Second Quarter 2024 and Other
Highlights
- Net loss of $68 million and EPS of negative $1.92
- Adjusted EBITDA* of $67 million, including a $10 million
unfavorable impact from net timing; Adjusted Net Loss* of $52
million, reflecting year-over-year and sequential profitability
improvement
- Cash used in operations of $42 million and capital expenditures
of $14 million resulted in Free Cash Flow* of negative $56 million.
Second quarter Free Cash Flow* included a $12 million increase in
working capital
- Second quarter ending cash of $108 million, of which $2 million
is restricted, with approximately $244 million of additional
available liquidity under two committed financing facilities with
continued focus on cash management and liquidity
- Entered into a new Accounts Receivable Securitization Facility
that extends the maturity date to January 2028
- Announced the opening of our PMMA depolymerization plant in
Rho, Italy, a significant step forward in the Company’s commitment
to sustainability
- Trinseo and Chevron Phillips Chemical Company LP, co-owners of
AmSty, have decided to pursue a joint sale process that is expected
to begin in the third quarter and, in the ordinary course, lead to
a definitive agreement in the first half of 2025
Trinseo (NYSE: TSE):
Three Months Ended
June 30,
$millions, except per share
data
2024
2023
Net Sales
$
920
$
963
Net Loss
(68
)
(349
)
Diluted EPS ($)
(1.92
)
(9.93
)
Adjusted Net Loss*
(52
)
(68
)
Adjusted EPS ($)*
(1.46
)
(1.92
)
EBITDA*
64
(281
)
Adjusted EBITDA*
67
57
*For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted
Net Loss, all of which are non-GAAP measures, to Net Loss, as well
as a reconciliation of Free Cash Flow and Adjusted EPS, see Notes 2
and 3 to the financial statements included below.
Trinseo (NYSE: TSE), a specialty material solutions provider,
today reported its second quarter 2024 financial results. Net sales
of $920 million in the second quarter decreased 4% versus prior
year. Lower sales volumes in Polystyrene, Plastics Solutions and
Latex Binders were partially offset by higher sales volumes in
Engineered Materials, which resulted in a 6% decrease in net sales.
Higher price led to a 1% increase.
Second quarter net loss of $68 million was $281 million better
than prior year primarily due to a $349 million non-cash impairment
charge taken in the prior year partially offset by higher interest
and tax expenses in the current year. The second quarter results
included a $13.5 million non-cash after-tax charge for an increase
in valuation allowance on deferred tax assets in China. Adjusted
EBITDA of $67 million, which included an unfavorable impact of $10
million from net timing, was $10 million above prior year with
increases across all business segments except Plastics
Solutions.
Commenting on the Company’s second quarter performance, Frank
Bozich, President and Chief Executive Officer of Trinseo, said,
“The market conditions that we saw at the end of the first quarter
continued through the second quarter as expected, resulting in our
highest Adjusted EBITDA quarter since the first half of 2022
despite the headwind from unfavorable net timing. We continued to
see positive momentum in Engineered Materials as moderating input
costs, normalization of MMA market dynamics, and steady demand for
our downstream PMMA applications led the segment to record its
highest sales volumes and Adjusted EBITDA since the second quarter
of 2022. We continue to be pleased by the impact of our
restructuring initiatives and the resulting improvements we are
seeing in our financial results.”
Second Quarter Results and Commentary
by Business Segment
- Engineered Materials net sales of $230 million for the
quarter increased 12% versus prior year including a 17% impact from
higher sales volume of MMA and formulated products for automotive,
consumer electronics and lighting applications, partially offset by
an impact of 5% from lower price due to a higher percentage of MMA
sales in the current year. Adjusted EBITDA of $25 million was $13
million above prior year primarily due to higher volumes, as
mentioned above, as well as higher margin.
- Latex Binders net sales of $252 million for the quarter
decreased 1% versus prior year including a 5% impact from lower
volumes primarily in Europe paper and carpet applications,
partially offset by a 4% impact from higher price from the
pass-through of higher raw material costs. Adjusted EBITDA of $26
million was $3 million above prior year due to improved regional
and product mix and higher plant utilization in the current year.
Sales volumes sold to CASE applications accounted for a record 12%
of total segment volumes in the second quarter and increased 8%
over prior year.
- Plastics Solutions net sales of $263 million for the
quarter were 7% below prior year including a 5% decrease from lower
sales volume, from a planned polycarbonate turnaround, and a 1%
decrease from lower price. Adjusted EBITDA of $16 million was $8
million below prior year due to lower polycarbonate volumes and an
unfavorable timing variance from decreasing styrene costs during
the quarter.
- Polystyrene net sales of $175 million for the quarter
were 21% below prior year including a 28% impact from lower sales
volume. This was a result of lower styrene-related sales following
the closure of Terneuzen, the Netherlands styrene production
facility, an intentional reduction of low-margin sales to optimize
plant operations and sales mix, as well as customer destocking amid
a declining price environment. This was partially offset by an 8%
impact from higher price from the pass-through of higher styrene
costs. Adjusted EBITDA of $7 million was $5 million above prior
year due to higher margins in Europe from decreasing raw material
costs.
- Americas Styrenics Adjusted EBITDA of $16 million for
the quarter was $3 million above prior year due to higher styrene
margins in the current year.
2024 Outlook
- Third quarter 2024 net loss of $42 million to $52 million
- Third quarter 2024 Adjusted EBITDA of $65 million to $75
million
Commenting on the third quarter outlook, Bozich said, “We expect
market conditions and Adjusted EBITDA in the third quarter to be
similar to the second quarter. Normalized MMA market dynamics
continue to support healthy margins in Engineered Materials, while
seasonal improvements in building and construction and consumer
electronics applications are expected to continue through the third
quarter. We also expect free cash flow to turn positive in the
second half of the year from continuing higher profitability and
typical seasonal working capital improvements.”
Bozich continued, “We are pleased to see a sustained higher
level of profitability following the asset and cost optimization
actions that we implemented. While operating results have improved
and we have more than adequate access to liquidity, we continue to
focus on developing additional profit improvement initiatives while
prioritizing liquidity preservation.”
Conference Call and Webcast
Information
Trinseo will host a conference call to discuss its second
quarter 2024 financial results on Wednesday, August 7, 2024 at 10
a.m. Eastern Time.
Commenting on results will be Frank Bozich, President and Chief
Executive Officer, David Stasse, Executive Vice President and Chief
Financial Officer, and Andy Myers, Director of Investor
Relations.
For those interested in asking questions during the Q&A
session, please register using the following link:
- Conference Call Registration
For those interested in listening only, please register for the
webcast using the following link:
After registering for the conference call, you will receive a
confirmation email with a meeting invitation and information for
entry. Registration is open through the live call, but it is
advised that you register in advance to ensure you are connected
for the full call.
Trinseo has posted its second quarter 2024 financial results on
the Company’s Investor Relations website. The presentation slides
will also be made available in the webcast player prior to the
conference call. The Company will also furnish copies of the
financial results press release and presentation slides to
investors by means of a Form 8-K filing with the U.S. Securities
and Exchange Commission.
A replay of the conference call and transcript will be archived
on the Company’s Investor Relations website shortly following the
conference call. The replay will be available until August 7,
2025.
About Trinseo
Trinseo (NYSE: TSE), a specialty material solutions provider,
partners with companies to bring ideas to life in an imaginative,
smart and sustainably focused manner by combining its premier
expertise, forward-looking innovations and best-in-class materials
to unlock value for companies and consumers.
From design to manufacturing, Trinseo taps into decades of
experience in diverse material solutions to address customers’
unique challenges in a wide range of industries, including building
and construction, consumer goods, medical and mobility.
Trinseo’s approximately 3,100 employees bring endless creativity
to reimagining the possibilities with clients all over the world
from the company’s locations in North America, Europe and Asia
Pacific. Trinseo reported net sales of approximately $3.7 billion
in 2023. Discover more by visiting www.trinseo.com and connecting
with Trinseo on LinkedIn, Twitter, Facebook and WeChat.
Use of non-GAAP measures
In addition to using standard measures of performance and
liquidity that are recognized in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), we use additional measures of income excluding certain
GAAP items (“non-GAAP measures”), such as Adjusted Net Income,
EBITDA, Adjusted EBITDA and Adjusted EPS and measures of liquidity
excluding certain GAAP items, such as Free Cash Flow. We believe
these measures are useful for investors and management in
evaluating business trends and performance each period. These
measures are also used to manage our business and assess current
period profitability, as well as to provide an appropriate basis to
evaluate the effectiveness of our pricing strategies. Such measures
are not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance or liquidity, as
applicable. The definitions of each of these measures, further
discussion of usefulness, and reconciliations of non-GAAP measures
to GAAP measures are provided in the Notes to Condensed
Consolidated Financial Information presented herein.
Cautionary Note on Forward-Looking
Statements
This press release may contain forward-looking statements
including, without limitation, statements concerning plans,
objectives, goals, projections, forecasts, strategies, future
events or performance, and underlying assumptions and other
statements, which are not statements of historical facts or
guarantees or assurances of future performance. Forward-looking
statements may be identified by the use of words like “expect,”
“anticipate,” “believe,” “intend,” “forecast,” “outlook,” “will,”
“may,” “might,” “see,” “tend,” “assume,” “potential,” “likely,”
“target,” “plan,” “contemplate,” “seek,” “attempt,” “should,”
“could,” “would” or expressions of similar meaning. Forward-looking
statements reflect management’s evaluation of information currently
available and are based on our current expectations and assumptions
regarding our business, the economy, our current indebtedness, and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Factors
that might cause future results to differ from those expressed by
the forward-looking statements include, but are not limited to, our
ability to successfully implement proposed restructuring
initiatives, including the closure of certain plants and production
lines, and to successfully generate cost savings through
restructuring and cost reduction initiatives; our ability to
successfully execute our business and transformation strategy; the
timing of, and our ability to complete, the sale of our interest in
Americas Styrenics; increased costs or disruption in the supply of
raw materials; deterioration of our credit profile limiting our
access to commercial credit; increased energy costs; compliance
with laws and regulations impacting our business; any disruptions
in production at our chemical manufacturing facilities, including
those resulting from accidental spills or discharges; conditions in
the global economy and capital markets; our current and future
levels of indebtedness and ability to service our debt; our ability
to meet the covenants under our existing indebtedness; our ability
to generate cash flows from operations and achieve our forecasted
cash flows; and those discussed in our Annual Report on Form 10-K,
under Part I, Item 1A —"Risk Factors" and elsewhere in our other
reports, filings and furnishings made with the U.S. Securities and
Exchange Commission from time to time. As a result of these or
other factors, our actual results, performance or achievements may
differ materially from those contemplated by the forward-looking
statements. Therefore, we caution you against relying on any of
these forward-looking statements. The forward-looking statements
included in this press release are made only as of the date hereof.
We undertake no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law.
TRINSEO PLC Condensed
Consolidated Statements of Operations (In millions, except
per share data) (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net sales
$
920.0
$
962.6
$
1,824.0
$
1,958.9
Cost of sales
851.6
909.0
1,695.0
1,868.2
Gross profit
68.4
53.6
129.0
90.7
Selling, general and administrative
expenses
70.1
53.8
140.2
138.5
Equity in earnings of unconsolidated
affiliate
15.6
12.5
21.8
30.2
Impairment and other charges
—
349.1
—
349.4
Operating income (loss)
13.9
(336.8
)
10.6
(367.0
)
Interest expense, net
64.7
40.2
127.7
78.5
Other expense (income), net
(3.3
)
(2.9
)
0.5
(5.8
)
Loss before income taxes
(47.5
)
(374.1
)
(117.6
)
(439.7
)
Provision for (benefit from) income
taxes
20.3
(25.1
)
25.7
(41.8
)
Net loss
$
(67.8
)
$
(349.0
)
$
(143.3
)
$
(397.9
)
Weighted average shares- basic
35.3
35.2
35.3
35.1
Net loss per share- basic
$
(1.92
)
$
(9.93
)
$
(4.06
)
$
(11.34
)
Weighted average shares- diluted
35.3
35.2
35.3
35.1
Net loss per share- diluted
$
(1.92
)
$
(9.93
)
$
(4.06
)
$
(11.34
)
TRINSEO PLC Condensed
Consolidated Balance Sheets (In millions)
(Unaudited)
June 30,
December 31,
2024
2023
Assets
Cash and cash equivalents
$
105.6
$
259.1
Accounts receivable, net of allowance
541.9
490.8
Inventories
410.4
404.7
Other current assets
36.0
39.5
Investments in unconsolidated
affiliate
269.0
252.2
Property, plant, equipment, goodwill, and
other intangible assets, net
1,317.6
1,401.4
Right-of-use assets - operating, net
57.0
65.3
Other long-term assets
110.3
116.2
Total assets
$
2,847.8
$
3,029.2
Liabilities and shareholders’
equity
Current liabilities
662.1
672.6
Long-term debt, net of unamortized
deferred financing fees
2,275.8
2,277.6
Noncurrent lease liabilities -
operating
44.6
51.7
Other noncurrent obligations
279.1
295.3
Shareholders’ equity
(413.8
)
(268.0
)
Total liabilities and shareholders’
equity
$
2,847.8
$
3,029.2
TRINSEO PLC Condensed
Consolidated Statements of Cash Flows (In millions)
(Unaudited)
Six Months Ended
June 30,
2024
2023
Cash flows from operating
activities
Cash provided by (used in) operating
activities
$
(108.1
)
$
101.9
Cash flows from investing
activities
Capital expenditures
(29.9
)
(35.6
)
Proceeds from the sale of businesses and
other assets
8.2
22.3
Cash used in investing activities
(21.7
)
(13.3
)
Cash flows from financing
activities
Deferred financing fees
(0.3
)
(0.4
)
Short-term borrowings, net
(8.8
)
(5.9
)
Dividends paid
(0.9
)
(17.1
)
Proceeds from exercise of option
awards
—
0.1
Withholding taxes paid on restricted share
units
—
(1.8
)
Acquisition-related contingent
consideration payment
(0.7
)
(1.2
)
Repurchases and repayments of long-term
debt
(9.1
)
(5.4
)
Proceeds from Accounts Receivable
Securitization Facility
200.4
—
Repayments of Accounts Receivable
Securitization Facility
(200.4
)
—
Cash used in financing activities
(19.8
)
(31.7
)
Effect of exchange rates on cash
(3.6
)
0.9
Net change in cash, cash equivalents, and
restricted cash
(153.2
)
57.8
Cash, cash equivalents, and restricted
cash—beginning of period
261.1
211.7
Cash, cash equivalents, and restricted
cash—end of period
$
107.9
$
269.5
Less: Restricted cash
2.3
—
Cash and cash equivalents—end of
period
$
105.6
$
269.5
TRINSEO PLC Notes to
Condensed Consolidated Financial Information
(Unaudited)
Note 1: Net Sales
by Segment
Three Months Ended
Six Months Ended
June 30,
June 30,
(In millions)
2024
2023
2024
2023
Engineered Materials
$
230.1
$
206.2
$
419.3
$
412.4
Latex Binders
252.4
254.8
493.9
503.8
Plastics Solutions
262.7
281.6
528.4
581.9
Polystyrene
174.8
220.0
382.4
460.8
Americas Styrenics*
—
—
—
—
Total Net Sales
$
920.0
$
962.6
$
1,824.0
$
1,958.9
* The results of this segment are comprised entirely of earnings
from Americas Styrenics, our 50%-owned equity method investment. As
such, we do not separately report net sales of Americas Styrenics
within our condensed consolidated statements of operations.
Note 2: Reconciliation of Non-GAAP
Performance Measures to Net Income
EBITDA is a non-GAAP financial performance measure, which is
defined as income from continuing operations before interest
expense, net; income tax provision; depreciation and amortization
expense. We refer to EBITDA in making operating decisions because
we believe it provides our management as well as our investors with
meaningful information regarding the Company’s operational
performance. We believe the use of EBITDA as a metric assists our
board of directors, management and investors in comparing our
operating performance on a consistent basis.
We also present Adjusted EBITDA as a non-GAAP financial
performance measure, which we define as income from continuing
operations before interest expense, net; income tax provision;
depreciation and amortization expense; loss on extinguishment of
long-term debt; asset impairment charges; gains or losses on the
dispositions of businesses and assets; restructuring charges;
acquisition related costs and benefits, and other items. In doing
so, we are providing management, investors, and credit rating
agencies with an indicator of our ongoing performance and business
trends, removing the impact of transactions and events that we
would not consider a part of our core operations.
Lastly, we present Adjusted Net Income (Loss) and Adjusted EPS
as additional performance measures. Adjusted Net Income (Loss) is
calculated as Adjusted EBITDA (defined beginning with net income
from continuing operations, above), less interest expense, less the
provision for income taxes and depreciation and amortization, tax
affected for various discrete items, as appropriate. Adjusted EPS
is calculated as Adjusted Net Income (Loss) per weighted average
diluted shares outstanding for a given period. We believe that
Adjusted Net Income (Loss) and Adjusted EPS provide transparent and
useful information to management, investors, analysts and other
stakeholders in evaluating and assessing our operating results from
period-to-period after removing the impact of certain transactions
and activities that affect comparability and that are not
considered part of our core operations.
There are limitations to using the financial performance
measures noted above. These performance measures are not intended
to represent net income or other measures of financial performance.
As such, they should not be used as alternatives to net income as
indicators of operating performance. Other companies in our
industry may define these performance measures differently than we
do. As a result, it may be difficult to use these or
similarly-named financial measures that other companies may use, to
compare the performance of those companies to our performance. We
compensate for these limitations by providing reconciliations of
these performance measures to our net income, which is determined
in accordance with GAAP.
Three Months Ended
June 30,
(In millions, except per share
data)
2024
2023
Net loss
$
(67.8
)
$
(349.0
)
Interest expense, net
64.7
40.2
Provision for (benefit from) income
taxes
20.3
(25.1
)
Depreciation and amortization
46.6
52.5
EBITDA
$
63.8
$
(281.4
)
Net gain on disposition of businesses and
assets
(3.5
)
(16.3
)
Selling, general, and administrative
expenses; Other expense (income), net
Restructuring and other charges (a)
4.0
1.5
Selling, general, and administrative
expenses
Asset impairment charges or write-offs
—
1.3
Impairment and other charges
Goodwill impairment charge (b)
—
349.0
Impairment and other charges
Other items (c)
2.5
2.7
Cost of goods sold; Selling, general, and
administrative expenses
Adjusted EBITDA
$
66.8
$
56.8
Adjusted EBITDA to
Adjusted Net Loss:
Adjusted EBITDA
66.8
56.8
Interest expense, net
64.7
40.2
Provision for income taxes - Adjusted
(d)
5.9
34.8
Depreciation and amortization - Adjusted
(e)
47.9
49.5
Adjusted Net Loss
$
(51.7
)
$
(67.7
)
Weighted average shares- diluted
35.3
35.2
Adjusted EPS
$
(1.46
)
$
(1.92
)
Adjusted EBITDA by
Segment:
Engineered Materials
$
25.2
$
11.8
Latex Binders
25.6
23.5
Plastics Solutions
16.3
24.6
Polystyrene
6.6
1.7
Americas Styrenics
15.6
12.5
Corporate Unallocated
(22.5
)
(17.3
)
Adjusted EBITDA
$
66.8
$
56.8
(a)
Restructuring and other charges
for the 2024 and 2023 periods primarily relate to contract
termination costs as well as decommissioning and other charges
incurred in connection with the Company’s restructuring plans.
(b)
Amounts for the 2023 period
relate to the Engineered Materials reporting unit’s goodwill
impairment charge resulting from the second quarter triggering
event impairment testing.
(c)
Other items for the 2024 and 2023
periods primarily relate to fees incurred in conjunction with
certain of the Company’s strategic initiatives, as well as costs
related to our transition to a new enterprise resource planning
system.
(d)
Adjusted to remove the tax impact
of the items noted within the table above. The income tax expense
(benefit) related to these items was determined utilizing either
(1) the estimated annual effective tax rate on our ordinary income
based upon our forecasted ordinary income for the full year or, (2)
for items treated discretely for tax purposes we utilized the
applicable rates in the taxing jurisdictions in which these
adjustments occurred.
(e)
Amounts for the three months
ended June 30, 2024 and 2023 excludes accelerated depreciation of
$1.3 million and $3.0 million, respectively. The 2024 period
charges are primarily related to the shortening of the useful life
of certain assets related to the asset optimization and corporate
restructuring plan. The 2023 period charges are primarily related
to the shortening of the useful life of certain assets related to
the asset restructuring plan as well as charges related to the
shortening of the useful life of certain IT assets related to the
Company’s transition to a new enterprise resource planning
system.
For the same reasons discussed above, we are providing the
following reconciliation of forecasted net loss to forecasted
Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS for the three
months ended September 30, 2024. See “Note on Forward-Looking
Statements” above for a discussion of the limitations of these
forecasts. Totals may not sum due to rounding.
Three Months Ended
September 30,
(In millions, except per share
data)
2024
Adjusted EBITDA
$
65 - 75
Interest expense, net
65
Provision for income taxes
5
Depreciation and amortization
47
Reconciling items to Adjusted EBITDA
(f)
—
Net Loss
(52) - (42)
Reconciling items to Adjusted Net Loss
(f)
—
Adjusted Net Loss
$
(52) - (42)
Weighted average shares - diluted (g)
35.3
EPS - diluted ($)
$
(1.45) - (1.17)
Adjusted EPS ($)
$
(1.45) - (1.17)
(f)
Reconciling items to Adjusted
EBITDA and Adjusted Net Income (Loss) are not typically forecasted
by the Company based on their nature as being primarily driven by
transactions that are not part of the core operations of the
business and, as a result, cannot be estimated without unreasonable
cost or uncertainty. As such, for the forecasted third quarter
ended September 30, 2024, we have not included estimates for these
items.
(g)
Weighted average shares presented
for the purpose of forecasting EPS and Adjusted EPS assume that the
Company will be in a net loss position for third quarter 2024, and
therefore excludes the impact of potentially dilutive shares, as
the inclusion of said shares would have an anti-dilutive effect.
Further, the weighted average shares presented do not forecast
significant future share transactions or events, such as
repurchases, significant share-based compensation award grants, and
changes in the Company’s share price. These are all factors which
could have a significant impact on the calculation of EPS and
Adjusted EPS during actual future periods.
Note 3: Reconciliation of Non-GAAP
Liquidity Measures to Cash from Operations
The Company uses certain measures, such as Free Cash Flow as
non-GAAP measures, to evaluate and discuss its liquidity position
and results. Free Cash Flow is defined as cash from operating
activities, less capital expenditures. We believe that Free Cash
Flow provides an indicator of the Company’s ongoing ability to
generate cash through core operations, as it excludes the cash
impacts of various financing transactions as well as cash flows
from business combinations that are not considered organic in
nature. We also believe that Free Cash Flow provides management and
investors with useful analytical indicators of our ability to
service our indebtedness, pay dividends (when declared), and meet
our ongoing cash obligations.
Free Cash Flow is not intended to represent cash flows from
operations as defined by GAAP, and therefore, should not be used as
alternatives for that measure. Other companies in our industry may
define Free Cash Flow differently than we do. As a result, it may
be difficult to use this or similarly-named financial measures that
other companies may use, to compare the liquidity and cash
generation of those companies to our own. The Company compensates
for these limitations by providing the following detail, which is
determined in accordance with GAAP.
Free Cash Flow
Three Months Ended
Six Months Ended
June 30,
June 30,
(In millions)
2024
2023
2024
2023
Cash provided by (used in) operating
activities
$
(41.9
)
$
56.5
$
(108.1
)
$
101.9
Capital expenditures
(14.2
)
(13.8
)
(29.9
)
(35.6
)
Free Cash Flow
$
(56.1
)
$
42.7
$
(138.0
)
$
66.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806851976/en/
Andy Myers Tel : +1 610-240-3221 Email: aemyers@trinseo.com
Trinseo (NYSE:TSE)
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Trinseo (NYSE:TSE)
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부터 11월(11) 2023 으로 11월(11) 2024
