Trinseo(TSE) - 2024 Q3 - Quarterly Report

Financial Performance - Trinseo reported a net loss of $87.3 million for Q3 2024, compared to a net loss of$38.4 million in Q3 2023, and a year-to-date net loss of $230.6 million versus$436.3 million in the same period last year[106][111]. - Adjusted EBITDA for Q3 2024 was $66.1 million, showing improvement across all segments except Americas Styrenics, driven by restructuring initiatives and improved product mix[106]. - Net sales for Q3 2024 decreased by 1$867.7 million, primarily due to an 8% reduction in volumes from low-margin businesses, partially offset by a 7% increase in pricing[112]. - Adjusted EBITDA for the three months ended September 30, 2024, was $4.0 million, a decrease of 79$19.0 million for the same period in 2023[151]. - For the nine months ended September 30, 2024, Adjusted EBITDA was $25.8 million, down 47$49.1 million in the prior year[151]. - The decrease in Adjusted EBITDA was primarily due to an unplanned outage at the styrene production facility and lower styrene margins[152]. Cost and Expenses - Cost of sales decreased by 7% in Q3 2024, attributed to lower sales volumes and reduced utility costs, despite a 6% increase in raw material costs[113]. - Gross profit increased by $49.3 million in Q3 2024, mainly due to higher pricing across all segments and prior year impacts from natural gas hedges[114]. - Selling, general and administrative expenses rose by$30.4 million, or 46%, primarily due to increased restructuring costs related to the 2024 Restructuring Plan[115]. - Interest expense increased by $25.7 million, or 55$45.0 million to $50.0 million starting in 2026[107]. - The company is exploring the divestiture of its interest in Americas Styrenics, with a definitive agreement expected in the first half of 2025[109]. - The company anticipates that profitability improvement initiatives will allow it to maintain adequate liquidity and deliver improved results in the future[131]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2024, was$99.3 million, compared to a cash inflow of $131.2 million in the same period of 2023[159]. - Free Cash Flow for the nine months ended September 30, 2024, was$(141.4) million, a decline from $82.1 million in the prior year[165]. - The company had liquidity of$340.3 million as of September 30, 2024, consisting of $163.1 million in cash and cash equivalents and$177.2 million available for borrowing[168]. - The company reported a net cash change of $(93.5) million for the nine months ended September 30, 2024, compared to a positive change of$66.9 million in the prior year[158]. Debt and Financing - As of September 30, 2024, total debt amounted to $2,438.0 million, with interest expenses of$202.5 million[169]. - The 2028 Refinance Term Loans had an original principal of $1,077.3 million, maturing in May 2028, with a stated interest rate of SOFR plus 8.50$10.5 million of interest margin payable, capitalizing $13.0 million to principal payments due at maturity[171]. - The company is in compliance with all covenants and default provisions under its debt agreements as of September 30, 2024[173]. Segment Performance - Adjusted EBITDA for the Engineered Materials segment increased by 1,012$54.5 million for the nine months ended September 30, 2024, driven by higher sales volumes and improved margins[134]. - Net sales for the Latex Binders segment increased by 8% to $241.9 million for the three months ended September 30, 2024, primarily due to higher prices from raw material cost pass-through[139]. - Adjusted EBITDA for the Plastics Solutions segment increased by 64$27.7 million for the three months ended September 30, 2024, attributed to higher margins and lower fixed costs[144]. - Net sales for the Polystyrene segment decreased by 28% to $150.6 million for the three months ended September 30, 2024, primarily due to a 35$0.01 per ordinary share, totaling $0.3 million, accrued as of September 30, 2024[173].