Nexeo cuts leverage to 4.3x; free cash flow used to reduce leverage

By Devika Patel

Knoxville, Tenn., Dec. 7 – Nexeo Solutions, Inc. plans to continue using its free cash flow to reduce leverage after already reducing its net leverage to 4.3x from 4.9x in the third quarter.

“We have not changed our position of using free cash flow to reduce leverage,” executive vice president and chief financial officer Ross J. Crane said on the company’s fourth quarter and full year ended Sept. 30 earnings conference call on Thursday.

At the end of the fourth quarter, the company had total debt outstanding of about $845 million and net debt of approximately $791 million.

Net leverage was slightly below last year’s 4.4x.

“The total debt increase year over year was driven in part by the Ultra Chem acquisition which was funded out of our ABL,” Crane said.

“Since that transaction in April, we’ve been able to reduce our net leverage from 4.9x in the third quarter to 4.3x at the end of the fourth quarter,” he said.

On April 3, Nexeo completed an acquisition of Ultra Chem, S de RL de CV, a specialty chemicals distribution business based in Mexico City.

At the end of the fourth quarter, total liquidity was about $332 million, consisting of $54 million of cash on hand and $278 million of borrowing capacity under the ABL facility.

Nexeo is a The Woodlands, Texas-based distributor of chemicals, plastics and composites.

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