UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30, 2019~~March 31, 2020

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

For the transition period from __________ to __________

Commission file number: 001-38912

Avantor, Inc.

(Exact name of registrant as specified in its charter)



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

Radnor Corporate Center, Building One, Suite 200

100 Matsonford Road

Radnor, Pennsylvania 19087

(Address of principal executive offices) (zip code)

(610) 386-1700

(Registrant’s telephone number, including area code)

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



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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

On ~~October 30, 2019, 571,734,767~~April 21, 2020, 574,929,861 shares of common stock, $0.01 par value per share, were outstanding.

Avantor, Inc. and subsidiaries

Form 10-Q for the quarterly period ended ~~September 30, 2019~~March 31, 2020

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	Page
Glossary	ii
Cautionary factors regarding forward-looking statements	iii

PART I — FINANCIAL INFORMATION
Item 1. Financial ~~Statements~~statements	1
Item 2. Management’s ~~Discussion~~discussion and ~~Analysis~~analysis of ~~Financial Condition~~financial condition and ~~Results~~results of ~~Operations~~operations	3020
Item 3. Quantitative and ~~Qualitative Disclosures~~qualitative disclosures about ~~Market Risk~~market risk	4229
Item 4. Controls and ~~Procedures~~procedures	4329

PART II — OTHER INFORMATION
Item 1. Legal ~~Proceedings~~proceedings	4330
Item 1A. Risk ~~Factors~~factors	4330
Item 2. Unregistered ~~Sales~~sales of ~~Equity Securities~~equity securities and ~~Use~~use of ~~Proceeds~~proceeds	4432
Item 3. Defaults ~~Upon Senior Securities~~upon senior securities	4432
Item 4. Mine ~~Safety Disclosures~~safety disclosures	4432
Item 5. Other ~~Information~~information	4432
Item 6. Exhibits	4433

Signature	4534

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Glossary



	Description
we, us, our	Avantor, Inc. and its subsidiaries
~~2017 Plan~~	~~the Vail Holdco Corp Equity Incentive Plan, a share-based compensation plan~~
2019 Plan	the Avantor, Inc. 2019 Equity Incentive Plan, a ~~share-based~~stock-based compensation plan
Adjusted EBITDA	our earnings or loss before interest, taxes, depreciation, amortization and certain other adjustments
Annual Report	our annual report on Form 10-K for the year ended December 31, 2019
AMEA	Asia, Middle-East and Africa
AOCI	accumulated other comprehensive income or loss
cGMP	Current Good Manufacturing Practice
EURIBOR	the basic rate of interest used in lending between banks on the European Union interbank market
FASB	the Financial Accounting Standards Board of the United States
GAAP	United States generally accepted accounting principles
~~Goldman Sachs~~	~~an investment banking firm and its affiliates~~
high single-digit	7 - 9%
~~IPO~~	~~initial public offering~~
LIBOR	the basic rate of interest used in lending between banks on the London interbank market
low double-digit	10 - 19%
low single-digit	1 - 3%
~~Management EBITDA~~	~~earnings before interest, income taxes, depreciation, amortization and certain other items, our segment profitability measurement under GAAP~~
MCPS	6.250% Series A Mandatory Convertible Preferred Stock
mid single-digit	4 - 6%
~~New Mountain Capital~~RSU	~~a private equity investor and its affiliates~~
~~NuSil~~	~~NuSil Acquisition Corp, NuSil Investments LLC and subsidiaries, a business organization with which we merged in 2016~~
~~PSP Investments~~	~~a pension investment manager and its affiliates~~
~~Registration Statement~~	~~our registration statement on Form S-1 (File No. 333-229578), as amended~~
~~SAR~~	~~stand alone appreciation right~~restricted stock unit
SEC	the United States Securities and Exchange Commission
SG&A expenses	selling, general and administrative expenses
Specialty procurement	Product sales related to customer procurement services
VWR	VWR Corporation and its subsidiaries, a company we acquired in November 2017

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Cautionary factors regarding forward-looking statements

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

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

In the first quarter of 2020, we updated our risk factors to reflect new developments in the scale and scope of the new global coronavirus pandemic under Part II, Item 1A, “Risk Factors.” You should also understand that the following important factors, in addition to those discussed under “Risk Factors” in our ~~Registration Statement,~~Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

disruptions to our operations;

competition from other industry providers;

our ability to implement our growth strategy;

our ability to anticipate and respond to changing industry trends;

adverse trends in consumer, business, and government spending;

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

our ability to successfully value and integrate acquired businesses;

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

our ability to maintain our relationships with key customers;

our ability to maintain our relationships with distributors;

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

iii

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our ability to maintain consistent purchase volumes under purchase orders;

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

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

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

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

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

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

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

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

the availability of raw materials;

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

our ability to maintain highly skilled employees;

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

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

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

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

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

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

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

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this report. We undertake no obligations to update or

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revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

ivv

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PART I — FINANCIAL INFORMATION


Item 1.	Financial ~~Statements~~statements

Avantor, Inc. and subsidiaries

Index to unaudited condensed consolidated financial statements



	Page
Unaudited condensed consolidated balance sheets	2
Unaudited condensed consolidated statements of operations	43
Unaudited condensed consolidated statements of comprehensive income or loss	54
Unaudited condensed consolidated statements of ~~redeemable equity and~~ stockholders’ equity or deficit	65
Unaudited condensed consolidated statements of cash flows	86
Notes to unaudited condensed consolidated financial statements	97

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated balance sheets

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

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~~Avantor, Inc. and subsidiaries~~

~~Unaudited condensed consolidated balance sheets (continued)~~


(in millions)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Liabilities, redeemable equity and stockholders’ equity or deficit
Assets
Current assets:
Cash and cash equivalents							$	346.3		$	186.7
Accounts receivable, net of allowances of $24.6 and $18.6							1,041.1			988.8
Inventory							686.1			711.2
Other current assets							123.1			134.8
Total current assets							2,196.6			2,021.5
Property, plant and equipment, net of accumulated depreciation of $321.3 and $307.8							556.0			557.0
Other intangible assets, net (see note 8)							4,097.7			4,220.2
Goodwill							2,736.4			2,769.4
Other assets							199.5			205.2
Total assets							$	9,786.2		$	9,773.3
Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	41.4		$	142.4		$	14.3		$	93.5
Accounts payable	556.3			557.4			610.9			560.2
Employee-related liabilities	118.9			144.9			114.0			114.3
Accrued interest	135.1			76.6			135.0			74.2
Other current liabilities	227.0			174.9			252.4			232.3
Total current liabilities	1,078.7			1,096.2			1,126.6			1,074.5
Debt, net of current portion	5,088.7			6,782.3			5,040.4			5,023.0
Deferred income tax liabilities	832.8			907.5			767.4			785.4
Other liabilities	407.3			318.0			411.7			428.2
Total liabilities	7,407.5			9,104.0			7,346.1			7,311.1
Commitments and contingencies, see note 10
Redeemable equity:
Series A preferred stock at redemption value, zero and 2.3 shares outstanding	—			2,297.3
Junior convertible preferred stock, zero and 1.7 shares outstanding	—			1,562.0
Total redeemable equity	—			3,859.3
Stockholders’ equity (deficit):
Mandatory convertible preferred stock including paid-in capital, 20.7 and zero shares outstanding	1,003.7			—
Common stock including paid-in capital, 571.4 and 132.8 shares outstanding	1,753.7			(2,746.8		)
Stockholders’ equity:
MCPS including paid-in capital, 20.7 shares outstanding							1,003.7			1,003.7
Common stock including paid-in capital, 574.9 and 572.8 shares outstanding							1,748.0			1,748.1
Accumulated deficit	(274.3		)	(238.4		)	(158.3		)	(203.7		)
Accumulated other comprehensive loss	(127.5		)	(66.5		)	(153.3		)	(85.9		)
Total stockholders’ equity (deficit)	2,355.6			(3,051.7		)
Total liabilities, redeemable equity and stockholders’ equity or deficit	$	9,763.1		$	9,911.6
Total stockholders’ equity							2,440.1			2,462.2
Total liabilities and stockholders’ equity							$	9,786.2		$	9,773.3

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of operations


(in millions, except per share data)	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2019			2018			2019			2018			2020			2019
Net sales	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4		$	1,519.0		$	1,480.1
Cost of sales	1,029.8			1,015.5			3,076.0			3,003.4			1,017.1			1,004.9
Gross profit	474.0			478.7			1,440.3			1,387.0			501.9			475.2
Selling, general and administrative expenses	330.8			346.5			1,040.4			1,072.8			343.5			337.6
Operating income	143.2			132.2			399.9			314.2			158.4			137.6
Interest expense	(98.3		)	(130.2		)	(342.0		)	(388.7		)	(94.5		)	(128.6		)
Loss on extinguishment of debt	—			—			(70.2		)	—
Other (expense) income, net	(7.6		)	(0.9		)	2.9			7.0
Income (loss) before income taxes	37.3			1.1			(9.4		)	(67.5		)
Income tax (expense) benefit	(15.2		)	33.4			(23.4		)	33.9
Other income (expense), net													0.8			(5.1		)
Income before income taxes													64.7			3.9
Income tax expense													(17.7		)	(10.1		)
Net income (loss)	22.1			34.5			(32.8		)	(33.6		)	47.0			(6.2		)
Accumulation of yield on preferred stock	(16.4		)	(68.9		)	(136.4		)	(198.4		)	(16.1		)	(71.8		)
Accretion of make whole premium on series A preferred stock	—			—			(220.4		)	—
Net income (loss) available to common stockholders	$	5.7		$	(34.4	)	$	(389.6	)	$	(232.0	)	$	30.9		$	(78.0	)

Earnings (loss) per share, basic and diluted	$	0.01		$	(0.26	)	$	(1.13	)	$	(1.75	)
Earnings (loss) per share:
Basic													$	0.05		$	(0.59	)
Diluted													$	0.05		$	(0.59	)
Weighted average shares outstanding:
Basic	570.0			132.8			343.7			132.7			573.7			132.8
Diluted	580.7			132.8			343.7			132.7			581.3			132.8

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of comprehensive income or loss


(in millions)	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2019			2018			2019			2018			2020			2019
Net income (loss)	$	22.1		$	34.5		$	(32.8	)	$	(33.6	)	$	47.0		$	(6.2	)
Other comprehensive income (loss):
Other comprehensive loss:
Foreign currency translation — unrealized loss	(62.7		)	(0.8		)	(59.3		)	(59.1		)	(68.8		)	(8.9		)
Derivative instruments:
Unrealized gain (loss)	1.0			(0.2		)	(0.5		)	1.2			1.6			(0.3		)
Reclassification of gain into earnings	(0.9		)	(0.6		)	(1.2		)	(1.2		)	(0.1		)	(0.3		)
Defined benefit plans:
Unrealized (loss) gain	(0.1		)	—			(0.1		)	0.1
Unrealized gain (loss)													0.4			(0.1		)
Reclassification of gain into earnings	(0.2		)	(0.2		)	(0.5		)	(0.5		)	(0.1		)	(0.2		)
Other comprehensive loss before income taxes	(62.9		)	(1.8		)	(61.6		)	(59.5		)	(67.0		)	(9.8		)
Income tax benefit	0.1			0.2			0.6			—
Income tax effect													(0.4		)	0.2
Other comprehensive loss	(62.8		)	(1.6		)	(61.0		)	(59.5		)	(67.4		)	(9.6		)
Comprehensive (loss) income	$	(40.7	)	$	32.9		$	(93.8	)	$	(93.1	)
Comprehensive loss													$	(20.4	)	$	(15.8	)

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Avantor, Inc. and subsidiaries

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

~~Table of contents~~

~~Avantor, Inc. and subsidiaries~~

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

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

Balance at December 31, 2017 $ 2,027.8
$ 1,562.0
$ 3,589.8
$ —
$ (2,490.3 ) $ (156.3 ) $ 26.4
$ (2,620.2 )
Cumulative effect of adopting new accounting standard, see note 1 —
—
—
—
—
4.8
—
4.8
Comprehensive loss —
—
—
—
—
(33.6 ) (59.5 ) (93.1 )
Share-based compensation expense —
—
—
—
10.3
—
—
10.3
Accumulation of yield 198.4
—
198.4
—
(198.4 ) —
—
(198.4 )
Balance at September 30, 2018 $ 2,226.2
$ 1,562.0
$ 3,788.2
$ —
$ (2,678.4 ) $ (185.1 ) $ (33.1 ) $ (2,896.6 )



(in millions)	Stockholders’ equity (deficit)
	MCPS including paid-in capital			Common stock including paid-in capital				Accumulated deficit			AOCI				Total
	Shares	Amount		Shares	Amount			Accumulated deficit			AOCI				Total
Balance at December 31, 2019	20.7	$	1,003.7	572.8	$	1,748.1		$	(203.7	)	$	(85.9	)		$	2,462.2
Cumulative effect of adopting new accounting standard	—	—		—	—			(1.6		)	—			—	(1.6		)
Comprehensive income (loss)	—	—		—	—			47.0			(67.4		)		(20.4		)
Stock-based compensation expense	—	—		—	9.2			—			—				9.2
Accumulation of yield on preferred stock	—	—		—	(16.1		)	—			—				(16.1		)
Exercise of stock options	—	—		2.1	6.8			—			—				6.8
Balance at March 31, 2020	20.7	$	1,003.7	574.9	$	1,748.0		$	(158.3	)	$	(153.3	)		$	2,440.1

Balance at December 31, 2018	—	$	—	132.8	$	(2,746.8	)	$	(238.4	)	$	(66.5	)		$	(3,051.7	)
Cumulative effect of adopting new accounting standard	—	—		—	—			(3.1		)	—				(3.1		)
Comprehensive loss	—	—		—	—			(6.2		)	(9.6		)		(15.8		)
Stock-based compensation expense	—	—		—	4.0			—			—				4.0
Accumulation of yield on preferred stock	—	—		—	(71.8		)	—			—				(71.8		)
Balance at March 31, 2019	—	$	—	132.8	$	(2,814.6	)	$	(247.7	)	$	(76.1	)		$	(3,138.4	)

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of cash flows


(in millions)	Nine months ended September 30,						Three months ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net loss	$	(32.8	)	$	(33.6	)
Net income (loss)							$	47.0		$	(6.2	)
Reconciling adjustments:
Depreciation and amortization	301.6			303.5			96.5			98.3
Share-based compensation expense	57.4			14.5
Other restructuring charges (see note 9)	10.0			—
Stock-based compensation expense							8.4			4.8
Provision for accounts receivable and inventory	22.9			19.5			13.6			7.7
Deferred income tax benefit	(67.5		)	(135.7		)	(4.2		)	(21.5		)
Amortization of deferred financing costs	26.5			31.1			6.9			10.4
Loss on extinguishment of debt	70.2			—
Foreign currency remeasurement loss							6.7			7.2
Changes in assets and liabilities:
Accounts receivable	(76.9		)	(86.7		)	(80.1		)	(54.2		)
Inventory	(74.1		)	(19.8		)	5.3			(41.2		)
Accounts payable	7.9			(28.1		)	67.0			5.4
Accrued interest							60.8			59.7
Other assets and liabilities	22.2			48.4			24.5			5.5
Other, net	(0.4		)	17.5			0.7			(0.9		)
Net cash provided by operating activities	267.0			130.6			253.1			75.0
Cash flows from investing activities:
Capital expenditures	(39.5		)	(32.3		)	(12.6		)	(12.4		)
Other	8.8			9.1			0.7			4.5
Net cash used in investing activities	(30.7		)	(23.2		)	(11.9		)	(7.9		)
Cash flows from financing activities:
Debt borrowings							—			3.6
Debt repayments	(1,825.4		)	(95.4		)	(63.8		)	(109.7		)
Dividend payment	(15.1		)	—
Payments of contingent consideration	(4.6		)	(20.5		)
Proceeds from issuance of stock, net of issuance costs	4,235.6			—
Redemption of series A preferred stock	(2,630.9		)	—
Payments of dividends on preferred stock							(16.1		)	—
Other							6.8			—
Net cash used in financing activities	(240.4		)	(115.9		)	(73.1		)	(106.1		)
Effect of currency rate changes on cash, restricted cash and equivalents	(6.7		)	(5.3		)
Net change in cash, restricted cash and equivalents	(10.8		)	(13.8		)
Cash, restricted cash and equivalents, beginning of period	187.7			188.5
Cash, restricted cash and equivalents, end of period	$	176.9		$	174.7
Effect of currency rate changes on cash							(8.5		)	(1.8		)
Net change in cash and cash equivalents							159.6			(40.8		)
Cash, cash equivalents and restricted cash, beginning of period							189.3			187.7
Cash, cash equivalents and restricted cash, end of period							$	348.9		$	146.9

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Avantor, Inc. and subsidiaries

Notes to unaudited condensed consolidated financial statements


1.	Nature of operations and presentation of financial statements

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

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

September 30, 2019 December 31, 2018

New Mountain Capital Goldman Sachs Other investors New Mountain Capital Goldman Sachs Other investors
17% 11% 72% 40% 15% 45%
Avantor, Inc. and subsidiaries Avantor, Inc. and subsidiaries

Basis of presentation

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

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

We report three geographic segments based on customer location: the Americas, Europe and AMEA. For the periods presented, all share and per share information has been adjusted for a stock split that occurred in connection with our IPO (see note 12). Principles of consolidation

All intercompany balances and transactions have been eliminated from the financial statements.

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

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

~~Immaterial error~~

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

(in millions) Nine months ended September 30, 2018
Previously reported Adjustment As adjusted
Net sales:

Americas $ 2,590.6
$ 12.4
$ 2,603.0
Europe 1,575.5
(16.2 ) 1,559.3
AMEA 224.3
3.8
228.1
Total $ 4,390.4
$ —
$ 4,390.4
Management EBITDA:
Americas $ 480.5
$ 3.3
$ 483.8
Europe 259.3
(6.0 ) 253.3
AMEA 51.7
3.0
54.7
Corporate (48.5 ) (0.3 ) (48.8 )
Total $ 743.0
$ —
$ 743.0

Reclassifications

In ~~the second quarter of~~ 2019, we changed our presentation of disaggregated net sales ~~included in~~(see note 65) to depict the product line categories that are regularly used by management. Product sales associated with our service offerings, referred to as specialty procurement, have been reclassified from third party materials & consumables and combined with net sales from services ~~to present~~into the services & specialty procurement product line for all periods presented.

Use of estimates

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

Global coronavirus outbreak

The ongoing coronavirus outbreak known as COVID-19 has adversely affected global economies, financial markets and the overall environment in which we do business, and the

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extent to which it may impact our future results of operations and overall financial performance remains uncertain. We will continue to monitor for developments as the outbreak continues.


2.	Summary of significant accounting policies

~~Leases~~Interim update to segment reporting policy

~~We primarily enter into real estate leases~~Effective as of and for ~~manufacturing, warehousing and commercial office space~~the quarter ended March 31, 2020, our Chief Executive Officer, who is our chief operating decision maker, changed the measure he uses to ~~support our global operations. We also enter into vehicle and equipment leases~~evaluate segment profitability from Management EBITDA to ~~support~~Adjusted EBITDA. All disclosures relating to segment profitability, including those ~~operations.~~

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

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

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

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

~~Earnings or loss per share~~

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

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

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

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

~~Stockholders’ equity or deficit~~

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

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


3.	New accounting standards

New tax standard

In ~~February~~December 2019, the FASB issued a new standard to simplify the accounting for income taxes by removing certain exceptions to the existing guidance and also providing for additional clarification. This standard encompasses multiple amendments, and requires adoption either retrospectively, prospectively, or using a modified retrospective approach, depending on the amendment. For the amendments in which we are given the choice between adopting retrospectively or on a modified retrospective basis, we expect to adopt on a modified retrospective basis. All other amendments will be adopted using the method prescribed by the standard. The standard is effective on January 1, 2021 and we are currently evaluating its impact.

New credit losses standard

In June 2016, the FASB issued a new standard ~~related to leases. The most significant change for us was~~that modifies the recognition of credit losses related to financial assets. Under the new ~~assets~~standard, an entity must measure and ~~liabilities for leases classified~~record its total expected credit losses, rather than recording such losses when it is probable that they have occurred, as ~~operating leases. Our accounting for finance leases~~ was ~~substantially unchanged.~~

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

previous standard. We adopted the ~~standard effective~~new guidance on January 1, ~~2019~~2020 using a modified retrospective ~~transition~~ approach ~~whereby the new standard was~~ applied to ~~all leases existing at January 1, 2019 with~~our portfolio of trade receivables as of that date. On the adoption date, we (i) recorded a cumulative effect adjustment recorded in equity representing the cumulative earnings effect of this new standard. We elected to utilize the package of practical expedients permitted under the transition guidance in the standard which allowed us to not reassess (i) whether any expired or existing contracts contain leases, (ii) historical lease classification and (iii) initial direct costs.

~~The most significant impacts upon adoption were: (i) a $3.1~~$1.6 million cumulative effect adjustment ~~that increased~~to increase accumulated deficit, (ii) increased our allowance for credit losses to accounts receivable by $2.2 million, and ~~(ii) recognition of $155.0~~(iii) recognized a $0.6 million ~~of operating lease assets and $162.5 million of operating lease liabilities. Other impacts were immaterial and included adjustments~~reduction to ~~existing finance lease assets and liabilities, recognition of~~ deferred income tax ~~assets and a similar amount of deferred income tax liabilities, and derecognition of prepaid rent expense assets.~~liabilities.

Other

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

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4.	Earnings or loss per share

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended ~~September 30, 2019:~~March 31, 2020:


(in millions, except per share data)	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share		Earnings (numerator)		Weighted average shares outstanding (denominator)		Earnings per share
Basic	$	5.7	570.0	$	0.01	$	30.9	573.7		$	0.05
Effect of dilutive securities:
Stock-based awards	—		8.3
Warrants	—		2.4
Dilutive effect of stock-based awards						—		7.6
Diluted	$	5.7	580.7	$	0.01	$	30.9	$	581.3	$	0.05

For the three months ended ~~September 30, 2019,~~March 31, 2020, diluted earnings per share included ~~accumulated~~accumulation of yield on preferred stock of ~~$16.4~~$16.1 million and excluded ~~70.4~~73.9 million of common stock equivalents under the MCPS because they were anti-dilutive to the calculation.

For ~~all other periods presented,~~the three months ended March 31, 2019, basic and diluted loss per share calculations were the same because we reported a net loss available to common stockholders. ~~As a result, the following potentially dilutive instruments were excluded from those calculations:~~

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

~~Additionally, the junior convertible preferred~~Stock options for 21.0 million shares of common stock ~~and warrants~~ were excluded from the ~~basic~~calculation of diluted loss per share ~~calculation in the 2018 periods~~ because ~~holders of those instruments do not participate in losses.~~their effect would have been anti-dilutive.


5.	~~Risks and uncertainties~~Segment financial information

~~Remeasurement of foreign currency transactions~~

~~For~~We report based on three geographic segments based on customer location: Americas, Europe and AMEA. Each segment manufactures and distributes solutions for the ~~three months ended September 30, 2019, other income, net included $8.2 million of net foreign currency loss from financing activities.~~

~~On July 11, 2019, we completed an intercompany recapitalization that is intended~~biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. Corporate costs are managed on a standalone basis and not allocated to mitigate substantially all of our net euro financing exposure in future periods. We still expect to experience gains and losses related to other currencies whose effect has not historically been material to our earnings.segments.

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6.	~~Segment financial information~~

The following ~~tables present~~table presents information by reportable segment:


(in millions)	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2019			2018			2020			2019
Net sales:										(as adjusted, see note 1)
Americas	$	918.2		$	912.9		$	2,701.0		$	2,603.0		$	899.1		$	857.3
Europe	501.1			503.1			1,561.8			1,559.3			544.0			542.1
AMEA	84.5			78.2			253.5			228.1			75.9			80.7
Total	$	1,503.8		$	1,494.2		$	4,516.3		$	4,390.4		$	1,519.0		$	1,480.1
Management EBITDA:
Adjusted EBITDA:
Americas	$	187.7		$	181.9		$	560.4		$	483.8		$	190.0		$	166.3
Europe	85.1			85.0			261.6			253.3			91.7			89.7
AMEA	16.9			18.9			53.4			54.7			13.4			18.5
Corporate	(20.5		)	(17.6		)	(53.9		)	(48.8		)	(32.3		)	(26.5		)
Total	$	269.2		$	268.2		$	821.5		$	743.0		$	262.8		$	248.0

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

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

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



(in millions)	Three months ended March 31,
(in millions)	2020		2019
Net income (loss)	$	47.0	$	(6.2	)
Interest expense	94.5		128.6
Income tax expense	17.7		10.1
Depreciation and amortization	96.5		98.3
Net foreign currency loss from financing activities	1.6		6.2
Restructuring and severance charges	1.2		5.5
VWR transaction, integration and planning expenses	3.6		6.3
Other	0.7		(0.8		)
Adjusted EBITDA	$	262.8	$	248.0

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The following table presents net sales by product line:


(in millions)	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2019		2018		2019		2018		2020		2019
Proprietary materials & consumables	$	494.2	$	522.0	$	1,500.9	$	1,469.0	$	533.1	$	487.7
Third party materials & consumables	592.8		572.2		1,792.8		1,765.4		604.6		605.2
Services & specialty procurement	195.7		177.1		562.5		511.1		178.0		168.4
Equipment & instrumentation	221.1		222.9		660.1		644.9		203.3		218.8
Total	$	1,503.8	$	1,494.2	$	4,516.3	$	4,390.4	$	1,519.0	$	1,480.1


7.6.	Supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:


(in millions)	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Cash and cash equivalents	$	173.9	$	184.7	$	346.3	$	186.7
Restricted cash classified as other assets	3.0		3.0		2.6		2.6
Total	$	176.9	$	187.7	$	348.9	$	189.3



(in millions)	Three months ended March 31,
	2020		2019
Cash flows from operating activities:
Cash paid for income taxes, net	$	12.2	$	19.7
Cash paid for interest	27.2		58.6
Cash paid under operating leases	10.0		13.5
Cash paid under finance leases	1.3		1.1
Cash flows from financing activities:
Cash paid under finance leases	1.1		1.4

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7.	Inventory

The following table presents the components of inventory:

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



(in millions)	March 31, 2020		December 31, 2019
Merchandise inventory	$	411.3	$	445.2
Finished goods	112.4		104.4
Raw materials	123.3		125.1
Work in process	39.1		36.5
Total	$	686.1	$	711.2


8.	~~Inventory~~Other intangible assets

The following table presents the components of ~~inventory:~~other intangible assets:

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



(in millions)	March 31, 2020						December 31, 2019
(in millions)	Gross value		Accumulated amortization		Carrying value		Gross value		Accumulated amortization		Carrying value
Customer relationships	$	4,499.6	$	692.4	$	3,807.2	$	4,547.7	$	641.3	$	3,906.4
VWR trade name	261.1		136.1		125.0		264.3		123.3		141.0
Other	180.4		107.2		73.2		182.8		102.3		80.5
Total finite-lived	$	4,941.1	$	935.7	4,005.4		$	4,994.8	$	866.9	4,127.9
Indefinite-lived					92.3						92.3
Total					$	4,097.7					$	4,220.2


9.	Restructuring and severance

The following table presents restructuring and severance charges by plan:


(in millions)	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
(in millions)	2019		2018		2019		2018		2020		2019
2017 restructuring program	$	13.3	$	16.6	$	19.1	$	54.8	$	1.2	$	5.1
Other	0.1		0.1		0.7		2.3		—		0.4
Total	$	13.4	$	16.7	$	19.8	$	57.1	$	1.2	$	5.5

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

~~2017 restructuring program~~

~~We implemented a $215 million program over a three-year period~~During the first quarter of 2020, there were no material updates to ~~optimize~~ our sales, gross margins and operating costs. The spending currently includes an estimated $55 million for capital expenditures and an estimated $135 million for employee severance and related costs, facility closures and other charges. Our plans have included combining sales and marketing resources, eliminating redundant corporate functions, optimizing procurement and our manufacturing footprint, and implementing best practices throughout the organization. We expect all synergies and cost savings to be fully realized by 2021.

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~~The following table presents information about charges~~liabilities or expense under the 2017 restructuring ~~program:~~

(in millions) Three months ended September 30, Nine months ended September 30, September 30, 2019
Charges incurred to date Expected remaining charges Total expected charges
2019 2018 2019 2018
Employee severance and related $ 3.0
$ 12.4
$ 8.4
$ 46.0
$ 74.6
$ 15.4
$ 90.0
Facility closure 0.3
0.5
0.7
0.8
1.9
3.1
5.0
Other 10.0
3.7
10.0
8.0
38.4
1.6
40.0
Total $ 13.3
$ 16.6
$ 19.1
$ 54.8
$ 114.9
$ 20.1
$ 135.0

Americas $ 10.3
$ 6.3
$ 11.1
$ 15.7
$ 51.7
$ 9.3
$ 61.0
Europe 2.0
9.5
7.0
37.3
47.6
4.4
52.0
AMEA —
0.8
—
0.8
0.8
0.2
1.0
Corporate 1.0
—
1.0
1.0
14.8
6.2
21.0
Total $ 13.3
$ 16.6
$ 19.1
$ 54.8
$ 114.9
$ 20.1
$ 135.0

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

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

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


10.	Commitments and contingencies

Our business involves commitments and contingencies related to compliance with environmental laws and regulations, the manufacture and sale of products ~~employment arrangements~~ and litigation. The ultimate resolution

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of contingencies is subject to significant uncertainty, and it is reasonably possible that ~~contingencies could be decided unfavorably for us. We have also entered into lease commitments as disclosed in note 18.~~

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we will experience adverse outcomes related to these matters.

Environmental laws and regulations

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

Mallinckrodt indemnification

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

In connection with environmental liabilities arising from pre-closing noncompliance with environmental laws, Mallinckrodt is contractually obligated to reimburse us for a percentage of the total liability, with such reimbursements made through disbursements from a $30.0 million environmental escrow established at the time of the closing. Specifically, Mallinckrodt will be responsible for reimbursement of 80% of the total costs up to $40.0 million of such environmental ~~liabilities,~~liabilities. Mallinckrodt will then be responsible for reimbursement of 50% of the next $40.0 million of such environmental liabilities. If such environmental liabilities ~~and~~exceed $80.0 million in the aggregate, Mallinckrodt will be responsible for reimbursement of 100% of such liabilities up to the next $30.0 million ~~of such environmental liabilities~~ in the aggregate. Currently, reimbursements are 80% of the amounts spent by us, with reimbursements and settlements to date exceeding $12.0 million. In addition, in connection with operation and maintenance activities required pursuant to administrative consent orders and subsequently issued remedial action permits involving our Phillipsburg, New Jersey, facility, amounts in excess of a small annual threshold are also subject to reimbursement, currently at the 80% level.

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

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Other noteworthy matters

The New Jersey Department of Environmental Protection has ordered us to remediate groundwater conditions near our plant in Phillipsburg, New Jersey. This matter is covered by the indemnification arrangement previously described. At ~~September 30, 2019,~~March 31, 2020, our accrued obligation

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under this order is ~~$3.8~~$4.1 million, which is calculated based on expected cash payments discounted at rates ranging from ~~1.5%~~0.1% in ~~2019~~2020 to ~~2.1%~~1.3% in 2045. The undiscounted amount of that obligation is $4.5 million.

In 2016, we assessed the environmental condition of our chemical manufacturing site in Gliwice, Poland. Our assessment revealed specific types of soil and groundwater contamination throughout the site. We are also monitoring the condition of a closed landfill on that site. These matters are not covered by our indemnification arrangement because they relate to an operation we subsequently acquired. At ~~September 30, 2019,~~March 31, 2020, our balance sheet includes a liability of ~~$3.6~~$3.3 million for remediation and monitoring costs. That liability is estimated primarily on expected remediation payments discounted through 2020 and is not materially different than its undiscounted amount.

Manufacture and sale of products

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

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

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

Litigation

At ~~September 30, 2019,~~March 31, 2020, there was no outstanding litigation that we believe would result in material losses if decided against us, and we do not believe that there are any unasserted matters that are reasonably possible to result in a material loss.

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11.	Debt

~~During~~In the first ~~nine months~~quarter of ~~2019,~~2020, we ~~used proceeds from the IPO and operating cash flows~~entered into a new receivables facility as described further below. The new receivables facility replaces our previous facility, which was set to ~~repay $1,096.2 million of U.S. dollar term loans and $625.5 million of euro term loans.~~expire on November 20, 2020. We also ~~incurred a loss on extinguishment of debt of $70.2 million, primarily caused by the proportional write-off of unamortized deferred financing costs related to the term loans.~~

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

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The following table presents information about our debt:

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

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(dollars in millions)	March 31, 2020						December 31, 2019
(dollars in millions)	Interest terms	Rate		Amount			December 31, 2019
Receivables facility	LIBOR plus 0.90%	1.89	%	$	—		$	55.5
Senior secured credit facilities:
Euro term loans	EURIBOR plus 2.50%	2.50	%	383.3			391.8
U.S. dollar term loans	LIBOR plus 2.25%	3.85	%	675.5			677.2
4.75% secured notes	fixed rate	4.75	%	550.4			561.2
6% secured notes	fixed rate	6.00	%	1,500.0			1,500.0
9% unsecured notes	fixed rate	9.00	%	2,000.0			2,000.0
Finance lease liabilities				71.9			59.2
Other				0.1			4.5
Total debt, gross				5,181.2			5,249.4
Less: unamortized deferred financing costs				(126.5		)	(132.9		)
Total debt				$	5,054.7		$	5,116.5
Classification on balance sheets:
Current portion of debt				$	14.3		$	93.5
Debt, net of current portion				5,040.4			5,023.0

Credit facilities

The following table presents availability under our credit facilities:


(in millions)	September 30, 2019									March 31, 2020
(in millions)	Receivables facility			Revolving credit facility			Total			Receivables facility			Revolving credit facility			Total
Current availability	$	250.0		$	250.0		$	500.0		$	300.0		$	250.0		$	550.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)	(12.9		)	(1.6		)	(14.5		)
Outstanding borrowings	—			—			—			—			—			—
Unused availability	$	237.5		$	234.7		$	472.2		$	287.1		$	248.4		$	535.5

Maximum availability	$	250.0		$	250.0		$	500.0		$	300.0		$	250.0		$	550.0

Current availability under the receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable. At ~~September 30, 2019, $455.6~~March 31, 2020, $470.4 million of accounts receivable were available as collateral under the facility.

Receivables facility


~~12.~~	~~Redeemable equity and stockholders’ equity or deficit~~

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

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

~~In connection~~receivables facility is with ~~the closing~~a commercial bank, functions like a line of credit and matures on March 27, 2023. Borrowings are secured by accounts receivable which are sold by certain of our ~~IPO, we filed an amended and restated certificate of incorporation~~domestic subsidiaries to ~~effect~~ a five-for-one split of our common stock and authorize the classes of stock noted above. All shares of common stock, stock-based instruments and per-share data included in these financial statements give effect to the stock split.

~~Initial public offering~~

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

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~~Mandatory convertible preferred stock~~are not available to satisfy the claims of other creditors. We bear the risk of collection on those receivables and account for the receivables facility as a secured borrowing.

~~MCPS accrues cumulative dividends at~~Debt covenants

Our debt agreements include representations and covenants that we consider usual and customary, and our receivables facility and senior secured credit facilities include a ~~rate of 6.250% per annum on the liquidation preference of $50 per share. Accrued cumulative dividends~~financial covenant that becomes applicable for periods in ~~arrears as of September 30, 2019 was $8.1 million, and~~which we paid a dividend of $15.1 million during the nine months ended September 30, 2019. Each share of MCPS converts into between 3.0395 and 3.5714 shares of common stock, depending upon the average trading pricehave drawn more than 35% of our ~~common stock leading up to~~revolving credit facility under the ~~conversion date~~senior secured credit facilities. When applicable, we may not have combined borrowings on our senior secured credit facilities and ~~subject to customary anti-dilution adjustments. The MCPS converts:~~

~~Automatically on May 15, 2022;~~

~~Following the occurrence~~secured notes in excess of a ~~change of control or certain other defined events,~~pro forma net leverage ratio, as defined. We were in ~~which case holders are also entitled to receive a make-whole dividend equal to the present value of all remaining dividends that would have accumulated through May 15, 2022; and~~compliance with this covenant at March 31, 2020.

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

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

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

~~Redemption of series A preferred stock~~

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

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

~~Conversion of junior convertible preferred stock~~

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

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

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~~13.~~12.	Accumulated other comprehensive income or loss

The following table presents changes in the components of AOCI:

(in millions) Foreign currency translation Derivative instruments Defined benefit plans Total
Balance at June 30, 2019 $ (55.6 ) $ (0.2 ) $ (8.9 ) $ (64.7 )
Unrealized (loss) gain (62.7 ) 1.0
(0.1 ) (61.8 )
Reclassification of gain into earnings —
(0.9 ) (0.2 ) (1.1 )
Income tax benefit —
—
0.1
0.1
Balance at September 30, 2019 $ (118.3 ) $ (0.1 ) $ (9.1 ) $ (127.5 )

Balance at June 30, 2018 $ (34.6 ) $ 0.9
$ 2.2
�� $ (31.5 )
Unrealized loss (0.8 ) (0.2 ) —
(1.0 )
Reclassification of gain into earnings —
(0.6 ) (0.2 ) (0.8 )
Income tax benefit —
0.2
—
0.2
Balance at September 30, 2018 $ (35.4 ) $ 0.3
$ 2.0
$ (33.1 )

Balance at December 31, 2018 $ (59.0 ) $ 1.1
$ (8.6 ) $ (66.5 )
Unrealized (loss) gain (59.3 ) (0.5 ) (0.1 ) (59.9 )
Reclassification of gain into earnings —
(1.2 ) (0.5 ) (1.7 )
Income tax benefit —
0.5
0.1
0.6
Balance at September 30, 2019 $ (118.3 ) $ (0.1 ) $ (9.1 ) $ (127.5 )

Balance at December 31, 2017 $ 23.7
$ 0.3
$ 2.4
$ 26.4
Unrealized loss (59.1 ) 1.2
0.1
(57.8 )
Reclassification of gain into earnings —
(1.2 ) (0.5 ) (1.7 )
Income tax benefit —
—
—
—
Balance at September 30, 2018 $ (35.4 ) $ 0.3
$ 2.0
$ (33.1 )



(in millions)	Foreign currency translation			Derivative instruments			Defined benefit plans			Total
Balance at December 31, 2019	$	(62.3	)	$	(0.5	)	$	(23.1	)	$	(85.9	)
Unrealized (loss) gain	(68.8		)	1.6			0.4			(66.8		)
Reclassification of gain into earnings	—			(0.1		)	(0.1		)	(0.2		)
Income tax effect	—			(0.4		)	—			(0.4		)
Balance at March 31, 2020	$	(131.1	)	$	0.6		$	(22.8	)	$	(153.3	)

Balance at December 31, 2018	$	(59.0	)	$	1.1		$	(8.6	)	$	(66.5	)
Unrealized loss	(8.9		)	(0.3		)	(0.1		)	(9.3		)
Reclassification of gain into earnings	—			(0.3		)	(0.2		)	(0.5		)
Income tax effect	—			0.2			—			0.2
Balance at March 31, 2019	$	(67.9	)	$	0.7		$	(8.9	)	$	(76.1	)

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

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~~14.~~13.	Stock-based compensation

The following table presents ~~information about~~the components of stock-based compensation ~~expense (benefit):~~expense:

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



(in millions)	Classification	Three months ended March 31,
(in millions)	Classification	2020			2019
Stock options	Equity	$	3.9		$	3.8
RSUs	Equity	4.9			0.2
Optionholder awards	Liability	0.3			0.8
Other	Both	(0.7		)	—
Total		$	8.4		$	4.8
Balance sheet classification:
Equity		$	9.2		$	4.0
Liability		(0.8		)	0.8

At ~~September 30, 2019,~~March 31, 2020, unvested awards under the 2019 Plan have remaining ~~share-based~~stock-based compensation expense of ~~$65.4~~$113.1 million to be recognized over a weighted average period of ~~3.2~~2.0 years.

~~2019 Plan~~

~~In connection with the IPO, we adopted~~At March 31, 2020, 11.2 million shares were available for future issuance under the 2019 Plan. ~~The 2019 Plan initially provides for up to 23.5 million shares of common stock to be issued in the form of stock~~

Stock options restricted stock units or other equity-based awards or cash-based awards. The 2019 Plan also provides for 1% annual increases to the number of shares of common stock available for issuance unless reduced by our Board of Directors.

The following ~~awards were~~table presents information about outstanding stock options:



(options and intrinsic value in millions)	Number of options		Weighted average exercise price per option		Aggregate intrinsic value		Weighted average remaining term
Balance on December 31, 2019	22.7		$	15.04
Granted	4.8		17.55
Exercised	(2.1	)	3.32
Forfeited	(0.4	)	17.79
Balance on March 31, 2020	25.0		16.44		$	49.6	7.5 years
Expected to vest	11.4		18.14		0.2		9.1 years
Exercisable	13.6		15.03		49.4		6.1 years

In the first quarter of 2020, we granted ~~under the 2019 plan in connection with the IPO:~~

~~We granted 3.2 million~~ stock options ~~having~~that have a grant date fair value of $4.79 per option using the following inputs: an expected term of 6.3 years as determined under the simplified method, 30% volatility and a risk free rate of 2.2%. The options have an exercise price of $14.00, a ten-year10-year contractual life and will vest annually over three to four years, subject to the recipient continuously providing service to us through each such date.

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WeThe following table presents weighted-average information about stock options granted:



	Three months ended March 31, 2020
Grant date fair value per option	$	5.41
Assumptions used to determine grant date fair value:
Expected stock price volatility	28		%
Risk free interest rate	1.4		%
Expected dividend rate	nil
Expected life of options	6.2 years

The following table presents other information about stock options:



(in millions)	Three months ended March 31, 2020
Fair value of options vested	$	0.7
Intrinsic value of options exercised	27.5
Tax benefit of options exercised	7.1

RSUs

The following table presents information about unvested RSUs:



(awards in millions)	Number of awards		Weighted average grant date fair value per award
Balance on December 31, 2019	5.2		$	13.97
Granted	1.3		17.40
Forfeited	(0.3	)	13.45
Balance on March 31, 2020	6.2		14.73

In the first quarter of 2020, we granted ~~3.6 million~~ restricted stock units ~~having a grant date fair value of $14.00 each. The restricted stock units~~that will vest annually over three to four years, subject to the recipient continuously providing service to us through each such date.

~~We converted $26.2 million~~

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

~~Interim update for awards issued under the 2017 Plan~~

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

~~Interim update for awards issued under the NuSil Plans~~

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

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


~~15.~~14.	Other income or expense, net

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


(in millions)	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(in millions)	2019			2018			2019			2018			2020			2019
Net foreign currency loss from financing activities	$	(8.2	)	$	(3.4	)	$	(0.1	)	$	(0.2	)	$	(1.6	)	$	(6.2	)
Income related to defined benefit plans	1.3			2.5			3.8			7.5			2.3			1.3
Other	(0.7		)	—			(0.8		)	(0.3		)	0.1			(0.2		)
Other (expense) income, net	$	(7.6	)	$	(0.9	)	$	2.9		$	7.0
Other income (expense), net													$	0.8		$	(5.1	)

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~~16.~~15.	Income taxes

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

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



(in millions)	Three months ended March 31,
(in millions)	2020			2019
Income tax expense	$	(17.7	)	$	(10.1	)
Income before income taxes	64.7			3.9

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

The relationship between pretax income or loss and income tax expense or benefit is greatly affected by the impact of losses for which we cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions. Our effective tax rate decreased from the prior period as a result of higher operating income as well as lower charges related to valuation allowances.


~~17.~~16.	Financial instruments and fair value measurements

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

Assets and liabilities for which fair value is only disclosed

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

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The following table presents the gross amounts, which exclude unamortized deferred financing costs, and the fair values of debt instruments:


(in millions)	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Gross amount		Fair value		Gross amount		Fair value		Gross amount		Fair value		Gross amount		Fair value
Receivables facility	$	—	$	—	$	104.0	$	104.0	$	—	$	—	$	55.5	$	55.5
Senior secured credit facilities:
Euro term loans	417.6		423.1		1,078.0		1,063.2		383.3		354.8		391.8		397.4
U.S. dollar term loans	742.7		749.6		1,838.9		1,786.0		675.5		578.8		677.2		685.2
4.75% secured notes	545.3		584.9		572.5		581.2		550.4		528.9		561.2		599.7
6% secured notes	1,500.0		1,610.0		1,500.0		1,467.8		1,500.0		1,567.9		1,500.0		1,603.2
9% unsecured notes	2,000.0		2,250.4		2,000.0		1,998.5		2,000.0		2,119.7		2,000.0		2,241.7
Finance lease liabilities									71.9		71.9		59.2		59.2
Other	67.3		67.3		69.5		69.5		0.1		0.1		4.5		4.5
Total	$	5,272.9	$	5,685.3	$	7,162.9	$	7,070.2	$	5,181.2	$	5,222.1	$	5,249.4	$	5,646.4

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


~~18.~~	~~Leases~~

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

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

~~The following tables present information about lease expense:~~

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

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



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

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

(in millions) September 30, 2019
Operating leases Finance leases
Three months ending December 31, 2019
$ 10.3
$ 2.4
Year ending December 31,

2020 35.2
7.6
2021 30.2
6.6
2022 23.7
5.9
2023 20.2
5.4
Thereafter 32.8
92.7
Total undiscounted lease payments 152.4
120.6
Difference between undiscounted and discounted lease payments (26.0 ) (60.9 )
Lease liabilities $ 126.4
$ 59.7

~~The following table presents future minimum payments under operating leases:~~

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

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~~The following tables present supplemental disclosures of cash flow information:~~

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


~~19.~~	~~Related party disclosures~~

~~New Mountain Capital~~

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

~~Goldman Sachs~~

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

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

~~PSP Investments~~

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

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Item 2.	Management’s ~~Discussion~~discussion and ~~Analysis~~analysis of ~~Financial Condition~~financial condition and ~~Results~~results of ~~Operations~~operations

In addition to historical financial information, this discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our results may differ materially from those contained in or implied by any forward-looking statements. You should carefully read “Cautionary factors regarding forward-looking statements” for additional information. Also, please refer to the “Factors and current trends affecting our business and results of operations” for discussion concerning the ongoing coronavirus outbreak known as COVID-19.

Basis of presentation

Pursuant to SEC ~~regulations~~rules for reports covering interim ~~reports,~~periods, we have prepared this discussion and analysis ~~discloses~~to enable you to assess material changes in our financial condition and results of operations since December 31, ~~2018,~~2019, the ~~end~~date of ~~the most recent annual period covered by~~ our ~~Registration Statement.~~Annual Report. Therefore, we encourage you to read this discussion and analysis ~~should be read~~ in conjunction with ~~“Summary~~—Summary Historical and Other Financial Data,” “Risk Factors,” Selected Condensed Historical Financial Data” and our audited consolidated financial statements and notes thereto, each included in the ~~Registration Statement, and our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1~~ — ~~“Financial Statements.”~~Annual Report.

Overview

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

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of products and services and allows us to create customized and integrated solutions for our customers.

In the ~~third~~first quarter of ~~2019,~~2020, we recorded net sales of ~~$1,503.8~~$1,519.0 million, net income of ~~$22.1~~$47.0 million and Adjusted EBITDA of ~~$250.8~~$262.8 million. We also generated net sales growth of ~~0.6%~~2.6% and organic net sales growth of 4.1% compared to the same period in ~~2018. Please see~~2019. See “Reconciliations of non-GAAP ~~financial measures.”~~measures” for ~~the definition~~a reconciliation of net income to Adjusted EBITDA and “Results of operations” for a reconciliation of ~~this measure from~~ net ~~loss.~~sales growth to organic net sales growth.

Factors and current trends affecting our business and results of operations

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

~~We completed an initial public offering~~Our results are being impacted by the ongoing global coronavirus outbreak

InThe COVID-19 pandemic has adversely affected global economies, financial markets and the ~~second~~overall environment in which we do business as further described in Part II, Item 1A, “Risk Factors.” The outbreak had a mixed impact on first quarter ~~of 2019, we completed~~results in our ~~IPO, resulting in net proceeds of $4,235.6 million after deducting underwriting discounts, commissions and other offering costs of $132.1 million.~~

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~~The IPO resulted~~three regions as described further in the ~~satisfaction~~“Results of a performance condition for certain of our share-based compensation awards. This caused the immediate recognition of $26.9 million of share-based compensation expense during the second quarter of 2019.

~~We simplified our capital structure and reduced our balance sheet leverage~~

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

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

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

Key indicators of performance and financial condition

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

The key indicators that we monitor are as follows:

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

~~Adjusted EBITDA~~Organic net sales growth, which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth eliminates from our reported net sales the impacts of earnings from any acquired or disposed businesses and changes in foreign currency exchange rates. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across our segments and the periods presented. This measurement is used by our management for the same reason. Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of operations.”

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Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP measures discussed in the section entitled “Results of Operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain ~~infrequently occurring items.~~other adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that ~~this measurement is~~these measurements are useful to investors as a way to analyze the underlying trends in our core business consistently across the periods presented. This measurement is used by our management for the same reason. A reconciliation of net income or loss, the most

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

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

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

Results of ~~Operations~~operations

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

~~Net sales~~

~~Three months ended~~Executive summary

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



(dollars in millions)	Three months ended March 31,						Change
(dollars in millions)	2020			2019			Change
Net sales	$	1,519.0		$	1,480.1		$	38.9
Gross margin	33.0		%	32.1		%	90 bps
Operating income	$	158.4		$	137.6		$	20.8
Net income (loss)	47.0			(6.2		)	53.2
Adjusted EBITDA	262.8			248.0			14.8
Adjusted EBITDA margin	17.3		%	16.8		%	50 bps

Net sales increased $9.6 million (0.6%), which included a $26.0 million (1.8%) unfavorable foreign currency impact. Excluding the foreign currency impact, net sales increased $35.6 million (2.4%) reflecting both volume growth, gross margin improvement and ~~improved pricing, offset by the non-recurrence of a discrete growth factor~~lower interest expense each contributed to strong performance in the ~~Americas in 2018, which adversely impacted global growth in~~first quarter of 2020 compared to 2019, reflecting the ~~quarter by approximately 200 basis points.~~continued execution of our business model.

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~~In Americas, net~~Net sales



(in millions)	Three months ended March 31,				Reconciliation of net sales growth to organic net sales growth
	Three months ended March 31,				Net sales growth			Foreign currency impact			Organic net sales growth
	2020		2019		Net sales growth			Foreign currency impact			Organic net sales growth
Americas	$	899.1	$	857.3	$	41.8		$	(4.5	)	$	46.3
Europe	544.0		542.1		1.9			(15.8		)	17.7
AMEA	75.9		80.7		(4.8		)	(0.7		)	(4.1		)
Total	$	1,519.0	$	1,480.1	$	38.9		$	(21.0	)	$	59.9

Net sales increased ~~$5.3~~$38.9 million ~~(0.6%)~~or 2.6%, ~~reflecting price increases that were partially offset by lower volume and a $1.2~~which included $21.0 million ~~(0.1%)~~or 1.5% of unfavorable foreign currency impact. We estimate that the non-recurrence of the discrete growth factor in the education & government business described below reduced growth in the Americas by approximately 300 basis points. Additional information by end market is as follows:

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

~~We experienced mid single-digit contraction in healthcare due to a challenging comparison to the prior year which included low double-digit~~Organic net sales growth ~~that did not repeat in 2019. This~~ was ~~partially offset by growth in chemicals~~$59.9 million or 4.1% and ~~equipment & instrumentation.~~

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

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

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

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

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

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

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

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

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

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

~~Nine months ended~~

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

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

In Americas, net sales increased ~~$98.0~~$41.8 million ~~(3.8%)~~or 4.9%, ~~reflecting organic growth~~which included $4.5 million or 0.5% of ~~$105.2 million (4.1%) due to price increases and volume growth, which was partially offset by a $7.2 million (0.3%)~~ unfavorable foreign currency impact. ~~Additional information by end market is as follows:~~

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

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

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

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~~Advanced technologies & applied materials~~ was ~~down low single-digits~~$46.3 million or 5.4% and was driven by ~~high single-digit decreases from food~~similar amounts of volume and ~~beverage, agriculture and chemical customers, reflecting market softness in the industrial sector. This was partially offset by high single-digit growth in our aerospace & defense platforms.~~

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

Biopharma — Sales grew in the high-single digits. Production and research and development accounts experienced double digit growth driven by sales of chemicals and personal protective equipment, partially offset by a decline in equipment & instrumentation due to impacts from COVID-19.

Healthcare — Sales were flat year over year. We experienced ~~low double-digit~~strong growth in ~~biopharma~~medical/clinical laboratories that was offset by our proprietary silicones business, which performed according to expectations but had a challenging comparison due to ~~broad-based~~robust growth ~~across strategic customer accounts, new customer wins~~in the prior year.

Education and ~~strong growth from specialty procurement.~~

government — We experienced low single-digit ~~growth in healthcare~~contraction due to ~~sales of proprietary materials, which was~~university lab and school shut-downs related to COVID-19, partially offset by ~~declines in sales of equipment & instrumentation products.~~

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

Advanced technologies & applied materials ~~experienced mid single-digit growth due to~~ — Sales grew mid-single digits driven by strength in microelectronics and aerospace and defense platforms, coupled with modest growth in ~~chemicals~~food and ~~consumables, which was partially offset by softness in equipment & instrumentation. Growth was driven by new business wins~~beverage and ~~strong sales of proprietary advanced technology products.~~petroleum industries.

In ~~AMEA,~~Europe, net sales increased ~~$25.4~~$1.9 million ~~(11.1%) due to growth in biopharma and advanced technologies & applied materials, our two largest end markets, offset by a $3.9~~or 0.3%, which included $15.8 million ~~(1.7%)~~or 3.0% of unfavorable foreign currency impact. ~~Excluding the foreign currency impact,~~Organic net sales ~~grew $29.3~~growth was $17.7 million ~~(12.8%)~~or 3.3%, due to volume ~~growth.~~growth and favorable pricing in nearly equal parts. Additional information by end market is as follows:

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

~~Advanced technologies & applied materials~~ experienced high single-digit growth driven by sales of personal protective equipment and chemicals from new account wins. That growth ~~in third-party materials & consumables sales.~~was partially

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offset by lower sales of equipment & instrumentation as customers delayed discretionary capital spending following the COVID-19 outbreak.

Healthcare — We experienced high single-digit growth due to strong sales of personal protective equipment following the COVID-19 outbreak.

Education & government — Sales declined in the mid single-digits from closures of various academic institutions as a result of the COVID-19 outbreak. This was partially offset by growth in sales of personal protective equipment to government entities.

Advanced technologies & applied materials — We experienced low single-digit contraction as general market conditions and equipment & instrumentation sales slowed following the COVID-19 outbreak.

In AMEA, net sales decreased $4.8 million or 5.9% due to lower sales of laboratory supplies and diagnostic products in India due to COVID-19 related shutdowns and logistics challenges. Additional information by end market is as follows:

Biopharma — Despite strong demand in biopharma production, we experienced high single digit contraction driven by logistics constraints in India relating to COVID-19.

Advanced technologies & applied materials — We experienced low single-digit growth driven by semiconductor growth, partially offset by lower production chemicals and equipment & instrumentation sales.

Gross margin

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

~~Three months ended~~

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

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

~~Nine months ended~~



	Three months ended March 31,				Change
	2020		2019		Change
Gross margin	33.0	%	32.1	%	90 bps

The increase in gross margin ~~was primarily driven by 60~~included 20 basis points from more favorable prices relative to cost inflation and 70 basis points of ~~pricing improvements that were in excess of product cost inflation. We also experienced a 30 basis point~~ favorable ~~impact due to the absence of higher 2018 product costs from the step-up of VWR inventory in purchase accounting. These factors were partially offset by 60 basis points of unfavorable~~ product mix, reflecting ~~greater~~ sales of our ~~specialty procurement products~~higher margin personal protective equipment and ~~the lower levels of healthcare product sales previously discussed.~~proprietary materials products.

The global restructuring program initiated following the VWR acquisition contributed a total of ~~$69.8~~$25.9 million to ~~the~~2020 gross ~~margin increases noted above~~profit and included ~~improvements in improved pricing,~~more favorable prices relative to cost inflation, product cost ~~footprint~~reductions and ~~lean~~productivity improvements from leaner footprints and operating practices.

~~Operating income~~

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

~~Three months ended~~

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

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

~~Nine months ended~~



(in millions)	Three months ended March 31,				Change
(in millions)	2020		2019		Change
Gross profit	$	501.9	$	475.2	$	26.7
Operating expenses	343.5		337.6		5.9
Operating income	$	158.4	$	137.6	$	20.8

Operating income increased primarily from higher gross profit, as previously discussed, as well as a reduction of SG&A expenses. SG&A expenses decreased $32.4 million, the result of lower restructuring charges, realized cost synergies from the global restructuring program, favorable foreign currency translation and lower incentive compensation expense accruals. These decreases werediscussed. This was partially offset by an increase in operating expenses primarily from $3.6 million of additional ~~share-based~~stock-based compensation expense ~~triggered by the completion of~~from new awards issued after our IPO. Additionally, we made targeted investments in customer facing sales and marketing functions to support growth in AMEA, new supply chain facilities to better serve our markets in AMEA, research and development,May 2019 initial public offering, other incremental public company expenses and ~~inflationary impacts.~~cost inflation.

Net income or loss

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

~~Three months ended~~



(in millions)	Three months ended March 31,						Change
(in millions)	2020			2019			Change
Operating income	$	158.4		$	137.6		$	20.8
Interest expense	(94.5		)	(128.6		)	34.1
Other income (expense), net	0.8			(5.1		)	5.9
Income tax expense	(17.7		)	(10.1		)	(7.6		)
Net income (loss)	$	47.0		$	(6.2	)	$	53.2

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

~~Nine months ended~~

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

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

Adjusted EBITDA and ~~Management~~Adjusted EBITDA margin

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

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

~~Three months ended~~

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

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

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

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

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

~~Nine months ended~~



(in millions)	Three months ended March 31,						Change
(in millions)	2020			2019			Change
Adjusted EBITDA:
Americas	$	190.0		$	166.3		$	23.7
Europe	91.7			89.7			2.0
AMEA	13.4			18.5			(5.1		)
Corporate	(32.3		)	(26.5		)	(5.8		)
Total	$	262.8		$	248.0		$	14.8

Adjusted EBITDA margin	17.3		%	16.8		%	50 bps

Adjusted EBITDA increased ~~$58.0~~$14.8 million ~~(8.2%)~~or 5.9%, ~~including~~which included an unfavorable foreign currency translation impact of ~~$15.7~~$2.4 million ~~(2.2%)~~or 1.1%. ~~Excluding~~The reasons for the ~~foreign currency impact, Adjusted EBITDA grew $73.7~~remaining growth of $17.2 million, (10.4%) due to pricing improvements that were in excess of product cost inflation and realized productivity and VWR integration synergies. These benefits were partially offset by an adverse sales mix, additional growth investments, unfavorable manufacturing variances and additional stock-based compensation expense resulting from our IPO.or 7.0%, are discussed below.

In the Americas, Adjusted EBITDA grew $23.7 million or 14.2% from the ~~strong growth in Management EBITDA was driven by our mid single-digit~~improvements to net sales ~~growth and~~previously discussed, coupled with gross margin expansion ~~which was partially offset by unfavorable mix~~ driven by ~~lower sales of our proprietary healthcare materials. SG&A savings of $11.0 million were driven by synergies generated from our global restructuring program.~~favorable product mix and productivity improvements.

In Europe, ~~the~~Adjusted EBITDA increased $2.0 million or 2.2% from volume growth, more favorable prices relative to cost inflation and a favorable mix of customers and products. The growth in ~~Management EBITDA was driven by gross margin expansion, which was offset by unfavorable product mix driven by growth in specialty procurement sales. Management~~Adjusted EBITDA also reflected ~~SG&A~~operating expense savings primarily related to headcount reduction ~~workforce~~ and facility footprint ~~optimization and general cost controls.~~optimization. These factors were ~~substantially~~partially offset by both unfavorable foreign currency ~~transaction~~translation and ~~translation impacts.~~transactional impact.

In AMEA, ~~management~~Adjusted EBITDA ~~was favorably impacted by an increase in gross profit driven by sales growth, however, this was more than offset by an increase to SG&A expenses due to targeted investments in customer facing~~decreased $5.1 million or 27.5% reflecting lower sales and ~~marketing functions to support the growth in this strategic region and new supply chain facilities to better serve our markets.~~unfavorable working capital adjustments.

In Corporate, ~~the decrease to management~~Adjusted EBITDA was reduced primarily related to increases in ~~branding~~stock-based compensation and increased compliance costs asrelated to becoming a ~~result of our IPO and investments into our global business center as we continue to grow our offshore capabilities.~~public company.

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Reconciliations of ~~Non-GAAP~~non-GAAP financial measures

The following table presents the reconciliation of net income or loss to ~~non-GAAP measures:~~Adjusted EBITDA:

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



(in millions)	Three months ended March 31,
(in millions)	2020		2019
Net income (loss)	$	47.0	$	(6.2	)
Interest expense	94.5		128.6
Income tax expense	17.7		10.1
Depreciation and amortization	96.5		98.3
Net foreign currency loss from financing activities	1.6		6.2
Restructuring and severance charges	1.2		5.5
VWR transaction, integration and planning expenses	3.6		6.3
Other	0.7		(0.8		)
Adjusted EBITDA	$	262.8	$	248.0

Liquidity and ~~Capital Resources~~capital resources

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

The ongoing COVID-19 outbreak has dramatically reduced global economic activity and negatively impacted the financial markets. Despite this, in the first quarter of 2020 our results remained strong. We ~~believe that~~reported $253.1 million of cash ~~generated from operations, together~~provided by operating activities, we ended the quarter with ~~available liquidity~~$346.3 million of cash and cash equivalents and our availability under credit facilities was $535.5 million, which included a $50.0 million increase of availability under our ~~credit facilities, will be adequate to meet our current and expected needs for cash prior to~~receivables facility in the ~~maturity~~first quarter of ~~our~~2020. We also have no debt ~~although no assurances can be given~~repayments due in ~~this regard.~~the next twelve months other than required term loan repayments of $14.3 million.

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Liquidity

The following table presents our primary sources of liquidity:


(in millions)	September 30, 2019									March 31, 2020
(in millions)	Receivables facility			Revolving credit facility			Total			Receivables facility			Revolving credit facility			Total
Unused availability under credit facilities:
Current availability	$	250.0		$	250.0		$	500.0		$	300.0		$	250.0		$	550.0
Undrawn letters of credit outstanding	(12.5		)	(15.3		)	(27.8		)	(12.9		)	(1.6		)	(14.5		)
Outstanding borrowings	—			—			—			—			—			—
Unused availability	$	237.5		$	234.7		$	472.2		$	287.1		$	248.4		$	535.5
Cash and cash equivalents	Cash and cash equivalents						173.9			Cash and cash equivalents						346.3
Total liquidity	Total liquidity						$	646.1		Total liquidity						$	881.8

~~Our liquidity needs change daily.~~

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We ~~manage liquidity needs by utilizing~~fund short-term cash requirements primarily from operating cash flows and cash availability under our ~~credit line availability and also by monitoring working capital levels.~~receivables facility. Some of our credit line availability ~~also~~ depends upon maintaining a sufficient borrowing base of eligible accounts receivable. We believe that we have sufficient capital resources to meet our ~~daily~~ liquidity needs. As of ~~September 30, 2019,~~March 31, 2020, we were in compliance with ~~all~~our debt covenants.

At March 31, 2020, $160.4 million or 46.3% of our ~~debt covenants, and no event of default had occurred or was ongoing.~~

~~At September 30, 2019, $130.1 million of our $173.9~~$346.3 million in cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply.

Historical cash flows

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


(in millions)	Nine months ended September 30,						Change			Three months ended March 31,						Change
	2019			2018						2020			2019
Operating activities:
Working capital changes	$	(120.9	)	$	(86.2	)	$	(34.7	)
Working capital changes*										$	(7.8	)	$	(90.0	)	$	82.2
Non-cash items										127.9			106.9			21.0
All other	387.9			216.8			171.1			133.0			58.1			74.9
Total	267.0			130.6			136.4			253.1			75.0			178.1
Investing activities:
Investing activities										(11.9		)	(7.9		)	(4.0		)
Financing activities										(73.1		)	(106.1		)	33.0
Capital expenditures	(39.5		)	(32.3		)	(7.2		)	(12.6		)	(12.4		)	(0.2		)
All other	8.8			9.1			(0.3		)
Total	(30.7		)	(23.2		)	(7.5		)
Financing activities	(240.4		)	(115.9		)	(124.5		)


*	Includes changes to our accounts receivable, inventory and accounts payable balances.

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Cash flows from operating activities increased ~~$136.4~~$178.1 million in ~~2019~~2020 primarily due to an increase of operating income and ~~a reduction in cash for paid interest. This was partially offset by growth in working capital and an increase~~reductions in cash paid for ~~taxes.~~interest, income taxes and working capital.

Investing activities ~~used $7.5~~increased $4.0 million ~~of additional cash~~ in ~~2019,~~2020, reflecting a fairly consistent capital spending ~~trend.~~trend but fewer proceeds from the sale of capital assets.

Financing activities used ~~$124.5~~$33.0 million ~~of additional~~less cash in ~~2019~~2020 primarily due to lower required debt payments following the significant ~~offsetting factors. The $2,630.9 million redemption~~2019 repayments of our ~~series A preferred stock and $1,825.4 million repayment of debt was substantially funded by $4,235.6 million of IPO proceeds.~~term loan facilities in connection with our initial public offering.

Indebtedness

~~In June 2019, we amended our senior secured~~The following interim update is provided to the disclosures given in the Annual Report.

Our credit facilities provide us access to ~~reduce~~up to $550 million of additional cash

We have entered into a receivables facility and a revolving credit facility that provide us access to cash to fund short-term business needs. For additional information, see the ~~annual interest rate margins on~~section entitled “Liquidity” and note 11 to our ~~euro term loans by 0.50% and our U.S. dollar term loans by 0.75%. The cost to complete the amendment was not material.~~unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial statements.”

New accounting standards

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


Item 3.	Quantitative and ~~Qualitative Disclosures~~qualitative disclosures about ~~Market Risk~~market risk

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

~~Interest rate risk~~

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

~~Remeasurement of foreign currency transactions~~

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

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Item 4.	Controls and ~~Procedures~~procedures

Management’s evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2019.~~March 31, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2019,~~March 31, 2020, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, reported, accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the fiscal quarter ended ~~September 30, 2019~~March 31, 2020 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~~proceedings

In April 2018 the EPA notified us of potential liabilities under the Toxic Substances Control Act and the Emergency Planning and Community Right to Know Act that were identified in March 2017 and June 2017 inspections of our Phillipsburg, New Jersey facility. The alleged violations relate to our failure to timely file reports regarding the Phillipsburg facility. We have also become aware of additional potential liabilities under the Toxic Substances Control Act relating to failure to timely file reports regarding the Paris, Kentucky facility, and relating to export shipments of elemental mercury, which we have voluntarily disclosed to the EPA. We have taken steps to correct these errors and have filed amended reports. ~~The EPA has proposed total civil penalties of $1.5 million relating to these issues. While we are cooperating~~Through our cooperation with the EPA, ~~and pursuing a negotiated resolution,~~ we ~~cannot predict with certainty~~believe that we will settle the ~~amount of penalties that may ultimately be imposed.~~matter for less than $1 million.

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


Item 1A.	Risk ~~Factors~~factors

For ~~a discussion~~information regarding factors that could affect the Company's results of ~~potential risks or uncertainties, please~~operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A. “Risk Factors” in our ~~Registration Statement. There have been no material changes~~Annual Report on Form 10-K for the year ended December 31, 2019.

In light of developments relating to the coronavirus (COVID-19) pandemic occurring subsequent to the filing of our Annual Report, the Company is supplementing the risk factors ~~disclosed~~discussed in our ~~Registration Statement.~~Annual Report with the following risk factor, which should be read in conjunction with the risk factors contained in our Annual Report.

The scale and scope of the recent coronavirus (COVID-19) outbreak and resulting pandemic is unknown and is expected to adversely impact our business at least for the near term. The overall impact on our business, operating results, cash flows and/or financial condition could be material.

In December 2019, a novel coronavirus disease was reported and in January 2020, the World Health Organization (“WHO”) declared COVID-19 a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. The COVID-19 pandemic has adversely affected global economies, financial markets and the

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overall environment in which we do business, and the extent to which it may impact our future results of operations and overall financial performance remains uncertain.

The scale and scope of the COVID-19 pandemic may heighten the potential adverse effects on our business, operating results, cash flows and/or financial condition described in the risk factors contained in our Annual Report on Form 10-K, including the impact of:

Significant interruptions in the operations of our manufacturing or distribution centers and logistics providers for the reasons described below;

Global and regional economic and political conditions on our production, supply chain, the overall demand for our products and the ability of our customers to purchase and/or pay for our products as a result of the pandemic’s impact on them; Our ability to develop and produce new products and services in an effort to address medical and other requirements as a result of the pandemic;

Changes in foreign laws, regulations and regulatory requirements;

Limitations on our ability to enforce legal rights and remedies with third parties or partners outside the United States;

The risk of regulatory enforcement actions, product defects or claims thereof;

Our strategy to pursue strategic acquisitions;

Changes within the industries that we serve;

Our ability to access raw materials for use in the products we manufacture; and

The potential loss of customers or a reduction in orders from a significant number of customers.

In addition, COVID-19 is adversely affecting, and is expected to continue to adversely affect, certain elements of our business (including certain elements of our operations, supply chains and distribution systems) as a result of impacts associated with preventive and precautionary measures that we, other businesses, our communities and governments are taking. In an effort to halt the outbreak of COVID-19, countries throughout the world, including the United States, most European Union member states, India and China, have placed significant restrictions on travel and many businesses have announced extended closures. These restrictions extend to a number of locations where we have significant operations and include shelter in place or stay-at-home orders that require our employees in that area to work from home and avoid unnecessary travel. In addition to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel and business activity, which could significantly impact our ability to support our operations and customers, the ability of our employees to get to their workplaces to produce products and provide services and the availability of raw materials for production of our products, as well as significantly hamper our products from moving through the supply chain.

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Further, in connection with the global outbreak and spread of COVID-19 and in an effort to increase the wider availability of needed medical and other supplies and products, we may elect to, or governments may require us to, allocate our products (for example pursuant to the U.S. Defense Production Act) in a way that adversely affects our regular operations and financial results, results in differential treatment of customers and/or adversely affects our reputation and customer relationships. In addition, unpredictable increases in demand for certain of our products could exceed our capacity to meet such demand, which could adversely affect our financial results and customer relationships and result in negative publicity.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, suppliers and partners. Such impact on our business, operating results, cash flows and/or financial condition could be material.


Item 2.	Unregistered ~~Sales~~sales of ~~Equity Securities~~equity securities and ~~Use~~use of ~~Proceeds~~proceeds

~~Unregistered sales of equity securities~~

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

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

The securities were issued in reliance upon the exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions not involving a public offering due to lack of general solicitation or advertising, the status and knowledge of the warrant holders and publicly available information about us and our operations.None.


Item 3.	Defaults ~~Upon Senior Securities~~upon senior securities

None.


Item 4.	Mine ~~Safety Disclosures~~safety disclosures

Not applicable.


Item 5.	Other ~~Information~~information

None.

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Item 6.	Exhibits



Exhibit ~~No.~~no.	Exhibit ~~Description~~description	Method of ~~Filing~~filing
10.1	Amendment No. 3 to the Credit Agreement, dated as of November 21, 2017, among Vail Holdco Sub LLC, Avantor Funding, Inc., each of the Guarantors, each of the lenders from time to time party thereto and Goldman Sachs Bank USA, as administrative agent and collateral agent, Swing Line Lender and an L/C Issuer, the lenders party thereto and Goldman Sachs Lending Partners LLC, as the Additional Initial B-3 Euro Term Lender and the Additional Initial B-3 Dollar Term Lender	Previously filed as Exhibit 10.1 to the Current Report on Form 8-K on January 27, 2020
10.2	Receivables Purchase Agreement, dated March 27, 2020, among Avantor Receivables Funding, LLC, VWR International, LLC, the various conduit purchasers from time to time party thereto, the various related committed purchasers from time to time party thereto, the various purchaser agents from time to time party thereto, the various LC participants from time to time party thereto and PNC Bank, National Association, as Administrator and LC Bank	Previously filed as Exhibit 10.1 to the Current Report on Form 8-K on March 30, 2020
10.3	Purchase and Sale Agreement, dated March 27, 2020, between the various entities listed on Schedule I thereto as Originators and Avantor Receivables Funding, LLC	Previously filed as Exhibit 10.2 to the Current Report on Form 8-K on March 30, 2020
10.4	Amended and Restated Employment Letter Agreement, dated April 2, 2019, between Ashish Kulkarni and VWR International, LLC	Filed herewith
10.5	Employment Letter Agreement, dated November 10, 2017, between Devashish Ohri and Avantor Performance Materials India Limited	Filed herewith
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
101	XBRL exhibits	Filed herewith

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SIGNATURE

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



	Avantor, Inc.

Date: ~~November 5, 2019~~April 29, 2020	By:	/s/ Steven Eck
		Name:	Steven Eck
		Title:	Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

4534



(in millions)	Redeemable equity						Stockholders’ equity (deficit)
(in millions)	Series A preferred stock		Junior convertible preferred stock		Total		MCPS including paid-in capital		Common stock including paid-in capital			Accum-ulated deficit			AOCI			Total
Balance at June 30, 2019	$	—	$	—	$	—	$	1,003.7	$	1,768.3		$	(296.4	)	$	(64.7	)	$	2,410.9
Comprehensive income (loss)	—		—		—		—		—			22.1			(62.8		)	(40.7		)
Share-based compensation expense	—		—		—		—		1.9			—			—			1.9
Accumulation of yield	—		—		—		—		(16.4		)	—			—			(16.4		)
Issuances, net of issuance costs	—		—		—		—		(0.1		)							(0.1		)
Balance at September 30, 2019	$	—	$	—	$	—	$	1,003.7	$	1,753.7		$	(274.3	)	$	(127.5	)	$	2,355.6

Balance at June 30, 2018	$	2,157.3	$	1,562.0	$	3,719.3	$	—	$	(2,613.6	)	$	(219.6	)	$	(31.5	)	$	(2,864.7	)
Comprehensive income (loss)	—		—		—		—		—			34.5			(1.6		)	32.9
Share-based compensation expense	—		—		—		—		4.1			—			—			4.1
Accumulation of yield	68.9		—		68.9		—		(68.9		)	—			—			(68.9		)
Balance at September 30, 2018	$	2,226.2	$	1,562.0	$	3,788.2	$	—	$	(2,678.4	)	$	(185.1	)	$	(33.1	)	$	(2,896.6	)



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



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



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



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



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