10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

☐ 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: 001-38912

Avantor, Inc.

(Exact name of registrant as specified in its charter)

Delaware	82-2758923
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Radnor Corporate Center, Building One, Suite 200

100 Matsonford Road

Radnor, Pennsylvania 19087

(Address of principal executive offices) (zip code)

(610) 386-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AVTR	New York Stock Exchange
6.250% Series A Mandatory Convertible Preferred Stock, $0.01 par value	AVTR PRA	New York Stock Exchange

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 ☐ No

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 ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐ Accelerated Filer ☒ Non-accelerated Filer ☐ Smaller reporting company ☐ Emerging growth company

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. ☐

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

On October 30, 2019, 571,734,767 shares of common stock, $0.01 par value per share, were outstanding.

Avantor, Inc. and subsidiaries

Form 10-Q for the quarterly period ended September 30, 2019

Table of contents

	Page
Glossary	ii
Cautionary factors regarding forward-looking statements	iii
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures about Market Risk	42
Item 4. Controls and Procedures	43
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	44
Item 5. Other Information	44
Item 6. Exhibits	44
Signature	45

i

Glossary

	Description
we, us, our	Avantor, Inc. and its subsidiaries
2017 Plan	the Vail Holdco Corp Equity Incentive Plan, a share-based compensation plan
2019 Plan	the Avantor, Inc. 2019 Equity Incentive Plan, a share-based compensation plan
AMEA	Asia, Middle-East and Africa
AOCI	accumulated other comprehensive income or loss
EURIBOR	the basic rate of interest used in lending between banks on the European Union interbank market
FASB	the Financial Accounting Standards Board of the United States
GAAP	United States generally accepted accounting principles
Goldman Sachs	an investment banking firm and its affiliates
high single-digit	7 - 9%
IPO	initial public offering
LIBOR	the basic rate of interest used in lending between banks on the London interbank market
low double-digit	10 - 19%
low single-digit	1 - 3%
Management EBITDA	earnings before interest, income taxes, depreciation, amortization and certain other items, our segment profitability measurement under GAAP
MCPS	6.250% Series A Mandatory Convertible Preferred Stock
mid single-digit	4 - 6%
New Mountain Capital	a private equity investor and its affiliates
NuSil	NuSil Acquisition Corp, NuSil Investments LLC and subsidiaries, a business organization with which we merged in 2016
PSP Investments	a pension investment manager and its affiliates
Registration Statement	our registration statement on Form S-1 (File No. 333-229578), as amended
SAR	stand alone appreciation right
SEC	the United States Securities and Exchange Commission
SG&A expenses	selling, general and administrative expenses
Specialty procurement	Product sales related to customer procurement services
VWR	VWR Corporation and its subsidiaries, a company we acquired in November 2017

ii

Cautionary factors regarding forward-looking statements

This report contains forward-looking statements. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

You should understand that the following important factors, in addition to those discussed under “Risk Factors” in our Registration Statement, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

• disruptions to our operations;

• competition from other industry providers;

• our ability to implement our growth strategy;

• our ability to anticipate and respond to changing industry trends;

• adverse trends in consumer, business, and government spending;

• our dependence on sole or limited sources for some essential materials and components;

• our ability to successfully value and integrate acquired businesses;

• our products’ satisfaction of applicable quality criteria, specifications and performance standards;

• our ability to maintain our relationships with key customers;

• our ability to maintain our relationships with distributors;

• our ability to maintain consistent purchase volumes under purchase orders;

iii

• our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;

• the impact of new laws, regulations, or other industry standards;

• changes in the interest rate environment that increase interest on our borrowings;

• adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;

• our ability to implement and improve processing systems and prevent a compromise of our information systems;

• our ability to protect our intellectual property and avoid third-party infringement claims;

• exposure to product liability and other claims in the ordinary course of business;

• our ability to develop new products responsive to the markets we serve;

• the availability of raw materials;

• our ability to avoid negative outcomes related to the use of chemicals;

• our ability to maintain highly skilled employees;

• adverse impact of impairment charges on our goodwill and other intangible assets;

• fluctuations and uncertainties related to doing business outside the United States;

• our ability to obtain and maintain required regulatory clearances or approvals may constrain the commercialization of submitted products;

• our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;

• our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations;

• our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and

• our ability to maintain an adequate system of internal control over financial reporting.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this report. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

iv

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Avantor, Inc. and subsidiaries

Index to unaudited condensed consolidated financial statements

	Page
Unaudited condensed consolidated balance sheets	2
Unaudited condensed consolidated statements of operations	4
Unaudited condensed consolidated statements of comprehensive income or loss	5
Unaudited condensed consolidated statements of redeemable equity and stockholders’ equity or deficit	6
Unaudited condensed consolidated statements of cash flows	8
Notes to unaudited condensed consolidated financial statements	9

1

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated balance sheets

(in millions)	September 30, 2019		December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	173.9	$	184.7
Accounts receivable, net	983.3		931.2
Inventory	714.5		671.1
Other current assets	147.0		112.6
Total current assets	2,018.7		1,899.6
Property, plant and equipment, net of accumulated depreciation of $290.4 and $225.8	559.4		598.6
Customer relationships, net of accumulated amortization of $578.7 and $412.5	3,917.0		4,159.8
Other intangible assets, net of accumulated amortization of $203.2 and $146.7	331.2		405.9
Goodwill	2,736.0		2,784.7
Other assets	200.8		63.0
Total assets	$	9,763.1	$	9,911.6

See accompanying notes to the condensed consolidated financial statements.

2

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated balance sheets (continued)

(in millions)	September 30, 2019			December 31, 2018
Liabilities, redeemable equity and stockholders’ equity or deficit
Current liabilities:
Current portion of debt	$	41.4		$	142.4
Accounts payable	556.3			557.4
Employee-related liabilities	118.9			144.9
Accrued interest	135.1			76.6
Other current liabilities	227.0			174.9
Total current liabilities	1,078.7			1,096.2
Debt, net of current portion	5,088.7			6,782.3
Deferred income tax liabilities	832.8			907.5
Other liabilities	407.3			318.0
Total liabilities	7,407.5			9,104.0
Commitments and contingencies, see note 10
Redeemable equity:
Series A preferred stock at redemption value, zero and 2.3 shares outstanding	—			2,297.3
Junior convertible preferred stock, zero and 1.7 shares outstanding	—			1,562.0
Total redeemable equity	—			3,859.3
Stockholders’ equity (deficit):
Mandatory convertible preferred stock including paid-in capital, 20.7 and zero shares outstanding	1,003.7			—
Common stock including paid-in capital, 571.4 and 132.8 shares outstanding	1,753.7			(2,746.8		)
Accumulated deficit	(274.3		)	(238.4		)
Accumulated other comprehensive loss	(127.5		)	(66.5		)
Total stockholders’ equity (deficit)	2,355.6			(3,051.7		)
Total liabilities, redeemable equity and stockholders’ equity or deficit	$	9,763.1		$	9,911.6

See accompanying notes to the condensed consolidated financial statements.

3

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of operations

(in millions, except per share data)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net sales	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4
Cost of sales	1,029.8			1,015.5			3,076.0			3,003.4
Gross profit	474.0			478.7			1,440.3			1,387.0
Selling, general and administrative expenses	330.8			346.5			1,040.4			1,072.8
Operating income	143.2			132.2			399.9			314.2
Interest expense	(98.3		)	(130.2		)	(342.0		)	(388.7		)
Loss on extinguishment of debt	—			—			(70.2		)	—
Other (expense) income, net	(7.6		)	(0.9		)	2.9			7.0
Income (loss) before income taxes	37.3			1.1			(9.4		)	(67.5		)
Income tax (expense) benefit	(15.2		)	33.4			(23.4		)	33.9
Net income (loss)	22.1			34.5			(32.8		)	(33.6		)
Accumulation of yield on preferred stock	(16.4		)	(68.9		)	(136.4		)	(198.4		)
Accretion of make whole premium on series A preferred stock	—			—			(220.4		)	—
Net income (loss) available to common stockholders	$	5.7		$	(34.4	)	$	(389.6	)	$	(232.0	)
Earnings (loss) per share, basic and diluted	$	0.01		$	(0.26	)	$	(1.13	)	$	(1.75	)
Weighted average shares outstanding:
Basic	570.0			132.8			343.7			132.7
Diluted	580.7			132.8			343.7			132.7

See accompanying notes to the condensed consolidated financial statements.

4

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of comprehensive income or loss

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)
Other comprehensive income (loss):
Foreign currency translation — unrealized loss	(62.7		)	(0.8		)	(59.3		)	(59.1		)
Derivative instruments:
Unrealized gain (loss)	1.0			(0.2		)	(0.5		)	1.2
Reclassification of gain into earnings	(0.9		)	(0.6		)	(1.2		)	(1.2		)
Defined benefit plans:
Unrealized (loss) gain	(0.1		)	—			(0.1		)	0.1
Reclassification of gain into earnings	(0.2		)	(0.2		)	(0.5		)	(0.5		)
Other comprehensive loss before income taxes	(62.9		)	(1.8		)	(61.6		)	(59.5		)
Income tax benefit	0.1			0.2			0.6			—
Other comprehensive loss	(62.8		)	(1.6		)	(61.0		)	(59.5		)
Comprehensive (loss) income	$	(40.7	)	$	32.9		$	(93.8	)	$	(93.1	)

See accompanying notes to the condensed consolidated financial statements.

5

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of redeemable equity and stockholders’ equity or deficit

(in millions)	Redeemable equity						Stockholders’ equity (deficit)
	Series A preferred stock		Junior convertible preferred stock		Total		MCPS including paid-in capital		Common stock including paid-in capital			Accum-ulated deficit			AOCI			Total
Balance at June 30, 2019	$	—	$	—	$	—	$	1,003.7	$	1,768.3		$	(296.4	)	$	(64.7	)	$	2,410.9
Comprehensive income (loss)	—		—		—		—		—			22.1			(62.8		)	(40.7		)
Share-based compensation expense	—		—		—		—		1.9			—			—			1.9
Accumulation of yield	—		—		—		—		(16.4		)	—			—			(16.4		)
Issuances, net of issuance costs	—		—		—		—		(0.1		)							(0.1		)
Balance at September 30, 2019	$	—	$	—	$	—	$	1,003.7	$	1,753.7		$	(274.3	)	$	(127.5	)	$	2,355.6
Balance at June 30, 2018	$	2,157.3	$	1,562.0	$	3,719.3	$	—	$	(2,613.6	)	$	(219.6	)	$	(31.5	)	$	(2,864.7	)
Comprehensive income (loss)	—		—		—		—		—			34.5			(1.6		)	32.9
Share-based compensation expense	—		—		—		—		4.1			—			—			4.1
Accumulation of yield	68.9		—		68.9		—		(68.9		)	—			—			(68.9		)
Balance at September 30, 2018	$	2,226.2	$	1,562.0	$	3,788.2	$	—	$	(2,678.4	)	$	(185.1	)	$	(33.1	)	$	(2,896.6	)

See accompanying notes to the condensed consolidated financial statements.

6

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of redeemable equity and stockholders’ equity or deficit (continued)

(in millions)	Redeemable equity									Stockholders’ equity (deficit)
	Series A preferred stock			Junior convertible preferred stock			Total			MCPS including paid-in capital		Common stock including paid-in capital			Accum-ulated deficit			AOCI			Total
Balance at December 31, 2018	$	2,297.3		$	1,562.0		$	3,859.3		$	—	$	(2,746.8	)	$	(238.4	)	$	(66.5	)	$	(3,051.7	)
Cumulative effect of adopting new accounting standard, see note 1	—			—			—			—		—			(3.1		)	—			(3.1		)
Comprehensive loss	—			—			—			—		—			(32.8		)	(61.0		)	(93.8		)
Share-based compensation expense	—			—			—			—		54.6			—			—			54.6
Award reclassification, see note 14												8.8									8.8
Accumulation of yield	113.2			—			113.2			—		(136.4		)	—			—			(136.4		)
Accretion of make whole premium	220.4			—			220.4			—		(220.4		)	—			—			(220.4		)
Issuances, net of issuance costs	—			—			—			1,003.7		3,231.9			—			—			4,235.6
Redemptions	(2,630.9		)	—			(2,630.9		)	—		—			—			—			—
Conversions	—			(1,562.0		)	(1,562.0		)	—		1,562.0			—			—			1,562.0
Balance at September 30, 2019	$	—		$	—		$	—		$	1,003.7	$	1,753.7		$	(274.3	)	$	(127.5	)	$	2,355.6
Balance at December 31, 2017	$	2,027.8		$	1,562.0		$	3,589.8		$	—	$	(2,490.3	)	$	(156.3	)	$	26.4		$	(2,620.2	)
Cumulative effect of adopting new accounting standard, see note 1	—			—			—			—		—			4.8			—			4.8
Comprehensive loss	—			—			—			—		—			(33.6		)	(59.5		)	(93.1		)
Share-based compensation expense	—			—			—			—		10.3			—			—			10.3
Accumulation of yield	198.4			—			198.4			—		(198.4		)	—			—			(198.4		)
Balance at September 30, 2018	$	2,226.2		$	1,562.0		$	3,788.2		$	—	$	(2,678.4	)	$	(185.1	)	$	(33.1	)	$	(2,896.6	)

See accompanying notes to the condensed consolidated financial statements.

7

Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of cash flows

(in millions)	Nine months ended September 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(32.8	)	$	(33.6	)
Reconciling adjustments:
Depreciation and amortization	301.6			303.5
Share-based compensation expense	57.4			14.5
Other restructuring charges (see note 9)	10.0			—
Provision for accounts receivable and inventory	22.9			19.5
Deferred income tax benefit	(67.5		)	(135.7		)
Amortization of deferred financing costs	26.5			31.1
Loss on extinguishment of debt	70.2			—
Changes in assets and liabilities:
Accounts receivable	(76.9		)	(86.7		)
Inventory	(74.1		)	(19.8		)
Accounts payable	7.9			(28.1		)
Other assets and liabilities	22.2			48.4
Other, net	(0.4		)	17.5
Net cash provided by operating activities	267.0			130.6
Cash flows from investing activities:
Capital expenditures	(39.5		)	(32.3		)
Other	8.8			9.1
Net cash used in investing activities	(30.7		)	(23.2		)
Cash flows from financing activities:
Debt repayments	(1,825.4		)	(95.4		)
Dividend payment	(15.1		)	—
Payments of contingent consideration	(4.6		)	(20.5		)
Proceeds from issuance of stock, net of issuance costs	4,235.6			—
Redemption of series A preferred stock	(2,630.9		)	—
Net cash used in financing activities	(240.4		)	(115.9		)
Effect of currency rate changes on cash, restricted cash and equivalents	(6.7		)	(5.3		)
Net change in cash, restricted cash and equivalents	(10.8		)	(13.8		)
Cash, restricted cash and equivalents, beginning of period	187.7			188.5
Cash, restricted cash and equivalents, end of period	$	176.9		$	174.7

See accompanying notes to the condensed consolidated financial statements.

8

Avantor, Inc. and subsidiaries

Notes to unaudited condensed consolidated financial statements

1. Nature of operations and presentation of financial statements

We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.

Our IPO of common stock and MCPS was on May 17, 2019 (see note 12). Among other things, the IPO had the effect of reducing the ownership percentage of certain significant investors, changed the composition of our board and caused one of our investors to cease being a related party (see note 19). The following chart depicts selected ownership amounts as if all convertible securities were converted into common stock at the dates indicated:

September 30, 2019						December 31, 2018
New Mountain Capital		Goldman Sachs		Other investors		New Mountain Capital		Goldman Sachs		Other investors
	17%		11%		72%		40%		15%		45%
Avantor, Inc. and subsidiaries						Avantor, Inc. and subsidiaries

Basis of presentation

We have prepared these condensed consolidated financial statements pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Registration Statement. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in note 2.

We report three geographic segments based on customer location: the Americas, Europe and AMEA. For the periods presented, all share and per share information has been adjusted for a stock split that occurred in connection with our IPO (see note 12). All intercompany balances and transactions have been eliminated from the financial statements.

These financial statements reflect the adoptions of a new revenue recognition standard at January 1, 2018 and a new lease standard at January 1, 2019. Information about the new revenue

9

recognition standard is disclosed in the audited consolidated financial statements included within our Registration Statement. Information about the new lease standard is disclosed in note 3.

Immaterial error

The initial draft of the Registration Statement issued in connection with the IPO included unaudited interim financial information for the nine months ended September 30, 2018. We subsequently identified and corrected an immaterial error in the segment financial information that was included therein. The following table presents the impact of the correction:

(in millions)	Nine months ended September 30, 2018
	Previously reported			Adjustment			As adjusted
Net sales:
Americas	$	2,590.6		$	12.4		$	2,603.0
Europe	1,575.5			(16.2		)	1,559.3
AMEA	224.3			3.8			228.1
Total	$	4,390.4		$	—		$	4,390.4
Management EBITDA:
Americas	$	480.5		$	3.3		$	483.8
Europe	259.3			(6.0		)	253.3
AMEA	51.7			3.0			54.7
Corporate	(48.5		)	(0.3		)	(48.8		)
Total	$	743.0		$	—		$	743.0

Reclassifications

In the second quarter of 2019, we changed our presentation of disaggregated net sales included in note 6 to depict the product line categories that are regularly used by management. Product sales associated with our service offerings, referred to as specialty procurement, have been reclassified from third party materials & consumables and combined with net sales from services to present the services & specialty procurement product line for all periods presented.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, income and loss during the reporting periods. Actual results could differ from those estimates.

10

2. Summary of significant accounting policies

Leases

We primarily enter into real estate leases for manufacturing, warehousing and commercial office space to support our global operations. We also enter into vehicle and equipment leases to support those operations.

We determine if an arrangement is a lease at inception. Short-term leases, defined as having an initial term of twelve months or less, are expensed as incurred and not recorded on the balance sheet. We record the value of all other leased property and the related obligations as assets and liabilities on the balance sheet. Information about the amount and classification of lease assets and liabilities is included in note 18.

At inception, lease assets and liabilities are measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we exercise judgment in selecting the incremental borrowing rate based on the information available at inception to determine the present value of future payments. Operating lease assets are further adjusted for lease incentives and initial direct costs.

Our lease terms may include options to extend or terminate the lease. We exercise judgment to calculate the term of those leases when extension or termination options are present, and we include such options in the calculation of the lease term when it is reasonably certain that we will exercise those options. Operating lease expense is recognized on a straight-line basis over the lease term, except for variable rent which is expensed as incurred. Short-term lease and variable rent expense was immaterial to the financial statements and has been included within operating lease expense. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and an immaterial amount of interest expense.

Some of our lease agreements include both lease and non-lease components. We account for those components separately for real estate leases and as a combined single lease component for all other types of leases.

Earnings or loss per share

Basic earnings or loss per share is calculated by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the applicable period.

Diluted earnings per share is computed based on the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares we could have repurchased with the proceeds from the issuance of the potentially dilutive shares. Variable conversion ratios are determined as of period end. Preferred dividends

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are added back to net income or loss available to common stockholders provided that the preferred securities are not anti-dilutive to the calculation.

In periods of net loss available to common stockholders, diluted calculations are equal to basic calculations because the inclusion of dilutive shares would be anti-dilutive.

Stockholders’ equity or deficit

MCPS is classified as permanent equity and initially recorded at fair value, net of issuance costs. Accrued but unpaid MCPS dividends are classified as other current liabilities with a corresponding reduction to common stock including paid-in capital.

Certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings are capitalized on the balance sheet as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of the proceeds received in arriving at the amount recorded in stockholders’ equity or deficit. When a planned equity financing is abandoned, the deferred offering costs are expensed immediately as a charge to SG&A expenses.

3. New accounting standards

In February 2016, the FASB issued a new standard related to leases. The most significant change for us was the recognition of new assets and liabilities for leases classified as operating leases. Our accounting for finance leases was substantially unchanged.

The standard also expanded disclosures about the amount, timing, and uncertainty of cash flows arising from leases. Those new disclosures are provided in notes 2 and 18.

We adopted the standard effective January 1, 2019 using a modified retrospective transition approach whereby the new standard was applied to all leases existing at January 1, 2019 with a cumulative effect adjustment recorded in equity representing the cumulative earnings effect of this new standard. We elected to utilize the package of practical expedients permitted under the transition guidance in the standard which allowed us to not reassess (i) whether any expired or existing contracts contain leases, (ii) historical lease classification and (iii) initial direct costs.

The most significant impacts upon adoption were: (i) a $3.1 million cumulative effect adjustment that increased accumulated deficit and (ii) recognition of $155.0 million of operating lease assets and $162.5 million of operating lease liabilities. Other impacts were immaterial and included adjustments to existing finance lease assets and liabilities, recognition of deferred income tax assets and a similar amount of deferred income tax liabilities, and derecognition of prepaid rent expense assets.

There were no other new accounting standards that had a material impact to our financial position or results of operations upon adoption in 2019.

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4. Earnings or loss per share

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended September 30, 2019:

(in millions, except per share data)	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	5.7	570.0	$	0.01
Effect of dilutive securities:
Stock-based awards	—		8.3
Warrants	—		2.4
Diluted	$	5.7	580.7	$	0.01

For the three months ended September 30, 2019, diluted earnings per share included accumulated yield of $16.4 million and excluded 70.4 million of common stock equivalents under the MCPS because they were anti-dilutive to the calculation.

For all other periods presented, basic and diluted loss per share calculations were the same because we reported a net loss available to common stockholders. As a result, the following potentially dilutive instruments were excluded from those calculations:

(in millions)	Three months ended September 30, 2018	Nine months ended September 30,
		2019	2018
Stock-based awards	19.3	29.7	19.3
MCPS	—	70.4	—
Total	19.3	100.1	19.3

Additionally, the junior convertible preferred stock and warrants were excluded from the basic loss per share calculation in the 2018 periods because holders of those instruments do not participate in losses.

5. Risks and uncertainties

Remeasurement of foreign currency transactions

For the three months ended September 30, 2019, other income, net included $8.2 million of net foreign currency loss from financing activities.

On July 11, 2019, we completed an intercompany recapitalization that is intended to mitigate substantially all of our net euro financing exposure in future periods. We still expect to experience gains and losses related to other currencies whose effect has not historically been material to our earnings.

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6. Segment financial information

The following tables present information by reportable segment:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net sales:										(as adjusted, see note 1)
Americas	$	918.2		$	912.9		$	2,701.0		$	2,603.0
Europe	501.1			503.1			1,561.8			1,559.3
AMEA	84.5			78.2			253.5			228.1
Total	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4
Management EBITDA:
Americas	$	187.7		$	181.9		$	560.4		$	483.8
Europe	85.1			85.0			261.6			253.3
AMEA	16.9			18.9			53.4			54.7
Corporate	(20.5		)	(17.6		)	(53.9		)	(48.8		)
Total	$	269.2		$	268.2		$	821.5		$	743.0

The amounts above exclude inter-segment activity because it is not material. All of the net sales for each segment are from external customers.

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The following table presents the reconciliation of Management EBITDA from net income or loss, the nearest measurement under GAAP:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)
Interest expense	98.3			130.2			342.0			388.7
Income tax expense (benefit)	15.2			(33.4		)	23.4			(33.9		)
Depreciation and amortization	100.3			101.3			301.6			303.5
Loss on extinguishment of debt	—			—			70.2			—
Share-based compensation expense	1.7			5.8			57.4			14.5
Net foreign currency loss from financing activities	8.2			3.4			0.1			0.2
Restructuring and severance charges	13.4			16.7			19.8			57.1
Purchase accounting adjustments	(3.1		)	(4.1		)	(7.2		)	2.8
VWR transaction and integration expenses	5.4			5.1			16.8			19.4
Write-offs of working capital and other assets	5.5			0.2			19.9			0.2
Business performance improvement programs	0.4			3.1			2.2			6.4
Long-term incentive plan	0.5			2.7			5.1			8.1
Other	1.3			2.7			3.0			9.6
Management EBITDA	$	269.2		$	268.2		$	821.5		$	743.0

The following table presents net sales by product line:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Proprietary materials & consumables	$	494.2	$	522.0	$	1,500.9	$	1,469.0
Third party materials & consumables	592.8		572.2		1,792.8		1,765.4
Services & specialty procurement	195.7		177.1		562.5		511.1
Equipment & instrumentation	221.1		222.9		660.1		644.9
Total	$	1,503.8	$	1,494.2	$	4,516.3	$	4,390.4

7. Supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:

(in millions)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	173.9	$	184.7
Restricted cash classified as other assets	3.0		3.0
Total	$	176.9	$	187.7

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(in millions)	Nine months ended September 30,
	2019		2018
Cash flows from operating activities:
Cash paid for income taxes, net	$	100.2	$	49.9
Cash paid for interest	258.4		300.5

8. Inventory

The following table presents components of inventory:

(in millions)	September 30, 2019		December 31, 2018
Merchandise inventory	$	438.9	$	409.0
Finished goods	117.8		122.9
Raw materials	121.4		105.2
Work in process	36.4		34.0
Total	$	714.5	$	671.1

9. Restructuring and severance

The following table presents restructuring and severance charges by plan:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
2017 restructuring program	$	13.3	$	16.6	$	19.1	$	54.8
Other	0.1		0.1		0.7		2.3
Total	$	13.4	$	16.7	$	19.8	$	57.1

Restructuring and severance charges are classified as SG&A expenses.

2017 restructuring program

We implemented a $215 million program over a three-year period to optimize our sales, gross margins and operating costs. The spending currently includes an estimated $55 million for capital expenditures and an estimated $135 million for employee severance and related costs, facility closures and other charges. Our plans have included combining sales and marketing resources, eliminating redundant corporate functions, optimizing procurement and our manufacturing footprint, and implementing best practices throughout the organization. We expect all synergies and cost savings to be fully realized by 2021.

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The following table presents information about charges under the 2017 restructuring program:

(in millions)	Three months ended September 30,				Nine months ended September 30,				September 30, 2019
									Charges incurred to date		Expected remaining charges		Total expected charges
	2019		2018		2019		2018
Employee severance and related	$	3.0	$	12.4	$	8.4	$	46.0	$	74.6	$	15.4	$	90.0
Facility closure	0.3		0.5		0.7		0.8		1.9		3.1		5.0
Other	10.0		3.7		10.0		8.0		38.4		1.6		40.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0
Americas	$	10.3	$	6.3	$	11.1	$	15.7	$	51.7	$	9.3	$	61.0
Europe	2.0		9.5		7.0		37.3		47.6		4.4		52.0
AMEA	—		0.8		—		0.8		0.8		0.2		1.0
Corporate	1.0		—		1.0		1.0		14.8		6.2		21.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0

Other charges in the table above were to write-down the carrying value of assets we plan to close or sell under the program as well as expense related to a voluntary early retirement program under one of our pension plans in the United States. These charges do not impact the accrued restructuring charges shown in the following table.

The following table presents changes to accrued employee severance and related charges under the 2017 restructuring program, which are primarily classified as employee-related current liabilities:

(in millions)	Employee severance and related
Balance at December 31, 2018	$	33.6
Charges	8.4
Cash payments	(23.4		)
Currency translation	(1.0		)
Balance at September 30, 2019	$	17.6

10. Commitments and contingencies

Our business involves commitments and contingencies related to compliance with environmental laws and regulations, the manufacture and sale of products, employment arrangements and litigation. The ultimate resolution of contingencies is subject to significant uncertainty, and it is reasonably possible that contingencies could be decided unfavorably for us. We have also entered into lease commitments as disclosed in note 18.

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Environmental laws and regulations

Our environmental liabilities are subject to changing governmental policy and regulations, discovery of unknown conditions, judicial proceedings, method and extent of remediation, existence of other potentially responsible parties and future changes in technology. We believe that known and unknown environmental matters, if not resolved favorably, could have a material effect on our financial position, liquidity and profitability.

Mallinckrodt indemnification

In 2010, New Mountain Capital acquired us from Covidien plc in accordance with a stock purchase agreement dated May 25, 2010. At that time, we were organized as Mallinckrodt Baker, Inc. or MBI. Pursuant to the terms of that agreement, we are entitled to various levels of indemnification with respect to environmental liabilities involving the former MBI operations. In 2013, in connection with the Covidien plc divestiture of Mallinckrodt Group S.a.r.l and Mallinckrodt LLC, together “Mallinckrodt,” and by a second amendment to the stock purchase agreement dated June 6, 2013, but effective upon the consummation of the divestiture, Covidien plc assigned its obligations as described herein to Mallinckrodt, and Mallinckrodt assumed those obligations from Covidien plc. As a result of the stock purchase agreement and assignment, Mallinckrodt is contractually obligated to indemnify and defend us for all off-site environmental liabilities (for example, Superfund or Comprehensive Environmental Response, Compensation, and Clean-up Act type liabilities) arising from the pre-closing disposal of chemicals or wastes by former MBI operations.

In connection with environmental liabilities arising from pre-closing noncompliance with environmental laws, Mallinckrodt is contractually obligated to reimburse us for a percentage of the total liability, with such reimbursements made through disbursements from a $30.0 million environmental escrow established at the time of the closing. Specifically, Mallinckrodt will be responsible for reimbursement of 80% of the total costs up to $40.0 million of such environmental liabilities, 50% of the next $40.0 million of such environmental liabilities and 100% of the next $30.0 million of such environmental liabilities in the aggregate. Currently, reimbursements are 80% of the amounts spent by us, with reimbursements and settlements to date exceeding $12.0 million. In addition, in connection with operation and maintenance activities required pursuant to administrative consent orders and subsequently issued remedial action permits involving our Phillipsburg, New Jersey, facility, amounts in excess of a small annual threshold are also subject to reimbursement, currently at the 80% level.

In a separate matter, in 2013, we reached a settlement with Mallinckrodt whereby in exchange for a payment of $4.0 million, all claims regarding non-compliance with process safety management laws and regulations are deemed resolved. We used the settlement proceeds to establish a reserve of $4.0 million and have since made payments to address safety related matters that have reduced the balance of the reserve to $2.6 million as of September 30, 2019.

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Other noteworthy matters

The New Jersey Department of Environmental Protection has ordered us to remediate groundwater conditions near our plant in Phillipsburg, New Jersey. This matter is covered by the indemnification arrangement previously described. At September 30, 2019, our accrued obligation under this order is $3.8 million, which is calculated based on expected cash payments discounted at rates ranging from 1.5% in 2019 to 2.1% in 2045. The undiscounted amount of that obligation is $4.5 million.

In 2016, we assessed the environmental condition of our chemical manufacturing site in Gliwice, Poland. Our assessment revealed specific types of soil and groundwater contamination throughout the site. We are also monitoring the condition of a closed landfill on that site. These matters are not covered by our indemnification arrangement because they relate to an operation we subsequently acquired. At September 30, 2019, our balance sheet includes a liability of $3.6 million for remediation and monitoring costs. That liability is estimated primarily on expected remediation payments discounted through 2020 and is not materially different than its undiscounted amount.

Manufacture and sale of products

Our business involves risk of product liability, patent infringement and other claims in the ordinary course of business arising from the products that we produce ourselves or obtain from our suppliers, as well as from the services we provide. Our exposure to such claims may increase to the extent that we expand our manufacturing operations or service offerings.

We maintain insurance policies to protect us against these risks, including product liability insurance. In many cases the suppliers of products we distribute have indemnified us against such claims. Our insurance coverage or indemnification agreements with suppliers may not be adequate in all pending or any future cases brought against us. Furthermore, our ability to recover under any insurance or indemnification arrangements is subject to the financial viability of our insurers, our suppliers and our suppliers’ insurers, as well as legal enforcement under the local laws governing the arrangements.

We have entered into indemnification agreements with customers of our self-manufactured products to protect them from liabilities and losses arising from our negligence, willful misconduct or sale of defective products. To date, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

Litigation

At September 30, 2019, there was no outstanding litigation that we believe would result in material losses if decided against us, and we do not believe that there are any unasserted matters that are reasonably possible to result in a material loss.

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11. Debt

During the first nine months of 2019, we used proceeds from the IPO and operating cash flows to repay $1,096.2 million of U.S. dollar term loans and $625.5 million of euro term loans. We also incurred a loss on extinguishment of debt of $70.2 million, primarily caused by the proportional write-off of unamortized deferred financing costs related to the term loans.

The repayment of debt from our IPO improved our credit profile which enabled us to amend our senior secured credit facilities in June 2019. The amendment reduced the annual interest rate margins on our euro term loans by 0.50% and our U.S. dollar term loans by 0.75%. The cost to complete the amendment was not material.

The following table presents information about our debt:

(dollars in millions)	September 30, 2019						December 31, 2018
	Interest terms	Rate		Amount
Receivables facility	LIBOR plus 1.50%	3.52	%	$	—		$	104.0
Senior secured credit facilities:
Euro term loans	EURIBOR plus 3.25%	3.25	%	417.6			1,078.0
U.S. dollar term loans	LIBOR plus 3.00%	5.11	%	742.7			1,838.9
4.75% secured notes	fixed rate	4.75	%	545.3			572.5
6% secured notes	fixed rate	6.00	%	1,500.0			1,500.0
9% unsecured notes	fixed rate	9.00	%	2,000.0			2,000.0
Other				67.3			69.5
Total debt, gross				5,272.9			7,162.9
Less: unamortized deferred financing costs				(142.8		)	(238.2		)
Total debt				$	5,130.1		$	6,924.7
Classification on balance sheets:
Current portion of debt				$	41.4		$	142.4
Debt, net of current portion				5,088.7			6,782.3

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Credit facilities

The following table presents availability under our credit facilities:

(in millions)	September 30, 2019
	Receivables facility			Revolving credit facility			Total
Current availability	$	250.0		$	250.0		$	500.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)
Outstanding borrowings	—			—			—
Unused availability	$	237.5		$	234.7		$	472.2
Maximum availability	$	250.0		$	250.0		$	500.0

Current availability under the receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable. At September 30, 2019, $455.6 million of accounts receivable were available as collateral under the facility.

12. Redeemable equity and stockholders’ equity or deficit

The following table presents information about our capitalization at September 30, 2019:

(shares in millions)	Par value per share		Shares authorized
Undesignated preferred stock	$	0.01	50.0
Stockholders’ equity:
Mandatory convertible preferred stock	0.01		25.0
Common stock	0.01		750.0

In connection with the closing of our IPO, we filed an amended and restated certificate of incorporation to effect a five-for-one split of our common stock and authorize the classes of stock noted above. All shares of common stock, stock-based instruments and per-share data included in these financial statements give effect to the stock split.

Initial public offering

In the second quarter of 2019, we completed the IPO of our common stock and MCPS. We sold 238.1 million shares of common stock at a price per share of $14, resulting in net proceeds of $3,231.9 million after deducting underwriting discounts, commissions and other offering costs of $100.8 million. We also sold 20.7 million shares of MCPS at a price per share of $50, resulting in net proceeds of $1,003.7 million after deducting underwriting discounts, commissions and other offering costs of $31.3 million.

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Mandatory convertible preferred stock

MCPS accrues cumulative dividends at a rate of 6.250% per annum on the liquidation preference of $50 per share. Accrued cumulative dividends in arrears as of September 30, 2019 was $8.1 million, and we paid a dividend of $15.1 million during the nine months ended September 30, 2019. Each share of MCPS converts into between 3.0395 and 3.5714 shares of common stock, depending upon the average trading price of our common stock leading up to the conversion date and subject to customary anti-dilution adjustments. The MCPS converts:

• Automatically on May 15, 2022;

• Following the occurrence of a change of control or certain other defined events, in which case holders are also entitled to receive a make-whole dividend equal to the present value of all remaining dividends that would have accumulated through May 15, 2022; and

• At any time at the option of the holder at the minimum conversion rate of 3.0395.

The holders have the right to appoint two additional members to the board of directors if dividends on the MCPS have not been declared or paid for the equivalent of six or more dividend periods. The holders do not have any other voting rights.

In the event of any bankruptcy, liquidation, dissolution or winding up of the Company, the holders are entitled to a liquidation preference of $50 in cash per share before any payment or distribution is made to holders of common stock.

Redemption of series A preferred stock

In connection with the IPO, we redeemed all outstanding series A preferred stock at an aggregate redemption price of $2,630.9 million. The series A preferred stock redemption price was equal to the sum of their $2,410.5 million liquidation preference on such shares of series A preferred stock and a make-whole premium of $220.4 million.

In connection with the redemption, we filed a certificate of elimination to eliminate the 25.0 million of authorized shares designated as series A preferred stock, making those shares available for other preferred stock designations.

Conversion of junior convertible preferred stock

As a result of the completion of our IPO, all outstanding shares of junior convertible preferred stock automatically converted into 194.5 million shares of common stock. The number of shares of common stock received upon conversion of the junior convertible preferred stock was based on the $2,722.5 million liquidation preference of such stock divided by the IPO price per share of common stock.

In connection with the conversion, we filed a certificate of elimination to eliminate the 5.0 million of authorized shares designated as junior convertible preferred stock, making those shares available for other preferred stock designations.

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13. Accumulated other comprehensive income or loss

The following table presents changes in the components of AOCI:

(in millions)	Foreign currency translation			Derivative instruments			Defined benefit plans			Total
Balance at June 30, 2019	$	(55.6	)	$	(0.2	)	$	(8.9	)	$	(64.7	)
Unrealized (loss) gain	(62.7		)	1.0			(0.1		)	(61.8		)
Reclassification of gain into earnings	—			(0.9		)	(0.2		)	(1.1		)
Income tax benefit	—			—			0.1			0.1
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at June 30, 2018	$	(34.6	)	$	0.9		$	2.2		$	(31.5	)
Unrealized loss	(0.8		)	(0.2		)	—			(1.0		)
Reclassification of gain into earnings	—			(0.6		)	(0.2		)	(0.8		)
Income tax benefit	—			0.2			—			0.2
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)
Balance at December 31, 2018	$	(59.0	)	$	1.1		$	(8.6	)	$	(66.5	)
Unrealized (loss) gain	(59.3		)	(0.5		)	(0.1		)	(59.9		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			0.5			0.1			0.6
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at December 31, 2017	$	23.7		$	0.3		$	2.4		$	26.4
Unrealized loss	(59.1		)	1.2			0.1			(57.8		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			—			—			—
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)

The reclassifications and income tax effects shown above were immaterial to the financial statements. The reclassifications were made to either cost of sales or SG&A expenses depending upon the nature of the underlying transaction.

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14. Stock-based compensation

The following table presents information about stock-based compensation expense (benefit):

(in millions)	Classification	Three months ended September 30,					Nine months ended September 30,
		2019			2018		2019		2018
2019 Plan:
Stock options	Equity	$	0.9		$	—	$	1.5	$	—
Restricted stock units	Equity	4.8			—		7.8		—
2017 Plan and predecessors:
Stock options	Equity	4.2			4.1		38.2		10.2
Optionholder awards	Liability	0.7			1.7		2.6		4.2
Restricted stock units	Equity	0.3			—		0.7		0.1
NuSil plans:
Phantom units	Liability	(0.9		)	—		0.2		—
SARs	Equity	(8.3		)	—		6.4		—
Total		$	1.7		$	5.8	$	57.4	$	14.5
Financial statement classification:
Equity-classified		$	1.9		$	4.1	$	54.6	$	10.3
Liability-classified		(0.2		)	1.7		2.8		4.2

At September 30, 2019, unvested awards under the 2019 Plan have remaining share-based compensation expense of $65.4 million to be recognized over a weighted average period of 3.2 years.

2019 Plan

In connection with the IPO, we adopted the 2019 Plan. The 2019 Plan initially provides for up to 23.5 million shares of common stock to be issued in the form of stock options, restricted stock units or other equity-based awards or cash-based awards. The 2019 Plan also provides for 1% annual increases to the number of shares of common stock available for issuance unless reduced by our Board of Directors.

The following awards were granted under the 2019 plan in connection with the IPO:

• We granted 3.2 million stock options having a grant date fair value of $4.79 per option using the following inputs: an expected term of 6.3 years as determined under the simplified method, 30% volatility and a risk free rate of 2.2%. The options have an exercise price of $14.00, a ten-year contractual life and will vest annually over four years, subject to the recipient continuously providing service to us through each such date.

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• We granted 3.6 million restricted stock units having a grant date fair value of $14.00 each. The restricted stock units will vest annually over four years, subject to the recipient continuously providing service to us through each such date.

• We converted $26.2 million of long-term cash incentive awards into 1.9 million restricted stock units having a grant date fair value of $14.00 each. Half of the restricted stock units vest on December 31, 2020, subject to the recipient continuously providing service to us through such date; half of the units vest upon achievement of a specified earnings target in addition to that service condition. The conversion was accounted for following the guidance for modifications of stock-based awards with no incremental compensation cost recognized as a result of the conversion. The conversion also resulted in the $8.8 million reclassification of a long-term incentive plan liability into equity.

Interim update for awards issued under the 2017 Plan

We recognized $26.9 million of stock-based compensation expense upon the completion of the IPO, which satisfied a performance condition for 0.9 million stock options. The expense recognized was equal to the grant date fair value for these awards.

Interim update for awards issued under the NuSil Plans

The value of a SAR is based on the value of NuSil LLC, a former owner of NuSil and one of our current investors, whose assets primarily consist of shares of our common stock. The IPO established a quoted price and an active market for our common stock, a level 1 fair value measurement. Expense related to our SARs is now remeasured quarterly at fair value based on movements in those quoted prices. At September 30, 2019, outstanding SARs had an aggregate intrinsic value of $28.2 million with no expiration. NuSil LLC is obligated to pay cash to the holders upon settlement of these awards. We do not have any funding obligations to SAR holders or NuSil LLC.

Each $1.00 increase (decrease) in the quoted price of our common stock will result in the recognition of an additional $1.9 million of stock-based compensation expense (benefit).

15. Other income or expense, net

The following table presents the components of other income, net:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net foreign currency loss from financing activities	$	(8.2	)	$	(3.4	)	$	(0.1	)	$	(0.2	)
Income related to defined benefit plans	1.3			2.5			3.8			7.5
Other	(0.7		)	—			(0.8		)	(0.3		)
Other (expense) income, net	$	(7.6	)	$	(0.9	)	$	2.9		$	7.0

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16. Income taxes

The following table presents the relationship between income tax expense or benefit and income or loss before income taxes:

(in millions)	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019			2018
Income tax (expense) benefit	$	(15.2	)	$	33.4	$	(23.4	)	$	33.9
Income (loss) before income taxes	37.3			1.1		(9.4		)	(67.5		)

Income tax expense or benefit in the quarter is based upon the estimated income or loss for the full year. The composition of the income or loss in different countries and adjustments, if any, in the applicable quarterly periods influences our expense or benefit. Because of the anomalies of losses to the effective rate and the inclusion in the prior year of the resolution of 2017 U.S. tax law changes, a prior year comparison is not meaningful.

The relationship between pretax income or loss and income tax expense or benefit is greatly affected by the impact of losses for which we cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions.

17. Financial instruments and fair value measurements

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt, contingent consideration arrangements and derivative instruments.

Assets and liabilities for which fair value is only disclosed

The carrying amount of cash and cash equivalents was the same as its fair value and is a Level 1 measurement. The carrying amounts for trade accounts receivable and accounts payable approximated fair value due to their short-term nature and are Level 2 measurements.

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The following table presents the gross amounts and fair values of debt instruments:

(in millions)	September 30, 2019				December 31, 2018
	Gross amount		Fair value		Gross amount		Fair value
Receivables facility	$	—	$	—	$	104.0	$	104.0
Senior secured credit facilities:
Euro term loans	417.6		423.1		1,078.0		1,063.2
U.S. dollar term loans	742.7		749.6		1,838.9		1,786.0
4.75% secured notes	545.3		584.9		572.5		581.2
6% secured notes	1,500.0		1,610.0		1,500.0		1,467.8
9% unsecured notes	2,000.0		2,250.4		2,000.0		1,998.5
Other	67.3		67.3		69.5		69.5
Total	$	5,272.9	$	5,685.3	$	7,162.9	$	7,070.2

The gross amounts of debt instruments exclude unamortized deferred financing costs (see note 11). The fair values of debt instruments are based on standard pricing models that take into account the present value of future cash flows, and in some cases private trading data, which are Level 2 measurements.

18. Leases

The following table presents lease assets and liabilities and their balance sheet classification:

(in millions)	Classification	September 30, 2019
Operating leases:
Lease assets	Other assets	$	119.5
Current portion of liabilities	Other current liabilities	29.7
Liabilities, net of current portion	Other liabilities	96.7
Finance leases:
Lease assets	Property, plant and equipment, net	54.7
Current portion of liabilities	Current portion of debt	3.3
Liabilities, net of current portion	Debt, net of current portion	56.4

The following tables present information about lease expense:

(in millions)	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	SG&A expenses	$	12.7	$	39.4
Finance lease expense	SG&A expenses	1.6		8.6
Total		$	14.3	$	48.0

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Finance lease expense consists primarily of amortization of finance lease assets.

	September 30, 2019
Weighted average remaining lease term, in years:
Operating leases	5.5
Finance leases	16.6
Weighted average discount rate:
Operating leases	5.8	%
Finance leases	8.5	%

The following table presents future payments due under leases reconciled to lease liabilities:

(in millions)	September 30, 2019
	Operating leases			Finance leases
Three months ending December31, 2019	$	10.3		$	2.4
Year ending December31,
2020	35.2			7.6
2021	30.2			6.6
2022	23.7			5.9
2023	20.2			5.4
Thereafter	32.8			92.7
Total undiscounted lease payments	152.4			120.6
Difference between undiscounted and discounted lease payments	(26.0		)	(60.9		)
Lease liabilities	$	126.4		$	59.7

The following table presents future minimum payments under operating leases:

(in millions)	December 31, 2018
2019	$	44.2
2020	34.1
2021	29.2
2022	25.7
2023	20.9
Thereafter	58.9
Total minimum payments	$	213.0

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The following tables present supplemental disclosures of cash flow information:

(in millions)	Nine months ended September 30, 2019
Cash flows from operating activities:
Cash paid under operating leases	$	33.4
Cash paid under finance leases	3.7
Cash flows from financing activities:
Cash paid under finance leases	4.1

19. Related party disclosures

New Mountain Capital

Prior to the completion of the IPO, we were party to an advisory agreement with New Mountain Capital that required us to pay various fees and expenses on their behalf. In connection with and as a result of the completion of the IPO, our advisory agreement with New Mountain Capital automatically terminated.

Goldman Sachs

Goldman Sachs acted as co-lead book-running manager for our IPO. In exchange for these services, Goldman Sachs received an aggregate underwriter discount of $24.5 million. Goldman Sachs also executed our June 2019 debt repricing. The cost to complete the repricing was not material.

Goldman Sachs purchased shares of common stock in the IPO valued at $70.0 million. Goldman Sachs also received proceeds of $421.9 million upon the redemption of our series A preferred stock and from repayment of term loans held under our senior secured credit facilities. As of September 30, 2019, Goldman Sachs held $9.1 million of term loans under our senior secured credit facilities.

PSP Investments

Following the IPO, PSP Investments received proceeds of $302.5 million upon redemption of our series A preferred stock and lost the right to nominate a director to our board. As a result, PSP Investments no longer meets the definition of a related party.

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

In addition to historical financial information, this discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our results may differ materially from those contained in or implied by any forward-looking statements. You should carefully read “Cautionary factors regarding forward-looking statements” for additional information.

Basis of presentation

Pursuant to SEC regulations for interim reports, this discussion and analysis discloses material changes in our financial condition and results of operations since December 31, 2018, the end of the most recent annual period covered by our Registration Statement. Therefore, this discussion and analysis should be read in conjunction with “Summary—Summary Historical and Other Financial Data,” “Risk Factors,” Selected Condensed Historical Financial Data” and our audited consolidated financial statements and notes thereto, each included in the Registration Statement, and our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 — “Financial Statements.”

Overview

We are a leading global provider of mission critical products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. We have global operations and an extensive product portfolio. We strive to enable customer success through innovation, cGMP manufacturing and comprehensive service offerings. The depth and breadth of our portfolio provides our customers a comprehensive range of products and services and allows us to create customized and integrated solutions for our customers.

In the third quarter of 2019, we recorded net sales of $1,503.8 million, net income of $22.1 million and Adjusted EBITDA of $250.8 million. We also generated net sales growth of 0.6% compared to the same period in 2018. Please see “Reconciliations of non-GAAP financial measures.” for the definition of Adjusted EBITDA and reconciliation of this measure from net loss.

Factors and current trends affecting our business and results of operations

The following updates the factors and current trends disclosed in the Registration Statement. These updates could affect our performance and financial condition in future periods.

We completed an initial public offering

In the second quarter of 2019, we completed our IPO, resulting in net proceeds of $4,235.6 million after deducting underwriting discounts, commissions and other offering costs of $132.1 million.

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The IPO resulted in the satisfaction of a performance condition for certain of our share-based compensation awards. This caused the immediate recognition of $26.9 million of share-based compensation expense during the second quarter of 2019.

We simplified our capital structure and reduced our balance sheet leverage

Proceeds from the IPO, supplemented by operating cash flows, enabled us to simplify our equity capitalization, reduce debt levels and lower the interest rates payable on outstanding indebtedness. These actions have reduced our interest expense and positively impacted our net operating cash flows and earnings, and will continue to do so in future periods.

We redeemed all of our outstanding series A preferred stock for $2,630.9 million using proceeds from the IPO. Furthermore, all shares of junior convertible preferred stock automatically converted into shares of our common stock. The redemption of series A preferred stock eliminated the accumulation of yield thereon, which has positively impacted our income available to common stockholders and will continue to do so in future periods.

We used the remaining net proceeds from the IPO to repay $1.6 billion of outstanding term loans. Enabled by this reduction in leverage, in the second quarter of 2019 amended our senior secured credit facilities to reduce the annual interest rate margins on our euro term loans by 0.50% and our U.S. dollar term loans by 0.75%, which has reduced our interest and will continue to do so in future periods.

Key indicators of performance and financial condition

To evaluate our performance, we monitor a number of key indicators including certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business.

The key indicators that we monitor are as follows:

• Net sales, gross margin, operating income and net income or loss. These measures are discussed in the section entitled “Results of Operations;”

• Adjusted EBITDA, which is a non-GAAP measure discussed in the section entitled “Results of Operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain infrequently occurring items. We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business consistently across the periods presented. A reconciliation of net loss, the most

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directly comparable GAAP financial measure, to Adjusted EBITDA is included in “Reconciliations of non-GAAP financial measures;”

• Management EBITDA, which is a non-GAAP measure discussed in the section entitled “Results of Operations.” Management EBITDA is used by our management to measure and evaluate the internal operating performance of our business segments. It is also the basis for calculating management incentive compensation programs. Management EBITDA is our Adjusted EBITDA further adjusted for other items that are not used to measure internal operating performance. We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business, including at the segment level, consistently across the periods presented and also to evaluate performance under management incentive compensation programs. Management EBITDA is also our segment reporting profitability measure under GAAP. A reconciliation of net loss, the most directly comparable GAAP financial measure, to Management EBITDA is included in “Reconciliations of non-GAAP financial measures;”

• Cash flows from operating activities, which we discuss in the section entitled “Liquidity and capital resources—historical cash flows.”

Results of Operations

We present results of operations in the same way that we manage our business, evaluate our performance and allocate our resources. We also provide discussion of net sales and Management EBITDA by geographic segment based on customer location: Americas, Europe and AMEA. Corporate costs are managed on a standalone basis and not allocated to segments.

Net sales

Three months ended

(in millions)	Three months ended September 30,				Change			Reason for change
								Foreign currency impact			Organic factors
	2019		2018
Americas	$	918.2	$	912.9	$	5.3		$	(1.2	)	$	6.5
Europe	501.1		503.1		(2.0		)	(24.7		)	22.7
AMEA	84.5		78.2		6.3			(0.1		)	6.4
Total	$	1,503.8	$	1,494.2	$	9.6		$	(26.0	)	$	35.6

Net sales increased $9.6 million (0.6%), which included a $26.0 million (1.8%) unfavorable foreign currency impact. Excluding the foreign currency impact, net sales increased $35.6 million (2.4%) reflecting both volume growth and improved pricing, offset by the non-recurrence of a discrete growth factor in the Americas in 2018, which adversely impacted global growth in the quarter by approximately 200 basis points.

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In Americas, net sales increased $5.3 million (0.6%), reflecting price increases that were partially offset by lower volume and a $1.2 million (0.1%) unfavorable foreign currency impact. We estimate that the non-recurrence of the discrete growth factor in the education & government business described below reduced growth in the Americas by approximately 300 basis points. Additional information by end market is as follows:

• Sales to biopharma, our largest customer group, grew in the mid-single digits. We gained new customers and experienced strong volume growth from customer spending on research and development as well as low double-digit growth in biopharma production.

• We experienced mid single-digit contraction in healthcare due to a challenging comparison to the prior year which included low double-digit sales growth that did not repeat in 2019. This was partially offset by growth in chemicals and equipment & instrumentation.

• We experienced mid single-digit contraction in education & government. There was a significant ramp up of production of customized inventory in the K-12 business in 2018 relating to a key customer win. In 2019, sales for this customer were lower and more heavily skewed to the second quarter. This was partially offset by improved performance in the remainder of the end market, including low single-digit growth from our four-year university customers.

• Advanced technologies & applied materials was down low single-digits driven by high single-digit decreases from food and beverage, agriculture, semiconductor and chemical customers, reflecting market softness in the industrial sector. This was partially offset by growth in our aerospace & defense platforms.

In Europe, net sales were slightly down due to a $24.7 million (4.9%) unfavorable foreign currency impact. Excluding the foreign currency impact, net sales increased $22.7 million (4.5%) due in equal parts to price increases and volume growth. Equipment & instrumentation experienced contraction due to the macroeconomic slowdown in Europe, which we believe has caused customers to reduce capital spending. Additional information by end market is as follows:

• We experienced high single-digit growth in biopharma due to broad-based growth across strategic customer accounts and new customer wins.

• We experienced mid single-digit growth in healthcare due to strong sales of proprietary materials, which was partially offset by declines in sales of third-party consumables and equipment & instrumentation products.

• We experienced low single-digit growth in education & government as new government project wins were partially offset by contraction in sales of equipment & instrumentation.

• Advanced technologies & applied materials experienced low single-digit growth due to growth in third-party chemicals and consumables, which was partially offset by softness in equipment & instrumentation.

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In AMEA, net sales increased $6.3 million (8.1%) due to volume growth in biopharma and advanced technologies & applied materials, our two largest end markets. Additional information by end market is as follows:

• Biopharma experienced low double-digit growth driven by increased volume in lab products, primarily through sales of third party materials & consumables. This was partially offset by a decline in sales to biopharma production customers driven by challenging prior year comparisons and the timing of customer production campaigns. The decline in sales to biopharma production customers was partially offset by an increase in sales of single use offerings.

• Advanced technologies & applied materials experienced mid single-digit growth driven by higher sales of third-party materials & consumables, which was partially offset by flat growth in electronic materials.

Nine months ended

(in millions)	Nine months ended September 30,				Change		Reason for change
							Foreign currency impact			Organic factors
	2019		2018
Americas	$	2,701.0	$	2,603.0	$	98.0	$	(7.2	)	$	105.2
Europe	1,561.8		1,559.3		2.5		(98.5		)	101.0
AMEA	253.5		228.1		25.4		(3.9		)	29.3
Total	$	4,516.3	$	4,390.4	$	125.9	$	(109.6	)	$	235.5

Net sales increased $125.9 million (2.9%), which included a $109.6 million (2.5%) unfavorable foreign currency impact. Excluding the foreign currency impact, net sales increased $235.5 million (5.4%) reflecting both volume growth and improved pricing.

In Americas, net sales increased $98.0 million (3.8%), reflecting organic growth of $105.2 million (4.1%) due to price increases and volume growth, which was partially offset by a $7.2 million (0.3%) unfavorable foreign currency impact. Additional information by end market is as follows:

• Sales to biopharma, our largest customer group, grew in the high single-digits. We gained new customers and experienced strong volume growth from customer spending on research and development as well as high single-digit growth in biopharma production.

• We experienced low single-digit contraction in healthcare due to a challenging comparison to the prior year which included low double-digit sales growth that did not repeat in 2019.

• We experienced low single-digit growth in education & government due to growth in our four-year university segment, partially offset by a significant ramp up of production of customized inventory in the K-12 business in 2018 relating to a key customer win.

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• Advanced technologies & applied materials was down low single-digits driven by high single-digit decreases from food and beverage, agriculture and chemical customers, reflecting market softness in the industrial sector. This was partially offset by high single-digit growth in our aerospace & defense platforms.

In Europe, net sales increased $2.5 million (0.2%), despite an unfavorable foreign currency impact of $98.5 million (6.4%). Excluding the foreign currency impact, net sales grew $101.0 million (6.5%) due in equal parts to price increases and volume growth. Additional information by end market is as follows:

• We experienced low double-digit growth in biopharma due to broad-based growth across strategic customer accounts, new customer wins and strong growth from specialty procurement.

• We experienced low single-digit growth in healthcare due to sales of proprietary materials, which was partially offset by declines in sales of equipment & instrumentation products.

• We experienced low single-digit growth in education & government as increased demand from this customer group was partially offset by the completion of large projects in the prior year.

• Advanced technologies & applied materials experienced mid single-digit growth due to growth in chemicals and consumables, which was partially offset by softness in equipment & instrumentation. Growth was driven by new business wins and strong sales of proprietary advanced technology products.

In AMEA, net sales increased $25.4 million (11.1%) due to growth in biopharma and advanced technologies & applied materials, our two largest end markets, offset by a $3.9 million (1.7%) unfavorable foreign currency impact. Excluding the foreign currency impact, net sales grew $29.3 million (12.8%) due to volume growth. Additional information by end market is as follows:

• Biopharma experienced over 25% growth driven by increased volume in lab products, primarily through sales of equipment & instrumentation. We also experienced an increase in sales to biopharma production customers, driven by sales of proprietary production chemicals and strong growth in single use offerings.

• Advanced technologies & applied materials experienced high single-digit growth driven by growth in third-party materials & consumables sales.

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Gross margin

	Three months ended September 30,				Change	Nine months ended September 30,				Change
	2019		2018			2019		2018
Gross margin	31.5	%	32.0	%	(50) bps	31.9	%	31.6	%	30 bps

Three months ended

The decrease in gross margin was primarily driven by 60 basis points of unfavorable product mix, reflecting the lower levels of K-12 and healthcare product sales previously discussed. We also experienced 50 basis points of contraction from unfavorable manufacturing variances and timing of vendor rebates. These factors were partially offset by 60 basis points of pricing improvements that were in excess of product cost inflation.

The global restructuring program contributed a total of $23.7 million to gross margin expansion and included improvements in pricing, product cost, footprint and lean operating practices.

Nine months ended

The increase in gross margin was primarily driven by 60 basis points of pricing improvements that were in excess of product cost inflation. We also experienced a 30 basis point favorable impact due to the absence of higher 2018 product costs from the step-up of VWR inventory in purchase accounting. These factors were partially offset by 60 basis points of unfavorable product mix, reflecting greater sales of our specialty procurement products and the lower levels of healthcare product sales previously discussed.

The global restructuring program contributed a total of $69.8 million to the gross margin increases noted above and included improvements in improved pricing, product cost, footprint and lean operating practices.

Operating income

(in millions)	Three months ended September 30,				Change			Nine months ended September 30,				Change
	2019		2018					2019		2018
Gross profit	$	474.0	$	478.7	$	(4.7	)	$	1,440.3	$	1,387.0	$	53.3
SG&A expenses	330.8		346.5		(15.7		)	1,040.4		1,072.8		(32.4		)
Operating income	$	143.2	$	132.2	$	11.0		$	399.9	$	314.2	$	85.7

Three months ended

Operating income increased primarily from a reduction in SG&A expenses, which was partially offset by the decrease in gross profit as previously described. SG&A expense decreased $15.7 million, the result of realized cost synergies from the global restructuring program, lower

36

incentive compensation expense accruals, favorable foreign currency translation and lower share-based compensation expense. These decreases were partially offset by targeted investments in customer facing sales and marketing functions to support growth in AMEA, new supply chain facilities to better serve our markets in AMEA, research and development, incremental public company expenses and inflationary impacts.

Nine months ended

Operating income increased primarily from higher gross profit, as previously discussed, as well as a reduction of SG&A expenses. SG&A expenses decreased $32.4 million, the result of lower restructuring charges, realized cost synergies from the global restructuring program, favorable foreign currency translation and lower incentive compensation expense accruals. These decreases were partially offset by additional share-based compensation expense triggered by the completion of our IPO. Additionally, we made targeted investments in customer facing sales and marketing functions to support growth in AMEA, new supply chain facilities to better serve our markets in AMEA, research and development, incremental public company expenses and inflationary impacts.

Net income or loss

(in millions)	Three months ended September 30,						Change			Nine months ended September 30,						Change
	2019			2018						2019			2018
Operating income	$	143.2		$	132.2		$	11.0		$	399.9		$	314.2		$	85.7
Interest expense	(98.3		)	(130.2		)	31.9			(342.0		)	(388.7		)	46.7
Loss on extinguishment of debt	—			—			—			(70.2		)	—			(70.2		)
Other (expense) income, net	(7.6		)	(0.9		)	(6.7		)	2.9			7.0			(4.1		)
Income tax (expense) benefit	(15.2		)	33.4			(48.6		)	(23.4		)	33.9			(57.3		)
Net income (loss)	$	22.1		$	34.5		$	(12.4	)	$	(32.8	)	$	(33.6	)	$	0.8

Three months ended

Net income decreased primarily due to higher income tax expense. In the third quarter of 2018, we reduced the provisional reserve relating to the 2017 U.S. tax reform that was recorded in the fourth quarter of 2017 by $48.8 million. This benefit did not reoccur in 2019. This was partially offset by the growth in operating income, as previously discussed, and a reduction of interest expense following the application of IPO proceeds and operating cash flows to pay down debt and the interest rate margin reductions from the repricing of our term loans.

Nine months ended

Net loss was relatively flat. We experienced growth in operating income, as previously discussed, and a reduction of interest expense due to the application of IPO proceeds and operating cash flows to our debt and the interest rate margin reductions from the repricing of our

37

term loans. This was substantially offset by the $70.2 million non-cash loss on extinguishment of debt which was paid down in conjunction with the IPO, and an increase in income tax expense relating to our accounting for the 2017 U.S. tax reform, as discussed above.

Adjusted EBITDA and Management EBITDA

For a reconciliation of Adjusted EBITDA and Management EBITDA to the most directly comparable measure under GAAP, see “Reconciliations of Non-GAAP Financial Measures.”

(in millions)	Three months ended September 30,						Change			Nine months ended September 30,						Change
	2019			2018						2019			2018
Adjusted EBITDA	$	250.8		$	254.9		$	(4.1	)	$	767.6		$	709.6		$	58.0
Management EBITDA:
Americas	$	187.7		$	181.9		$	5.8		$	560.4		$	483.8		$	76.6
Europe	85.1			85.0			0.1			261.6			253.3			8.3
AMEA	16.9			18.9			(2.0		)	53.4			54.7			(1.3		)
Corporate	(20.5		)	(17.6		)	(2.9		)	(53.9		)	(48.8		)	(5.1		)
Total	$	269.2		$	268.2		$	1.0		$	821.5		$	743.0		$	78.5

Three months ended

Adjusted EBITDA decreased $4.1 million (1.6%), including an unfavorable foreign currency impact of $3.6 million (1.4%). Excluding the foreign currency impact, Adjusted EBITDA was flat. While we had excellent performance on pricing improvements that were in excess of product cost inflation and realized productivity and VWR integration synergies that continue to provide value, these benefits were offset by an adverse sales mix, additional growth investments and unfavorable manufacturing variances.

In the Americas, the moderate growth in Management EBITDA was driven by modest sales growth and stable gross margin as strong growth in biopharma was tempered by the lower levels of education & government and proprietary healthcare materials sales, as described above. SG&A savings were driven by synergies generated from our global restructuring program.

In Europe, Management EBITDA was flat driven by offsetting factors. Growth was driven by gross margin expansion from favorable product mix due to strong sales of proprietary healthcare materials and also lower sales of equipment & instrumentation. Growth in Management EBITDA also reflected SG&A savings primarily related to headcount reduction, workforce and facility footprint optimization and general cost controls. These factors were substantially offset by timing of supplier rebates and unfavorable foreign currency transaction and translation impacts.

In AMEA, management EBITDA was favorably impacted by an increase in gross profit driven by sales growth, however, this was more than offset by an increase to SG&A expenses due to targeted investments in customer facing sales and marketing functions to support the growth in this strategic region and new supply chain facilities to better serve our markets.

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In Corporate, the decrease to management EBITDA was primarily related to increases in branding costs as a result of our IPO and investments into our global business center as we continue to grow our offshore capabilities.

Nine months ended

Adjusted EBITDA increased $58.0 million (8.2%), including an unfavorable foreign currency translation impact of $15.7 million (2.2%). Excluding the foreign currency impact, Adjusted EBITDA grew $73.7 million (10.4%) due to pricing improvements that were in excess of product cost inflation and realized productivity and VWR integration synergies. These benefits were partially offset by an adverse sales mix, additional growth investments, unfavorable manufacturing variances and additional stock-based compensation expense resulting from our IPO.

In the Americas, the strong growth in Management EBITDA was driven by our mid single-digit sales growth and gross margin expansion which was partially offset by unfavorable mix driven by lower sales of our proprietary healthcare materials. SG&A savings of $11.0 million were driven by synergies generated from our global restructuring program.

In Europe, the growth in Management EBITDA was driven by gross margin expansion, which was offset by unfavorable product mix driven by growth in specialty procurement sales. Management EBITDA also reflected SG&A savings primarily related to headcount reduction, workforce and facility footprint optimization and general cost controls. These factors were substantially offset by unfavorable foreign currency transaction and translation impacts.

In AMEA, management EBITDA was favorably impacted by an increase in gross profit driven by sales growth, however, this was more than offset by an increase to SG&A expenses due to targeted investments in customer facing sales and marketing functions to support the growth in this strategic region and new supply chain facilities to better serve our markets.

In Corporate, the decrease to management EBITDA was primarily related to increases in branding costs as a result of our IPO and investments into our global business center as we continue to grow our offshore capabilities.

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Reconciliations of Non-GAAP financial measures

The following table presents the reconciliation of net loss to non-GAAP measures:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)
Interest expense	98.3			130.2			342.0			388.7
Income tax expense (benefit)	15.2			(33.4		)	23.4			(33.9		)
Depreciation and amortization	100.3			101.3			301.6			303.5
Loss on extinguishment of debt	—			—			70.2			—
Other share-based compensation (benefit) expense	(9.2		)	—			33.5			—
Net foreign currency loss from financing activities	8.2			3.4			0.1			0.2
Restructuring and severance charges	13.4			16.7			19.8			57.1
Purchase accounting adjustments	(3.1		)	(4.1		)	(7.2		)	2.8
VWR transaction and integration expenses	5.4			5.1			16.8			19.4
Other transaction and integration expenses	0.2			1.2			0.2			5.4
Adjusted EBITDA	250.8			254.9			767.6			709.6
Business performance improvement programs	0.4			3.1			2.2			6.4
Ongoing share-based compensation expense	10.9			5.8			23.9			14.5
Write-offs of working capital and other assets	5.5			0.2			19.9			0.2
Long-term incentive plan	0.5			2.7			5.1			8.1
Other	1.1			1.5			2.8			4.2
Management EBITDA	$	269.2		$	268.2		$	821.5		$	743.0

Liquidity and Capital Resources

We fund short-term cash requirements primarily from operating cash flows and unused availability under our credit facilities. Most of our long-term financing is from indebtedness.

We believe that cash generated from operations, together with available liquidity under our credit facilities, will be adequate to meet our current and expected needs for cash prior to the maturity of our debt, although no assurances can be given in this regard.

40

Liquidity

The following table presents our primary sources of liquidity:

(in millions)	September 30, 2019
	Receivables facility			Revolving credit facility			Total
Unused availability under credit facilities:
Current availability	$	250.0		$	250.0		$	500.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)
Outstanding borrowings	—			—			—
Unused availability	$	237.5		$	234.7		$	472.2
Cash and cash equivalents							173.9
Total liquidity							$	646.1

Our liquidity needs change daily. We manage liquidity needs by utilizing our credit line availability and also by monitoring working capital levels. Some of our credit line availability also depends upon maintaining a sufficient borrowing base of eligible accounts receivable. We believe that we have sufficient capital resources to meet our daily liquidity needs. As of September 30, 2019, we were in compliance with all of our debt covenants, and no event of default had occurred or was ongoing.

At September 30, 2019, $130.1 million of our $173.9 million in cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply.

Historical cash flows

The following table presents a summary of cash provided by (used in) various activities:

(in millions)	Nine months ended September 30,						Change
	2019			2018
Operating activities:
Working capital changes	$	(120.9	)	$	(86.2	)	$	(34.7	)
All other	387.9			216.8			171.1
Total	267.0			130.6			136.4
Investing activities:
Capital expenditures	(39.5		)	(32.3		)	(7.2		)
All other	8.8			9.1			(0.3		)
Total	(30.7		)	(23.2		)	(7.5		)
Financing activities	(240.4		)	(115.9		)	(124.5		)

41

Cash flows from operating activities increased $136.4 million in 2019 primarily due to an increase of operating income and a reduction in cash for paid interest. This was partially offset by growth in working capital and an increase in cash paid for taxes.

Investing activities used $7.5 million of additional cash in 2019, reflecting a fairly consistent capital spending trend.

Financing activities used $124.5 million of additional cash in 2019 due to significant offsetting factors. The $2,630.9 million redemption of our series A preferred stock and $1,825.4 million repayment of debt was substantially funded by $4,235.6 million of IPO proceeds.

Indebtedness

In June 2019, we amended our senior secured credit facilities to reduce the annual interest rate margins on our euro term loans by 0.50% and our U.S. dollar term loans by 0.75%. The cost to complete the amendment was not material.

New accounting standards

For information about new accounting standards, see note 3 to our condensed consolidated financial statements included in Part I, Item 1 — “Financial Statements.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For disclosures about market risk, please see “Quantitative and Qualitative Disclosures About Market Risk” in our Registration Statement. Except as described below, as of September 30, 2019, there have been no material changes to our disclosures about market risk in the Registration Statement.

Interest rate risk

At September 30, 2019, we had borrowings of $1.3 billion under our senior secured credit facilities and our receivables facility. Borrowings under these facilities bear interest at variable rates based on prevailing LIBOR and EURIBOR rates in the financial markets. Changes to those market rates affect both the amount of cash we pay for interest and our reported interest expense. Our euro term loans include a zero percent floor on EURIBOR, which has been negative, so the floor provides a partial hedge of our variable interest rate risk on that loan. At September 30, 2019, a 100 basis point increase to the applicable variable rates of interest would have increased the amount of interest by $0.4 million per annum.

Remeasurement of foreign currency transactions

In July 2019, we completed an intercompany recapitalization that is intended to mitigate substantially all of our net euro financing. We still expect to experience gains and losses related to other currencies whose effect has not historically been material to our earnings.

42

Item 4. Controls and Procedures

Management’s evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2019, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, reported, accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the fiscal quarter ended September 30, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In April 2018 the EPA notified us of potential liabilities under the Toxic Substances Control Act and the Emergency Planning and Community Right to Know Act that were identified in March 2017 and June 2017 inspections of our Phillipsburg, New Jersey facility. The alleged violations relate to our failure to timely file reports regarding the Phillipsburg facility. We have also become aware of additional potential liabilities under the Toxic Substances Control Act relating to failure to timely file reports regarding the Paris, Kentucky facility, and relating to export shipments of elemental mercury, which we have voluntarily disclosed to the EPA. We have taken steps to correct these errors and have filed amended reports. The EPA has proposed total civil penalties of $1.5 million relating to these issues. While we are cooperating with the EPA and pursuing a negotiated resolution, we cannot predict with certainty the amount of penalties that may ultimately be imposed.

For additional information regarding legal proceedings and matters, see note 10 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial Statements,” which information is incorporated into this item by reference.

Item 1A. Risk Factors

For a discussion of potential risks or uncertainties, please see “Risk Factors” in our Registration Statement. There have been no material changes to the risk factors disclosed in our Registration Statement.

43

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

Unregistered sales of equity securities

During the three months ended September 30, 2019, we issued an aggregate of 2.7 million shares of common stock to warrant holders who exercised outstanding warrants pursuant to the warrants' cash exercise mechanism. The cash proceeds received from the exercises was not material.

These warrants had an exercise price of $0.002 per share. The warrants were originally issued to holders of our series A preferred stock in connection with our acquisition of VWR in 2017.

The securities were issued in reliance upon the exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions not involving a public offering due to lack of general solicitation or advertising, the status and knowledge of the warrant holders and publicly available information about us and our operations.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Exhibit Description	Method of Filing
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
101	XBRL exhibits	Filed herewith

44

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.

	Avantor, Inc.
Date: November 5, 2019	By:	/s/ Steven Eck
		Name:	Steven Eck
		Title:	Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

45

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael Stubblefield, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Avantor, Inc.;

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)) 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) 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

c) 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: November 5, 2019	By:	/s/ Michael Stubblefield
		Name:	Michael Stubblefield
		Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas A. Szlosek, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Avantor, Inc.;

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)) 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) 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

c) 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: November 5, 2019	By:	/s/ Thomas A. Szlosek
		Name:	Thomas A. Szlosek
		Title:	Executive Vice President, Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Avantor, Inc. (the “Company”) for the quarterly period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Stubblefield, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

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

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

Date: November 5, 2019	By:	/s/ Michael Stubblefield
		Name:	Michael Stubblefield
		Title:	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Avantor, Inc. (the “Company”) for the quarterly period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas A. Szlosek, Executive Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

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

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

Date: November 5, 2019	By:	/s/ Thomas A. Szlosek
		Name:	Thomas A. Szlosek
		Title:	Executive Vice President, Chief Financial Officer (Principal Financial Officer)

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Accumulated other comprehensive income or loss (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Schedule of changes in components of AOCI

The following table presents changes in the components of AOCI:

(in millions)	Foreign currency translation			Derivative instruments			Defined benefit plans			Total
Balance at June 30, 2019	$	(55.6	)	$	(0.2	)	$	(8.9	)	$	(64.7	)
Unrealized (loss) gain	(62.7		)	1.0			(0.1		)	(61.8		)
Reclassification of gain into earnings	—			(0.9		)	(0.2		)	(1.1		)
Income tax benefit	—			—			0.1			0.1
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at June 30, 2018	$	(34.6	)	$	0.9		$	2.2		$	(31.5	)
Unrealized loss	(0.8		)	(0.2		)	—			(1.0		)
Reclassification of gain into earnings	—			(0.6		)	(0.2		)	(0.8		)
Income tax benefit	—			0.2			—			0.2
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)
Balance at December 31, 2018	$	(59.0	)	$	1.1		$	(8.6	)	$	(66.5	)
Unrealized (loss) gain	(59.3		)	(0.5		)	(0.1		)	(59.9		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			0.5			0.1			0.6
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at December 31, 2017	$	23.7		$	0.3		$	2.4		$	26.4
Unrealized loss	(59.1		)	1.2			0.1			(57.8		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			—			—			—
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)

The reclassifications and income tax effects shown above were immaterial to the financial statements. The reclassifications were made to either cost of sales or SG&A expenses depending upon the nature of the underlying transaction.

XML

Inventory (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of inventory components

The following table presents components of inventory:

(in millions)	September 30, 2019		December 31, 2018
Merchandise inventory	$	438.9	$	409.0
Finished goods	117.8		122.9
Raw materials	121.4		105.2
Work in process	36.4		34.0
Total	$	714.5	$	671.1

XML

Nature of operations and presentation of financial statements (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of immaterial error correction

The following table presents the impact of the correction:

(in millions)	Nine months ended September 30, 2018
	Previously reported			Adjustment			As adjusted
Net sales:
Americas	$	2,590.6		$	12.4		$	2,603.0
Europe	1,575.5			(16.2		)	1,559.3
AMEA	224.3			3.8			228.1
Total	$	4,390.4		$	—		$	4,390.4
Management EBITDA:
Americas	$	480.5		$	3.3		$	483.8
Europe	259.3			(6.0		)	253.3
AMEA	51.7			3.0			54.7
Corporate	(48.5		)	(0.3		)	(48.8		)
Total	$	743.0		$	—		$	743.0

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Risk and uncertainties

9 Months Ended

Sep. 30, 2019

Risks and Uncertainties [Abstract]

Risks and uncertainties

5. Risks and uncertainties

Remeasurement of foreign currency transactions

For the three months ended September 30, 2019, other income, net included $8.2 million of net foreign currency loss from financing activities.

On July 11, 2019, we completed an intercompany recapitalization that is intended to mitigate substantially all of our net euro financing exposure in future periods. We still expect to experience gains and losses related to other currencies whose effect has not historically been material to our earnings.

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Restructuring and severance

9 Months Ended

Sep. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and severance

9. Restructuring and severance

The following table presents restructuring and severance charges by plan:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
2017 restructuring program	$	13.3	$	16.6	$	19.1	$	54.8
Other	0.1		0.1		0.7		2.3
Total	$	13.4	$	16.7	$	19.8	$	57.1

Restructuring and severance charges are classified as SG&A expenses.

2017 restructuring program

We implemented a $215 million program over a three-year period to optimize our sales, gross margins and operating costs. The spending currently includes an estimated $55 million for capital expenditures and an estimated $135 million for employee severance and related costs, facility closures and other charges. Our plans have included combining sales and marketing resources, eliminating redundant corporate functions, optimizing procurement and our manufacturing footprint, and implementing best practices throughout the organization. We expect all synergies and cost savings to be fully realized by 2021.

The following table presents information about charges under the 2017 restructuring program:

(in millions)	Three months ended September 30,				Nine months ended September 30,				September 30, 2019
									Charges incurred to date		Expected remaining charges		Total expected charges
	2019		2018		2019		2018
Employee severance and related	$	3.0	$	12.4	$	8.4	$	46.0	$	74.6	$	15.4	$	90.0
Facility closure	0.3		0.5		0.7		0.8		1.9		3.1		5.0
Other	10.0		3.7		10.0		8.0		38.4		1.6		40.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0
Americas	$	10.3	$	6.3	$	11.1	$	15.7	$	51.7	$	9.3	$	61.0
Europe	2.0		9.5		7.0		37.3		47.6		4.4		52.0
AMEA	—		0.8		—		0.8		0.8		0.2		1.0
Corporate	1.0		—		1.0		1.0		14.8		6.2		21.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0

Other charges in the table above were to write-down the carrying value of assets we plan to close or sell under the program as well as expense related to a voluntary early retirement program under one of our pension plans in the United States. These charges do not impact the accrued restructuring charges shown in the following table.

The following table presents changes to accrued employee severance and related charges under the 2017 restructuring program, which are primarily classified as employee-related current liabilities:

(in millions)	Employee severance and related
Balance at December 31, 2018	$	33.6
Charges	8.4
Cash payments	(23.4		)
Currency translation	(1.0		)
Balance at September 30, 2019	$	17.6

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Segment financial information - product lines (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation by product line
Net sales	$ 1,503.8	$ 1,494.2	$ 4,516.3	$ 4,390.4
Proprietary materials & consumables
Disaggregation by product line
Net sales	494.2	522.0	1,500.9	1,469.0
Third party materials & consumables
Disaggregation by product line
Net sales	592.8	572.2	1,792.8	1,765.4
Services & specialty procurement
Disaggregation by product line
Net sales	195.7	177.1	562.5	511.1
Equipment & instrumentation
Disaggregation by product line
Net sales	$ 221.1	$ 222.9	$ 660.1	$ 644.9

XML

Restructuring and severance - incurred to date and expected charges (Details) - 2017 restructuring program $ in Millions	Sep. 30, 2019 USD ($)
Incurred to date and expected charges
Total expected expenditures	$ 215.0
Expected capital expenditures	55.0
Charges incurred to date	114.9
Expected remaining charges	20.1
Total expected charges	135.0
Americas
Incurred to date and expected charges
Charges incurred to date	51.7
Expected remaining charges	9.3
Total expected charges	61.0
Europe
Incurred to date and expected charges
Charges incurred to date	47.6
Expected remaining charges	4.4
Total expected charges	52.0
AMEA
Incurred to date and expected charges
Charges incurred to date	0.8
Expected remaining charges	0.2
Total expected charges	1.0
Corporate
Incurred to date and expected charges
Charges incurred to date	14.8
Expected remaining charges	6.2
Total expected charges	21.0
Employee severance and related
Incurred to date and expected charges
Charges incurred to date	74.6
Expected remaining charges	15.4
Total expected charges	90.0
Facility closure
Incurred to date and expected charges
Charges incurred to date	1.9
Expected remaining charges	3.1
Total expected charges	5.0
Other
Incurred to date and expected charges
Charges incurred to date	38.4
Expected remaining charges	1.6
Total expected charges	$ 40.0

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Debt - components (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Information about debt
Debt, gross	$ 5,272.9	$ 7,162.9
Unamortized deferred financing costs	(142.8)	(238.2)
Debt	5,130.1	6,924.7
Current portion of debt	41.4	142.4
Debt, net of current portion	5,088.7	6,782.3
Information about credit facilities
Current availability	500.0
Undrawn letters of credit outstanding	(27.8)
Outstanding borrowings	0.0
Unused availability	472.2
Maximum availability	$ 500.0
Receivables facility
Information about debt
Interest terms	LIBOR plus 1.50%
Interest rate margin	1.50%
Interest rate	3.52%
Debt, gross	$ 0.0	104.0
Information about credit facilities
Current availability	250.0
Undrawn letters of credit outstanding	(12.5)
Outstanding borrowings	0.0
Unused availability	237.5
Maximum availability	250.0
Amount pledged as collateral	455.6
Senior secured credit facilities | Multi-currency revolving loan facility
Information about credit facilities
Current availability	250.0
Undrawn letters of credit outstanding	(15.3)
Outstanding borrowings	0.0
Unused availability	234.7
Maximum availability	$ 250.0
Senior secured credit facilities | Term loans | Euro
Information about debt
Interest terms	EURIBOR plus 3.25%
Interest rate margin	3.25%
Interest rate	3.25%
Debt, gross	$ 417.6	1,078.0
Senior secured credit facilities | Term loans | U.S. dollars
Information about debt
Interest terms	LIBOR plus 3.00%
Interest rate margin	3.00%
Interest rate	5.11%
Debt, gross	$ 742.7	1,838.9
Notes | 4.75% secured
Information about debt
Interest terms	fixed rate
Interest rate	4.75%
Debt, gross	$ 545.3	572.5
Notes | 6% secured
Information about debt
Interest terms	fixed rate
Interest rate	6.00%
Debt, gross	$ 1,500.0	1,500.0
Notes | 9% unsecured
Information about debt
Interest terms	fixed rate
Interest rate	9.00%
Debt, gross	$ 2,000.0	2,000.0
Other
Information about debt
Debt, gross	$ 67.3	$ 69.5

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Other income, net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other Income and Expenses [Abstract]
Net foreign currency loss from financing activities	$ (8.2)	$ (3.4)	$ (0.1)	$ (0.2)
Income related to defined benefit plans	1.3	2.5	3.8	7.5
Other	(0.7)	0.0	(0.8)	(0.3)
Other (expense) income, net	$ (7.6)	$ (0.9)	$ 2.9	$ 7.0

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Related party disclosures (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Goldman Sachs
Related Party Transaction [Line Items]
Related party loan	$ 9.1
Goldman Sachs | Underwriter fee
Related Party Transaction [Line Items]
Amount of related party transaction	24.5
Goldman Sachs | Purchase of shares
Related Party Transaction [Line Items]
Amount of related party transaction	70.0
Goldman Sachs | Redemption of preferred stock
Related Party Transaction [Line Items]
Amount of related party transaction	421.9
PSP Investments | Redemption of preferred stock
Related Party Transaction [Line Items]
Amount of related party transaction	$ 302.5

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Unaudited condensed consolidated statements of stockholders' equity or deficit - USD ($) $ in Millions	Total	Common stock including paid-in capital	Accumulated deficit	AOCI	Mandatory convertible preferred stock
Cumulative effect of adopting new accounting standard, see note 1	$ 4.8		$ 4.8
Beginning balance, stockholders' equity at Dec. 31, 2017	(2,620.2)	$ (2,490.3)	(156.3)	$ 26.4	$ 0.0
Increase (decrease) to stockholders' equity
Comprehensive income (loss)	(93.1)		(33.6)	(59.5)
Share-based compensation expense	10.3	10.3
Accumulation of yield	(198.4)	(198.4)
Ending balance, stockholders' equity at Sep. 30, 2018	(2,896.6)	(2,678.4)	(185.1)	(33.1)	0.0
Beginning balance, stockholders' equity at Jun. 30, 2018	(2,864.7)	(2,613.6)	(219.6)	(31.5)	0.0
Increase (decrease) to stockholders' equity
Comprehensive income (loss)	32.9		34.5	(1.6)
Share-based compensation expense	4.1	4.1
Accumulation of yield	(68.9)	(68.9)
Ending balance, stockholders' equity at Sep. 30, 2018	(2,896.6)	(2,678.4)	(185.1)	(33.1)	0.0
Cumulative effect of adopting new accounting standard, see note 1	(3.1)		(3.1)
Beginning balance, stockholders' equity at Dec. 31, 2018	(3,051.7)	(2,746.8)	(238.4)	(66.5)	0.0
Increase (decrease) to stockholders' equity
Comprehensive income (loss)	(93.8)		(32.8)	(61.0)
Share-based compensation expense	54.6	54.6
Award reclassification, see note 14	8.8	8.8
Accumulation of yield	(136.4)	(136.4)
Accretion of make whole premium	(220.4)	(220.4)
Issuances, net of issuance costs	4,235.6	3,231.9			1,003.7
Conversions	1,562.0	1,562.0
Ending balance, stockholders' equity at Sep. 30, 2019	2,355.6	1,753.7	(274.3)	(127.5)	1,003.7
Beginning balance, stockholders' equity at Jun. 30, 2019	2,410.9	1,768.3	(296.4)	(64.7)	1,003.7
Increase (decrease) to stockholders' equity
Comprehensive income (loss)	(40.7)		22.1	(62.8)
Share-based compensation expense	1.9	1.9
Accumulation of yield	(16.4)	(16.4)
Issuances, net of issuance costs	(0.1)	(0.1)
Ending balance, stockholders' equity at Sep. 30, 2019	$ 2,355.6	$ 1,753.7	$ (274.3)	$ (127.5)	$ 1,003.7

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Earnings or loss per share - antidilutive securities (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Diluted loss per share
Accumulated yield	$ 16.4	$ 68.9	$ 136.4	$ 198.4
Number of common shares from convertible instruments that were excluded from calculation		19.3	100.1	19.3
Stock options
Diluted loss per share
Number of common shares from convertible instruments that were excluded from calculation		19.3	29.7	19.3
Mandatory convertible preferred stock
Diluted loss per share
Number of common shares from convertible instruments that were excluded from calculation		0.0	70.4	0.0

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Unaudited condensed consolidated balance sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Accumulated depreciation on property and equipment	$ 290.4	$ 225.8
Common stock, shares outstanding	571.4	132.8
Series A preferred stock at redemption value, zero and 2.3 shares outstanding
Redeemable equity, shares outstanding	0.0	2.3
Junior convertible preferred stock
Redeemable equity, shares outstanding	0.0	1.7
Mandatory convertible preferred stock
Preferred stock, shares outstanding	20.7	0.0
Customer relationships, net of accumulated amortization of $578.7 and $412.5
Accumulated amortization on intangible assets	$ 578.7	$ 412.5
Other intangible assets, net of accumulated amortization of $203.2 and $146.7
Accumulated amortization on intangible assets	$ 203.2	$ 146.7

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Nature of operations and presentation of financial statements - general (Details) - segment	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Nature of operations and basis of presentation
Number of reportable segments	3
New Mountain Capital
Nature of operations and basis of presentation
Ownership percentage	17.00%	40.00%
Goldman Sachs
Nature of operations and basis of presentation
Ownership percentage	11.00%	15.00%
Other investors
Nature of operations and basis of presentation
Ownership percentage	72.00%	45.00%

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Other income, net (Tables)

9 Months Ended

Sep. 30, 2019

Other Income and Expenses [Abstract]

Schedule of components of other income, net

The following table presents the components of other income, net:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net foreign currency loss from financing activities	$	(8.2	)	$	(3.4	)	$	(0.1	)	$	(0.2	)
Income related to defined benefit plans	1.3			2.5			3.8			7.5
Other	(0.7		)	—			(0.8		)	(0.3		)
Other (expense) income, net	$	(7.6	)	$	(0.9	)	$	2.9		$	7.0

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Accumulated other comprehensive income or loss

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Accumulated other comprehensive income or loss

13. Accumulated other comprehensive income or loss

The following table presents changes in the components of AOCI:

(in millions)	Foreign currency translation			Derivative instruments			Defined benefit plans			Total
Balance at June 30, 2019	$	(55.6	)	$	(0.2	)	$	(8.9	)	$	(64.7	)
Unrealized (loss) gain	(62.7		)	1.0			(0.1		)	(61.8		)
Reclassification of gain into earnings	—			(0.9		)	(0.2		)	(1.1		)
Income tax benefit	—			—			0.1			0.1
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at June 30, 2018	$	(34.6	)	$	0.9		$	2.2		$	(31.5	)
Unrealized loss	(0.8		)	(0.2		)	—			(1.0		)
Reclassification of gain into earnings	—			(0.6		)	(0.2		)	(0.8		)
Income tax benefit	—			0.2			—			0.2
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)
Balance at December 31, 2018	$	(59.0	)	$	1.1		$	(8.6	)	$	(66.5	)
Unrealized (loss) gain	(59.3		)	(0.5		)	(0.1		)	(59.9		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			0.5			0.1			0.6
Balance at September 30, 2019	$	(118.3	)	$	(0.1	)	$	(9.1	)	$	(127.5	)
Balance at December 31, 2017	$	23.7		$	0.3		$	2.4		$	26.4
Unrealized loss	(59.1		)	1.2			0.1			(57.8		)
Reclassification of gain into earnings	—			(1.2		)	(0.5		)	(1.7		)
Income tax benefit	—			—			—			—
Balance at September 30, 2018	$	(35.4	)	$	0.3		$	2.0		$	(33.1	)

The reclassifications and income tax effects shown above were immaterial to the financial statements. The reclassifications were made to either cost of sales or SG&A expenses depending upon the nature of the underlying transaction.

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Financial instruments and fair value measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Financial instruments and fair value measurements

17. Financial instruments and fair value measurements

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt, contingent consideration arrangements and derivative instruments.

Assets and liabilities for which fair value is only disclosed

The carrying amount of cash and cash equivalents was the same as its fair value and is a Level 1 measurement. The carrying amounts for trade accounts receivable and accounts payable approximated fair value due to their short-term nature and are Level 2 measurements.

The following table presents the gross amounts and fair values of debt instruments:

(in millions)	September 30, 2019				December 31, 2018
	Gross amount		Fair value		Gross amount		Fair value
Receivables facility	$	—	$	—	$	104.0	$	104.0
Senior secured credit facilities:
Euro term loans	417.6		423.1		1,078.0		1,063.2
U.S. dollar term loans	742.7		749.6		1,838.9		1,786.0
4.75% secured notes	545.3		584.9		572.5		581.2
6% secured notes	1,500.0		1,610.0		1,500.0		1,467.8
9% unsecured notes	2,000.0		2,250.4		2,000.0		1,998.5
Other	67.3		67.3		69.5		69.5
Total	$	5,272.9	$	5,685.3	$	7,162.9	$	7,070.2

The gross amounts of debt instruments exclude unamortized deferred financing costs (see note 11). The fair values of debt instruments are based on standard pricing models that take into account the present value of future cash flows, and in some cases private trading data, which are Level 2 measurements.

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Summary of significant accounting policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Leases

Leases

We primarily enter into real estate leases for manufacturing, warehousing and commercial office space to support our global operations. We also enter into vehicle and equipment leases to support those operations.

We determine if an arrangement is a lease at inception. Short-term leases, defined as having an initial term of twelve months or less, are expensed as incurred and not recorded on the balance sheet. We record the value of all other leased property and the related obligations as assets and liabilities on the balance sheet. Information about the amount and classification of lease assets and liabilities is included in note 18.

At inception, lease assets and liabilities are measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we exercise judgment in selecting the incremental borrowing rate based on the information available at inception to determine the present value of future payments. Operating lease assets are further adjusted for lease incentives and initial direct costs.

Our lease terms may include options to extend or terminate the lease. We exercise judgment to calculate the term of those leases when extension or termination options are present, and we include such options in the calculation of the lease term when it is reasonably certain that we will exercise those options. Operating lease expense is recognized on a straight-line basis over the lease term, except for variable rent which is expensed as incurred. Short-term lease and variable rent expense was immaterial to the financial statements and has been included within operating lease expense. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and an immaterial amount of interest expense.

Some of our lease agreements include both lease and non-lease components. We account for those components separately for real estate leases and as a combined single lease component for all other types of leases.

Earnings or loss per share

Earnings or loss per share

Basic earnings or loss per share is calculated by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the applicable period.

Diluted earnings per share is computed based on the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares we could have repurchased with the proceeds from the issuance of the potentially dilutive shares. Variable conversion ratios are determined as of period end. Preferred dividends are added back to net income or loss available to common stockholders provided that the preferred securities are not anti-dilutive to the calculation.

In periods of net loss available to common stockholders, diluted calculations are equal to basic calculations because the inclusion of dilutive shares would be anti-dilutive.

Stockholders' equity

Stockholders’ equity or deficit

MCPS is classified as permanent equity and initially recorded at fair value, net of issuance costs. Accrued but unpaid MCPS dividends are classified as other current liabilities with a corresponding reduction to common stock including paid-in capital.

Certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings are capitalized on the balance sheet as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of the proceeds received in arriving at the amount recorded in stockholders’ equity or deficit. When a planned equity financing is abandoned, the deferred offering costs are expensed immediately as a charge to SG&A expenses.

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Stock-based compensation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Information about expense and shares
Share-based compensation expense (benefit)	$ 1.7	$ 5.8	$ 57.4	$ 14.5
Information about awards other than options
Award reclassification			8.8
Equity-classified
Information about expense and shares
Share-based compensation expense (benefit)	1.9	4.1	54.6	10.3
Liability-classified
Information about expense and shares
Share-based compensation expense (benefit)	(0.2)	1.7	2.8	4.2
2019 Plan
Information about expense and shares
Remaining share-based compensation expense	$ 65.4		$ 65.4
Remaining share-based compensation expense, period of recognition	3 years 2 months 12 days
Shares authorized	23.5		23.5
2019 Plan | Stock options
Information about expense and shares
Share-based compensation expense (benefit)	$ 0.9	0.0	$ 1.5	0.0
Information about stock options
Stock options granted			3.2
Grant date fair value			$ 4.79
Expected term			6 years 3 months 18 days
Expected volatility			30.00%
Risk free interest rate			2.20%
Exercise price			$ 14.00
Contractual life			10 years
Vesting period			4 years
2019 Plan | Restricted stock units
Information about expense and shares
Share-based compensation expense (benefit)	4.8	0.0	$ 7.8	0.0
Information about awards other than options
Restricted stock units granted			3.6
2019 Plan | Restricted stock units | Conversion of LTIP
Information about awards other than options
Amount of cash-based award converted			$ 26.2
Restricted stock units granted			1.9
Grant date fair value			$ 14.00
Award reclassification			$ 8.8
2017 Plan and predecessors | Stock options
Information about expense and shares
Share-based compensation expense (benefit)	4.2	4.1	$ 38.2	10.2
2017 Plan and predecessors | Stock options | Satisfaction of performance condition
Information about expense and shares
Share-based compensation expense (benefit)	$ 26.9
Information about awards other than options
Stock options outstanding	0.9		0.9
2017 Plan and predecessors | Optionholder awards
Information about expense and shares
Share-based compensation expense (benefit)	$ 0.7	1.7	$ 2.6	4.2
2017 Plan and predecessors | Restricted stock units
Information about expense and shares
Share-based compensation expense (benefit)	0.3	0.0	0.7	0.1
NuSil plans | Phantom units
Information about expense and shares
Share-based compensation expense (benefit)	(0.9)	0.0	0.2	0.0
NuSil plans | SARs
Information about expense and shares
Share-based compensation expense (benefit)	(8.3)	$ 0.0	6.4	$ 0.0
Information about awards other than options
Intrinsic value			28.2
Sensitivity to $1.00 change	$ 1.9		$ 1.9

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Leases (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Information about lease assets and liabilities
Operating lease assets	$ 119.5	$ 119.5
Finance lease assets	54.7	54.7
Current portion of operating lease liabilities	29.7	29.7
Current portion of finance lease liabilities	3.3	3.3
Operating lease liabilities, net of current portion	96.7	96.7
Finance lease liabilities, net of current portion	56.4	56.4
Information about lease expense
Operating lease expense	12.7	39.4
Finance lease expense	1.6	8.6
Total	$ 14.3	$ 48.0
Weighted average remaining lease term, in years
Operating leases	5 years 6 months	5 years 6 months
Finance leases	16 years 7 months 6 days	16 years 7 months 6 days
Weighted average discount rate
Operating leases	5.80%	5.80%
Finance leases	8.50%	8.50%
Future payments due under operating leases
Three months ending December 31, 2019	$ 10.3	$ 10.3
Year ending December 31,
2020	35.2	35.2
2021	30.2	30.2
2022	23.7	23.7
2023	20.2	20.2
Thereafter	32.8	32.8
Total undiscounted lease payments	152.4	152.4
Difference between undiscounted and discounted lease payments	(26.0)	(26.0)
Lease liabilities	126.4	126.4
Future payments due under finance leases
Three months ending December 31, 2019	2.4	2.4
Year ending December 31,
2020	7.6	7.6
2021	6.6	6.6
2022	5.9	5.9
2023	5.4	5.4
Thereafter	92.7	92.7
Total undiscounted lease payments	120.6	120.6
Difference between undiscounted and discounted lease payments	(60.9)	(60.9)
Lease liabilities	$ 59.7	59.7
Future payments under operating leases (legacy standard), year ended December 31,
2019			$ 44.2
2020			34.1
2021			29.2
2022			25.7
2023			20.9
Thereafter			58.9
Total minimum payments			$ 213.0
Supplemental disclosures of cash flow information
Cash paid under operating leases		33.4
Cash paid under finance leases		3.7
Cash paid under finance leases		$ 4.1

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Nature of operations and presentation of financial statements - immaterial error (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment financial information
Net sales	$ 1,503.8	$ 1,494.2	$ 4,516.3	$ 4,390.4
Management EBITDA	269.2	268.2	821.5	743.0
Americas
Segment financial information
Net sales	918.2	912.9	2,701.0	2,603.0
Management EBITDA	187.7	181.9	560.4	483.8
Europe
Segment financial information
Net sales	501.1	503.1	1,561.8	1,559.3
Management EBITDA	85.1	85.0	261.6	253.3
AMEA
Segment financial information
Net sales	84.5	78.2	253.5	228.1
Management EBITDA	16.9	18.9	53.4	54.7
Corporate
Segment financial information
Management EBITDA	$ (20.5)	$ (17.6)	$ (53.9)	(48.8)
Previously reported
Segment financial information
Net sales				4,390.4
Management EBITDA				743.0
Previously reported | Americas
Segment financial information
Net sales				2,590.6
Management EBITDA				480.5
Previously reported | Europe
Segment financial information
Net sales				1,575.5
Management EBITDA				259.3
Previously reported | AMEA
Segment financial information
Net sales				224.3
Management EBITDA				51.7
Previously reported | Corporate
Segment financial information
Management EBITDA				(48.5)
Adjustment
Segment financial information
Net sales				0.0
Management EBITDA				0.0
Adjustment | Americas
Segment financial information
Net sales				12.4
Management EBITDA				3.3
Adjustment | Europe
Segment financial information
Net sales				(16.2)
Management EBITDA				(6.0)
Adjustment | AMEA
Segment financial information
Net sales				3.8
Management EBITDA				3.0
Adjustment | Corporate
Segment financial information
Management EBITDA				$ (0.3)

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Income taxes (Tables)

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of relationship between income tax expense or benefit and income or loss before income taxes

The following table presents the relationship between income tax expense or benefit and income or loss before income taxes:

(in millions)	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019			2018
Income tax (expense) benefit	$	(15.2	)	$	33.4	$	(23.4	)	$	33.9
Income (loss) before income taxes	37.3			1.1		(9.4		)	(67.5		)

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Unaudited condensed consolidated statements of redeemable equity - USD ($) $ in Millions	Total	Series A preferred stock	Junior convertible preferred stock
Beginning balance, redeemable equity at Dec. 31, 2017	$ 3,589.8	$ 2,027.8	$ 1,562.0
Increase (decrease) to redeemable equity
Accumulation of yield	198.4	198.4
Ending balance, redeemable equity at Sep. 30, 2018	3,788.2	2,226.2	1,562.0
Beginning balance, redeemable equity at Jun. 30, 2018	3,719.3	2,157.3	1,562.0
Increase (decrease) to redeemable equity
Accumulation of yield	68.9	68.9
Ending balance, redeemable equity at Sep. 30, 2018	3,788.2	2,226.2	1,562.0
Beginning balance, redeemable equity at Dec. 31, 2018	3,859.3	2,297.3	1,562.0
Increase (decrease) to redeemable equity
Accumulation of yield	113.2	113.2
Accretion of make whole premium	220.4	220.4
Redemptions	2,630.9	2,630.9
Conversions	1,562.0		1,562.0
Ending balance, redeemable equity at Sep. 30, 2019	0.0	0.0	0.0
Beginning balance, redeemable equity at Jun. 30, 2019	0.0	0.0	0.0
Increase (decrease) to redeemable equity
Accumulation of yield	0.0	0.0
Ending balance, redeemable equity at Sep. 30, 2019	$ 0.0	$ 0.0	$ 0.0

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Risk and uncertainties (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Risks and Uncertainties [Abstract]
Net foreign currency loss from financing activities	$ 8.2	$ 3.4	$ 0.1	$ 0.2

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Unaudited condensed consolidated balance sheets - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 173.9	$ 184.7
Accounts receivable, net	983.3	931.2
Inventory	714.5	671.1
Other current assets	147.0	112.6
Total current assets	2,018.7	1,899.6
Property, plant and equipment, net of accumulated depreciation of $290.4 and $225.8	559.4	598.6
Goodwill	2,736.0	2,784.7
Other assets	200.8	63.0
Total assets	9,763.1	9,911.6
Liabilities, redeemable equity and stockholders’ equity or deficit
Current portion of debt	41.4	142.4
Accounts payable	556.3	557.4
Employee-related liabilities	118.9	144.9
Accrued interest	135.1	76.6
Other current liabilities	227.0	174.9
Total current liabilities	1,078.7	1,096.2
Debt, net of current portion	5,088.7	6,782.3
Deferred income tax liabilities	832.8	907.5
Other liabilities	407.3	318.0
Total liabilities	7,407.5	9,104.0
Commitments and contingencies, see note 10
Redeemable equity	0.0	3,859.3
Mandatory convertible preferred stock including paid-in capital, 20.7 and zero shares outstanding	1,003.7	0.0
Common stock including paid-in capital, 571.4 and 132.8 shares outstanding	1,753.7	(2,746.8)
Accumulated deficit	(274.3)	(238.4)
Accumulated other comprehensive loss	(127.5)	(66.5)
Total stockholders’ equity (deficit)	2,355.6	(3,051.7)
Total liabilities, redeemable equity and stockholders’ equity or deficit	9,763.1	9,911.6
Series A preferred stock at redemption value, zero and 2.3 shares outstanding
Liabilities, redeemable equity and stockholders’ equity or deficit
Redeemable equity	0.0	2,297.3
Junior convertible preferred stock, zero and 1.7 shares outstanding
Liabilities, redeemable equity and stockholders’ equity or deficit
Redeemable equity	0.0	1,562.0
Customer relationships, net of accumulated amortization of $578.7 and $412.5
Assets
Other intangible assets, net	3,917.0	4,159.8
Other intangible assets, net of accumulated amortization of $203.2 and $146.7
Assets
Other intangible assets, net	$ 331.2	$ 405.9

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Nature of operations and presentation of financial statements (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of presentation

We have prepared these condensed consolidated financial statements pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Registration Statement. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in note 2.

We report three geographic segments based on customer location: the Americas, Europe and AMEA. For the periods presented, all share and per share information has been adjusted for a stock split that occurred in connection with our IPO (see note 12). All intercompany balances and transactions have been eliminated from the financial statements.

These financial statements reflect the adoptions of a new revenue recognition standard at January 1, 2018 and a new lease standard at January 1, 2019. Information about the new revenue recognition standard is disclosed in the audited consolidated financial statements included within our Registration Statement. Information about the new lease standard is disclosed in note 3.

Reclassifications

Reclassifications

In the second quarter of 2019, we changed our presentation of disaggregated net sales included in note 6 to depict the product line categories that are regularly used by management. Product sales associated with our service offerings, referred to as specialty procurement, have been reclassified from third party materials & consumables and combined with net sales from services to present the services & specialty procurement product line for all periods presented.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, income and loss during the reporting periods. Actual results could differ from those estimates.

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Redeemable equity and stockholders' equity or deficit

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Redeemable equity and stockholders' equity or deficit

12. Redeemable equity and stockholders’ equity or deficit

The following table presents information about our capitalization at September 30, 2019:

(shares in millions)	Par value per share		Shares authorized
Undesignated preferred stock	$	0.01	50.0
Stockholders’ equity:
Mandatory convertible preferred stock	0.01		25.0
Common stock	0.01		750.0

In connection with the closing of our IPO, we filed an amended and restated certificate of incorporation to effect a five-for-one split of our common stock and authorize the classes of stock noted above. All shares of common stock, stock-based instruments and per-share data included in these financial statements give effect to the stock split.

Initial public offering

In the second quarter of 2019, we completed the IPO of our common stock and MCPS. We sold 238.1 million shares of common stock at a price per share of $14, resulting in net proceeds of $3,231.9 million after deducting underwriting discounts, commissions and other offering costs of $100.8 million. We also sold 20.7 million shares of MCPS at a price per share of $50, resulting in net proceeds of $1,003.7 million after deducting underwriting discounts, commissions and other offering costs of $31.3 million.

Mandatory convertible preferred stock

MCPS accrues cumulative dividends at a rate of 6.250% per annum on the liquidation preference of $50 per share. Accrued cumulative dividends in arrears as of September 30, 2019 was $8.1 million, and we paid a dividend of $15.1 million during the nine months ended September 30, 2019. Each share of MCPS converts into between 3.0395 and 3.5714 shares of common stock, depending upon the average trading price of our common stock leading up to the conversion date and subject to customary anti-dilution adjustments. The MCPS converts:

• Automatically on May 15, 2022;

• Following the occurrence of a change of control or certain other defined events, in which case holders are also entitled to receive a make-whole dividend equal to the present value of all remaining dividends that would have accumulated through May 15, 2022; and

• At any time at the option of the holder at the minimum conversion rate of 3.0395.

The holders have the right to appoint two additional members to the board of directors if dividends on the MCPS have not been declared or paid for the equivalent of six or more dividend periods. The holders do not have any other voting rights.

In the event of any bankruptcy, liquidation, dissolution or winding up of the Company, the holders are entitled to a liquidation preference of $50 in cash per share before any payment or distribution is made to holders of common stock.

Redemption of series A preferred stock

In connection with the IPO, we redeemed all outstanding series A preferred stock at an aggregate redemption price of $2,630.9 million. The series A preferred stock redemption price was equal to the sum of their $2,410.5 million liquidation preference on such shares of series A preferred stock and a make-whole premium of $220.4 million.

In connection with the redemption, we filed a certificate of elimination to eliminate the 25.0 million of authorized shares designated as series A preferred stock, making those shares available for other preferred stock designations.

Conversion of junior convertible preferred stock

As a result of the completion of our IPO, all outstanding shares of junior convertible preferred stock automatically converted into 194.5 million shares of common stock. The number of shares of common stock received upon conversion of the junior convertible preferred stock was based on the $2,722.5 million liquidation preference of such stock divided by the IPO price per share of common stock.

In connection with the conversion, we filed a certificate of elimination to eliminate the 5.0 million of authorized shares designated as junior convertible preferred stock, making those shares available for other preferred stock designations.

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Income taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income taxes

16. Income taxes

The following table presents the relationship between income tax expense or benefit and income or loss before income taxes:

(in millions)	Three months ended September 30,					Nine months ended September 30,
	2019			2018		2019			2018
Income tax (expense) benefit	$	(15.2	)	$	33.4	$	(23.4	)	$	33.9
Income (loss) before income taxes	37.3			1.1		(9.4		)	(67.5		)

Income tax expense or benefit in the quarter is based upon the estimated income or loss for the full year. The composition of the income or loss in different countries and adjustments, if any, in the applicable quarterly periods influences our expense or benefit. Because of the anomalies of losses to the effective rate and the inclusion in the prior year of the resolution of 2017 U.S. tax law changes, a prior year comparison is not meaningful.

The relationship between pretax income or loss and income tax expense or benefit is greatly affected by the impact of losses for which we cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions.

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Restructuring and severance (Tables)

9 Months Ended

Sep. 30, 2019

Restructuring Cost and Reserve [Line Items]

Schedule of restructuring and severance charges

The following table presents restructuring and severance charges by plan:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
2017 restructuring program	$	13.3	$	16.6	$	19.1	$	54.8
Other	0.1		0.1		0.7		2.3
Total	$	13.4	$	16.7	$	19.8	$	57.1

2017 restructuring program

Restructuring Cost and Reserve [Line Items]

Schedule of restructuring and severance charges

The following table presents information about charges under the 2017 restructuring program:

(in millions)	Three months ended September 30,				Nine months ended September 30,				September 30, 2019
									Charges incurred to date		Expected remaining charges		Total expected charges
	2019		2018		2019		2018
Employee severance and related	$	3.0	$	12.4	$	8.4	$	46.0	$	74.6	$	15.4	$	90.0
Facility closure	0.3		0.5		0.7		0.8		1.9		3.1		5.0
Other	10.0		3.7		10.0		8.0		38.4		1.6		40.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0
Americas	$	10.3	$	6.3	$	11.1	$	15.7	$	51.7	$	9.3	$	61.0
Europe	2.0		9.5		7.0		37.3		47.6		4.4		52.0
AMEA	—		0.8		—		0.8		0.8		0.2		1.0
Corporate	1.0		—		1.0		1.0		14.8		6.2		21.0
Total	$	13.3	$	16.6	$	19.1	$	54.8	$	114.9	$	20.1	$	135.0

Other charges in the table above were to write-down the carrying value of assets we plan to close or sell under the program as well as expense related to a voluntary early retirement program under one of our pension plans in the United States. These charges do not impact the accrued restructuring charges shown in the following table.

Schedule of changes to accrued restructuring and severance charges

The following table presents changes to accrued employee severance and related charges under the 2017 restructuring program, which are primarily classified as employee-related current liabilities:

(in millions)	Employee severance and related
Balance at December 31, 2018	$	33.6
Charges	8.4
Cash payments	(23.4		)
Currency translation	(1.0		)
Balance at September 30, 2019	$	17.6

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Earnings or loss per share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of basic and diluted earnings per share

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended September 30, 2019:

(in millions, except per share data)	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	5.7	570.0	$	0.01
Effect of dilutive securities:
Stock-based awards	—		8.3
Warrants	—		2.4
Diluted	$	5.7	580.7	$	0.01

Schedule of securities excluded from calculations of diluted loss per share

For all other periods presented, basic and diluted loss per share calculations were the same because we reported a net loss available to common stockholders. As a result, the following potentially dilutive instruments were excluded from those calculations:

(in millions)	Three months ended September 30, 2018	Nine months ended September 30,
		2019	2018
Stock-based awards	19.3	29.7	19.3
MCPS	—	70.4	—
Total	19.3	100.1	19.3

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Stock-based compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of information about stock-based compensation expense

The following table presents information about stock-based compensation expense (benefit):

(in millions)	Classification	Three months ended September 30,					Nine months ended September 30,
		2019			2018		2019		2018
2019 Plan:
Stock options	Equity	$	0.9		$	—	$	1.5	$	—
Restricted stock units	Equity	4.8			—		7.8		—
2017 Plan and predecessors:
Stock options	Equity	4.2			4.1		38.2		10.2
Optionholder awards	Liability	0.7			1.7		2.6		4.2
Restricted stock units	Equity	0.3			—		0.7		0.1
NuSil plans:
Phantom units	Liability	(0.9		)	—		0.2		—
SARs	Equity	(8.3		)	—		6.4		—
Total		$	1.7		$	5.8	$	57.4	$	14.5
Financial statement classification:
Equity-classified		$	1.9		$	4.1	$	54.6	$	10.3
Liability-classified		(0.2		)	1.7		2.8		4.2

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Earnings or loss per share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings or loss per share

4. Earnings or loss per share

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended September 30, 2019:

(in millions, except per share data)	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	5.7	570.0	$	0.01
Effect of dilutive securities:
Stock-based awards	—		8.3
Warrants	—		2.4
Diluted	$	5.7	580.7	$	0.01

For the three months ended September 30, 2019, diluted earnings per share included accumulated yield of $16.4 million and excluded 70.4 million of common stock equivalents under the MCPS because they were anti-dilutive to the calculation.

For all other periods presented, basic and diluted loss per share calculations were the same because we reported a net loss available to common stockholders. As a result, the following potentially dilutive instruments were excluded from those calculations:

(in millions)	Three months ended September 30, 2018	Nine months ended September 30,
		2019	2018
Stock-based awards	19.3	29.7	19.3
MCPS	—	70.4	—
Total	19.3	100.1	19.3

Additionally, the junior convertible preferred stock and warrants were excluded from the basic loss per share calculation in the 2018 periods because holders of those instruments do not participate in losses.

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Inventory

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventory

8. Inventory

The following table presents components of inventory:

(in millions)	September 30, 2019		December 31, 2018
Merchandise inventory	$	438.9	$	409.0
Finished goods	117.8		122.9
Raw materials	121.4		105.2
Work in process	36.4		34.0
Total	$	714.5	$	671.1

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Debt - repayments and repricing (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Repayment and repricing of debt
Loss on extinguishment of debt	$ 0.0	$ 0.0	$ 70.2	$ 0.0
Senior secured credit facilities | Term loans
Repayment and repricing of debt
Loss on extinguishment of debt			70.2
Senior secured credit facilities | Term loans | U.S. dollars
Repayment and repricing of debt
Repayment of debt			$ 1,096.2
Change in interest rate margin			0.75%
Senior secured credit facilities | Term loans | Euro
Repayment and repricing of debt
Repayment of debt			$ 625.5
Change in interest rate margin			0.50%

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Segment financial information - reportable segments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Information by reportable segment
Net sales	$ 1,503.8	$ 1,494.2	$ 4,516.3	$ 4,390.4
Management EBITDA	269.2	268.2	821.5	743.0
Reconciliation of Management EBITDA from net loss
Net income (loss)	22.1	34.5	(32.8)	(33.6)
Interest expense	98.3	130.2	342.0	388.7
Income tax expense (benefit)	15.2	(33.4)	23.4	(33.9)
Depreciation and amortization	100.3	101.3	301.6	303.5
Loss on extinguishment of debt	0.0	0.0	70.2	0.0
Share-based compensation expense	1.7	5.8	57.4	14.5
Net foreign currency loss from financing activities	8.2	3.4	0.1	0.2
Restructuring and severance charges	13.4	16.7	19.8	57.1
Purchase accounting adjustments	(3.1)	(4.1)	(7.2)	2.8
VWR transaction and integration expenses	5.4	5.1	16.8	19.4
Write-offs of working capital and other assets	5.5	0.2	19.9	0.2
Business performance improvement programs	0.4	3.1	2.2	6.4
Long-term incentive plan	0.5	2.7	5.1	8.1
Other	1.3	2.7	3.0	9.6
Management EBITDA	269.2	268.2	821.5	743.0
Americas
Information by reportable segment
Net sales	918.2	912.9	2,701.0	2,603.0
Management EBITDA	187.7	181.9	560.4	483.8
Reconciliation of Management EBITDA from net loss
Management EBITDA	187.7	181.9	560.4	483.8
Europe
Information by reportable segment
Net sales	501.1	503.1	1,561.8	1,559.3
Management EBITDA	85.1	85.0	261.6	253.3
Reconciliation of Management EBITDA from net loss
Management EBITDA	85.1	85.0	261.6	253.3
AMEA
Information by reportable segment
Net sales	84.5	78.2	253.5	228.1
Management EBITDA	16.9	18.9	53.4	54.7
Reconciliation of Management EBITDA from net loss
Management EBITDA	16.9	18.9	53.4	54.7
Corporate
Information by reportable segment
Management EBITDA	(20.5)	(17.6)	(53.9)	(48.8)
Reconciliation of Management EBITDA from net loss
Management EBITDA	$ (20.5)	$ (17.6)	$ (53.9)	$ (48.8)

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Restructuring and severance - period charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Information about restructuring charges
Charges	$ 13.4	$ 16.7	$ 19.8	$ 57.1
2017 restructuring program
Information about restructuring charges
Charges	13.3	16.6	19.1	54.8
2017 restructuring program | Americas
Information about restructuring charges
Charges	10.3	6.3	11.1	15.7
2017 restructuring program | Europe
Information about restructuring charges
Charges	2.0	9.5	7.0	37.3
2017 restructuring program | AMEA
Information about restructuring charges
Charges	0.0	0.8	0.0	0.8
2017 restructuring program | Corporate
Information about restructuring charges
Charges	1.0	0.0	1.0	1.0
2017 restructuring program | Employee severance and related
Information about restructuring charges
Charges	3.0	12.4	8.4	46.0
2017 restructuring program | Facility closure
Information about restructuring charges
Charges	0.3	0.5	0.7	0.8
2017 restructuring program | Other
Information about restructuring charges
Charges	10.0	3.7	10.0	8.0
Other
Information about restructuring charges
Charges	$ 0.1	$ 0.1	$ 0.7	$ 2.3

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Unaudited condensed consolidated statements of cash flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net income (loss)	$ (32.8)	$ (33.6)
Reconciling adjustments:
Depreciation and amortization	301.6	303.5
Share-based compensation expense	57.4	14.5
Other restructuring charges (see note 9)	10.0	0.0
Deferred income tax benefit	(67.5)	(135.7)
Amortization of deferred financing costs	26.5	31.1
Loss on extinguishment of debt	70.2	0.0
Provision for accounts receivable and inventory	22.9	19.5
Changes in assets and liabilities:
Accounts receivable	(76.9)	(86.7)
Inventory	(74.1)	(19.8)
Accounts payable	7.9	(28.1)
Other assets and liabilities	22.2	48.4
Other, net	(0.4)	17.5
Net cash provided by operating activities	267.0	130.6
Cash flows from investing activities
Capital expenditures	(39.5)	(32.3)
Other	8.8	9.1
Net cash used in investing activities	(30.7)	(23.2)
Cash flows from financing activities
Debt repayments	(1,825.4)	(95.4)
Dividend payment	(15.1)	0.0
Payments of contingent consideration	(4.6)	(20.5)
Proceeds from issuance of stock, net of issuance costs	4,235.6	0.0
Redemption of series A preferred stock	(2,630.9)	0.0
Net cash used in financing activities	(240.4)	(115.9)
Effect of currency rate changes on cash, restricted cash and equivalents	(6.7)	(5.3)
Net change in cash, restricted cash and equivalents	(10.8)	(13.8)
Cash, restricted cash and equivalents, beginning of period	187.7	188.5
Cash, restricted cash and equivalents, end of period	$ 176.9	$ 174.7

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Earnings or loss per share - reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings (numerator)
Basic	$ 5.7	$ (34.4)	$ (389.6)	$ (232.0)
Stock-based awards	0.0
Warrants	0.0
Diluted	$ 5.7
Weighted average shares outstanding (denominator)
Basic	570.0	132.8	343.7	132.7
Stock-based awards	8.3
Warrants	2.4
Diluted	580.7	132.8	343.7	132.7
Earnings per share
Basic	$ 0.01
Diluted	$ 0.01

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Schedule of lease assets and liabilities and their balance sheet classification

The following table presents lease assets and liabilities and their balance sheet classification:

(in millions)	Classification	September 30, 2019
Operating leases:
Lease assets	Other assets	$	119.5
Current portion of liabilities	Other current liabilities	29.7
Liabilities, net of current portion	Other liabilities	96.7
Finance leases:
Lease assets	Property, plant and equipment, net	54.7
Current portion of liabilities	Current portion of debt	3.3
Liabilities, net of current portion	Debt, net of current portion	56.4

Schedule of information about lease expense

The following tables present information about lease expense:

(in millions)	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	SG&A expenses	$	12.7	$	39.4
Finance lease expense	SG&A expenses	1.6		8.6
Total		$	14.3	$	48.0

Finance lease expense consists primarily of amortization of finance lease assets.

	September 30, 2019
Weighted average remaining lease term, in years:
Operating leases	5.5
Finance leases	16.6
Weighted average discount rate:
Operating leases	5.8	%
Finance leases	8.5	%

Schedule of future payments under operating leases

The following table presents future payments due under leases reconciled to lease liabilities:

(in millions)	September 30, 2019
	Operating leases			Finance leases
Three months ending December31, 2019	$	10.3		$	2.4
Year ending December31,
2020	35.2			7.6
2021	30.2			6.6
2022	23.7			5.9
2023	20.2			5.4
Thereafter	32.8			92.7
Total undiscounted lease payments	152.4			120.6
Difference between undiscounted and discounted lease payments	(26.0		)	(60.9		)
Lease liabilities	$	126.4		$	59.7

Schedule of future payments under finance leases

The following table presents future payments due under leases reconciled to lease liabilities:

(in millions)	September 30, 2019
	Operating leases			Finance leases
Three months ending December31, 2019	$	10.3		$	2.4
Year ending December31,
2020	35.2			7.6
2021	30.2			6.6
2022	23.7			5.9
2023	20.2			5.4
Thereafter	32.8			92.7
Total undiscounted lease payments	152.4			120.6
Difference between undiscounted and discounted lease payments	(26.0		)	(60.9		)
Lease liabilities	$	126.4		$	59.7

Schedule of future minimum payments under operating leases

The following table presents future minimum payments under operating leases:

(in millions)	December 31, 2018
2019	$	44.2
2020	34.1
2021	29.2
2022	25.7
2023	20.9
Thereafter	58.9
Total minimum payments	$	213.0

Schedule of supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:

(in millions)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	173.9	$	184.7
Restricted cash classified as other assets	3.0		3.0
Total	$	176.9	$	187.7

(in millions)	Nine months ended September 30,
	2019		2018
Cash flows from operating activities:
Cash paid for income taxes, net	$	100.2	$	49.9
Cash paid for interest	258.4		300.5

The following tables present supplemental disclosures of cash flow information:

(in millions)	Nine months ended September 30, 2019
Cash flows from operating activities:
Cash paid under operating leases	$	33.4
Cash paid under finance leases	3.7
Cash flows from financing activities:
Cash paid under finance leases	4.1

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Unaudited condensed consolidated statements of operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Net sales	$ 1,503.8	$ 1,494.2	$ 4,516.3	$ 4,390.4
Cost of sales	1,029.8	1,015.5	3,076.0	3,003.4
Gross profit	474.0	478.7	1,440.3	1,387.0
Selling, general and administrative expenses	330.8	346.5	1,040.4	1,072.8
Operating income	143.2	132.2	399.9	314.2
Interest expense	(98.3)	(130.2)	(342.0)	(388.7)
Loss on extinguishment of debt	0.0	0.0	(70.2)	0.0
Other (expense) income, net	(7.6)	(0.9)	2.9	7.0
Income (loss) before income taxes	37.3	1.1	(9.4)	(67.5)
Income tax (expense) benefit	(15.2)	33.4	(23.4)	33.9
Net income (loss)	22.1	34.5	(32.8)	(33.6)
Accumulation of yield on preferred stock	(16.4)	(68.9)	(136.4)	(198.4)
Accretion of make whole premium on series A preferred stock	0.0	0.0	(220.4)	0.0
Net income (loss) available to common stockholders	$ 5.7	$ (34.4)	$ (389.6)	$ (232.0)
Earnings (loss) per share, basic and diluted	$ 0.01	$ (0.26)	$ (1.13)	$ (1.75)
Weighted average shares outstanding:
Basic	570.0	132.8	343.7	132.7
Diluted	580.7	132.8	343.7	132.7

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Redeemable equity and stockholders' equity or deficit (Details) $ / shares in Units, $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)
Information about capitalization
Dividend payment		$ 15.1	$ 0.0
Redemption and conversion of stock
Amount paid to redeem stock		$ 2,630.9	$ 0.0
Undesignated preferred stock
Information about capitalization
Preferred stock, par value per share | $ / shares	$ 0.01	$ 0.01
Preferred stock, shares authorized | shares	50,000,000	50,000,000
Mandatory convertible preferred stock
Information about capitalization
Preferred stock, par value per share | $ / shares	$ 0.01	$ 0.01
Preferred stock, shares authorized | shares	25,000,000	25,000,000
Dividend rate		6.25%
Liquidation preference per share | $ / shares	$ 50	$ 50
Accrued cumulative dividends in arrears		$ 8.1
Dividend payment		$ 15.1
Initial public offering
Number of shares issued | shares	20,700,000
Price per share issued | $ / shares	$ 50	$ 50
Proceeds from offering of stock	$ 1,003.7
Payments of offering costs	$ 31.3
Mandatory convertible preferred stock | Minimum
Information about capitalization
Conversion ratio		3.0395
Mandatory convertible preferred stock | Maximum
Information about capitalization
Conversion ratio		3.5714
Common stock
Information about capitalization
Common stock, par value per share | $ / shares	$ 0.01	$ 0.01
Common stock, shares authorized | shares	750,000,000	750,000,000
Stock split ratio		5
Initial public offering
Number of shares issued | shares	238,100,000
Price per share issued | $ / shares	$ 14	$ 14
Proceeds from offering of stock	$ 3,231.9
Payments of offering costs	100.8
Series A preferred stock
Redemption and conversion of stock
Amount paid to redeem stock		$ 2,630.9
Liquidation preference	$ 2,410.5	2,410.5
Redemption premium		$ 220.4
Shares authorized | shares	25,000,000	25,000,000
Junior convertible preferred stock
Redemption and conversion of stock
Conversion of stock, shares issued | shares		194,500,000
Liquidation preference	$ 2,722.5	$ 2,722.5
Shares authorized | shares	5,000,000	5,000,000

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Income taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Income tax (expense) benefit	$ (15.2)	$ 33.4	$ (23.4)	$ 33.9
Income (loss) before income taxes	$ 37.3	$ 1.1	$ (9.4)	$ (67.5)

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Stock-based compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock-based compensation

14. Stock-based compensation

The following table presents information about stock-based compensation expense (benefit):

(in millions)	Classification	Three months ended September 30,					Nine months ended September 30,
		2019			2018		2019		2018
2019 Plan:
Stock options	Equity	$	0.9		$	—	$	1.5	$	—
Restricted stock units	Equity	4.8			—		7.8		—
2017 Plan and predecessors:
Stock options	Equity	4.2			4.1		38.2		10.2
Optionholder awards	Liability	0.7			1.7		2.6		4.2
Restricted stock units	Equity	0.3			—		0.7		0.1
NuSil plans:
Phantom units	Liability	(0.9		)	—		0.2		—
SARs	Equity	(8.3		)	—		6.4		—
Total		$	1.7		$	5.8	$	57.4	$	14.5
Financial statement classification:
Equity-classified		$	1.9		$	4.1	$	54.6	$	10.3
Liability-classified		(0.2		)	1.7		2.8		4.2

At September 30, 2019, unvested awards under the 2019 Plan have remaining share-based compensation expense of $65.4 million to be recognized over a weighted average period of 3.2 years.

2019 Plan

In connection with the IPO, we adopted the 2019 Plan. The 2019 Plan initially provides for up to 23.5 million shares of common stock to be issued in the form of stock options, restricted stock units or other equity-based awards or cash-based awards. The 2019 Plan also provides for 1% annual increases to the number of shares of common stock available for issuance unless reduced by our Board of Directors.

The following awards were granted under the 2019 plan in connection with the IPO:

• We granted 3.2 million stock options having a grant date fair value of $4.79 per option using the following inputs: an expected term of 6.3 years as determined under the simplified method, 30% volatility and a risk free rate of 2.2%. The options have an exercise price of $14.00, a ten-year contractual life and will vest annually over four years, subject to the recipient continuously providing service to us through each such date.

• We granted 3.6 million restricted stock units having a grant date fair value of $14.00 each. The restricted stock units will vest annually over four years, subject to the recipient continuously providing service to us through each such date.

• We converted $26.2 million of long-term cash incentive awards into 1.9 million restricted stock units having a grant date fair value of $14.00 each. Half of the restricted stock units vest on December 31, 2020, subject to the recipient continuously providing service to us through such date; half of the units vest upon achievement of a specified earnings target in addition to that service condition. The conversion was accounted for following the guidance for modifications of stock-based awards with no incremental compensation cost recognized as a result of the conversion. The conversion also resulted in the $8.8 million reclassification of a long-term incentive plan liability into equity.

Interim update for awards issued under the 2017 Plan

We recognized $26.9 million of stock-based compensation expense upon the completion of the IPO, which satisfied a performance condition for 0.9 million stock options. The expense recognized was equal to the grant date fair value for these awards.

Interim update for awards issued under the NuSil Plans

The value of a SAR is based on the value of NuSil LLC, a former owner of NuSil and one of our current investors, whose assets primarily consist of shares of our common stock. The IPO established a quoted price and an active market for our common stock, a level 1 fair value measurement. Expense related to our SARs is now remeasured quarterly at fair value based on movements in those quoted prices. At September 30, 2019, outstanding SARs had an aggregate intrinsic value of $28.2 million with no expiration. NuSil LLC is obligated to pay cash to the holders upon settlement of these awards. We do not have any funding obligations to SAR holders or NuSil LLC.

Each $1.00 increase (decrease) in the quoted price of our common stock will result in the recognition of an additional $1.9 million of stock-based compensation expense (benefit).

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

18. Leases

The following table presents lease assets and liabilities and their balance sheet classification:

(in millions)	Classification	September 30, 2019
Operating leases:
Lease assets	Other assets	$	119.5
Current portion of liabilities	Other current liabilities	29.7
Liabilities, net of current portion	Other liabilities	96.7
Finance leases:
Lease assets	Property, plant and equipment, net	54.7
Current portion of liabilities	Current portion of debt	3.3
Liabilities, net of current portion	Debt, net of current portion	56.4

The following tables present information about lease expense:

(in millions)	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	SG&A expenses	$	12.7	$	39.4
Finance lease expense	SG&A expenses	1.6		8.6
Total		$	14.3	$	48.0

Finance lease expense consists primarily of amortization of finance lease assets.

	September 30, 2019
Weighted average remaining lease term, in years:
Operating leases	5.5
Finance leases	16.6
Weighted average discount rate:
Operating leases	5.8	%
Finance leases	8.5	%

The following table presents future payments due under leases reconciled to lease liabilities:

(in millions)	September 30, 2019
	Operating leases			Finance leases
Three months ending December31, 2019	$	10.3		$	2.4
Year ending December31,
2020	35.2			7.6
2021	30.2			6.6
2022	23.7			5.9
2023	20.2			5.4
Thereafter	32.8			92.7
Total undiscounted lease payments	152.4			120.6
Difference between undiscounted and discounted lease payments	(26.0		)	(60.9		)
Lease liabilities	$	126.4		$	59.7

The following table presents future minimum payments under operating leases:

(in millions)	December 31, 2018
2019	$	44.2
2020	34.1
2021	29.2
2022	25.7
2023	20.9
Thereafter	58.9
Total minimum payments	$	213.0

The following tables present supplemental disclosures of cash flow information:

(in millions)	Nine months ended September 30, 2019
Cash flows from operating activities:
Cash paid under operating leases	$	33.4
Cash paid under finance leases	3.7
Cash flows from financing activities:
Cash paid under finance leases	4.1

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Summary of significant accounting policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Summary of significant accounting policies

2. Summary of significant accounting policies

Leases

We primarily enter into real estate leases for manufacturing, warehousing and commercial office space to support our global operations. We also enter into vehicle and equipment leases to support those operations.

We determine if an arrangement is a lease at inception. Short-term leases, defined as having an initial term of twelve months or less, are expensed as incurred and not recorded on the balance sheet. We record the value of all other leased property and the related obligations as assets and liabilities on the balance sheet. Information about the amount and classification of lease assets and liabilities is included in note 18.

At inception, lease assets and liabilities are measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we exercise judgment in selecting the incremental borrowing rate based on the information available at inception to determine the present value of future payments. Operating lease assets are further adjusted for lease incentives and initial direct costs.

Our lease terms may include options to extend or terminate the lease. We exercise judgment to calculate the term of those leases when extension or termination options are present, and we include such options in the calculation of the lease term when it is reasonably certain that we will exercise those options. Operating lease expense is recognized on a straight-line basis over the lease term, except for variable rent which is expensed as incurred. Short-term lease and variable rent expense was immaterial to the financial statements and has been included within operating lease expense. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and an immaterial amount of interest expense.

Some of our lease agreements include both lease and non-lease components. We account for those components separately for real estate leases and as a combined single lease component for all other types of leases.

Earnings or loss per share

Basic earnings or loss per share is calculated by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding for the applicable period.

Diluted earnings per share is computed based on the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares we could have repurchased with the proceeds from the issuance of the potentially dilutive shares. Variable conversion ratios are determined as of period end. Preferred dividends are added back to net income or loss available to common stockholders provided that the preferred securities are not anti-dilutive to the calculation.

In periods of net loss available to common stockholders, diluted calculations are equal to basic calculations because the inclusion of dilutive shares would be anti-dilutive.

Stockholders’ equity or deficit

MCPS is classified as permanent equity and initially recorded at fair value, net of issuance costs. Accrued but unpaid MCPS dividends are classified as other current liabilities with a corresponding reduction to common stock including paid-in capital.

Certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings are capitalized on the balance sheet as deferred offering costs until such financings are completed. Upon completion of an equity financing, these costs are recorded as a reduction of the proceeds received in arriving at the amount recorded in stockholders’ equity or deficit. When a planned equity financing is abandoned, the deferred offering costs are expensed immediately as a charge to SG&A expenses.

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Segment financial information

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment financial information

6. Segment financial information

The following tables present information by reportable segment:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net sales:										(as adjusted, see note 1)
Americas	$	918.2		$	912.9		$	2,701.0		$	2,603.0
Europe	501.1			503.1			1,561.8			1,559.3
AMEA	84.5			78.2			253.5			228.1
Total	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4
Management EBITDA:
Americas	$	187.7		$	181.9		$	560.4		$	483.8
Europe	85.1			85.0			261.6			253.3
AMEA	16.9			18.9			53.4			54.7
Corporate	(20.5		)	(17.6		)	(53.9		)	(48.8		)
Total	$	269.2		$	268.2		$	821.5		$	743.0

The amounts above exclude inter-segment activity because it is not material. All of the net sales for each segment are from external customers.

The following table presents the reconciliation of Management EBITDA from net income or loss, the nearest measurement under GAAP:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)
Interest expense	98.3			130.2			342.0			388.7
Income tax expense (benefit)	15.2			(33.4		)	23.4			(33.9		)
Depreciation and amortization	100.3			101.3			301.6			303.5
Loss on extinguishment of debt	—			—			70.2			—
Share-based compensation expense	1.7			5.8			57.4			14.5
Net foreign currency loss from financing activities	8.2			3.4			0.1			0.2
Restructuring and severance charges	13.4			16.7			19.8			57.1
Purchase accounting adjustments	(3.1		)	(4.1		)	(7.2		)	2.8
VWR transaction and integration expenses	5.4			5.1			16.8			19.4
Write-offs of working capital and other assets	5.5			0.2			19.9			0.2
Business performance improvement programs	0.4			3.1			2.2			6.4
Long-term incentive plan	0.5			2.7			5.1			8.1
Other	1.3			2.7			3.0			9.6
Management EBITDA	$	269.2		$	268.2		$	821.5		$	743.0

The following table presents net sales by product line:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Proprietary materials & consumables	$	494.2	$	522.0	$	1,500.9	$	1,469.0
Third party materials & consumables	592.8		572.2		1,792.8		1,765.4
Services & specialty procurement	195.7		177.1		562.5		511.1
Equipment & instrumentation	221.1		222.9		660.1		644.9
Total	$	1,503.8	$	1,494.2	$	4,516.3	$	4,390.4

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Commitments and contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

10. Commitments and contingencies

Our business involves commitments and contingencies related to compliance with environmental laws and regulations, the manufacture and sale of products, employment arrangements and litigation. The ultimate resolution of contingencies is subject to significant uncertainty, and it is reasonably possible that contingencies could be decided unfavorably for us. We have also entered into lease commitments as disclosed in note 18.

Environmental laws and regulations

Our environmental liabilities are subject to changing governmental policy and regulations, discovery of unknown conditions, judicial proceedings, method and extent of remediation, existence of other potentially responsible parties and future changes in technology. We believe that known and unknown environmental matters, if not resolved favorably, could have a material effect on our financial position, liquidity and profitability.

Mallinckrodt indemnification

In 2010, New Mountain Capital acquired us from Covidien plc in accordance with a stock purchase agreement dated May 25, 2010. At that time, we were organized as Mallinckrodt Baker, Inc. or MBI. Pursuant to the terms of that agreement, we are entitled to various levels of indemnification with respect to environmental liabilities involving the former MBI operations. In 2013, in connection with the Covidien plc divestiture of Mallinckrodt Group S.a.r.l and Mallinckrodt LLC, together “Mallinckrodt,” and by a second amendment to the stock purchase agreement dated June 6, 2013, but effective upon the consummation of the divestiture, Covidien plc assigned its obligations as described herein to Mallinckrodt, and Mallinckrodt assumed those obligations from Covidien plc. As a result of the stock purchase agreement and assignment, Mallinckrodt is contractually obligated to indemnify and defend us for all off-site environmental liabilities (for example, Superfund or Comprehensive Environmental Response, Compensation, and Clean-up Act type liabilities) arising from the pre-closing disposal of chemicals or wastes by former MBI operations.

In connection with environmental liabilities arising from pre-closing noncompliance with environmental laws, Mallinckrodt is contractually obligated to reimburse us for a percentage of the total liability, with such reimbursements made through disbursements from a $30.0 million environmental escrow established at the time of the closing. Specifically, Mallinckrodt will be responsible for reimbursement of 80% of the total costs up to $40.0 million of such environmental liabilities, 50% of the next $40.0 million of such environmental liabilities and 100% of the next $30.0 million of such environmental liabilities in the aggregate. Currently, reimbursements are 80% of the amounts spent by us, with reimbursements and settlements to date exceeding $12.0 million. In addition, in connection with operation and maintenance activities required pursuant to administrative consent orders and subsequently issued remedial action permits involving our Phillipsburg, New Jersey, facility, amounts in excess of a small annual threshold are also subject to reimbursement, currently at the 80% level.

In a separate matter, in 2013, we reached a settlement with Mallinckrodt whereby in exchange for a payment of $4.0 million, all claims regarding non-compliance with process safety management laws and regulations are deemed resolved. We used the settlement proceeds to establish a reserve of $4.0 million and have since made payments to address safety related matters that have reduced the balance of the reserve to $2.6 million as of September 30, 2019.

Other noteworthy matters

The New Jersey Department of Environmental Protection has ordered us to remediate groundwater conditions near our plant in Phillipsburg, New Jersey. This matter is covered by the indemnification arrangement previously described. At September 30, 2019, our accrued obligation under this order is $3.8 million, which is calculated based on expected cash payments discounted at rates ranging from 1.5% in 2019 to 2.1% in 2045. The undiscounted amount of that obligation is $4.5 million.

In 2016, we assessed the environmental condition of our chemical manufacturing site in Gliwice, Poland. Our assessment revealed specific types of soil and groundwater contamination throughout the site. We are also monitoring the condition of a closed landfill on that site. These matters are not covered by our indemnification arrangement because they relate to an operation we subsequently acquired. At September 30, 2019, our balance sheet includes a liability of $3.6 million for remediation and monitoring costs. That liability is estimated primarily on expected remediation payments discounted through 2020 and is not materially different than its undiscounted amount.

Manufacture and sale of products

Our business involves risk of product liability, patent infringement and other claims in the ordinary course of business arising from the products that we produce ourselves or obtain from our suppliers, as well as from the services we provide. Our exposure to such claims may increase to the extent that we expand our manufacturing operations or service offerings.

We maintain insurance policies to protect us against these risks, including product liability insurance. In many cases the suppliers of products we distribute have indemnified us against such claims. Our insurance coverage or indemnification agreements with suppliers may not be adequate in all pending or any future cases brought against us. Furthermore, our ability to recover under any insurance or indemnification arrangements is subject to the financial viability of our insurers, our suppliers and our suppliers’ insurers, as well as legal enforcement under the local laws governing the arrangements.

We have entered into indemnification agreements with customers of our self-manufactured products to protect them from liabilities and losses arising from our negligence, willful misconduct or sale of defective products. To date, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

Litigation

At September 30, 2019, there was no outstanding litigation that we believe would result in material losses if decided against us, and we do not believe that there are any unasserted matters that are reasonably possible to result in a material loss.

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Redeemable equity and stockholders' equity or deficit (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Schedule of information about capitalization

The following table presents information about our capitalization at September 30, 2019:

(shares in millions)	Par value per share		Shares authorized
Undesignated preferred stock	$	0.01	50.0
Stockholders’ equity:
Mandatory convertible preferred stock	0.01		25.0
Common stock	0.01		750.0

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Supplemental disclosures of cash flow information (Tables)

9 Months Ended

Sep. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Schedule of supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:

(in millions)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	173.9	$	184.7
Restricted cash classified as other assets	3.0		3.0
Total	$	176.9	$	187.7

(in millions)	Nine months ended September 30,
	2019		2018
Cash flows from operating activities:
Cash paid for income taxes, net	$	100.2	$	49.9
Cash paid for interest	258.4		300.5

The following tables present supplemental disclosures of cash flow information:

(in millions)	Nine months ended September 30, 2019
Cash flows from operating activities:
Cash paid under operating leases	$	33.4
Cash paid under finance leases	3.7
Cash flows from financing activities:
Cash paid under finance leases	4.1

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Supplemental disclosures of cash flow information (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Components and classification of cash, restricted cash and equivalents
Cash and cash equivalents	$ 173.9		$ 184.7
Restricted cash classified as other assets	3.0		3.0
Total	176.9	$ 174.7	$ 187.7	$ 188.5
Cash flows from operating activities
Cash paid for income taxes, net	100.2	49.9
Cash paid for interest	$ 258.4	$ 300.5

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Restructuring and severance - accrued charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Changes to accrued charges
Charges	$ 13.4	$ 16.7	$ 19.8	$ 57.1
2017 restructuring program
Changes to accrued charges
Charges	13.3	16.6	19.1	54.8
2017 restructuring program | Employee severance and related
Changes to accrued charges
Beginning balance			33.6
Charges	3.0	$ 12.4	8.4	$ 46.0
Cash payments			(23.4)
Currency translation			(1.0)
Ending balance	$ 17.6		$ 17.6

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Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

11. Debt

During the first nine months of 2019, we used proceeds from the IPO and operating cash flows to repay $1,096.2 million of U.S. dollar term loans and $625.5 million of euro term loans. We also incurred a loss on extinguishment of debt of $70.2 million, primarily caused by the proportional write-off of unamortized deferred financing costs related to the term loans.

The repayment of debt from our IPO improved our credit profile which enabled us to amend our senior secured credit facilities in June 2019. The amendment reduced the annual interest rate margins on our euro term loans by 0.50% and our U.S. dollar term loans by 0.75%. The cost to complete the amendment was not material.

The following table presents information about our debt:

(dollars in millions)	September 30, 2019						December 31, 2018
	Interest terms	Rate		Amount
Receivables facility	LIBOR plus 1.50%	3.52	%	$	—		$	104.0
Senior secured credit facilities:
Euro term loans	EURIBOR plus 3.25%	3.25	%	417.6			1,078.0
U.S. dollar term loans	LIBOR plus 3.00%	5.11	%	742.7			1,838.9
4.75% secured notes	fixed rate	4.75	%	545.3			572.5
6% secured notes	fixed rate	6.00	%	1,500.0			1,500.0
9% unsecured notes	fixed rate	9.00	%	2,000.0			2,000.0
Other				67.3			69.5
Total debt, gross				5,272.9			7,162.9
Less: unamortized deferred financing costs				(142.8		)	(238.2		)
Total debt				$	5,130.1		$	6,924.7
Classification on balance sheets:
Current portion of debt				$	41.4		$	142.4
Debt, net of current portion				5,088.7			6,782.3

Credit facilities

The following table presents availability under our credit facilities:

(in millions)	September 30, 2019
	Receivables facility			Revolving credit facility			Total
Current availability	$	250.0		$	250.0		$	500.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)
Outstanding borrowings	—			—			—
Unused availability	$	237.5		$	234.7		$	472.2
Maximum availability	$	250.0		$	250.0		$	500.0

Current availability under the receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable. At September 30, 2019, $455.6 million of accounts receivable were available as collateral under the facility.

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New accounting standards

9 Months Ended

Sep. 30, 2019

Accounting Changes and Error Corrections [Abstract]

New accounting standards

3. New accounting standards

In February 2016, the FASB issued a new standard related to leases. The most significant change for us was the recognition of new assets and liabilities for leases classified as operating leases. Our accounting for finance leases was substantially unchanged.

The standard also expanded disclosures about the amount, timing, and uncertainty of cash flows arising from leases. Those new disclosures are provided in notes 2 and 18.

We adopted the standard effective January 1, 2019 using a modified retrospective transition approach whereby the new standard was applied to all leases existing at January 1, 2019 with a cumulative effect adjustment recorded in equity representing the cumulative earnings effect of this new standard. We elected to utilize the package of practical expedients permitted under the transition guidance in the standard which allowed us to not reassess (i) whether any expired or existing contracts contain leases, (ii) historical lease classification and (iii) initial direct costs.

The most significant impacts upon adoption were: (i) a $3.1 million cumulative effect adjustment that increased accumulated deficit and (ii) recognition of $155.0 million of operating lease assets and $162.5 million of operating lease liabilities. Other impacts were immaterial and included adjustments to existing finance lease assets and liabilities, recognition of deferred income tax assets and a similar amount of deferred income tax liabilities, and derecognition of prepaid rent expense assets.

There were no other new accounting standards that had a material impact to our financial position or results of operations upon adoption in 2019.

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Supplemental disclosures of cash flow information

9 Months Ended

Sep. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental disclosures of cash flow information

7. Supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:

(in millions)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	173.9	$	184.7
Restricted cash classified as other assets	3.0		3.0
Total	$	176.9	$	187.7

(in millions)	Nine months ended September 30,
	2019		2018
Cash flows from operating activities:
Cash paid for income taxes, net	$	100.2	$	49.9
Cash paid for interest	258.4		300.5

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Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of information about debt

The following table presents information about our debt:

(dollars in millions)	September 30, 2019						December 31, 2018
	Interest terms	Rate		Amount
Receivables facility	LIBOR plus 1.50%	3.52	%	$	—		$	104.0
Senior secured credit facilities:
Euro term loans	EURIBOR plus 3.25%	3.25	%	417.6			1,078.0
U.S. dollar term loans	LIBOR plus 3.00%	5.11	%	742.7			1,838.9
4.75% secured notes	fixed rate	4.75	%	545.3			572.5
6% secured notes	fixed rate	6.00	%	1,500.0			1,500.0
9% unsecured notes	fixed rate	9.00	%	2,000.0			2,000.0
Other				67.3			69.5
Total debt, gross				5,272.9			7,162.9
Less: unamortized deferred financing costs				(142.8		)	(238.2		)
Total debt				$	5,130.1		$	6,924.7
Classification on balance sheets:
Current portion of debt				$	41.4		$	142.4
Debt, net of current portion				5,088.7			6,782.3

Schedule of availability under credit facilities

The following table presents availability under our credit facilities:

(in millions)	September 30, 2019
	Receivables facility			Revolving credit facility			Total
Current availability	$	250.0		$	250.0		$	500.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)
Outstanding borrowings	—			—			—
Unused availability	$	237.5		$	234.7		$	472.2
Maximum availability	$	250.0		$	250.0		$	500.0

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Segment financial information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of segment financial information

The following tables present information by reportable segment:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net sales:										(as adjusted, see note 1)
Americas	$	918.2		$	912.9		$	2,701.0		$	2,603.0
Europe	501.1			503.1			1,561.8			1,559.3
AMEA	84.5			78.2			253.5			228.1
Total	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4
Management EBITDA:
Americas	$	187.7		$	181.9		$	560.4		$	483.8
Europe	85.1			85.0			261.6			253.3
AMEA	16.9			18.9			53.4			54.7
Corporate	(20.5		)	(17.6		)	(53.9		)	(48.8		)
Total	$	269.2		$	268.2		$	821.5		$	743.0

The amounts above exclude inter-segment activity because it is not material. All of the net sales for each segment are from external customers.

Reconciliation of segment profitability to consolidated earnings

The following table presents the reconciliation of Management EBITDA from net income or loss, the nearest measurement under GAAP:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)
Interest expense	98.3			130.2			342.0			388.7
Income tax expense (benefit)	15.2			(33.4		)	23.4			(33.9		)
Depreciation and amortization	100.3			101.3			301.6			303.5
Loss on extinguishment of debt	—			—			70.2			—
Share-based compensation expense	1.7			5.8			57.4			14.5
Net foreign currency loss from financing activities	8.2			3.4			0.1			0.2
Restructuring and severance charges	13.4			16.7			19.8			57.1
Purchase accounting adjustments	(3.1		)	(4.1		)	(7.2		)	2.8
VWR transaction and integration expenses	5.4			5.1			16.8			19.4
Write-offs of working capital and other assets	5.5			0.2			19.9			0.2
Business performance improvement programs	0.4			3.1			2.2			6.4
Long-term incentive plan	0.5			2.7			5.1			8.1
Other	1.3			2.7			3.0			9.6
Management EBITDA	$	269.2		$	268.2		$	821.5		$	743.0

Schedule of net sales by product line

The following table presents net sales by product line:

(in millions)	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Proprietary materials & consumables	$	494.2	$	522.0	$	1,500.9	$	1,469.0
Third party materials & consumables	592.8		572.2		1,792.8		1,765.4
Services & specialty procurement	195.7		177.1		562.5		511.1
Equipment & instrumentation	221.1		222.9		660.1		644.9
Total	$	1,503.8	$	1,494.2	$	4,516.3	$	4,390.4

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Inventory (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Components of inventory
Merchandise inventory	$ 438.9	$ 409.0
Finished goods	117.8	122.9
Raw materials	121.4	105.2
Work in process	36.4	34.0
Total	$ 714.5	$ 671.1

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Commitments and contingencies (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2013
Mallinckrodt indemnification
Commitments and contingencies
Cash held in escrow	$ 30.0
Mallinckrodt indemnification | Minimum
Commitments and contingencies
Settlement amount awarded	$ 12.0
Mallinckrodt indemnification | First $40 million of environmental costs
Commitments and contingencies
Percent indemnified	80.00%
Mallinckrodt indemnification | First $40 million of environmental costs | Maximum
Commitments and contingencies
Estimate of possible loss	$ 40.0
Mallinckrodt indemnification | $40 million to $80 million of environmental costs
Commitments and contingencies
Percent indemnified	50.00%
Mallinckrodt indemnification | $40 million to $80 million of environmental costs | Maximum
Commitments and contingencies
Estimate of possible loss	$ 40.0
Mallinckrodt indemnification | $80 million to $110 million of environmental costs
Commitments and contingencies
Percent indemnified	100.00%
Mallinckrodt indemnification | $80 million to $110 million of environmental costs | Maximum
Commitments and contingencies
Estimate of possible loss	$ 30.0
Mallinckrodt indemnification | Non-compliance with process safety
Commitments and contingencies
Settlement amount awarded		$ 4.0
Accrued loss contingency	2.6	$ 4.0
Environmental remediation | Phillipsburg, New Jersey
Commitments and contingencies
Accrued environmental loss	3.8
Accrued environmental loss, gross	$ 4.5
Environmental remediation | Phillipsburg, New Jersey | Minimum
Commitments and contingencies
Accrued environmental loss, discount rate	1.50%
Environmental remediation | Phillipsburg, New Jersey | Maximum
Commitments and contingencies
Accrued environmental loss, discount rate	2.10%
Environmental remediation | Gliwice, Poland
Commitments and contingencies
Accrued environmental loss	$ 3.6

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Unaudited condensed consolidated statements of comprehensive income or loss - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 22.1	$ 34.5	$ (32.8)	$ (33.6)
Other comprehensive income (loss):
Foreign currency translation — unrealized loss	(62.7)	(0.8)	(59.3)	(59.1)
Derivative instruments:
Unrealized gain (loss)	1.0	(0.2)	(0.5)	1.2
Reclassification of gain into earnings	(0.9)	(0.6)	(1.2)	(1.2)
Defined benefit plans:
Unrealized (loss) gain	(0.1)	0.0	(0.1)	0.1
Reclassification of gain into earnings	(0.2)	(0.2)	(0.5)	(0.5)
Other comprehensive loss before income taxes	(62.9)	(1.8)	(61.6)	(59.5)
Income tax benefit	0.1	0.2	0.6	0.0
Other comprehensive loss	(62.8)	(1.6)	(61.0)	(59.5)
Comprehensive (loss) income	$ (40.7)	$ 32.9	$ (93.8)	$ (93.1)

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Document and entity information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 30, 2019
Document and Entity Information [Abstract]
Document type	10-Q
Document period end date	Sep. 30, 2019
Amendment flag	false
Entity registrant name	Avantor, Inc.
Entity central index key	0001722482
Current fiscal year end date	--12-31
Entity current reporting status	Yes
Entity filer category	Non-accelerated Filer
Entity shell company	false
Entity small business	false
Entity emerging growth company	false
Document fiscal year focus	2019
Document fiscal period focus	Q3
Entity common stock, shares outstanding		571,734,767

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Nature of operations and presentation of financial statements

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of operations and presentation of financial statements

1. Nature of operations and presentation of financial statements

We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.

Our IPO of common stock and MCPS was on May 17, 2019 (see note 12). Among other things, the IPO had the effect of reducing the ownership percentage of certain significant investors, changed the composition of our board and caused one of our investors to cease being a related party (see note 19). The following chart depicts selected ownership amounts as if all convertible securities were converted into common stock at the dates indicated:

September 30, 2019						December 31, 2018
New Mountain Capital		Goldman Sachs		Other investors		New Mountain Capital		Goldman Sachs		Other investors
	17%		11%		72%		40%		15%		45%
Avantor, Inc. and subsidiaries						Avantor, Inc. and subsidiaries

Basis of presentation

We have prepared these condensed consolidated financial statements pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Registration Statement. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in note 2.

We report three geographic segments based on customer location: the Americas, Europe and AMEA. For the periods presented, all share and per share information has been adjusted for a stock split that occurred in connection with our IPO (see note 12). All intercompany balances and transactions have been eliminated from the financial statements.

These financial statements reflect the adoptions of a new revenue recognition standard at January 1, 2018 and a new lease standard at January 1, 2019. Information about the new revenue recognition standard is disclosed in the audited consolidated financial statements included within our Registration Statement. Information about the new lease standard is disclosed in note 3.

Immaterial error

The initial draft of the Registration Statement issued in connection with the IPO included unaudited interim financial information for the nine months ended September 30, 2018. We subsequently identified and corrected an immaterial error in the segment financial information that was included therein. The following table presents the impact of the correction:

(in millions)	Nine months ended September 30, 2018
	Previously reported			Adjustment			As adjusted
Net sales:
Americas	$	2,590.6		$	12.4		$	2,603.0
Europe	1,575.5			(16.2		)	1,559.3
AMEA	224.3			3.8			228.1
Total	$	4,390.4		$	—		$	4,390.4
Management EBITDA:
Americas	$	480.5		$	3.3		$	483.8
Europe	259.3			(6.0		)	253.3
AMEA	51.7			3.0			54.7
Corporate	(48.5		)	(0.3		)	(48.8		)
Total	$	743.0		$	—		$	743.0

Reclassifications

In the second quarter of 2019, we changed our presentation of disaggregated net sales included in note 6 to depict the product line categories that are regularly used by management. Product sales associated with our service offerings, referred to as specialty procurement, have been reclassified from third party materials & consumables and combined with net sales from services to present the services & specialty procurement product line for all periods presented.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, income and loss during the reporting periods. Actual results could differ from those estimates.

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New accounting standards (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
New accounting standards
Cumulative effect adjustment		$ 3.1	$ (4.8)
Operating lease assets	$ 119.5
Operating lease liabilities	$ 126.4
New lease standard
New accounting standards
Cumulative effect adjustment		3.1
Operating lease assets		155.0
Operating lease liabilities		$ 162.5

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Financial instruments and fair value measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of gross amounts and fair values of debt instruments

The following table presents the gross amounts and fair values of debt instruments:

(in millions)	September 30, 2019				December 31, 2018
	Gross amount		Fair value		Gross amount		Fair value
Receivables facility	$	—	$	—	$	104.0	$	104.0
Senior secured credit facilities:
Euro term loans	417.6		423.1		1,078.0		1,063.2
U.S. dollar term loans	742.7		749.6		1,838.9		1,786.0
4.75% secured notes	545.3		584.9		572.5		581.2
6% secured notes	1,500.0		1,610.0		1,500.0		1,467.8
9% unsecured notes	2,000.0		2,250.4		2,000.0		1,998.5
Other	67.3		67.3		69.5		69.5
Total	$	5,272.9	$	5,685.3	$	7,162.9	$	7,070.2

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Accumulated other comprehensive income or loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Changes in AOCI, net of tax
Beginning balance	$ (64.7)	$ (31.5)	$ (66.5)	$ 26.4
Unrealized gain (loss)	(61.8)	(1.0)	(59.9)	(57.8)
Reclassification of (gain) loss into earnings	(1.1)	(0.8)	(1.7)	(1.7)
Income tax expense (benefit)	0.1	0.2	0.6	0.0
Ending balance	(127.5)	(33.1)	(127.5)	(33.1)
Foreign currency translation
Changes in AOCI, net of tax
Beginning balance	(55.6)	(34.6)	(59.0)	23.7
Unrealized gain (loss)	(62.7)	(0.8)	(59.3)	(59.1)
Reclassification of (gain) loss into earnings	0.0	0.0	0.0	0.0
Income tax expense (benefit)	0.0	0.0	0.0	0.0
Ending balance	(118.3)	(35.4)	(118.3)	(35.4)
Derivative instruments
Changes in AOCI, net of tax
Beginning balance	(0.2)	0.9	1.1	0.3
Unrealized gain (loss)	1.0	(0.2)	(0.5)	1.2
Reclassification of (gain) loss into earnings	(0.9)	(0.6)	(1.2)	(1.2)
Income tax expense (benefit)	0.0	0.2	0.5	0.0
Ending balance	(0.1)	0.3	(0.1)	0.3
Defined benefit plans
Changes in AOCI, net of tax
Beginning balance	(8.9)	2.2	(8.6)	2.4
Unrealized gain (loss)	(0.1)	0.0	(0.1)	0.1
Reclassification of (gain) loss into earnings	(0.2)	(0.2)	(0.5)	(0.5)
Income tax expense (benefit)	0.1	0.0	0.1	0.0
Ending balance	$ (9.1)	$ 2.0	$ (9.1)	$ 2.0

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Financial instruments and fair value measurements (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	$ 5,272.9	$ 7,162.9
Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	5,685.3	7,070.2
Receivables facility
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	0.0	104.0
Receivables facility | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	0.0	104.0
Senior secured credit facilities | Term loans | Euro
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	417.6	1,078.0
Senior secured credit facilities | Term loans | Euro | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	423.1	1,063.2
Senior secured credit facilities | Term loans | U.S. dollars
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	742.7	1,838.9
Senior secured credit facilities | Term loans | U.S. dollars | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	749.6	1,786.0
Notes | 4.75% secured
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	545.3	572.5
Notes | 4.75% secured | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	584.9	581.2
Notes | 6% secured
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	1,500.0	1,500.0
Notes | 6% secured | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	1,610.0	1,467.8
Notes | 9% unsecured
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	2,000.0	2,000.0
Notes | 9% unsecured | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	2,250.4	1,998.5
Other
Estimated Fair Value Of Financial Instruments [Line Items]
Gross amount	67.3	69.5
Other | Level 2
Estimated Fair Value Of Financial Instruments [Line Items]
Fair value	$ 67.3	$ 69.5

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Other income, net

9 Months Ended

Sep. 30, 2019

Other Income and Expenses [Abstract]

Other income, net

15. Other income or expense, net

The following table presents the components of other income, net:

(in millions)	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net foreign currency loss from financing activities	$	(8.2	)	$	(3.4	)	$	(0.1	)	$	(0.2	)
Income related to defined benefit plans	1.3			2.5			3.8			7.5
Other	(0.7		)	—			(0.8		)	(0.3		)
Other (expense) income, net	$	(7.6	)	$	(0.9	)	$	2.9		$	7.0

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Related party disclosures

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related party disclosures

19. Related party disclosures

New Mountain Capital

Prior to the completion of the IPO, we were party to an advisory agreement with New Mountain Capital that required us to pay various fees and expenses on their behalf. In connection with and as a result of the completion of the IPO, our advisory agreement with New Mountain Capital automatically terminated.

Goldman Sachs

Goldman Sachs acted as co-lead book-running manager for our IPO. In exchange for these services, Goldman Sachs received an aggregate underwriter discount of $24.5 million. Goldman Sachs also executed our June 2019 debt repricing. The cost to complete the repricing was not material.

Goldman Sachs purchased shares of common stock in the IPO valued at $70.0 million. Goldman Sachs also received proceeds of $421.9 million upon the redemption of our series A preferred stock and from repayment of term loans held under our senior secured credit facilities. As of September 30, 2019, Goldman Sachs held $9.1 million of term loans under our senior secured credit facilities.

PSP Investments

Following the IPO, PSP Investments received proceeds of $302.5 million upon redemption of our series A preferred stock and lost the right to nominate a director to our board. As a result, PSP Investments no longer meets the definition of a related party.