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Trinseo(TSE) - 2025 Q1 - Earnings Call Transcript
2025-05-08 15:00
Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 improved to $65 million, up $20 million year-over-year, driven by restructuring actions, improved business mix, and a polycarbonate licensing agreement [6][10][12] - Free cash flow was negative $119 million in Q1, influenced by $25 million related to refinancing and a typical seasonal working capital outflow of $84 million [11][12] Business Line Data and Key Metrics Changes - Volume in recycled content products grew by 33% year-over-year, and consumer electronics applications saw a 43% increase [7] - PMMA resin volumes in Asia more than doubled, while case volumes grew by 3% despite flat demand [7] - Latex Binders adjusted EBITDA remained similar to the prior year despite lower volumes, primarily due to improved sales mix and cost savings initiatives [10] - Polymer Solutions adjusted EBITDA was above the prior year, supported by $26 million in polycarbonate licensing income [10] Market Data and Key Metrics Changes - In China, specialized PMMA products contributed to a 50% volume growth year-over-year [9] - Demand for paper and board applications in China weakened significantly due to tariff announcements, impacting overall performance [10][54] Company Strategy and Development Direction - The company is focused on geographic expansion, material replacement, process change, and sustainability to drive growth in specialized technologies [7] - The strategic partnership with Deepak Chemtech is viewed as a significant opportunity for growth in India [7] - The company is committed to higher growth and higher margin business segments, particularly in specialty and sustainable offerings [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertain business conditions and highlighted the impact of restructuring actions on performance [16] - The company withdrew its full-year guidance due to increased economic and geopolitical uncertainty, providing only a Q2 adjusted EBITDA outlook of $55 million to $70 million [16] Other Important Information - The company anticipates little direct impact from proposed tariffs, as over 95% of product sales are produced within the region where they are sold [13] - The company is exploring additional licensing opportunities related to recycling technologies [41] Q&A Session Summary Question: Volume patterns ahead of tariffs - Management noted no evidence of pre-buying to beat tariffs, with Q1 demand continuing into Q2 [21] Question: Free cash flow guidance for Q2 - Management expressed confidence in achieving breakeven free cash flow in Q2, supported by working capital management [22] Question: Impact of styrene closures - Management indicated no significant negative impact from styrene closures, as the company is no longer a styrene producer in Europe [24] Question: Amsty performance and sale process - Management confirmed ongoing commitment to market Amsty and maximize asset value, with expectations for improved performance in Q2 [28][31] Question: Battery binders opportunity - Management highlighted investments in anode binders for lithium-ion batteries, indicating a growing business with a unique global footprint [34] Question: Full-year cash flow outlook - Management provided insights on cash outflows and indicated that working capital actions could offset any EBITDA deterioration [39] Question: Additional licensing deals - Management confirmed interest in recycling technologies and potential future licensing opportunities [41]
Trinseo(TSE) - 2025 Q1 - Earnings Call Presentation
2025-05-08 12:38
Q1 2025 Financial Performance - The company reported a net loss of $79 million and a diluted EPS of negative $2.22, which included $25 million in refinancing costs related to debt transactions completed in January 2025 [7] - Adjusted EBITDA was $65 million, exceeding the prior year by $20 million, driven by $26 million in polycarbonate technology licensing income and restructuring actions, but partially offset by lower equity income from Americas Styrenics and reduced volume [7] - Cash used in operations amounted to $110 million, and capital expenditures were $9 million, resulting in a negative Free Cash Flow of $119 million, including seasonal working capital build and $25 million in refinancing-related costs [7] - Net sales for Q1 2025 were $785 million, compared to $904 million in Q1 2024 [21] Q2 2025 Outlook - The company anticipates a net loss ranging from $61 million to $46 million and an Adjusted EBITDA between $55 million and $70 million [7] - The company expects seasonally higher volumes compared to Q1 and approximately breakeven Free Cash Flow [7] Sales Volume Analysis - Overall sales volume experienced a year-over-year decrease of 13% [21] - Consumer electronics sales volume increased by 43% [14] - Sales volumes sold to CASE applications accounted for 15% of total segment net sales, with volumes increasing 3% over prior year in a flat demand environment [28] - Sales volumes in Battery Binders up >3.5x versus prior year [28] Debt and Liquidity - The company's first quarter ending cash was $128 million (of which $2 million was restricted) and total liquidity of $421 million [7] - The company has $1933 million in Term Loans 2L Senior Secured Notes due 2029 [36] - The company has $445 million in Revolving Credit Facility [36] Full-Year 2025 Guidance - Due to increased tariff and geopolitical uncertainty, the company is withdrawing all full-year guidance furnished in connection with its debt refinancing transaction [42] - The company estimates capital expenditures of $65 million, cash interest of $195 million, cash taxes of $35 million, restructuring costs of $45 million, turnaround costs of $10 million, and working capital/other costs of $20 million, resulting in net cash expenditures of $370 million [43]
Trinseo (TSE) Reports Q1 Loss, Misses Revenue Estimates
ZACKS· 2025-05-08 01:15
Financial Performance - Trinseo reported a quarterly loss of $1.37 per share, which is better than the Zacks Consensus Estimate of a loss of $1.40, and an improvement from a loss of $1.94 per share a year ago, indicating an earnings surprise of 2.14% [1] - The company posted revenues of $784.8 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 19.92%, and down from $904 million in the same quarter last year [2] - Over the last four quarters, Trinseo has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Trinseo shares have declined approximately 16.7% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The current Zacks Rank for Trinseo is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$1.40 on revenues of $966.82 million, and for the current fiscal year, it is -$3.88 on revenues of $3.78 billion [7] - The estimate revisions trend for Trinseo is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Chemical - Specialty industry, to which Trinseo belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]
Trinseo(TSE) - 2025 Q1 - Quarterly Results
2025-05-07 21:26
[First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) Trinseo's Q1 2025 results show decreased net sales but improved Adjusted EBITDA, driven by licensing income and restructuring savings, despite an increased net loss due to higher interest and refinancing costs [Q1 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Trinseo reported its first quarter 2025 financial results with a decrease in net sales but an increase in Adjusted EBITDA year-over-year, primarily driven by licensing income and restructuring savings, despite a net loss increase due to higher interest expense and refinancing costs | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net Sales | $785 million | $904 million | | Net Loss | $(79) million | $(76) million | | Diluted EPS ($) | $(2.22) | $(2.14) | | Adjusted Net Loss* | $(49) million | $(69) million | | Adjusted EPS ($)* | $(1.37) | $(1.94) | | EBITDA* | $30 million | $38 million | | Adjusted EBITDA* | $65 million | $45 million | - Net loss of **$79 million** included **$25 million** of refinancing costs for debt transactions closed in January 2025[3](index=3&type=chunk) - **Adjusted EBITDA of $65 million** was **$20 million** above prior year, driven by **$26 million** of polycarbonate technology licensing income and savings from restructuring actions, partially offset by lower equity income from Americas Styrenics and lower volumes[3](index=3&type=chunk)[5](index=5&type=chunk) - **Cash used in operations of $110 million** and **capital expenditures of $9 million** resulted in **Free Cash Flow of negative $119 million**, which included a seasonal working capital build and **$25 million** of refinancing-related costs[3](index=3&type=chunk) [CEO Commentary on Q1 Performance](index=2&type=section&id=Commenting%20on%20the%20Company%27s%20first%20quarter%20performance) CEO Frank Bozich noted that core business results were in line with expectations and sequentially higher, marking the 7th consecutive quarter of year-over-year Adjusted EBITDA improvement despite persistent market weakness, attributed to early management actions - Core business results in Q1 were in line with expectations and sequentially higher due to prior quarter customer destocking and seasonality[6](index=6&type=chunk) - Achieved **7th consecutive quarter of year-over-year Adjusted EBITDA improvement**, driven by management actions taken early in the industry downturn[6](index=6&type=chunk) [First Quarter Results by Business Segment](index=2&type=section&id=First%20Quarter%20Results%20and%20Commentary%20by%20Business%20Segment) The company's business segments showed mixed performance in Q1 2025, with Engineered Materials and Polymer Solutions reporting increased Adjusted EBITDA, while Latex Binders and Americas Styrenics saw declines, influenced by varying market demands, pricing, and strategic actions [Engineered Materials](index=2&type=section&id=Engineered%20Materials%20net%20sales) Engineered Materials saw a 2% net sales decrease due to lower volume, but Adjusted EBITDA increased by $16 million from higher margins and moderating input costs | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Net Sales | $278 million | $282.5 million | -2% | | Adjusted EBITDA | $26 million | $10.4 million | +$15.6 million | - Lower sales volume was partially offset by higher pricing, leading to a **2% decrease in net sales**[12](index=12&type=chunk) - **Adjusted EBITDA increased by $16 million** year-over-year, reflecting higher margins from moderating input costs[12](index=12&type=chunk) - Sales volume growth in consumer electronics and PMMA geographic expansion was offset by lower market demand in automotive and building and construction[12](index=12&type=chunk) [Latex Binders](index=2&type=section&id=Latex%20Binders%20net%20sales) Latex Binders experienced a 13% net sales decrease and a $2 million Adjusted EBITDA decline, primarily due to lower volumes in paper applications | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Net Sales | $209 million | $241.5 million | -13% | | Adjusted EBITDA | $24 million | $25.7 million | -$1.7 million | - **Net sales decreased 13%** year-over-year due to lower volumes, primarily in paper applications in Asia and Europe, partially offset by higher prices[12](index=12&type=chunk) - **Adjusted EBITDA decreased by $2 million** year-over-year due to lower volume[12](index=12&type=chunk) - Net sales to CASE applications accounted for **15% of total segment net sales**, with volume increasing **3%** over prior year in a flat market environment[12](index=12&type=chunk) [Polymer Solutions](index=2&type=section&id=Polymer%20Solutions%20net%20sales) Polymer Solutions' net sales decreased by 22% due to reduced low-margin polystyrene sales, yet Adjusted EBITDA increased by $15 million, boosted by fixed cost reductions and licensing income | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Net Sales | $298 million | $380 million | -22% | | Adjusted EBITDA | $44 million | $29.1 million | +$14.9 million | - **Net sales decreased 22%** year-over-year, primarily due to intentionally reducing low-margin polystyrene sales[12](index=12&type=chunk) - **Adjusted EBITDA increased by $15 million** year-over-year, as lower volumes and margins were more than offset by fixed cost reductions and **$26 million** of polycarbonate technology licensing income[12](index=12&type=chunk) [Americas Styrenics](index=2&type=section&id=Americas%20Styrenics%20Adjusted%20EBITDA) Americas Styrenics reported a negative Adjusted EBITDA of $2 million, an $8 million decrease year-over-year, primarily due to an unfavorable timing impact | Metric | Q1 2025 | Q1 2024 | Change | | :----- | :------ | :------ | :----- | | Adjusted EBITDA | -$2 million | $6.2 million | -$8.2 million | - **Adjusted EBITDA was negative $2 million**, an **$8 million decrease** from prior year, mainly driven by an unfavorable timing impact[12](index=12&type=chunk) [Second Quarter 2025 Outlook](index=2&type=section&id=Second%20Quarter%202025%20Outlook) Trinseo has withdrawn its full-year guidance due to macroeconomic uncertainty, providing a Q2 2025 Adjusted EBITDA outlook of $55 million to $70 million, driven by seasonal volumes and cost improvements [Outlook and CEO Commentary](index=2&type=section&id=Second%20Quarter%202025%20Outlook%20and%20CEO%20Commentary) Trinseo has withdrawn its full-year guidance due to macroeconomic uncertainty, focusing solely on Q2 2025. CEO Frank Bozich anticipates Q2 Adjusted EBITDA of $55 million to $70 million, driven by seasonally higher volumes, lower Engineered Materials costs, and improved AmSty performance, offsetting Q1's polycarbonate technology license income - Withdrew all full-year guidance previously furnished due to high macroeconomic uncertainty limiting the ability to assess future end-market demand[8](index=8&type=chunk) - Anticipates **Adjusted EBITDA of $55 million to $70 million** in Q2 2025[9](index=9&type=chunk) - Expected Q2 drivers include seasonally higher volumes, lower costs in Engineered Materials, and improved Americas Styrenics performance, offsetting Q1 polycarbonate technology license income[9](index=9&type=chunk) [Key Q2 2025 Outlook Figures](index=2&type=section&id=Second%20quarter%202025%20outlook%20figures) Trinseo provides specific financial projections for the second quarter of 2025, including ranges for net loss, Adjusted EBITDA, and free cash flow | Metric | Q2 2025 Outlook | | :----- | :-------------- | | Net Loss | $61 million to $46 million | | Adjusted EBITDA | $55 million to $70 million | | Free Cash Flow | Approximately breakeven (includes $21 million from polycarbonate technology license income) | [Conference Call and Webcast Information](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Information) Details for Trinseo's Q1 2025 financial results conference call and webcast are provided, including registration, access to materials, and replay information [Conference Call and Webcast Details](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Details) Trinseo will host a conference call on May 8, 2025, to discuss its Q1 2025 financial results, with registration links provided for both Q&A participants and listen-only webcast attendees. Financial results and presentation slides will be available on the Investor Relations website and via Form 8-K filing, with a replay and transcript archived online - Conference call to discuss Q1 2025 financial results scheduled for Thursday, **May 8, 2025, at 10 a.m. Eastern Time**[10](index=10&type=chunk) - Registration links are provided for asking questions during the Q&A session and for listening-only webcast[11](index=11&type=chunk) - Financial results and presentation slides will be posted on the Company's Investor Relations website and furnished via Form 8-K filing; a replay and transcript will be archived online until **May 8, 2026**[14](index=14&type=chunk)[15](index=15&type=chunk) [About Trinseo](index=3&type=section&id=About%20Trinseo) Trinseo is a global specialty material solutions provider with approximately $3.5 billion in net sales in 2024, serving diverse industries across North America, Europe, and Asia Pacific [Company Overview](index=3&type=section&id=Company%20Overview) Trinseo is a specialty material solutions provider that partners with companies across various industries, including building and construction, consumer goods, medical, and mobility, leveraging its expertise and global presence. The company reported approximately $3.5 billion in net sales in 2024 - Trinseo (NYSE: TSE) is a specialty material solutions provider, partnering with companies to deliver innovative and sustainable material solutions[16](index=16&type=chunk) - Serves a wide range of industries including building and construction, consumer goods, medical, and mobility, with operations in North America, Europe, and Asia Pacific[17](index=17&type=chunk)[18](index=18&type=chunk) - Reported **net sales of approximately $3.5 billion** in 2024[18](index=18&type=chunk) [Use of Non-GAAP Measures](index=3&type=section&id=Use%20of%20non-GAAP%20measures) Trinseo uses non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow to assess performance and trends, acknowledging they are not GAAP alternatives [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Trinseo utilizes non-GAAP financial measures such as Adjusted Net Income, EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow to evaluate business trends and performance, manage operations, and assess profitability. These measures are considered useful for investors and management but are not GAAP alternatives and may not be comparable to similarly named measures used by other companies - Uses non-GAAP measures (**Adjusted Net Income, EBITDA, Adjusted EBITDA, Adjusted EPS, Free Cash Flow**) to evaluate business trends, performance, and profitability[19](index=19&type=chunk) - Believes these measures provide useful information for investors and management, assisting in comparing operating performance and evaluating pricing strategies[19](index=19&type=chunk) - Non-GAAP measures are not recognized in accordance with GAAP and should not be viewed as alternatives; definitions and reconciliations are provided in the financial statement notes[19](index=19&type=chunk) [Cautionary Note on Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20on%20Forward-Looking%20Statements) This section highlights that forward-looking statements are subject to inherent uncertainties and risks, including global economic conditions and raw material costs, which could cause actual results to differ materially [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This press release contains forward-looking statements, which are subject to inherent uncertainties, risks, and changes in circumstances that could cause actual results to differ materially from expectations. Key risk factors include global economic conditions, tariffs, cost savings initiatives, raw material costs, credit profile, energy costs, and indebtedness - The press release contains forward-looking statements, identified by words like 'expect,' 'anticipate,' 'believe,' reflecting management's current expectations and assumptions[20](index=20&type=chunk) - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict[20](index=20&type=chunk) - Factors that could cause actual results to differ include global economic conditions, tariffs, ability to generate cost savings, raw material costs, credit profile, energy costs, indebtedness, and compliance with regulations[20](index=20&type=chunk) [Condensed Consolidated Financial Information (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Information%20%28Unaudited%29) This section presents Trinseo's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows for Q1 2025 and comparative periods [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Trinseo's Condensed Consolidated Statements of Operations show a decrease in net sales from $904.0 million in Q1 2024 to $784.8 million in Q1 2025, resulting in an increased net loss from $75.5 million to $79.0 million, and diluted EPS remaining negative at -$2.22 | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $784.8 million | $904.0 million | | Cost of sales | $721.0 million | $843.4 million | | Gross profit | $63.8 million | $60.6 million | | Operating loss | $(29.0) million | $(3.3) million | | Net loss | $(79.0) million | $(75.5) million | | Net loss per share- diluted | $(2.22) | $(2.14) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, Trinseo's balance sheet shows a slight increase in total assets to $2,655.0 million from $2,644.1 million at December 31, 2024. Cash and cash equivalents decreased significantly, while accounts receivable and inventories increased. Long-term debt also increased from $2,200.7 million to $2,305.1 million, contributing to a larger shareholders' deficit | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $126.1 million | $209.8 million | | Accounts receivable, net | $470.5 million | $379.9 million | | Inventories | $383.7 million | $347.2 million | | Total assets | $2,655.0 million | $2,644.1 million | | Current liabilities | $689.3 million | $720.9 million | | Long-term debt, net | $2,305.1 million | $2,200.7 million | | Shareholders' equity (deficit) | $(679.2) million | $(619.9) million | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Trinseo's cash flow statement for Q1 2025 shows increased cash used in operating activities to $110.2 million from $66.2 million in Q1 2024. Cash used in investing activities decreased, while cash provided by financing activities turned positive at $32.8 million, primarily due to net proceeds from the issuance of 2028 Refinance Term Loans and proceeds from Accounts Receivable Securitization Facility, despite repayments of 2025 Senior Notes | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash used in operating activities | $(110.2) million | $(66.2) million | | Capital expenditures | $(8.7) million | $(15.7) million | | Cash used in investing activities | $(8.7) million | $(11.0) million | | Cash provided by (used in) financing activities | $32.8 million | $(9.2) million | | Net change in cash, cash equivalents, and restricted cash | $(83.6) million | $(89.6) million | | Cash and cash equivalents—end of period | $126.1 million | $166.4 million | - Financing activities in Q1 2025 included net proceeds from issuance of **2028 Refinance Term Loans ($115.0 million)** and proceeds from **Accounts Receivable Securitization Facility ($70.0 million)**, offset by repayments of **2025 Senior Notes ($115.0 million)**[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Information](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the unaudited condensed consolidated financial information, including segment net sales, non-GAAP measure reconciliations, and liquidity measure definitions [Note 1: Net Sales by Segment](index=8&type=section&id=Note%201%3A%20Net%20Sales%20by%20Segment) Note 1 provides a breakdown of Trinseo's net sales by segment for the three months ended March 31, 2025, and 2024, showing a decline across all reporting segments, with Polymer Solutions experiencing the largest percentage decrease | Segment | Q1 2025 Net Sales (millions) | Q1 2024 Net Sales (millions) | | :---------------- | :--------------------------- | :--------------------------- | | Engineered Materials | $277.3 | $282.5 | | Latex Binders | $209.3 | $241.5 | | Polymer Solutions | $298.2 | $380.0 | | Total Net Sales | $784.8 | $904.0 | - Americas Styrenics results are comprised entirely of earnings from its 50%-owned equity method investment, and thus net sales are not separately reported within consolidated statements of operations[29](index=29&type=chunk) [Note 2: Reconciliation of Non-GAAP Performance Measures to Net Income](index=8&type=section&id=Note%202%3A%20Reconciliation%20of%20Non-GAAP%20Performance%20Measures%20to%20Net%20Income) Note 2 details the definitions, usefulness, and limitations of non-GAAP performance measures like EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted EPS, providing reconciliations to GAAP Net Loss for both Q1 2025 and a forecast for Q2 2025 [Definitions and Usefulness](index=8&type=section&id=Definitions%20and%20Usefulness%20of%20Non-GAAP%20Performance%20Measures) This section defines non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, explaining their utility for evaluating operational performance and business trends - **EBITDA** is defined as income from continuing operations before interest expense, net; income tax provision; depreciation and amortization expense, used for evaluating operational performance[30](index=30&type=chunk) - **Adjusted EBITDA** further adjusts EBITDA for items like loss on extinguishment of long-term debt, asset impairment charges, restructuring charges, and acquisition-related costs, to indicate ongoing performance and business trends[31](index=31&type=chunk) - **Adjusted Net Income (Loss)** and **Adjusted EPS** provide transparent information by removing the impact of certain transactions and activities not considered part of core operations, aiding period-to-period comparability[32](index=32&type=chunk) [Q1 2025 Reconciliation Table](index=9&type=section&id=Q1%202025%20Reconciliation%20of%20Non-GAAP%20Performance%20Measures) This table provides a reconciliation of non-GAAP performance measures, including EBITDA, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS, to GAAP Net Loss for Q1 2025 and Q1 2024 | Metric | Three Months Ended March 31, 2025 (millions) | Three Months Ended March 31, 2024 (millions) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net loss | $(79.0) | $(75.5) | | EBITDA | $30.2 | $37.9 | | Adjusted EBITDA | $64.8 | $45.0 | | Adjusted Net Loss | $(48.5) | $(68.5) | | Adjusted EPS | $(1.37) | $(1.94) | | Adjusted EBITDA by Segment | Three Months Ended March 31, 2025 (millions) | Three Months Ended March 31, 2024 (millions) | | :------------------------- | :------------------------------------------- | :------------------------------------------- | | Engineered Materials | $25.7 | $10.4 | | Latex Binders | $24.5 | $25.7 | | Polymer Solutions | $44.5 | $29.1 | | Americas Styrenics | $(1.8) | $6.2 | | Corporate Unallocated | $(28.1) | $(26.4) | | Total Adjusted EBITDA | $64.8 | $45.0 | - **Adjusted EBITDA for Q1 2025 was $64.8 million**, an increase from **$45.0 million** in Q1 2024, driven by factors including a **$24.9 million loss on financing transactions** in 2025 and restructuring charges[34](index=34&type=chunk) [Q2 2025 Forecasted Reconciliation Table](index=10&type=section&id=Q2%202025%20Forecasted%20Reconciliation%20of%20Non-GAAP%20Performance%20Measures) This table presents the forecasted reconciliation of non-GAAP performance measures, including Adjusted EBITDA, Net Loss, and Adjusted EPS, for the second quarter of 2025 | Metric | Three Months Ended June 30, 2025 (millions) | | :-------------------------------- | :------------------------------------------ | | Adjusted EBITDA | $55 - 70 | | Net Loss | $(61) - (46) | | Adjusted Net Loss | $(61) - (46) | | EPS - diluted ($) | $(1.72) - (1.30) | | Adjusted EPS ($) | $(1.72) - (1.30) | - Reconciling items to Adjusted EBITDA and Adjusted Net Income (Loss) are not typically forecasted due to their nature as being primarily driven by non-core operations and cannot be estimated without unreasonable cost or uncertainty[41](index=41&type=chunk) [Note 3: Reconciliation of Non-GAAP Liquidity Measures to Cash from Operations](index=10&type=section&id=Note%203%3A%20Reconciliation%20of%20Non-GAAP%20Liquidity%20Measures%20to%20Cash%20from%20Operations) Note 3 defines Free Cash Flow as a non-GAAP liquidity measure, explaining its usefulness for evaluating the company's ability to generate cash from core operations, service debt, and pay dividends, while also providing its reconciliation to cash from operating activities for Q1 2025 and Q1 2024 [Definitions and Usefulness](index=10&type=section&id=Definitions%20and%20Usefulness%20of%20Non-GAAP%20Liquidity%20Measures) This section defines Free Cash Flow as a non-GAAP liquidity measure, highlighting its utility for assessing the company's ability to generate cash for debt service and other obligations - **Free Cash Flow** is defined as cash from operating activities less capital expenditures, used to evaluate ongoing ability to generate cash through core operations[37](index=37&type=chunk) - Provides useful analytical indicators for management and investors regarding the ability to service indebtedness, pay dividends, and meet ongoing cash obligations[37](index=37&type=chunk) - Free Cash Flow is not intended to represent cash flows from operations as defined by GAAP and may not be comparable to similarly named measures used by other companies[38](index=38&type=chunk) [Q1 2025 Free Cash Flow Reconciliation Table](index=10&type=section&id=Q1%202025%20Free%20Cash%20Flow%20Reconciliation%20Table) This table provides a reconciliation of Free Cash Flow, a non-GAAP liquidity measure, to cash used in operating activities for Q1 2025 and Q1 2024 | Metric | Three Months Ended March 31, 2025 (millions) | Three Months Ended March 31, 2024 (millions) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Cash used in operating activities | $(110.2) | $(66.2) | | Capital expenditures | $(8.7) | $(15.7) | | Free Cash Flow | $(118.9) | $(81.9) |
Trinseo: Refinancing Done, And Signs Of Turnaround
Seeking Alpha· 2025-03-30 10:24
Core Insights - Trinseo PLC (TSE) executed a refinancing at the beginning of the year, extending their debt maturity to 2028/2029 with only a slight increase in interest expense and no stock dilution [1] Company Overview - Trinseo PLC is involved in the refinancing of its debt, which indicates a strategic move to manage its financial obligations effectively [1] Management Background - Sunshine Kapital's CIO/Founder, Stefan, has a BA in Finance and two decades of institutional experience in Research and Portfolio Management, focusing on distressed situations and value opportunities [1]
Trinseo(TSE) - 2024 Q4 - Annual Report
2025-02-27 16:53
Business Segments and Sales - Trinseo PLC operates under four reportable segments: Engineered Materials, Latex Binders, Polymer Solutions, and Americas Styrenics as of December 31, 2024[34]. - In 2024, approximately 36% of total Engineered Materials net sales were generated in Europe, 45% in the United States, and 12% in Asia[39]. - The Engineered Materials segment's sustainable products represented 4% of its volume in 2024, indicating a core growth area[41]. - The Latex Binders segment holds the 1 position in SB latex capacity in North America and a Top 3 position in Europe, with 43% of sales generated in Europe and 31% in the United States in 2024[52]. - The Polymer Solutions segment generated approximately 48% of net sales in Europe, 28% in North America, and the remainder primarily in Asia in 2024[60]. - Copolymers, including ABS and SAN, represented approximately 41% of total net sales in the Polymer Solutions segment in 2024[61]. - In 2024, Americas Styrenics was the 1 producer of polystyrene in North America, supplying 18% of the styrene monomer capacity in the region[76]. - In 2024, net sales to CASE applications accounted for approximately 14% of total Latex Binders net sales, with margins about two times the average of products in the segment[55]. Sustainability Initiatives - Trinseo announced the opening of a PMMA depolymerization plant in Rho, Italy in June 2024, enhancing its sustainability goals[26]. - The company continues to invest in differentiated and sustainable product offerings, particularly in the compounding business segments and CASE applications[25]. - The company continued its recycled polystyrene efforts in 2024, including offering recycled polystyrene for food packaging applications[70]. - The company announced the opening of a PMMA depolymerization pilot facility in Rho, Italy, in June 2024, which produces high-purity regenerated MMA[114]. - The company started two more recycling demo/pilot plants in 2024, one in Terneuzen, Netherlands, for ABS dissolution technology and one in Rho, Italy, for PMMA depolymerization technology[114]. Financial Performance and Strategy - Trinseo's restructuring initiatives include product line shutdowns and workforce reductions aimed at improving profitability and cash flow generation[27]. - Trinseo maintains a disciplined approach to capital allocation, prioritizing debt servicing, targeted growth initiatives, and shareholder returns[31]. - The contribution to equity earnings from Americas Styrenics' polystyrene business was approximately 229% in 2024, up from 88% in 2023 and 71% in 2022[76]. - The company has received dividends of $45.0 million from its Americas Styrenics joint venture for the year ended December 31, 2024[169]. - The divestiture of the styrenics business is a key part of the company's transformation strategy, but the timing and success of this process remain uncertain[167]. Workforce and Corporate Governance - As of December 31, 2024, the company had approximately 2,950 employees worldwide, with 57% in the EMEA region, 26% in the Americas, and the remainder in Asia Pacific[124]. - Approximately 97% of the company's workforce is full-time, with nearly 70% located at manufacturing and R&D sites[125]. - The company has a commitment to equity and inclusion, with 36% of its Board and 33% of its executive leadership team being women[131]. - The company has conducted internal reviews to ensure equitable compensation practices across all jurisdictions where it operates[133]. Risks and Challenges - The company is subject to various risks, including volatility in raw material costs and the impact of global trade conflicts on its operations[139]. - Principal raw materials (butadiene, MMA, and styrene) account for approximately 48% of the total cost of goods sold, making volatility in their prices a significant concern for financial results[149]. - Increased energy costs and supply constraints, particularly due to the ongoing conflict in Ukraine, could adversely impact the company's operations and financial results[152]. - The company faces risks related to the integration of acquired businesses, which may not yield the anticipated benefits or synergies[170]. - The company is subject to numerous regulations that could increase costs and impact its operations if violated[174]. Legal and Compliance - The company has ongoing legal proceedings that could incur significant costs and divert management resources, potentially impacting financial condition and cash flows[197]. - The company is subject to covenants in its credit agreements that may restrict its ability to operate and take advantage of business opportunities[195]. - The company must meet a minimum liquidity test under its 2028 Refinance Credit Agreement and other facilities, which is dependent on future performance and general economic conditions[195]. Technology and Innovation - The company acknowledges that technological innovation and successful product development are critical for maintaining competitive advantage and profit margins[164]. - Cybersecurity incidents could compromise confidential information and negatively impact operations and reputation, leading to potential financial repercussions[210]. - The implementation of a new enterprise resource planning system has been paused, which could disrupt operations and affect financial reporting[211].
Trinseo(TSE) - 2024 Q4 - Earnings Call Transcript
2025-02-14 05:12
Financial Data and Key Metrics Changes - The company reported a full-year adjusted EBITDA improvement of $50 million, despite macroeconomic challenges such as geopolitical uncertainty and high inflation [12][19] - Fourth quarter adjusted EBITDA was $26 million, which was $6 million higher than the prior year, but negatively impacted by unfavorable net timing effects [25][19] - Cash provided by operations during the fourth quarter was $85 million, resulting in free cash flow of $64 million, marking the highest quarter of free cash flow generation in over two years [26][20] Business Line Data and Key Metrics Changes - Sales of recycled content products increased by 47% year-over-year, now representing 4% of total company variable margin in 2024 [15] - Engineered Materials segment saw a 3% increase in PMMA Resins sales volumes year-over-year, despite weak end market demand [15] - The Polymer Solutions segment faced significant negative timing impacts due to falling raw material prices, particularly styrene [25][19] Market Data and Key Metrics Changes - The company noted a significant decline in consumer confidence across major markets, particularly in Europe and China, affecting end markets such as automotive and construction [12] - The company anticipates a compound annual demand growth of at least 7% in target end markets through the end of the decade, particularly in India [18] Company Strategy and Development Direction - The company is focused on executing self-help actions and transformation strategies to navigate macroeconomic challenges [12] - Significant advancements in circular technologies were highlighted, including the commissioning of pilot facilities for polycarbonate and PMMA [16] - The company is pursuing a strategic partnership with Deepak Nitrite Limited, viewing India as a significant growth market [17][18] Management's Comments on Operating Environment and Future Outlook - Management does not anticipate meaningful demand recovery in major end markets in 2025, citing ongoing geopolitical issues [27] - The first quarter of 2025 is expected to be sequentially better than Q4, with anticipated adjusted EBITDA of $60 million to $80 million, including a one-time contribution from the licensing agreement [29] - Management expressed confidence in the actions taken over the past two years to position the company for eventual market recovery [30] Other Important Information - The company has restructured its reporting segments to better reflect its operational strategy [22] - A transaction was closed in January that increased available liquidity by approximately $150 million and extended debt maturity to 2028 [24] Q&A Session Summary Question: Follow-up on cash spends for 2025 - Management indicated that the increase in cash expenditures is primarily due to working capital changes and higher cash taxes resulting from increased profitability [33][36] Question: Impact of lower styrene pricing on profitability - Management explained that pricing on styrene-containing products is generally indexed, leading to a pass-through effect on profitability [39][40] Question: Guidance for Q1 and potential destocking - Management noted that they do not foresee significant destocking initiatives from customers and that demand in automotive is more related to consumer confidence than inventory levels [81][82] Question: Status of the AmSty sale process - Management clarified that the sale process is not halted but is being timed to optimize value [122] Question: Insights on the recycling platform and margins - Management reported that recycled products are seeing significant demand and margins are substantially higher than virgin products [75][76]
Trinseo(TSE) - 2024 Q4 - Earnings Call Presentation
2025-02-14 05:10
Fourth Quarter 2024 Financial Results & First Quarter 2025 Outlook February 12, 2025 1 Trademark of Trinseo PLC or its affiliates Introductions & Disclosure Rules Introductions • Bee van Kessel, Senior Vice President, Corporate Finance & Investor Relations Disclosure Rules This presentation 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 ...
Trinseo(TSE) - 2024 Q4 - Earnings Call Transcript
2025-02-13 16:00
Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted EBITDA of $26 million, which was $6 million higher than the prior year, despite a $9 million unfavorable net timing impact primarily in plastic solutions due to falling styrene prices [17] - Full year adjusted EBITDA improved by $50 million due to self-help actions taken over the past couple of years [8][9] - Cash provided by operations during the fourth quarter was $85 million, resulting in free cash flow of $64 million, marking the highest quarter of free cash flow generation in over two years [17] Business Line Data and Key Metrics Changes - Sales volumes in the Engineered Materials segment increased by 3% year over year, with a notable 61% increase in volumes sold into consumer electronics applications [10][17] - The Latex Binder segment saw higher margin case applications account for 11% of total segment sales volumes and 18% of total segment variable margin in 2024 [10] - Sales of recycled content products increased by 47% compared to the prior year, representing 4% of the total company variable margin in 2024 [10] Market Data and Key Metrics Changes - The company faced significant challenges in major end markets, particularly in Europe and China, due to geopolitical uncertainty, elevated inflation, and high interest rates [8] - The automotive and building and construction markets showed continued weakness, impacting overall demand [19] Company Strategy and Development Direction - The company is focused on executing actions within its control and aligning with its transformation strategy while waiting for macroeconomic recovery [8] - Significant advancements in Circular Technologies were made, including the commissioning of pilot facilities for polycarbonate and PMMA [11] - The company anticipates a compound annual demand growth of at least 7% through the end of the decade in target end markets, particularly in India [12] Management's Comments on Operating Environment and Future Outlook - Management does not anticipate meaningful demand recovery in major end markets for 2025, citing ongoing geopolitical issues [18] - The first quarter of 2025 is expected to be sequentially better than Q4, with anticipated adjusted EBITDA of $60 million to $80 million, including a one-time $26 million contribution from the polycarbonate technology license agreement [19] - Management expressed confidence in the actions taken over the past two years positioning the company well for eventual market recovery [20] Other Important Information - The company has restructured its reporting segments to better reflect its operational strategy, combining Engineered Materials, Plastic Solutions, and Polystyrene businesses [14][15] - The company closed a transaction in January that increased available liquidity by approximately $150 million and extended debt maturity to 2028 [16] Q&A Session Summary Question: Follow-up on cash spend expectations for 2025 - Management indicated that the increase in expected cash expenditures is primarily due to working capital changes, influenced by volume and raw material prices [22][24] Question: Impact of lower styrene pricing on profitability - Management noted that pricing on styrene-containing products is generally indexed to styrene prices, indicating a pass-through effect [26] Question: Update on the sale process of Americas Styrenics - Management confirmed that the sale process is ongoing, with a focus on maximizing value and timing the market appropriately [28][90] Question: Impact of rising European natural gas prices on Q1 guidance - Management acknowledged a pricing lag due to natural gas price increases, particularly affecting the Engineered Materials segment [31][32] Question: Details on the growth in Engineered Materials - Management attributed the 61% increase in volumes to a low base in 2023 and successful diversification of the customer base [36][39] Question: Guidance for 2025 and normalized earnings expectations - Management refrained from providing specific guidance for 2025 but expressed confidence in positive earnings momentum due to various strategic actions [44][78] Question: Status of cost cuts and restructuring savings - Management confirmed that significant cost reductions have been realized, with expectations for full-year savings in 2025 [81][82]
Trinseo(TSE) - 2024 Q4 - Annual Results
2025-02-12 21:24
Financial Performance - Fourth quarter 2024 net sales were $821 million, a decrease of 2% compared to the prior year, driven by lower sales volumes across all business segments [5]. - The net loss for the fourth quarter was $118 million, an improvement of $147 million year-over-year, primarily due to a lower provision for income taxes [6]. - Adjusted EBITDA for the fourth quarter was $26 million, which was $6 million higher than the previous year despite a $10 million unfavorable net timing variance [6]. - Full-year 2024 net sales totaled $3.5 billion, reflecting a 4% decrease compared to 2023, with lower sales volumes contributing to a 6% decline [7]. - The full-year net loss was $349 million, which was $352 million better than the prior year, mainly due to a significant goodwill impairment charge recorded in 2023 [7]. - Gross profit for Q4 2024 was $56.0 million, significantly up from $20.3 million in Q4 2023, reflecting a gross margin improvement [34]. - Net loss for the year ended December 31, 2024, was $348.5 million, compared to a net loss of $701.3 million for the year ended December 31, 2023, indicating a 50.3% reduction in losses [34]. - Adjusted EBITDA for the year ended December 31, 2024, was $203.7 million, up from $154.3 million in 2023, representing a 32% increase [34]. - Adjusted EPS for the year ended December 31, 2024, was $(7.71), compared to $(6.92) for the year ended December 31, 2023 [34]. Cash Flow and Liquidity - Free Cash Flow for the fourth quarter was $64 million, marking a sequential and year-over-year improvement of $67 million [4]. - Free Cash Flow for the year ended December 31, 2024, was $63.9 million, compared to $(3.1) million in 2023 [40]. - Cash provided by operating activities for the year ended December 31, 2024, was $148.7 million, an increase from $(14.2) million in 2023 [40]. - Cash and cash equivalents at the end of Q4 2024 were $209.8 million, down from $259.1 million at the end of Q4 2023 [27]. - The company emphasizes that Free Cash Flow is a non-GAAP measure and may differ from other companies' definitions [38]. Future Outlook - For the first quarter of 2025, the company expects a net loss between $55 million and $40 million and Adjusted EBITDA of $65 million to $80 million, including approximately $26 million from the polycarbonate technology license agreement [11]. - Trinseo anticipates seasonally higher volumes in the first quarter but expects year-over-year volume declines due to ongoing weakness in certain end markets [10]. - Adjusted EBITDA for the three months ended March 31, 2025, is projected to be between $60 million and $80 million [36]. - Net Loss from continuing operations is estimated to be between $(60) million and $(40) million for the same period [36]. - Adjusted EPS is expected to range from $(1.68) to $(1.12) for the first quarter of 2025 [36]. Operational Changes - The company agreed to sell its polycarbonate manufacturing assets in Stade, Germany, and license polycarbonate technology to Deepak Chem Tech Limited for $52 million [4]. - The company has executed numerous initiatives to exit loss-generating businesses and improve liquidity and debt maturity profile [4]. Shareholder Information - The company’s weighted average shares outstanding for Q4 2024 were 35.4 million, slightly up from 35.2 million in Q4 2023 [34]. - The weighted average shares for diluted EPS calculation is 35.7 million [36]. - Future share transactions or events that could impact EPS calculations are not included in the forecast [41]. - The company does not forecast reconciling items to Adjusted EBITDA and Adjusted Net Income due to their nature [41].