Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ 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: 001-36473 Trinseo S.A. (Exact name of registrant as specified in its charter) Luxembourg N/A (State or other juri ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2019 ☐ 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: 001-36473 Trinseo S.A. (Exact name of registrant as specified in its charter) Luxembourg N/A (State or other jurisdiction of incorp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 or Table of Contents ☐ 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: 001-36473 Trinseo S.A. (Exact name of registrant as specified in its charter) Luxembourg N/A (State or other ...

[Part I Financial Information](index=5&type=section&id=Part%20I%20Financial%20Information) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2019 financials show decreased net income and equity, impacted by new lease accounting standards [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $534.9 | $452.3 | | Total current assets | $1,638.5 | $1,631.3 | | Total assets | $2,804.2 | $2,726.8 | | **Liabilities & Equity** | | | | Total current liabilities | $579.1 | $537.0 | | Long-term debt, net | $1,160.5 | $1,160.8 | | Total liabilities | $2,059.1 | $1,958.1 | | Total shareholders' equity | $745.1 | $768.7 | - The company adopted a new lease accounting standard in 2019, resulting in the recognition of $70.8 million in operating Right-of-Use assets and corresponding current ($15.5 million) and noncurrent ($55.6 million) lease liabilities, which were not present on the 2018 balance sheet[17](index=17&type=chunk)[32](index=32&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $951.8 | $1,236.6 | $1,964.9 | $2,358.1 | | Gross profit | $86.2 | $162.7 | $183.7 | $337.9 | | Operating income | $55.1 | $134.2 | $115.9 | $290.6 | | Net income | $28.0 | $98.3 | $63.8 | $218.6 | | Net income per share- diluted | $0.68 | $2.24 | $1.54 | $4.95 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) - Comprehensive income was $25.9 million for Q2 2019, down from $94.7 million in Q2 2018. For the first six months, comprehensive income was $60.5 million in 2019, a significant decrease from $216.3 million in the same period of 2018[23](index=23&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) - Total shareholders' equity decreased from $768.7 million at the end of 2018 to $745.1 million as of June 30, 2019. The decrease was driven by the purchase of treasury shares ($55.7 million) and payment of dividends ($32.9 million), which offset the net income of $63.8 million for the six-month period[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Cash provided by operating activities | $234.0 | $182.4 | | Cash used in investing activities | ($46.9) | ($56.7) | | Cash used in financing activities | ($101.9) | ($102.5) | | Net change in cash | $83.6 | $18.6 | - Key financing activities in the first six months of 2019 included the purchase of treasury shares for $59.1 million and dividend payments of $33.8 million[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company adopted the new lease accounting standard (Topic 842) on January 1, 2019, recognizing Right-of-Use assets of $73.0 million and lease liabilities of $72.4 million on the balance sheet[32](index=32&type=chunk) - The company's investment in its unconsolidated affiliate, Americas Styrenics, was $199.1 million as of June 30, 2019. The company received dividends of $52.5 million from this joint venture in the first six months of 2019[39](index=39&type=chunk)[42](index=42&type=chunk) - As of June 30, 2019, total debt was approximately **$1.19 billion**, primarily consisting of the 2024 Term Loan B ($687.8 million) and 2025 Senior Notes ($500.0 million). The company was in compliance with all debt covenants[45](index=45&type=chunk) - The company uses derivative instruments, including foreign exchange forward contracts, interest rate swaps, and cross currency swaps, to manage risks from foreign exchange rates and interest rates. These are not held for speculative purposes[50](index=50&type=chunk) - In June 2018, a subsidiary received a Request for Information from the European Commission regarding styrene monomer commercial activity. The company is cooperating fully, but the ultimate outcome and potential losses, which could be material, are currently unpredictable[82](index=82&type=chunk)[83](index=83&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) H1 2019 results show significant declines in net income and sales due to market weakness, prompting strategic reviews - On May 2, 2019, the company agreed to acquire Dow's latex binders production assets in Rheinmünster, Germany. The transaction involves no upfront cash but includes the assumption of approximately **€40.0 million** in pension liabilities[122](index=122&type=chunk) - The company is operating in a difficult business environment, and the timing of macroeconomic improvement remains uncertain. Management is focused on working capital initiatives and a strategic review of its business portfolio to improve performance[149](index=149&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2019 vs Q2 2018 Performance (in millions) | Metric | Q2 2019 | Q2 2018 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Net sales | $951.8 | $1,236.6 | ($284.8) | (23%) | | Gross profit | $86.2 | $162.7 | ($76.5) | (47%) | | Net income | $28.0 | $98.3 | ($70.3) | (72%) | - The **23%** decrease in Q2 2019 net sales was driven by: - **11%** from lower selling prices due to pass-through of lower raw material costs. - **9%** from lower sales volume across all segments. - **3%** from unfavorable currency impacts (weakening euro)[125](index=125&type=chunk)[127](index=127&type=chunk) - The **47%** decrease in Q2 2019 gross profit was primarily due to margin compression in the Feedstocks, Performance Plastics, Latex Binders, and Synthetic Rubber segments, impacted by weaker market performance in automotive, graphical paper, and tires[129](index=129&type=chunk) - The **17%** decrease in H1 2019 net sales was primarily due to **13%** from lower selling prices and **3%** from unfavorable currency impacts[138](index=138&type=chunk) [Selected Segment Information](index=34&type=section&id=Selected%20Segment%20Information) Segment Adjusted EBITDA (in millions) | Segment | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | :--- | | Latex Binders | $20.6 | $36.0 | $38.1 | $63.5 | | Synthetic Rubber | $12.9 | $30.6 | $21.7 | $56.2 | | Performance Plastics | $34.2 | $48.9 | $69.9 | $114.3 | | Polystyrene | $16.2 | $13.7 | $32.9 | $23.3 | | Feedstocks | ($0.6) | $32.4 | $16.6 | $73.9 | | Americas Styrenics | $40.3 | $33.2 | $72.5 | $78.8 | - **Latex Binders:** Adjusted EBITDA fell **43%** in Q2 2019 due to lower margins from raw material dynamics, competitive pressure, and lower volumes in graphical paper and carpet markets[155](index=155&type=chunk) - **Synthetic Rubber:** Adjusted EBITDA dropped **58%** in Q2 2019, driven by a **27%** decrease from lower sales volume (SSBR and ESBR) and a **21%** decrease from lower margins[160](index=160&type=chunk) - **Performance Plastics:** Adjusted EBITDA decreased **30%** in Q2 2019, primarily due to a **42%** negative impact from lower margins in ABS and PC, stemming from market weakness and increased PC supply[166](index=166&type=chunk) - **Feedstocks:** Adjusted EBITDA plummeted **102%** in Q2 2019, becoming negative, mainly due to lower margins from weaker market conditions and lower production from an outage at the Boehlen, Germany facility[178](index=178&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary (in millions) | Metric | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Cash from operating activities | $234.0 | $182.4 | | Capital expenditures | ($47.6) | ($59.5) | | **Free Cash Flow** | **$186.4** | **$122.9** | - As of June 30, 2019, the company had total outstanding indebtedness of **$1,191.9 million** and working capital of **$1,059.4 million**[205](index=205&type=chunk) - The company had **$360.9 million** of available borrowing capacity under its **$375.0 million** 2022 Revolving Facility as of June 30, 2019[209](index=209&type=chunk) - During H1 2019, the company repurchased **1.2 million** ordinary shares for **$59.1 million** and declared dividends of **$0.80 per share**, totaling **$32.9 million**[217](index=217&type=chunk)[218](index=218&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material revisions to the company's critical accounting policies and estimates, other than the impacts from the adoption of the new lease accounting guidance on January 1, 2019[222](index=222&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risk exposures, including interest rates and foreign currency, remain materially unchanged from 2018 - There have been no material changes in the company's exposure to market risks since the 2018 Annual Report[227](index=227&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2019, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[228](index=228&type=chunk) - No changes occurred during the quarter ended June 30, 2019, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[229](index=229&type=chunk) [Part II Other Information](index=44&type=section&id=Part%20II%20Other%20Information) [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company believes no pending legal claims will have a material adverse effect, consistent with European Commission inquiry - The company does not believe that any currently pending litigation will have a material adverse effect on its business[231](index=231&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the 2018 Annual Report - No material changes have been made to the risk factors disclosed in the 2018 Annual Report[232](index=232&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2019, the company repurchased 500,000 ordinary shares at an average price of $43.49 under authorized programs Issuer Purchases of Equity Securities (Q2 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2019 | 210,000 | $47.15 | | May 2019 | 219,847 | $41.30 | | June 2019 | 70,153 | $39.41 | | **Total** | **500,000** | **$43.49** | - On June 19, 2019, shareholders authorized a new share repurchase program for up to **4.0 million** ordinary shares over the next eighteen months, replacing the previous 2017 authorization[241](index=241&type=chunk) [Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[237](index=237&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[238](index=238&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[239](index=239&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section references the Exhibit Index, listing all documents filed as part of the Form 10-Q - The report includes an Exhibit Index listing all filed documents[240](index=240&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 or ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES Luxembourg N/A (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) For the transition period from to 1000 Chesterbrook Boulevard Suite 300 Be ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Trinseo S.A. is a global materials company producing synthetic rubber, latex binders, and plastics across six segments, focusing on growth, acquisitions, and cost efficiencies - Trinseo is a leading global materials company producing synthetic rubber, latex binders, and plastics for diverse industries like automotive and packaging[23](index=23&type=chunk) - As of December 31, 2018, the company operated **30 manufacturing plants** at **23 sites** across **12 countries** and **10 R&D facilities** globally[24](index=24&type=chunk) - Effective January 1, 2018, the company realigned its reporting structure into **six segments**: Latex Binders, Synthetic Rubber, Performance Plastics, Polystyrene, Feedstocks, and Americas Styrenics[32](index=32&type=chunk)[33](index=33&type=chunk) [Latex Binders Segment](index=8&type=section&id=Latex%20Binders%20Segment) This segment is a global leader in styrene-butadiene (SB) latex, primarily used in coated paper and carpet, leveraging R&D and global manufacturing - The Latex Binders segment holds the **1 global market position** for supplying SB latex for the coated paper market[37](index=37&type=chunk) - In 2018, sales were geographically distributed with **43% in Europe**, **27% in the United States**, and the majority in Asia[35](index=35&type=chunk) - Principal competitors include BASF Group, Omnova Solutions Inc., and Synthomer plc, with **over half of 2018 net sales** from raw material pass-through contracts[40](index=40&type=chunk)[42](index=42&type=chunk) [Synthetic Rubber Segment](index=10&type=section&id=Synthetic%20Rubber%20Segment) This segment is a leading European producer of styrene-butadiene and polybutadiene-based rubber, primarily for high-performance tires, focusing on advanced SSBR grades - Approximately **88% of the segment's 2018 net sales** were attributable to the tire market[47](index=47&type=chunk) - The product mix is shifting towards advanced SSBR grades, growing from **12% of segment volume in 2012 to 34% in 2018**, with SSBR representing approximately **60% of total segment net sales in 2018**[49](index=49&type=chunk) - The company expanded SSBR capacity by **125 KT since 2012**, including a new capacity addition and pilot plant in Schkopau, Germany in 2018[58](index=58&type=chunk) - In 2018, the top three customers accounted for **56% of the segment's net sales**, indicating significant customer concentration[53](index=53&type=chunk) [Performance Plastics Segment](index=14&type=section&id=Performance%20Plastics%20Segment) This segment produces highly engineered compounds and plastics for automotive, electronics, and medical markets, leveraging proprietary technology and the API Plastics acquisition - In 2018, sales were geographically distributed with **59% in Europe**, **21% in the United States**, and **14% in Asia**[61](index=61&type=chunk) - The segment's 2018 product sales comprised approximately **47% Copolymers (ABS, SAN)** and **49% PC & Compounding products**[62](index=62&type=chunk)[66](index=66&type=chunk) - The company started a new MAGNUM™ ABS production line in Zhangjiagang, China in late 2017 to serve the Asia Pacific market[63](index=63&type=chunk) [Polystyrene Segment](index=18&type=section&id=Polystyrene%20Segment) This segment is a leading polystyrene producer for injection molding and thermoforming, focusing on maintaining market position without near-term strategic growth investments - In 2018, approximately **60% of the segment's net sales** were generated in Europe and **40% in Asia**[79](index=79&type=chunk) - The product offerings include general purpose polystyrene (GPPS) and high impact polystyrene (HIPS)[80](index=80&type=chunk) - Principal competitors include INEOS Styrolution, Versalis S.p.A., and Total S.p.A[82](index=82&type=chunk) [Feedstocks Segment](index=20&type=section&id=Feedstocks%20Segment) This segment produces and procures styrene monomer, primarily for internal consumption, benefiting from high global operating rates that can elevate margins - The segment supplied **15% of the styrene monomer capacity in Europe** in 2018[86](index=86&type=chunk) - The majority of styrene monomer produced is consumed internally by the Company's other manufacturing activities[88](index=88&type=chunk) - Global styrene operating rates were approximately **89% in 2018** and are expected to increase through 2020 due to demand growth and limited new capacity[89](index=89&type=chunk) [Americas Styrenics Segment](index=20&type=section&id=Americas%20Styrenics%20Segment) This segment represents the company's 50% ownership in Americas Styrenics, a leading North American styrene and polystyrene producer, which provided significant dividends in 2018 - In 2018, Americas Styrenics was the **1 producer of polystyrene** and supplied **18% of the styrene monomer capacity in North America**[91](index=91&type=chunk) - Trinseo received **$117.5 million in cash dividends** from Americas Styrenics during 2018[91](index=91&type=chunk) - Approximately **58% of the styrene monomer** produced by Americas Styrenics in 2018 was consumed in its own polystyrene production[92](index=92&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks from raw material volatility, operational disruptions, legal inquiries, and debt covenants, alongside share-related risks due to its Luxembourg incorporation - Volatility in the cost and supply of principal raw materials, representing approximately **56% of Cost of Goods Sold**, can adversely affect financial results[145](index=145&type=chunk) - The company is migrating key IT, ERP, and supply chain services from Dow, incurring **$26.1 million in 2018 costs** and potential operational disruptions[151](index=151&type=chunk)[152](index=152&type=chunk) - Trinseo Europe GmbH received a Request for Information from the European Commission regarding styrene monomer commercial activity, potentially leading to fines or adverse effects[161](index=161&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk) - The company's total indebtedness was approximately **$1.2 billion as of December 31, 2018**, with debt covenants potentially restricting operations and actions[181](index=181&type=chunk)[183](index=183&type=chunk) [Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[206](index=206&type=chunk) [Properties](index=49&type=section&id=Item%202.%20Properties) The company operates a global network of owned and leased facilities, including 61 production units at 16 sites and 14 units at 7 joint venture sites as of December 31, 2018 | Facility Type | Location Highlights | | :--- | :--- | | **Corporate Offices** | Luxembourg, Berwyn (USA), Hong Kong, Horgen (Switzerland) | | **Production Sites** | Germany (Boehlen, Rheinmunster, Schkopau, Stade), USA (Dalton, Midland), The Netherlands (Terneuzen), Italy (Mussolente), China (Zhangjiagang), Taiwan (Hsinchu) | | **R&D Facilities** | Germany (Rheinmunster, Schkopau), USA (Dalton, Midland), Switzerland (Samstagern), The Netherlands (Terneuzen) | | **Joint Venture Sites** | Americas Styrenics has 7 sites in the USA and Colombia | [Legal Proceedings](index=51&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to various legal claims but believes no pending litigation will have a material adverse effect, excluding the European Commission inquiry - The company states no pending litigation is likely to have a material adverse effect on its business[212](index=212&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[213](index=213&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Trinseo's ordinary shares trade on the NYSE under "TSE", with details on share repurchases and Luxembourg tax considerations for shareholders - The company's ordinary shares are traded on the New York Stock Exchange under the ticker symbol **"TSE"**[215](index=215&type=chunk) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Oct 1 - Oct 31, 2018 | 202,624 | $65.14 | | Nov 1 - Nov 30, 2018 | 45,000 | $50.24 | | Dec 1 - Dec 31, 2018 | 755,000 | $46.80 | | **Total Q4 2018** | **1,002,624** | **$50.66** | - The company has a share repurchase authorization from June 2017 to repurchase up to **4.0 million ordinary shares**, ending in June 2020[219](index=219&type=chunk) [Selected Financial Data](index=57&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of the company's key financial data from its statements of operations, balance sheets, and other financial metrics | (In millions, except per share data) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net sales** | $4,622.8 | $4,448.1 | $3,716.6 | | **Gross profit** | $528.8 | $640.3 | $592.2 | | **Operating income** | $414.4 | $525.0 | $498.2 | | **Net income** | $292.5 | $328.3 | $318.3 | | **Net income per share—diluted** | $6.70 | $7.30 | $6.70 | | **Dividends per share** | $1.56 | $1.38 | $0.90 | | **Total assets (at year-end)** | $2,726.8 | $2,772.0 | $2,421.3 | | **Total debt (at year-end)** | $1,192.4 | $1,199.7 | $1,187.4 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's 2018 financial performance, segment results, liquidity, and capital resources, anticipating continued market challenges into Q1 2019 - For FY 2018, net income was **$292.5 million** and Adjusted EBITDA was **$573.2 million**, amidst challenging market dynamics and economic conditions late in the year[244](index=244&type=chunk) - The company returned significant cash to shareholders in 2018, repurchasing approximately **2.2 million shares for $142.9 million** and paying dividends of **$1.56 per share**[244](index=244&type=chunk) - The company expects unfavorable market conditions from late 2018 to continue into Q1 2019, with market recovery timing being a key factor for 2019 results[311](index=311&type=chunk) [Results of Operations](index=61&type=section&id=Results%20of%20Operations) This section details operational results, showing 2018 net sales increased 4% to **$4.62 billion** but gross profit decreased 17%, while 2017 net sales increased 20% to **$4.45 billion** and gross profit increased 8% | (in millions) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net sales** | $4,622.8 | $4,448.1 | $3,716.6 | | **Gross profit** | $528.8 | $640.3 | $592.2 | | **Operating income** | $414.4 | $525.0 | $498.2 | | **Net income** | $292.5 | $328.3 | $318.3 | - **2018 vs. 2017:** Net sales increased **4%** due to currency impacts, while gross profit decreased **17%** due to weaker margins across several segments[255](index=255&type=chunk)[257](index=257&type=chunk) - **2017 vs. 2016:** Net sales increased **20%** primarily due to higher selling prices from raw material cost pass-through, and gross profit increased **8%** due to higher margins, especially in Latex Binders and Feedstocks[268](index=268&type=chunk)[270](index=270&type=chunk) [Selected Segment Information](index=66&type=section&id=Selected%20Segment%20Information) This section details the financial performance of the company's six segments, highlighting 2018 Adjusted EBITDA declines in Performance Plastics, Latex Binders, and Polystyrene, and an increase in Americas Styrenics | Segment (2018 Adjusted EBITDA in millions) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | Latex Binders | $110.4 | $138.5 | (20)% | | Synthetic Rubber | $77.0 | $83.3 | (8)% | | Performance Plastics | $188.9 | $230.9 | (18)% | | Polystyrene | $33.7 | $48.2 | (30)% | | Feedstocks | $107.1 | $110.5 | (3)% | | Americas Styrenics | $144.1 | $122.9 | 17% | [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity stems from cash, operations, and credit facilities, with **$452.3 million** cash and **$1.2 billion** total debt as of year-end 2018, and it uses derivatives to manage financial risks | (in millions) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $366.5 | $391.3 | $403.7 | | Net cash used in investing activities | $(118.7) | $(182.6) | $(117.3) | | Net cash used in financing activities | $(222.2) | $(253.0) | $(247.6) | - As of December 31, 2018, total debt was **$1,192.4 million**, and working capital was **$1,094.3 million**[334](index=334&type=chunk) - Free Cash Flow, a non-GAAP measure, was **$245.1 million in 2018**, compared to **$243.9 million in 2017**[332](index=332&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=89&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, foreign currency, and commodity prices, which it manages using derivatives, though commodity price volatility can impact earnings due to cost pass-through lags - **Interest Rate Risk:** The company has variable rate debt (2024 Term Loan B) and uses interest rate swaps to convert a portion to a fixed rate[399](index=399&type=chunk)[400](index=400&type=chunk) - **Foreign Currency Risk:** The primary exposure is the euro, as approximately **60% of 2018 net sales** were generated in Europe, hedged with foreign exchange forward contracts[405](index=405&type=chunk) - **Commodity Price Risk:** The company is exposed to volatile raw material prices; a hypothetical **10% change** would have impacted 2018 cost of sales by approximately **$322.2 million**[409](index=409&type=chunk) [Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that required financial statements and supplementary data are included in Item 15 of the report - The financial statements and supplementary data are included in Item 15 of the Form 10-K[411](index=411&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=93&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[412](index=412&type=chunk) [Controls and Procedures](index=93&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2018[413](index=413&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2018, based on the COSO framework[416](index=416&type=chunk) [Other Information](index=95&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[419](index=419&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=95&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2019 proxy statement - Information is incorporated by reference from the 2019 Proxy Statement[421](index=421&type=chunk) [Executive Compensation](index=95&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2019 Proxy Statement - Information is incorporated by reference from the 2019 Proxy Statement[423](index=423&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=95&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's 2019 Proxy Statement - Information is incorporated by reference from the 2019 Proxy Statement[424](index=424&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2019 Proxy Statement - Information is incorporated by reference from the 2019 Proxy Statement[425](index=425&type=chunk) [Principal Accounting Fees and Services](index=95&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2019 Proxy Statement - Information is incorporated by reference from the 2019 Proxy Statement[426](index=426&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=96&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements, Americas Styrenics LLC financials, and an index of all exhibits - This item contains the list of financial statements and an index of all exhibits filed with the Form 10-K[428](index=428&type=chunk)[430](index=430&type=chunk) [Form 10-K Summary](index=104&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[438](index=438&type=chunk) [Financial Statements and Supplementary Data](index=107&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) [Report of Independent Registered Public Accounting Firm](index=108&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued unqualified opinions on Trinseo S.A.'s consolidated financial statements and the effectiveness of its internal control over financial reporting - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[447](index=447&type=chunk) [Consolidated Financial Statements](index=111&type=section&id=Consolidated%20Financial%20Statements) This section presents Trinseo S.A.'s core audited financial statements, including Consolidated Balance Sheets and Statements of Operations, Comprehensive Income, Shareholders' Equity, and Cash Flows | (in millions) | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Total Assets** | $2,726.8 | $2,772.0 | | **Total Liabilities** | $1,958.1 | $2,097.2 | | **Total Shareholders' Equity** | $768.7 | $674.8 | | (in millions) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net Sales** | $4,622.8 | $4,448.1 | $3,716.6 | | **Net Income** | $292.5 | $328.3 | $318.3 | [Notes to Consolidated Financial Statements](index=117&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures supplementing financial statements, covering accounting policies, acquisitions, investments, debt, derivatives, income taxes, and segment information - **Note 2:** The company adopted new accounting guidance for revenue recognition (Topic 606) on January 1, 2018, with no material impact, and new guidance for presenting pension costs[529](index=529&type=chunk)[534](index=534&type=chunk) - **Note 4:** The company acquired API Plastics in July 2017 for a net purchase price of **$82.3 million**, adding TPEs to its Performance Plastics segment[555](index=555&type=chunk) - **Note 11:** As of December 31, 2018, total debt was **$1.2 billion**, primarily comprising a **$691.3 million 2024 Term Loan B** and **$500.0 million in 5.375% 2025 Senior Notes**[578](index=578&type=chunk) - **Note 19:** Details the realignment of reporting segments effective January 1, 2018, and provides a reconciliation of income before taxes to Segment Adjusted EBITDA[697](index=697&type=chunk)[701](index=701&type=chunk) [Americas Styrenics LLC Financial Statements](index=191&type=section&id=Americas%20Styrenics%20LLC%20Financial%20Statements) This section contains the complete audited consolidated financial statements for Americas Styrenics LLC, the company's 50%-owned joint venture, including auditor's report and financial statements | (in millions) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,825.7 | $1,783.6 | $1,483.1 | | **Net Income** | $260.2 | $194.4 | $228.8 | | **Distribution to Members** | $235.0 | $240.0 | $260.0 |