UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

Form 10-Q

__________________________________________________________



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2018



¨	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 001-37443

__________________________________________________________

Univar Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________________



Delaware		26-1251958
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



3075 Highland Parkway, Suite 200 Downers Grove, Illinois		60515
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (331) 777-6000

__________________________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ý Yes ¨ No

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



Large accelerated filer	ý	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 ý

At ~~October 25, 2017, 140,847,141~~April 30, 2018, 141,301,164 shares of the registrant’s common stock, $0.01 par value, were outstanding.

Univar Inc.

Form 10-Q

For the quarterly period ended ~~September 30, 2017~~March 31, 2018

TABLE OF CONTENTS



Part I. FINANCIAL INFORMATION	Page
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Operations	1
Condensed Consolidated Statements of Comprehensive Income	2
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Cash Flows	4
Condensed Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity	5
Notes to Condensed Consolidated Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3832
Item 4. Controls and Procedures	3832
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	3932
Item 1A. Risk Factors	3932
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3932
Item 3. Defaults Upon Senior Securities	3932
Item 4. Mine Safety Disclosures	3932
Item 5. Other Information	3932
Item 6. Exhibits	3933
Signatures	4034

PART I.

FINANCIAL INFORMATION


Item 1.	Financial Statements

Univar Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in millions, except per share data)	Note	2017			2016			2017			2016			Note	2018			2017
Net sales		$	2,048.7		$	1,999.7		$	6,294.5		$	6,261.2			$	2,158.0		$	1,998.8
Cost of goods sold		1,593.9			1,561.6			4,933.9			4,947.4				1,671.4			1,559.4
Gross profit		$	454.8		$	438.1		$	1,360.6		$	1,313.8			$	486.6		$	439.4
Operating expenses:
Outbound freight and handling		74.8			76.2			217.7			220.8				79.3			71.0
Warehousing, selling and administrative		228.0			216.0			687.7			664.8				241.0			228.5
Other operating expenses, net	4	11.8			12.1			55.8			29.1			4	13.6			19.8
Depreciation		32.5			42.4			102.5			113.9				31.4			35.9
Amortization		16.8			22.5			50.0			67.8				13.4			16.7
Impairment charges		—			133.9			—			133.9
Total operating expenses		$	363.9		$	503.1		$	1,113.7		$	1,230.3			$	378.7		$	371.9
Operating income (loss)		$	90.9		$	(65.0	)	$	246.9		$	83.5
Operating income															$	107.9		$	67.5
Other (expense) income:
Interest income		0.9			1.1			2.6			3.0				1.2			0.9
Interest expense		(39.3		)	(40.6		)	(112.6		)	(123.5		)		(36.1		)	(36.7		)
Loss on extinguishment of debt		—			—			(0.8		)	—				—			(0.8		)
Other expense, net	6	(7.1		)	(3.1		)	(27.9		)	(10.8		)
Other income (expense), net														6	2.6			(6.7		)
Total other expense		$	(45.5	)	$	(42.6	)	$	(138.7	)	$	(131.3	)		$	(32.3	)	$	(43.3	)
Income (loss) before income taxes		45.4			(107.6		)	108.2			(47.8		)
Income tax expense (benefit)	7	6.5			(44.6		)	15.4			(38.6		)
Net income (loss)		$	38.9		$	(63.0	)	$	92.8		$	(9.2	)
Income (loss) per common share:
Income before income taxes															75.6			24.2
Income tax expense														8	10.2			1.6
Net income															$	65.4		$	22.6
Income per common share:
Basic	8	$	0.28		$	(0.46	)	$	0.66		$	(0.07	)	9	$	0.46		$	0.16
Diluted	8	0.28			(0.46		)	0.66			(0.07		)	9	0.46			0.16
Weighted average common shares outstanding:
Basic	8	140.4			137.7			140.0			137.7			9	140.9			139.4
Diluted	8	141.4			137.7			141.3			137.7			9	142.0			140.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

Univar Inc.

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

(Unaudited)


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
(in millions)	Note	2017			2016			2017			2016			Note	2018			2017
Net income (loss)		$	38.9		$	(63.0	)	$	92.8		$	(9.2	)
Net income															$	65.4		$	22.6

Other comprehensive income (loss), net of tax:
Impact due to adoption of ASU 2017-12 ⁽¹⁾														10	0.5			—
Foreign currency translation	9	56.9			(20.3		)	120.1			46.4			10	(7.2		)	18.2
Pension and other postretirement benefit adjustment	9	(0.1		)	—			(0.2		)	(3.0		)
Derivative financial instruments	9	0.9			—			0.9			—			10	9.1			—
Total other comprehensive income (loss), net of tax		$	57.7		$	(20.3	)	$	120.8		$	43.4
Comprehensive income (loss)		$	96.6		$	(83.3	)	$	213.6		$	34.2
Total other comprehensive income, net of tax															$	2.4		$	18.2
Comprehensive income															$	67.8		$	40.8


(1)	Adjusted due to the adoption of ASU 2017-12 “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2018. Refer to “Note 2: Significant accounting policies” for more information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Univar Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions, except per share data)	Note	September 30, 2017			December 31, 2016			Note	March 31, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents		$	293.9		$	336.4			$	115.9		$	467.0
Trade accounts receivable, net		1,205.3			950.3				1,288.5			1,062.4
Inventories		792.3			756.6				921.9			839.5
Prepaid expenses and other current assets		155.9			134.8				174.6			149.6
Total current assets		$	2,447.4		$	2,178.1			$	2,500.9		$	2,518.5
Property, plant and equipment, net	11	1,019.1			1,019.5			12	983.8			1,003.0
Goodwill		1,825.9			1,784.4				1,809.2			1,818.4
Intangible assets, net	11	308.2			339.2			12	279.0			287.7
Deferred tax assets		22.8			18.2				30.3			22.8
Other assets		66.7			50.5				91.1			82.3
Total assets		$	5,690.1		$	5,389.9			$	5,694.3		$	5,732.7
Liabilities and stockholders’ equity
Current liabilities:
Short-term financing	10	$	15.4		$	25.3		11	$	8.5		$	13.4
Trade accounts payable		945.4			852.3				1,011.7			941.7
Current portion of long-term debt	10	82.8			109.0			11	20.5			62.0
Accrued compensation		97.5			65.6				74.6			100.7
Other accrued expenses		224.9			287.3				330.7			301.6
Total current liabilities		$	1,366.0		$	1,339.5			$	1,446.0		$	1,419.4
Long-term debt	10	2,872.6			2,845.0			11	2,683.5			2,820.0
Pension and other postretirement benefit liabilities		260.2			268.6				252.5			257.1
Deferred tax liabilities		19.6			17.2				45.8			35.4
Other long-term liabilities		107.4			109.7				100.8			110.7
Total liabilities		$	4,625.8		$	4,580.0			$	4,528.6		$	4,642.6
Stockholders’ equity:
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of September 30, 2017 and December 31, 2016		$	—		$	—
Common stock, 2.0 billion shares authorized at $0.01 par value with 140.8 million and 138.8 million shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		1.4			1.4
Preferred stock, 200.0 million shares authorized at $0.01 par value with no shares issued or outstanding as of March 31, 2018 and December 31, 2017									$	—		$	—
Common stock, 2.0 billion shares authorized at $0.01 par value with 141.3 million and 141.1 million shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively									1.4			1.4
Additional paid-in capital		2,293.1			2,251.8				2,308.8			2,301.3
Accumulated deficit		(961.1		)	(1,053.4		)		(868.4		)	(934.1		)
Accumulated other comprehensive loss	9	(269.1		)	(389.9		)	10	(276.1		)	(278.5		)
Total stockholders’ equity		$	1,064.3		$	809.9			$	1,165.7		$	1,090.1
Total liabilities and stockholders’ equity		$	5,690.1		$	5,389.9			$	5,694.3		$	5,732.7

The accompanying notes are an integral part of these condensed consolidated financial statements.

Univar Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine months ended September 30,							Three months ended March 31,
(in millions)	Note	2017			2016			Note	2018			2017
Operating activities:
Net income (loss)		$	92.8		$	(9.2	)
Adjustments to reconcile net income to net cash provided by operating activities:
Net income									$	65.4		$	22.6
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization		152.5			181.7				44.8			52.6
Impairment charges		—			133.9
Amortization of deferred financing fees and debt discount		5.9			6.0				2.0			2.0
Amortization of pension credit from accumulated other comprehensive loss	9	(0.2		)	(4.5		)
Loss on extinguishment of debt		0.8			—				—			0.8
Deferred income taxes		(4.0		)	(57.2		)		(3.0		)	(3.3		)
Stock-based compensation expense	4	16.0			7.1			4	9.4			6.4
Other		(0.2		)	(1.0		)		0.4			0.5
Changes in operating assets and liabilities:
Trade accounts receivable, net		(198.3		)	(83.2		)		(219.4		)	(142.4		)
Inventories		1.5			60.2				(80.1		)	(66.4		)
Prepaid expenses and other current assets		(15.4		)	30.2				(14.1		)	(18.9		)
Trade accounts payable		58.1			40.8				67.3			79.9
Pensions and other postretirement benefit liabilities		(34.6		)	(30.8		)		(11.6		)	(9.0		)
Other, net		(42.3		)	(49.8		)		(0.1		)	(1.9		)
Net cash provided by operating activities		$	32.6		$	224.2
Net cash used by operating activities									$	(139.0	)	$	(77.1	)
Investing activities:
Purchases of property, plant and equipment		$	(58.0	)	$	(65.9	)		$	(16.2	)	$	(20.9	)
Purchases of businesses, net of cash acquired		(24.4		)	(54.8		)		(8.9		)	(0.5		)
Proceeds from sale of property, plant and equipment		3.2			4.1				2.2			—
Other		(1.2		)	(1.6		)		—			(0.3		)
Net cash used by investing activities		$	(80.4	)	$	(118.2	)		$	(22.9	)	$	(21.7	)
Financing activities:
Proceeds from issuance of long-term debt	10	$	2,234.0		$	(14.0	)	11	$	141.8		$	2,264.0
Payments on long-term debt and capital lease obligations	10	(2,267.6		)	(26.6		)	11	(320.1		)	(2,211.5		)
Short-term financing, net	10	(18.9		)	(11.0		)	11	(6.6		)	(5.2		)
Financing fees paid		(4.4		)	—				—			(4.4		)
Taxes paid related to net share settlements of stock-based compensation awards		(8.0		)	(0.2		)		(2.7		)	(6.0		)
Stock option exercises		32.1			4.7				0.8			23.8
Other		0.5			0.5
Net cash used by financing activities		$	(32.3	)	$	(46.6	)
Contingent consideration payments									—			(3.2		)
Net cash (used) provided by financing activities									$	(186.8	)	$	57.5
Effect of exchange rate changes on cash and cash equivalents		$	37.6		$	19.6			$	(2.4	)	$	5.5
Net (decrease) increase in cash and cash equivalents		(42.5		)	79.0
Net decrease in cash and cash equivalents									(351.1		)	(35.8		)
Cash and cash equivalents at beginning of period		336.4			188.1				467.0			336.4
Cash and cash equivalents at end of period		$	293.9		$	267.1			$	115.9		$	300.6
Supplemental disclosure of cash flow information:
Non-cash activities:
Additions of property, plant and equipment included in trade accounts payable and other accrued expenses		$	7.3		$	2.7			$	7.3		$	6.7
Additions of property, plant and equipment under a capital lease obligation		17.0			18.5				6.0			9.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

Univar Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(in millions)
Common
stock
(shares)

Common
stock

Additional
paid-in
capital

Accumulated
deficit

Accumulated
other
comprehensive
loss
Total
Balance, December 31, 2015 138.0
$ 1.4
$ 2,224.7
$ (985.0 ) $ (424.4 ) $ 816.7
Net loss —
—
—
(68.4 ) —
(68.4 )
Foreign currency translation adjustment, net of tax $23.9 —
—
—
—
36.3
36.3
Pension and other postretirement benefits adjustment, net of tax $1.5 —
—
—
—
(1.8 ) (1.8 )
Stock option exercises 0.8
—
16.9
—
—
16.9
Stock-based compensation —
—
10.4
—
—
10.4
Other —
—
—
(0.2 ) —
—
(0.2 )
Balance, December 31, 2016 138.8
$ 1.4
$ 2,251.8
$ (1,053.4 )
$ (389.9 ) $ 809.9
Impact due to adoption of ASU, net of tax $0.2⁽¹⁾
—
—
0.7
(0.5 ) —
0.2
Net income —
—
—
92.8
—
92.8
Foreign currency translation adjustment, net of tax ($1.0) —
—
—
—
120.1
120.1
Pension and other postretirement benefits adjustment, net of tax $0.0 —
—
—
—
(0.2 ) (0.2 )
Derivative financial instruments, net of tax ($0.5) —
—
—
—
0.9
0.9
Restricted stock units vested 0.7
—
—
—
—
—
Tax withholdings related to net share settlements of stock-based compensation awards (0.3 ) —
(8.0 ) —
—
(8.0 )
Stock option exercises 1.6
—
32.1
—
—
32.1
Employee stock purchase plan⁽²⁾
—
—
0.5
—
—
0.5
Stock-based compensation —
—
16.0
—
—
16.0
Balance, September 30, 2017 140.8
$ 1.4
$ 2,293.1
$ (961.1 ) $ (269.1 ) $ 1,064.3



(in millions)	Common stock (shares)		Common stock		Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss			Total
Balance, December 31, 2016	138.8		$	1.4	$	2,251.8		$	(1,053.4	)	$	(389.9	)	$	809.9
Impact due to adoption of ASU, net of tax $0.2 ⁽¹⁾	—		—		0.7			(0.5		)	—			0.2
Net income	—		—		—			119.8			—			119.8
Foreign currency translation adjustment, net of tax ($2.1)	—		—		—			—			107.1			107.1
Pension and other postretirement benefits adjustment, net of tax $0.6	—		—		—			—			(2.4		)	(2.4		)
Derivative financial instruments, net of tax ($4.3)	—		—		—			—			6.7			6.7
Restricted stock units vested	0.8		—		—			—			—			—
Tax withholdings related to net share settlements of stock-based compensation awards	(0.3	)	—		(8.5		)	—			—			(8.5		)
Stock option exercises	1.8		—		36.5			—			—			36.5
Employee stock purchase plan ⁽²⁾	—		—		1.1			—			—			1.1
Stock-based compensation	—		—		19.7			—			—			19.7
Balance, December 31, 2017	141.1		$	1.4	$	2,301.3		$	(934.1	)	$	(278.5	)	$	1,090.1
Impact due to adoption of ASU's, net of tax ($0.3) ⁽³⁾	—		—		—			0.3			0.5			0.8
Net income	—		—		—			65.4			—			65.4
Foreign currency translation adjustment	—		—		—			—			(7.2		)	(7.2		)
Derivative financial instruments, net of tax ($3.2)	—		—		—			—			9.1			9.1
Restricted stock units vested	0.2		—		—			—			—			—
Tax withholdings related to net share settlements of stock-based compensation awards	(0.1	)	—		(2.7		)	—			—			(2.7		)
Stock option exercises	0.1		—		0.8			—			—			0.8
Employee stock purchase plan	—		—		—			—			—			—
Stock-based compensation	—		—		9.4			—			—			9.4
Balance, March 31, 2018	141.3		$	1.4	$	2,308.8		$	(868.4	)	$	(276.1	)	$	1,165.7


(1)	Adjusted due to the adoption of ASU 2016-09 “Improvement to Employee Share-Based Payment Accounting” on January 1, 2017. ~~Refer to “Note 2: Significant accounting policies” for more information.~~


(2)	During November 2016, our Board of Directors approved the Univar Employee Stock Purchase Plan, or ESPP, authorizing the issuances of up to 2.0 million shares of the Company's common stock effective January 1, 2017. The total number of shares issued under the plan for the first two offering ~~period~~periods from January through ~~June~~December 2017 was ~~approximately 18,000~~39,418 shares.


(3)	Adjusted due to the adoption of ASU 2014-09 “Revenue from Contracts with Customers” and ASU 2017-12 “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2018. Refer to “Note 2: Significant accounting policies” for more information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Univar Inc.

Notes to Condensed Consolidated Financial Statements

As of ~~September 30, 2017~~March 31, 2018 and

For the Three ~~and Nine~~ Month Periods Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~

(Unaudited)


1.	~~Nature of operations~~

1. Nature of operations

Headquartered in Downers Grove, Illinois, Univar Inc. (“the Company” or “Univar”) is a leading global chemicals and ingredients distributor and provider of specialty chemicals. The Company’s operations are structured into four operating segments that represent the geographic areas under which the Company manages its business:

Univar USA (“USA”)

Univar Canada (“Canada”)

Univar Europe, the Middle East and Africa (“EMEA”)

Rest of World (“Rest of World”)

Rest of World includes certain developing businesses in Latin America (including Brazil and Mexico) and the Asia-Pacific region.


2. 2. Significant accounting policies	~~Significant accounting policies~~

Basis of presentation

The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) as applicable to interim financial reporting. Unless otherwise indicated, all financial data presented in these condensed consolidated financial statements are expressed in US dollars. These condensed consolidated financial statements, in the Company’s opinion, include all adjustments, consisting of normal recurring accruals necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, comprehensive income, cash flows and changes in stockholders’ equity. The results of operations for the periods presented are not necessarily indicative of the operating results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are consolidated if the Company has a controlling financial interest, which may exist based on ownership of a majority of the voting interest, or based on the Company’s determination that it is the primary beneficiary of a variable interest entity (“VIE”) or if otherwise required by US GAAP. The Company did not have any material interests in VIEs during the periods presented in these condensed consolidated financial statements. All intercompany balances and transactions are eliminated in consolidation.

The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ materially from these estimates.

Recently issued and adopted accounting pronouncements

In March 2016, the FASB issued ASU 2016-09 “Compensation – Stock Compensation” (Topic 718) – “Improvement to Employee Share-Based Payment Accounting.” The core principal of the guidance is to simplify several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. The standard was effective for fiscal years beginning after December 15, 2016, including interim periods within such fiscal years. The guidance was applied using a modified retrospective method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance was adopted. The Company adopted the ASU as of January 1, 2017 which resulted in an increase of $0.5 million, net of tax of $0.2 million, in accumulated deficit and the offset of $0.7 million was recorded in additional paid-in capital within condensed consolidated balance sheet and statements of changes in stockholders' equity.

In October 2016, the FASB issued ASU 2016-17 “Consolidation” (Topic 810) - “Interests Held through Related Parties That Are under Common Control.” The core principle of the guidance is to provide amendments to the current consolidation guidance. The revised consolidation guidance modifies how a reporting entity that is a single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted the ASU as of January 1, 2017 and the ASU was applied

retrospectively to all relevant prior periods beginning with the fiscal year in which the amendments in ASU 2015-02 “Consolidation” (Topic 810) - “Amendments to the Consolidation Analysis” were applied. The adoption of this ASU had no material impact on the Company’s condensed consolidated financial statements.

~~Accounting pronouncements issued and not yet adopted~~

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606)~~, which supersedes~~. On January 1, 2018, the ~~revenue recognition requirements in~~Company adopted the new accounting standard Accounting Standards Codification (“ASC”) ~~605, “Revenue Recognition.” This~~ Topic 606, Revenue from Contracts with Customers and all the related amendments (“new revenue ~~standard creates a single source of revenue guidance for~~standard”) to all companies in all industries and is more principles-based than the current revenue guidance. The standard will be effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The core principle of the guidance is that “an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In achieving this objective, an entity must perform five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations of the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, the standard requires additional new disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts ~~with customers.~~

The Company has established a project team who has completed a review of revenue streams and customer contracts to identify and evaluate the potential impacts of the provisions of ASC 606. The project team is utilizing the conclusions reached regarding customer contracts and revenue streams to complete their analysis of the impact of the standard's requirements upon the Company’s operations and financial reporting. The Company has accumulated information that will be necessary for implementation disclosures and is assessing the impact the adoption of ASU 2014-09 will have on its consolidated financial statements, related disclosures, and reporting processes. The Company is also in the process of identifying and drafting changes to processes and controls to meet the ASU's updated reporting and disclosure requirements and plans to update its assessment of the impact of the ASU through the date of adoption. Based on the analysis to date, the Company is revising its estimation processes related to arrangements that involve, among other items, revenue deferral where performance to date may have reached right to receive consideration. Identified changes may impact the timing of revenue recognition between quarters. The Company expects to adopt the new standard using the modified retrospective ~~approach, under which~~method. The Company recognized the cumulative effect of initially applying the ~~guidance is recognized~~new revenue standard as an adjustment to the opening balance of ~~retained earnings in the first quarter of 2018 for contracts that are currently deferred but will~~accumulated deficit. The comparative information has not been restated and continues to be ~~recognized as revenue as the Company will reach its right to consideration, and disclose all line items in the year of adoption as if they were prepared~~reported under the ~~old~~accounting standards in effect for those periods.

In August 2017, the FASB issued ASU 2017-12 “Derivatives and Hedging“ (Topic 815) - “Targeted Improvements to Accounting for Hedging Activities.” The ASU better aligns hedge accounting with the Company’s risk management activities, simplifies the application of hedge accounting, and improves transparency as to the scope and results of hedging programs. The Company early adopted the new pronouncement effective January 1, 2018, as allowed, using the modified retrospective approach by recognizing the cumulative effect of initially applying the new pronouncement as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The cumulative effect of the changes made to our January 1, 2018 condensed consolidated balance sheet for the adoption of ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and ASU 2017-12 “Derivatives and Hedging” (Topic 815) - “Targeted Improvements to Accounting for Hedging Activities” is as follows:



(in millions)	Balance at December 31, 2017			Adjustments due to ASU 2014-09			Adjustments due to ASU 2017-12			Balance at January 1, 2018
Assets
Trade accounts receivable, net	$	1,062.4		$	41.3		$	—		$	1,103.7
Inventories	839.5			(2.1		)	—			837.4
Prepaid expenses and other current assets	149.6			1.8			—			151.4
Liabilities
Trade accounts payable	$	941.7		$	7.0		$	—		$	948.7
Other accrued expenses	301.6			33.2			—			334.8
Equity
Accumulated deficit	$	(934.1	)	$	0.8		$	(0.5	)	$	(933.8	)
Accumulated other comprehensive loss	(278.5		)	—			0.5			(278.0		)

The following tables summarize the impact of adopting the new revenue ~~guidance.~~standard upon the Company’s condensed consolidated balance sheet and statement of operations as of and for the quarter ended March 31, 2018:



	Three months ended March 31, 2018
(in millions)	As reported		Balances without adoption of ASC 606		Effect of change higher/(lower)

Net sales	$	2,158.0	$	2,151.7	$	6.3
Cost of goods sold	1,671.4		1,665.5		5.9
Gross profit	$	486.6	$	486.2	$	0.4

Income tax expense	$	10.2	$	10.1	$	0.1
Net income	65.4		65.1		0.3



	March 31, 2018
(in millions)	As reported			Balances without adoption of ASC 606			Effect of change higher/(lower)
Assets
Trade accounts receivable, net	$	1,288.5		$	1,240.2		$	48.3
Inventories	921.9			930.3			(8.4		)
Prepaid expenses and other current assets	174.6			165.8			8.8
Liabilities
Trade accounts payable	$	1,011.7		$	997.8		$	13.9
Other accrued expenses	330.7			297.0			33.7
Equity
Accumulated deficit	$	(868.4	)	$	(869.5	)	$	1.1

In March 2017, the FASB issued ASU 2017-07 “Compensation - Retirement Benefits” (Topic 715) - “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ~~The ASU requires entities~~On January 1, 2018, the Company adopted the amendments to ~~disaggregate~~ASC 715 that improves the presentation of net periodic pension and postretirement benefit costs, by separating the presentation of service ~~cost component~~costs from ~~the~~ other components of net periodic costs. The interest cost, expected return on assets, and amortization of prior service costs have been reclassified from warehousing, selling, and administrative expenses to

other expense, net. The mark to market, curtailment, and settlement expenses have been reclassified from other operating expenses, net to other expense, net.

The effect of the retrospective presentation change related to the net periodic cost of our defined benefit ~~costs~~pension and ~~present it with~~ other ~~current compensation costs for related employees in the~~postretirement employee benefits (“OPEB”) plans on our consolidated income statement and present the other component elsewhere in the income statement and outside of income from operations if that subtotal is presented. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable. The guidance is to be applied retrospectively for all periods presented. The standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within such fiscal years. Refer to “Note 3: Employee benefit plans” for our components of net periodic benefit cost.was as follows:



	Three months ended March 31, 2017
(in millions)	As revised			Previously reported			Effect of change higher/(lower)

Warehousing, selling and administrative	$	228.5		$	226.1		$	2.4
Other income (expense), net	(6.7		)	(9.1		)	(2.4		)

In ~~May 2017,~~August 2016, the FASB issued ASU ~~2017-09 “Compensation~~2016-15 “Statement of Cash Flows” (Topic 230) - ~~Stock Compensation” (Topic 718) - “Scope~~“Classification of ~~Modification Accounting.~~Certain Cash Receipts and Cash Payments.” The ASU clarifies and provides ~~clarity~~specific guidance on eight cash flow classification issues that were not currently addressed by the previous guidance. The Company adopted the ASU as of January 1, 2018 and ~~reduces both diversity in practice and cost and complexity when applying~~accordingly restated the ~~guidance in Topic 718, Compensation—Stock Compensation,~~condensed consolidated statement of cash flows for the three months ended March 31, 2017 to conform with the current period presentation under this new guidance. As a ~~change~~result of the adoption, the Company reclassified $3.2 million of cash outflows previously reported as operating activities to financing activities within the condensed consolidated statement of cash flows related to contingent consideration payments for the three months ended March 31, 2017.

The Company also adopted the following standards during 2018, none of which had a material impact to the ~~terms~~financial statements or conditions of a share-based payment award. The standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within such fiscal years. Early adoption is permitted, including adoption in an interim period. The guidance is to be applied prospectively. The Company is evaluating the impact of the ASU on its consolidated financial ~~statements.~~statement disclosures:



Standard		Effective date

2017-09	Compensation - Stock Compensation - Scope of Modification Accounting	January 1, 2018
2017-04	Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment	January 1, 2018
2017-01	Business Combinations - Clarifying the Definition of a Business	January 1, 2018
2016-18	Statement of Cash Flows - Restricted Cash	January 1, 2018
2016-16	Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory	January 1, 2018
2016-01	Financial Instrument - Recognition and Measurement of Financial Assets and Financial Liabilities	January 1, 2018

Accounting pronouncements issued and not yet adopted

In ~~August 2017,~~February 2016, the FASB issued ASU ~~2017-12 “Derivatives and Hedging~~2016-02 “Leases” (Topic ~~815) - Targeted Improvements to Accounting for Hedging Activities.~~842), which supersedes the lease recognition requirements in ASC Topic 840, “Leases.” The ~~ASU better aligns hedge accounting~~core principal of the guidance is that an entity should recognize assets and liabilities arising from a lease for both financing and operating leases, along with ~~an entity’s risk management activities, simplifies the application of hedge accounting,~~additional qualitative and ~~improves transparency as to the scope and results of hedging programs.~~quantitative disclosures. The standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal years. Early adoption is ~~permitted in any interim period after issuance of the ASU.~~permitted. The guidance is to be applied using a modified retrospective ~~approach~~transition method with the option to ~~existing hedging relationships as~~elect a package of practical expedients. The Company has established a project team who has completed the initial scoping and has begun implementing a software solution to comply with the new standard's reporting and disclosure requirements. The Company is also in the process of identifying changes to processes and controls. Upon adoption of this standard, the Company expects the condensed consolidated balance sheet to include a right of use asset and liability related to certain operating lease arrangements.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses” (Topic 326) - “Measurement of Credit Losses on Financial Instruments.” The ASU requires entities to use a Current Expected Credit Loss model, which is a new impairment model based on expected losses rather than incurred losses. Under the model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity’s estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses upon initial recognition of the related assets. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. The Company expects to adopt this guidance when effective, and does not expect the guidance to have a significant impact to the condensed consolidated financial statements when adopted on January 1, 2020.

In January 2018, the FASB issued ASU 2018-02 “Income Statement - Reporting Comprehensive Income” (Topic 220) “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“AOCI”), which gives entities the option to reclassify certain tax effects, that the FASB refers to as having been stranded, resulting from the Tax Cuts and Jobs Act

from AOCI to retained earnings. The new guidance may be applied retrospectively to each period in which the effect of the Tax Cuts and Jobs Act is recognized, or in the period of adoption. The Company must adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption ~~date. The amended presentation and disclosure guidance~~ is ~~required only prospectively.~~permitted. The Company is evaluating early adoption of this guidance, and is currently determining the impact to the Company's reported accumulated deficit and accumulated other comprehensive loss line items within the condensed consolidated balance sheet.

3. Revenue

On January 1, 2018, the Company adopted the new revenue standard using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under ASC Topic 605. The Company recorded a net decrease to the opening accumulated deficit of $0.8 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue standard.

The Company disaggregates revenues from contracts with customers by both geographic segments and revenue contract types. Geographic reportable segmentation is pertinent to understanding Univar’s revenues, as it aligns to how the Company reviews the financial performance of its operations. Revenue contract types are differentiated by the type of good or service Univar offers customers, since the contractual terms necessary for revenue recognition are unique to each of the ~~ASU on its consolidated financial statements.~~identified revenue contract types.


3.	~~Employee benefit plans~~

The following table ~~summarizes~~disaggregates external customer net sales by major stream:



(in millions)	USA		Canada		EMEA		Rest of World		Consolidated
	Three Months Ended March 31, 2018
Chemical Distribution	$	1,160.8	$	232.0	$	538.4	$	99.9	$	2,031.1
Crop Sciences	—		69.4		—		—		69.4
Services	43.6		12.0		0.2		1.7		57.5
Total external customer net sales	$	1,204.4	$	313.4	$	538.6	$	101.6	$	2,158.0

Revenue is recognized when performance obligations under the ~~components~~terms of ~~net periodic~~the contract are satisfied, which generally occurs when goods or services are transferred to a customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Payment terms and conditions vary by regions where the Company performs business and contract types. The term between invoicing and when payment is due is generally one year or less. As of March 31, 2018, none of the Company's contracts contained a significant financing component.

Chemical Distribution

The Company generates revenue when control is transferred for products provided to customers. Certain customers may receive discounts off the transaction price, primarily due to price and volume incentives, or return product for non-conformance, which are accounted for as variable consideration. The Company estimates the change in the transaction price that is expected to be provided to customers based on historical experience, which impacts revenues recognized.

Crop Sciences

The Company generates revenue when control is transferred for products provided to customers. The amount of consideration recorded varies due to price movements and rights granted to customers to return product. Customer payment terms often extend through a growing season, which may be up to six months.

Transaction prices may move during an agricultural growing season and changes may affect the amount of consideration the Company will receive. Transaction prices are also affected by special offers or volume discounts. The Company estimates the expected changes in the transaction price based on the combination of historical experience and the impact of weather on the current agriculture season. The adjustments to the transaction price are recognized as variable consideration and impacts revenues recognized.

When customers are provided rights to return eligible products, the Company estimates the expected returns based on the combination of historical experience and the impact of weather on the current agriculture season, which impacts the revenues recognized.

Services

The Company generates revenue from services as they are performed and economic value is transferred to customers. Univar's services provided to customers are primarily related to waste management services and warehousing services. Waste management

services are primarily related to plant maintenance, environmental contracting, environmental consulting and the collection and disposal of both hazardous and non-hazardous waste products. Warehousing services is primarily inclusive of blending, warehousing, logistics and distribution services for customers. Waste management and warehousing services are recognized over time as the performance obligations are satisfied.

Costs to obtain or fulfill contracts with customers

Univar expenses costs to obtain contracts when the contract term and benefit period is expected to be one year or less. Contract costs where the contract term and benefit period is expected to be more than a year are capitalized and amortized over the performance obligation period. Capitalized contract costs of $0.8 million and $2.0 million are included in other current assets and other assets as of March 31, 2018.

Deferred revenue

Deferred revenues are recognized inas a contract liability when customers have provided Univar with consideration prior to the Company satisfying a performance obligation. The following table provides information pertaining to the deferred revenue balance and account activity:



(in millions)
Deferred revenue as of January 1, 2018	$	100.9
Deferred revenue as of March 31, 2018	80.5
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	49.5

The deferred revenue balances are all expected to have a duration of one year or less and are recorded within the other accrued expenses line item of the condensed consolidated ~~statements of operations:~~

Domestic - Defined Benefit Pension Plans

Three months ended
September 30,
Nine months ended
September 30,
(in millions)
2017
2016
2017
2016
Service cost $ —
$ —
$ —
$ —
Interest cost
7.7

8.0

23.1
24.0
Expected return on plan assets
(7.7 )
(8.2 )
(23.2 ) (24.4 )
Net periodic benefit
$ —

$ (0.2 )
$ (0.1 )
$ (0.4 )

Foreign - Defined Benefit Pension Plans
Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Service cost $ 0.6
$ 0.6
$ 1.8
$ 1.9
Interest cost 4.1
4.6
12.0
14.0
Expected return on plan assets (6.6 ) (7.1 ) (19.3 ) (22.0 )
Prior service credits (0.2 ) —
(0.2 ) —
Net periodic benefit $ (2.1 ) $ (1.9 ) $ (5.7 ) $ (6.1 )

Other Postretirement Benefits
Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Service cost $ —
$ —
$ —
$ —
Interest cost —
—
0.1
0.2
Prior service credits —
—
—
(4.5 )
Net periodic cost (benefit) $ —
$ —
$ 0.1
$ (4.3 )
balance sheet.


4. 4. Other operating expenses, net	~~Other operating expenses, net~~

Other operating expenses, net consisted of the following activity:


	Three months ended September 30,					Nine months ended September 30,				Three months ended March 31,
(in millions)	2017			2016		2017		2016		2018		2017
Acquisition and integration related expenses	$	1.3		$	1.2	$	2.0	$	5.5
Stock-based compensation expense	4.5			3.6		16.0		7.1		$	9.4	$	6.4
Restructuring charges	0.9			1.8		4.4		8.3		0.5		1.7
Other employee termination costs										2.4		1.7
Business transformation costs	3.0			3.0		23.6		3.0		—		9.1
Other employee termination costs	2.8			0.1		5.9		0.1
Acquisition and integration related expenses										0.4		0.2
Other	(0.7		)	2.4		3.9		5.1		0.9		0.7
Total other operating expenses, net	$	11.8		$	12.1	$	55.8	$	29.1	$	13.6	$	19.8

5. Restructuring charges


5.	~~Restructuring charges~~

Restructuring charges relate to the implementation of several regional strategic initiatives aimed at streamlining the Company’s cost structure and improving its operations. These actions primarily resulted in workforce reductions, lease termination costs and other facility rationalization costs. The following table presents cost information related to restructuring plans that have not been completed as of ~~September 30, 2017~~March 31, 2018 and does not contain any estimates for plans that may be developed and implemented in future periods.


(in millions)	USA		Canada		EMEA		ROW		Other		Total		USA		Canada		EMEA		ROW		Other		Total
Anticipated total costs
Employee termination costs	$	16.8	$	5.7	$	21.6	$	6.1	$	5.8	$	56.0	$	16.5	$	5.8	$	22.5	$	6.2	$	5.8	$	56.8
Facility exit costs	22.9		—		3.8		0.2		—		26.9		24.1		—		3.7		0.2		—		28.0
Other exit costs	1.7		—		6.8		—		0.8		9.3		1.7		—		6.7		0.1		0.8		9.3
Total	$	41.4	$	5.7	$	32.2	$	6.3	$	6.6	$	92.2	$	42.3	$	5.8	$	32.9	$	6.5	$	6.6	$	94.1

Incurred to date costs
Inception of plans through September 30, 2017
Inception of plans through March 31, 2018
Employee termination costs	$	16.8	$	5.7	$	21.6	$	6.1	$	5.8	$	56.0	$	16.5	$	5.8	$	22.5	$	6.2	$	5.8	$	56.8
Facility exit costs	21.5		—		3.8		0.2		—		25.5		22.4		—		3.7		0.2		—		26.3
Other exit costs	1.7		—		6.8		—		0.8		9.3		1.7		—		6.7		0.1		0.8		9.3
Total	$	40.0	$	5.7	$	32.2	$	6.3	$	6.6	$	90.8	$	40.6	$	5.8	$	32.9	$	6.5	$	6.6	$	92.4

Inception of plans through December 31, 2016
Inception of plans through December 31, 2017
Employee termination costs	$	16.8	$	5.2	$	21.6	$	4.4	$	5.8	$	53.8	$	16.5	$	5.7	$	22.5	$	6.2	$	5.8	$	56.7
Facility exit costs	19.6		—		3.5		0.2		—		23.3		22.2		—		3.7		0.2		—		26.1
Other exit costs	1.7		—		6.8		—		0.8		9.3		1.7		—		6.6		—		0.8		9.1
Total	$	38.1	$	5.2	$	31.9	$	4.6	$	6.6	$	86.4	$	40.4	$	5.7	$	32.8	$	6.4	$	6.6	$	91.9

The following table summarizes activity related to accrued liabilities associated with restructuring:


(in millions)	January 1, 2017		Charge to earnings		Cash paid			Non-cash and other		September 30, 2017		January 1, 2018			Charge to earnings		Cash paid			Non-cash and other		March 31, 2018
Employee termination costs	$	6.9	$	1.7	$	(6.0	)	$	0.3	$	2.9	$	3.0		$	0.1	$	(0.9	)	$	0.1	$	2.3
Facility exit costs	13.2		2.7		(4.6		)	—		11.3		10.2			0.2		(1.1		)	—		9.3
Other exit costs	—		—		—			—		—		(0.5		)	0.2		(0.2		)	—		(0.5		)
Total	$	20.1	$	4.4	$	(10.6	)	$	0.3	$	14.2	$	12.7		$	0.5	$	(2.2	)	$	0.1	$	11.1


(in millions)	January 1, 2016		Charge to earnings		Cash paid			Non-cash and other		December 31, 2016		January 1, 2017		Charge to earnings			Cash paid			Non-cash and other			December 31, 2017
Employee termination costs	$	31.0	$	0.4	$	(24.5	)	$	—	$	6.9	$	6.9	$	2.9		$	(7.2	)	$	0.4		$	3.0
Facility exit costs	15.5		6.0		(8.3		)	—		13.2		13.2		2.8			(5.5		)	(0.3		)	10.2
Other exit costs	0.1		0.1		(0.2		)	—		—		—		(0.2		)	(0.3		)	—			(0.5		)
Total	$	46.6	$	6.5	$	(33.0	)	$	—	$	20.1	$	20.1	$	5.5		$	(13.0	)	$	0.1		$	12.7

Restructuring liabilities of ~~$6.2~~$5.1 million and ~~$10.1~~$5.8 million were classified as current in other accrued expenses in the condensed consolidated balance sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The long-term portion of restructuring liabilities of ~~$8.0~~$6.0 million and ~~$10.0~~$6.9 million were recorded in other long-term liabilities in the condensed consolidated balance sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, and primarily consists of facility exit costs that are expected to be paid within the next ~~four~~five years.

While the Company believes the recorded restructuring liabilities are adequate, revisions to current estimates may be recorded in future periods based on new information as it becomes available.


6.	~~Other expense, net~~

6. Other income (expense), net

Other ~~expense,~~income (expense), net consisted of the following gains (losses):


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2017			2016			2017			2016			2018			2017
Foreign currency transactions	$	(0.4	)	$	(0.3	)	$	(4.3	)	$	(2.7	)	$	(0.1	)	$	(2.1	)
Foreign currency denominated loans revaluation	(6.8		)	(4.4		)	(15.2		)	(13.7		)	1.2			(3.0		)
Undesignated foreign currency derivative instruments ⁽¹⁾	(0.6		)	(0.2		)	1.6			0.8			(1.3		)	1.0
Undesignated interest rate swap contracts ⁽¹⁾	1.8			2.0			(3.0		)	4.2
Debt amendment costs ⁽²⁾	—			—			(4.2		)	—
Debt amendment costs													—			(4.2		)
Non-operating retirement benefits ⁽²⁾													3.5			2.4
Other	(1.1		)	(0.2		)	(2.8		)	0.6			(0.7		)	(0.8		)
Total other expense, net	$	(7.1	)	$	(3.1	)	$	(27.9	)	$	(10.8	)
Total other income (expense), net													$	2.6		$	(6.7	)


(1)	Refer to “Note ~~13:~~14: Derivatives” for more information.


(2)	Refer to “Note ~~10: Debt”~~7: Employee benefit plans” for more information.

7. Employee benefit plans

The following table summarizes the components of net periodic benefit recognized in the condensed consolidated statements of operations:



	Domestic - Defined Benefit Pension Plans						Foreign - Defined Benefit Pension Plans
	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2018			2017
Service cost ⁽¹⁾	$	—		$	—		$	0.7		$	0.6
Interest cost ⁽²⁾	6.8			7.7			4.0			3.9
Expected return on plan assets ⁽²⁾	(7.8		)	(7.7		)	(6.5		)	(6.3		)
Net periodic benefit	$	(1.0	)	$	—		$	(1.8	)	$	(1.8	)


7.(1)	~~Income taxes~~Service cost is included in warehouse, selling and administrative expenses.


(2)	These amounts are included in other income (expense), net.

The Company’s tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, an estimate of the annual effective tax rate is updated should management revise its forecast of earnings based upon the Company’s operating results. If there is a change in the estimated effective annual tax rate, a cumulative adjustment is made. The quarterly tax provision and forecast estimate of the annual effective tax rate may be subject to volatility due to several factors, including the complexity in forecasting jurisdictional earnings before tax, the rate of realization of forecasting earnings or losses by quarter, acquisitions, divestitures, foreign currency gains and losses, pension gains and losses, etc.

8. Income taxes

The income tax expense for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 was ~~$6.5 million and $15.4~~$10.2 million, resulting in an effective tax rate of ~~14.3% and 14.2%, respectively.~~13.5%. The Company’s effective tax rate for the three month period ended March 31, 2018 was lower than the US federal statutory rate of 21.0% primarily due to discrete tax benefits of a $9.0 million release of valuation allowance on certain foreign tax attributes and ~~nine month periods~~a $2.7 million recognition of previously unrecognized tax benefits due to a statute of limitation expiration. Without consideration of the $12.3 million discrete benefits in the period, the Company's estimated effective annual tax rate was 29.5%, which is higher than the US federal rate of 21.0% due to state income taxes, foreign rate differential, and the overall impact of the new provisions of the Tax Cuts and Jobs Act (discussed below).

The income tax expense for the three months ended ~~September 30,~~March 31, 2017 was $1.6 million, resulting in an effective tax rate of 6.6%. The Company’s effective tax rate for three months ended March 31, 2017 was lower than the US federal statutory rate of 35.0% primarily due to the mix of earnings in multiple jurisdictions, non-taxable interest income and the release of a valuation allowance on certain foreign tax attributes. Included in the ~~$6.5 million and $15.4~~$1.6 million expense for ~~the three and nine months ended September 30,~~March 31, 2017 was ~~a $0.5~~$2.2 million ~~and $4.0 million~~ benefit ~~respectively,~~ related to excess tax benefits from ~~share-based compensation.~~

~~The income tax benefit for~~equity compensation now reported as a discrete item on the three and nine months ended September 30, 2016 was $44.6 million and $38.6 million, resulting in an effective tax rate of 41.4% and 80.8%, respectively. The Company’s effective tax rate for three months ended September 30, 2016 was higher than the US federal statutory rate of 35.0% primarilyquarter due to the ~~mix~~Company's adoption of ASU 2016-09.

Impacts of the Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”) was signed into law. The Tax Act contains significant changes to corporate taxation. Beginning in 2018, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions become effective. The GILTI provisions require the Company to include in its US income tax return foreign subsidiary earnings in ~~multiple jurisdictions, non-taxable interest income and~~excess of an allowable return on the ~~release of a valuation allowance on certain~~ foreign ~~tax attributes.~~ subsidiary’s tangible assets.

The Company's effective tax rate for the nine months ended September 30, 2016 was higher than the US federal statutory rate primarily due to the mix of earnings in multiple jurisdictions, non-taxable interest income and the release of a valuation allowance on certain foreign tax attributes.

~~Canadian General Anti-Avoidance Rule matters~~

~~In 2007, the outstanding shares of Univar N.V., the ultimate public company parent of the Univar group at that time, were acquired by investment fundsadvised by CVC. To facilitate the acquisition and leveraged financing of Univar N.V. by CVC, a restructuring of some of the companies in the Univar group,including its Canadian operating company, was completed (the “Restructuring”). In February 2013, the Canada Revenue Agency (“CRA”) issued a Notice of~~Assessment, asserting the General Anti-Avoidance Rule (“GAAR”) against the Company’s subsidiary Univar Holdco Canada ULC (“Univar Holdco”) for withholding tax of $29.4 million (Canadian), relating to this Restructuring. Univar Holdco appealed the assessment, and the matter was litigatedBEAT provisions in the Tax ~~Court~~Act eliminate the deduction of ~~Canada in June 2015. On June 22, 2016,~~certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. Due to the complexity of the new GILTI tax rules, the Company is continuing to evaluate the provision of the Tax ~~Court~~Act and the application of Canada issued its judgment in favor of the CRA. The Company subsequently appealed the judgment and a trial in the Federal Court of Canada occurred on May 10, 2017. On October 13, 2017, the Federal Court of Appeals issued its judgment in favor ofASC 740. Under US GAAP, the Company ~~ruling the Canadian restructuring was not subject~~is allowed to ~~the GAAR, reversing the lower court's ruling and remanding the matter~~make an accounting policy choice of either (1) treating taxes due on future US inclusions in taxable income related to ~~the Canadian Ministry~~GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a Company’s measurement of ~~Finance for further action consistent with~~ its ~~decision.~~deferred taxes (the “deferred method”). The ~~Canadian Ministry~~Company’s selection of Finance has until December 12, 2017 to appeal the judgment to the Canadian Supreme Court. A $52.1 million (Canadian) Letter of Credit, covering the initial assessment of $29.4 million (Canadian) and interest of $22.7 million (Canadian), issued with respect to this assessment is currently outstanding.

In September 2014, also relating to the Restructuring, the CRA issued the 2008 and 2009 Notice of Reassessments for federal corporate income tax liabilities of $11.9 million (Canadian) and $11.0 million (Canadian), respectively, and a departure tax liability

of $9.0 million (Canadian). Likewise, in April 2015, the Company’s subsidiary received the 2008 and 2009 Alberta Notice of Reassessments of $6.0 million (Canadian) and $5.8 million (Canadian), respectively. These Reassessments reflect the additional tax liability and interest relating to those tax years should the CRA be successful in its assertion of the GAAR relating to the Restructuring described above. In accordance with the CRA's collection procedures, a $21.0 million (Canadian) Letter of Credit had been issuedan accounting policy with respect to the ~~federal assessment.~~

~~At September 30, 2017, the total Canadian federal and provincial~~new GILTI tax ~~liability assessed~~rules will depend, in part, on analyzing our global income to determine whether we expect to have future US inclusions in taxable income related to ~~these matters, inclusive~~GILTI. This determination depends not only on the Company’s current structure and estimated future results of ~~interest~~global operations but also on the Company’s intent and ability to reasonably estimate the effect of ~~$42.9 million (Canadian),~~this provision of the Tax Act. As the Company is ~~$116.0 million (Canadian)~~still evaluating the impact of the Tax Act, no accounting policy election has been made yet regarding which method the Company will utilize for GILTI.

Based on the existing legislative guidance and interpretation, the Company has provisionally estimated the impact on the tax provision of the GILTI inclusion, offset by the related foreign tax credit, and expects that the annual effective tax rate will increase by approximately 3.8%. The Company ~~has~~does not ~~recorded any liabilities~~expect it will be subject to BEAT in 2018.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for ~~these matters in its financial statements.~~certain income tax effects of the Tax Act. The Company has ~~notified~~recognized the ~~CRA~~provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its ~~intention to cancel both Letters of Credit previously provided on these matters in light~~consolidated financial statements for the year ended December 31, 2017. As a result of the ~~favorable decision reached by~~Tax Act, the ~~Canadian Federal Court~~Company recorded provisional amounts in 2017 including a one-time repatriation tax of ~~Appeal.~~$76.5 million, $47.6 million of foreign tax credits, of which $34.0 million was recorded as a deferred tax asset, net of a valuation allowance. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. The accounting is expected to be complete within the measurement period of one year from December 22, 2017.


8.	~~Earnings per share~~

9. Earnings per share

The following table presents the basic and diluted earnings per share computations:


	Three months ended September 30,					Nine months ended September 30,					Three months ended March 31,
(in millions, except per share data)	2017		2016			2017		2016			2018		2017
Basic:
Net income (loss)	$	38.9	$	(63.0	)	$	92.8	$	(9.2	)
Net income											$	65.4	$	22.6
Less: earnings allocated to participating securities	0.1		—			0.2		—			0.1		—
Earnings allocated to common shares outstanding	$	38.8	$	(63.0	)	$	92.6	$	(9.2	)	$	65.3	$	22.6
Weighted average common shares outstanding	140.4		137.7			140.0		137.7			140.9		139.4
Basic income (loss) per common share	$	0.28	$	(0.46	)	$	0.66	$	(0.07	)
Basic income per common share											$	0.46	$	0.16
Diluted:
Net income (loss)	$	38.9	$	(63.0	)	$	92.8	$	(9.2	)
Net income											$	65.4	$	22.6
Less: earnings allocated to participating securities	—		—			—		—			—		—
Earnings allocated to common shares outstanding	$	38.9	$	(63.0	)	$	92.8	$	(9.2	)	$	65.4	$	22.6
Weighted average common shares outstanding	140.4		137.7			140.0		137.7			140.9		139.4
Effect of dilutive securities: stock compensation plans ⁽¹⁾	1.0		—			1.3		—			1.1		1.4
Weighted average common shares outstanding – diluted	141.4		137.7			141.3		137.7			142.0		140.8
Diluted income (loss) per common share	$	0.28	$	(0.46	)	$	0.66	$	(0.07	)
Diluted income per common share											$	0.46	$	0.16

(1)

Stock options to purchase ~~0.9 million and 3.2~~0.6 million shares of common stock were outstanding during the three months ended ~~September 30,~~March 31, 2018 and 2017, and 2016, respectively, but were not included in the calculation of diluted income per share as the impact of these stock options would have been anti-dilutive. Stock options to purchase 0.8 million and 4.0 million shares of common stock were outstanding during the nine months ended September 30, 2017 and 2016, respectively, but were not included in the calculation of diluted income per share as the impact of these stock options would have been anti-dilutive.


9.	~~Accumulated other comprehensive loss~~

10. Accumulated other comprehensive loss

The following tables present the changes in accumulated other comprehensive loss by component, net of tax:

(in millions) Cash flow hedges
Defined
benefit
pension items

Currency
translation
items
Total
Balance as of December 31, 2016 $ —
$ 1.2
$ (391.1 ) $ (389.9 )
Other comprehensive income before reclassifications (0.3 ) —
120.1
119.8
Amounts reclassified from accumulated other comprehensive loss 1.2
(0.2 ) —
1.0
Net current period other comprehensive (loss) income $ 0.9
$ (0.2 ) $ 120.1
$ 120.8
Balance as of September 30, 2017 $ 0.9
$ 1.0
$ (271.0 ) $ (269.1 )

Balance as of December 31, 2015 $ —
$ 3.0
$ (427.4 ) $ (424.4 )
Other comprehensive income before reclassifications —
—
46.4
46.4
Amounts reclassified from accumulated other comprehensive loss —
(3.0 ) —
(3.0 )
Net current period other comprehensive (loss) income $ —
$ (3.0 ) $ 46.4
$ 43.4
Balance as of September 30, 2016 $ —
$ —
$ (381.0 ) $ (381.0 )

~~The following is a summary of the amounts reclassified from accumulated other comprehensive loss to net income:~~

Three months ended September 30,
(in millions)
2017 ⁽¹⁾

2016 ⁽¹⁾

Location of impact on
statement of operations
Amortization of defined benefit pension items:
Prior service credits $ (0.1 ) $ —
Warehousing, selling and administrative
Tax expense —
—
Income tax expense (benefit)
Net of tax $ (0.1 ) $ —

Cash flow hedges:
Interest rate swap contracts $ 1.9
$ —
Interest expense
Tax benefit (0.7 ) —
Income tax expense (benefit)
Net of tax $ 1.2
$ —

Total reclassifications for the period $ 1.1
$ —



(in millions)	Cash flow hedges		Defined benefit pension items			Currency translation items			Total
Balance as of December 31, 2017	$	6.7	$	(1.2	)	$	(284.0	)	$	(278.5	)
Impact due to adoption of ASU 2017-12 ⁽¹⁾	0.5		—			—			0.5
Other comprehensive income (loss) before reclassifications	9.1		—			(7.2		)	1.9
Net current period other comprehensive income (loss)	$	9.6	$	—		$	(7.2	)	$	2.4
Balance as of March 31, 2018	$	16.3	$	(1.2	)	$	(291.2	)	$	(276.1	)

Balance as of December 31, 2016	$	—	$	1.2		$	(391.1	)	$	(389.9	)
Other comprehensive income before reclassifications	—		—			18.2			18.2
Net current period other comprehensive income (loss)	$	—	$	—		$	18.2		$	18.2
Balance as of March 31, 2017	$	—	$	1.2		$	(372.9	)	$	(371.7	)

Nine months ended September 30,
(in millions)
2017 ⁽¹⁾

2016 ⁽¹⁾

Location of impact on
statement of operations
Amortization of defined benefit pension items:
Prior service credits $ (0.2 ) $ (4.5 ) Warehousing, selling and administrative
Tax expense —
1.5
Income tax expense (benefit)
Net of tax $ (0.2 ) $ (3.0 )
Cash flow hedges:
Interest rate swap contracts $ 1.9
$ —
Interest expense
Tax benefit (0.7 ) —
Income tax expense (benefit)
Net of tax $ 1.2
$ —

Total reclassifications for the period $ 1.0
$ (3.0 )


(1)	~~Amounts in parentheses indicate credits~~Adjusted due to ~~net income in~~ the ~~condensed consolidated statement~~adoption of ~~operations.~~ASU 2017-12 “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2018. Refer to “Note 2: Significant accounting policies” for more information.

~~Refer to “Note 3: Employee benefit plans” for additional information regarding the amortization of defined benefit pension items.~~

Foreign currency gains and losses relating to intercompany borrowings that are considered a part of the Company’s investment in a foreign subsidiary are reflected in accumulated other comprehensive loss. ~~Total~~There were no foreign currency gains and losses related to such intercompany borrowings ~~were $4.3 million which include $4.0 million of previously deferred losses that were realized as foreign currency expense in the three month period ended September 30, 2017 and $4.4 million in losses~~ for the three month period ended ~~September 30, 2016.~~March 31, 2018. Total foreign currency gains ~~and losses~~ related to such intercompany borrowings were ~~$4.8~~$0.5 million ~~and $24.4 million in losses~~ for the ~~nine~~three month ~~periods~~period ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2017.


~~10.~~	~~Debt~~

11. Debt

Short-term financing

Short-term financing consisted of the following:


(in millions)	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
Amounts drawn under credit facilities	$	9.0	$	12.1	$	6.9	$	9.1
Bank overdrafts	6.4		13.2		1.6		4.3
Total short-term financing	$	15.4	$	25.3	$	8.5	$	13.4

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had ~~$206.1~~$147.2 million and ~~$175.3~~$147.0 million in outstanding letters of credit and guarantees, respectively.

Long-term debt

Long-term debt consisted of the following:


(in millions)	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Senior Term Loan Facilities:
Term B Loan Due 2022, variable interest rate of 3.99% and 4.25% at September 30, 2017 and December 31, 2016, respectively	$	2,183.5		$	2,024.4
Euro Tranche Term Loan Due 2022, variable interest rate of 4.25% at September 30, 2017 and December 31, 2016	95.5			259.9
Term B Loan due 2024, variable interest rate of 4.38% and 4.07% at March 31, 2018 and December 31, 2017, respectively							$	1,977.8		$	2,277.8
Asset Backed Loan (ABL) Facilities:
North American ABL Facility Due 2020, variable interest rate of 3.29% and 4.25% at September 30, 2017 and December 31, 2016, respectively	202.5			152.0
North American ABL Term Loan Due 2018, variable interest rate of 4.08% and 3.75% at September 30, 2017 and December 31, 2016, respectively	33.3			83.3
North American ABL Facility due 2020, variable interest rate of 3.38% and 5.00% at March 31, 2018 and December 31, 2017, respectively							296.6			155.0
North American ABL Term Loan due 2018, fully paid off at March 31, 2018 and variable interest rate of 4.44% at December 31, 2017							—			16.7
Senior Unsecured Notes:
Senior Unsecured Notes due 2023, fixed interest rate of 6.75% at September 30, 2017 and December 31, 2016	399.5			399.5
Senior Unsecured Notes due 2023, fixed interest rate of 6.75% at March 31, 2018 and December 31, 2017							399.5			399.5
Capital lease obligations	65.2			63.4			56.8			60.9
Total long-term debt before discount	$	2,979.5		$	2,982.5		$	2,730.7		$	2,909.9
Less: unamortized debt issuance costs and discount on debt	(24.1		)	(28.5		)	(26.7		)	(27.9		)
Total long-term debt	$	2,955.4		$	2,954.0		$	2,704.0		$	2,882.0
Less: current maturities	(82.8		)	(109.0		)	(20.5		)	(62.0		)
Total long-term debt, excluding current maturities	$	2,872.6		$	2,845.0		$	2,683.5		$	2,820.0

The weighted average interest rate on long-term debt was ~~4.62%~~4.17% and ~~4.84%~~4.50% as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

On ~~January 19, 2017,~~February 12, 2018, Univar ~~USA Inc. entered into~~made an ~~amended~~optional $300.0 million early repayment of principal against the $2,277.8 million balance of its Term B ~~loan agreement which replaced the~~Loan due 2024. This early repayment used existing ~~US dollar denominated loans with new US dollar denominated loans in aggregate of $2.2 billion. The amendment also reduced the interest rate credit spread on~~cash balances that were remitted to the US ~~dollar denominated loans by 50 basis points~~ from ~~3.25%~~non-US subsidiary earnings, subject to ~~2.75%~~the newly enacted US Tax Cuts and ~~removed the 1.00% LIBOR floor. The additional proceeds of $175.6 million received from the US dollar denominated loans were used to prepay a portion of the existing Euro denominated Term B Loans.~~

As a result of this debt amendment, the Company recognized debt refinancing costs of $4.2 million in other expense, net in the condensed consolidated statements of operations during the nine months ended September 30, 2017. Refer to “Note 6: Other

~~expense, net” for further information. In addition, the Company recognized a loss on extinguishment of debt of $0.8 million in the nine months ended September 30, 2017.~~Jobs Act.


~~11.~~	~~Supplemental balance sheet information~~

12. Supplemental balance sheet information

Property, plant and equipment, net


(in millions)	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Property, plant and equipment, at cost	$	1,931.3		$	1,831.0		$	1,923.9		$	1,930.2
Less: accumulated depreciation	(912.2		)	(811.5		)	(940.1		)	(927.2		)
Property, plant and equipment, net	$	1,019.1		$	1,019.5		$	983.8		$	1,003.0

Capital lease assets, net

Included within property, plant and equipment, net are assets related to capital leases where the Company is the lessee. The below table summarizes the cost and accumulated depreciation related to these assets:


(in millions)	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
Capital lease assets, at cost	$	87.8		$	76.5		$	83.8		$	86.0
Less: accumulated depreciation	(24.5		)	(14.5		)	(28.9		)	(27.0		)
Capital lease assets, net	$	63.3		$	62.0		$	54.9		$	59.0

Intangible assets, net

The gross carrying amounts and accumulated amortization of the Company’s intangible assets were as follows:


	September 30, 2017							December 31, 2016							March 31, 2018							December 31, 2017
(in millions)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Intangible assets:
Customer relationships	$	860.9	$	(569.5	)	$	291.4	$	826.2	$	(514.3	)	$	311.9	$	852.5	$	(593.0	)	$	259.5	$	853.5	$	(582.1	)	$	271.4
Other	177.6		(160.8		)	16.8		178.2		(150.9		)	27.3		182.8		(163.3		)	19.5		177.8		(161.5		)	16.3
Total intangible assets	$	1,038.5	$	(730.3	)	$	308.2	$	1,004.4	$	(665.2	)	$	339.2	$	1,035.3	$	(756.3	)	$	279.0	$	1,031.3	$	(743.6	)	$	287.7

Other intangible assets consist of intellectual property trademarks, trade names, supplier relationships, non-compete agreements and exclusive distribution rights.

Other accrued expenses

~~As of September 30, 2017, there were no components within other accrued expenses that were greater than five percent of total current liabilities. As of December 31, 2016, other~~Other accrued expenses that were greater than five percent of total current liabilities consisted of customer prepayments and deposits, which were ~~$84.6 million.~~$91.4 million and $97.7 million as of March 31, 2018 and December 31, 2017, respectively.

13. Fair value measurements


~~12.~~	~~Fair value measurements~~

Items measured at fair value on a recurring basis

The following table presents the Company’s gross assets and liabilities measured on a recurring basis:


	Level 2				Level 3				Level 2				Level 3
(in millions)	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Financial current assets:
Forward currency contracts	$	0.3	$	0.5	$	—	$	—	$	0.3	$	0.3	$	—	$	—
Financial noncurrent assets:
Interest rate swap contracts									10.8		1.2		—		—
Financial non-current assets:
Interest rate swap contracts	4.8		9.8		—		—		13.2		10.6		—		—
Financial current liabilities:
Forward currency contracts	0.2		0.3		—		—		0.3		0.4		—		—
Interest rate swap contracts	3.4		5.6		—		—
Contingent consideration	—		—		0.4		1.6		—		—		0.3		—
Financial noncurrent liabilities:
Financial non-current liabilities:
Contingent consideration	—		—		1.7		5.9		—		—		0.3		0.4

The net amounts by legal entity related to forward currency contracts included in prepaid and other current assets were $0.2 million and ~~$0.5~~$0.2 million as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The net amounts related to foreign currency contracts included in other accrued expenses were ~~$0.1~~$0.2 million and $0.3 million as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is determined by estimating the net present value of amounts to be paid under the agreement offset by the net present value of the expected cash inflows based on market rates and associated yield curves. Based on these valuation methodologies, these derivative contracts are classified as ~~level~~Level 2 in the fair value hierarchy.

The fair value of the contingent consideration is based on a real options approach, which takes into account management’s best estimate of the acquired business performance, as well as achievement risk. Based on the valuation methodology, contingent consideration is classified as ~~level~~Level 3 in the fair value hierarchy.

The following table is a reconciliation of the fair value measurements that use significant unobservable inputs (Level 3), which consists of contingent consideration related to prior acquisitions.

(in millions)
Contingent
consideration
Fair value as of December 31, 2016 $ 7.5
Fair value adjustments (3.0 )
Acquisitions 1.7
Payments (3.2 )
Gain on settlement (0.9 )
Fair value as of September 30, 2017 $ 2.1



(in millions)	Contingent Consideration
Fair value as of December 31, 2017	$	0.4
Fair value adjustments	0.2
Fair value as of March 31, 2018	$	0.6

The change in the fair value and payments related to the contingent consideration are recorded in the other, net line item of the operating activities within the condensed consolidated statement of cash flows.

Financial instruments not carried at fair value

The estimated fair value of financial instruments not carried at fair value in the condensed consolidated balance sheets were as follows:


	September 30, 2017				December 31, 2016				March 31, 2018				December 31, 2017
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Long-term debt including current portion (Level 2)	$	2,955.4	$	3,016.7	$	2,954.0	$	3,019.1	$	2,704.0	$	2,760.6	$	2,882.0	$	2,939.7

The fair values of the long-term debt, including the current portions, were based on current market quotes for similar borrowings and credit risk adjusted for liquidity, margins and amortization, as necessary.

Fair value of other financial instruments

The carrying value of cash and cash equivalents, trade accounts receivable, net, trade accounts payable and short-term financing included in the condensed consolidated balance sheets approximate fair value due to their short-term nature.


~~13.~~	~~Derivatives~~

14. Derivatives

Interest rate swaps

The objective of the interest rate swap contracts is to offset the variability of cash flows in LIBOR indexed debt interest payments attributable to changes in the aforementioned benchmark interest rate related to the Term B Loan due ~~2022.~~2024.

At ~~September 30, 2017,~~March 31, 2018, the Company had interest rate swap contracts with a total notional amount of $2.0 billion whereby a fixed rate of interest (weighted-average of 1.70%) is paid and a variable rate of interest (three-month LIBOR) is received as calculated on the notional amount. The interest rate swap contracts will expire on June 30, 2020. The initial interest rate swap contracts that were replaced with the contracts currently outstanding initially included a LIBOR floor of 1.00%. The LIBOR floor was removed on February 1, 2017, as part of the amendment to the interest rate swap contracts. The contracts were amended as a result of the amendment to the Term B Loan agreement with US dollar denominated tranche on January 19, 2017. Refer to “Note 10: Debt” for additional information. As a result of the interest rate swap contracts amendment, the Company had realized a gain of $1.4 million in other expense, net in the condensed consolidated statement of operations.

As of July 6, 2017, the Company designated the interest rate swaps as a cash flow hedge in an effort to reduce the mark-to-market volatility recognized within the condensed consolidated statement of operations. As of ~~September 30, 2017,~~March 31, 2018, the interest rate swaps held by the Company continue to qualify for hedge accounting. Prior to the hedge accounting designation, changes in fair value of the interest rate swap contracts were recognized directly in other ~~expense,~~income (expense), net in the condensed consolidated statement of operations. Refer to “Note 6: Other ~~expense,~~income (expense), net” for additional information. ~~In accordance with ASC 815 - Derivative and Hedging,~~With the adoption of ASU 2017-12, the Company recognizesthe ~~effective portion~~changes in fair value of the ~~gain~~interest rate swap contracts, whether it is due to effectiveness or ~~loss on the derivative as a component of~~ineffectiveness, in other comprehensive income ~~which~~and subsequently is reclassified ~~into earnings in~~to the ~~same period or periods~~income statement when the ~~underlying transaction~~hedged item impacts earnings. ~~Derivative~~

During the three months ended March 31, 2018, there were no gains ~~and losses due to hedge ineffectiveness are recognized in current period earnings.~~

~~Net unrealized~~or losses on our interest rate swap contracts ~~totaling $1.9 million~~that were reclassified to interest expense in the condensed consolidated statement of ~~operations during the three and nine months ended September 30, 2017.~~operations. As of ~~September 30, 2017,~~March 31, 2018, we estimate that ~~$3.4~~$10.8 million of derivative ~~losses~~gains included in accumulated other comprehensive loss will be reclassified into the condensed consolidated statement of operations within the next 12 months. The activity related to our cash flow hedges is included in “Note 9:10: Accumulated other comprehensive loss.”

The fair value of interest rate swaps is recorded either in prepaids and other current assets, other assets, other accrued expenses or other long-term liabilities in the condensed consolidated balance sheets. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, a current ~~liability~~asset of ~~$3.4~~$10.8 million and ~~$5.6~~$1.2 million was included in other ~~accrued expenses,~~current assets, respectively. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, a ~~noncurrent~~non-current asset of ~~$4.8~~$13.2 million and ~~$9.8~~$10.6 million was included in other assets, respectively.

~~The Company had interest rate swap contracts with a total notional amount of $1.0 billion which expired during June 2017.~~

~~Interest rate caps~~

The Company had interest rate caps with a notional amount of $800.0 million which expired during June 2017. As of June 30, 2017, the interest rate cap premiums had been fully amortized through interest expense within the condensed consolidated statements of operations. At September 30, 2017, the Company had no interest rate caps outstanding.

Foreign currency derivatives

The Company uses forward currency contracts to hedge earnings from the effects of foreign exchange relating to certain of the Company’s monetary assets and liabilities denominated in a foreign currency. These derivative instruments are not formally designated as hedges by the Company and the terms of these instruments range from one to three months. Forward currency contracts are recorded at fair value in either prepaid expenses and other current assets or other accrued expenses in the condensed consolidated balance sheet, reflecting their short-term nature. The fair value adjustments and gains and losses are included in other ~~expense,~~income (expense), net within the condensed consolidated statements of operations. Refer to “Note 6: Other ~~expense,~~income (expense), net” for more information. The total notional amount of undesignated forward currency contracts were ~~$97.7~~$130.6 million and ~~$111.0~~$134.0 million as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Cash flows associated with derivative financial instruments are recognized in the operating section of the condensed consolidated statement of cash flows.


~~14.~~	~~Business combinations~~

15. Business combinations

2018 Acquisitions

Acquisition of Kemetyl Industrial Chemicals

On January 4, 2018, the Company completed an acquisition of 100% of the equity interest in Kemetyl Norge Industri AS (“Kemetyl”) as well as a definitive asset purchase agreement with Kemetyl Aktiebolag. Kemetyl is among the leading distributors of chemical products in the Nordic region and provides bulk and specialty chemicals, such as isopropanol, glycols, metal salts, minerals and polyacrylamides, to customers in Sweden and Norway. The addition of Kemetyl will allow Univar to expand its leading position in the pharmaceutical industry.

The purchase price of these acquisitions was $8.9 million (net of cash acquired of $0.7 million). The purchase price allocation includes goodwill of $5.3 million and intangibles of $3.7 million. The operating results subsequent to the acquisition date did not have a significant impact on the consolidated financial statement of the Company. The initial accounting for these acquisitions has only been preliminarily determined, and is subject to final working capital adjustments and valuations of intangible assets and property, plant and equipment.

2017 Acquisitions

Acquisition of Tagma Brasil

On September 21, 2017, the Company completed an acquisition of 100% of the equity interest in Tagma Brasil Ltda. (“Tagma”), a leading Brazilian provider of customized formulation and packaging services for crop protection chemicals that include herbicides, insecticides, fungicides and surfactants. This acquisition expands Univar's agriculture business in one of the world's fastest-growing agricultural markets.

Other acquisitions

On September 29, 2017, the Company completed a definitive asset purchase agreement with PVS Minibulk, Inc. (“PVS”), a provider of Minibulk services for inorganic chemicals in California, Oregon, and Washington. This acquisition expands and strengthens Univar's MiniBulk business in the West Coast market as the Company has the opportunity to service PVS customers and integrate them into the Univar business.

The purchase price of ~~these~~the 2017 acquisitions was $23.9 million (net of cash acquired of $0.2 million). The purchase price allocation includes goodwill of ~~$6.5~~$0.8 million and intangibles of ~~$8.1~~$5.3 million. The operating results subsequent to the acquisition dates did not have a significant impact on the consolidated financial statement of the Company. The initial accounting for these acquisitions has only been preliminarily determined, and is subject to final settlement of the working capital ~~adjustments~~ and ~~valuations of intangible assets and property, plant and equipment.~~other purchase agreement adjustments.

~~As of March 31, 2017, the purchase price allocation for the Bodine and Nexus Ag 2016 acquisitions were finalized.~~ Purchase price adjustments on prior year acquisitions resulted in a decrease of $3.4 million to goodwill recorded in 2018. The adjustments were primarily attributable to additional ~~cash payments~~prepaid expenses and other current assets of ~~$0.5~~$2.6 million ~~during~~and $1.1 million increase in the ~~three months ended March 31, 2017.~~value allocated to intangible assets.


~~15.~~	~~Commitments and contingencies~~

16. Commitments and contingencies

Litigation

In the ordinary course of business the Company is subject to pending or threatened claims, lawsuits, regulatory matters and administrative proceedings from time to time. Where appropriate the Company has recorded provisions in the condensed consolidated financial statements for these matters. The liabilities for injuries to persons or property are in some instances covered by liability insurance, subject to various deductibles and self-insured retentions.

The Company is not aware of any claims, lawsuits, regulatory matters or administrative proceedings, pending or threatened, that are likely to have a material effect on its overall financial position, results of operations or cash flows. However, the Company cannot predict the outcome of any claims or litigation or the potential for future claims or litigation.

The Company is subject to liabilities from claims alleging personal injury from exposure to asbestos. The claims result primarily from an indemnification obligation related to Univar USA Inc.’s (“Univar”) 1986 purchase of McKesson Chemical Company from McKesson Corporation (“McKesson”). Univar is also a defendant in a small number of asbestos claims. As of ~~September 30, 2017,~~March 31, 2018, there were fewer than ~~290~~245 asbestos-related claims for which the Company has liability for defense and indemnity pursuant to the indemnification obligation. The volume of such cases has decreased in recent quarters. Historically, the vast majority of the claims against both McKesson and Univar have been dismissed without payment. The Company does incur costs in defending

these claims. While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any of these matters will have a material effect on its overall financial position, results of operations or cash flows. However, the Company cannot predict the outcome of any present or future claims or litigation and adverse developments could negatively impact earnings or cash flows in a particular future period.

Environmental

The Company is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively “environmental remediation work”) at approximately ~~129~~130 locations, some that are now or were previously Company-owned/occupied and some that were never Company-owned/occupied (“non-owned sites”).

The Company’s environmental remediation work at some sites is being conducted pursuant to governmental proceedings or investigations. At other sites, the Company, with appropriate state or federal agency oversight and approval, is conducting the environmental remediation work voluntarily. The Company is currently undergoing remediation efforts or is in the process of active review of the need for potential remediation efforts at approximately ~~106~~107 current or formerly Company-owned/occupied sites. In addition, the Company may be liable for a share of the clean-up of approximately 23 non-owned sites. These non-owned sites are typically (a) locations of independent waste disposal or recycling operations with alleged or confirmed contaminated soil and/or groundwater to which the Company may have shipped waste products or drums for re-conditioning, or (b) contaminated

non-owned sites near historical sites owned or operated by the Company or its predecessors from which contamination is alleged to have arisen.

In determining the appropriate level of environmental reserves, the Company considers several factors such as information obtained from investigatory studies; changes in the scope of remediation; the interpretation, application and enforcement of laws and regulations; changes in the costs of remediation programs; the development of alternative cleanup technologies and methods; and the relative level of the Company’s involvement at various sites for which the Company is allegedly associated. The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed. Project lives, and therefore cash flows, range from 21 to 30 years, depending on the specific site and type of remediation project.

Although the Company believes that its reserves are adequate for environmental contingencies, it is possible due to the uncertainties noted above; that additional reserves could be required in the future that could have a material effect on the overall financial position, results of operations, or cash flows in a particular period. This additional loss or range of losses cannot be recorded at this time, as it is not reasonably estimable.

Changes in total environmental liabilities are as follows:


	Nine months ended September 30,						Three months ended March 31,
(in millions)	2017			2016			2018			2017
Environmental liabilities at beginning of period	$	95.8		$	113.2		$	89.2		$	95.8
Revised obligation estimates	11.4			9.2			2.2			3.1
Environmental payments	(14.1		)	(15.4		)	(4.8		)	(5.3		)
Foreign exchange	0.3			(0.2		)	0.1			0.1
Environmental liabilities at end of period	$	93.4		$	106.8		$	86.7		$	93.7

Environmental liabilities of ~~$31.0~~$28.7 million and ~~$30.2~~$29.1 million were classified as current in other accrued expenses in the condensed consolidated balance sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively. The long-term portion of environmental liabilities is recorded in other long-term liabilities in the condensed consolidated balance sheets.

Customs and International Trade Laws

In April 2012, the US Department of Justice (“DOJ”) issued a civil investigative demand to the Company in connection with an investigation into the Company’s compliance with applicable customs and international trade laws and regulations relating to the importation of saccharin from 2002 through 2012. The Company also became aware in 2010 of an investigation being conducted by US Customs and Border Patrol (“CBP”) into the Company’s importation of saccharin. Finally, the Company learned that a civil plaintiff had sued the Company and two other defendants in a Qui Tam proceeding, such filing having been made under seal in 2012, and this plaintiff had requested that the DOJ intervene in its lawsuit.

The US government, through the DOJ, declined to intervene in the Qui Tam proceeding in November 2013 and, as a result, the DOJ’s inquiry related to the Qui Tam lawsuit and its initial investigation demand are now finished. On February 26, 2014, the Qui Tam plaintiff also voluntarily dismissed its lawsuit against the Company.

CBP, however, continued its investigation on the importation of saccharin by the Company’s subsidiary, Univar USA Inc. On July 21, 2014, CBP sent the Company a “Pre-Penalty Notice” indicating the imposition of a penalty against Univar USA Inc.

in the amount of approximately $84.0 million. Univar USA Inc. responded to CBP that the proposed penalty was not justified. On October 1, 2014, the CBP issued a penalty notice to Univar USA Inc. for $84.0 million and has reaffirmed this penalty notice. On August 6, 2015, the DOJ filed a complaint on CBP’s behalf against Univar USA Inc. in the Court of International Trade seeking approximately $84.0 million in allegedly unpaid duties and penalties, ~~interest, costs and attorneys’ fees.~~plus interest. The Company continues to defend this matter vigorously. Discovery has largely concluded and ~~motions to exclude certain evidence as well as for summary judgment to resolve the dispute in whole or in part have been filed.~~dispositive motion is pending. Univar USA Inc. has not recorded a liability related to this investigation as the Company believes a loss is not probable. Although the Company believes its position is strong, it cannot guarantee the outcome of this or other litigation.

~~16.~~17. Segments

Management monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Management evaluates performance on the basis of Adjusted EBITDA. Adjusted EBITDA is defined as consolidated net income, plus the sum of: interest expense, net of interest income; income tax expense; depreciation; amortization; ~~impairment charges;~~loss on extinguishment of debt; other operating expenses, net; and other ~~expense,~~income (expense), net.

Transfer prices between operating segments are set on an arms-length basis in a similar manner to transactions with third parties. Corporate operating expenses that directly benefit segments have been allocated to the operating segments. Allocable operating expenses are identified through a review process by management. These costs are allocated to the operating segments on a basis that reasonably approximates the use of services. This is typically measured on a weighted distribution of margin, asset, headcount or time spent.

Financial information for the Company’s segments is as follows:


(in millions)	USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated		USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated
	Three Months Ended September 30, 2017													Three Months Ended March 31, 2018
Net sales:
External customers	$	1,185.0	$	299.9	$	456.9	$	106.9	$	—		$	2,048.7	$	1,204.4	$	313.4	$	538.6	$	101.6	$	—		$	2,158.0
Inter-segment	25.9		2.5		1.1		—		(29.5		)	—		35.1		2.0		1.4		0.1		(38.6		)	—
Total net sales	$	1,210.9	$	302.4	$	458.0	$	106.9	$	(29.5	)	$	2,048.7	$	1,239.5	$	315.4	$	540.0	$	101.7	$	(38.6	)	$	2,158.0
Cost of goods sold	937.5		246.2		355.1		84.6		(29.5		)	1,593.9		960.6		253.0		416.0		80.4		(38.6		)	1,671.4
Gross profit	$	273.4	$	56.2	$	102.9	$	22.3	$	—		$	454.8	$	278.9	$	62.4	$	124.0	$	21.3	$	—		$	486.6
Outbound freight and handling	50.3		9.1		13.8		1.6		—			74.8		49.9		10.4		17.0		2.0		—			79.3
Warehousing, selling and administrative	132.4		21.5		55.9		11.4		6.8			228.0		137.8		22.5		62.3		11.5		6.9			241.0
Adjusted EBITDA	$	90.7	$	25.6	$	33.2	$	9.3	$	(6.8	)	$	152.0	$	91.2	$	29.5	$	44.7	$	7.8	$	(6.9	)	$	166.3
Other operating expenses, net												11.8													13.6
Depreciation												32.5													31.4
Amortization												16.8													13.4
Interest expense, net												38.4													34.9
Other expense, net												7.1
Other income, net																									(2.6		)
Income tax expense												6.5													10.2
Net income												$	38.9												$	65.4
Total assets	$	3,634.0	$	2,006.9	$	905.2	$	251.7	$	(1,107.7	)	$	5,690.1	$	3,356.1	$	1,821.5	$	1,034.0	$	247.4	$	(764.7	)	$	5,694.3

(in millions)
USA
Canada
EMEA
Rest of
World
Other/
Eliminations ⁽¹⁾

Consolidated

Three Months Ended September 30, 2016
Net sales:

External customers
$ 1,222.1
$ 260.8
$ 412.5
$ 104.3
$ —
$ 1,999.7
Inter-segment
21.2
2.1
1.1
—
(24.4 ) —
Total net sales
$ 1,243.3
$ 262.9
$ 413.6
$ 104.3
$ (24.4 ) $ 1,999.7
Cost of goods sold
974.0
207.3
320.8
83.9
(24.4 ) 1,561.6
Gross profit
$ 269.3
$ 55.6
$ 92.8
$ 20.4
$ —
$ 438.1
Outbound freight and handling
52.3
9.0
13.1
1.8
—
76.2
Warehousing, selling and administrative
126.9
20.6
51.2
11.7
5.6
216.0
Adjusted EBITDA
$ 90.1
$ 26.0
$ 28.5
$ 6.9
$ (5.6 ) $ 145.9
Other operating expenses, net
12.1
Depreciation
42.4
Amortization
22.5
Impairment charges 133.9
Interest expense, net
39.5
Other expense, net
3.1
Income tax benefit
(44.6 )
Net loss

$ (63.0 )
Total assets
$ 3,824.4
$ 1,824.3
$ 971.9
$ 232.5
$ (1,256.2 ) $ 5,596.9

(in millions) USA Canada EMEA
Rest of
World

Other/
Eliminations ⁽¹⁾
Consolidated
Nine Months Ended September 30, 2017
Net sales:
External customers $ 3,527.0
$ 1,099.6
$ 1,360.3
$ 307.6
$ —
$ 6,294.5
Inter-segment 92.1
6.6
3.6
0.3
(102.6 ) —
Total net sales $ 3,619.1
$ 1,106.2
$ 1,363.9
$ 307.9
$ (102.6 ) $ 6,294.5
Cost of goods sold 2,807.1
926.7
1,054.5
248.2
(102.6 ) 4,933.9
Gross profit $ 812.0
$ 179.5
$ 309.4
$ 59.7
$ —
$ 1,360.6
Outbound freight and handling 144.4
27.5
41.0
4.8
—
217.7
Warehousing, selling and administrative 403.2
64.8
163.0
34.0
22.7
687.7
Adjusted EBITDA $ 264.4
$ 87.2
$ 105.4
$ 20.9
$ (22.7 ) $ 455.2
Other operating expenses, net 55.8
Depreciation 102.5
Amortization 50.0
Interest expense, net 110.0
Loss on extinguishment of debt 0.8
Other expense, net 27.9
Income tax expense 15.4
Net income $ 92.8
Total assets $ 3,634.0
$ 2,006.9
$ 905.2
$ 251.7
$ (1,107.7 ) $ 5,690.1


(in millions)	USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated			USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated
	Nine Months Ended September 30, 2016														Three Months Ended March 31, 2017
Net sales:
External customers	$	3,622.4	$	1,018.9	$	1,309.8	$	310.1	$	—		$	6,261.2		$	1,150.9	$	307.3	$	439.7	$	100.9	$	—		$	1,998.8
Inter-segment	73.1		6.1		3.5		—		(82.7		)	—			31.2		1.8		1.3		0.1		(34.4		)	—
Total net sales	$	3,695.5	$	1,025.0	$	1,313.3	$	310.1	$	(82.7	)	$	6,261.2		$	1,182.1	$	309.1	$	441.0	$	101.0	$	(34.4	)	$	1,998.8
Cost of goods sold	2,900.2		858.2		1,021.2		250.5		(82.7		)	4,947.4			919.2		253.3		339.2		82.1		(34.4		)	1,559.4
Gross profit	$	795.3	$	166.8	$	292.1	$	59.6	$	—		$	1,313.8		$	262.9	$	55.8	$	101.8	$	18.9	$	—		$	439.4
Outbound freight and handling	148.2		25.2		41.9		5.5		—			220.8			46.8		9.2		13.4		1.6		—			71.0
Warehousing, selling and administrative	393.0		62.4		160.4		35.1		13.9			664.8			134.8		22.0		54.7		10.6		6.4			228.5
Adjusted EBITDA	$	254.1	$	79.2	$	89.8	$	19.0	$	(13.9	)	$	428.2		$	81.3	$	24.6	$	33.7	$	6.7	$	(6.4	)	$	139.9
Other operating expenses, net												29.1														19.8
Depreciation												113.9														35.9
Amortization												67.8														16.7
Impairment charges												133.9
Interest expense, net												120.5														35.8
Loss on extinguishment of debt																										0.8
Other expense, net												10.8														6.7
Income tax benefit												(38.6		)
Net loss												$	(9.2	)
Income tax expense																										1.6
Net income																										$	22.6
Total assets	$	3,824.4	$	1,824.3	$	971.9	$	232.5	$	(1,256.2	)	$	5,596.9		$	3,640.2	$	1,975.5	$	908.2	$	227.9	$	(1,155.8	)	$	5,596.0


(1)	Other/Eliminations represents the elimination of intersegment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively.


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

Our operations are structured into four operating segments that represent the geographic areas under which we operate and manage our business. These segments are Univar USA (“USA”), Univar Canada (“Canada”), Univar Europe and the Middle East and Africa (“EMEA”), and Rest of World (“Rest of World”), which includes developing businesses in Latin America (including Brazil and Mexico) and the Asia-Pacific region.

We monitor the results of our operating segments separately for the purposes of making decisions about resource allocation and performance assessment. We evaluate performance on the basis of Adjusted EBITDA, which we define as our consolidated net income, plus the sum of interest expense, net of interest income, income tax expense, depreciation, amortization, loss on extinguishment of debt, other operating expenses, net (which primarily consists of acquisition and integration related expenses, employee stock-based compensation expense, restructuring charges, other employee termination costs, business optimization, and other unusual or non-recurring expenses) and other ~~expense,~~income (expense), net (which consists of gains and losses on foreign currency transactions and undesignated derivative instruments, debt refinancing costs, non-operating retirement benefits, and other ~~nonoperating~~non-operating activity). We believe that Adjusted EBITDA is an important indicator of operating performance because:

we report Adjusted EBITDA to our lenders as required under the covenants of our credit agreements;

we consider gains (losses) on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations;

Adjusted EBITDA excludes the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization ~~expenses;~~expenses and therefore more closely measures our operational performance;

we use Adjusted EBITDA in setting performance incentive ~~targets;~~

~~we consider gains (losses) on the acquisition, disposal and impairment of assets as resulting from investing decisions rather than ongoing operations;~~targets in order to align performance measurement with operational performance; and

other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of our results.

We set transfer prices between operating segments on an arms-length basis in a similar manner to transactions with third parties. We allocate corporate operating expenses that directly benefit our operating segments on a basis that reasonably approximates our estimates of the use of these services.

Other/Eliminations represents the elimination of inter-segment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively. In the analysis of our results of operations, we discuss operating segment results for the current reporting period following our consolidated results of operations period-to-period comparison.

The following is management’s discussion and analysis of the financial condition and results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 as compared to the corresponding period in the prior year. This discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, set forth in this report under “Financial Statements” and our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Results of Operations

The following tables set forth, for the periods indicated, certain statements of operations data first on the basis of reported data and then as a percentage of total net sales for the relevant period.

Three Months Ended ~~September 30, 2017~~March 31, 2018 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2017


	Three Months Ended										Favorable (unfavorable)			% Change		Impact of currency ⁽¹⁾		Three Months Ended										Favorable (unfavorable)			% Change		Impact of currency ⁽¹⁾
(in millions)	September 30, 2017					September 30, 2016					Favorable (unfavorable)			% Change		Impact of currency ⁽¹⁾		March 31, 2018					March 31, 2017					Favorable (unfavorable)			% Change		Impact of currency ⁽¹⁾
Net sales	$	2,048.7		100.0	%	$	1,999.7		100.0	%	$	49.0		2.5	%	1.7	%	$	2,158.0		100.0	%	$	1,998.8		100.0	%	$	159.2		8.0	%	4.2	%
Cost of goods sold	1,593.9			77.8	%	1,561.6			78.1	%	(32.3		)	2.1	%	(1.7	)%	1,671.4			77.5	%	1,559.4			78.0	%	(112.0		)	7.2	%	(4.2	)%
Gross profit	$	454.8		22.2	%	$	438.1		21.9	%	$	16.7		3.8	%	1.6	%	$	486.6		22.5	%	$	439.4		22.0	%	$	47.2		10.7	%	4.2	%
Operating expenses:
Outbound freight and handling	74.8			3.7	%	76.2			3.8	%	1.4			(1.8	)%	(1.4	)%	79.3			3.7	%	71.0			3.6	%	(8.3		)	11.7	%	(3.8	)%
Warehousing, selling and administrative	228.0			11.1	%	216.0			10.8	%	(12.0		)	5.6	%	(1.6	)%	241.0			11.2	%	228.5			11.4	%	(12.5		)	5.5	%	(4.0	)%
Other operating expenses, net	11.8			0.6	%	12.1			0.6	%	0.3			(2.5	)%	(2.5	)%	13.6			0.6	%	19.8			1.0	%	6.2			(31.3	)%	(1.0	)%
Depreciation	32.5			1.6	%	42.4			2.1	%	9.9			(23.3	)%	(0.9	)%	31.4			1.5	%	35.9			1.8	%	4.5			(12.5	)%	(2.2	)%
Amortization	16.8			0.8	%	22.5			1.1	%	5.7			(25.3	)%	(0.4	)%	13.4			0.6	%	16.7			0.8	%	3.3			(19.8	)%	(1.2	)%
Impairment charges	—			—	%	133.9			6.7	%	133.9			(100.0	)%	—	%
Total operating expenses	$	363.9		17.8	%	$	503.1		25.2	%	$	139.2		(27.7	)%	(1.1	)%	$	378.7		17.5	%	$	371.9		18.6	%	$	(6.8	)	1.8	%	(3.5	)%
Operating income (loss)	$	90.9		4.4	%	$	(65.0	)	(3.3	)%	$	155.9		N/M		2.8	%	$	107.9		5.0	%	$	67.5		3.4	%	$	40.4		59.9	%	8.6	%
Other (expense) income:
Interest income	0.9			—	%	1.1			0.1	%	(0.2		)	(18.2	)%	9.1	%	1.2			0.1	%	0.9			—	%	0.3			33.3	%	—	%
Interest expense	(39.3		)	(1.9	)%	(40.6		)	(2.0	)%	1.3			(3.2	)%	—	%	(36.1		)	(1.7	)%	(36.7		)	(1.8	)%	0.6			(1.6	)%	(0.5	)%
Other expense, net	(7.1		)	(0.3	)%	(3.1		)	(0.2	)%	(4.0		)	(129.0	)%	(9.7	)%
Loss on extinguishment of debt																		—			—	%	(0.8		)	—	%	0.8			(100.0	)%	—	%
Other income (expense), net																		2.6			0.1	%	(6.7		)	(0.3	)%	9.3			N/M		3.0	%
Total other expense	$	(45.5	)	(2.2	)%	$	(42.6	)	(2.1	)%	$	(2.9	)	6.8	%	(0.5	)%	$	(32.3	)	(1.5	)%	$	(43.3	)	(2.2	)%	$	11.0		(25.4	)%	—	%
Income (loss) before income taxes	45.4			2.2	%	(107.6		)	(5.4	)%	153.0			N/M		1.5	%
Income tax expense (benefit)	6.5			0.3	%	(44.6		)	(2.2	)%	(51.1		)	N/M		(0.7	)%
Net income (loss)	$	38.9		1.9	%	$	(63.0	)	(3.2	)%	$	101.9		N/M		2.1	%
Income before income taxes																		75.6			3.5	%	24.2			1.2	%	51.4			212.4	%	24.0	%
Income tax expense																		10.2			0.5	%	1.6			0.1	%	(8.6		)	537.5	%	31.3	%
Net income																		$	65.4		3.0	%	$	22.6		1.1	%	$	42.8		189.4	%	27.9	%


(1)	Foreign currency translation is included in the percentage change. Unfavorable impacts from foreign currency translation are designated with parentheses.

Net sales



Net sales percentage change due to:
Acquisitions	—0.4	%
Reported sales volumes	(~~8.4~~3.5	)%
Sales pricing and product mix	~~9.2~~6.9	%
Foreign currency translation	~~1.7~~4.2	%
Total	~~2.5~~8.0	%

Net sales were ~~$2,048.7~~$2,158.0 million for the three months ended ~~September 30, 2017,~~March 31, 2018, an increase of ~~$49.0~~$159.2 million, or ~~2.5%~~8.0%, from the three months ended ~~September 30, 2016. The decrease in~~March 31, 2017. On a constant currency basis, net sales ~~from~~increased due to sales pricing and product mix improvements in all regions, offsetting lower reported sales volumes ~~was driven by the USA, EMEA, and Rest of World segments, partially offset by higher sales volumes in the Canada segment. The decrease in~~ ~~reported sales volumes is partly~~primarily due to ~~the impact from hurricanes in the USA segment and~~ one less selling day in many regions for the three months ended ~~September 30, 2017~~. ~~The increase in net sales from changes in sales pricing and product mix was driven by all of our segments. Foreign currency translation increased net sales, due~~March 31, 2018 compared to the ~~US dollar weakening against~~three months ended March 31, 2017. Net sales also increased from the ~~British pound, euro, Canadian dollar, Mexican peso,~~January 2018 Kemetyl acquisition in EMEA and the ~~Brazilian real.~~September 2017 Tagma acquisition in the Rest of World segment. Refer to the “Segment results” for the three months ended ~~September 30, 2017~~March 31, 2018 discussion for additional information.

Gross profit



Gross profit percentage change due to:
Acquisitions	~~0.1~~0.6	%
Reported sales volumes	(~~8.4~~3.5	)%
Sales pricing, product costs and other adjustments	~~10.5~~9.4	%
Foreign currency translation	~~1.6~~4.2	%
Total	~~3.8~~10.7	%

Gross profit increased ~~$16.7~~$47.2 million, or ~~3.8%~~10.7%, to ~~$454.8~~$486.6 million for the three months ended ~~September 30, 2017.~~March 31, 2018. The increase in gross profit is attributable to sales pricing improvements, changes in product and market mix, and chemical price inflation on certain products in all of our segments. The increase in gross profit from acquisitions was ~~driven by~~attributable to the January 2018 Kemetyl acquisition in EMEA and the September 2017 Tagma acquisition in the Rest of World segment. The decrease in gross profit from reported sales volumes was driven by the USA, EMEA, and Rest of World segments, partially offset by higher sales volumes in the Canada segment. The increase in gross profit from changes in sales pricing, product costs and other adjustments was driven by USA, EMEA, and Rest of World segments, partially offset by lower gross profit in the Canada segment. Gross margin, which we define as gross profit divided by net sales, increased to ~~22.2%~~22.5% for the three months ended ~~September 30, 2017~~March 31, 2018 from ~~21.9%~~22.0% for the three months ended September 30, 2016 primarily due to favorable product mix, market changes, and focused margin management efforts. Foreign currency translation increased gross profit due to the weakening of the US dollar against the British pound, euro, Canadian dollar, Mexican peso, and the Brazilian real.March 31, 2017. Refer to the “Segment results” for the three months ended ~~September 30, 2017~~March 31, 2018 discussion for additional information.

Outbound freight and handling

Outbound freight and handling expenses ~~decreased $1.4~~increased $8.3 million, or ~~1.8%~~11.7%, to ~~$74.8~~$79.3 million for the three months ended ~~September 30, 2017. Foreign currency translation increased outbound freight and handling expense by $1.1 million, or 1.4%.~~March 31, 2018. On a constant currency basis, outbound freight and handling expenses ~~decreased $2.5~~increased $5.6 million, or ~~3.2%~~7.9%, primarily due to ~~lower reported sales volumes offset by~~ higher delivery costs resulting from ~~changes in product mix, market~~higher fuel costs and capacity constraints, ~~and higher fuel costs.~~partially offset by lower reported sales volumes. Refer to the “Segment results” for the three months ended ~~September 30, 2017~~March 31, 2018 discussion for additional information.

Warehousing, selling and administrative

Warehousing, selling and administrative expenses increased ~~$12.0~~$12.5 million, or ~~5.6%~~5.5%, to ~~$228.0~~$241.0 million for the three months ended ~~September 30, 2017. Foreign currency translation increased warehousing, selling and administrative expenses by $3.5 million, or 1.6%.~~March 31, 2018. On a constant currency basis, the ~~$8.5~~$3.4 million increase is primarily due to ~~higher personnel~~focused investments in training, software and additional sales and technology resources to meet our sales force and digital initiative objectives. These costs ~~of $10.3 million driven by higher variable compensation expense,~~were partially offset by ~~$1.3 million~~good cost management across all of our segments and lower medical expenses and bad debt charges in ~~lower legal fees and $0.9 million in lower lease expense. The remaining $0.4 million increase related to several insignificant components.~~the current year. Refer to the “Segment results” for the three months ended ~~September 30, 2017~~March 31, 2018 discussion for additional information.

Other operating expenses, net

Other operating expenses, net decreased ~~$0.3~~$6.2 million from ~~$12.1~~$19.8 million for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~$11.8~~$13.6 million for the three months ended ~~September 30, 2017.~~March 31, 2018. The decrease was related to ~~$0.9 million~~the reduction in costs incurred to support the transformation of the US business and lower restructuring ~~charges and a benefit from the release of a contingent payment reserve.~~charges. The decrease was partially offset by ~~$0.9 million of~~ higher stock-based ~~compensation. The Company also experienced~~compensation, higher other employee termination costs ~~in the USA segment. The remaining $0.3 million decrease~~and higher acquisition and integration related ~~to several insignificant components. Foreign currency translation increased other operating expenses, net by $0.3 million, or 2.5%.~~expenses. Refer to “Note 4: Other operating expenses, net” and “Note 5: Restructuring charges” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

Depreciation and amortization

Depreciation expense decreased ~~$9.9~~$4.5 million, or ~~23.3%~~12.5%, to ~~$32.5~~$31.4 million for the three months ended ~~September 30, 2017. Foreign currency translation increased depreciation expense by $0.4 million, or 0.9%.~~March 31, 2018. On a constant currency basis, the ~~$10.3~~$5.3 million decrease was primarily ~~related~~due to assets reaching the ~~second quarter 2016 reassessment~~end of their useful ~~lives of certain internally developed software which were fully depreciated by May 2017.~~lives.

Amortization expense decreased ~~$5.7~~$3.3 million, or ~~25.3%~~19.8%, to ~~$16.8~~$13.4 million for the three months ended ~~September 30, 2017. Foreign currency translation increased amortization expense by $0.1 million, or 0.4%.~~March 31, 2018. On a constant currency basis, the decrease of ~~$5.8~~$3.5 million was primarily ~~driven by the third quarter 2016 impairment charge which reduced the intangible asset base along with lower expense related~~attributable to intangibles reaching the end of their useful ~~life.~~

~~Impairment charges~~

There were no impairment charges in the three months ended September 30, 2017. Impairment charges of $133.9 million were recorded in the three months ended September 30, 2016 of which $133.6 million was due to the impairment of intangible assets and fixed assets related to the upstream oil and gas customers in the USA segment. The Company also recorded a non-cash, long-lived asset impairment charge of $0.3 million related to assets held-for-sale.lives.

Interest expense

Interest expense decreased ~~$1.3~~$0.6 million, or ~~3.2%~~1.6%, to ~~$39.3~~$36.1 million for the three months ended ~~September 30, 2017~~March 31, 2018 primarily due to lower average outstanding borrowings, ~~as well as lower~~largely offset by higher net average interest ~~rates~~rates. Refer to “Note 11: Debt” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

Other income (expense), net

Other income (expense), net decreased $9.3 million, or 138.8%, from an expense of $6.7 million for the three months ended March 31, 2017 to and income of $2.6 million for the three months ended March 31, 2018. The decrease was primarily related to the absence of debt amendment fees for the January 2017 ~~debt~~ amendment of the Senior Term B loan agreement.

~~Other expense, net~~

~~Other expense, net increased $4.0 million, or 129.0%,~~ The decrease was also due to ~~$7.1 million for~~ the ~~three months ended September 30, 2017. The increase was primarily driven by the increase of $2.4 million in~~reduced exposure to exchange movements on foreign currency denominated loans due to the Euro Term B loan ~~revaluation losses. The remaining $1.6 million change is related to several insignificant components.~~repayment in November 2017. Refer to “Note 6: Other ~~expense,~~income (expense), net” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

Income tax expense

~~Income~~The income tax ~~expense increased $51.1 million from a $44.6 million benefit for the three months ended September 30, 2016 to a $6.5 million~~ expense for the three months ended ~~September 30, 2017.~~March 31, 2018 was $10.2 million, resulting in an effective tax rate of 13.5%. The ~~$51.1 million increase in income~~Company’s effective tax expense was primarily a result of a decrease in earnings in the third quarter of 2016 resulting from a one-time $133.9 million impairment charge and an increase in earnings in the third quarter of 2017 over the third quarter of 2016 of $19.1 million. As compared to the $52.2 million of discrete benefit recorded for the three months of 2016, $0.1 million of discrete expense was recordedrate for the three month period ended ~~September 30, 2017.~~March 31, 2018 was lower than the US federal statutory rate of 21.0% primarily due to discrete tax benefits of a $9.0 million release of valuation allowance on certain foreign tax attributes and a $2.7 million recognition of previously unrecognized tax benefits due to a statute of limitation expiration. Without consideration

of the $12.3 million discrete benefits in the period, the Company’s estimated effective annual tax rate was 29.5%, which is higher than the US federal rate of 21.0% due to state income taxes, foreign rate differential, and the overall impact of the new provisions of the Tax Cuts and Jobs Act. Refer to “Note 8: Income taxes” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

Income tax expense for the three months ended March 31, 2017 was $1.6 million, resulting in an effective tax rate of 6.6%. The Company’s effective tax rate for three months ended March 31, 2017 was lower than the US federal statutory rate of 35.0%, primarily due to the mix of earnings in multiple jurisdictions, non-taxable interest income and the release of a valuation allowance on certain foreign tax attributes. Included in the $1.6 million expense for March 31, 2017 was $2.2 million benefit related to excess tax benefits from equity compensation now reported as a discrete item on the quarter due to the Company's adoption of ASU 2016-09.

Segment results

Our Adjusted EBITDA by operating segment and in aggregate is summarized in the following tables:


(in millions)	USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated		USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated
	Three months ended September 30, 2017													Three months ended March 31, 2018
Net sales:
External customers	$	1,185.0	$	299.9	$	456.9	$	106.9	$	—		$	2,048.7	$	1,204.4	$	313.4	$	538.6	$	101.6	$	—		$	2,158.0
Inter-segment	25.9		2.5		1.1		—		(29.5		)	—		35.1		2.0		1.4		0.1		(38.6		)	—
Total net sales	$	1,210.9	$	302.4	$	458.0	$	106.9	$	(29.5	)	$	2,048.7	$	1,239.5	$	315.4	$	540.0	$	101.7	$	(38.6	)	$	2,158.0
Cost of goods sold	937.5		246.2		355.1		84.6		(29.5		)	1,593.9		960.6		253.0		416.0		80.4		(38.6		)	1,671.4
Gross profit	$	273.4	$	56.2	$	102.9	$	22.3	$	—		$	454.8	$	278.9	$	62.4	$	124.0	$	21.3	$	—		$	486.6
Outbound freight and handling	50.3		9.1		13.8		1.6		—			74.8		49.9		10.4		17.0		2.0		—			79.3
Warehousing, selling and administrative	132.4		21.5		55.9		11.4		6.8			228.0		137.8		22.5		62.3		11.5		6.9			241.0
Adjusted EBITDA	$	90.7	$	25.6	$	33.2	$	9.3	$	(6.8	)	$	152.0	$	91.2	$	29.5	$	44.7	$	7.8	$	(6.9	)	$	166.3
Other operating expenses, net												11.8													13.6
Depreciation												32.5													31.4
Amortization												16.8													13.4
Interest expense, net												38.4													34.9
Other expense, net												7.1
Other income, net																									(2.6		)
Income tax expense												6.5													10.2
Net income												$	38.9												$	65.4


(in millions)	USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated			USA		Canada		EMEA		Rest of World		Other/ Eliminations ⁽¹⁾			Consolidated
	Three months ended September 30, 2016														Three months ended March 31, 2017
Net sales:
External customers	$	1,222.1	$	260.8	$	412.5	$	104.3	$	—		$	1,999.7		$	1,150.9	$	307.3	$	439.7	$	100.9	$	—		$	1,998.8
Inter-segment	21.2		2.1		1.1		—		(24.4		)	—			31.2		1.8		1.3		0.1		(34.4		)	—
Total net sales	$	1,243.3	$	262.9	$	413.6	$	104.3	$	(24.4	)	$	1,999.7		$	1,182.1	$	309.1	$	441.0	$	101.0	$	(34.4	)	$	1,998.8
Cost of goods sold	974.0		207.3		320.8		83.9		(24.4		)	1,561.6			919.2		253.3		339.2		82.1		(34.4		)	1,559.4
Gross profit	$	269.3	$	55.6	$	92.8	$	20.4	$	—		$	438.1		$	262.9	$	55.8	$	101.8	$	18.9	$	—		$	439.4
Outbound freight and handling	52.3		9.0		13.1		1.8		—			76.2			46.8		9.2		13.4		1.6		—			71.0
Warehousing, selling and administrative	126.9		20.6		51.2		11.7		5.6			216.0			134.8		22.0		54.7		10.6		6.4			228.5
Adjusted EBITDA	$	90.1	$	26.0	$	28.5	$	6.9	$	(5.6	)	$	145.9		$	81.3	$	24.6	$	33.7	$	6.7	$	(6.4	)	$	139.9
Other operating expenses, net												12.1														19.8
Depreciation												42.4														35.9
Amortization												22.5														16.7
Impairment charges												133.9
Interest expense, net												39.5														35.8
Loss on extinguishment of debt																										0.8
Other expense, net												3.1														6.7
Income tax benefit												(44.6		)
Net loss												$	(63.0	)
Income tax expense																										1.6
Net income																										$	22.6


(1)	Other/Eliminations represents the elimination of intersegment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively.

USA.


Net sales percentage change due to:	Net sales percentage change due to:			Gross profit percentage change due to:			Net sales percentage change due to:			Gross profit percentage change due to:
Reported sales volumes		(9.4	)%	Reported sales volumes	(9.4	)%		(0.9	)%	Reported sales volumes	(0.9	)%
Sales pricing and product mix		6.4	%	Sales pricing, product costs and other adjustments	10.9	%		5.5	%	Sales pricing, product costs and other adjustments	7.0	%
Total		(3.0	)%	Total	1.5	%		4.6	%	Total	6.1	%

External sales in the USA segment were ~~$1,185.0~~$1,204.4 million, ~~a decrease~~an increase of ~~$37.1~~$53.5 million, or ~~3.0%~~4.6%, for the three months ended ~~September 30, 2017~~March 31, 2018, primarily due to ~~lower sales volumes, partially offset by~~ higher average selling prices resulting from favorable changes in product mix, the ~~Company's~~Company’s efforts to improve its sales force effectiveness and ~~margin management initiatives. The decrease in~~ ~~reported~~chemical price inflation on certain products, partially offset by slightly lower sales ~~volumes is partly due to one less selling day and lost business to customers who were unable to operate as a result of Hurricane Harvey and Irma.~~ volumes.

Gross profit increased ~~$4.1~~$16.0 million, or ~~1.5%~~6.1%, to ~~$273.4~~$278.9 million for the three months ended ~~September 30, 2017.~~March 31, 2018. Gross profit increased ~~due to sales pricing, product costs and other adjustments primarily~~ due to higher average selling prices, ~~and~~ changes in product mix, ~~to higher margin products.~~and a net benefit from miscellaneous operating items. Gross margin increased from ~~22.0%~~22.8% for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~23.1%~~23.2% during the three months ended ~~September 30, 2017 primarily due to the factors impacting gross profit discussed above.~~March 31, 2018.

Outbound freight and handling expenses ~~decreased $2.0~~increased $3.1 million, or ~~3.8%~~6.6%, to ~~$50.3~~$49.9 million for the three months ended ~~September 30, 2017~~March 31, 2018 primarily due to ~~lower shipment volumes, partially offset by~~ higher delivery costs resulting from ~~a combination of market~~ capacity constraints and higher fuel costs.

Operating expenses increased ~~$5.5~~$3.0 million, or ~~4.3%~~2.2%, to ~~$132.4~~$137.8 million for the three months ended ~~September 30, 2017~~March 31, 2018 primarily due to ~~increased personnel expenses including higher variable compensation expense of $5.6 million. The remaining $0.1 million offsetting decrease related to several insignificant components.~~focused investments in training, software and additional sales and technology resources. These costs were partially offset by lower medical claims in the current year. Operating expenses as a percentage of external sales ~~increased~~decreased from ~~10.4%~~11.7% for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~11.2%~~11.4% for the three months ended ~~September 30, 2017.~~March 31, 2018.

Adjusted EBITDA increased by ~~$0.6~~$9.9 million, or ~~0.7%~~12.2%, to ~~$90.7~~$91.2 million for the three months ended ~~September 30, 2017.~~March 31, 2018. Adjusted EBITDA margin increased from ~~7.4%~~7.1% in the three months ended ~~September 30, 2016~~March 31, 2017 to ~~7.7%~~7.6% for the three months ended ~~September 30, 2017~~March 31, 2018 primarily as a result of higher gross margin ~~partially offset by increased~~and lower operating expenses as a percentage of sales.

Canada.


Net sales percentage change due to:	Net sales percentage change due to:			Gross profit percentage change due to:			Net sales percentage change due to:			Gross profit percentage change due to:
Reported sales volumes		4.2	%	Reported sales volumes	4.2	%		(3.1	)%	Reported sales volumes	(3.1	)%
Sales pricing and product mix		5.4	%	Sales pricing, product costs and other adjustments	(7.4	)%		0.5	%	Sales pricing, product costs and other adjustments	9.9	%
Foreign currency translation		5.4	%	Foreign currency translation	4.3	%		4.6	%	Foreign currency translation	5.0	%
Total		15.0	%	Total	1.1	%		2.0	%	Total	11.8	%

External sales in the Canada segment were ~~$299.9~~$313.4 million, an increase of ~~$39.1~~$6.1 million, or ~~15.0%~~2.0%, for the three months ended September 30, 2017. Foreign currency translation increased external sales dollars as the US dollar weakened against the Canadian dollar when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016.March 31, 2018. On a constant currency basis, external ~~sales dollars increased $24.9 million, or 9.6%. The increase in external~~ net sales was driven by higher average selling prices in the industrial end market, partially offset by lower average selling prices in the agricultural business. The increase in external net sales is also driven by higher reported sales volumes across all regions. Gross profit increased $0.6 million, or 1.1%, to $56.2 million in the three months ended September 30, 2017. Gross profit increased due to foreign currency translation and higher volumes, partially offset by lower sales pricing, product costs and other adjustments primarily due to changes in product mix in the agricultural business and lower supplier rebates during the three months ended September 30, 2017. Gross margin decreased ~~from 21.3% for the three months ended September 30, 2016 to 18.7% for the three months ended September 30, 2017 primarily due to the factors impacting gross profit discussed above.~~

Outbound freight and handling expenses increased $0.1 million, or 1.1%, to $9.1 million for the three months ended September 30, 2017 primarily due to higher reported sales volumes, partially offset by lower delivery costs. Operating expenses increased by $0.9 million, or 4.4%, to $21.5 million for the three months ended September 30, 2017, and decreased as a percentage of external sales from 7.9% for the three months ended September 30, 2016 to 7.2% for the three months ended September 30, 2017. Foreign currency translation increased operating expenses by $0.9 million, or 4.4%. On a constant currency basis, operating expenses remained flat when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016.

Adjusted EBITDA decreased by $0.4 million, or 1.5%, to $25.6 million for the three months ended September 30, 2017. Foreign currency translation increased Adjusted EBITDA by $1.1 million, or 4.3%. On a constant currency basis, Adjusted EBITDA decreased $1.5 million, or 5.8%, primarily due to the decrease in gross profit due to sales pricing, product costs and other adjustments offset by volumes as discussed above. Adjusted EBITDA margin decreased from 10.0% for the three months ended September 30, 2016 to 8.5% for the three months ended September 30, 2017 primarily as a result of lower ~~gross margin, partially offset by lower outbound freight and handling expenses and operating expenses as a percentage of sales.~~

~~EMEA~~.

Net sales percentage change due to: Gross profit percentage change due to:
Reported sales volumes (9.4 )% Reported sales volumes (9.4 )%
Sales pricing and product mix 16.7 % Sales pricing, product costs and other adjustments 16.1 %
Foreign currency translation 3.5 % Foreign currency translation 4.2 %
Total 10.8 % Total 10.9 %

~~External~~ sales in the EMEA segment were $456.9 million, an increase of $44.4 million, or 10.8%, for the three months ended September 30, 2017, primarily due to higher average selling prices driven by mix improvement, and margin management initiatives, partially offset by lower volumes partly due to one less selling day for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016. Foreign currency translation increased external~~March 31, 2017. The effects of prolonged cold weather conditions contributed to higher sales ~~dollars resulting from~~volumes in Western Canada, but delayed sales into the ~~US dollar weakening against the British pound and the euro, when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016.~~ agriculture market.

Gross profit increased ~~$10.1~~$6.6 million, or ~~10.9%~~11.8%, to ~~$102.9~~$62.4 million in the three months ended ~~September 30, 2017. Gross~~March 31, 2018. On a constant currency basis, gross profit increased due to ~~changes in sales pricing, product costs and other adjustments primarily due to increased sales of higher margin pharmaceutical finished goods as well as the continued impact of~~ favorable product and ~~end~~ market ~~mix.~~mix, and higher average selling prices in key industrial chemical products. Gross margin ~~remained flat at 22.5% when comparing~~increased 1.7% to 19.9% for the three months ended ~~September 30, 2017 to the three months ended September 30, 2016.~~March 31, 2018.

Outbound freight and handling expenses increased ~~$0.7~~$1.2 million, or ~~5.3%~~13.0%, to ~~$13.8~~$10.4 million for the three months ended March 31, 2018 primarily due to higher delivery costs ~~per ton due to lower bulk volume sales.~~ resulting from changes in product mix.

Operating expenses increased ~~$4.7~~by $0.5 million, or ~~9.2%~~2.3%, to ~~$55.9~~$22.5 million for the three months ended ~~September 30, 2017,~~March 31, 2018, and ~~decreased~~remained flat at 7.2% as a percentage of external sales ~~from 12.4% for~~when comparing the three months ended ~~September 30, 2016~~March 31, 2018 to ~~12.2% for~~ the three months ended ~~September 30,~~March 31, 2017. ~~Foreign currency translation increased operating expenses by $2.1 million, or 4.1%.~~ On a constant currency basis, operating expenses ~~increased $2.6~~decreased $0.5 million, or 5.1%, which was primarily due to higher personnel costs of $1.9 million, largely due to higher variable compensation expense, and $1.1 million in higher environmental remediation expense. The remaining $0.4 million offsetting decrease related to several insignificant components.2.3%.

Adjusted EBITDA increased by ~~$4.7~~$4.9 million, or ~~16.5%~~19.9%, to ~~$33.2~~$29.5 million for the three months ended ~~September 30, 2017. Foreign currency translation increased Adjusted EBITDA by $1.1 million, or 3.9%.~~March 31, 2018. On a constant currency basis, Adjusted EBITDA increased $3.6 million, or ~~12.6%.~~14.6%, primarily due to the increase in gross profit and flat operating expenses. Adjusted EBITDA ~~growth~~margin increased from 8.0% for the three months ended March 31, 2017 to 9.4% for the three months ended March 31, 2018.

EMEA.



Net sales percentage change due to:			Gross profit percentage change due to:
Acquisitions	1.5	%	Acquisitions	1.8	%
Reported sales volumes	(6.5	)%	Reported sales volumes	(6.5	)%
Sales pricing and product mix	12.6	%	Sales pricing, product costs and other adjustments	11.3	%
Foreign currency translation	14.9	%	Foreign currency translation	15.2	%
Total	22.5	%	Total	21.8	%

External sales in the ~~quarter can be attributed~~EMEA segment were $538.6 million, an increase of $98.9 million, or 22.5%, for the three months ended March 31, 2018. On a constant currency basis, external net sales increased primarily due to ~~improved sales force execution and~~higher average selling prices from mix improvement, margin management initiatives ~~together with~~and chemical price inflation on certain products. Although a cold winter supported strong winter product sales, reported sales volumes decreased due to one less selling day for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase in external net sales from acquisitions was due to the January 2018 Kemetyl acquisition.

Gross profit increased $22.2 million, or 21.8%, to $124.0 million in the three months ended March 31, 2018. On a constant currency basis, gross profit increased from higher average selling prices attributable to favorable product mix and chemical price inflation. The increase in gross profit from acquisitions was due to the January 2018 Kemetyl acquisition. Gross margin decreased from 23.2% for the three months ended March 31, 2017 to 23.0% for the three months ended March 31, 2018 primarily due to the change in product mix and pressure from price inflation.

Outbound freight and handling expenses increased $3.6 million, or 26.9%, to $17.0 million, primarily due to higher delivery costs per ton based on product mix.

Operating expenses increased $7.6 million, or 13.9%, to $62.3 million for the three months ended March 31, 2018, and decreased as a percentage of external sales by 0.8% to 11.6% for the three months ended March 31, 2018. On a constant currency basis, operating expenses decreased $0.2 million, or 0.4%, which was primarily due to lower bad debt charges and environmental remediation expense, partially offset by the addition of ~~pharmaceutical finished goods.~~costs for Kemetyl’s operations.

Adjusted EBITDA increased by $11.0 million, or 32.6%, to $44.7 million for the three months ended March 31, 2018. On a constant currency basis, Adjusted EBITDA increased $5.5 million, or 16.3% on improved gross margin and flat operating expenses. For the three months ended ~~September 30, 2017,~~March 31, 2018, the pharmaceutical finished goods product line represented approximately ~~30%~~28% of Adjusted EBITDA in the EMEA segment. Adjusted EBITDA margin increased from ~~6.9%~~7.7% for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~7.3%~~8.3% for the three months ended ~~September 30, 2017 primarily due to lower outbound freight and handling expenses and operating expenses as a percentage of sales.~~March 31, 2018.

Rest of World.


Net sales percentage change due to:	Net sales percentage change due to:			Gross profit percentage change due to:			Net sales percentage change due to:			Gross profit percentage change due to:
Acquisitions		0.8	%	Acquisitions	2.4	%		2.1	%	Acquisitions	4.2	%
Reported sales volumes		(21.1	)%	Reported sales volumes	(21.1	)%		(28.3	)%	Reported sales volumes	(28.3	)%
Sales pricing and product mix		18.1	%	Sales pricing, product costs and other adjustments	23.6	%		22.9	%	Sales pricing, product costs and other adjustments	33.6	%
Foreign currency translation		4.7	%	Foreign currency translation	4.4	%		4.0	%	Foreign currency translation	3.2	%
Total		2.5	%	Total	9.3	%		0.7	%	Total	12.7	%

External sales in the Rest of World segment were ~~$106.9~~$101.6 million, an increase of ~~$2.6~~$0.7 million, or ~~2.5%~~0.7%, for the three months ended ~~September 30, 2017. Foreign~~March 31, 2018. On a constant currency ~~translation increased~~basis, external sales ~~dollars when comparing the three months ended September 30, 2017~~increased from higher average selling prices attributable to ~~the three months ended September 30, 2016 primarily~~changes in product and market mix, shortages on certain products and improved sales force effectiveness. Reported sales volumes were lower due to certain product shortages as well as the ~~US dollar weakening against the Brazilian~~

~~real and the Mexican peso~~Company’s continued focus on margin management efforts. . The increase in external net sales from acquisitions was due to the September 2017 Tagma acquisition. ~~The~~ ~~decrease~~ ~~in external net sales from reported sales volumes was due to weak industrial demand and in particular lower demand in~~ ~~upstream oil and gas products and solvents in Mexico~~. ~~The increase in external net sales from changes in sales pricing and product mix was primarily~~ ~~due to favorable product mix and~~ ~~higher average selling prices as chemical prices increased due to product shortages where supply was impacted by hurricanes.~~

Gross profit increased ~~$1.9~~$2.4 million, or ~~9.3%~~12.7%, to ~~$22.3~~$21.3 million for the three months ended ~~September 30, 2017~~March 31, 2018 due to higher average selling price resulting from higher chemical prices ~~due to the impact from hurricanes, offset by lower volumes across the region.~~discussed above as well as favorable product mix. The increase in gross profit from acquisitions was due to the September 2017 Tagma acquisition. Gross margin increased from ~~19.6%~~18.7% for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~20.9%~~21.0% for the three months ended ~~September 30, 2017~~March 31, 2018 primarily due to the factors discussed above.

Outbound freight and handling expenses ~~decreased $0.2~~increased $0.4 million, or ~~11.1%~~25.0%, to ~~$1.6~~$2.0 million for the three months ended ~~September 30, 2017,~~March 31, 2018, primarily due to higher delivery cost, ~~efficiencies resulting from changes in product mix and~~partially offset by lower sales volumes.

Operating expenses ~~decreased $0.3~~increased $0.9 million, or ~~2.6%~~8.5%, to ~~$11.4~~$11.5 million for the three months ended ~~September 30, 2017~~March 31, 2018 and ~~decreased~~increased as a percentage of external sales from ~~11.2%~~10.5% when comparing the three months ended ~~September 30, 2016~~March 31, 2017 to ~~10.7%~~11.3% for the three months ended ~~September 30, 2017. Foreign~~March 31, 2018. Approximately 30% of the increase is attributable to foreign currency ~~translation increased operating expenses by $0.5 million, or 4.3%. On a constant currency basis, operating expenses decreased $0.8 million, or 6.8%, due to several insignificant components.~~translation.

Adjusted EBITDA increased by ~~$2.4~~$1.1 million, or ~~34.8%~~16.4%, to ~~$9.3~~$7.8 million for the three months ended ~~September 30, 2017. Foreign currency translation increased Adjusted EBITDA by $0.5 million, or 7.3%.~~March 31, 2018. On a constant currency basis, Adjusted EBITDA increased ~~$1.9~~$0.9 million, or ~~27.5%~~13.4%, primarily due to increased gross profit. Adjusted EBITDA margin increased from 6.6% for the three months ended ~~September 30, 2016~~March 31, 2017 to ~~8.7%~~7.7% for the three months ended ~~September 30, 2017 primarily due to~~ ~~higher average selling prices driven by the hurricanes~~ ~~and lower outbound freight and handling expenses and operating expenses as a percentage of sales.~~

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

Nine Months Ended
Favorable
(unfavorable)
% Change
Impact of
currency ⁽¹⁾
(in millions) September 30, 2017 September 30, 2016
Net sales $ 6,294.5
100.0 % $ 6,261.2
100.0 % $ 33.3
0.5 % (0.2 )%
Cost of goods sold 4,933.9
78.4 % 4,947.4
79.0 % 13.5
(0.3 )% 0.3 %
Gross profit $ 1,360.6
21.6 % $ 1,313.8
21.0 % $ 46.8
3.6 % (0.2 )%
Operating expenses:
Outbound freight and handling 217.7
3.5 % 220.8
3.5 % 3.1
(1.4 )% — %
Warehousing, selling and administrative 687.7
10.9 % 664.8
10.6 % (22.9 ) 3.4 % (3.1 )%
Other operating expenses, net 55.8
0.9 % 29.1
0.5 % (26.7 ) 91.8 % (0.3 )%
Depreciation 102.5
1.6 % 113.9
1.8 % 11.4
(10.0 )% 0.1 %
Amortization 50.0
0.8 % 67.8
1.1 % 17.8
(26.3 )% — %
Impairment charges —
— % 133.9
2.1 % 133.9
(100.0 )% — %
Total operating expenses $ 1,113.7
17.7 % $ 1,230.3
19.6 % $ 116.6
(9.5 )% — %
Operating income $ 246.9
3.9 % $ 83.5
1.3 % $ 163.4
195.7 % (2.8 )%
Other (expense) income:
Interest income 2.6
— % 3.0
— % (0.4 ) (13.3 )% — %
Interest expense (112.6 ) (1.8 )% (123.5 ) (2.0 )% 10.9
(8.8 )% 0.2 %
Loss on extinguishment of debt (0.8 ) — % —
— % (0.8 ) 100.0 % — %
Other expense, net (27.9 ) (0.4 )% (10.8 ) (0.2 )% (17.1 ) 158.3 % 13.9 %
Total other expense $ (138.7 ) (2.2 )% $ (131.3 ) (2.1 )% $ (7.4 ) 5.6 % 1.4 %
Income (loss) before income taxes 108.2
1.7 % (47.8 ) (0.8 )% 156.0
N/M
(1.0 )%
Income tax expense (benefit) 15.4
0.2 % (38.6 ) (0.6 )% (54.0 ) N/M
0.5 %
Net income (loss) $ 92.8
1.5 % $ (9.2 ) (0.1 )% $ 102.0
N/M
(3.3 )%


~~(1)~~	~~Foreign currency translation is included in the percentage change. Unfavorable impacts from foreign currency translation are designated with parentheses.~~

~~Net sales~~



~~Net sales percentage change due to:~~
~~Acquisitions~~	~~0.1~~	%
~~Reported sales volumes~~	~~(5.9~~	)%
~~Sales pricing and product mix~~	~~6.5~~	%
~~Foreign currency translation~~	~~(0.2~~	)%
~~Total~~	~~0.5~~	%

Net sales were $6,294.5 million for the nine months ended September 30, 2017, an increase of $33.3 million, or 0.5%, from the nine months ended September 30, 2016. The increase in net sales from acquisitions was driven by the September 2017 Tagma acquisition in the Rest of World segment, the March 2016 Nexus Ag acquisition in Canada, and the March 2016 Bodine acquisition in the USA. The decrease in net sales from reported sales volumes was driven by the USA, EMEA, and Rest of World segments, partially offset by higher sales volumes in the Canada segment. The increase in net sales from changes in sales pricing and product mix was driven by the USA, EMEA, and Rest of World segments, partially offset by a decrease in the Canada segment. Foreign currency translation decreased net sales, due to the US dollar strengthening against the British pound, euro, and Mexican peso, partially offset by the weakening of the US dollar against the Canadian dollar and the Brazilian real. Refer to the “Segment results” for the nine months ended September 30, 2017 discussion for additional information.

~~Gross profit~~



~~Gross profit percentage change due to:~~
~~Acquisitions~~	~~0.2~~	%
~~Reported sales volumes~~	~~(5.9~~	)%
~~Sales pricing, product costs and other adjustments~~	~~9.5~~	%
~~Foreign currency translation~~	~~(0.2~~	)%
~~Total~~	~~3.6~~	%

Gross profit increased $46.8 million, or 3.6%, to $1,360.6 million for the nine months ended September 30, 2017. The increase in gross profit from acquisitions was driven by the September 2017 Tagma acquisition in the Rest of World segment, the March 2016 Bodine acquisition in the USA, and the March 2016 Nexus Ag acquisition in Canada. The decrease in gross profit from reported sales volumes was driven by the USA, EMEA, and Rest of World segments, partially offset by higher sales volumes in the Canada segment. The increase in gross profit from changes in sales pricing, product costs and other adjustments was driven by the USA, EMEA, and Rest of World segments, partially offset by a decrease in the Canada segment. Gross margin, which we define as gross profit divided by net sales, increased to 21.6% for the nine months ended September 30, 2017 from 21.0% for the nine months ended September 30, 2016 primarily due to favorable product mix and focused margin management efforts. Foreign currency translation decreased gross profit due to the strengthening of the US dollar against the British pound, euro, and Mexican peso, partially offset by the weakening of the US dollar against the Canadian dollar and the Brazilian real. Refer to the “Segment results” for the nine months ended September 30, 2017 discussion for additional information.

~~Outbound freight and handling~~

Outbound freight and handling expenses decreased $3.1 million, or 1.4%, to $217.7 million for the nine months ended September 30, 2017. Foreign currency translation increased outbound freight and handling expense by $0.1 million. On a constant currency basis, outbound freight and handling expenses decreased $3.2 million primarily due to lower reported sales volumes offset by higher delivery costs resulting from changes in product mix, market capacity constraints, and increasing fuel prices. Refer to the “Segment results” for the nine months ended September 30, 2017 discussion for additional information.

~~Warehousing, selling and administrative~~

Warehousing, selling and administrative expenses increased $22.9 million, or 3.4%, to $687.7 million for the nine months ended September 30, 2017. Foreign currency translation increased warehousing, selling and administrative expenses by $0.2 million, or 3.1%. On a constant currency basis, the $22.7 million increase is primarily due to higher personnel costs of $31.8 million primarily driven by higher variable compensation expense, including the absence of $4.5 million in prior service credits recognized in 2016 related to the US retiree health care plan, partially offset by $3.2 million in lower lease expense, and $1.5 million in lower legal expenses. The remaining $4.4 million decrease related to several insignificant components. Refer to the “Segment results” for the nine months ended September 30, 2017 discussion for additional information.

~~Other operating expenses, net~~

Other operating expenses, net increased $26.7 million from $29.1 million for the nine months ended September 30, 2016 to $55.8 million for the nine months ended September 30, 2017. The increase was primarily related to the increase of $20.6 million of costs incurred to support the transformation of the US business, $8.9 million of higher stock-based compensation, and $5.8 million of higher other employee termination costs. The increase was partially offset by $3.9 million in lower restructuring charges and $3.5 million in lower acquisition and integration related expenses. The remaining $1.2 million decrease related to several insignificant components. Foreign currency translation increased other operating expenses, net by $0.1 million, or 0.3%. Refer to “Note 4: Other operating expenses, net” and “Note 5: Restructuring charges” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

~~Depreciation and amortization~~

Depreciation expense decreased $11.4 million, or 10.0%, to $102.5 million for the nine months ended September 30, 2017. Foreign currency translation decreased depreciation expense by $0.1 million, or 0.1%. On a constant currency basis, the $11.3 million decrease was primarily due to assets reaching the end of their useful lives and due to the second quarter 2016 reassessment of useful lives of certain internally developed software which were fully depreciated by May 2017.

Amortization expense decreased $17.8 million, or 26.3%, to $50.0 million for the nine months ended September 30, 2017. Foreign currency translation had no impact on amortization expense. The decrease of $17.8 million was primarily driven by the third quarter 2016 impairment charge which reduced the intangible asset base along with lower expense related to intangibles reaching the end of their useful life.

~~Impairment charges~~

There were no impairment charges in the nine months ended September 30, 2017. Impairment charges of $133.9 million were recorded in the nine months ended September 30, 2016 of which $133.6 million was due to the impairment of intangible assets and fixed assets related to the upstream oil and gas customers in the USA segment. The Company also recorded a non-cash, long-lived asset impairment charge of $0.3 million related to assets held-for-sale.

~~Interest expense~~

Interest expense decreased $10.9 million, or 8.8%, to $112.6 million for the nine months ended September 30, 2017 primarily due to lower average outstanding borrowings, as well as lower interest rates related to the January 2017 debt amendment of the Senior Term B loan agreement.

~~Loss on extinguishment of debt~~

Loss on extinguishment of debt included $0.8 million for the nine months ended September 30, 2017 due to the write off of unamortized debt discount and debt issuance costs related to the January 2017 debt amendment of the Senior Term B loan agreement.

~~Other expense, net~~

Other expense, net increased $17.1 million from $10.8 million for the nine months ended September 30, 2016 to $27.9 million for the nine months ended September 30, 2017. The increase was primarily due to the $7.2 million change in mark-to-market for interest rate swaps from a loss of $3.0 million in the nine months ended September 30, 2017 compared to a gain of $4.2 million in the nine months ended September 30, 2016. The increase was also driven by $4.2 million in fees related to the January 2017 debt amendment of the Senior Term B loan agreement. Also contributing to the increase were $1.6 million in higher foreign currency transactions and $1.5 million in higher foreign currency denominated loan revaluation losses. The remaining $2.6 million increase is related to several insignificant components. Refer to “Note 6: Other expense, net” in Item 1 of this Quarterly Report on Form 10-Q for additional information.

~~Income tax expense~~

Income tax expense increased $54.0 million from a $38.6 million benefit for the nine months ended September 30, 2016 to a $15.4 million expense for the nine months ended September 30, 2017. The $54.0 million increase in income tax expense was primarily the result of a decrease in earnings in the third quarter of 2016 resulting from a one-time $133.9 million impairment charge and an increase in earnings in the third quarter of 2017 over the third quarter of 2016 of $22.1 million. As compared to the $53.1 million of discrete benefit for the nine months of 2016, $3.7 million of discrete benefit was recorded for the nine month period ended September 30, 2017 of which a $4.0 million benefit is related to excess tax benefits from share-based compensation.

~~Segment results~~

~~Our Adjusted EBITDA by operating segment and in aggregate is summarized in the following tables:~~

(in millions) USA Canada     EMEA
Rest of
World

Other/
Eliminations ⁽¹⁾
Consolidated
Nine months ended September 30, 2017
Net sales:
External customers $ 3,527.0
$ 1,099.6
$ 1,360.3
$ 307.6
$ —
$ 6,294.5
Inter-segment 92.1
6.6
3.6
0.3
(102.6 ) —
Total net sales $ 3,619.1
$ 1,106.2
$ 1,363.9
$ 307.9
$ (102.6 ) $ 6,294.5
Cost of goods sold 2,807.1
926.7
1,054.5
248.2
(102.6 ) 4,933.9
Gross profit $ 812.0
$ 179.5
$ 309.4
$ 59.7
$ —
$ 1,360.6
Outbound freight and handling 144.4
27.5
41.0
4.8
—
217.7
Warehousing, selling and administrative 403.2
64.8
163.0
34.0
22.7
687.7
Adjusted EBITDA $ 264.4
$ 87.2
$ 105.4
$ 20.9
$ (22.7 ) $ 455.2
Other operating expenses, net 55.8
Depreciation 102.5
Amortization 50.0
Interest expense, net 110.0
Loss on extinguishment of debt 0.8
Other expense, net 27.9
Income tax expense 15.4
Net income $ 92.8

(in millions) USA Canada EMEA Rest of
World
Other/
Eliminations ⁽¹⁾
Consolidated
Nine Months Ended September 30, 2016
Net sales:
External customers $ 3,622.4
$ 1,018.9
$ 1,309.8
$ 310.1
$ —
$ 6,261.2
Inter-segment 73.1
6.1
3.5
—
(82.7 ) —
Total net sales $ 3,695.5
$ 1,025.0
$ 1,313.3
$ 310.1
$ (82.7 ) $ 6,261.2
Cost of goods sold 2,900.2
858.2
1,021.2
250.5
(82.7 ) 4,947.4
Gross profit $ 795.3
$ 166.8
$ 292.1
$ 59.6
$ —
$ 1,313.8
Outbound freight and handling 148.2
25.2
41.9
5.5
—
220.8
Warehousing, selling and administrative 393.0
62.4
160.4
35.1
13.9
664.8
Adjusted EBITDA $ 254.1
$ 79.2
$ 89.8
$ 19.0
$ (13.9 ) $ 428.2
Other operating expenses, net 29.1
Depreciation 113.9
Amortization 67.8
Impairment charges 133.9
Interest expense, net 120.5
Other expense, net 10.8
Income tax benefit (38.6 )
Net loss $ (9.2 )


~~(1)~~	Other/Eliminations represents the elimination of intersegment transactions as well as unallocated corporate costs consisting of costs specifically related to parent company operations that do not directly benefit segments, either individually or collectively.

~~USA~~.

Net sales percentage change due to: Gross profit percentage change due to:
Acquisitions 0.1 % Acquisitions 0.1 %
Reported sales volumes (7.5 )% Reported sales volumes (7.5 )%
Sales pricing and product mix 4.8 % Sales pricing, product costs and other adjustments 9.5 %
Total (2.6 )% Total 2.1 %

External sales in the USA segment were $3,527.0 million, a decrease of $95.4 million, or 2.6%, for the nine months ended September 30, 2017 due to lower sales volumes, partially offset by higher average selling prices resulting from the Company's efforts to improve its sales force effectiveness and favorable changes in product mix. The increase in external net sales from acquisitions was due to the March 2016 Bodine acquisition. Gross profit increased $16.7 million, or 2.1%, to $812.0 million for the nine months ended September 30, 2017. Gross profit increased due to sales pricing, product costs and other adjustments primarily due to higher average selling prices and changes in product mix to higher margin products. The increase in gross profit from acquisitions was due to the March 2016 Bodine acquisition. Gross margin increased from 22.0% for the nine months ended September 30, 2016 to 23.0% during the nine months ended September 30, 2017 primarily due to the factors impacting gross profit discussed above.

Outbound freight and handling expenses decreased $3.8 million, or 2.6%, to $144.4 million for the nine months ended September 30, 2017 primarily due to lower shipment volumes, partially offset by higher delivery costs resulting from market capacity constraints and increasing fuel prices. Operating expenses increased $10.2 million, or 2.6%, to $403.2 million for the nine months ended September 30, 2017 of which $18.2 million is attributable to higher personnel costs primarily driven by higher variable compensation expense, including the absence of $4.5 million in prior service credits recognized in 2016 related to the US retiree health care plan, partially offset by $3.4 million of lower lease expenses, $2.1 million in lower bad debt charges, and $1.4 million in lower legal expenses. The remaining $1.1 million decrease related to several insignificant components. Operating expenses as a percentage of external sales increased from 10.8% for the nine months ended September 30, 2016 to 11.4% for the nine months ended September 30, 2017.

Adjusted EBITDA increased by $10.3 million, or 4.1%, to $264.4 million for the nine months ended September 30, 2017. Adjusted EBITDA margin increased from 7.0% in the nine months ended September 30, 2016 to 7.5% for the nine months ended September 30, 2017 primarily as a result of higher gross margin, partially offset by increased operating expenses as a percentage of sales.

~~Canada~~.

Net sales percentage change due to: Gross profit percentage change due to:
Acquisitions 0.4 % Acquisitions 0.4 %
Reported sales volumes 6.9 % Reported sales volumes 6.9 %
Sales pricing and product mix (0.5 )% Sales pricing, product costs and other adjustments (0.9 )%
Foreign currency translation 1.1 % Foreign currency translation 1.2 %
Total 7.9 % Total 7.6 %

External sales in the Canada segment were $1,099.6 million, an increase of $80.7 million, or 7.9%, for the nine months ended September 30, 2017. Foreign currency translation increased external sales dollars as the US dollar weakened against the Canadian dollar when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016. On a constant currency basis, external sales dollars increased $69.0 million, or 6.8%. The increase in external net sales from acquisitions was due to the March 2016 Nexus Ag acquisition. The increase in external net sales was driven by higher reported sales volumes across all regions. The decrease in external net sales from changes in sales pricing and product mix was primarily driven by a change in market and product mix, offsetting strong pricing gains achieved in Western Canada. Gross profit increased $12.7 million, or 7.6%, to $179.5 million in the nine months ended September 30, 2017. The increase in gross profit from acquisitions was due to the March 2016 Nexus Ag acquisition. Gross profit decreased from sales pricing, product costs, and other adjustments due to change in market and product mix, partially offset by margin management efforts during the nine months ended September 30, 2017. Gross margin decreased from 16.4% for the nine months ended September 30, 2016 to 16.3% for the nine months ended September 30, 2017 primarily due to the factors impacting gross profit discussed above.

Outbound freight and handling expenses increased $2.3 million, or 9.1%, to $27.5 million for the nine months ended September 30, 2017 primarily due to higher reported sales volumes and higher delivery costs resulting from changes in product mix. Operating expenses increased by $2.4 million, or 3.8%, to $64.8 million for the nine months ended September 30, 2017, but decreased as a percentage of external sales from 6.1% for the nine months ended September 30, 2016 to 5.9% for the nine months ended September 30, 2017. Foreign currency translation increased operating expenses by 1.3%, or $0.8 million. On a constant currency basis, operating expenses increased $1.6 million, or 2.6%, primarily due to increased personnel expenses of $2.0 million driven by higher salary and variable compensation expense. The remaining $0.4 million offsetting decrease related to several insignificant components.

Adjusted EBITDA increased by $8.0 million, or 10.1%, to $87.2 million for the nine months ended September 30, 2017. Foreign currency translation increased Adjusted EBITDA by $0.9 million, or 1.1%. On a constant currency basis, Adjusted EBITDA increased $7.1 million, or 9.0%, primarily due to increased gross profit. Adjusted EBITDA margin increased from 7.8% for the nine months ended September 30, 2016 to 7.9% for the nine months ended September 30, 2017 primarily as a result of lower operating expenses as a percentage of sales, partially offset by lower gross margin.

~~EMEA~~.

Net sales percentage change due to: Gross profit percentage change due to:
Reported sales volumes (5.9 )% Reported sales volumes (5.9 )%
Sales pricing and product mix 12.1 % Sales pricing, product costs and other adjustments 13.7 %
Foreign currency translation (2.3 )% Foreign currency translation (1.9 )%
Total 3.9 % Total 5.9 %

External sales in the EMEA segment were $1,360.3 million, an increase of $50.5 million, or 3.9%, for the nine months ended September 30, 2017, primarily due to higher average selling prices driven by mix improvement, margin management initiatives, partially offset by lower volumes. Foreign currency translation decreased external sales dollars as the US dollar strengthened against the British pound and euro, when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016. Gross profit increased $17.3 million, or 5.9%, to $309.4 million in the nine months ended September 30, 2017. Gross profit increased due to changes in sales pricing, product costs and other adjustments primarily due to increased sales of higher margin pharmaceutical finished goods as well as the continued impact of favorable product and end market mix. Gross margin increased from 22.3% for the nine months ended September 30, 2016 to 22.7% for the nine months ended September 30, 2017 primarily due to the factors discussed above.

Outbound freight and handling expenses decreased $0.9 million, or 2.1%, to $41.0 million, primarily due to lower reported sales volumes. Operating expenses increased $2.6 million, or 1.6%, to $163.0 million for the nine months ended September 30, 2017, and decreased as a percentage of external sales from 12.2% for the nine months ended September 30, 2016 to 12.0% for the nine months ended September 30, 2017. Foreign currency translation decreased operating expenses by $1.3 million, or 0.8%. On a constant currency basis, operating expenses increased $3.9 million, or 2.4%, which was driven by higher personnel costs of $4.5 million primarily due to higher variable compensation expense, higher environmental remediation expense of $1.9 million, and $1.2 million in higher bad debt charges. The increase was partially offset by a decrease of $0.8 million in lease expenses. The remaining offsetting $2.9 million decrease related to several other insignificant components.

Adjusted EBITDA increased by $15.6 million, or 17.4%, to $105.4 million for the nine months ended September 30, 2017. Foreign currency translation decreased Adjusted EBITDA by $4.0 million, or 4.4%. On a constant currency basis, Adjusted EBITDA increased $19.6 million, or 21.8%. Adjusted EBITDA growth for the nine months ended September 30, 2017 can be attributed to increased gross profit due to improved sales force execution and margin management initiatives together with increased sales of pharmaceutical finished goods compared to the nine months ended September 30, 2016. For the nine months ended September 30, 2017, the pharmaceutical finished goods product line represented approximately 30% of Adjusted EBITDA in the EMEA segment. Adjusted EBITDA margin increased from 6.9% for the nine months ended September 30, 2016 to 7.7% for the nine months ended September 30, 2017 primarily due to higher gross margin and lower outbound freight and handling expenses and operating expenses as a percentage of sales.

~~Rest of World~~.

Net sales percentage change due to: Gross profit percentage change due to:
Acquisitions 0.3 % Acquisitions 0.8 %
Reported sales volumes (14.2 )% Reported sales volumes (14.2 )%
Sales pricing and product mix 12.0 % Sales pricing, product costs and other adjustments 10.9 %
Foreign currency translation 1.1 % Foreign currency translation 2.7 %
Total (0.8 )% Total 0.2 %

External sales in the Rest of World segment were $307.6 million, a decrease of $2.5 million, or 0.8%, for the nine months ended September 30, 2017. Foreign currency translation increased external sales dollars when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016 primarily due to the US dollar weakening against the Brazilian real~~, partially offset by the US dollar strengthening against the Mexican peso. The increase in external net sales from acquisitions was due to the September 2017 Tagma acquisition. The~~ ~~decrease~~ ~~in external net sales from reported sales volumes was due to weak industrial demand and in particular lower demand in~~ ~~upstream oil and gas products and solvents in Mexico~~. ~~The increase in external net sales from changes in sales pricing and product mix was primarily~~ ~~due to favorable product mix and~~ ~~higher average selling prices resulting from the Company's efforts to improve its sales force effectiveness and higher chemical prices due to product shortages in the areas impacted by hurricanes. Gross profit increased $0.1 million, or 0.2%, to $59.7 million for the nine months ended~~ ~~September 30, 2017~~. The increase in gross profit from acquisitions was due to the September 2017 Tagma acquisition. Gross profit increased from sales pricing, product costs and other adjustments primarily due to favorable product mix and higher average selling prices resulting from product shortages stemming from the recent hurricanes as well as the Company's efforts to improve its sales force effectiveness, offset by lower volumes across the region for the nine months ended ~~September 30, 2017~~. ~~Gross margin increased from 19.2% for the nine months ended September 30, 2016 to 19.4% for the nine months ended September 30, 2017 primarily due to the factors discussed above.~~

Outbound freight and handling expenses decreased $0.7 million, or 12.7%, to $4.8 million for the nine months ended September 30, 2017, primarily due to delivery cost efficiencies resulting from changes in product mix and lower volumes. Operating expenses decreased $1.1 million, or 3.1%, to $34.0 million for the nine months ended September 30, 2017 and decreased as a percentage of external sales from 11.3% for the nine months ended September 30, 2016 to 11.1% for the nine months ended September 30, 2017. Foreign currency translation increased operating expenses by $0.9 million, or 2.6%. On constant currency basis, operating expenses decreased $2.0 million, or 5.7%, which was primarily related to lower personnel expenses of $0.5 million due to reduced headcount. The remaining $1.5 million decrease related to several insignificant components.

Adjusted EBITDA increased by $1.9 million, or 10.0%, to $20.9 million for the nine months ended September 30, 2017. Foreign currency translation increased Adjusted EBITDA by $0.8 million, or 4.2%. On a constant currency basis, Adjusted EBITDA increased $1.1 million, or 5.8%, primarily due to increased gross profit and benefit from reductions in outbound freight and handling expenses and operating expenses. Adjusted EBITDA margin increased from 6.1% for the nine months ended September 30, 2016 to 6.8% for the nine months ended September 30, 2017 primarily due to ~~higher average selling prices driven by the hurricanes~~ ~~and lower outbound freight and handling expenses and operating expenses as a percentage of sales.~~31, 2018.

Liquidity and Capital Resources

Our primary source of liquidity is cash generated from our operations as well as borrowings under our credit facilities. As of ~~September 30, 2017,~~March 31, 2018, we had ~~$667.7~~$701.0 million available under our credit facilities.

We are in compliance with our covenants. Our primary liquidity and capital resource needs are to service our debt and to finance working capital, capital expenditures, other liabilities and cost of acquisitions. We believe that funds provided by these sources will be adequate to meet the liquidity and capital resource needs for at least the next 12 months under current operating conditions. We will continue to balance our focus on sales and earnings growth with continuing efforts in cost control and working capital management.

Cash Flows

The following table presents a summary of our cash flow activity for the periods set forth below:


	Nine months ended						Three months ended
(in millions)	September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Net cash provided by operating activities	$	32.6		$	224.2
Net cash used by operating activities							$	(139.0	)	$	(77.1	)
Net cash used by investing activities	(80.4		)	(118.2		)	(22.9		)	(21.7		)
Net cash used by financing activities	(32.3		)	(46.6		)
Net cash (used) provided by financing activities							(186.8		)	57.5
Effect of exchange rate changes on cash and cash equivalents	37.6			19.6			(2.4		)	5.5
Net (decrease) increase in cash and cash equivalents	$	(42.5	)	$	79.0
Net decrease in cash and cash equivalents							$	(351.1	)	$	(35.8	)

Cash ~~Provided~~Used by Operating Activities

Cash ~~provided by operating activities decreased $191.6 million from $224.2 million for the nine months ended September 30, 2016 to $32.6 million for the nine months ended September 30, 2017.~~

~~Cash provided~~used by operating activities increased ~~$6.8~~$61.9 million ~~due~~from $77.1 million for the three months ended March 31, 2017 to ~~an increase~~$139.0 million for the three months ended March 31, 2018 primarily from a higher investment in net working capital compared to the prior year three months ended March 31, 2017, partially offset by higher net income, exclusive of non-cash items. ~~Net income exclusive~~

The Company adopted ASC 606 as of ~~non-cash~~January 1, 2018, and although there was no impact to total operating cash flows, there were a certain number of presentation changes to specific line items ~~was $263.6 million~~in the condensed consolidated balance sheet and ~~256.8 million~~within operating activities in the condensed consolidated statement of cash flows. See “Note 2: Significant accounting policies,” for the ~~nine months ended September 30, 2017 and September 30, 2016, respectively. Refer~~impact to ~~“Results~~the condensed consolidated balance sheet at March 31, 2018.

Excluding the presentation changes from the adoption of ~~Operations” above for additional information.~~

~~The~~ASC 606, the change in trade working ~~capital;~~capital, which includes trade accounts receivable, net, inventories and trade accounts ~~payable; resulted in~~payable, was an increased use of cash of ~~$156.5 million. Trade accounts receivable, net used cash of $198.3 million and $83.2~~$77.3 million for the ~~nine~~three months ended ~~September 30, 2017 and September 30, 2016, respectively.~~March 31, 2018. The ~~increase in current year~~increased cash ~~outflows~~outflow for trade accounts receivable is ~~due~~attributable to higher sales ~~and~~for the ~~timing of customer payments~~three months ended March 31, 2018. Inventory cash outflows during the three months ended March 31, 2018 increased compared to the ~~prior nine months~~three month ended ~~September 30, 2016. Inventories provided cash~~March 31, 2017 from the seasonal buildup of ~~$1.5 million~~inventory that typically occurs during the first quarter and ~~$60.2 million for~~higher agriculture inventories in Canada from the nine months ended September 30, 2017 and September 30, 2016, respectively. The current year cash inflows are lower than prior year due to higher inventories as a result of drought conditions that led to a soft agriculture season. Trade accounts payable provided cash inflows of $58.1 million and $40.8 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. The cash inflows related to trade accounts payable are primarily due to higher purchases.drought-affected growing season in 2017.

~~Prepaid~~Lower prepaid expenses and other current assets contributed ~~$45.6~~$13.6 million to partially offset the ~~increased use of cash. During the nine months ended September 30, 2017, prepaid expenses and other current assets~~increase in cash used $15.4 million of cash, primarily due to increases in prepaid expenses, sales taxes, and several other insignificant components. Prepaid expenses and other current assets provided cash of $30.2 million during the nine months ended September 30, 2016, which was primarily due to the receipt of cash related to rebates, income tax receivables, and several other insignificant components.by operating activities.

The change in pensions and other postretirement benefit liabilities ~~used~~resulted in use of cash of ~~$3.8~~$2.6 million, ~~which consisted~~consisting of higher cash ~~outflows of $34.6 million~~contributions and ~~$30.8 million~~benefit credits for the ~~nine~~three months ended ~~September 30, 2017 and September 30, 2016, respectively.~~March 31, 2018 compared to the three months ended March 31, 2017.

The remaining cash ~~inflow~~outflow associated with operating activities of ~~$7.5~~$31.9 million is related ~~to other, net. During the nine months ended September 30, 2017 and September 30, 2016, other, net used $42.3 million and $49.8 million of cash, respectively, primarily due to the settlement of~~lower agriculture customer ~~prepayment obligations. During the nine months ended September 30, 2017 the increased cash usage in other, net was~~prepayments, higher compensation payments, partially offset by ~~cash inflows related to increased reserves for variable compensation.~~lower interest and income tax payments.

Cash Used by Investing Activities

Cash used by investing activities ~~decreased $37.8~~increased $1.2 million from ~~$118.2~~$21.7 million for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to ~~$80.4~~$22.9 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~decrease~~increase is primarily related to ~~lower~~higher cash outflows for purchases of businesses, net of ~~$30.4 million. In 2016, the~~ cash ~~outflows related to the Bodine and Nexus Ag acquisitions were $54.8~~acquired of $8.4 million. In 2017, the cash outflows of $0.5 million were related to purchase accounting adjustments from the Nexus Ag acquisition. In 2018, the cash outflows of $8.9 million were related to the ~~Tagma Brasil acquisition and certain assets of PVS were $24.4 million. Another factor contributing to~~Kemetyl acquisition.

Partially offsetting the ~~decrease~~increase in cash used by investing activities in 2018 was lower capital spending of $4.7 million and an increase in proceeds from sale of property, plant and equipment of $2.2 million, which was primarily due to the sale of a ~~reduction of spending related to capital expenditures of $7.9 million.~~

~~The remaining decrease in cash used by investing activities of $0.5 million did not contain any significant activity.~~closed facility.

Cash ~~Used~~(Used) Provided by Financing Activities

Cash ~~used~~(used) provided by financing activities decreased ~~$14.3~~$244.3 million from ~~$46.6~~cash provided of $57.5 million for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 to ~~$32.3~~cash used of $186.8 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018, primarily due to an early payment of $300.0 million on the Company's Senior Term B Loan during the three months ended March 31, 2018. This was offset by increased borrowings on the ABL facilities to address seasonal working capital needs.

~~An increase in cash~~Cash (used) provided by financing activities ~~of $11.6~~also decreased by $23.0 million ~~was~~ due to fewer stock option exercises for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. This was partially offset by a reduction of$3.3 million in net ~~change in~~share settlements of stock-based compensation awards.

Additionally, there were no payments on contingent consideration agreements for acquisitions for the three months ended March 31, 2018 compared to the cash ~~used by the ABL facilities~~outflow of ~~$2.4 million and $14.0~~$3.2 million for the ~~nine~~three months ended ~~September 30, 2017 and September 30, 2016, respectively.~~March 31, 2017. The ~~change in~~Company reclassified the ~~outstanding ABL facilities is~~contingent consideration payments due to ~~changes in borrowings related to working capital funding requirements. Partially offsetting~~ the ~~increase in cash provided by financing activities are $2.3 million~~adoption of ~~cash outflows due to repayments~~ASU 2016-15 “Statement of ~~term debt; inclusive~~Cash Flows” (Topic 230) - “Classification of ~~the Term B Loan, Euro Tranche Term Loan,~~Certain Cash Receipts and ~~Senior Unsecured Note. The January 19, 2017 agreement to amend the Senior Term B loan resulted in a net cash outflow of $4.4 million of financing fees.~~Cash Payments.” Refer to “Note ~~10: Debt”~~2: Significant accounting policies” in Item 1 of this Quarterly Report on Form 10-Q for additional information. ~~Increased payments related to capital leases resulted in increased cash usage due to financing activities of $2.3 million.~~

Cash provided by financing activities also increased by $27.4 million due to a net increase in stock option exercises of $32.1 million and $4.7 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. Partially offsetting the increase in cash due to the exercise of stock options was cash used for taxes paid related to net share settlements of stock-based compensation awards of $7.8 million, which was inclusive of cash used of $8.0 million and $0.2 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.

The change in short-term financing, net resulted in an increased usage of cash related to financing activities of $7.9 million due to increased repayments. Short-term financing, net used cash of $18.9 million and $11.0 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.

Contractual Obligations and Commitments

There were no material changes in our contractual obligations and commitments since the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Critical Accounting Estimates

There were no material changes in our critical accounting estimates since the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Recently Issued and Adopted Accounting Pronouncements

See “Note 2: Significant accounting policies” in the notes to the condensed consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

See “Note 2: Significant accounting policies” in the notes to the condensed consolidated financial statements.

Forward Looking Statements and Information

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, macro-economic conditions, liquidity, prospects, business trends, currency trends, competition, markets, growth strategies and the industries in which we operate and including, without limitation, statements relating to our estimated or anticipated financial performance or results. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of

operations, financial condition and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results, conditions or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those reflected in forward-looking statements relating to our operations and business and the risks and uncertainties discussed in “Risk Factors.” Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include:

general economic conditions, particularly fluctuations in industrial production and the demands of our customers;

disruptions in the supply of chemicals we distribute or our customers’ or producers' operations;

termination or change of contracts or relationships with customers or producers on short notice;

the price and availability of chemicals, or a decline in the demand for chemicals;

our ability to pass through cost increases to our customers;

our ability to meet customer demand for a product;

trends in oil and gas prices;

competitive pressures in the chemical distribution industry;

consolidation of our competitors;

our ability to execute strategic investments, including pursuing acquisitions and/or dispositions, and successfully integrating and operating acquired companies;

~~challenges~~liabilities associated with ~~international operations, including securing producers~~acquisitions, dispositions and ~~personnel, import/export requirements, compliance with foreign laws and international business laws and changes in economic or political conditions;~~ventures;

potential impairment of goodwill;

inability to generate sufficient working capital;

our ability to ~~effectively implement our strategies or achieve our business goals;~~

~~exposure to interest rate and currency fluctuations;~~

~~competitive pressures in the chemical distribution industry;~~

~~consolidation of our competitors;~~sustain profitability;

our ability to implement and efficiently operate the systems needed to manage our operations;

the risks associated with security threats, including cybersecurity threats;

increases in transportation costs and changes in our relationship with third party carriers;

the risks associated with hazardous materials and related activities;

accidents, safety failures, environmental damage, product quality issues, major or systemic delivery failures involving our distribution network or the products we carry or adverse health effects or other harm related to the materials we blend, manage, handle, store, sell or transport;

challenges associated with international operations, including securing producers and personnel, import/export requirements, compliance with foreign laws and international business laws and changes in economic or political conditions;

our ability to effectively implement our strategies or achieve our business goals;

exposure to interest rate and currency fluctuations;

evolving laws and regulations relating to hydraulic fracturing and risks associated with chemicals used in hydraulic fracturing;

losses due to potential product liability claims and recalls and asbestos claims;

compliance with extensive environmental, health and safety laws, including laws relating to our environmental services businesses and the investigation and remediation of contamination, that could require material expenditures or changes in our operations;

general regulatory and tax requirements;

operational risks for which we may not be adequately insured;

ongoing litigation and other legal and regulatory actions and risks, including asbestos claims;

~~potential impairment of goodwill;~~

~~inability to generate sufficient working capital;~~

loss of key personnel;

labor disruptions and other costs associated with the unionized portion of our workforce;

negative developments affecting our pension plans and multi-employer pensions;

~~the impact of labeling regulations;~~changes in legislation, regulation and government policy; and

our substantial indebtedness and the restrictions imposed by our debt instruments and indenture.

You should read this Quarterly Report on Form 10-Q, including the uncertainties and factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report on Form 10-Q are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise and changes in future operating results over time or otherwise.

Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

There were no material changes from the “Quantitative and Qualitative Disclosure about Market Risk” disclosed in Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.


Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of ~~September 30, 2017~~March 31, 2018 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act

of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017.~~March 31, 2018.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2017~~March 31, 2018 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

Information pertaining to legal proceedings can be found in Note 1416 to the interim condensed consolidated financial statements included in Part I, Financial Statements of this report.

Item 1A. Risk Factors

There have been no material changes from the “Risk Factors” disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number		Exhibit Description

10.1†*		~~Employment~~Offer Letter, dated February 1, 2018, by and between Univar Inc. and David Jukes.

10.2		Form of Employee Stock Option Agreement for awards granted on or after February 7, 2018, 2017 Omnibus Equity Incentive Plan.

10.3†*		Stock Option Agreement, dated as of ~~November 1, 2017,~~February 7, 2018, by and between Univar Inc., and ~~David Jukes~~Stephen D. Newlin, 2017 Omnibus Equity Incentive Plan.

10.4		Form of Employee Restricted Stock Unit Agreement for awards granted on or after February 7, 2018, 2017 Omnibus Equity Incentive Plan.

10.5†*		Restricted Stock Unit Agreement, dated as of February 7, 2018, by and between Univar Inc. and Stephen D. Newlin, 2017 Omnibus Equity Incentive Plan.

10.6		Form of Employee Performance-Based Restricted Stock Unit Agreement for awards granted on or after February 7, 2018, 2017 Omnibus Equity Incentive Plan.

10.7†*		Performance-Based Restricted Stock Unit Agreement dated as of February 7, 2018, by and between Univar Inc. and Stephen D. Newlin, 2017 Omnibus Equity Incentive Plan.

10.8		Form of Director Deferred Share Unit Agreement for awards granted on or after February 7, 2018, 2017 Omnibus Equity Incentive Plan.

10.9		Form of Director Restricted Stock Agreement for awards granted on or after February 7, 2018, 2017 Omnibus Equity Incentive Plan.

31.1*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.1*		Interactive Data File

_______________________



†	Identifies each management compensation plan or arrangement.
*	Filed herewith
**	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Univar Inc. (Registrant)

By:		/s/ ~~Stephen D. Newlin~~David C. Jukes
		~~Stephen D. Newlin~~David C. Jukes President and Chief Executive Officer

Date: ~~November 3, 2017~~May 10, 2018



By:		/s/ Carl J. Lukach
		Carl J. Lukach Executive Vice President, Chief Financial Officer

Date: ~~November 3, 2017~~May 10, 2018

4034



	Other Postretirement Benefits
	Three months ended September 30,				Nine months ended September 30,
(in millions)	2017		2016		2017		2016
Service cost	$	—	$	—	$	—	$	—
Interest cost	—		—		0.1		0.2
Prior service credits	—		—		—		(4.5		)
Net periodic cost (benefit)	$	—	$	—	$	0.1	$	(4.3	)



	Three months ended September 30,
(in millions)	2017 ⁽¹⁾			2016 ⁽¹⁾		Location of impact on statement of operations
Amortization of defined benefit pension items:
Prior service credits	$	(0.1	)	$	—	Warehousing, selling and administrative
Tax expense	—			—		Income tax expense (benefit)
Net of tax	$	(0.1	)	$	—
Cash flow hedges:
Interest rate swap contracts	$	1.9		$	—	Interest expense
Tax benefit	(0.7		)	—		Income tax expense (benefit)
Net of tax	$	1.2		$	—
Total reclassifications for the period	$	1.1		$	—



(in millions)	Contingent consideration
Fair value as of December 31, 2016	$	7.5
Fair value adjustments	(3.0		)
Acquisitions	1.7
Payments	(3.2		)
Gain on settlement	(0.9		)
Fair value as of September 30, 2017	$	2.1