 2018, Univar and Nexeo announced that the waiting period under the HSR Act expired. Additional required filings have been made with other regulatory agencies in certain foreign jurisdictions and the process is ongoing.

The Univar Merger Agreement contains customary representations and warranties made by each of Univar and Nexeo, and also contains customary pre-closing covenants, including covenants, among others, by each of Univar and Nexeo to operate its respective businesses in the ordinary course consistent with past practice and to refrain from taking certain actions without the other party’s consent during the period prior to closing.

The proposed transaction is expected to close in the first quarter of 2019. Transaction costs incurred by the Company associated with the Univar Merger Agreement were $8.2 million during the three months ended December 31, 2018.

Asset Acquisitions

In December 2016, the Company acquired customer contracts and a customer list. Additionally, in connection with this transaction, the Company entered into a supply agreement and a licensing agreement granting the Company the non-exclusive use of a certain trademark. The total consideration associated with this transaction was $8.5 million, of which $5.1 million was paid at closing and $1.7 million was paid in January 2018 and December 2018. The Company recognized intangible assets totaling $8.5 million in December 2016 which are included in Other intangible assets, net of amortization on the Company’s condensed consolidated balance sheets. The acquired intangible assets will be fully amortized over estimated useful lives ranging between 10 and 13 years.

5. Certain Balance Sheet Information

Cash and Cash Equivalents

Cash and cash equivalents were $54.6 million as of December 31, 2018 and $58.9 million as of September 30, 2018. These amounts included the following:

	December 31, 2018		September 30, 2018
Cash held by foreign subsidiaries	$	45.7	$	52.9
Non-USD denominated currency held by foreign subsidiaries	$	44.3	$	48.8
Currency denominated in RMB	$	3.5	$	6.5

Non-USD denominated currency held by foreign subsidiaries was primarily in euros and CAD. While the RMB is convertible into USD, foreign exchange transactions are subject to approvals from SAFE. The Company does not anticipate any significant adverse impact to overall liquidity from potential limitations on the transfer or conversion of cash and cash equivalents.

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Inventories

Inventories at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Finished products	$	355.6	$	334.0
Supplies	4.9		4.8
Total	$	360.5	$	338.8

The Company’s inventories in the U.S. and Canada are collateral under the Credit Facilities.

Other Non-Current Assets

Other non-current assets at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Debt issuance costs of the ABL Facility	$	3.5	$	3.8
Deposits	2.0		2.5
Interest rate swap (1)	1.8		8.0
Other	1.7		1.9
Total	$	9.0	$	16.2

⁽¹⁾ See Note 9 for additional information.

Amortization of debt issuance costs related to the ABL Facility recorded in Interest expense in the condensed consolidated statements of operations was $0.3 million for the three months ended December 31, 2018 and 2017.

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Due to Related Party Pursuant to Contingent Consideration Obligations

Contingent Consideration - Deferred Cash Consideration

The contingent consideration associated with the Deferred Cash Consideration will be an amount in cash equal to the prevailing price of the Company’s common stock at the time that the Company pays such deferred cash payment multiplied by the number of Excess Shares (5,178,642 Excess Shares as of December 31, 2018).  Based on the terms of the Excess Shares, certain circumstances require the Company to pay all or a portion of the Deferred Cash Consideration to the Selling Equityholders, where such cash amount is calculated as set forth in the Merger Agreement, including (i) where the volume weighted average trading price of the Company’s common stock for any period of 20 trading days in any 30 trading day period exceeds $15.00 per share, and (ii) if any Excess Shares remain on June 30, 2021. If any Excess Shares remain on June 30, 2021, the Company must elect to either (i) within five business days of such date, pay the Selling Equityholders an amount in cash equal to the product of the number of remaining Excess Shares multiplied by the volume weighted-average trading price for the 20 trading day period immediately preceding such date or (ii) use reasonable best efforts to sell such shares to a third party in a primary offering and pay the gross proceeds thereof (less any underwriting discounts and commissions) to the Selling Equityholders. However, to the extent the number of shares issued in such offerings does not equal the full amount of Excess Shares remaining at the time of the offering, the Company’s obligations with respect to any remaining Excess Shares, including the obligation to continue to complete any necessary additional offerings, shall continue.

In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model. The estimated fair value of the Deferred Cash Consideration liability was $43.5 million and $62.7 million as of December 31, 2018 and September 30, 2018, respectively. See Note 10.

Upon consummation of the Univar Merger Agreement, the obligation to pay the Deferred Cash Consideration will be accelerated. The Deferred Cash Consideration will be calculated as an amount in cash equal to the Excess Shares multiplied by an amount equal to the Cash Consideration plus the implied value of the Stock Consideration based on the closing trading price of Univar's common stock on the day prior to the completion of the proposed transaction.

Contingent Consideration - TRA

Concurrent with the completion of the Business Combination, the Company incurred the liability for contingent consideration related to the TRA, which reflects amounts owed to the Selling Equityholders. This liability generally provides for the payment by the Company to the Selling Equityholders of 85% of the net cash savings, if any, in U.S. federal, state and local income taxes that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing Date as a result of (i) certain increases in tax basis resulting from the Company Merger, (ii) certain tax attributes of Holdings existing prior to the Mergers, (iii) net operating losses and certain other tax attributes of Blocker available to the Company as a result of the Blocker Merger and (iv) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, payments the Company makes under the TRA. The Company will retain the benefit of the remaining 15% of the net cash savings, if any. The Company estimated the fair value of the TRA liability based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. The current undiscounted cash flows associated with the TRA liability were estimated to be approximately $125.8 million over the time period during which the tax benefits are expected to be realized, currently estimated at over 20 years. The estimated fair value of the TRA liability is $71.1 million and $74.8 million as of December 31, 2018 and September 30, 2018, respectively. See Note 10.

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The amount and timing of any payments due under the TRA will vary depending upon a number of factors, including the amount and timing of the taxable income the Company generates in the future and the U.S. federal, state and local income tax rates then applicable. In addition, payments made under the TRA will give rise to additional tax benefits for the Company and therefore additional potential payments due under the TRA. The term of the TRA commenced upon the consummation of the Mergers and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless the Company exercises its right to terminate the TRA early. If the Company elects to terminate the TRA early, its obligations under the TRA would accelerate and it generally would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by it under the TRA, calculated in accordance with certain valuation assumptions set forth in the TRA.

In connection with the Univar Merger Agreement, Nexeo and the TRA Holders entered into a TRA Termination Agreement under which the parties agreed to terminate the TRA, upon consummation of the proposed transaction. Upon termination of the TRA, a cash payment to the TRA Holders will be made in an amount equal to $60.0 million. In the event the Univar Merger Agreement is terminated, the TRA Termination Agreement will no longer be in force.

The liabilities related to the Deferred Cash Consideration and the TRA are included in Due to related party pursuant to contingent consideration obligations on the Company’s condensed consolidated balance sheets.

6. Property, Plant and Equipment

Property, plant and equipment at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018			September 30, 2018
Land	$	50.5		$	50.8
Plants and buildings(1)	109.7			109.7
Machinery and equipment (2)	154.6			153.4
Software and computer equipment	70.7			70.5
Construction in progress	8.3			5.4
Total	393.8			389.8
Less accumulated depreciation (3)	(114.7		)	(104.9		)
Property, plant and equipment, net	$	279.1		$	284.9

⁽¹⁾ Includes $13.7 million related to facilities acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽²⁾ Includes $26.5 million related to equipment acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽³⁾ Includes $8.3 million and $7.4 million, respectively, related to facilities and equipment acquired under capital leases.

Depreciation expense recognized on the property, plant and equipment described above was as follows:

	Three Months Ended December 31,
	2018		2017
Depreciation expense	$	10.1	$	12.6

Included in the carrying value of property, plant and equipment in the Company’s condensed consolidated balance sheets are certain closed facilities located in the U.S., which collectively have a carrying value of $1.1 million as of December 31, 2018 and September 30, 2018. The facilities do not currently meet the criteria for held-for-sale classification; accordingly, they remain classified as held and used.

During the fourth quarter of fiscal year 2017, the Company entered into a purchase agreement to buy land currently leased at one of the Company's distribution centers. The purchase is expected to be finalized during fiscal year 2019 for approximately $10.8 million.

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7. Goodwill and Other Intangibles

Goodwill

The following is a progression of goodwill by reportable segment: 

	Chemicals			Plastics			Other		Total
Balance at September 30, 2018	$	362.4		$	274.0		$	63.5	$	699.9
Foreign currency translation	(0.5		)	(1.8		)	—		(2.3		)
Balance at December 31, 2018	$	361.9		$	272.2		$	63.5	$	697.6

Goodwill Impairment Test

Goodwill is tested for impairment annually as of March 31 and whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is reviewed for impairment at the reporting unit level, or operating segment, for the Company. The Company performed an impairment test as of March 31, 2018 and concluded that goodwill was not impaired. For purposes of the impairment testing of the Company's recognized goodwill, fair value measurements are determined using the income approach, based largely on inputs that are not observable to active markets, which would be deemed Level 3 fair value measurements as defined in Note 10.

The evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted operations can materially affect these estimates, which could materially affect the Company’s results of operations. The estimate of fair value requires significant judgment and is based on management’s fair value estimates on assumptions that are believed to be reasonable but that are unpredictable and inherently uncertain, including: estimates of future growth rates, operating margins and assumptions about the overall economic climate as well as the competitive environment for the reporting units. There can be no assurance that these estimates and assumptions made for purposes of the goodwill testing as of the time of testing will prove to be accurate. If assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, the Company may be required to record goodwill impairment charges in future periods, whether in connection with future annual impairment testing, or earlier, if an indicator of an impairment is present prior to the next annual evaluation.

Other Intangible Assets

Definite-lived intangible assets at December 31, 2018 and September 30, 2018 consisted of the following:

		December 31, 2018							September 30, 2018
	Estimated Useful Life (years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer-related	5-13	$	239.0	$	(49.1	)	$	189.9	$	239.6	$	(44.1	)	$	195.5
Supplier-related	6-10	3.1		(0.5		)	2.6		3.1		(0.4		)	2.7
Trade name	2-10	23.3		(14.1		)	9.2		23.3		(12.7		)	10.6
Below-market leases	1-7	0.7		(0.6		)	0.1		0.7		(0.5		)	0.2
Non-compete agreements	3-10	4.6		(2.4		)	2.2		4.6		(2.0		)	2.6
Total		$	270.7	$	(66.7	)	$	204.0	$	271.3	$	(59.7	)	$	211.6

Amortization expense recognized on the intangible assets described above was as follows:

	Three Months Ended December 31,
	2018		2017
Amortization expense	$	7.1	$	6.9

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8. Debt

Short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations at December 31, 2018 and September 30, 2018 are summarized below:

	December 31, 2018		September 30, 2018
Short-term borrowings	$	39.6	$	38.1
Current portion of long-term debt and capital lease obligations	9.7		9.6
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net	$	49.3	$	47.7

Long-term debt outstanding at December 31, 2018 and September 30, 2018 is summarized below:

	December 31, 2018			September 30, 2018
ABL Facility	$	159.0		$	104.6
Term Loan Facility	638.8			640.4
Capital lease obligations (1)	33.2			34.0
Total long-term debt	831.0			779.0
Less: unamortized debt discount (2)	(2.2		)	(2.3		)
Less: debt issuance costs (3)	(14.0		)	(14.7		)
Less: current portion of long-term debt and capital lease obligations	(9.7		)	(9.6		)
Long-term debt and capital lease obligations, less current portion, net	$	805.1		$	752.4

⁽¹⁾  Capital lease obligations exclude executory costs and interest payments associated with the underlying leases. See “Capital Lease Obligations” below.

⁽²⁾  The unamortized debt discount is related to the Term Loan Facility and amortized to interest expense over the life of the instrument using the effective interest rate method.

⁽³⁾  See discussion below under Term Loan Facility and Debt Issuance Cost Amortization.

Short-Term Borrowings

The Company’s short-term borrowings are associated with the Company’s operations in China and are summarized below:

	Facility Limit		Outstanding Borrowings Balance		Weighted Average Interest Rate on Borrowings		Outstanding LOC and Bankers’ Acceptance Bills		Remaining Availability
December 31, 2018
Bank of America - China (1)	$	24.3	$	22.1	4.6	%	$	—	$	2.2
Bank of Communications - China (2)	21.8		17.5		5.4	%	3.4		0.9
Total	$	46.1	$	39.6			$	3.4	$	3.1
September 30, 2018
Bank of America - China (1)	$	24.3	$	22.2	4.6	%	$	—	$	2.1
Bank of Communications - China (2)	21.8		15.9		5.4	%	5.1		0.8
Total	$	46.1	$	38.1			$	5.1	$	2.9

⁽¹⁾   The borrowing limit of this facility is denominated in USD. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 110% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. The Company has the ability to provide additional capacity under these lines of credit, if needed.

⁽²⁾ The borrowing limit of this facility is denominated in RMB. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 100% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance.

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Long-Term Debt

ABL Facility

The ABL Facility provides for committed revolving credit financing including a U.S. Tranche of up to $505.0 million, a Canadian Tranche of up to the USD equivalent of $40.0 million and a FILO Tranche up to $30.0 million. Provided no default or event of default, the ABL Borrowers have the option to request that the ABL Facility be increased by an aggregate amount, when included with any incremental borrowings issued under the Term Loan Facility, not to exceed $175.0 million.

The weighted average interest rate on borrowings under the ABL Facility was 3.98% at December 31, 2018. The Company had the USD equivalent of $69.5 million in outstanding letters of credit under the ABL Facility at December 31, 2018. The collective credit availability under the U.S. and Canadian Tranches of the ABL Facility was the U.S. equivalent of $258.1 million at December 31, 2018. There was $5.0 million availability under the FILO Tranche at December 31, 2018. The ABL Facility matures on June 9, 2021.

Obligations under the ABL Facility are secured by a first priority lien on all ABL Facility first lien collateral, including eligible inventory and accounts receivable of the ABL Borrowers, and a second priority lien on all Term Loan Facility first lien collateral including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, in each case, subject to certain limitations; provided, that no ABL Facility first lien collateral or Term Loan Facility first lien collateral owned by the Canadian Borrower secure the obligations owing under the U.S. Tranche of the ABL Facility. These accounts receivable and inventory totaled $669.6 million in the aggregate as of December 31, 2018.

As of December 31, 2018, the ABL Borrowers were in compliance with the covenants of the ABL Facility.

Term Loan Facility

The Term Loan Facility provides secured debt financing in an aggregate principal amount of up to $655.0 million and the right, at the Company’s option, to request additional tranches of term loans in an aggregate principal amount, when included with any incremental borrowings issued under the ABL Facility, of up to $175.0 million, plus unlimited additional amounts such that the aggregate principal amount of indebtedness outstanding at the time of incurrence does not cause the Secured Net Leverage Ratio, calculated on a pro forma basis, to exceed 4.1 to 1.0. Availability of such additional tranches of term loans is subject to the absence of any default and, among other things, the receipt of commitments by existing or additional financial institutions.

The Company is required to make scheduled quarterly payments in an aggregate annual amount equal to 1.0% of the aggregate principal amount of the outstanding term loans as of the Closing Date of the TLB Amendment No. 2, with the balance due at maturity. The weighted average interest rate for the Term Loan Facility was 5.69% at December 31, 2018. The Company amortized $0.1 million of debt discount to interest expense during the three months ended December 31, 2018 and 2017. The Term Loan Facility matures on June 9, 2023.

Additionally, the Term Loan Facility requires the Company to make mandatory principal payments on an annual basis, if cash flows for the year, as defined in the Term Loan Facility, exceed certain levels specified in the Term Loan Facility. The Company was not required to make such mandatory principal payment for the fiscal year ended September 30, 2018. The Company generally has the right to prepay loans in whole or in part, without incurring any penalties for early payment.

Obligations under the Term Loan Facility are secured by a first priority lien on all Term Loan Facility first lien collateral, including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, and a second priority lien on all ABL Facility first lien collateral, including accounts receivable and inventory of the loan parties under the Term Loan Facility, subject to certain limitations.

As of December 31, 2018, the Company was in compliance with the covenants of the Term Loan Facility.

Debt Issuance Cost Amortization

Amortization expense included in interest expense related to debt issuance costs of the Term Loan Facility was $0.7 million for the three months ended December 31, 2018 and 2017.

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Capital Lease Obligations

The capital lease obligation balance of $33.2 million as of December 31, 2018 is primarily associated with the Ryder Lease and the Montgomery Lease. The Ryder Lease obligation excludes decreasing annual interest payments ranging from $0.8 million to less than $0.1 million, for aggregate interest payments totaling $2.5 million. The Montgomery Lease obligation excludes decreasing annual interest payments ranging from $1.0 million to $0.1 million, for aggregate interest payments of $12.4 million.

9. Derivatives

The Company is a party to interest rate swap agreements of varying expiration dates ranging from February 2020 through February 2023, to help mitigate interest rate risk related to the variable rate Term Loan Facility. As of December 31, 2018, the notional amount of the seven outstanding interest rate swap agreements was $599.1 million. The swap agreements are accounted for as cash flow hedges. Gains or losses resulting from changes in the fair value of the swaps are recorded in other comprehensive income. Gains and losses recorded in other comprehensive income are reclassified into and recognized in income when the interest expense on the Term Loan Facility is recognized.

Derivative assets and liabilities at December 31, 2018 and September 30, 2018 consisted of the following:

	Recorded to	December 31, 2018		September 30, 2018
Short-term derivative asset	Other current assets	$	2.1	$	2.2
Long-term derivative asset	Other non-current assets	$	1.8	$	8.0
Short-term derivative liability (1)	Accrued expenses and other liabilities	$	—	$	—
Long-term derivative liability	Other non-current liabilities	$	1.2	$	—
Other Comprehensive Income	Accumulated other comprehensive income	$	2.4	$	8.1

⁽¹⁾ Short-term derivative liability for the three months ended December 31, 2018 and the fiscal year ended September 30, 2018 was less than $0.1 million.

Gains and losses (net of reclassifications into income, including any ineffective portion) related to the interest rate swaps were as follows:

		Three Months Ended December 31,
	Recorded to	2018			2017
Realized loss	Interest expense	$	0.1		$	0.4
Unrealized gain (loss), net of tax	Other comprehensive income	$	(5.7	)	$	1.9

The tax impact of the unrealized gains and losses related to the interest rate swaps was $2.0 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively. At December 31, 2018, $2.5 million in unrealized gains were expected to be realized and recognized in income within the next twelve months.

See Note 10 for additional information on the Company’s fair value of the derivative instruments.

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10. Fair Value Measurements

The accounting standard for fair value measurements establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is as follows:

• Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2—Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3—Prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Fair value of financial instruments

The carrying values of cash and cash equivalents, accounts and notes receivable, accounts payable and short-term borrowings approximate their fair value due to the short-term maturity of those instruments.

The carrying values of borrowings outstanding under the Credit Facilities approximate fair value at December 31, 2018 and September 30, 2018, primarily due to their variable interest rate. The estimated fair value of these instruments is classified by the Company as a Level 3 measurement within the fair value hierarchy due to the varying interest rate parameters as outlined in the respective loan agreements.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

In addition to the financial instruments that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a non-recurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges or as part of a business combination.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Contingent Consideration

The fair value of the contingent consideration related to the Deferred Cash Consideration as discussed in Note 5 was $43.5 million and $62.7 million as of December 31, 2018 and September 30, 2018, respectively. The decrease in the liability was largely driven by the decrease in the Company’s stock price. The measurement of the contingent consideration related to the Deferred Cash Consideration is classified by the Company as a Level 3 measurement within the fair value hierarchy. In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model with the market price of the Company’s common stock at each valuation date being 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. An increase in the market price of the Company’s common stock has the same directional effect on the value of the liability related to the Deferred Cash Consideration. An increase in the volatility and marketability discount will lower the value of the liability related to the Deferred Cash Consideration.

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The fair value of the liability for the contingent consideration related to the TRA as discussed in Note 5 was $71.1 million and $74.8 million as of December 31, 2018 and September 30, 2018, respectively. The liability for the contingent consideration related to the TRA is classified by the Company as a Level 3 measurement within the fair value hierarchy. The Company estimates the fair value of the liability for the contingent consideration related to the TRA based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. Key inputs to the valuation are prevailing tax rates and market interest rates impacting the discount rate. A 100 basis point increase in the discount rate compared to the discount rate used at the December 31, 2018 valuation would have resulted in a decrease of approximately $0.4 million in the value of the liability for the contingent consideration related to the TRA. Additionally, this cash flow model is sensitive to changes in prevailing tax rates. A 100 basis point increase in the tax rate compared to the tax rate used at the December 31, 2018 valuation would have resulted in an increase of approximately $2.4 million in the value of the liability for the contingent consideration related to the TRA.

Changes in the fair value of the contingent consideration obligations for the three months ended December 31, 2018 were as follows:

	TRA			Deferred Cash Consideration			Total Fair Value
Contingent consideration as of September 30, 2018	$	74.8		$	62.7		$	137.5
Change in fair value of contingent consideration(1)	(3.7		)	(19.2		)	(22.9		)
Contingent consideration as of December 31, 2018	$	71.1		$	43.5		$	114.6

⁽¹⁾ Included in Operating income in the condensed consolidated statements of operations.

Significant changes in the estimates and inputs used in determining the fair value of the contingent consideration could have a material impact on the amounts recognized as a component of Operating income in future periods.

Interest Rate Swaps

The Company classifies interest rate swaps within Level 2. The Company is a party to interest rate swap agreements of varying expiration dates ranging from February 2020 through February 2023, to help mitigate interest rate risk related to the variable rate Term Loan Facility. As of December 31, 2018, the notional amount of the seven outstanding interest rate swap agreements was $599.1 million. At December 31, 2018, the Company recorded $2.1 million in Other current assets, $1.8 million in Other non-current assets, less than $0.1 million in Accrued expenses and other liabilities and $1.2 million in Other non-current liabilities in the condensed consolidated balance sheets related to these instruments.

During the three months ended December 31, 2018 and 2017, the Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements.

11. Share-based Compensation and Employee Benefit Plans

On June 8, 2016, the Company’s stockholders approved the 2016 LTIP, with an effective date of March 30, 2016, covering approximately a ten-year period. No awards may be granted under the 2016 LTIP after March 20, 2026. The 2016 LTIP permits the grant of up to 9,000,000 shares of the Company's common stock for various types of awards to employees, directors and consultants of the Company or its subsidiaries, including incentive and non-incentive stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, stock awards, conversion awards and performance awards.

During the fiscal year ended September 30, 2018, the Company granted 193,667 PSUs to employees under the 2016 LTIP. These awards will vest on September 30, 2020, entitling the recipient to receive a certain number of shares of the Company’s common stock, based on the Company’s achievement of the performance goals included in the PSUs, which are based on a return on invested capital calculation over a three-year performance period. Depending on the calculation as of the vesting date, a recipient is entitled to receive between 0% and 200% of the initial award. The awards are accounted for as equity instruments, and the fair value of these awards was determined by the closing price of the Company's common stock on the date of grant.

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During the fiscal years ended September 30, 2017 and 2016, the Company granted 212,000 and 1,557,500 PSU awards to employees, respectively, under the 2016 LTIP. The recipient can receive between 0% and 200% of the initial award, based on the Company’s total stockholder return during approximate three-year performance period, or a cumulative Adjusted EBITDA target if a specified total stockholder return is not met. These awards are accounted for as equity instruments. The Company used the Monte Carlo simulation model to estimate the fair value of the PSU awards at the grant date, factoring in the market-based vesting condition and considering the probability of satisfying the various performance criteria. The resulting grant date fair value is recognized as expense on a straight-line basis from the grant date through the end of the performance period. The assumptions used in the Monte Carlo simulation model for PSUs included an expected stock price volatility between 35% and 40% based on a peer group of similar companies, an expected dividend yield of 0%, an expected term of two to three years, and a risk-free interest rate of between 0.9% and 1.3%.

The following table summarizes all PSU activity during the three months ended December 31, 2018:

	PSUs	Average Grant Date Fair Value Per Unit
Unvested PSUs at September 30, 2018	1,695,167	$	8.76
Granted	—	—
Vested	—	—
Forfeited/Canceled	—	—
Unvested PSUs at December 31, 2018	1,695,167	$	8.76

As of December 31, 2018, the Company may issue up to 3,390,334 shares of common stock related to the outstanding PSU awards described above under the 2016 LTIP.

In November 2017, the Company granted 415,867 shares of restricted stock to employees under the 2016 LTIP. The restricted stock awards vest equally on the anniversary of the grant date over a three-year period provided that the recipients of such grants continue their employment with the Company. The awards are accounted for as equity instruments, and the fair value of the restricted stock awards was determined by the closing price of the Company's common stock on the date of grant. During the fiscal year ended September 30, 2017, the Company granted restricted stock awards to certain of the Company’s non-employee directors under the 2016 LTIP that vested one year from the date of grant.

The following table summarizes all restricted stock activity during the three months ended December 31, 2018:

	Shares of Restricted Stock		Average Grant Date Fair Value Per Unit
Restricted stock at September 30, 2018	409,267		$	7.50
Granted	—		—
Vested	(136,291	)	7.50
Forfeited/Canceled	—		—
Restricted stock at December 31, 2018	272,976		$	7.50

During the fiscal year ended September 30, 2016, the TPG Restricted Stock Grants were awarded with respect to 100,000 shares of Company common stock owned by TPG. These awards vest in equal amounts over a three-year period provided that the recipients of such grants continue their employment with the Company. During the fiscal year ended September 30, 2018, 27,471 shares of these awards vested, and 7,163 shares were transferred to the Company (reflected as treasury stock) to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting. During the fiscal year ended September 30, 2017, 33,297 shares of these awards vested, 9,576 shares were transferred to the Company (reflected as treasury stock) to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting, and 11,673 shares were transferred back to TPG due to forfeiture. There were 27,559 unvested shares of these awards at December 31, 2018. While these awards were not made pursuant to the 2016 LTIP, they constitute equity-based compensation and therefore will count against the 2016 LTIP's share reserve to the extent the awards vest.

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During the fiscal year ended September 30, 2018, the Company granted 999,492 stock options to employees under the 2016 LTIP. The awards vest in equal amounts over a three-year period provided that the recipients of such grants continue their employment with the Company. The awards are accounted for as equity instruments. The Company used the Black-Scholes Merton model to estimate the fair value of the option awards at the grant date. The resulting grant date fair value is recognized as expense on a straight-line basis over the vesting period. The assumptions used in the Black-Scholes Merton model for the options included an expected term of six years, an expected stock price volatility of 35.0% based on a peer group of similar companies, an expected dividend yield of 0.0% and a risk-free interest rate of 2.1%.

The following table summarizes stock option activity during the three months ended December 31, 2018:

	Stock Options	Average Grant Date Fair Value Per Unit		Weighted Average Exercise Price
Stock Options at September 30, 2018	992,892	$	2.84	$	7.42
Granted	—	—		—
Exercised	—	—		—
Forfeited/Canceled	—	—		—
Stock Options at December 31, 2018	992,892	$	2.84	$	7.42

The outstanding stock options as of December 31, 2018 had an aggregate intrinsic value of $1.2 million. No stock options were exercisable as of December 31, 2018.

During the three months ended December 31, 2016, the Company granted certain employees a total of 28,000 RSUs under the 2016 LTIP that vest equally over a three-year period on the anniversary of the grant date provided the employee remains employed by the Company. The awards are accounted for as equity instruments. Upon vesting, the recipients will receive a share of common stock in the Company for each RSU awarded. The fair value of these RSUs was determined based on the closing price of the Company’s stock on the grant date.

The following table summarizes RSU award activity during the three months ended December 31, 2018:

	RSUs		Average Grant Date Fair Value Per Unit
Unvested RSUs at September 30, 2018	16,338		$	7.28
Granted	—		—
Vested	(8,169	)	7.28
Forfeited/Canceled	—		—
Unvested RSUs at December 31, 2018	8,169		$	7.28

During the three months ended December 31, 2016, the Company also awarded 10,500 phantom RSUs and 10,000 phantom PSUs to certain non-U.S. employees under the 2016 LTIP. The phantom RSUs vest equally over a three-year period on the anniversary of the grant date while the phantom PSUs vest under the same conditions as the PSU awards described above. During the fiscal year ended September 30, 2017, 3,500 of the phantom RSUs were forfeited and all of the phantom PSUs were forfeited. Upon vesting and provided the employee remains employed by the Company at that time, the awards will be settled in cash. In accordance with ASC 718, the remaining phantom RSU awards are accounted for as a liability, with the awards re-measured at the end of each reporting period based on the closing price of the Company’s common stock or using a Monte Carlo simulation model, as applicable. Compensation expense is recognized ratably on a straight-line basis over the requisite service period. An immaterial amount of compensation expense was recognized during the three months ended December 31, 2018 and 2017 related to these awards.

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The following table summarizes the amount of compensation expense recognized as a component of Selling, general and administrative expenses on the condensed consolidated statements of operations by award type:

	Three Months Ended December 31,
	2018		2017
PSUs	$	1.2	$	1.2
Restricted Stock	$	0.3	$	0.3
TPG restricted stock grants	$	0.1	$	0.1
Stock options	$	0.2	$	0.1
RSUs (1)	$	—	$	—

⁽¹⁾ Compensation expense recognized as a component of Selling, general and administrative expenses for RSUs for the three months ended December 31, 2018 and 2017 is less than $0.1 million.

The following table summarizes unrecognized compensation expense and weighted average remaining life as of the three months ended December 31, 2018 by award type:

	Unrecognized Compensation Expense		Weighted Average Remaining Life (in years)
PSUs	$	2.9	0.5
Restricted Stock	$	1.7	1.8
TPG restricted stock grants	$	0.4	0.4
Stock options	$	1.6	8.8
RSUs (1)	$	—	0.9

⁽¹⁾ Unrecognized compensation expense for RSUs as of the three months ended December 31, 2018 is less than $0.1 million.

As of December 31, 2018, there were 3,980,465 shares of the Company’s common stock available for issuance under the 2016 LTIP, assuming the PSU awards vest at their maximum target.

Pursuant to the terms of the Univar Merger Agreement and upon the closing of the transactions contemplated by the Univar Merger Agreement, each outstanding award granted, including unvested awards, under the 2016 LTIP will be cancelled in exchange for the consideration set forth in the Univar Merger Agreement. Each outstanding stock option, not including options out of the money, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders in respect of each "net share" covered by such stock option. The number of "net shares" covered by each stock option is equivalent to the number of shares of the Company's common stock with a value equal to the intrinsic value of such stock option. Each outstanding option that is out of the money will be cancelled for no consideration. Each outstanding share of restricted stock, including unvested shares, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders. Each outstanding PSU award, including unvested PSU awards, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such PSU award (determined based on actual performance through the latest practicable date prior to the closing of the transactions contemplated by the Univar Merger Agreement). For purposes of the Univar Merger Agreement, the recipients of 2016 PSU awards will receive between 70% and 200% of the initial award, based on the Company’s actual level of performance at the time of the change in control. Each outstanding RSU award, including unvested RSU awards, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such RSU award. Each outstanding phantom RSU, including unvested phantom RSUs, will be cancelled and converted into the right to receive an amount in cash equal to the value of the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such phantom RSU award. The Company is restricted from granting any additional share-based compensation pursuant to a covenant contained in the Univar Merger Agreement.

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Defined Contribution Plans

Qualifying employees of the Company are eligible to participate in the Company’s 401(k) Plan. The 401(k) Plan is a defined contribution plan which allows employees to make tax deferred contributions as well as company contributions, designed to assist employees of the Company and its affiliates in providing for their retirement. The Company matches 100% of employee contributions up to 4.0%. The Company makes an additional contribution to the 401(k) Plan of 1.5%, 3.0%, or 4.5%, based upon years of service of one to ten years, eleven to twenty years and twenty-one years or more, respectively. A version of the 401(k) Plan is also available for qualifying employees of the Company’s foreign subsidiaries.

The following summarizes contributions to the plans described above:

	Three Months Ended December 31,
	2018		2017
Contributions recorded as a component of cost of sales and operating expenses	$	1.1	$	1.0
Contributions recorded as a component of selling, general and administrative expenses	1.6		1.5
Total contributions	$	2.7	$	2.5

12. Equity

Common Stock

The authorized common stock of the Company consists of 300,000,000 shares. Holders of the Company’s common stock are entitled to one vote for each share of common stock. As of December 31, 2018, there were 89,755,231 shares of common stock issued and 89,698,331 shares of common stock outstanding, which includes the 12,476,250 Founder Shares. The Company has units outstanding which consist of one share of common stock and one warrant which are included in the respective totals.

Founder Shares

As of December 31, 2018, there were 12,476,250 Founder Shares. These Founder Shares are subject to forfeiture on the tenth anniversary of the Closing Date unless:

• with respect to 50% of such Founder Shares, the last sale price of the Company’s common stock as quoted on NASDAQ equals or exceeds $12.50 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; and

• with respect to the remaining 50% of such Founder Shares, the last sale price of the Company’s common stock equals or exceeds $15.00 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; or

• the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all or substantially all of its stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property or any transaction involving a consolidation, merger, proxy contest, tender offer or similar transaction in which the post-combination company is the surviving entity which results in a change in the majority of the Company’s board of directors or management team or the Company’s post-combination stockholders immediately prior to such transaction ceasing to own a majority of the surviving entity immediately after such transaction.

The Founder Shares will not participate in dividends or other distributions with respect to the shares prior to these targets being met, whereupon the Founder Shares shall be entitled to all dividends and distributions paid on the common stock after the Business Combination as if they had been holders of record entitled to receive distributions on the applicable record date.

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Warrants

As of December 31, 2018, there were 50,025,000 warrants outstanding to purchase 25,012,500 shares of common stock at an exercise price of $11.50 per share.

In the case of any reclassification, reorganization, merger or consolidation, or upon a dissolution following such sale or transfer, the holders of the warrants share thereafter have the right to purchase and receive the kind and amount of shares of stock or other securities or property (including cash) receivable upon reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holders of the warrants have received if such holders had exercised their warrants immediately prior to such event.

Preferred Stock

The authorized preferred stock of the Company consists of 1,000,000 shares. As of December 31, 2018, there were no shares of preferred stock issued and outstanding.

Treasury Stock

During the three months ended December 31, 2018, in connection with the vesting of restricted stock and RSUs, 34,461 and 2,923 shares of common stock, respectively, were transferred to the Company to satisfy the employees’ tax withholding obligations in connection with the vesting. Following the transfers, these shares were not canceled and are therefore classified as treasury stock. Total treasury stock as of December 31, 2018 was 56,900 shares.

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13. Earnings per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computation follows.

	Three Months Ended December 31,
	2018		2017
Basic:
Net income	$	16.2	$	26.5
Weighted average number of common shares outstanding during the period	76,945,078		76,793,518
Net income per common share - basic	$	0.21	$	0.35
Diluted:
Net income	$	16.2	$	26.5
Denominator for diluted earnings per share:
Weighted average number of common shares attributable to the period	76,945,078		76,793,518
Incremental common shares attributable to outstanding diluted options and unvested restricted shares	149,352		345,718
Denominator for diluted earnings per common share	77,094,430		77,139,236
Net income per common share - diluted	$	0.21	$	0.34

Dilutive computations during the current period contain additional incremental common shares which are attributable to the outstanding unvested restricted stock awards issued to directors and employees, restricted stock units awarded to employees and unvested outstanding stock options awarded to employees. During the three months ended December 31, 2017, the outstanding unvested restricted stock awards issued to directors and employees and restricted stock units awards to employees were included in the dilutive share calculation; the outstanding stock options were not included as the result would have been anti-dilutive. For the three months ended December 31, 2018 and 2017, there were 12,476,250 Founder Shares excluded from the basic and diluted computations because such shares were subject to forfeiture, and PSU awards, which were not included in the computation of diluted shares outstanding because performance targets and/or market conditions were not yet met for these awards. Diluted shares outstanding also did not include 25,012,500 shares of common stock issuable on the exercise of 50,025,000 warrants because the warrants were out-of-the-money for the three months ended December 31, 2018 and 2017.

14. Commitments, Contingencies and Litigation

Operating Leases

The Company is a lessee of office buildings, transportation equipment, warehouses and storage facilities, other equipment, facilities and properties under operating lease agreements that expire at various dates. Rent expense (including rentals under short-term leases) was $6.7 million and $6.5 million for the three months ended December 31, 2018 and 2017, respectively.

Future minimum non-cancellable rental payments as of December 31, 2018 are as follows:

2019	$	14.2
2020	9.6
2021	8.1
2022	5.0
2023	1.8
Thereafter	0.2
Total	$	38.9

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Capital Leases

The Company leases certain equipment and facilities under capital lease agreements. As of December 31, 2018, future minimum lease payments under capital leases were as follows:

2019	$	7.5
2020	7.1
2021	7.0
2022	13.7
2023	2.4
Thereafter	25.0
Total minimum capital lease payments	62.7
Less amount representing executory costs	(14.5		)
Less amount representing interest	(15.0		)
Present value of net minimum capital lease payments	$	33.2

Environmental Remediation

Due to the nature of its business, the Company is subject to various laws and regulations pertaining to the environment and to the sale, handling, transportation and disposal of chemicals and hazardous materials. These laws pertain to air and water, the management of solid and hazardous wastes, transportation and human health and safety.

The Company’s reserves will be subject to numerous uncertainties that affect its ability to accurately estimate its costs, or its share of costs if multiple parties are responsible. These uncertainties involve the legal, regulatory and enforcement parameters governing environmental assessment and remediation, the nature and extent of contamination, the extent of required remediation efforts, the choice of remediation methodology, availability of insurance coverage and, in the case of sites with multiple responsible parties, the number and financial strength of any other potentially responsible parties.

Other Legal Proceedings

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities, including product liability claims. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company.

Other Contingencies

In June 2014, the Predecessor self-disclosed to the DTSC that an inventory of its Fairfield facility had revealed potential violations of RCRA and the California Health and Safety Code. Although no formal proceeding has been initiated, the Company expects the DTSC to seek payment of fines or other penalties for non-compliance. The Company does not expect the amount of any such fine or other penalty to have a material adverse effect on its business, financial position or results of operations.

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15. Related Party Transactions

The tables below summarize activity recorded during the respective periods for related party transactions:

	Three Months Ended December 31,
	2018		2017
Sales to related entities:
TPG portfolio entities	$	0.7	$	1.6
Entities related to members of the Board of Directors	$	0.2	$	—
Purchases from related entities:
TPG portfolio entities	$	0.5	$	—
Entities related to members of the Board of Directors	$	2.6	$	3.4

	December 31, 2018		September 30, 2018
Accounts receivable from related entities:
TPG portfolio entities	$	0.7	$	1.0
Entities related to members of the Board of Directors	$	0.2	$	0.2
Accounts payable to related entities:
TPG portfolio entities	$	0.2	$	0.5
Entities related to members of the Board of Directors	$	0.1	$	0.6

Contingent Consideration Obligations Pursuant to the TRA and the Merger Agreement

Subsequent to the Business Combination, TPG beneficially owns approximately 35% of the Company’s common stock, including Founder Shares, and is considered a related party of the Company. In connection with the Business Combination, TPG became a party to the TRA and obtained the right to receive the Deferred Cash Consideration pursuant to the Merger Agreement. The fair value of these contingent consideration liabilities was as follows:

	December 31, 2018		September 30, 2018
Due to related party pursuant to contingent consideration obligations:
Current liability	$	14.5	$	14.7
Non-current liability	100.1		122.8
Total fair value	$	114.6	$	137.5

During the three months ended December 31, 2018, the Company made no payments to TPG related to the TRA, and the Company paid $4.2 million to TPG related to the TRA during the three months ended December 31, 2017.

16. Income Taxes

For all periods, the Company computed the provision for income taxes based on the actual year-to-date effective tax rate by applying the discrete method.  Use of the annual effective tax rate, which relies on accurate projections by legal entity of income earned and taxed in foreign jurisdictions, as well as accurate projections by legal entity of permanent and temporary differences, was not considered a reliable estimate for purposes of calculating year-to-date income tax expense.

The Tax Act effective date combined with the Company’s fiscal year end resulted in a U.S. statutory federal rate of approximately 24.5% for the Company’s fiscal year ended September 30, 2018. Beginning in fiscal year 2019, the U.S. statutory federal rate is 21.0%.

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Income tax expense for the three months ended December 31, 2018 was $4.2 million on pre-tax income of $20.4 million compared to the income tax expense of $1.3 million on pre-tax income of $27.8 million for the three months ended December 31, 2017. The current tax expense was largely attributable to income on profitable U.S. operations. The prior period tax expense was attributable to prior period income partially offset by the benefit on deferred tax liabilities due to the impact of the Tax Act, which resulted in a decrease in income tax expense of $4.5 million.

At December 31, 2018 and September 30, 2018, the valuation allowance was $4.1 million and $3.6 million, respectively, primarily related to operations in Asia. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon management’s expectations at December 31, 2018, management believes it is more likely than not that it will realize the majority of its deferred tax assets.

Uncertain Tax Positions

The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of Income tax expense in the condensed consolidated statements of operations. There was an insignificant amount of interest and penalties recognized during all periods. The Company had $4.1 million and $4.0 million related to uncertain tax positions, including related accrued interest and penalties as of December 31, 2018 and September 30, 2018, respectively.

17. Segment and Geographic Data

The Company operates through three lines of business, or operating segments: Chemicals, Plastics and Environmental Services, which market to different sets of customers operating in an array of industries, with various end markets and customer segments within those industries. For segment presentation and disclosure purposes, the Chemicals and Plastics lines of business constitute separate reportable segments, while the Environmental Services line of business, which does not meet the materiality threshold for separate disclosure, is included in an "Other" segment.

Each line of business represents unique products and suppliers, and each line of business focuses on specific end markets within its industry based on a variety of factors, including supplier or customer opportunities, expected growth and prevailing economic conditions. Across the Chemicals and Plastics lines of business there are numerous industry segments, end markets and sub markets that the Company may choose to focus on. These end markets may change from year to year depending on the underlying market economics, supplier focus, expected profitability and the Company’s strategic agenda.

The Chemicals, Plastics and Environmental Services lines of business compete with national, regional and local companies throughout North America. Additionally, the Chemicals and Plastics lines of business compete with other distribution companies in Asia. The Plastics line of business also competes with other distribution companies in EMEA. Competition within each line of business is based primarily on the diversity of the product portfolio, service offerings, reliability of services and supply, technical support, price and delivery capabilities. The accounting policies used to account for transactions in each of the lines of business are the same as those used to account for transactions at the corporate level.

The Chemicals and Plastics lines of business are distribution businesses, while the Environmental Services line of business provides hazardous and non-hazardous waste collection, recovery, recycling and disposal services.

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A brief description of each segment follows:

Chemicals. The Chemicals line of business distributes specialty and industrial chemicals, additives and solvents to industrial users via railcars, barges, bulk tanker trucks and as packaged goods in trucks. The Company’s chemical products are distributed in approximately 50 countries worldwide, primarily in North America and Asia. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. While the Chemicals line of business serves multiple end markets, the key end markets within the industrial space are household, industrial and institutional, performance coatings (including architectural coatings, adhesives, sealants and elastomers), lubricants, oil and gas and personal care.

Plastics. The Plastics line of business distributes a broad product line consisting of commodity polymer products and prime engineering resins to plastics processors engaged in blow molding, extrusion, injection molding and rotation molding via railcars, bulk trucks, truckload boxes and mixed truckloads, or less-than-truckload quantities. The Company's plastics products are distributed in more than 60 countries worldwide, primarily in North America, EMEA and Asia. The Plastics line of business serves a broad cross section of industrial segments, including key automotive and healthcare end markets.

Other. The Environmental Services line of business, in connection with certain waste disposal service companies, provides customers with comprehensive on-site and off-site hazardous and non-hazardous waste collection, transportation, recovery, disposal arrangement and recycling services in North America, primarily in the U.S. These environmental services are offered through the Company’s network of distribution facilities used as transfer facilities and through a staff of dedicated on-site waste professionals. The Environmental Services line of business serves multiple end markets such as aerospace and defense, automotive, chemical manufacturing, industrial manufacturing and oil and gas.

The Chief Executive Officer is the Chief Operating Decision Maker. The Chief Operating Decision Maker reviews operating results in order to make decisions, assess performance and allocate resources to each line of business. In order to maintain the focus on line of business performance, certain expenses are excluded from the line of business results utilized by the Company’s Chief Operating Decision Maker in evaluating line of business performance. These expenses include depreciation and amortization, selling, general and administrative expense and corporate items including transaction related costs, interest and income tax expense. These items are separately delineated to reconcile to reported net income. No single customer accounted for more than 10% of revenues for any line of business for each of the periods reported. Intersegment revenues were insignificant.

Certain assets are aggregated at the line of business level. The assets attributable to the Company’s lines of business, that are reviewed by the Chief Operating Decision Maker, consist of trade accounts receivable, inventories, goodwill and any specific assets that are otherwise directly associated with a line of business. The Company’s inventory of packaging materials and containers, as well as property, plant and equipment, are generally not allocated to a line of business and are included in unallocated assets.

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Summarized financial information relating to the Company’s lines of business is as follows:

	Three Months Ended December 31,
	2018			2017
Sales and operating revenues
Chemicals	$	438.5		$	431.9
Plastics	456.1			462.2
Other	41.2			35.5
Total sales and operating revenues	935.8			929.6
Gross profit
Chemicals	53.5			58.4
Plastics	38.7			41.9
Other	6.5			6.6
Total gross profit	98.7			106.9
Selling, general & administrative expenses	79.8			84.8
Transaction related costs	8.2			0.1
Change in fair value related to 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

	December 31, 2018		September 30, 2018
IDENTIFIABLE ASSETS
Chemicals	$	795.8	$	826.2
Plastics	743.1		758.2
Other	100.1		95.7
Total identifiable assets by reportable segment	1,639.0		1,680.1
Unallocated assets	540.1		563.5
Total assets	$	2,179.1	$	2,243.6

Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale, are presented below:

	Three Months Ended December 31,
	2018		2017
U.S.	$	696.8	$	668.1
Canada	45.1		42.5
Other North America	29.8		33.0
Total North America Operations	771.7		743.6
EMEA	120.0		127.2
Asia	44.1		58.8
Total	$	935.8	$	929.6

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Forward-Looking Statements” elsewhere in this Quarterly Report on Form 10-Q. 

The terms “the Company,” “us,” “our,” “we” and similar terms in this report refer to Nexeo Solutions, Inc. and its consolidated subsidiaries.

Overview

We are a global materials distributor for chemicals products in North America and Asia and for plastics products in North America, EMEA and Asia. In connection with the distribution of chemicals products, we provide value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. We also provide on-site and off-site hazardous and non-hazardous environmental services, including waste collection, transportation, recovery, disposal arrangement and recycling services in North America, primarily in the U.S.

We have long-standing relationships with major chemicals and plastics producers and suppliers, a strong geographic presence and supply chain network and a balanced customer base that benefits from the service and distribution value we provide. The products we distribute are used in various end markets and customer segments within a broad cross section of manufacturing industries, including household, industrial and institutional, lubricants, performance coatings (including architectural coatings, adhesives, sealants and elastomers), automotive, healthcare, personal care, oil and gas and construction end markets.

We distribute our product portfolio through a global supply chain consisting of owned, leased or third-party warehouses, rail terminals and tank terminals. We have a private fleet of tractors and trailers, primarily in North America.

Univar Merger Agreement

On September 17, 2018, Nexeo and Univar entered into the Univar Merger Agreement providing for the acquisition of Nexeo by Univar. The Univar Merger Agreement and the proposed transaction were approved unanimously by the Board of Directors of both Nexeo and Univar and are subject to review by the SEC and regulatory agencies in the U.S. and other jurisdictions. The Univar Merger Agreement is also subject to a number of conditions, including, among other things and as further described in the Univar Merger Agreement: (i) the adoption by Nexeo’s stockholders of the Univar Merger Agreement, (ii) the approval by Univar’s stockholders of the issuance of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (iii) the receipt of other required regulatory approvals, (iv) the absence of any law or governmental order prohibiting the proposed transaction, (v) the effectiveness of Univar's registration statement (which occurred on January 29, 2019) and the approval for listing on the NYSE of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (vi) no material adverse effect on Nexeo's and Univar's operations having occurred since the signing of the Univar Merger Agreement and (vii) the termination of the TRA. There can be no assurance that the conditions to the completion of the proposed transaction will be satisfied or waived or that the proposed transaction will be completed. On November 16, 2018, Univar and Nexeo announced that the waiting period under the HSR Act expired. Additional required filings have been made with other regulatory agencies in certain foreign jurisdictions and the process is ongoing. For further information about the Univar Merger Agreement, see Note 4 to our condensed consolidated financial statements.

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Segment Overview

We operate through three lines of business, or operating segments: Chemicals, Plastics and Environmental Services. Our lines of business market to different sets of customers operating in an array of different industries, with various end markets and customer segments within those industries. For segment presentation and disclosure purposes, our Chemicals and Plastics lines of business constitute separate reportable segments, while our Environmental Services line of business, which does not meet the materiality threshold for separate disclosure, is included in an "Other" segment.

A brief description of each of our lines of business follows:

Chemicals. Our Chemicals line of business distributes specialty and industrial chemicals, additives and solvents to industrial users via railcars, barges and bulk tanker trucks and as packaged goods in trucks. Our chemicals products are distributed in approximately 50 countries worldwide, primarily in North America and Asia. In connection with the distribution of chemicals products, we provide value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. While our Chemicals line of business serves multiple end markets, the key end markets within the industrial space are household, industrial and institutional, performance coatings (including architectural coatings, adhesives, sealants and elastomers), lubricants, oil and gas and personal care.

Plastics. Our Plastics line of business distributes a broad product line consisting of commodity polymer products and prime engineering resins to plastics processors engaged in blow molding, extrusion, injection molding and rotation molding via railcars, bulk trucks, truckload boxes and mixed truckloads, or less-than-truckload quantities. We distribute plastics products in more than 60 countries worldwide, primarily in North America, EMEA and Asia. Our Plastics line of business serves a broad cross section of industrial segments, including key automotive and healthcare end markets.

Other. Our Environmental Services line of business, in connection with certain waste disposal service companies, provides customers with comprehensive on-site and off-site hazardous and non-hazardous waste collection, transportation, recovery, disposal arrangement and recycling services in North America, primarily in the U.S. These environmental services are offered through our network of distribution facilities used as transfer facilities and through a staff of dedicated on-site waste professionals. Our Environmental Services line of business serves multiple end markets such as aerospace and defense, automotive, chemical manufacturing, industrial manufacturing and oil and gas.

Key Factors Affecting our Results of Operations and Financial Condition

General and regional economic conditions. Consumption of chemicals and plastics in the industries and markets we serve are generally affected by the global economy and amplified by regional conditions. Although we manage our cost structure in line with general economic conditions, our volumes and profitability are ultimately correlated with the underlying demand for the end-products of the industries we serve. In the current period we experienced lower industrial market demand due to the deflationary environment, lower oil and gas prices, political uncertainty in EMEA and economic slowdown in Asia.

Price fluctuations. Selling prices of the products we distribute within our Chemicals and Plastics lines of business fluctuate with changes in the prices we pay for products.  Product costs are largely driven by global and regional economic conditions affecting the prices of two primary raw materials of production: crude oil (primarily naphtha) and natural gas (primarily ethane).  These two raw materials are used in the production of propylene and ethylene, the key feedstocks used in over 90% of organic-based commodity and specialty chemicals, as well as in the subsequent production of the intermediate plastics products we distribute.  The prices of these feedstocks are also affected by other factors, including choices made by producers for uses of feedstocks (e.g., as an ingredient in gasoline versus a feedstock to the chemical industry) and the capacity devoted to production for market supply and other macroeconomic factors that impact the producers.  As a distributor, the prices of these feedstocks are not in our control.  We are generally able to adjust finished good prices in accordance with fluctuations of our product costs and transportation-related costs (e.g., fuel costs).  As a result, movements in our sales revenue and cost of sales tend to correspond with changes in our product prices.  We continue to execute on effective pricing initiatives.

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As supply or demand patterns change, there can be corresponding volatility in the selling prices of the products we distribute.  Gross profit margins generally decrease in deflationary price environments and increase during inflationary pricing environments, although the extent to which profitability increases or decreases depends on the rate at which selling prices adjust relative to inventory costs.  As a logistics provider, oil prices affect our transportation and delivery costs, along with changes in driver regulations, supply of drivers and common carrier rates.

Volume-based pricing. We generally procure chemicals and plastics raw materials through purchase orders rather than under long-term contracts with firm commitments.  Our arrangements with key producers and suppliers are typically embodied in agreements that we refer to as framework supply agreements.  We work to develop strong relationships with a select group of producers and suppliers that complement our strategy based on a number of factors, including price, breadth of product offering, quality, market recognition, delivery terms and schedules, continuity of supply and each producer’s strategic positioning.  Our framework supply agreements with producers and suppliers typically renew annually. They generally do not provide for specific product pricing, some, primarily those related to our Chemicals line of business, include volume-based financial incentives through supplier rebates, which we earn by meeting or exceeding target purchase volumes. Supplier rebates are recorded as a reduction of inventory costs and accrued as part of cost of sales for products sold based on its purchases to date and estimates of purchases for the remainder of the calendar year.

Inflation. Our average selling prices generally rise in inflationary environments as producers and suppliers raise the market prices of the products that we distribute.  During inflationary periods our customers typically maximize the amount of inventory they carry in anticipation of price increases.  Consequently, this environment of excess demand favorably impacts our volumes sold, revenues and gross profit due to the lag between rising prices and our cost of goods sold.  The reverse is true in deflationary price environments.  Deflationary forces create an environment of oversupply, driving market prices of products downward, and we must quickly adjust inventories and buying patterns to respond to price declines.  Our primary objective is to replace inventories at lower costs while maintaining or enhancing unit profitability. The environment turned to a deflationary environment at the end of the first quarter of fiscal year 2019.

Some of our assets and liabilities, primarily cash, receivables, inventories and accounts payable, are impacted by commodity price inflation because they are indirectly affected by market prices of the raw materials that are used to manufacture our products.  We manage our working capital during periods of changing prices, so the overall impact of inflation on our net working capital is generally not significant.

Currency exchange rate fluctuations. We conduct our business on an international basis, in multiple currencies.  A portion of our sales and costs of sales transactions are denominated in currencies other than the functional currency of our subsidiaries.  Further, we have exposure to foreign exchange fluctuations arising from the remeasurement of certain foreign operations where the USD is the functional currency but accounting records are maintained in local currency. Strengthening/weakening of our subsidiaries’ functional currency relative to the other currencies in which some transactions are denominated or recorded creates foreign currency gains/losses, which we include in Selling, general and administrative expenses. Additionally, we report our consolidated results in USD and the results of operations and the financial position of our local international operations are translated into USD at the applicable exchange rates for inclusion in our condensed consolidated financial statements.  Strengthening of the USD relative to our subsidiaries’ functional currencies causes a negative impact on sales but a positive impact on costs.

Outlook

General. We have operations in North America, EMEA and Asia and are subject to broad, global and regional macroeconomic factors. These factors include:

• the general state of the economy, specifically inflationary or deflationary trends, GDP growth rates and commodity/feedstock price movements;

• unemployment levels;

• government regulation and geopolitical changes;

• fiscal and monetary policies of governments, including import and export tariffs, duties and other taxes;

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• general income growth and the consumption rates of products;

• increases in transportation related costs and changes in our relationship with common carriers; and

• technological change in the industries we serve.

We monitor these factors routinely for both strategic and operational impacts.

Our operations are most impacted by regional market price fluctuations of the primary feedstock materials, including crude oil and natural gas, and the downstream derivatives of these primary raw materials. Market price fluctuations of these primary raw materials directly impact the decisions of our suppliers, specifically the manufacturing capacity and market supply made available for production of the products we distribute. As supply or demand patterns change, we may experience a corresponding change in the average selling prices of the products we distribute.

The global markets showed slower growth in the first quarter of fiscal year 2019 reflected by decreases in oil prices and U.S. Industrial Production Index.

The following is a summary of GDP, oil price and U.S. Industrial Production Index fluctuations in our various regions of operations by fiscal quarter:

	Q1 19 v Q1 18		Q4 18 v Q4 17		Q3 18 v Q3 17		Q2 18 v Q2 17
North America
U.S. GDP Growth	*		3.0	%	2.9	%	2.6	%
U.S. Industrial Production Index	4.1	%	5.0	%	3.4	%	3.4	%
West Texas Intermediate Crude Oil Average Price Increase	7.3	%	44.1	%	41.0	%	21.5	%
EMEA
Euro Area GDP Growth	1.2	%	1.6	%	2.2	%	2.4	%
Brent Crude Oil Average Price Increase	11.6	%	45.4	%	47.6	%	23.1	%
Asia
China GDP Growth (1)	6.6	%	6.7	%	6.8	%	6.8	%

⁽¹⁾ As reported by the Chinese government.

* Release date delayed

Overall GDP growth has slowed in many of the countries in which we operate. As a result we have experienced a decrease in sales volumes. In terms of currency, the USD has strengthened over the prior comparable period against most other currencies in which we transact. As a result of these factors, reported dollar revenues and gross profit have been negatively impacted in many of our regional operations.

North America

The North American economic environment modestly improved through the first quarter of fiscal year 2019. The inflation rate fell to 1.9% in the first fiscal quarter of 2019 compared to the same period in the prior year due primarily to falling oil and gas prices.

In terms of currency, the CAD weakened against the USD through the first quarter of fiscal year 2019, which negatively affected, among other items, the reported dollar revenues and gross profit from our operations in Canada. Additionally, the Peso weakened in value against the USD through the first quarter of fiscal year 2019.

EMEA

In Europe, we conduct business primarily in the Western European countries. As evidenced by their slight decreases in GDP growth through fiscal year 2018, the economic environment in the countries in which we operate in Europe has continued to improve.

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In terms of currency, the euro and other European currencies weakened versus the USD through the first quarter of fiscal year 2019, which negatively affected, among other items, the reported dollar revenues and gross profit from our European operations.

The market price for the products we sell in Europe typically correlate to the market price of Brent Crude as these operations are primarily based on the distribution of commodity plastics products which are sourced in Europe. Consistent with the decrease in oil prices through the first quarter of fiscal year 2019, we have experienced a slight decrease in average selling price for the products we distribute in Europe.

Asia

Our operations in Asia are concentrated mainly in China. GDP growth in China, as reported by the Chinese government, decreased in the current quarter.

In terms of currency, the RMB weakened against the USD through the first quarter of fiscal year 2019, which negatively affected, among other items, the reported dollar revenues and gross profit from our operations in China.

Results of Operations

Three Months Ended December 31, 2018 compared with Three Months Ended December 31, 2017

												Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,						Difference					Three Months Ended December 31,
(in millions)	2018			2017			$ Change			% Change		2018		2017
Sales and operating revenues
Chemicals	$	438.5		$	431.9		$	6.6		1.5	%	46.9	%	46.5	%
Plastics	456.1			462.2			(6.1		)	(1.3	)%	48.7	%	49.7	%
Other	41.2			35.5			5.7			16.1	%	4.4	%	3.8	%
Total sales and operating revenues	$	935.8		$	929.6		$	6.2		0.7	%	100.0	%	100.0	%
Gross profit
Chemicals	$	53.5		$	58.4		$	(4.9	)	(8.4	)%	12.2	%	13.5	%
Plastics	38.7			41.9			(3.2		)	(7.6	)%	8.5	%	9.1	%
Other	6.5			6.6			(0.1		)	(1.5	)%	15.8	%	18.6	%
Total gross profit	$	98.7		$	106.9		$	(8.2	)	(7.7	)%	10.5	%	11.5	%
Selling, general and administrative expenses	79.8			84.8			(5.0		)	(5.9	)%	8.5	%	9.1	%
Transaction related costs	8.2			0.1			8.1			**		0.9	%	—	%
Change in fair value of contingent consideration obligations	(22.9		)	(18.6		)	(4.3		)	(23.1	)%	(2.4	)%	(2.0	)%
Operating income	33.6			40.6			(7.0		)	(17.2	)%	3.6	%	4.4	%
Other income, net	0.1			0.1			—			—	%	—	%	—	%
Interest expense, net	(13.3		)	(12.9		)	(0.4		)	(3.1	)%	(1.4	)%	(1.4	)%
Net income before income taxes	20.4			27.8			(7.4		)	(26.6	)%	2.2	%	3.0	%
Income tax expense	4.2			1.3			2.9			223.1	%	0.4	%	0.1	%
Net income	$	16.2		$	26.5		$	(10.3	)	(38.9	)%	1.7	%	2.9	%

 

 ^{** Not meaningful} 

40

Sales and operating revenues

Sales and operating revenues for the three months ended December 31, 2018 increased $6.2 million, or 0.7%, compared to the three months ended December 31, 2017. 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.

Chemicals

Sales and operating revenues for the Chemicals line of business for the three months ended December 31, 2018 increased $6.6 million, or 1.5%, compared to the three months ended December 31, 2017. 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.

Plastics

Sales and operating revenues for the Plastics line of business for the three months ended December 31, 2018 decreased $6.1 million, or 1.3%, compared to the three months ended December 31, 2017. The 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.

Other

Sales and operating revenues for the Other segment for the three months ended December 31, 2018 increased $5.7 million, or 16.1%, compared to the three months ended December 31, 2017. The increase in revenues was due to growth in on-site services and an increase in waste services to existing customers.

Gross profit

Gross profit declined $8.2 million, or 7.7%, for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. 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.

Chemicals

Gross profit for the Chemicals line of business declined $4.9 million, or 8.4%, for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. 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

Gross profit for the Plastics line of business declined $3.2 million, or 7.6%, for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. 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.

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Other

Gross profit for the Other segment declined $0.1 million, or 1.5%, for the three months ended December 31, 2018 compared to the three months ended December 31, 2017. The decrease was primarily due to the shift in product mix for the current period.

Selling, general and administrative expenses

										Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,				Difference					Three Months Ended December 31,
(in millions)	2018		2017		$ Change			% Change		2018		2017
Selling, general and administrative expenses	$	79.8	$	84.8	$	(5.0	)	(5.9	)%	8.5	%	9.1	%

Selling, general and administrative expenses for the three months ended December 31, 2018 decreased $5.0 million, or 5.9%, compared to the three months ended December 31, 2017. This decrease was primarily driven by variable incentives and consulting services.

Transaction related costs

								Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,				Difference			Three Months Ended December 31,
(in millions)	2018		2017		$ Change		% Change	2018		2017
Transaction related costs	$	8.2	$	0.1	$	8.1	**	0.9	%	—	%

^{** Not meaningful} 

There were $8.2 million of transaction related costs in the three months ended December 31, 2018 related to the Univar Merger Agreement and $0.1 million in the three months ended December 31, 2017 related to the Ultra Chem Acquisition.

Changes in fair value of contingent consideration

												Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,						Difference					Three Months Ended December 31,
(in millions)	2018			2017			$ Change			% Change		2018		2017
Change in fair value of contingent consideration obligations	$	(22.9	)	$	(18.6	)	$	(4.3	)	(23.1	)%	(2.4	)%	(2.0	)%

We incurred a gain of $22.9 million and $18.6 million in the three months ended December 31, 2018 and 2017, respectively. The gain in the current fiscal quarter was due to the gain in Deferred Cash Consideration driven primarily by the decrease in our stock price during the three months ended December 31, 2018 and the gain on the TRA which was driven by changes in various inputs to the calculation including the estimated discount rate and expected interest rates. The gain for the three months ended December 31, 2017 was related to the TRA liability gain partially offset by the loss in Deferred Cash Consideration. See Notes 5 and 10 to our condensed consolidated financial statements.

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Other income, net

									Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,				Difference				Three Months Ended December 31,
(in millions)	2018		2017		$ Change		% Change		2018		2017
Other income, net	$	0.1	$	0.1	$	—	—	%	—	%	—	%

Other income, net for the three months ended December 31, 2018 and 2017 was $0.1 million related to proceeds from the sale of fleet vehicles.

Interest expense, net

									Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,				Difference				Three Months Ended December 31,
(in millions)	2018		2017		$ Change		% Change		2018		2017
Interest expense, net	$	13.3	$	12.9	$	0.4	3.1	%	1.4	%	1.4	%

Interest expense, net was $13.3 million and $12.9 million for the three months ended December 31, 2018 and 2017, respectively, related to the Credit Facilities, along with the amortization of debt issuance costs. Interest expense, net increased due to the higher average interest rate on the term loan facility in the current period.

Income tax expense

									Percentage of Sales and Operating Revenues For the
	Three Months Ended December 31,				Difference				Three Months Ended December 31,
(in millions)	2018		2017		$ Change		% Change		2018		2017
Income tax expense	$	4.2	$	1.3	$	2.9	223.1	%	0.4	%	0.1	%

Income tax expense was $4.2 million and $1.3 million for the three months ended December 31, 2018 and 2017, respectively. The current period expense was primarily attributable to income on profitable U.S. operations. The prior period tax expense was attributable to prior period income partially offset by the benefit on deferred tax liabilities due to the impact of the Tax Act, which resulted in a decrease in income tax expense of $4.5 million.

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Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash flows generated from our operations and borrowing availability under the ABL Facility. Cash flows generated from operations are influenced by seasonal patterns of our business and other timing circumstances that can result in increases or decreases in working capital requirements for any given period during the course of our fiscal year. Our ability to generate sufficient cash flows from operating activities will continue to be primarily dependent on purchasing and distributing chemical and plastic materials. Additionally, our ability to generate cash flows in the normal course of business can be significantly influenced by changing global and regional macroeconomic conditions. Borrowing availability under the ABL Facility is subject to a borrowing base generally comprised of eligible inventory, accounts receivable and cash and cash equivalents held in certain accounts and certain subsidiaries. Our availability under the ABL Facility is, therefore, potentially subject to fluctuations, depending on the value of the eligible assets in the borrowing base on a given valuation date. An inability to borrow under the ABL Facility may adversely affect our liquidity, results of operations and financial condition.

Our operating cash requirements consist principally of inventory purchases, trade credit extended to customers, labor, occupancy costs and transportation and delivery costs. Non-operating cash requirements include debt service requirements, acquisition-related costs and capital expenditures.

Capital Expenditures

Cash capital expenditures for the three months ended December 31, 2018 were $4.8 million and related primarily to facility improvements, equipment purchases, and additional information technology investments. We expect our aggregate capital expenditures for fiscal year 2019 (excluding acquisitions and any assets acquired via capital leases) to be approximately $39.5 million, including $10.8 million for a planned land acquisition at one of our facilities expected to close during fiscal year 2019. Capital expenditures are expected to be primarily related to fixed asset replacements, improvements to our information technology infrastructure and equipment.

Credit Facilities

ABL Facility

The ABL Facility provides for committed revolving credit financing including a U.S. Tranche of up to $505.0 million, a Canadian Tranche of up to the USD equivalent of $40.0 million and a FILO Tranche up to $30.0 million. The ABL Facility matures on June 9, 2021. Provided no default or event of default then exists or would arise therefrom, the ABL Borrowers have the option, at the beginning of each quarter, to request that the ABL Facility be increased by an aggregate amount, when included with any incremental borrowings issued under the Term Loan Facility, not to exceed $175.0 million.

The ABL Facility includes a letter of credit sub-facility, which permits up to $200.0 million of letters of credit under the U.S. Tranche (which may be denominated in USD, euros or other currencies approved by the administrative agent and the issuing bank) and up to the USD equivalent of $10.0 million of letters of credit under the Canadian Tranche (which may be denominated in CAD only). The ABL Facility also contains a FILO Tranche which can be used by any non-Canadian foreign subsidiary for loans or letters of credit up to an aggregate amount not to exceed $30.0 million.

Obligations under the ABL Facility are secured by a first priority lien on all ABL Facility first lien collateral, including eligible inventory and accounts receivable of the ABL Borrowers, and a second priority lien on all Term Loan Facility first lien collateral including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, in each case, subject to certain limitations; provided, that no ABL Facility first lien collateral or Term Loan Facility first lien collateral owned by the Canadian Borrower secure the obligations owing under the U.S. tranche of the ABL Facility.

At December 31, 2018, we had $159.0 million in borrowings outstanding under the ABL Facility. Interest expense related to the ABL Facility, excluding amortization of debt issuance costs, was $1.9 million for the three months ended December 31, 2018 and 2017.

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As of December 31, 2018, we were in compliance with the covenants of the ABL Facility.

Term Loan Facility

The Term Loan Facility provides secured debt financing in an aggregate principal amount of up to $655.0 million and the right, at our option, to request additional tranches of term loans in an aggregate principal amount, when included with any incremental borrowings issued under the ABL Facility, amount up to $175.0 million, plus unlimited additional amounts such that the aggregate principal amount of indebtedness outstanding at the time of incurrence does not cause the consolidated Secured Net Leverage Ratio, calculated on a pro forma basis, to exceed 4.1 to 1.0. Availability of such additional tranches of term loans is subject to the absence of any default, and among other things, the receipt of commitments by existing or additional financial institutions. The Term Loan Facility matures on June 9, 2023.

Obligations under the Term Loan Facility are secured by a first priority lien on all Term Loan Facility first lien collateral, including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, and a second priority lien on all ABL Facility first lien collateral, including accounts receivable and inventory of the loan parties under the Term Loan Facility, subject to certain limitations.

At December 31, 2018, we had $638.8 million in borrowings outstanding under the Term Loan Facility. We are required to make mandatory principal payments on an annual basis, if cash flows for the year, as defined in the agreement, exceed certain levels specified in the agreement. We were not required to make such principal payment for fiscal year 2018. Interest expense related to the Term Loan Facility, excluding original issue discount amortization and amortization of debt issuance costs, was $9.3 million and $8.3 million for the three months ended December 31, 2018 and 2017, respectively.

As of December 31, 2018, we were in compliance with the covenants of the Term Loan Facility.

Working Capital

Our Chemicals and Plastics lines of business generally require significant working capital to purchase products from suppliers and sell those materials to our customers. The primary components of our working capital accounts are accounts receivable, inventories, accounts payable, accrued expenses and other liabilities and current portion due to related party pursuant to contingent consideration obligations.

We generally manage working capital by utilizing our ERP system, which enables us to forecast rolling weekly volumes, anticipate demand shift fluctuations and quickly respond to rapidly changing customer needs for the majority of our operations. This platform, combined with our product line management department, enables us to efficiently manage working capital. We further manage working capital by focusing on terms of purchase and sale, evaluating the creditworthiness of customers when extending trade credit, utilizing systematic collection efforts and managing inventory to closely match demand and meet required customer service levels.

Liquidity

The following table summarizes our liquidity position as of December 31, 2018 and September 30, 2018:

	December 31, 2018		September 30, 2018
Cash and cash equivalents	$	54.6	$	58.9
ABL Facility availability	258.1		344.2
Total liquidity	$	312.7	$	403.1

Cash and Cash Equivalents

At December 31, 2018, we had $54.6 million in cash and cash equivalents of which $45.7 million was held by foreign subsidiaries, $44.3 million of which was denominated in currencies other than the USD, primarily in euros and CAD, and $3.5 million in China denominated in RMB. While the RMB is convertible into USD, foreign exchange transactions are subject to approvals from the SAFE. We do not anticipate any significant adverse impact to overall liquidity from potential limitations on the transfer or conversion of cash and cash equivalents.

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ABL Facility

Under the ABL Facility, if as of any date of determination when Trigger Event Excess Availability (as defined in the ABL Facility) is below certain thresholds or upon certain defaults, we will be required to deposit cash on a daily basis from certain depository accounts in a collection account maintained with the administrative agent, which will be used to repay outstanding loans and cash collateralized letters of credit. Such requirement will be deemed continuing until the Trigger Event Excess Availability exceeds such threshold amount for 20 consecutive days. At December 31, 2018, Trigger Event Excess Availability under the ABL Facility was $258.1 million, which was $46.2 million in excess of the $211.9 million threshold that would trigger the foregoing requirements.

As previously described, the Univar Merger Agreement contains customary covenants which restrict us without Univar's consent, from taking certain specified actions until the proposed transaction closes or the Univar Merger Agreement terminates. One such restriction limits us from incurring any additional indebtedness (as defined in the Univar Merger Agreement) in excess of $150.0 million in aggregate principal amount over the amount outstanding under the Credit Facilities as in effect as of the date of execution of the Univar Merger Agreement.

Based on current and anticipated levels of operations, capital spending projections and conditions in our markets, we believe that cash on hand, together with cash flows from operations and borrowings available under the ABL Facility (after taking into account the limitation noted above), are adequate to meet our working capital and capital expenditure needs as well as any debt service and other cash requirements for at least twelve months.

In addition to operating and non-operating cash requirements previously described, our longer-term liquidity needs are primarily related to our final maturity debt payments due in 2021 and 2023. Depending on market conditions and other factors, we may also consider alternative financing options, including, but not limited to, issuance of equity, issuance of debt or refinancing of our existing debt obligations.

Cash Flows

The following table sets forth the major categories of our cash flows for the three months ended December 31, 2018 and 2017:

Major Categories of Cash Flows
(in millions)	Three Months Ended December 31, 2018			Three Months Ended December 31, 2017
Net cash used in operating activities	$	(50.2	)	$	(59.2	)
Net cash used in investing activities	(6.5		)	(3.5		)
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 period	58.9			53.9
Cash and cash equivalents at the end of period	$	54.6		$	41.4

Three Months Ended December 31, 2018 compared to Three Months Ended December 31, 2017

Cash flows from operating activities

Net cash used in operating activities for the three months ended December 31, 2018 was $50.2 million. Net income of $16.2 million, adjusted for significant non-cash items such as depreciation and amortization expenses, amortization of debt issuance costs, provision for bad debt, deferred income taxes, equity-based compensation expense and changes relating to contingent consideration liabilities collectively totaling $1.3 million, resulted in cash inflows of $14.9 million during the three months ended December 31, 2018. Net cash used by operating activities was impacted by the items specified below:

• Accounts and notes receivable decreased $55.8 million primarily driven by lower volumes due to a deflationary pricing environment in the current period. There were no significant changes in billing terms during the three months ended December 31, 2018.

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• Inventories increased $23.1 million primarily due to the deflationary environment which resulted in customer inventory level reduction.

• Accounts payable decreased $70.7 million primarily driven by the timing of payments during the three months ended December 31, 2018.

• Accrued expenses and other liabilities decreased $26.4 million which primarily reflects the accrual of the annual employee incentive compensation for the current fiscal year offset by the payment in the first quarter of fiscal year 2019 of the annual employee incentive compensation related to prior fiscal year.

• Other current assets and other assets and liabilities were impacted by $0.7 million.

Net cash used in operating activities for the three months ended December 31, 2017 was $59.2 million. Net income of $26.5 million, adjusted for significant non-cash items such as depreciation and amortization expenses, amortization of debt issuance costs, provision for bad debt, deferred income taxes, equity based compensation expense, and changes relating to contingent consideration liabilities collectively totaling $2.2 million, resulted in cash inflows of $28.7 million during the three months ended December 31, 2017. Net cash used by operating activities was impacted by the items specified below:

• Accounts and notes receivable decreased $36.9 million primarily driven by lower sales volumes experienced during the period. There were no significant changes in billing terms during the current period.

• Inventories increased $50.5 million primarily due to replenishment of inventory and supply becoming available in the Plastics line of business.

• Accounts payable decreased $60.8 million primarily driven by timing of payments during the three months ended December 31, 2017.

• Accrued expenses and other liabilities decreased $12.6 million which included the payment of the annual employee incentive compensation.

• Other current assets and other assets and liabilities were impacted by $0.9 million.

Cash flows from investing activities

Investing activities used $6.5 million of cash during the three months ended December 31, 2018, primarily due to the additions of property and equipment of $4.8 million mainly related to facility improvements, equipment purchases, and additional information technology investments. The cash paid for asset acquisitions was $1.7 million.

Investing activities used $3.5 million of cash during the three months ended December 31, 2017, due to the additions of property and equipment of $4.1 million mainly related to facility improvements and additional information technology investments, partially offset by $0.6 million of proceeds from the disposal of property and equipment.

Cash flows from financing activities

Financing activities provided $53.6 million of cash during the three months ended December 31, 2018, primarily as a result of net borrowings on the ABL Facility of $54.4 million partially offset by net payments on short-term debt of $1.6 million, payments on the Term Loan Facility of $1.6 million and capital lease payments of $0.8 million.

Financing activities provided $50.1 million of cash during the three months ended December 31, 2017, primarily as a result of net borrowings on the ABL Facility of $60.9 million partially offset by net payments on short-term debt of $3.7 million, payments on the Term Loan Facility of $1.6 million, capital lease payments of $0.5 million, and the payment of debt issuance costs of $0.8 million related to TLB Amendment No. 2. In addition, in October 2017, $4.2 million was paid to TPG related to the TRA liability.

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Contractual Obligations and Commitments

As of December 31, 2018, amounts due under our contractual commitments were as follows: 

	Payments Due by Period (in millions)
	Less than  1 Year		1-3 Years		4-5 Years		More than 5 Years		Total
Short-term and long-term debt obligations (1)	$	46.1	$	171.9	$	619.4	$	—	$	837.4
Estimated interest payments on long-term debt obligations (2)	46.2		85.3		56.4		—		187.9
Capital lease obligations (3)	7.5		14.1		16.1		25.0		62.7
Operating lease obligations (4)	14.2		17.7		6.8		0.2		38.9
Employee benefit obligations	—		—		—		3.4		3.4
Contingent consideration (5)	15.8		73.8		17.6		63.1		170.3
Other obligations (6)	7.8		2.4		1.4		—		11.6
Total	$	137.6	$	365.2	$	717.7	$	91.7	$	1,312.2

⁽¹⁾  Short-term obligations primarily include the payment of $39.6 million outstanding under credit facilities available to our operations in China and $6.5 million in principal installment payments under our Term Loan Facility. Long-term debt obligations include the payment of $159.0 million in outstanding principal under our ABL Facility and the payment of $632.3 million in outstanding principal under our Term Loan Facility. See Note 8 to our condensed consolidated financial statements.

⁽²⁾  Estimated interest payments include cash interest payments and estimated commitment fees on long-term debt obligations. Variable interest rate payments were estimated using interest rates as of December 31, 2018 held constant to maturity.

⁽³⁾  Capital lease obligations represent future payments on capital lease agreements, including lease payments on all tractors under the Ryder Lease and the Montgomery Lease. The amounts above include executory costs of approximately $2.4 million per year, for aggregate executory costs totaling $14.5 million. Additionally, the amounts include decreasing annual interest payments ranging from $1.9 million to $0.1 million, for aggregate interest payments totaling $15.0 million on all capital leases. We are permitted to terminate the lease of an individual tractor under the Ryder Lease on the anniversary of its delivery date, provided that certain conditions are met. In the event we terminate the lease of an individual tractor in accordance with the terms of the Ryder Lease, we may elect to purchase the individual tractor at a predetermined residual value or return the tractor to Ryder, subject to an adjustment based on the then-current market value of the individual tractor. See Note 8 to our condensed consolidated financial statements.

⁽⁴⁾  Operating lease obligations represent payments for a variety of facilities and equipment under non-cancellable operating lease agreements, including office buildings, transportation equipment, warehouses and storage facilities and other equipment.

⁽⁵⁾  Liabilities for contingent consideration are related (i) to the TRA that we entered into in connection with the Business Combination and (ii) the Deferred Cash Consideration that will be paid to Selling Equityholders pursuant to the Merger Agreement. The amount included in the table above for the Deferred Cash Consideration is based on the undiscounted expected value of the payment and is currently included in the 1-3 Years column based on the final payment date of June 9, 2021 as defined in the Merger Agreement. However, as further defined in the Merger Agreement, payments could be required to be made by us prior to June 9, 2021. The timing of payments associated with the liability for the contingent consideration related to the TRA is based on expected undiscounted cash flows in future periods, and may change based on actual results. See Notes 5 and 10 to our condensed consolidated financial statements.

(6) Other obligations are related to non-cancellable equipment orders and certain IT-related contracts.

Not included in the table above is $10.8 million for a planned land acquisition expected to be finalized during fiscal year 2019. The consummation of this purchase agreement is subject to customary closing conditions.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements, as defined in Item 303(a) (4) (ii) of Regulation S-K at December 31, 2018.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Commodity and Product Price Risk

Our business model is to buy and sell products at current market prices in quantities approximately equal to estimated customer demand. Energy costs are a significant component of raw materials that are included in our product costs. Rising or volatile raw material prices for our suppliers, especially those of hydrocarbon derivatives, may cause our costs to increase or may result in volatility in our profitability. Although we do not speculate on changes in the prices of the products we sell, because we maintain inventories in order to serve the needs of our customers, we are subject to the risk of reductions in market prices for products we hold in inventory. We do not use derivatives to manage our commodity price risk because of the large number of products we sell and the large variety of raw materials used in the production of those products. Inventory management practices are focused on managing product price risk by generally purchasing our inventories via our ERP system which helps us forecast customer demand based on historical practices. Global inventory balances can fluctuate based on variations in regional customer demand forecasts. We collaborate directly with customers in all regions to enhance the ongoing accuracy of these forecasts in order to reduce the number of days sales held in inventories, as well as lower the amount of any slow moving and older inventories. In addition, we are generally able to pass on price increases to our customers, subject to market conditions, such as declining or otherwise volatile market prices for feedstocks, the presence of competitors in particular geographic and product markets and prevailing pricing mechanisms in customer contracts. We believe that these risk management practices reduce our exposure to changes in product selling prices or costs; however, significant unanticipated changes in market conditions or commodity prices could adversely affect our results of operations, financial condition and cash flows, as the prices of the products we purchase and sell are volatile.

Credit Risk

We are subject to the risk of loss arising from the credit risk related to the possible inability of our customers to pay for the products we resell and distribute to them. We attempt to limit our credit risk by monitoring the creditworthiness of our customers to whom we extend credit and establish credit limits in accordance with our credit policy. We perform credit evaluations on substantially all customers requesting credit and we will not extend credit to customers for whom we have substantial concerns and will deal with those customers on a cash basis. With the exception of our operations in China, we generally do not require collateral with respect to credit extended to customers. Our operations in China offer billing terms that allow certain customers to remit payment during a period of time ranging from 30 days to nine months. These notes receivable ($6.9 million at December 31, 2018) are supported by banknotes issued by large banks in China on behalf of their customers.

At December 31, 2018, no individual customer represented greater than 5.0% of the outstanding accounts receivable balance.

Interest Rate Risk

Interest rate risks can occur due to changes in market interest rates. This risk results from changes in the fair values of fixed-interest rate financial instruments or from changes in the cash flows of variable interest rate financial instruments. The optimal structure of variable and fixed interest rates is determined as part of interest rate risk management. It is not possible to simultaneously minimize both kinds of interest rate risk. We take steps to mitigate interest rate risk in part by entering into interest rate swap agreements as described under “Fair Value Measurements” below. Also, see Note 9 to our condensed consolidated financial statements.

Borrowings under our ABL Facility bear a variable interest rate, which was a weighted average rate of 3.98% for the three months ended December 31, 2018. For each $100.0 million drawn on the ABL Facility, a 100 basis point increase in the interest rate would result in a $1.0 million increase in annual interest expense.

Changes in market interest rates will have an effect on the Term Loan Facility interest expense. A 100 basis point increase/decrease in the interest rate would result in an increase/decrease of $6.4 million in annual interest expense based on the Term Loan Facility balance at December 31, 2018.

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Fair Value Measurements

Contingent Consideration

As a result of the Business Combination, we incurred liabilities related to contingent consideration payable to the Selling Equityholders, which are required to be adjusted to fair value at each reporting period. These measurements are considered Level 3 measurements within the fair value hierarchy. Projected taxable income, current interest rates, current tax rates and the market price of our common stock are key inputs used to estimate the fair value of these liabilities. As a result, any changes in these inputs will impact the fair value of these liabilities and could materially impact the amount of income or expense recorded each reporting period.

The fair value of the liability for the contingent consideration related to the TRA was $71.1 million as of December 31, 2018. The calculation of the liability for the contingent consideration related to the TRA uses a cash flow model which incorporates current interest rates in the discount rate used to discount the obligation to present value. A 100 basis point increase in the discount rate compared to the discount rate used at the December 31, 2018 valuation would have resulted in a decrease of approximately $0.4 million in the value of the liability for the contingent consideration related to the TRA. Additionally, this cash flow model is sensitive to changes in applicable tax rates. A 100 basis point increase in the tax rate compared to the tax rate used at the December 31, 2018 valuation would have resulted in an increase of approximately $2.4 million in the value of the liability for the contingent consideration related to the TRA.

The fair value of the liability for the contingent consideration related to Deferred Cash Consideration was $43.5 million as of December 31, 2018. The liability for the contingent consideration related to the Deferred Cash Consideration is highly sensitive to the price of our common stock at each valuation date. A $1.00 increase/decrease in the price of our common stock from its December 31, 2018 price would have increased/decreased the fair value of the liability for the Deferred Cash Consideration by approximately $5.1 million.

Derivatives

We are a party to interest rate swap agreements of varying expiration dates ranging from February 2020 through February 2023, to help mitigate interest rate risk related to the variable rate Term Loan Facility. As of December 31, 2018, the notional amount of the seven outstanding interest rate swap agreements was $599.1 million. The swap agreements are accounted for as cash flow hedges. Gains or losses resulting from changes in the fair value of the swaps are recorded in other comprehensive income. Gains and losses recorded in other comprehensive income are reclassified into and recognized in income when the interest expense on the Term Loan Facility is recognized. At December 31, 2018, we recorded a net asset of $2.7 million in the condensed consolidated balance sheet related to these instruments.

During the three months ended December 31, 2018, we reclassified into income and recognized a realized loss on the interest rate swaps of $0.1 million, which was recorded in interest expense. During the three months ended December 31, 2018, we recorded an unrealized loss on the interest rate swaps (net of taxes and reclassifications into income, including any ineffective portion) of $5.7 million, which was recorded in other comprehensive income. As of December 31, 2018, $2.5 million in unrealized gains were expected to be realized and recognized in income within the next twelve months.

Foreign Currency Risk

We may be adversely affected by foreign exchange rate fluctuations since we conduct our business on an international basis in multiple currencies. A portion of our sales and costs of sales are denominated in currencies other than the functional currency of our subsidiaries, exposing us to currency transaction risk.  Additionally, because we report our consolidated results in USD, the results of operations and the financial position of our local international operations, which are generally reported in the relevant local currencies, are translated into USD at the applicable exchange rates for inclusion in our condensed consolidated financial statements, exposing us to currency translation risk.  Further, we have exposure to foreign exchange fluctuations arising from the remeasurement of certain foreign operations where the USD is the functional currency but accounting records are kept in local currency. In this respect, we are vulnerable to currency remeasurement gains and losses to the extent that monetary assets and liabilities denominated in local currency do not offset each other when remeasured into USD.

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We currently do not utilize financial derivatives to manage our foreign currency risk, but we continue to monitor our exposure to foreign currency risk, employ operational strategies where practical and may consider utilizing financial derivatives in the future to mitigate losses associated with these foreign currency risks.

Included in our condensed consolidated statement of operations for the three months ended December 31, 2018 is a $0.2 million net gain related to foreign exchange rate fluctuations. The most significant currency exposures during this period were to the RMB and CAD versus the USD. Assuming the same directional fluctuations as occurred during the three months ended December 31, 2018, a hypothetical 10.0% weakening/strengthening in the average exchange rates of these currencies from that date would have generated a net loss/gain of $1.3 million in our condensed consolidated statement of operations for the three months ended December 31, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures 

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation performed, our management, including the principal executive officer and principal financial officer, concluded that the disclosure controls and procedures were effective as of December 31, 2018.

Changes in Internal Control over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer evaluated the changes in our internal control over financial reporting that occurred during the quarterly period covered by this Quarterly Report on Form 10-Q. Based on their evaluation, it is concluded that there had been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2018 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

Item 1. Legal Proceedings

We are not currently a party to any legal proceedings that, if determined adversely against us, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations or cash flows.     

In June 2014, we self-disclosed to the DTSC that an inventory of our Fairfield facility had revealed potential violations of RCRA and the California Health and Safety Code. Although no formal proceeding has been initiated, we expect the DTSC to seek payment of fines or other penalties for non-compliance. We do not expect the amount of any such fine or penalty to have a material adverse effect on our business, financial position or results of operations.

From time to time, we are party to ongoing legal proceedings in the ordinary course of business. While the outcome of these proceedings cannot be predicted with certainty, we do not believe the results of these proceedings, other than as is disclosed elsewhere in this Quarterly Report on Form 10-Q, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operation or liquidity.

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Item 1A. Risk Factors

We are subject to certain risks and hazards due to the nature of the business activities we conduct. For a discussion of these risks, see “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018. These risks could materially and adversely affect our business, financial condition, cash flows and result of operations. There have been no material changes to the risk factors described in the Form 10-K described above. We may experience additional risks and uncertainties not currently known to us or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information concerning our repurchase of shares of our common stock during the three months ended December 31, 2018:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchase as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
November 2, 2018 (1)	34,461	$	10.82	—	—
November 8, 2018 (2)	2,923	$	10.01	—	—
Total	37,384	$	10.42	—	—

⁽¹⁾ Shares transferred to the Company to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting of the restricted stock.

⁽²⁾ Shares transferred to the Company to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting of the RSUs.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Exhibit Index

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated September 17, 2018, by and among Nexeo Solutions, Inc, Univar, Inc, Pilates Merger Sub I Corp and Pilates Merger Sub II (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated September 18, 2018)
3.1	Second Amended and Restated Certificate of Incorporation of Nexeo Solutions, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated June 9, 2016)
3.2	Amended and Restated Bylaws of Nexeo Solutions, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K dated June 9, 2016)
4.1	Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Company's S-1 Registration Statement (Commission File No. 333-195854)
4.2	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company's S-1 Registration Statement (Commission File No. 333-195854)
4.3	Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company's S-1 Registration Statement (Commission File No. 333-195854)
4.4	Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.4 to the Company's S-1 Registration Statement (Commission File No. 333-195854)
4.5	Shareholders' and Registration Rights Agreement, dated as of March 21, 2016, by and among TPG Capital LLC, WL Ross Sponsor LLC and WL Ross Holding Corp. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 21, 2016)
4.6	Amendment No. 1 to Shareholders' and Registration Rights Agreement, dated June 6, 2016, by and among WL Ross Holding Corp., WL Ross Sponsor LLC and Nexeo Holdco, LLC (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K dated June 6, 2016)
4.7	Form of Joinder to Shareholders' and Registration Rights Agreement (incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K dated June 9, 2016)
4.8	Waiver and Consent Agreement made as of September 13, 2017 by and among Nexeo Solutions, Inc. and Nexeo Holdco, LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 13, 2017)
23.1†	Consent of PricewaterhouseCoopers LLP
31.1†	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1††	Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Interactive data files pursuant to Rule 405 of Regulation S-T.

†                          Filed herewith.

††                   Furnished herewith.

*                     Pursuant to Rule 406T of Regulation S-T, the interactive data files included in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURE

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 thereunto duly authorized.

	Nexeo Solutions, Inc.
February 7, 2019	By:	/s/ Ross J. Crane
		Ross J. Crane
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-212199) and Form S-3 (No. 333-212200) of Nexeo Solutions, Inc. of our reports dated December 7, 2017 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, and December 8, 2016 relating to the financial statements and financial statement schedule, which appear in the 2017 Form 10‑K.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

December 7, 2017

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, David A. Bradley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2018 of Nexeo Solutions, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	2/7/2019	By:	/s/ David A. Bradley
		Name:	David A. Bradley
		Title:	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Ross J. Crane, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended December 31, 2018 of Nexeo Solutions, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	2/7/2019	By:	/s/ Ross J. Crane
		Name:	Ross J. Crane
		Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

UNDER SECTION 906 OF THE

SARBANES OXLEY ACT OF 2001, 18 U.S.C. § 1350

In connection with the Quarterly Report of Nexeo Solutions, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2018, as filed with the Securities and Exchange Commission on February 7, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David A. Bradley, Chief Executive Officer, Nexeo Solutions, Inc., and Ross J. Crane, Chief Financial Officer, Nexeo Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(a) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	2/7/2019	By:	/s/ David A. Bradley
		Name:	David A. Bradley
		Title:	Chief Executive Officer (Principal Executive Officer)

Date:	2/7/2019	By:	/s/ Ross J. Crane
		Name:	Ross J. Crane
		Title:	Chief Financial Officer (Principal Financial Officer)

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Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2018	Feb. 01, 2019
Document and Entity Information
Entity Registrant Name	NEXEO SOLUTIONS, INC.
Entity Central Index Key	0001604416
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		89,698,331
Entity Small Business	false
Entity Emerging Growth Company	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2018	Sep. 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)	0.0	0.0
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)	0.0	0.0
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

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 3.9	$ 4.2
Preferred stock, par value (USD per share)	$ 0.0001	$ 0.0001
Preferred shares authorized (in shares)	1,000,000	1,000,000
Preferred shares issued (in shares)	0	0
Preferred shares outstanding (in shares)	0	0
Common stock, par value (USD per share)	$ 0.0001	$ 0.0001
Shares authorized (in shares)	300,000,000	300,000,000
Shares issued (in shares)	89,755,231	89,747,062
Shares outstanding (in shares)	89,698,331	89,727,546
Treasury stock (in shares)	56,900	19,516

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Condensed Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
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 (USD per share)	$ 0.21	$ 0.35
Diluted (USD per share)	$ 0.21	$ 0.34
Weighted average number of common shares outstanding
Basic (in shares)	76,945,078	76,793,518
Diluted (in shares)	77,094,430	77,139,236

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions		3 Months Ended
		Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income		$ 16.2	$ 26.5
Unrealized foreign currency translation gain (loss), net of tax	[1]	(6.9)	1.1
Unrealized gain (loss) on interest rate hedges, net of tax	[2]	(5.7)	1.9
Other comprehensive income (loss), net of tax		(12.6)	3.0
Total comprehensive income, net of tax		3.6	29.5
Tax impact of unrealized gains and losses		$ 2.0	$ 0.6

[1] Tax effects are not material.

[2] Tax impact of the unrealized gains and losses related to the interest rate swaps was $2.0 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively.

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Condensed Consolidated Statements of Equity - USD ($) $ in Millions	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Sep. 30, 2017		89,344,065	9,576
Beginning balance at Sep. 30, 2017	$ 777.6	$ 0.0	$ (0.1)	$ 764.4	$ 4.8	$ 8.5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of restricted stock (in shares)		415,867
Vesting of restricted stock units (in shares)		8,162
Forfeiture of restricted stock awards (in shares)		(24,008)
Shares associated with employee tax withholding for vesting of certain equity awards (in shares)		(2,777)	2,777
Shares associated with employee tax withholding for vesting of certain equity awards	0.0		$ 0.0
Equity-based compensation	1.7			1.7
Comprehensive income (loss):
Net income (loss)	26.5				26.5
Other comprehensive income (loss)	3.0					3.0
Ending balance (in shares) at Dec. 31, 2017		89,741,309	12,353
Ending balance at Dec. 31, 2017	808.8	$ 0.0	$ (0.1)	766.1	31.3	11.5
Beginning balance (in shares) at Sep. 30, 2017		89,344,065	9,576
Beginning balance at Sep. 30, 2017	777.6	$ 0.0	$ (0.1)	764.4	4.8	8.5
Ending balance (in shares) at Sep. 30, 2018		89,727,546	19,516
Ending balance at Sep. 30, 2018	814.5	$ 0.0	$ (0.2)	771.5	34.2	9.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted stock units (in shares)		8,169
Shares associated with employee tax withholding for vesting of certain equity awards (in shares)		(37,384)	37,384
Shares associated with employee tax withholding for vesting of certain equity awards	(0.4)		$ (0.4)
Equity-based compensation	1.8			1.8
Comprehensive income (loss):
Net income (loss)	16.2				16.2
Other comprehensive income (loss)	(12.6)					(12.6)
Ending balance (in shares) at Dec. 31, 2018		89,698,331	56,900
Ending balance at Dec. 31, 2018	$ 819.5	$ 0.0	$ (0.6)	$ 773.3	$ 50.4	$ (3.6)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 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	0.0	0.6
Cash paid for asset acquisitions	(1.7)	0.0
Net cash used in investing activities	(6.5)	(3.5)
Cash flows from financing activities
Cash paid to TPG related to TRA	0.0	(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	0.0	(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

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Basis of Presentation and Nature of Operations

3 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Nature of Operations

Basis of Presentation and Nature of Operations

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as disclosed herein) considered necessary for a fair statement have been included. Results of operations for the three months ended December 31, 2018 are not necessarily indicative of results to be expected for the fiscal year ending September 30, 2019. Quarterly financial data should be read in conjunction with the consolidated financial statements and accompanying notes for the fiscal year ended September 30, 2018 included in the Company's Annual Report on Form 10-K filed with the SEC on December 6, 2018.

The consolidated financial data as of September 30, 2018 presented in these unaudited condensed consolidated financial statements were derived from the Company’s audited consolidated financial statements, but do not include all disclosures required by U.S. GAAP.

Nature of Operations

The Company is a global materials distributor for chemicals products in North America and Asia and for plastics products in North America, EMEA and Asia. In North America, primarily in the U.S., the Company provides on-site and off-site hazardous and non-hazardous environmental services, including waste collection, transportation, recovery, disposal arrangement and recycling services. The Company offers its customers products used in a broad cross-section of end markets including household, industrial and institutional, lubricants, performance coatings (including architectural coatings, adhesives, sealants and elastomers), automotive, healthcare, personal care, oil and gas and construction. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development.

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Recent Accounting Pronouncements

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU supersede the revenue recognition requirements in Topic 605, Revenue Recognition and require that revenue be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. These amendments are effective for annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. The Company adopted this standard on October 1, 2018. For disclosures related to the adoption of this guidance, see Note 3.

In August 2016 the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  This ASU made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. The Company adopted this standard as of October 1, 2018 and it did not have a material effect on the Company’s financial position or results of operations.

New Accounting Pronouncements Not Yet Adopted

The Company continues the evaluation of the potential effects on its financial position or results of operations of the accounting pronouncements disclosed in its consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018, including ASU 2016-02, Leases. The Company is in the process of evaluating the potential effects of ASU 2016-02 and is formulating its implementation plan, including potential changes to accounting systems, policies and internal controls to support the adoption of the new guidance.

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Revenue Revenue

3 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

On October 1, 2018, the Company adopted the new revenue standard and there were no adjustments recorded in connection with the adoption.

The Company generally disaggregates revenues from contracts with customers by its operating segments. Reportable segmentation reflects how the Company reviews the financial performance of its operations. The Company also disaggregates revenues by geography and for its Chemicals and Plastics operating segments, by product type. Disaggregation by geography and product type provides information relevant to understanding underlying economic and regional trends.

The following table disaggregates external customer net sales by geography:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
U.S.	$	393.4	$	262.4	$	41.0	$	696.8
Canada	23.0		21.9		0.2		45.1
Other North America	17.5		12.3		—		29.8
EMEA	—		120.0		—		120.0
Asia	4.6		39.5		—		44.1
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

The following table disaggregates external customer net sales by specialties, non-specialties and environmental services:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
Specialty	$	136.5	$	218.9	$	—	$	355.4
Non-Specialty	302.0		237.2		—		539.2
Environmental Services	—		—		41.2		41.2
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

Revenue is recognized when performance obligations are satisfied, which generally occurs when goods or services are transferred to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Payment terms and conditions may vary by regions where the Company operates; however, the term between invoicing and when payment is due is less than one year. As of December 31, 2018, none of the Company’s contracts contained a significant financing component.

The Company is generally the primary obligor in sales transactions with its customers and recognizes revenue primarily based on the gross amount billed to the customer. In sales transactions where the Company is not the primary obligor, it recognizes revenue on a net basis by recognizing only the commission retained from such sales and including that commission in sales and operating revenues in the condensed consolidated statements of operations.

Consistent with industry standards, the Company may offer volume-based rebates to large customers if the customer purchases a specified volume with the Company over a specified time period. The Company utilizes its experience and access to relevant information to reasonably estimate the amounts of such deductions from gross revenues and regularly reviews the estimates and adjusts accordingly if and when actual experience differs from estimates.

Sales are reported net of tax assessed by governmental authorities. Shipping and handling activities are considered fulfillment costs, and the related amounts billed to customers are included in revenues.

Specialty

The Company classifies the products it sells as specialty products when the products have specified applications, are not easily duplicated and innovation is the main catalyst for product change. These products present higher costs to customers to make a change, have longer sales cycles and may include value added services that are critical to customer purchasing decisions.

Non-Specialty

Products which are not specifically classified as specialty products by the Company are classified as non-specialty products. Typically, attributes of non-specialty products include ease of product change, shorter sales cycles and increased market availability of substitute products. With some exceptions in the Plastics line of business, these attributes generally cause customers of non-specialty products to be more price sensitive.

Environmental Services

The Company generates revenue from environmental services as they are performed and the underlying economic value is transferred to customers. The Company’s environmental services provided to customers are related to waste management services, including on-site services on customer premises and offsite. These services include the collection, recycling and arrangement for disposal of both hazardous and non-hazardous waste products.

Costs to Obtain or Fulfill Contracts with Customers

The Company does not incur significant costs to obtain contracts and therefore none have been capitalized.

Deferred Revenue

While the Company typically bills the customer when products are transferred into the control of the customer, the Company occasionally collects revenues from customers in bill and hold or other similar arrangements or when customers have provided the Company with consideration prior to the Company satisfying a performance obligation.  The Company recognizes these prepayments as deferred revenues and the balances as of December 31, 2018 and September 30, 2018 were not material.

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Acquisitions

3 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Acquisitions

Acquisitions

Merger Agreement with Univar

On September 17, 2018, Nexeo and Univar entered into the Univar Merger Agreement providing for the acquisition of Nexeo by Univar.

Subject to the terms and conditions set forth in the Univar Merger Agreement, holders of Nexeo’s common stock will receive (A) the Cash Consideration, described below, and (B) 0.305 of a share of Univar common stock (referred to as the "Stock Consideration").

The “Cash Consideration” will be $3.29 per share, subject to reduction by up to $0.41 per share based on the closing price of Univar common stock on the day prior to the closing of the proposed transaction. The Cash Consideration will be reduced on a linear basis between $3.29 per share and $2.88 per share to the extent that the closing price of Univar common stock is between $25.34 and $22.18. If the closing price of Univar common stock is $22.18 per share or lower, the Cash Consideration will be $2.88 per share. If the closing price of Univar common stock on is $25.34 per share or higher, the Cash Consideration will be $3.29 per share.

The Univar Merger Agreement and the proposed transaction were approved unanimously by the Board of Directors of both Nexeo and Univar and are subject to review by the SEC and regulatory agencies in the U.S. and other jurisdictions. The Univar Merger Agreement is also subject to a number of conditions, including, among other things and as further described in the Univar Merger Agreement: (i) the adoption by Nexeo’s stockholders of the Univar Merger Agreement, (ii) the approval by Univar’s stockholders of the issuance of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (iii) the receipt of other required regulatory approvals, (iv) the absence of any law or governmental order prohibiting the proposed transaction, (v) the effectiveness of Univar's registration statement (which occurred on January 29, 2019) and the approval for listing on the NYSE of the shares of Univar common stock in connection with the proposed transaction contemplated by the Univar Merger Agreement, (vi) no material adverse effect on Nexeo's and Univar's operations having occurred since the signing of the Univar Merger Agreement and (vii) the termination of the TRA. There can be no assurance that the conditions to the completion of the proposed transaction will be satisfied or waived or that the proposed transaction will be completed. On November 16, 2018, Univar and Nexeo announced that the waiting period under the HSR Act expired. Additional required filings have been made with other regulatory agencies in certain foreign jurisdictions and the process is ongoing.

The Univar Merger Agreement contains customary representations and warranties made by each of Univar and Nexeo, and also contains customary pre-closing covenants, including covenants, among others, by each of Univar and Nexeo to operate its respective businesses in the ordinary course consistent with past practice and to refrain from taking certain actions without the other party’s consent during the period prior to closing.

The proposed transaction is expected to close in the first quarter of 2019. Transaction costs incurred by the Company associated with the Univar Merger Agreement were $8.2 million during the three months ended December 31, 2018.

Asset Acquisitions

In December 2016, the Company acquired customer contracts and a customer list. Additionally, in connection with this transaction, the Company entered into a supply agreement and a licensing agreement granting the Company the non-exclusive use of a certain trademark. The total consideration associated with this transaction was $8.5 million, of which $5.1 million was paid at closing and $1.7 million was paid in January 2018 and December 2018. The Company recognized intangible assets totaling $8.5 million in December 2016 which are included in Other intangible assets, net of amortization on the Company’s condensed consolidated balance sheets. The acquired intangible assets will be fully amortized over estimated useful lives ranging between 10 and 13 years.

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Certain Balance Sheet Information

3 Months Ended

Dec. 31, 2018

Certain Balance Sheet Information [Abstract]

Certain Balance Sheet Information

Certain Balance Sheet Information

Cash and Cash Equivalents

Cash and cash equivalents were $54.6 million as of December 31, 2018 and $58.9 million as of September 30, 2018. These amounts included the following:

	December 31, 2018		September 30, 2018
Cash held by foreign subsidiaries	$	45.7	$	52.9
Non-USD denominated currency held by foreign subsidiaries	$	44.3	$	48.8
Currency denominated in RMB	$	3.5	$	6.5

Non-USD denominated currency held by foreign subsidiaries was primarily in euros and CAD. While the RMB is convertible into USD, foreign exchange transactions are subject to approvals from SAFE. The Company does not anticipate any significant adverse impact to overall liquidity from potential limitations on the transfer or conversion of cash and cash equivalents.

Inventories

Inventories at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Finished products	$	355.6	$	334.0
Supplies	4.9		4.8
Total	$	360.5	$	338.8

The Company’s inventories in the U.S. and Canada are collateral under the Credit Facilities.

Other Non-Current Assets

Other non-current assets at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Debt issuance costs of the ABL Facility	$	3.5	$	3.8
Deposits	2.0		2.5
Interest rate swap (1)	1.8		8.0
Other	1.7		1.9
Total	$	9.0	$	16.2

⁽¹⁾ See Note 9 for additional information.

Amortization of debt issuance costs related to the ABL Facility recorded in Interest expense in the condensed consolidated statements of operations was $0.3 million for the three months ended December 31, 2018 and 2017.

Due to Related Party Pursuant to Contingent Consideration Obligations

Contingent Consideration - Deferred Cash Consideration

The contingent consideration associated with the Deferred Cash Consideration will be an amount in cash equal to the prevailing price of the Company’s common stock at the time that the Company pays such deferred cash payment multiplied by the number of Excess Shares (5,178,642 Excess Shares as of December 31, 2018).  Based on the terms of the Excess Shares, certain circumstances require the Company to pay all or a portion of the Deferred Cash Consideration to the Selling Equityholders, where such cash amount is calculated as set forth in the Merger Agreement, including (i) where the volume weighted average trading price of the Company’s common stock for any period of 20 trading days in any 30 trading day period exceeds $15.00 per share, and (ii) if any Excess Shares remain on June 30, 2021. If any Excess Shares remain on June 30, 2021, the Company must elect to either (i) within five business days of such date, pay the Selling Equityholders an amount in cash equal to the product of the number of remaining Excess Shares multiplied by the volume weighted-average trading price for the 20 trading day period immediately preceding such date or (ii) use reasonable best efforts to sell such shares to a third party in a primary offering and pay the gross proceeds thereof (less any underwriting discounts and commissions) to the Selling Equityholders. However, to the extent the number of shares issued in such offerings does not equal the full amount of Excess Shares remaining at the time of the offering, the Company’s obligations with respect to any remaining Excess Shares, including the obligation to continue to complete any necessary additional offerings, shall continue.

In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model. The estimated fair value of the Deferred Cash Consideration liability was $43.5 million and $62.7 million as of December 31, 2018 and September 30, 2018, respectively. See Note 10.

Upon consummation of the Univar Merger Agreement, the obligation to pay the Deferred Cash Consideration will be accelerated. The Deferred Cash Consideration will be calculated as an amount in cash equal to the Excess Shares multiplied by an amount equal to the Cash Consideration plus the implied value of the Stock Consideration based on the closing trading price of Univar's common stock on the day prior to the completion of the proposed transaction.

Contingent Consideration - TRA

Concurrent with the completion of the Business Combination, the Company incurred the liability for contingent consideration related to the TRA, which reflects amounts owed to the Selling Equityholders. This liability generally provides for the payment by the Company to the Selling Equityholders of 85% of the net cash savings, if any, in U.S. federal, state and local income taxes that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing Date as a result of (i) certain increases in tax basis resulting from the Company Merger, (ii) certain tax attributes of Holdings existing prior to the Mergers, (iii) net operating losses and certain other tax attributes of Blocker available to the Company as a result of the Blocker Merger and (iv) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, payments the Company makes under the TRA. The Company will retain the benefit of the remaining 15% of the net cash savings, if any. The Company estimated the fair value of the TRA liability based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. The current undiscounted cash flows associated with the TRA liability were estimated to be approximately $125.8 million over the time period during which the tax benefits are expected to be realized, currently estimated at over 20 years. The estimated fair value of the TRA liability is $71.1 million and $74.8 million as of December 31, 2018 and September 30, 2018, respectively. See Note 10.

The amount and timing of any payments due under the TRA will vary depending upon a number of factors, including the amount and timing of the taxable income the Company generates in the future and the U.S. federal, state and local income tax rates then applicable. In addition, payments made under the TRA will give rise to additional tax benefits for the Company and therefore additional potential payments due under the TRA. The term of the TRA commenced upon the consummation of the Mergers and will continue until all tax benefits that are subject to the TRA have been utilized or expired, unless the Company exercises its right to terminate the TRA early. If the Company elects to terminate the TRA early, its obligations under the TRA would accelerate and it generally would be required to make an immediate payment equal to the present value of the anticipated future payments to be made by it under the TRA, calculated in accordance with certain valuation assumptions set forth in the TRA.

In connection with the Univar Merger Agreement, Nexeo and the TRA Holders entered into a TRA Termination Agreement under which the parties agreed to terminate the TRA, upon consummation of the proposed transaction. Upon termination of the TRA, a cash payment to the TRA Holders will be made in an amount equal to $60.0 million. In the event the Univar Merger Agreement is terminated, the TRA Termination Agreement will no longer be in force.

The liabilities related to the Deferred Cash Consideration and the TRA are included in Due to related party pursuant to contingent consideration obligations on the Company’s condensed consolidated balance sheets.

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Property, Plant and Equipment

3 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018			September 30, 2018
Land	$	50.5		$	50.8
Plants and buildings(1)	109.7			109.7
Machinery and equipment (2)	154.6			153.4
Software and computer equipment	70.7			70.5
Construction in progress	8.3			5.4
Total	393.8			389.8
Less accumulated depreciation (3)	(114.7		)	(104.9		)
Property, plant and equipment, net	$	279.1		$	284.9

⁽¹⁾ Includes $13.7 million related to facilities acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽²⁾ Includes $26.5 million related to equipment acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽³⁾ Includes $8.3 million and $7.4 million, respectively, related to facilities and equipment acquired under capital leases.

Depreciation expense recognized on the property, plant and equipment described above was as follows:

	Three Months Ended December 31,
	2018		2017
Depreciation expense	$	10.1	$	12.6

Included in the carrying value of property, plant and equipment in the Company’s condensed consolidated balance sheets are certain closed facilities located in the U.S., which collectively have a carrying value of $1.1 million as of December 31, 2018 and September 30, 2018. The facilities do not currently meet the criteria for held-for-sale classification; accordingly, they remain classified as held and used.

During the fourth quarter of fiscal year 2017, the Company entered into a purchase agreement to buy land currently leased at one of the Company's distribution centers. The purchase is expected to be finalized during fiscal year 2019 for approximately $10.8 million.

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Goodwill and Other Intangibles

3 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

Goodwill and Other Intangibles

Goodwill

The following is a progression of goodwill by reportable segment: 

	Chemicals			Plastics			Other		Total
Balance at September 30, 2018	$	362.4		$	274.0		$	63.5	$	699.9
Foreign currency translation	(0.5		)	(1.8		)	—		(2.3		)
Balance at December 31, 2018	$	361.9		$	272.2		$	63.5	$	697.6

Goodwill Impairment Test

Goodwill is tested for impairment annually as of March 31 and whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is reviewed for impairment at the reporting unit level, or operating segment, for the Company. The Company performed an impairment test as of March 31, 2018 and concluded that goodwill was not impaired. For purposes of the impairment testing of the Company's recognized goodwill, fair value measurements are determined using the income approach, based largely on inputs that are not observable to active markets, which would be deemed Level 3 fair value measurements as defined in Note 10.

The evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted operations can materially affect these estimates, which could materially affect the Company’s results of operations. The estimate of fair value requires significant judgment and is based on management’s fair value estimates on assumptions that are believed to be reasonable but that are unpredictable and inherently uncertain, including: estimates of future growth rates, operating margins and assumptions about the overall economic climate as well as the competitive environment for the reporting units. There can be no assurance that these estimates and assumptions made for purposes of the goodwill testing as of the time of testing will prove to be accurate. If assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, the Company may be required to record goodwill impairment charges in future periods, whether in connection with future annual impairment testing, or earlier, if an indicator of an impairment is present prior to the next annual evaluation.

Other Intangible Assets

Definite-lived intangible assets at December 31, 2018 and September 30, 2018 consisted of the following:

		December 31, 2018							September 30, 2018
	Estimated Useful Life (years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer-related	5-13	$	239.0	$	(49.1	)	$	189.9	$	239.6	$	(44.1	)	$	195.5
Supplier-related	6-10	3.1		(0.5		)	2.6		3.1		(0.4		)	2.7
Trade name	2-10	23.3		(14.1		)	9.2		23.3		(12.7		)	10.6
Below-market leases	1-7	0.7		(0.6		)	0.1		0.7		(0.5		)	0.2
Non-compete agreements	3-10	4.6		(2.4		)	2.2		4.6		(2.0		)	2.6
Total		$	270.7	$	(66.7	)	$	204.0	$	271.3	$	(59.7	)	$	211.6

Amortization expense recognized on the intangible assets described above was as follows:

	Three Months Ended December 31,
	2018		2017
Amortization expense	$	7.1	$	6.9

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Debt

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt

Short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations at December 31, 2018 and September 30, 2018 are summarized below:

	December 31, 2018		September 30, 2018
Short-term borrowings	$	39.6	$	38.1
Current portion of long-term debt and capital lease obligations	9.7		9.6
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net	$	49.3	$	47.7

Long-term debt outstanding at December 31, 2018 and September 30, 2018 is summarized below:

	December 31, 2018			September 30, 2018
ABL Facility	$	159.0		$	104.6
Term Loan Facility	638.8			640.4
Capital lease obligations (1)	33.2			34.0
Total long-term debt	831.0			779.0
Less: unamortized debt discount (2)	(2.2		)	(2.3		)
Less: debt issuance costs (3)	(14.0		)	(14.7		)
Less: current portion of long-term debt and capital lease obligations	(9.7		)	(9.6		)
Long-term debt and capital lease obligations, less current portion, net	$	805.1		$	752.4

⁽¹⁾  Capital lease obligations exclude executory costs and interest payments associated with the underlying leases. See “Capital Lease Obligations” below.

⁽²⁾  The unamortized debt discount is related to the Term Loan Facility and amortized to interest expense over the life of the instrument using the effective interest rate method.

⁽³⁾  See discussion below under Term Loan Facility and Debt Issuance Cost Amortization.

Short-Term Borrowings

The Company’s short-term borrowings are associated with the Company’s operations in China and are summarized below:

	Facility Limit		Outstanding Borrowings Balance		Weighted Average Interest Rate on Borrowings		Outstanding LOC and Bankers’ Acceptance Bills		Remaining Availability
December 31, 2018
Bank of America - China (1)	$	24.3	$	22.1	4.6	%	$	—	$	2.2
Bank of Communications - China (2)	21.8		17.5		5.4	%	3.4		0.9
Total	$	46.1	$	39.6			$	3.4	$	3.1
September 30, 2018
Bank of America - China (1)	$	24.3	$	22.2	4.6	%	$	—	$	2.1
Bank of Communications - China (2)	21.8		15.9		5.4	%	5.1		0.8
Total	$	46.1	$	38.1			$	5.1	$	2.9

⁽¹⁾   The borrowing limit of this facility is denominated in USD. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 110% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. The Company has the ability to provide additional capacity under these lines of credit, if needed.

⁽²⁾ The borrowing limit of this facility is denominated in RMB. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 100% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance.

Long-Term Debt

ABL Facility

The ABL Facility provides for committed revolving credit financing including a U.S. Tranche of up to $505.0 million, a Canadian Tranche of up to the USD equivalent of $40.0 million and a FILO Tranche up to $30.0 million. Provided no default or event of default, the ABL Borrowers have the option to request that the ABL Facility be increased by an aggregate amount, when included with any incremental borrowings issued under the Term Loan Facility, not to exceed $175.0 million.

The weighted average interest rate on borrowings under the ABL Facility was 3.98% at December 31, 2018. The Company had the USD equivalent of $69.5 million in outstanding letters of credit under the ABL Facility at December 31, 2018. The collective credit availability under the U.S. and Canadian Tranches of the ABL Facility was the U.S. equivalent of $258.1 million at December 31, 2018. There was $5.0 million availability under the FILO Tranche at December 31, 2018. The ABL Facility matures on June 9, 2021.

Obligations under the ABL Facility are secured by a first priority lien on all ABL Facility first lien collateral, including eligible inventory and accounts receivable of the ABL Borrowers, and a second priority lien on all Term Loan Facility first lien collateral including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, in each case, subject to certain limitations; provided, that no ABL Facility first lien collateral or Term Loan Facility first lien collateral owned by the Canadian Borrower secure the obligations owing under the U.S. Tranche of the ABL Facility. These accounts receivable and inventory totaled $669.6 million in the aggregate as of December 31, 2018.

As of December 31, 2018, the ABL Borrowers were in compliance with the covenants of the ABL Facility.

Term Loan Facility

The Term Loan Facility provides secured debt financing in an aggregate principal amount of up to $655.0 million and the right, at the Company’s option, to request additional tranches of term loans in an aggregate principal amount, when included with any incremental borrowings issued under the ABL Facility, of up to $175.0 million, plus unlimited additional amounts such that the aggregate principal amount of indebtedness outstanding at the time of incurrence does not cause the Secured Net Leverage Ratio, calculated on a pro forma basis, to exceed 4.1 to 1.0. Availability of such additional tranches of term loans is subject to the absence of any default and, among other things, the receipt of commitments by existing or additional financial institutions.

The Company is required to make scheduled quarterly payments in an aggregate annual amount equal to 1.0% of the aggregate principal amount of the outstanding term loans as of the Closing Date of the TLB Amendment No. 2, with the balance due at maturity. The weighted average interest rate for the Term Loan Facility was 5.69% at December 31, 2018. The Company amortized $0.1 million of debt discount to interest expense during the three months ended December 31, 2018 and 2017. The Term Loan Facility matures on June 9, 2023.

Additionally, the Term Loan Facility requires the Company to make mandatory principal payments on an annual basis, if cash flows for the year, as defined in the Term Loan Facility, exceed certain levels specified in the Term Loan Facility. The Company was not required to make such mandatory principal payment for the fiscal year ended September 30, 2018. The Company generally has the right to prepay loans in whole or in part, without incurring any penalties for early payment.

Obligations under the Term Loan Facility are secured by a first priority lien on all Term Loan Facility first lien collateral, including outstanding equity interests of the Borrower and certain of the other subsidiaries of Holdings, and a second priority lien on all ABL Facility first lien collateral, including accounts receivable and inventory of the loan parties under the Term Loan Facility, subject to certain limitations.

As of December 31, 2018, the Company was in compliance with the covenants of the Term Loan Facility.

Debt Issuance Cost Amortization

Amortization expense included in interest expense related to debt issuance costs of the Term Loan Facility was $0.7 million for the three months ended December 31, 2018 and 2017.

Capital Lease Obligations

The capital lease obligation balance of $33.2 million as of December 31, 2018 is primarily associated with the Ryder Lease and the Montgomery Lease. The Ryder Lease obligation excludes decreasing annual interest payments ranging from $0.8 million to less than $0.1 million, for aggregate interest payments totaling $2.5 million. The Montgomery Lease obligation excludes decreasing annual interest payments ranging from $1.0 million to $0.1 million, for aggregate interest payments of $12.4 million.

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Derivatives

3 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The Company is a party to interest rate swap agreements of varying expiration dates ranging from February 2020 through February 2023, to help mitigate interest rate risk related to the variable rate Term Loan Facility. As of December 31, 2018, the notional amount of the seven outstanding interest rate swap agreements was $599.1 million. The swap agreements are accounted for as cash flow hedges. Gains or losses resulting from changes in the fair value of the swaps are recorded in other comprehensive income. Gains and losses recorded in other comprehensive income are reclassified into and recognized in income when the interest expense on the Term Loan Facility is recognized.

Derivative assets and liabilities at December 31, 2018 and September 30, 2018 consisted of the following:

	Recorded to	December 31, 2018		September 30, 2018
Short-term derivative asset	Other current assets	$	2.1	$	2.2
Long-term derivative asset	Other non-current assets	$	1.8	$	8.0
Short-term derivative liability (1)	Accrued expenses and other liabilities	$	—	$	—
Long-term derivative liability	Other non-current liabilities	$	1.2	$	—
Other Comprehensive Income	Accumulated other comprehensive income	$	2.4	$	8.1

⁽¹⁾ Short-term derivative liability for the three months ended December 31, 2018 and the fiscal year ended September 30, 2018 was less than $0.1 million.

Gains and losses (net of reclassifications into income, including any ineffective portion) related to the interest rate swaps were as follows:

		Three Months Ended December 31,
	Recorded to	2018			2017
Realized loss	Interest expense	$	0.1		$	0.4
Unrealized gain (loss), net of tax	Other comprehensive income	$	(5.7	)	$	1.9

The tax impact of the unrealized gains and losses related to the interest rate swaps was $2.0 million and $0.6 million for the three months ended December 31, 2018 and 2017, respectively. At December 31, 2018, $2.5 million in unrealized gains were expected to be realized and recognized in income within the next twelve months.

See Note 10 for additional information on the Company’s fair value of the derivative instruments.

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Fair Value Measurements

3 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The accounting standard for fair value measurements establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is as follows:

• Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2—Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3—Prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Fair value of financial instruments

The carrying values of cash and cash equivalents, accounts and notes receivable, accounts payable and short-term borrowings approximate their fair value due to the short-term maturity of those instruments.

The carrying values of borrowings outstanding under the Credit Facilities approximate fair value at December 31, 2018 and September 30, 2018, primarily due to their variable interest rate. The estimated fair value of these instruments is classified by the Company as a Level 3 measurement within the fair value hierarchy due to the varying interest rate parameters as outlined in the respective loan agreements.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

In addition to the financial instruments that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a non-recurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges or as part of a business combination.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Contingent Consideration

The fair value of the contingent consideration related to the Deferred Cash Consideration as discussed in Note 5 was $43.5 million and $62.7 million as of December 31, 2018 and September 30, 2018, respectively. The decrease in the liability was largely driven by the decrease in the Company’s stock price. The measurement of the contingent consideration related to the Deferred Cash Consideration is classified by the Company as a Level 3 measurement within the fair value hierarchy. In order to estimate the fair value of the Deferred Cash Consideration, the Company estimates the value of the Excess Shares using a Monte Carlo simulation model with the market price of the Company’s common stock at each valuation date being 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. An increase in the market price of the Company’s common stock has the same directional effect on the value of the liability related to the Deferred Cash Consideration. An increase in the volatility and marketability discount will lower the value of the liability related to the Deferred Cash Consideration.

The fair value of the liability for the contingent consideration related to the TRA as discussed in Note 5 was $71.1 million and $74.8 million as of December 31, 2018 and September 30, 2018, respectively. The liability for the contingent consideration related to the TRA is classified by the Company as a Level 3 measurement within the fair value hierarchy. The Company estimates the fair value of the liability for the contingent consideration related to the TRA based on a discounted cash flow model which incorporates assumptions of projected taxable income, projected income tax liabilities and an estimate of tax benefits expected to be realized as a result of the Business Combination. Key inputs to the valuation are prevailing tax rates and market interest rates impacting the discount rate. A 100 basis point increase in the discount rate compared to the discount rate used at the December 31, 2018 valuation would have resulted in a decrease of approximately $0.4 million in the value of the liability for the contingent consideration related to the TRA. Additionally, this cash flow model is sensitive to changes in prevailing tax rates. A 100 basis point increase in the tax rate compared to the tax rate used at the December 31, 2018 valuation would have resulted in an increase of approximately $2.4 million in the value of the liability for the contingent consideration related to the TRA.

Changes in the fair value of the contingent consideration obligations for the three months ended December 31, 2018 were as follows:

	TRA			Deferred Cash Consideration			Total Fair Value
Contingent consideration as of September 30, 2018	$	74.8		$	62.7		$	137.5
Change in fair value of contingent consideration(1)	(3.7		)	(19.2		)	(22.9		)
Contingent consideration as of December 31, 2018	$	71.1		$	43.5		$	114.6

⁽¹⁾ Included in Operating income in the condensed consolidated statements of operations.

Significant changes in the estimates and inputs used in determining the fair value of the contingent consideration could have a material impact on the amounts recognized as a component of Operating income in future periods.

Interest Rate Swaps

The Company classifies interest rate swaps within Level 2. The Company is a party to interest rate swap agreements of varying expiration dates ranging from February 2020 through February 2023, to help mitigate interest rate risk related to the variable rate Term Loan Facility. As of December 31, 2018, the notional amount of the seven outstanding interest rate swap agreements was $599.1 million. At December 31, 2018, the Company recorded $2.1 million in Other current assets, $1.8 million in Other non-current assets, less than $0.1 million in Accrued expenses and other liabilities and $1.2 million in Other non-current liabilities in the condensed consolidated balance sheets related to these instruments.

During the three months ended December 31, 2018 and 2017, the Company did not have any transfers between Level 1, Level 2 or Level 3 fair value measurements.

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Share-based Compensation and Employee Benefit Plans

3 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation and Employee Benefit Plans

Share-based Compensation and Employee Benefit Plans

On June 8, 2016, the Company’s stockholders approved the 2016 LTIP, with an effective date of March 30, 2016, covering approximately a ten-year period. No awards may be granted under the 2016 LTIP after March 20, 2026. The 2016 LTIP permits the grant of up to 9,000,000 shares of the Company's common stock for various types of awards to employees, directors and consultants of the Company or its subsidiaries, including incentive and non-incentive stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, stock awards, conversion awards and performance awards.

During the fiscal year ended September 30, 2018, the Company granted 193,667 PSUs to employees under the 2016 LTIP. These awards will vest on September 30, 2020, entitling the recipient to receive a certain number of shares of the Company’s common stock, based on the Company’s achievement of the performance goals included in the PSUs, which are based on a return on invested capital calculation over a three-year performance period. Depending on the calculation as of the vesting date, a recipient is entitled to receive between 0% and 200% of the initial award. The awards are accounted for as equity instruments, and the fair value of these awards was determined by the closing price of the Company's common stock on the date of grant.

During the fiscal years ended September 30, 2017 and 2016, the Company granted 212,000 and 1,557,500 PSU awards to employees, respectively, under the 2016 LTIP. The recipient can receive between 0% and 200% of the initial award, based on the Company’s total stockholder return during approximate three-year performance period, or a cumulative Adjusted EBITDA target if a specified total stockholder return is not met. These awards are accounted for as equity instruments. The Company used the Monte Carlo simulation model to estimate the fair value of the PSU awards at the grant date, factoring in the market-based vesting condition and considering the probability of satisfying the various performance criteria. The resulting grant date fair value is recognized as expense on a straight-line basis from the grant date through the end of the performance period. The assumptions used in the Monte Carlo simulation model for PSUs included an expected stock price volatility between 35% and 40% based on a peer group of similar companies, an expected dividend yield of 0%, an expected term of two to three years, and a risk-free interest rate of between 0.9% and 1.3%.

The following table summarizes all PSU activity during the three months ended December 31, 2018:

	PSUs	Average Grant Date Fair Value Per Unit
Unvested PSUs at September 30, 2018	1,695,167	$	8.76
Granted	—	—
Vested	—	—
Forfeited/Canceled	—	—
Unvested PSUs at December 31, 2018	1,695,167	$	8.76

As of December 31, 2018, the Company may issue up to 3,390,334 shares of common stock related to the outstanding PSU awards described above under the 2016 LTIP.

In November 2017, the Company granted 415,867 shares of restricted stock to employees under the 2016 LTIP. The restricted stock awards vest equally on the anniversary of the grant date over a three-year period provided that the recipients of such grants continue their employment with the Company. The awards are accounted for as equity instruments, and the fair value of the restricted stock awards was determined by the closing price of the Company's common stock on the date of grant. During the fiscal year ended September 30, 2017, the Company granted restricted stock awards to certain of the Company’s non-employee directors under the 2016 LTIP that vested one year from the date of grant.

The following table summarizes all restricted stock activity during the three months ended December 31, 2018:

	Shares of Restricted Stock		Average Grant Date Fair Value Per Unit
Restricted stock at September 30, 2018	409,267		$	7.50
Granted	—		—
Vested	(136,291	)	7.50
Forfeited/Canceled	—		—
Restricted stock at December 31, 2018	272,976		$	7.50

During the fiscal year ended September 30, 2016, the TPG Restricted Stock Grants were awarded with respect to 100,000 shares of Company common stock owned by TPG. These awards vest in equal amounts over a three-year period provided that the recipients of such grants continue their employment with the Company. During the fiscal year ended September 30, 2018, 27,471 shares of these awards vested, and 7,163 shares were transferred to the Company (reflected as treasury stock) to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting. During the fiscal year ended September 30, 2017, 33,297 shares of these awards vested, 9,576 shares were transferred to the Company (reflected as treasury stock) to satisfy the officers’ and employees’ tax withholding obligations in connection with the vesting, and 11,673 shares were transferred back to TPG due to forfeiture. There were 27,559 unvested shares of these awards at December 31, 2018. While these awards were not made pursuant to the 2016 LTIP, they constitute equity-based compensation and therefore will count against the 2016 LTIP's share reserve to the extent the awards vest.

During the fiscal year ended September 30, 2018, the Company granted 999,492 stock options to employees under the 2016 LTIP. The awards vest in equal amounts over a three-year period provided that the recipients of such grants continue their employment with the Company. The awards are accounted for as equity instruments. The Company used the Black-Scholes Merton model to estimate the fair value of the option awards at the grant date. The resulting grant date fair value is recognized as expense on a straight-line basis over the vesting period. The assumptions used in the Black-Scholes Merton model for the options included an expected term of six years, an expected stock price volatility of 35.0% based on a peer group of similar companies, an expected dividend yield of 0.0% and a risk-free interest rate of 2.1%.

The following table summarizes stock option activity during the three months ended December 31, 2018:

	Stock Options	Average Grant Date Fair Value Per Unit		Weighted Average Exercise Price
Stock Options at September 30, 2018	992,892	$	2.84	$	7.42
Granted	—	—		—
Exercised	—	—		—
Forfeited/Canceled	—	—		—
Stock Options at December 31, 2018	992,892	$	2.84	$	7.42

The outstanding stock options as of December 31, 2018 had an aggregate intrinsic value of $1.2 million. No stock options were exercisable as of December 31, 2018.

During the three months ended December 31, 2016, the Company granted certain employees a total of 28,000 RSUs under the 2016 LTIP that vest equally over a three-year period on the anniversary of the grant date provided the employee remains employed by the Company. The awards are accounted for as equity instruments. Upon vesting, the recipients will receive a share of common stock in the Company for each RSU awarded. The fair value of these RSUs was determined based on the closing price of the Company’s stock on the grant date.

The following table summarizes RSU award activity during the three months ended December 31, 2018:

	RSUs		Average Grant Date Fair Value Per Unit
Unvested RSUs at September 30, 2018	16,338		$	7.28
Granted	—		—
Vested	(8,169	)	7.28
Forfeited/Canceled	—		—
Unvested RSUs at December 31, 2018	8,169		$	7.28

During the three months ended December 31, 2016, the Company also awarded 10,500 phantom RSUs and 10,000 phantom PSUs to certain non-U.S. employees under the 2016 LTIP. The phantom RSUs vest equally over a three-year period on the anniversary of the grant date while the phantom PSUs vest under the same conditions as the PSU awards described above. During the fiscal year ended September 30, 2017, 3,500 of the phantom RSUs were forfeited and all of the phantom PSUs were forfeited. Upon vesting and provided the employee remains employed by the Company at that time, the awards will be settled in cash. In accordance with ASC 718, the remaining phantom RSU awards are accounted for as a liability, with the awards re-measured at the end of each reporting period based on the closing price of the Company’s common stock or using a Monte Carlo simulation model, as applicable. Compensation expense is recognized ratably on a straight-line basis over the requisite service period. An immaterial amount of compensation expense was recognized during the three months ended December 31, 2018 and 2017 related to these awards.

The following table summarizes the amount of compensation expense recognized as a component of Selling, general and administrative expenses on the condensed consolidated statements of operations by award type:

	Three Months Ended December 31,
	2018		2017
PSUs	$	1.2	$	1.2
Restricted Stock	$	0.3	$	0.3
TPG restricted stock grants	$	0.1	$	0.1
Stock options	$	0.2	$	0.1
RSUs (1)	$	—	$	—

⁽¹⁾ Compensation expense recognized as a component of Selling, general and administrative expenses for RSUs for the three months ended December 31, 2018 and 2017 is less than $0.1 million.

The following table summarizes unrecognized compensation expense and weighted average remaining life as of the three months ended December 31, 2018 by award type:

	Unrecognized Compensation Expense		Weighted Average Remaining Life (in years)
PSUs	$	2.9	0.5
Restricted Stock	$	1.7	1.8
TPG restricted stock grants	$	0.4	0.4
Stock options	$	1.6	8.8
RSUs (1)	$	—	0.9

⁽¹⁾ Unrecognized compensation expense for RSUs as of the three months ended December 31, 2018 is less than $0.1 million.

As of December 31, 2018, there were 3,980,465 shares of the Company’s common stock available for issuance under the 2016 LTIP, assuming the PSU awards vest at their maximum target.

Pursuant to the terms of the Univar Merger Agreement and upon the closing of the transactions contemplated by the Univar Merger Agreement, each outstanding award granted, including unvested awards, under the 2016 LTIP will be cancelled in exchange for the consideration set forth in the Univar Merger Agreement. Each outstanding stock option, not including options out of the money, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders in respect of each "net share" covered by such stock option. The number of "net shares" covered by each stock option is equivalent to the number of shares of the Company's common stock with a value equal to the intrinsic value of such stock option. Each outstanding option that is out of the money will be cancelled for no consideration. Each outstanding share of restricted stock, including unvested shares, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders. Each outstanding PSU award, including unvested PSU awards, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such PSU award (determined based on actual performance through the latest practicable date prior to the closing of the transactions contemplated by the Univar Merger Agreement). For purposes of the Univar Merger Agreement, the recipients of 2016 PSU awards will receive between 70% and 200% of the initial award, based on the Company’s actual level of performance at the time of the change in control. Each outstanding RSU award, including unvested RSU awards, will be cancelled and converted into the right to receive the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such RSU award. Each outstanding phantom RSU, including unvested phantom RSUs, will be cancelled and converted into the right to receive an amount in cash equal to the value of the merger consideration received by the Company's stockholders with respect to the number of shares of the Company's common stock subject to such phantom RSU award. The Company is restricted from granting any additional share-based compensation pursuant to a covenant contained in the Univar Merger Agreement.

Defined Contribution Plans

Qualifying employees of the Company are eligible to participate in the Company’s 401(k) Plan. The 401(k) Plan is a defined contribution plan which allows employees to make tax deferred contributions as well as company contributions, designed to assist employees of the Company and its affiliates in providing for their retirement. The Company matches 100% of employee contributions up to 4.0%. The Company makes an additional contribution to the 401(k) Plan of 1.5%, 3.0%, or 4.5%, based upon years of service of one to ten years, eleven to twenty years and twenty-one years or more, respectively. A version of the 401(k) Plan is also available for qualifying employees of the Company’s foreign subsidiaries.

The following summarizes contributions to the plans described above:

	Three Months Ended December 31,
	2018		2017
Contributions recorded as a component of cost of sales and operating expenses	$	1.1	$	1.0
Contributions recorded as a component of selling, general and administrative expenses	1.6		1.5
Total contributions	$	2.7	$	2.5

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Equity

3 Months Ended

Dec. 31, 2018

Equity [Abstract]

Equity

Equity

Common Stock

The authorized common stock of the Company consists of 300,000,000 shares. Holders of the Company’s common stock are entitled to one vote for each share of common stock. As of December 31, 2018, there were 89,755,231 shares of common stock issued and 89,698,331 shares of common stock outstanding, which includes the 12,476,250 Founder Shares. The Company has units outstanding which consist of one share of common stock and one warrant which are included in the respective totals.

Founder Shares

As of December 31, 2018, there were 12,476,250 Founder Shares. These Founder Shares are subject to forfeiture on the tenth anniversary of the Closing Date unless:

• with respect to 50% of such Founder Shares, the last sale price of the Company’s common stock as quoted on NASDAQ equals or exceeds $12.50 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; and

• with respect to the remaining 50% of such Founder Shares, the last sale price of the Company’s common stock equals or exceeds $15.00 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period; or

• the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all or substantially all of its stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property or any transaction involving a consolidation, merger, proxy contest, tender offer or similar transaction in which the post-combination company is the surviving entity which results in a change in the majority of the Company’s board of directors or management team or the Company’s post-combination stockholders immediately prior to such transaction ceasing to own a majority of the surviving entity immediately after such transaction.

The Founder Shares will not participate in dividends or other distributions with respect to the shares prior to these targets being met, whereupon the Founder Shares shall be entitled to all dividends and distributions paid on the common stock after the Business Combination as if they had been holders of record entitled to receive distributions on the applicable record date.

Warrants

As of December 31, 2018, there were 50,025,000 warrants outstanding to purchase 25,012,500 shares of common stock at an exercise price of $11.50 per share.

In the case of any reclassification, reorganization, merger or consolidation, or upon a dissolution following such sale or transfer, the holders of the warrants share thereafter have the right to purchase and receive the kind and amount of shares of stock or other securities or property (including cash) receivable upon reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holders of the warrants have received if such holders had exercised their warrants immediately prior to such event.

Preferred Stock

The authorized preferred stock of the Company consists of 1,000,000 shares. As of December 31, 2018, there were no shares of preferred stock issued and outstanding.

Treasury Stock

During the three months ended December 31, 2018, in connection with the vesting of restricted stock and RSUs, 34,461 and 2,923 shares of common stock, respectively, were transferred to the Company to satisfy the employees’ tax withholding obligations in connection with the vesting. Following the transfers, these shares were not canceled and are therefore classified as treasury stock. Total treasury stock as of December 31, 2018 was 56,900 shares.

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Earnings per Share

3 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computation follows.

	Three Months Ended December 31,
	2018		2017
Basic:
Net income	$	16.2	$	26.5
Weighted average number of common shares outstanding during the period	76,945,078		76,793,518
Net income per common share - basic	$	0.21	$	0.35
Diluted:
Net income	$	16.2	$	26.5
Denominator for diluted earnings per share:
Weighted average number of common shares attributable to the period	76,945,078		76,793,518
Incremental common shares attributable to outstanding diluted options and unvested restricted shares	149,352		345,718
Denominator for diluted earnings per common share	77,094,430		77,139,236
Net income per common share - diluted	$	0.21	$	0.34

Dilutive computations during the current period contain additional incremental common shares which are attributable to the outstanding unvested restricted stock awards issued to directors and employees, restricted stock units awarded to employees and unvested outstanding stock options awarded to employees. During the three months ended December 31, 2017, the outstanding unvested restricted stock awards issued to directors and employees and restricted stock units awards to employees were included in the dilutive share calculation; the outstanding stock options were not included as the result would have been anti-dilutive. For the three months ended December 31, 2018 and 2017, there were 12,476,250 Founder Shares excluded from the basic and diluted computations because such shares were subject to forfeiture, and PSU awards, which were not included in the computation of diluted shares outstanding because performance targets and/or market conditions were not yet met for these awards. Diluted shares outstanding also did not include 25,012,500 shares of common stock issuable on the exercise of 50,025,000 warrants because the warrants were out-of-the-money for the three months ended December 31, 2018 and 2017.

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Commitments, Contingencies and Litigation

3 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Litigation

Commitments, Contingencies and Litigation

Operating Leases

The Company is a lessee of office buildings, transportation equipment, warehouses and storage facilities, other equipment, facilities and properties under operating lease agreements that expire at various dates. Rent expense (including rentals under short-term leases) was $6.7 million and $6.5 million for the three months ended December 31, 2018 and 2017, respectively.

Future minimum non-cancellable rental payments as of December 31, 2018 are as follows:

2019	$	14.2
2020	9.6
2021	8.1
2022	5.0
2023	1.8
Thereafter	0.2
Total	$	38.9

Capital Leases

The Company leases certain equipment and facilities under capital lease agreements. As of December 31, 2018, future minimum lease payments under capital leases were as follows:

2019	$	7.5
2020	7.1
2021	7.0
2022	13.7
2023	2.4
Thereafter	25.0
Total minimum capital lease payments	62.7
Less amount representing executory costs	(14.5		)
Less amount representing interest	(15.0		)
Present value of net minimum capital lease payments	$	33.2

Environmental Remediation

Due to the nature of its business, the Company is subject to various laws and regulations pertaining to the environment and to the sale, handling, transportation and disposal of chemicals and hazardous materials. These laws pertain to air and water, the management of solid and hazardous wastes, transportation and human health and safety.

The Company’s reserves will be subject to numerous uncertainties that affect its ability to accurately estimate its costs, or its share of costs if multiple parties are responsible. These uncertainties involve the legal, regulatory and enforcement parameters governing environmental assessment and remediation, the nature and extent of contamination, the extent of required remediation efforts, the choice of remediation methodology, availability of insurance coverage and, in the case of sites with multiple responsible parties, the number and financial strength of any other potentially responsible parties.

Other Legal Proceedings

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities, including product liability claims. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company.

Other Contingencies

In June 2014, the Predecessor self-disclosed to the DTSC that an inventory of its Fairfield facility had revealed potential violations of RCRA and the California Health and Safety Code. Although no formal proceeding has been initiated, the Company expects the DTSC to seek payment of fines or other penalties for non-compliance. The Company does not expect the amount of any such fine or other penalty to have a material adverse effect on its business, financial position or results of operations.

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Related Party Transactions

3 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The tables below summarize activity recorded during the respective periods for related party transactions:

	Three Months Ended December 31,
	2018		2017
Sales to related entities:
TPG portfolio entities	$	0.7	$	1.6
Entities related to members of the Board of Directors	$	0.2	$	—
Purchases from related entities:
TPG portfolio entities	$	0.5	$	—
Entities related to members of the Board of Directors	$	2.6	$	3.4

	December 31, 2018		September 30, 2018
Accounts receivable from related entities:
TPG portfolio entities	$	0.7	$	1.0
Entities related to members of the Board of Directors	$	0.2	$	0.2
Accounts payable to related entities:
TPG portfolio entities	$	0.2	$	0.5
Entities related to members of the Board of Directors	$	0.1	$	0.6

Contingent Consideration Obligations Pursuant to the TRA and the Merger Agreement

Subsequent to the Business Combination, TPG beneficially owns approximately 35% of the Company’s common stock, including Founder Shares, and is considered a related party of the Company. In connection with the Business Combination, TPG became a party to the TRA and obtained the right to receive the Deferred Cash Consideration pursuant to the Merger Agreement. The fair value of these contingent consideration liabilities was as follows:

	December 31, 2018		September 30, 2018
Due to related party pursuant to contingent consideration obligations:
Current liability	$	14.5	$	14.7
Non-current liability	100.1		122.8
Total fair value	$	114.6	$	137.5

During the three months ended December 31, 2018, the Company made no payments to TPG related to the TRA, and the Company paid $4.2 million to TPG related to the TRA during the three months ended December 31, 2017.

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Income Taxes

3 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For all periods, the Company computed the provision for income taxes based on the actual year-to-date effective tax rate by applying the discrete method.  Use of the annual effective tax rate, which relies on accurate projections by legal entity of income earned and taxed in foreign jurisdictions, as well as accurate projections by legal entity of permanent and temporary differences, was not considered a reliable estimate for purposes of calculating year-to-date income tax expense.

The Tax Act effective date combined with the Company’s fiscal year end resulted in a U.S. statutory federal rate of approximately 24.5% for the Company’s fiscal year ended September 30, 2018. Beginning in fiscal year 2019, the U.S. statutory federal rate is 21.0%.

Income tax expense for the three months ended December 31, 2018 was $4.2 million on pre-tax income of $20.4 million compared to the income tax expense of $1.3 million on pre-tax income of $27.8 million for the three months ended December 31, 2017. The current tax expense was largely attributable to income on profitable U.S. operations. The prior period tax expense was attributable to prior period income partially offset by the benefit on deferred tax liabilities due to the impact of the Tax Act, which resulted in a decrease in income tax expense of $4.5 million.

At December 31, 2018 and September 30, 2018, the valuation allowance was $4.1 million and $3.6 million, respectively, primarily related to operations in Asia. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon management’s expectations at December 31, 2018, management believes it is more likely than not that it will realize the majority of its deferred tax assets.

Uncertain Tax Positions

The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of Income tax expense in the condensed consolidated statements of operations. There was an insignificant amount of interest and penalties recognized during all periods. The Company had $4.1 million and $4.0 million related to uncertain tax positions, including related accrued interest and penalties as of December 31, 2018 and September 30, 2018, respectively.

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Segment and Geographic Data

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment and Geographic Data

Segment and Geographic Data

The Company operates through three lines of business, or operating segments: Chemicals, Plastics and Environmental Services, which market to different sets of customers operating in an array of industries, with various end markets and customer segments within those industries. For segment presentation and disclosure purposes, the Chemicals and Plastics lines of business constitute separate reportable segments, while the Environmental Services line of business, which does not meet the materiality threshold for separate disclosure, is included in an "Other" segment.

Each line of business represents unique products and suppliers, and each line of business focuses on specific end markets within its industry based on a variety of factors, including supplier or customer opportunities, expected growth and prevailing economic conditions. Across the Chemicals and Plastics lines of business there are numerous industry segments, end markets and sub markets that the Company may choose to focus on. These end markets may change from year to year depending on the underlying market economics, supplier focus, expected profitability and the Company’s strategic agenda.

The Chemicals, Plastics and Environmental Services lines of business compete with national, regional and local companies throughout North America. Additionally, the Chemicals and Plastics lines of business compete with other distribution companies in Asia. The Plastics line of business also competes with other distribution companies in EMEA. Competition within each line of business is based primarily on the diversity of the product portfolio, service offerings, reliability of services and supply, technical support, price and delivery capabilities. The accounting policies used to account for transactions in each of the lines of business are the same as those used to account for transactions at the corporate level.

The Chemicals and Plastics lines of business are distribution businesses, while the Environmental Services line of business provides hazardous and non-hazardous waste collection, recovery, recycling and disposal services.

A brief description of each segment follows:

Chemicals. The Chemicals line of business distributes specialty and industrial chemicals, additives and solvents to industrial users via railcars, barges, bulk tanker trucks and as packaged goods in trucks. The Company’s chemical products are distributed in approximately 50 countries worldwide, primarily in North America and Asia. In connection with the distribution of chemicals products, the Company provides value-added services such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. While the Chemicals line of business serves multiple end markets, the key end markets within the industrial space are household, industrial and institutional, performance coatings (including architectural coatings, adhesives, sealants and elastomers), lubricants, oil and gas and personal care.

Plastics. The Plastics line of business distributes a broad product line consisting of commodity polymer products and prime engineering resins to plastics processors engaged in blow molding, extrusion, injection molding and rotation molding via railcars, bulk trucks, truckload boxes and mixed truckloads, or less-than-truckload quantities. The Company's plastics products are distributed in more than 60 countries worldwide, primarily in North America, EMEA and Asia. The Plastics line of business serves a broad cross section of industrial segments, including key automotive and healthcare end markets.

Other. The Environmental Services line of business, in connection with certain waste disposal service companies, provides customers with comprehensive on-site and off-site hazardous and non-hazardous waste collection, transportation, recovery, disposal arrangement and recycling services in North America, primarily in the U.S. These environmental services are offered through the Company’s network of distribution facilities used as transfer facilities and through a staff of dedicated on-site waste professionals. The Environmental Services line of business serves multiple end markets such as aerospace and defense, automotive, chemical manufacturing, industrial manufacturing and oil and gas.

The Chief Executive Officer is the Chief Operating Decision Maker. The Chief Operating Decision Maker reviews operating results in order to make decisions, assess performance and allocate resources to each line of business. In order to maintain the focus on line of business performance, certain expenses are excluded from the line of business results utilized by the Company’s Chief Operating Decision Maker in evaluating line of business performance. These expenses include depreciation and amortization, selling, general and administrative expense and corporate items including transaction related costs, interest and income tax expense. These items are separately delineated to reconcile to reported net income. No single customer accounted for more than 10% of revenues for any line of business for each of the periods reported. Intersegment revenues were insignificant.

Certain assets are aggregated at the line of business level. The assets attributable to the Company’s lines of business, that are reviewed by the Chief Operating Decision Maker, consist of trade accounts receivable, inventories, goodwill and any specific assets that are otherwise directly associated with a line of business. The Company’s inventory of packaging materials and containers, as well as property, plant and equipment, are generally not allocated to a line of business and are included in unallocated assets.

Summarized financial information relating to the Company’s lines of business is as follows:

	Three Months Ended December 31,
	2018			2017
Sales and operating revenues
Chemicals	$	438.5		$	431.9
Plastics	456.1			462.2
Other	41.2			35.5
Total sales and operating revenues	935.8			929.6
Gross profit
Chemicals	53.5			58.4
Plastics	38.7			41.9
Other	6.5			6.6
Total gross profit	98.7			106.9
Selling, general & administrative expenses	79.8			84.8
Transaction related costs	8.2			0.1
Change in fair value related to 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

	December 31, 2018		September 30, 2018
IDENTIFIABLE ASSETS
Chemicals	$	795.8	$	826.2
Plastics	743.1		758.2
Other	100.1		95.7
Total identifiable assets by reportable segment	1,639.0		1,680.1
Unallocated assets	540.1		563.5
Total assets	$	2,179.1	$	2,243.6

Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale, are presented below:

	Three Months Ended December 31,
	2018		2017
U.S.	$	696.8	$	668.1
Canada	45.1		42.5
Other North America	29.8		33.0
Total North America Operations	771.7		743.6
EMEA	120.0		127.2
Asia	44.1		58.8
Total	$	935.8	$	929.6

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Recent Accounting Pronouncements (Policies)

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. As such, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as disclosed herein) considered necessary for a fair statement have been included. Results of operations for the three months ended December 31, 2018 are not necessarily indicative of results to be expected for the fiscal year ending September 30, 2019. Quarterly financial data should be read in conjunction with the consolidated financial statements and accompanying notes for the fiscal year ended September 30, 2018 included in the Company's Annual Report on Form 10-K filed with the SEC on December 6, 2018.

The consolidated financial data as of September 30, 2018 presented in these unaudited condensed consolidated financial statements were derived from the Company’s audited consolidated financial statements, but do not include all disclosures required by U.S. GAAP.

Recent Accounting Pronouncements Adopted and New Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Adopted

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this ASU supersede the revenue recognition requirements in Topic 605, Revenue Recognition and require that revenue be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. These amendments are effective for annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. The Company adopted this standard on October 1, 2018. For disclosures related to the adoption of this guidance, see Note 3.

In August 2016 the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  This ASU made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. The Company adopted this standard as of October 1, 2018 and it did not have a material effect on the Company’s financial position or results of operations.

New Accounting Pronouncements Not Yet Adopted

The Company continues the evaluation of the potential effects on its financial position or results of operations of the accounting pronouncements disclosed in its consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 filed with the SEC on December 6, 2018, including ASU 2016-02, Leases. The Company is in the process of evaluating the potential effects of ASU 2016-02 and is formulating its implementation plan, including potential changes to accounting systems, policies and internal controls to support the adoption of the new guidance.

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Revenue Revenue (Tables)

3 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table disaggregates external customer net sales by geography:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
U.S.	$	393.4	$	262.4	$	41.0	$	696.8
Canada	23.0		21.9		0.2		45.1
Other North America	17.5		12.3		—		29.8
EMEA	—		120.0		—		120.0
Asia	4.6		39.5		—		44.1
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

The following table disaggregates external customer net sales by specialties, non-specialties and environmental services:

	Three Months Ended December 31, 2018
	Chemicals		Plastics		Other		Consolidated
Specialty	$	136.5	$	218.9	$	—	$	355.4
Non-Specialty	302.0		237.2		—		539.2
Environmental Services	—		—		41.2		41.2
Total external customer net sales	$	438.5	$	456.1	$	41.2	$	935.8

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Certain Balance Sheet Information (Tables)

3 Months Ended

Dec. 31, 2018

Certain Balance Sheet Information [Abstract]

Schedule of Cash and Cash Equivalents

These amounts included the following:

	December 31, 2018		September 30, 2018
Cash held by foreign subsidiaries	$	45.7	$	52.9
Non-USD denominated currency held by foreign subsidiaries	$	44.3	$	48.8
Currency denominated in RMB	$	3.5	$	6.5

Summary of Inventories

Inventories at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Finished products	$	355.6	$	334.0
Supplies	4.9		4.8
Total	$	360.5	$	338.8

Schedule of Other Non-Current Assets

Other non-current assets at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018		September 30, 2018
Debt issuance costs of the ABL Facility	$	3.5	$	3.8
Deposits	2.0		2.5
Interest rate swap (1)	1.8		8.0
Other	1.7		1.9
Total	$	9.0	$	16.2

⁽¹⁾ See Note 9 for additional information.

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Property, Plant and Equipment (Tables)

3 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

Property, plant and equipment at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018			September 30, 2018
Land	$	50.5		$	50.8
Plants and buildings(1)	109.7			109.7
Machinery and equipment (2)	154.6			153.4
Software and computer equipment	70.7			70.5
Construction in progress	8.3			5.4
Total	393.8			389.8
Less accumulated depreciation (3)	(114.7		)	(104.9		)
Property, plant and equipment, net	$	279.1		$	284.9

⁽¹⁾ Includes $13.7 million related to facilities acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽²⁾ Includes $26.5 million related to equipment acquired under capital leases for the periods ended December 31, 2018 and September 30, 2018.

⁽³⁾ Includes $8.3 million and $7.4 million, respectively, related to facilities and equipment acquired under capital leases.

Depreciation expense recognized on the property, plant and equipment described above was as follows:

	Three Months Ended December 31,
	2018		2017
Depreciation expense	$	10.1	$	12.6

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Goodwill and Other Intangibles (Tables)

3 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Progression of Goodwill by Reportable Segment

The following is a progression of goodwill by reportable segment: 

	Chemicals			Plastics			Other		Total
Balance at September 30, 2018	$	362.4		$	274.0		$	63.5	$	699.9
Foreign currency translation	(0.5		)	(1.8		)	—		(2.3		)
Balance at December 31, 2018	$	361.9		$	272.2		$	63.5	$	697.6

Schedule of Definite-Lived Intangible Assets

Definite-lived intangible assets at December 31, 2018 and September 30, 2018 consisted of the following:

		December 31, 2018							September 30, 2018
	Estimated Useful Life (years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer-related	5-13	$	239.0	$	(49.1	)	$	189.9	$	239.6	$	(44.1	)	$	195.5
Supplier-related	6-10	3.1		(0.5		)	2.6		3.1		(0.4		)	2.7
Trade name	2-10	23.3		(14.1		)	9.2		23.3		(12.7		)	10.6
Below-market leases	1-7	0.7		(0.6		)	0.1		0.7		(0.5		)	0.2
Non-compete agreements	3-10	4.6		(2.4		)	2.2		4.6		(2.0		)	2.6
Total		$	270.7	$	(66.7	)	$	204.0	$	271.3	$	(59.7	)	$	211.6

Schedule of Amortization Expense

Amortization expense recognized on the intangible assets described above was as follows:

	Three Months Ended December 31,
	2018		2017
Amortization expense	$	7.1	$	6.9

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Debt (Tables)

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Summary of Short-Term Borrowings Outstanding and the Current Portion of Long-Term Debt and Capital Lease Obligations

Short-term borrowings outstanding and the current portion of long-term debt and capital lease obligations at December 31, 2018 and September 30, 2018 are summarized below:

	December 31, 2018		September 30, 2018
Short-term borrowings	$	39.6	$	38.1
Current portion of long-term debt and capital lease obligations	9.7		9.6
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net	$	49.3	$	47.7

Summary of Long-Term Debt Outstanding

Long-term debt outstanding at December 31, 2018 and September 30, 2018 is summarized below:

	December 31, 2018			September 30, 2018
ABL Facility	$	159.0		$	104.6
Term Loan Facility	638.8			640.4
Capital lease obligations (1)	33.2			34.0
Total long-term debt	831.0			779.0
Less: unamortized debt discount (2)	(2.2		)	(2.3		)
Less: debt issuance costs (3)	(14.0		)	(14.7		)
Less: current portion of long-term debt and capital lease obligations	(9.7		)	(9.6		)
Long-term debt and capital lease obligations, less current portion, net	$	805.1		$	752.4

⁽¹⁾  Capital lease obligations exclude executory costs and interest payments associated with the underlying leases. See “Capital Lease Obligations” below.

⁽²⁾  The unamortized debt discount is related to the Term Loan Facility and amortized to interest expense over the life of the instrument using the effective interest rate method.

⁽³⁾  See discussion below under Term Loan Facility and Debt Issuance Cost Amortization.

Short-Term Borrowings Associated with Operations in China

The Company’s short-term borrowings are associated with the Company’s operations in China and are summarized below:

	Facility Limit		Outstanding Borrowings Balance		Weighted Average Interest Rate on Borrowings		Outstanding LOC and Bankers’ Acceptance Bills		Remaining Availability
December 31, 2018
Bank of America - China (1)	$	24.3	$	22.1	4.6	%	$	—	$	2.2
Bank of Communications - China (2)	21.8		17.5		5.4	%	3.4		0.9
Total	$	46.1	$	39.6			$	3.4	$	3.1
September 30, 2018
Bank of America - China (1)	$	24.3	$	22.2	4.6	%	$	—	$	2.1
Bank of Communications - China (2)	21.8		15.9		5.4	%	5.1		0.8
Total	$	46.1	$	38.1			$	5.1	$	2.9

⁽¹⁾   The borrowing limit of this facility is denominated in USD. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 110% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance. The Company has the ability to provide additional capacity under these lines of credit, if needed.

⁽²⁾ The borrowing limit of this facility is denominated in RMB. This line of credit is secured by a standby letter of credit drawn on the ABL Facility covering at least 100% of the facility’s borrowing limit amount. Borrowings under the line of credit are payable in full within 12 months of the date of the advance.

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Derivatives (Tables)

3 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Derivative Assets and Liabilities

Derivative assets and liabilities at December 31, 2018 and September 30, 2018 consisted of the following:

	Recorded to	December 31, 2018		September 30, 2018
Short-term derivative asset	Other current assets	$	2.1	$	2.2
Long-term derivative asset	Other non-current assets	$	1.8	$	8.0
Short-term derivative liability (1)	Accrued expenses and other liabilities	$	—	$	—
Long-term derivative liability	Other non-current liabilities	$	1.2	$	—
Other Comprehensive Income	Accumulated other comprehensive income	$	2.4	$	8.1

⁽¹⁾ Short-term derivative liability for the three months ended December 31, 2018 and the fiscal year ended September 30, 2018 was less than $0.1 million

Summary of Gains and Losses (Net of Reclassifications Into Income)

Gains and losses (net of reclassifications into income, including any ineffective portion) related to the interest rate swaps were as follows:

		Three Months Ended December 31,
	Recorded to	2018			2017
Realized loss	Interest expense	$	0.1		$	0.4
Unrealized gain (loss), net of tax	Other comprehensive income	$	(5.7	)	$	1.9

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Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of Changes in Fair Value of Contingent Consideration

Changes in the fair value of the contingent consideration obligations for the three months ended December 31, 2018 were as follows:

	TRA			Deferred Cash Consideration			Total Fair Value
Contingent consideration as of September 30, 2018	$	74.8		$	62.7		$	137.5
Change in fair value of contingent consideration(1)	(3.7		)	(19.2		)	(22.9		)
Contingent consideration as of December 31, 2018	$	71.1		$	43.5		$	114.6

⁽¹⁾ Included in Operating income in the condensed consolidated statements of operations.

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Share-based Compensation and Employee Benefit Plans (Tables)

3 Months Ended

Dec. 31, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of Non-Vested Equity Plan Units

The following table summarizes all restricted stock activity during the three months ended December 31, 2018:

	Shares of Restricted Stock		Average Grant Date Fair Value Per Unit
Restricted stock at September 30, 2018	409,267		$	7.50
Granted	—		—
Vested	(136,291	)	7.50
Forfeited/Canceled	—		—
Restricted stock at December 31, 2018	272,976		$	7.50

Schedule of Stock Option Activity

The following table summarizes stock option activity during the three months ended December 31, 2018:

	Stock Options	Average Grant Date Fair Value Per Unit		Weighted Average Exercise Price
Stock Options at September 30, 2018	992,892	$	2.84	$	7.42
Granted	—	—		—
Exercised	—	—		—
Forfeited/Canceled	—	—		—
Stock Options at December 31, 2018	992,892	$	2.84	$	7.42

Schedule of Compensation Expense by Award

The following table summarizes the amount of compensation expense recognized as a component of Selling, general and administrative expenses on the condensed consolidated statements of operations by award type:

	Three Months Ended December 31,
	2018		2017
PSUs	$	1.2	$	1.2
Restricted Stock	$	0.3	$	0.3
TPG restricted stock grants	$	0.1	$	0.1
Stock options	$	0.2	$	0.1
RSUs (1)	$	—	$	—

⁽¹⁾ Compensation expense recognized as a component of Selling, general and administrative expenses for RSUs for the three months ended December 31, 2018 and 2017 is less than $0.1 million.

Schedule of Remaining Compensation Expense and Weighted Average Remaining Life

The following table summarizes unrecognized compensation expense and weighted average remaining life as of the three months ended December 31, 2018 by award type:

	Unrecognized Compensation Expense		Weighted Average Remaining Life (in years)
PSUs	$	2.9	0.5
Restricted Stock	$	1.7	1.8
TPG restricted stock grants	$	0.4	0.4
Stock options	$	1.6	8.8
RSUs (1)	$	—	0.9

⁽¹⁾ Unrecognized compensation expense for RSUs as of the three months ended December 31, 2018 is less than $0.1 million.

Schedule of Plan Contributions

The following summarizes contributions to the plans described above:

	Three Months Ended December 31,
	2018		2017
Contributions recorded as a component of cost of sales and operating expenses	$	1.1	$	1.0
Contributions recorded as a component of selling, general and administrative expenses	1.6		1.5
Total contributions	$	2.7	$	2.5

PSUs

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation Activity

The following table summarizes all PSU activity during the three months ended December 31, 2018:

	PSUs	Average Grant Date Fair Value Per Unit
Unvested PSUs at September 30, 2018	1,695,167	$	8.76
Granted	—	—
Vested	—	—
Forfeited/Canceled	—	—
Unvested PSUs at December 31, 2018	1,695,167	$	8.76

RSU

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation Activity

The following table summarizes RSU award activity during the three months ended December 31, 2018:

	RSUs		Average Grant Date Fair Value Per Unit
Unvested RSUs at September 30, 2018	16,338		$	7.28
Granted	—		—
Vested	(8,169	)	7.28
Forfeited/Canceled	—		—
Unvested RSUs at December 31, 2018	8,169		$	7.28

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Earnings per Share (Tables)

3 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Earnings per Share

A reconciliation of the numerators and denominators of the basic and diluted per share computation follows.

	Three Months Ended December 31,
	2018		2017
Basic:
Net income	$	16.2	$	26.5
Weighted average number of common shares outstanding during the period	76,945,078		76,793,518
Net income per common share - basic	$	0.21	$	0.35
Diluted:
Net income	$	16.2	$	26.5
Denominator for diluted earnings per share:
Weighted average number of common shares attributable to the period	76,945,078		76,793,518
Incremental common shares attributable to outstanding diluted options and unvested restricted shares	149,352		345,718
Denominator for diluted earnings per common share	77,094,430		77,139,236
Net income per common share - diluted	$	0.21	$	0.34

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Commitments, Contingencies and Litigation (Tables)

3 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Non-Cancellable Rental Payments

Future minimum non-cancellable rental payments as of December 31, 2018 are as follows:

2019	$	14.2
2020	9.6
2021	8.1
2022	5.0
2023	1.8
Thereafter	0.2
Total	$	38.9

Schedule of Future Minimum Capital Lease Payments

As of December 31, 2018, future minimum lease payments under capital leases were as follows:

2019	$	7.5
2020	7.1
2021	7.0
2022	13.7
2023	2.4
Thereafter	25.0
Total minimum capital lease payments	62.7
Less amount representing executory costs	(14.5		)
Less amount representing interest	(15.0		)
Present value of net minimum capital lease payments	$	33.2

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Related Party Transactions (Tables)

3 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Schedule of Related Party Activity

The fair value of these contingent consideration liabilities was as follows:

	December 31, 2018		September 30, 2018
Due to related party pursuant to contingent consideration obligations:
Current liability	$	14.5	$	14.7
Non-current liability	100.1		122.8
Total fair value	$	114.6	$	137.5

The tables below summarize activity recorded during the respective periods for related party transactions:

	Three Months Ended December 31,
	2018		2017
Sales to related entities:
TPG portfolio entities	$	0.7	$	1.6
Entities related to members of the Board of Directors	$	0.2	$	—
Purchases from related entities:
TPG portfolio entities	$	0.5	$	—
Entities related to members of the Board of Directors	$	2.6	$	3.4

	December 31, 2018		September 30, 2018
Accounts receivable from related entities:
TPG portfolio entities	$	0.7	$	1.0
Entities related to members of the Board of Directors	$	0.2	$	0.2
Accounts payable to related entities:
TPG portfolio entities	$	0.2	$	0.5
Entities related to members of the Board of Directors	$	0.1	$	0.6

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Segment and Geographic Data (Tables)

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Summary of Financial Information

Summarized financial information relating to the Company’s lines of business is as follows:

	Three Months Ended December 31,
	2018			2017
Sales and operating revenues
Chemicals	$	438.5		$	431.9
Plastics	456.1			462.2
Other	41.2			35.5
Total sales and operating revenues	935.8			929.6
Gross profit
Chemicals	53.5			58.4
Plastics	38.7			41.9
Other	6.5			6.6
Total gross profit	98.7			106.9
Selling, general & administrative expenses	79.8			84.8
Transaction related costs	8.2			0.1
Change in fair value related to 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

	December 31, 2018		September 30, 2018
IDENTIFIABLE ASSETS
Chemicals	$	795.8	$	826.2
Plastics	743.1		758.2
Other	100.1		95.7
Total identifiable assets by reportable segment	1,639.0		1,680.1
Unallocated assets	540.1		563.5
Total assets	$	2,179.1	$	2,243.6

Schedule of Revenues by Geographic Location

Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale, are presented below:

	Three Months Ended December 31,
	2018		2017
U.S.	$	696.8	$	668.1
Canada	45.1		42.5
Other North America	29.8		33.0
Total North America Operations	771.7		743.6
EMEA	120.0		127.2
Asia	44.1		58.8
Total	$	935.8	$	929.6

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Revenue Schedule of Disaggregation of Revenue By Geography (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Sales and operating revenues	$ 935.8	$ 929.6
U.S.
Disaggregation of Revenue [Line Items]
Sales and operating revenues	696.8	668.1
Canada
Disaggregation of Revenue [Line Items]
Sales and operating revenues	45.1	42.5
Other North America
Disaggregation of Revenue [Line Items]
Sales and operating revenues	29.8	33.0
EMEA
Disaggregation of Revenue [Line Items]
Sales and operating revenues	120.0	127.2
Asia
Disaggregation of Revenue [Line Items]
Sales and operating revenues	44.1	58.8
Chemicals
Disaggregation of Revenue [Line Items]
Sales and operating revenues	438.5	431.9
Chemicals | U.S.
Disaggregation of Revenue [Line Items]
Sales and operating revenues	393.4
Chemicals | Canada
Disaggregation of Revenue [Line Items]
Sales and operating revenues	23.0
Chemicals | Other North America
Disaggregation of Revenue [Line Items]
Sales and operating revenues	17.5
Chemicals | EMEA
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Chemicals | Asia
Disaggregation of Revenue [Line Items]
Sales and operating revenues	4.6
Plastics
Disaggregation of Revenue [Line Items]
Sales and operating revenues	456.1	462.2
Plastics | U.S.
Disaggregation of Revenue [Line Items]
Sales and operating revenues	262.4
Plastics | Canada
Disaggregation of Revenue [Line Items]
Sales and operating revenues	21.9
Plastics | Other North America
Disaggregation of Revenue [Line Items]
Sales and operating revenues	12.3
Plastics | EMEA
Disaggregation of Revenue [Line Items]
Sales and operating revenues	120.0
Plastics | Asia
Disaggregation of Revenue [Line Items]
Sales and operating revenues	39.5
Other
Disaggregation of Revenue [Line Items]
Sales and operating revenues	41.2	$ 35.5
Other | U.S.
Disaggregation of Revenue [Line Items]
Sales and operating revenues	41.0
Other | Canada
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.2
Other | Other North America
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Other | EMEA
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Other | Asia
Disaggregation of Revenue [Line Items]
Sales and operating revenues	$ 0.0

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Revenue Schedule of Revenue by Products (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Sales and operating revenues	$ 935.8	$ 929.6
Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	355.4
Non-Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	539.2
Environmental Services
Disaggregation of Revenue [Line Items]
Sales and operating revenues	41.2
Chemicals
Disaggregation of Revenue [Line Items]
Sales and operating revenues	438.5	431.9
Chemicals | Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	136.5
Chemicals | Non-Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	302.0
Chemicals | Environmental Services
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Plastics
Disaggregation of Revenue [Line Items]
Sales and operating revenues	456.1	462.2
Plastics | Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	218.9
Plastics | Non-Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	237.2
Plastics | Environmental Services
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Other
Disaggregation of Revenue [Line Items]
Sales and operating revenues	41.2	$ 35.5
Other | Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Other | Non-Specialty
Disaggregation of Revenue [Line Items]
Sales and operating revenues	0.0
Other | Environmental Services
Disaggregation of Revenue [Line Items]
Sales and operating revenues	$ 41.2

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Acquisitions - Narrative (Details) - USD ($)		1 Months Ended			3 Months Ended
	Sep. 17, 2018	Dec. 31, 2018	Jan. 31, 2018	Dec. 31, 2016	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Reduction per share based in closing price of Univar common stock	$ 0.41
Transaction related costs					$ 8,200,000	$ 100,000
Univar Merger
Business Acquisition [Line Items]
Transaction related costs					$ 8,200,000
Univar Merger | Minimum
Business Acquisition [Line Items]
Cash consideration per share	2.88
Cash consideration basis-Univar common stock closing price	22.18
Univar Merger | Maximum
Business Acquisition [Line Items]
Cash consideration per share	3.29
Cash consideration basis-Univar common stock closing price	$ 25.34
Other intangible assets
Business Acquisition [Line Items]
Total consideration				$ 8,500,000
Payment for intangible assets		$ 1,700,000	$ 1,700,000	5,100,000
Recognized intangible assets				$ 8,500,000
Other intangible assets | Minimum
Business Acquisition [Line Items]
Estimated useful lives (years)				10 years
Other intangible assets | Maximum
Business Acquisition [Line Items]
Estimated useful lives (years)				13 years
Univar common stock
Business Acquisition [Line Items]
Number of Univar common stock holders of Nexeo stock will receive	0.305

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Certain Balance Sheet Information - Cash and Cash Equivalents (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 54.6	$ 58.9
Currency denominated in RMB
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	3.5	6.5
Foreign subsidiaries
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	45.7	52.9
Foreign subsidiaries | Non-USD denominated currency held by foreign subsidiaries
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 44.3	$ 48.8

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Certain Balance Sheet Information - Inventories (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Certain Balance Sheet Information [Abstract]
Finished products	$ 355.6	$ 334.0
Supplies	4.9	4.8
Total	$ 360.5	$ 338.8

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Certain Balance Sheet Information - Other Non-Current Assets (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Certain Balance Sheet Information [Abstract]
Debt issuance costs of the ABL Facility	$ 3.5	$ 3.8
Deposits	2.0	2.5
Interest rate swap	1.8	8.0
Other	1.7	1.9
Total	$ 9.0	$ 16.2

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Certain Balance Sheet Information - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Jun. 09, 2016	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018	Sep. 17, 2018
Line of Credit Facility [Line Items]
Cash and cash equivalents		$ 54.6		$ 58.9
Nexeo Solutions Inc.
Line of Credit Facility [Line Items]
Excess shares (in shares)		5,178,642
Number of days to elect excess shares provision	5 days
Contingent consideration - Fair value of deferred cash consideration		$ 43.5		62.7
Payment by the company to selling equityholders of percentage of net cash tax savings	85.00%
Percentage of net cash tax savings retained by the Company	15.00%
Contingent consideration - current undiscounted cash flows of TRA liability		$ 125.8
Expected benefit period of TRA		20 years
Contingent consideration - Fair value of TRA		$ 71.1		$ 74.8
Univar Merger
Line of Credit Facility [Line Items]
Cash payment for TRA termination					$ 60.0
ABL Facility
Line of Credit Facility [Line Items]
Amortization of debt issuance costs		$ 0.3	$ 0.3
Selling equityholders | Nexeo Solutions Inc.
Line of Credit Facility [Line Items]
Number of trading days to meet condition one	20 days
Number of consecutive trading days	30 days
Share price (USD per share)	$ 15.00

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Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 393.8	$ 389.8
Less accumulated depreciation	(114.7)	(104.9)
Property, plant and equipment, net	279.1	284.9
Accumulated depreciation related to facilities and equipment acquired under capital leases	8.3	7.4
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	50.5	50.8
Plants and buildings
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	109.7	109.7
Facilities and equipment acquired under capital leases	13.7	13.7
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	154.6	153.4
Facilities and equipment acquired under capital leases	26.5	26.5
Software and computer equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	70.7	70.5
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 8.3	$ 5.4

XML

Property, Plant and Equipment - Depreciation Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 10.1	$ 12.6

XML

Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Property, Plant and Equipment [Line Items]
Carrying value property, plant and equipment, net	$ 279.1	$ 284.9
Land under purchase options not yet recorded	10.8
Closed Facilities | U.S.
Property, Plant and Equipment [Line Items]
Carrying value property, plant and equipment, net	$ 1.1	$ 1.1

XML

Goodwill and Other Intangibles - Goodwill by Reportable Segment (Details) $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($)
Goodwill
Beginning balance	$ 699.9
Foreign currency translation	(2.3)
Ending balance	697.6
Chemicals
Goodwill
Beginning balance	362.4
Foreign currency translation	(0.5)
Ending balance	361.9
Plastics
Goodwill
Beginning balance	274.0
Foreign currency translation	(1.8)
Ending balance	272.2
Other
Goodwill
Beginning balance	63.5
Foreign currency translation	0.0
Ending balance	$ 63.5

XML

Goodwill and Other Intangibles - Definite-Lived Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 270.7	$ 271.3
Accumulated Amortization	(66.7)	(59.7)
Net Carrying Amount	204.0	211.6
Customer-related
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	239.0	239.6
Accumulated Amortization	(49.1)	(44.1)
Net Carrying Amount	$ 189.9	195.5
Customer-related | Minimum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	5 years
Customer-related | Maximum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	13 years
Supplier-related
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3.1	3.1
Accumulated Amortization	(0.5)	(0.4)
Net Carrying Amount	$ 2.6	2.7
Supplier-related | Minimum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	6 years
Supplier-related | Maximum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	10 years
Trade name
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 23.3	23.3
Accumulated Amortization	(14.1)	(12.7)
Net Carrying Amount	$ 9.2	10.6
Trade name | Minimum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	2 years
Trade name | Maximum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	10 years
Below-market leases
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 0.7	0.7
Accumulated Amortization	(0.6)	(0.5)
Net Carrying Amount	$ 0.1	0.2
Below-market leases | Minimum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	1 year
Below-market leases | Maximum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	7 years
Non-compete agreements
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 4.6	4.6
Accumulated Amortization	(2.4)	(2.0)
Net Carrying Amount	$ 2.2	$ 2.6
Non-compete agreements | Minimum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	3 years
Non-compete agreements | Maximum
Definite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	10 years

XML

Goodwill and Other Intangibles - Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 7.1	$ 6.9

XML

Goodwill and Other Intangibles - Narrative (Details)	3 Months Ended
	Mar. 31, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment	$ 0

XML

Debt - Summary of Debt (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Debt Disclosure [Abstract]
Short-term borrowings	$ 39.6	$ 38.1
Current portion of long-term debt and capital lease obligations	9.7	9.6
Total short-term borrowings and current portion of long-term debt and capital lease obligations, net	$ 49.3	$ 47.7

XML

Debt - Summary Long-Term Debt Outstanding (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Total long-term debt	$ 831.0	$ 779.0
Less: unamortized debt discount	(2.2)	(2.3)
Less: debt issuance costs	(14.0)	(14.7)
Less: current portion of long-term debt and capital lease obligations	(9.7)	(9.6)
Long-term debt and capital lease obligations, less current portion, net	805.1	752.4
Capital lease obligations
Debt Instrument [Line Items]
Total long-term debt	33.2	34.0
ABL Facility
Debt Instrument [Line Items]
Total long-term debt	159.0	104.6
Term Loan Facility
Debt Instrument [Line Items]
Total long-term debt	$ 638.8	$ 640.4

XML

Debt - Short-term Borrowings Associated with Operations in China (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Facility Limit	$ 46.1	$ 46.1
Outstanding Borrowings Balance	39.6	38.1
Remaining Availability	3.1	2.9
Bank of America - China
Debt Instrument [Line Items]
Facility Limit	24.3	24.3
Outstanding Borrowings Balance	$ 22.1	$ 22.2
Weighted Average Interest Rate on Borrowings	4.60%	4.60%
Remaining Availability	$ 2.2	$ 2.1
Bank of Communications - China
Debt Instrument [Line Items]
Facility Limit	21.8	21.8
Outstanding Borrowings Balance	$ 17.5	$ 15.9
Weighted Average Interest Rate on Borrowings	5.40%	5.40%
Remaining Availability	$ 0.9	$ 0.8
Outstanding LOC and Bankers’ Acceptance Bills
Debt Instrument [Line Items]
Outstanding LOC and Bankers’ Acceptance Bills	3.4	5.1
Outstanding LOC and Bankers’ Acceptance Bills | Bank of America - China
Debt Instrument [Line Items]
Outstanding LOC and Bankers’ Acceptance Bills	0.0	0.0
Outstanding LOC and Bankers’ Acceptance Bills | Bank of Communications - China
Debt Instrument [Line Items]
Outstanding LOC and Bankers’ Acceptance Bills	$ 3.4	$ 5.1
ABL Facility | Bank of America - China
Debt Instrument [Line Items]
Line of credit facility collateral coverage (at least)	110.00%
ABL Facility | Bank of Communications - China
Debt Instrument [Line Items]
Line of credit facility collateral coverage (at least)	100.00%

XML

Debt - ABL Facility (Details) - USD ($)	Dec. 31, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 46,100,000	$ 46,100,000
Remaining availability	$ 3,100,000	$ 2,900,000
ABL Facility
Debt Instrument [Line Items]
Weighted average interest rate	3.98%
Outstanding letters of credit	$ 69,500,000
Amount as collateral to the banking institution	669,600,000
ABL Facility | US Tranche
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	505,000,000.0
ABL Facility | Canadian Tranche
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	40,000,000.0
ABL Facility | FILO Tranche
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	30,000,000.0
Remaining availability	5,000,000.0
ABL Facility | U.S. and Canadian Tranches
Debt Instrument [Line Items]
Remaining availability	258,100,000
Term Loan Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	655,000,000.0
Line of credit facility, increase in maximum borrowing capacity	$ 175,000,000.0

XML

Debt - Term Loan Facility (Details)	3 Months Ended
	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2018 USD ($)
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 46,100,000		$ 46,100,000
Term Loan Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	655,000,000.0
Line of credit facility, increase in maximum borrowing capacity	$ 175,000,000.0
Secured net leverage ratio of available amount	4.1
Percentage of aggregate annual amount to be paid every quarter	1.00%
Weighted average interest rate for term loan facility	5.69%
Amortization of debt discount	$ 100,000	$ 100,000

XML

Debt - Debt Issuance Cost Amortization (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Term Loan Facility
Debt Instrument [Line Items]
Amortization of debt issuance costs	$ 0.7	$ 0.7

XML

Debt - Capital Lease Obligations (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Capital lease obligation balance	$ 831.0	$ 779.0
Annual interest payments	15.0
Capital lease obligations
Debt Instrument [Line Items]
Capital lease obligation balance	33.2	$ 34.0
2015 Ryder Lease | Ryder
Debt Instrument [Line Items]
Capital lease, aggregate future interest payments	2.5
2015 Ryder Lease | Ryder | Maximum
Debt Instrument [Line Items]
Annual interest payments	0.8
2015 Ryder Lease | Ryder | Minimum
Debt Instrument [Line Items]
Annual interest payments	0.1
Montgomery Lease
Debt Instrument [Line Items]
Capital lease, aggregate future interest payments	12.4
Montgomery Lease | Maximum
Debt Instrument [Line Items]
Annual interest payments	1.0
Montgomery Lease | Minimum
Debt Instrument [Line Items]
Annual interest payments	$ 0.1

XML

Derivatives - Narrative (Details) $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($) interest_rate_swap	Dec. 31, 2017 USD ($)
Derivative Instruments, Gain (Loss) [Line Items]
Tax benefit related to interest-rate swap unrealized gains and losses	$ (2.0)	$ (0.6)
Interest Rate Swap | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Number of new swaps entered into to manage interest rate exposure | interest_rate_swap	7
Combined notional amount	$ 599.1
Tax benefit related to interest-rate swap unrealized gains and losses	2.0	$ 0.6
Interest Rate Cash Flow Hedge Gain to be Reclassified During Next 12 Months, Net	$ 2.5

XML

Derivatives - Summary of Derivative Assets and Liabilities (Details) - Cash Flow Hedging - Interest Rate Swap - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Accumulated other comprehensive income
Derivatives, Fair Value [Line Items]
Other comprehensive income	$ 2.4	$ 8.1
Level 2 | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset	2.1	2.2
Level 2 | Other non-current assets
Derivatives, Fair Value [Line Items]
Derivative asset	1.8	8.0
Level 2 | Accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative liability	0.0	0.0
Level 2 | Other non-current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability	1.2	0.0
Maximum | Level 2 | Accrued expenses and other liabilities
Derivatives, Fair Value [Line Items]
Derivative liability	$ 0.1	$ 0.1

XML

Derivatives - Summary of Gains and Losses (Net of Reclassifications Into Income) (Details) - Interest Rate Swap - Designated as Hedging Instrument - Cash Flow Hedging - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Interest expense
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gain (loss) on derivative instruments	$ 0.1	$ 0.4
Other comprehensive income
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gain (loss) on derivative instruments	$ (5.7)	$ 1.9

XML

Fair Value Measurements - Narrative (Details) $ in Millions	Dec. 31, 2018 USD ($) interest_rate_swap	Sep. 30, 2018 USD ($)
Cash Flow Hedging | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Number of new swaps entered into to manage interest rate exposure | interest_rate_swap	7
Combined notional amount	$ 599.1
Level 2 | Cash Flow Hedging | Interest Rate Swap | Other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative asset	2.1	$ 2.2
Level 2 | Cash Flow Hedging | Interest Rate Swap | Other non-current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative asset	1.8	8.0
Level 2 | Cash Flow Hedging | Interest Rate Swap | Accrued expenses and other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative liability	0.0	0.0
Level 2 | Cash Flow Hedging | Interest Rate Swap | Other non-current liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative liability	1.2	0.0
TRA Liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Estimated adjustment to contingent consideration liability discount rate	0.4
Estimated adjustment to contingent consideration liability tax rate	2.4
Nexeo Solutions Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Contingent consideration - Fair value of deferred cash consideration	43.5	62.7
Contingent consideration - Fair value of TRA	71.1	74.8
Maximum | Level 2 | Cash Flow Hedging | Interest Rate Swap | Accrued expenses and other liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative liability	$ 0.1	$ 0.1

XML

Fair Value Measurements - Changes in Fair Value of Contingent Consideration (Details) $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration as of September 30, 2018	$ 137.5
Change in fair value of contingent consideration	(22.9)
Contingent consideration as of December 31, 2018	114.6
TRA
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration as of September 30, 2018	74.8
Change in fair value of contingent consideration	(3.7)
Contingent consideration as of December 31, 2018	71.1
Deferred Cash Consideration
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration as of September 30, 2018	62.7
Change in fair value of contingent consideration	(19.2)
Contingent consideration as of December 31, 2018	$ 43.5

XML

Share-based Compensation and Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		12 Months Ended
	Jun. 08, 2016	Nov. 30, 2017	Dec. 31, 2018	Dec. 31, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
TPG portfolio entities
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares awarded by related party (in shares)							100,000
Forfeited shares (in shares)						11,673
TPG portfolio entities | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							3 years
2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Effective period of plan	10 years
Number of shares available for grant	9,000,000
Shares available for issuance (in shares)			3,980,465
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0
Forfeited shares (in shares)			0
Unvested TPG restricted stock awards			1,695,167		1,695,167
Shares vested (in shares)			0
PSUs | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)					193,667
PSU's granted (in shares)						212,000	1,557,500
Shares authorized for issuance (up to) (in shares)			3,390,334
Expected dividend yield						0.00%
PSUs | 2016 LTIP | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Entitled percentage of common shares to recipient					0.00%	0.00%
Expected term (in years)						2 years
Expected stock price volatility						35.00%
Risk-free interest rate						0.90%
PSUs | 2016 LTIP | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Entitled percentage of common shares to recipient					200.00%	200.00%
Performance period					3 years	3 years
Expected term (in years)						3 years
Expected stock price volatility						40.00%
Risk-free interest rate						1.30%
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0
Forfeited shares (in shares)			0
Unvested TPG restricted stock awards			272,976		409,267
Shares vested (in shares)			136,291
Shares associated with employee tax withholding for vesting of certain equity awards (in shares)					7,163	9,576
Restricted Stock | TPG portfolio entities
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested TPG restricted stock awards			27,559
Shares vested (in shares)					27,471	33,297
Restricted Stock | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		415,867
Restricted Stock | 2016 LTIP | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period		3 years
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0
Outstanding options aggregate intrinsic value			$ 1.2
Exercisable stock options			0
Employee Stock Option | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)					999,492
Expected term (in years)					6 years
Expected stock price volatility					35.00%
Expected dividend yield					0.00%
Risk-free interest rate					2.10%
Employee Stock Option | 2016 LTIP | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					3 years
Phantom RSU | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeited shares (in shares)						3,500
Awards issued to certain non-U.S employees (in shares)				10,500
Phantom PSU | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards issued to certain non-U.S employees (in shares)				10,000
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0
Forfeited shares (in shares)			0
Unvested TPG restricted stock awards			8,169		16,338
Shares vested (in shares)			8,169
RSU | 2016 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				28,000
RSU | 2016 LTIP | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period				3 years
Univar Merger | PSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Entitled percentage of common shares to recipient			70.00%
Univar Merger | PSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Entitled percentage of common shares to recipient			200.00%

XML

Share-based Compensation and Employee Benefit Plans - PSU Activity (Details) - PSUs	3 Months Ended
	Dec. 31, 2018 $ / shares shares
Unvested Performance Share Units
Outstanding at the beginning of the period (in shares) | shares	1,695,167
Granted (in shares) | shares	0
Vested (in shares) | shares	0
Forfeited/Canceled (in shares) | shares	0
Outstanding at the end of the period (in shares) | shares	1,695,167
Average Grant Date Fair Value Per Unit
Outstanding at the beginning of the period (in USD per share) | $ / shares	$ 8.76
Granted (in USD per share) | $ / shares	0
Vested (in USD per share) | $ / shares	0
Forfeited/Canceled (in USD per share) | $ / shares	0
Outstanding at the end of the period (in USD per share) | $ / shares	$ 8.76

XML

Share-based Compensation and Employee Benefit Plans - Restricted Stock Activity (Details) - Restricted Stock	3 Months Ended
	Dec. 31, 2018 $ / shares shares
Shares
Outstanding at the beginning of the period (in shares) | shares	409,267
Granted (in shares) | shares	0
Vested (in shares) | shares	(136,291)
Forfeited/Canceled (in shares) | shares	0
Outstanding at the end of the period (in shares) | shares	272,976
Average Grant Date Fair Value Per Unit
Outstanding at the beginning of the period (in USD per share) | $ / shares	$ 7.50
Granted (in USD per share) | $ / shares	0
Vested (in USD per share) | $ / shares	7.50
Forfeited/Canceled (in USD per share) | $ / shares	0
Outstanding at the end of the period (in USD per share) | $ / shares	$ 7.50

XML

Share-based Compensation and Employee Benefit Plans - Summary of Stock Options (Details) - Employee Stock Option	3 Months Ended
	Dec. 31, 2018 $ / shares shares
Stock Options
Stock options, beginning (in shares) | shares	992,892
Granted (in shares) | shares	0
Exercised (in shares) | shares	0
Forfeited/canceled (in shares) | shares	0
Stock options, ending (in shares) | shares	992,892
Average Grant Date Fair Value Per Unit
Average grant date fair value per unit, beginning (USD per share)	$ 2.84
Average grant date fair value per unit, granted in period (USD per share)	0
Average grant date fair value per unit, ending (USD per share)	2.84
Weighted Average Exercise Price
Stock options, weighted average exercise price, beginning (USD per share)	7.42
Granted, weighted average exercise price, (USD per share)	0
Exercised, weighted average exercise price, (USD per share)	0
Forfeited/canceled, weighted average exercise price, (USD per share)	0
Stock options, weighted average exercise price, ending (USD per share)	$ 7.42

XML

Share-based Compensation and Employee Benefit Plans - Restricted Stock Unit Activity (Details) - RSU	3 Months Ended
	Dec. 31, 2018 $ / shares shares
Shares
Outstanding at the beginning of the period (in shares) | shares	16,338
Granted (in shares) | shares	0
Vested (in shares) | shares	(8,169)
Forfeited/Canceled (in shares) | shares	0
Outstanding at the end of the period (in shares) | shares	8,169
Average Grant Date Fair Value Per Unit
Outstanding at the beginning of the period (in USD per share) | $ / shares	$ 7.28
Granted (in USD per share) | $ / shares	0
Vested (in USD per share) | $ / shares	7.28
Forfeited/Canceled (in USD per share) | $ / shares	0
Outstanding at the end of the period (in USD per share) | $ / shares	$ 7.28

XML

Share-based Compensation and Employee Benefit Plans - Schedule of Compensation Expense (Details) - Selling, general and administrative expenses - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 1.2	$ 1.2
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	0.3	0.3
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	0.2	0.1
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	0.0	0.0
TPG | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	0.1	0.1
Maximum | RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 0.1	$ 0.1

XML

Share-based Compensation and Employee Benefit Plans - Unrecognized Compensation Cost and Weighted Average Remaining Life (Details) $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($)
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 2.9
Weighted Average Remaining Life (in years)	6 months
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 1.7
Weighted Average Remaining Life (in years)	1 year 9 months 18 days
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 1.6
Weighted Average Remaining Life (in years)	8 years 9 months 18 days
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 0.0
Weighted Average Remaining Life (in years)	10 months 24 days
TPG | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 0.4
Weighted Average Remaining Life (in years)	4 months 24 days
Maximum | RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 0.1

XML

Share-based Compensation and Employee Benefit Plans - Defined Contribution Plans (Details)	3 Months Ended
	Dec. 31, 2018
Defined Contribution Plan Disclosure [Line Items]
Company matching contribution of employee contributions up to 4% (as a percent)	100.00%
Portion of employee contribution eligible for company match, percentage of pay	4.00%
Service of one to 10 years
Defined Contribution Plan Disclosure [Line Items]
Company contribution percentage based on years of service	1.50%
Service of 11 to 20 years
Defined Contribution Plan Disclosure [Line Items]
Company contribution percentage based on years of service	3.00%
Service of 21 years and over
Defined Contribution Plan Disclosure [Line Items]
Company contribution percentage based on years of service	4.50%
Service period	21 years
Minimum | Service of one to 10 years
Defined Contribution Plan Disclosure [Line Items]
Service period	1 year
Minimum | Service of 11 to 20 years
Defined Contribution Plan Disclosure [Line Items]
Service period	11 years
Maximum | Service of one to 10 years
Defined Contribution Plan Disclosure [Line Items]
Service period	10 years
Maximum | Service of 11 to 20 years
Defined Contribution Plan Disclosure [Line Items]
Service period	20 years

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Share-based Compensation and Employee Benefit Plans - Cost of Defined Contribution Plan (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Defined Benefit Plan Disclosure [Line Items]
Contributions	$ 2.7	$ 2.5
Cost of sales and operating expense
Defined Benefit Plan Disclosure [Line Items]
Contributions	1.1	1.0
Selling, general and administrative expenses
Defined Benefit Plan Disclosure [Line Items]
Contributions	$ 1.6	$ 1.5

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Equity - Common Stock (Details)	3 Months Ended
	Dec. 31, 2018 vote shares	Sep. 30, 2018 shares
Class of Stock [Line Items]
Shares authorized (in shares)	300,000,000	300,000,000
Number of votes per common share (in vote) | vote	1
Shares issued (in shares)	89,755,231	89,747,062
Shares outstanding (in shares)	89,698,331	89,727,546
Common stock outstanding, unit (in shares)	1
Warrant, unit (in shares)	1
Founders Shares
Class of Stock [Line Items]
Shares issued (in shares)	12,476,250

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Equity - Founder Shares (Details) - Founders Shares	3 Months Ended
	Dec. 31, 2018 $ / shares shares
Class of Stock [Line Items]
Shares issued (in shares) | shares	12,476,250
Percentage of shares subject to condition one	50.00%
Sale price equals or exceeds, condition one (USD per share)	$ 12.50
Number of trading days to meet condition one	20 days
Number of consecutive trading days to meet condition one	30 days
Percentage of shares subject to condition two	50.00%
Sale price equals or exceeds, condition two (USD per share)	$ 15.00
Number of trading days to meet condition two	20 days
Number of consecutive trading days to meet condition two	30 days

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Equity - Warrants (Details) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Equity [Abstract]
Warrants outstanding (in shares)	50,025,000	50,025,000
Common stock to be purchased through warrants (in shares)	25,012,500
Exercise price of warrants (USD per share)	$ 11.50

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Equity - Preferred Stock (Details) - shares	Dec. 31, 2018	Sep. 30, 2018
Equity [Abstract]
Preferred shares authorized (in shares)	1,000,000	1,000,000
Preferred shares issued (in shares)	0	0
Preferred shares outstanding (in shares)	0	0

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Equity - Treasury Stock (Details) - shares	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Treasury Stock
Class of Stock [Line Items]
Shares issued (in shares)	56,900	19,516	12,353	9,576
Restricted Stock
Class of Stock [Line Items]
Treasury stock, shares acquired (in shares)	34,461
RSU
Class of Stock [Line Items]
Treasury stock, shares acquired (in shares)	2,923

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Earnings per Share - Schedule of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Basic:
Net income	$ 16.2	$ 26.5
Weighted average number of common shares outstanding during the period (in shares)	76,945,078	76,793,518
Net income per common share - basic (USD per share)	$ 0.21	$ 0.35
Diluted:
Net income	$ 16.2	$ 26.5
Denominator for diluted earnings per share:
Weighted average number of common shares outstanding during the period (in shares)	76,945,078	76,793,518
Incremental common shares attributable to outstanding dilutive options and unvested restricted shares(in shares)	149,352	345,718
Denominator for diluted earnings per common share (in shares)	77,094,430	77,139,236
Net income per common share - diluted (USD per share)	$ 0.21	$ 0.34

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Earnings per Share - Narrative (Details) - shares	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Warrants outstanding (in shares)	50,025,000	50,025,000
Founders Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	12,476,250	12,476,250
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	25,012,500	25,012,500

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Commitments, Contingencies and Litigation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 6.7	$ 6.5

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Commitments, Contingencies and Litigation - Schedule of Non-Cancellable Rental Payments (Details) $ in Millions	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 14.2
2020	9.6
2021	8.1
2022	5.0
2023	1.8
Thereafter	0.2
Total	$ 38.9

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Commitments, Contingencies and Litigation - Schedule of Future Minimum Capital Lease Payments (Details) $ in Millions	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 7.5
2020	7.1
2021	7.0
2022	13.7
2023	2.4
Thereafter	25.0
Total minimum capital lease payments	62.7
Less amount representing executory costs	(14.5)
Less amount representing interest	(15.0)
Present value of net minimum capital lease payments	$ 33.2

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Related Party Transactions - Schedule of Related Party Activity (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Accounts payable to related entities:
Due to related party pursuant to contingent consideration obligations	$ 14.5		$ 14.7
TPG portfolio entities
Sales to related entities:
Sales to related entities	0.7	$ 1.6
Purchases from related entities:
Purchases from related entities	0.5	0.0
Accounts receivable from related entities:
Amount due from related parties	0.7		1.0
Accounts payable to related entities:
Due to related party pursuant to contingent consideration obligations	0.2		0.5
Entities related to members of the Board of Directors
Sales to related entities:
Sales to related entities	0.2	0.0
Purchases from related entities:
Purchases from related entities	2.6	$ 3.4
Accounts receivable from related entities:
Amount due from related parties	0.2		0.2
Accounts payable to related entities:
Due to related party pursuant to contingent consideration obligations	$ 0.1		$ 0.6

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Related Party Transactions - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Jun. 09, 2016
Related Party Transaction [Line Items]
Cash paid to TPG related to TRA	$ 0.0	$ 4.2
TPG portfolio entities
Related Party Transaction [Line Items]
Ownership interest by related party			35.00%
TRA | TPG portfolio entities
Related Party Transaction [Line Items]
Cash paid to TPG related to TRA	$ 0.0	$ 4.2

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Related Party Transactions - Contingent Consideration Obligations (Details) - USD ($) $ in Millions	Dec. 31, 2018	Sep. 30, 2018
Related Party Transactions [Abstract]
Due to related party pursuant to contingent consideration obligations, current	$ 14.5	$ 14.7
Due to related party pursuant to contingent consideration obligations, noncurrent	100.1	122.8
Total fair value	$ 114.6	$ 137.5

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Income Tax Contingency [Line Items]
Federal income tax rate	21.00%		24.50%
Provisional income tax benefit		$ 4.5
Income tax expense	$ 4.2	1.3
Pre-tax income	20.4	$ 27.8
Valuation allowance	4.1		$ 3.6
Uncertain tax positions inclusive of interest and penalties	$ 4.1		$ 4.0

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Segment and Geographic Data - Narrative (Details)	3 Months Ended
	Dec. 31, 2018 segment country
Segment and Geographic Data
Number of operating segments | segment	3
Chemicals
Segment and Geographic Data
Number of countries products distributed in (more than)	50
Plastics
Segment and Geographic Data
Number of countries products distributed in (more than)	60

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Segment and Geographic Data - Summarized Financial Information (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Summarized financial information
Sales and operating revenues	$ 935.8	$ 929.6
Gross profit	98.7	106.9
Selling, general & 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	0.2	0.1
Interest expense	(13.5)	(13.0)
Net income before income taxes	20.4	27.8
Segment assets
Assets	2,179.1		$ 2,243.6
Operating Segments
Segment assets
Assets	1,639.0		1,680.1
Unallocated
Segment assets
Assets	540.1		563.5
Chemicals
Summarized financial information
Sales and operating revenues	438.5	431.9
Gross profit	53.5	58.4
Chemicals | Operating Segments
Segment assets
Assets	795.8		826.2
Plastics
Summarized financial information
Sales and operating revenues	456.1	462.2
Gross profit	38.7	41.9
Plastics | Operating Segments
Segment assets
Assets	743.1		758.2
Other
Summarized financial information
Sales and operating revenues	41.2	35.5
Gross profit	6.5	$ 6.6
Other | Operating Segments
Segment assets
Assets	$ 100.1		$ 95.7

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Segment and Geographic Data - Schedule of Revenues by Geographic Location (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	$ 935.8	$ 929.6
U.S.
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	696.8	668.1
Canada
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	45.1	42.5
Other North America
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	29.8	33.0
Total North America Operations
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	771.7	743.6
EMEA
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	120.0	127.2
Asia
Revenues by geographic location, based on the jurisdiction of the subsidiary entity receiving revenue credit for the sale
Revenues	$ 44.1	$ 58.8