Segment Highlights
Chemicals - Sales and operating revenues for the Chemicals line of business for the three months ended June 30, 2017 were $443.9 million, including $17.1 million in revenues from Ultra Chem, and $94.2 million for the three months ended June 30, 2016, for the Successor, and were $298.7 million for the Predecessor period from April 1, 2016 through June 8, 2016. Revenues were driven by an 8.8% increase in the average selling price primarily due to inflation, with flat volume in the current period. This increase was partially offset by a decline of $1.1 million as a result of the weakening of the exchange rates of various currencies versus the USD as compared to the same period in the prior fiscal year.Gross profit for the Successor was $54.3 million, or 12.2%, and $9.6 million, or 10.2%, for the three months ended June 30, 2017 and June 30, 2016, respectively, and was $38.8 million, or 13.0%, for the Predecessor period from April 1, 2016 through June 8, 2016. The increase in gross profit was primarily due to the increase in average selling price as discussed. As compared to the same period in the prior fiscal year, gross profit was negatively affected by the impact of the weakening of the exchange rates of various currencies versus the USD of approximately $0.2 million and additional depreciation expense of approximately $1.0 million due to the step up in fair value of property, plant and equipment as a result of the Business Combination. Gross profit in the current period includes $1.2 million related to the inventory step up as a result of the Ultra Chem acquisition, whereas, the same period in the prior year includes $3.0 million related to half of the inventory step up associated with the Business Combination. Additionally, gross profit was negatively affected by an increase in common carrier transportation costs.
Plastics - Sales and operating revenues for the Plastics line of business for the Successor were $466.2 million and $109.9 million for the three months ended June 30, 2017 and June 30, 2016, respectively, and were $329.8 million for the Predecessor period from April 1, 2016 through June 8, 2016. The increase in revenue was driven by a 3.5% increase in average selling price during the current period throughout the regions, as well as a 2.4% increase in volume driven primarily by regional strength in EMEA and Asia. These increases were partially offset by a decline of approximately $5.8 million as a result of the weakening of the exchange rates of various currencies versus the USD as compared to the same period in the prior fiscal year. North America revenues continued to be negatively impacted due to a supplier disruption which has limited the availability to us of certain products we distribute on a regular basis.
Gross profit for the Successor was $43.1 million, or 9.2%, and $6.7 million, or 6.1%, for the three months ended June 30, 2017 and June 30, 2016, respectively, and was $32.2 million, or 9.8%, for the Predecessor period from April 1, 2016 through June 8, 2016. The increase in gross profit was primarily due to the increase in average selling price as discussed and market expansion in EMEA. As compared to the same period in the prior fiscal year the impact of the weakening of the exchange rates of various currencies versus the USD of approximately $0.5 million and by additional depreciation expense of approximately $0.4 million affecting gross profit due to the step up in fair value of the property, plant and equipment as a result of the Business Combination as compared to the same quarter in the prior fiscal year. Gross profit in the same period in the prior year includes $3.9 million related to half of the inventory step up associated with the Business Combination. Additionally, gross profit was negatively affected by an increase in common carrier transportation costs and North America continued to be impacted from a supplier disruption which has limited the availability to us of certain products we distribute on a regular basis.
Other - Sales and operating revenues for the Other segment for the Successor were $32.6 million and $10.2 million for the three months ended June 30, 2017 and June 30, 2016, respectively, and were $21.7 million for the Predecessor period from April 1, 2016 through June 8, 2016. The increase in revenues was primarily driven by price increases during the current period.
Gross profit for the Successor was $5.3 million, or 16.3%, and $2.5 million, or 24.5%, for the three months ended June 30, 2017 and June 30, 2016, respectively, and was $4.4 million, or 20.3%, for the Predecessor period from April 1, 2016 through June 8, 2016. As compared to the same period in the prior fiscal year, gross profit was negatively affected by an increase in common carrier transportation costs and a shift in service mix toward on-site services.
Source: Nexeo Solutions, Inc.
