Trinseo(TSE) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview Second Quarter 2025 Highlights Trinseo's Q2 2025 financial performance declined significantly, with net sales down 15% and a $106 million net loss, while Adjusted EBITDA reduced, Free Cash Flow improved Second Quarter 2025 Key Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | 784 | 920 | -15% | | Net Loss | (106) | (68) | +$38M | | Diluted EPS ($) | (2.95) | (1.92) | -$1.03 | | Adjusted Net Loss* | (76) | (52) | +$24M | | Adjusted EPS ($)* | (2.12) | (1.46) | -$0.66 | | EBITDA* | 26 | 64 | -$38M | | Adjusted EBITDA* | 42 | 67 | -$25M | - Adjusted EBITDA of $42 million was $25 million below prior year, primarily due to lower volumes and equity income, partially offset by cost savings, including $10 million unfavorable net timing[4][6] - Free Cash Flow was negative $3 million, a $53 million improvement year-over-year despite lower earnings, driven by $7 million cash from operations and $10 million capital expenditures[4] - Second quarter ending cash stood at $139 million (including $2 million restricted), with total liquidity at $399 million[4] CEO Commentary & Business Environment CEO Frank Bozich highlighted a challenging Q2 2025 business environment due to geopolitical and trade uncertainty, leading to customer hesitancy; the company focused on restructuring savings and cash conversion cycle improvements - The Q2 business environment faced pressure across all segments due to increased geopolitical and trade uncertainty, resulting in customer hesitancy and order cancellations[7] - The company achieved restructuring savings and a double-digit day reduction in the cash conversion cycle to mitigate market headwinds[7] 2025 Full-Year Outlook Trinseo forecasts full-year 2025 Adjusted EBITDA of approximately $200 million, assuming no second-half recovery due to trade uncertainty, while focusing on working capital optimization and liquidity preservation Full-Year 2025 Financial Outlook | Metric | Forecast ($ millions) | | :--- | :--- | | Net Loss | ~$320 | | Adjusted EBITDA | ~$200 | | Free Cash Flow | ~$165 (negative) | - The forecast assumes no recovery in the second half of the year, with seasonally higher volumes dampened by trade uncertainty, though this depressed demand is not considered structural[9] - The company is intensely focused on optimizing working capital, reducing discretionary spend, and executing targeted actions to preserve liquidity and maintain financial flexibility[9] Consolidated Financial Statements Condensed Consolidated Statements of Operations Q2 2025 net sales decreased to $784.3 million from $920.0 million in Q2 2024, leading to a $105.5 million net loss, significantly higher than the prior year, with increased net losses for the six-month period Condensed Consolidated Statements of Operations (Selected Data) | Metric ($ millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | 784.3 | 920.0 | 1,569.1 | 1,824.0 | | Gross profit | 36.6 | 68.4 | 100.4 | 129.0 | | Operating income (loss) | (33.3) | 13.9 | (62.3) | 10.6 | | Net loss | (105.5) | (67.8) | (184.5) | (143.3) | | Net loss per share- diluted ($) | (2.95) | (1.92) | (5.18) | (4.06) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets slightly decreased to $2,631.9 million, cash declined, while accounts receivable and inventories rose; long-term debt increased, and shareholders' equity remained in deficit Condensed Consolidated Balance Sheets (Selected Data) | Metric ($ millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 137.0 | 209.8 | | Accounts receivable, net | 433.9 | 379.9 | | Inventories | 378.0 | 347.2 | | Total assets | 2,631.9 | 2,644.1 | | Current liabilities | 707.7 | 720.9 | | Long-term debt, net | 2,321.2 | 2,200.7 | | Shareholders' equity (deficit) | (750.3) | (619.9) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash used in operating activities was $103.4 million, a slight improvement year-over-year, with financing activities providing $42.2 million from refinancing term loans and revolving facilities Condensed Consolidated Statements of Cash Flows (Selected Data) | Metric ($ millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash used in operating activities | (103.4) | (108.1) | | Capital expenditures | (18.5) | (29.9) | | Cash used in investing activities | (18.5) | (21.7) | | Cash provided by (used in) financing activities | 42.2 | (19.8) | | Net change in cash, cash equivalents, and restricted cash | (72.7) | (153.2) | | Cash, cash equivalents, and restricted cash—end of period | 139.2 | 107.9 | Segment Performance Analysis Net Sales by Segment All segments experienced Q2 2025 net sales declines year-over-year, with Engineered Materials down 9%, Latex Binders 19%, and Polymer Solutions 17%, primarily due to lower volumes and pricing pressure Net Sales by Segment ($ millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | 293.2 | 323.8 | 570.5 | 606.3 | | Latex Binders | 204.2 | 252.4 | 413.5 | 493.9 | | Polymer Solutions | 286.9 | 343.8 | 585.1 | 723.8 | | Total Net Sales | 784.3 | 920.0 | 1,569.1 | 1,824.0 | - Engineered Materials net sales decreased 9% primarily due to lower sales volume[12] - Latex Binders net sales decreased 19% due to lower volumes in paper, board, and textile in Asia/Europe, and significant pricing pressure; CASE applications comprised 16% of segment sales with a 3% volume increase[12] - Polymer Solutions net sales decreased 17% due to lower margins and sales volumes, particularly in Europe, driven by significant pricing pressure from Asian imports[12] Adjusted EBITDA by Segment Q2 2025 Adjusted EBITDA declined across all segments, with Engineered Materials seeing a slight decrease, while Latex Binders, Polymer Solutions, and Americas Styrenics experienced more significant drops due to lower volumes, margins, and an unplanned outage Adjusted EBITDA by Segment ($ millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Engineered Materials | 31.1 | 32.0 | | Latex Binders | 16.8 | 25.6 | | Polymer Solutions | 5.2 | 16.0 | | Americas Styrenics | 8.2 | 15.7 | | Corporate Unallocated | (19.7) | (22.5) | | Total Adjusted EBITDA | 41.6 | 66.8 | - Engineered Materials Adjusted EBITDA was $31 million, $1 million below prior year, as lower volumes were largely offset by mix improvement and restructuring savings[12] - Latex Binders Adjusted EBITDA was $17 million, $9 million below prior year due to lower volume[12] - Polymer Solutions Adjusted EBITDA was $5 million, $11 million below prior year, due to lower margins and volumes, partially offset by restructuring savings; Americas Styrenics Adjusted EBITDA was $8 million, $8 million below prior year, mainly due to lower polystyrene volume and an unplanned outage[12] Non-GAAP Measures and Reconciliations Explanation of Non-GAAP Measures Trinseo uses non-GAAP measures like Adjusted Net Income (Loss), EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow to provide additional insights into business trends and performance, excluding certain non-core GAAP items, but these are not GAAP substitutes - Non-GAAP measures such as Adjusted Net Income (Loss), EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow are utilized to evaluate business trends, performance, management, and profitability[18] - EBITDA is defined as income from continuing operations before net interest expense, income tax provision, and depreciation and amortization expense[28] - Adjusted EBITDA further adjusts EBITDA for items like loss on extinguishment of long-term debt, asset impairment charges, and restructuring charges to indicate ongoing performance and business trends[29] - These non-GAAP measures are not recognized under GAAP and should not be considered alternatives to GAAP performance or liquidity measures[18][31][37] Reconciliation of Non-GAAP Performance Measures Q2 2025 EBITDA was $26.3 million (down from $63.8 million in Q2 2024), Adjusted EBITDA was $41.6 million (down from $66.8 million), and Adjusted Net Loss was $75.6 million (vs. $51.7 million in Q2 2024); full-year 2025 forecasts are $200 million Adjusted EBITDA and $320 million Adjusted Net Loss Reconciliation of Non-GAAP Performance Measures ($ millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | (105.5) | (67.8) | | EBITDA | 26.3 | 63.8 | | Adjusted EBITDA | 41.6 | 66.8 | | Adjusted Net Loss | (75.6) | (51.7) | | Adjusted EPS ($) | (2.12) | (1.46) | Forecasted Non-GAAP Performance Measures (Full Year 2025) | Metric ($ millions, except per share data) | Year Ended December 31, 2025 | | :--- | :--- | | Adjusted EBITDA | 200 | | Net Loss | (320) | | Adjusted Net Loss | (320) | | Adjusted EPS ($) | (8.96) | Reconciliation of Non-GAAP Liquidity Measures (Free Cash Flow) Q2 2025 Free Cash Flow was negative $3.0 million, a significant improvement from negative $56.1 million in Q2 2024, driven by improved cash from operations and reduced capital expenditures, with a full-year forecast of negative $165 million Free Cash Flow Reconciliation ($ millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cash provided by (used in) operating activities | 6.8 | (41.9) | (103.4) | (108.1) | | Capital expenditures | (9.8) | (14.2) | (18.5) | (29.9) | | Free Cash Flow | (3.0) | (56.1) | (121.9) | (138.0) | Forecasted Free Cash Flow (Full Year 2025) | Metric ($ millions) | Year Ended December 31, 2025 | | :--- | :--- | | Cash used in operating activities | (100) | | Capital expenditures | (65) | | Free Cash Flow | (165) | Additional Company Information About Trinseo Trinseo (NYSE: TSE) is a specialty material solutions provider, partnering across industries to deliver innovative and sustainable solutions, reporting approximately $3.5 billion in net sales in 2024 - Trinseo (NYSE: TSE) is a specialty material solutions provider partnering with companies to deliver imaginative, smart, and sustainably focused solutions[15] - Trinseo addresses customer challenges across industries including building and construction, consumer goods, medical, and mobility[16] - Trinseo reported net sales of approximately $3.5 billion in 2024[17] Conference Call and Webcast Details Trinseo will host a conference call on August 7, 2025, at 10 a.m. ET to discuss Q2 2025 financial results, with registration links available for Q&A participants and listen-only webcast attendees - Trinseo will host a conference call to discuss its second quarter 2025 financial results on Thursday, August 7, 2025, at 10 a.m. Eastern Time[10] - Frank Bozich (President and CEO), David Stasse (EVP and CFO), and Bee van Kessel (SVP, Corporate Finance and Investor Relations) will provide commentary on the results[10] - Registration links are provided for Q&A participants and listen-only webcast attendees[11] Cautionary Note on Forward-Looking Statements The press release contains forward-looking statements subject to inherent uncertainties and risks, including global economic conditions, cost savings, raw material costs, and debt servicing; actual results may differ materially, and the company undertakes no obligation to update them - The press release may contain forward-looking statements regarding plans, objectives, goals, projections, forecasts, strategies, future events, or performance, identifiable by terms such as 'expect,' 'anticipate,' 'believe,' 'intend,' and 'outlook'[19] - Forward-looking statements are subject to inherent uncertainties, risks, and unpredictable changes in circumstances, including global economic conditions, ability to generate cost savings, increased raw material and energy costs, and ability to service indebtedness[19] - The company undertakes no obligation to publicly update or revise any forward-looking statement due to new information, future events, or otherwise, except as legally required[19]