WYNYARD, UK, Feb. 20, 2019 /PRNewswire/ --
Fourth Quarter 2018 Highlights
- Net loss attributable to Venator of $69
million, including a restructuring charge of $55 million and adjusted net income of
$19 million
- Adjusted EBITDA of $45
million
- Diluted loss per share of $0.65
and adjusted diluted earnings per share of $0.18
Full-Year 2018 Highlights
- Net loss attributable to Venator of $163
million, including a restructuring charge of
$628 million, and adjusted net income
of $235 million
- Adjusted EBITDA of $436
million
- Diluted loss per share of $1.53
and adjusted diluted earnings per share of $2.20
Strategic Developments
- Successful completion of actions to deliver the fixed cost
reduction target as part of the 2017 Business Improvement
Program
- Commenced the 2019 Business Improvement Program, which is
anticipated to generate annual run-rate savings of approximately
$40 million in 2020 and deliver a
$60 million reduction in working
capital in 2019
- Selling prices for specialty TiO2 remain robust and we are
progressing the transfer of our specialty technology from Pori to
other sites in our network
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
September
30, 2018
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2018
|
|
2017
|
|
|
|
|
|
2018
|
|
2017
|
Revenues
|
|
$
|
484
|
|
|
$
|
528
|
|
|
$
|
533
|
|
|
$
|
2,265
|
|
|
$
|
2,209
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Venator
|
|
$
|
(69)
|
|
|
$
|
68
|
|
|
$
|
(368)
|
|
|
$
|
(163)
|
|
|
$
|
134
|
|
Adjusted net
income(1)
|
|
$
|
19
|
|
|
$
|
65
|
|
|
$
|
34
|
|
|
$
|
235
|
|
|
$
|
186
|
|
Adjusted
EBITDA(1)
|
|
$
|
45
|
|
|
$
|
118
|
|
|
$
|
77
|
|
|
$
|
436
|
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share(1)
|
|
$
|
(0.65)
|
|
|
$
|
0.64
|
|
|
$
|
(3.46)
|
|
|
$
|
(1.53)
|
|
|
$
|
1.26
|
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
$
|
0.32
|
|
|
$
|
2.20
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities from continuing
operations
|
|
$
|
(24)
|
|
|
$
|
157
|
|
|
$
|
1
|
|
|
$
|
282
|
|
|
$
|
337
|
|
Free cash
flow(3)
|
|
$
|
(79)
|
|
|
$
|
80
|
|
|
$
|
(103)
|
|
|
$
|
(38)
|
|
|
$
|
212
|
|
See end of press release for footnote explanations
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
fourth quarter 2018 results with revenues of $484 million, net loss attributable to Venator of
$69 million, including a
restructuring charge of $55 million,
adjusted net income of $19 million
and adjusted EBITDA of $45
million.
Simon Turner, President and
CEO of Venator, commented:
"Fourth quarter seasonality was amplified by a softer titanium
dioxide environment principally related to customer destocking in
China and Europe and higher raw material and energy
costs, although the effect of customer destocking decelerated from
the third quarter into the fourth. In response to the current
economic environment and a reduced TiO2 manufacturing footprint, we
have commenced a new comprehensive cost and operational improvement
program. These actions are designed to improve profitability,
starting with the rationalization of senior leadership and
simplification of organizational structure.
"As we aggressively manage costs under the 2019 Business
Improvement Program, we remain focused on transferring our
specialty TiO2 technology from Pori to other sites within our
network which, combined with other cost actions, should strengthen
our cash flow generation throughout the cycle. We continue to
explore measures within our portfolio to unlock shareholder
value.
"Notwithstanding global economic uncertainty, longer-term
industry fundamentals remain positive and we believe these actions
will better position Venator for the future."
Segment Analysis for 4Q18 Compared to 4Q17
Titanium Dioxide
The Titanium Dioxide segment generated revenue of $366 million in the three months ended
December 31, 2018, a decrease of $21
million, or 5%, compared to the same period in 2017. The
decrease was primarily due to a 6% decrease in sales volumes and a
1% unfavorable impact of foreign currency translation, partially
offset by a 1% increase in average selling prices and a 1%
improvement due to mix and other. Sales volumes decreased primarily
due to lower demand for functional product grades relating to
customer destocking and lower availability of certain specialty
grade products. Average selling prices for specialty product grades
increased in the quarter.
Adjusted EBITDA for the Titanium Dioxide segment was
$52 million, a decrease of
$67 million for the three months
ended December 31, 2018 compared to
the same period in 2017, or a decrease of $34 million after excluding $33 million of lost earnings attributable to our
Pori, Finland facility, which were
reimbursed through insurance proceeds in the 2017 period. A decline
in volumes and higher raw material and energy costs contributed to
the decline in earnings, partially offset by a $4 million benefit from our Business Improvement
Program.
In the fourth quarter of 2018, the Titanium Dioxide segment
incurred a $52 million pre-tax
restructuring expense, of which approximately $50 million is non-cash relating to Pori
accelerated depreciation and other.
Performance Additives
The Performance Additives segment generated $118 million of revenue in the three months ended
December 31, 2018, which is
$23 million, or 16%, lower compared
to the same period in 2017. The decrease was the result of a 13%
decrease in volumes, a 1% decline in average selling prices, a 1%
unfavorable impact from foreign currency translation and a 1%
decrease due to mix and other. The decline in volumes was primarily
the result of customer destocking in Functional Additives, the
restructuring of our North American business and the
discontinuation of sales of a product to a Timber Treatment
customer.
Adjusted EBITDA for the Performance Additives segment was
$3 million, a decrease of
$12 million for the three months
ended December 31, 2018 compared to
the same period in 2017, primarily as a result of destocking and
higher raw material and energy costs, partially offset by a
$1 million benefit from our 2017
Business Improvement Program.
Corporate and Other
Corporate and other represents expenses which are not allocated to
our segments. Losses from Corporate and other were $10 million, or $6
million lower for the three months ended December 31,
2018 than the same period in 2017 as a result of non-recurring
operational expenses incurred during the fourth quarter of 2017. We
expect Corporate and Other to be approximately $50 million for the full year 2019.
Tax Items
We recorded an income tax benefit of $18
million and $8 million for the
three and twelve months ended December 31, 2018, respectively,
compared to an income tax expense of $24
million and $50 million for
the three and twelve months ended December 31, 2017,
respectively. Our adjusted effective tax rate was 11% for the
twelve months ended December 31, 2018 compared to 18% for the
same period in 2017.
Our income taxes are significantly affected by the mix of income
and losses in tax jurisdictions in which we operate. We continue to
expect our adjusted long-term effective tax rate will be
approximately 15% to 20%. We expect our near-term cash tax rate
will be between 10% to 15%.
Liquidity and Capital Resources
As of December 31, 2018, we had cash and cash equivalents of
$165 million compared with
$251 million as of September 30,
2018 and $238 million as of
December 31, 2017. In addition, we have in place an undrawn
asset based revolving credit facility available for our working
capital needs and general corporate purposes with an available
borrowing base of $259 million as of
December 31, 2018.
As of December 31, 2018, net debt was $583 million compared to $497 million as of September 30, 2018 and
$519 million as of December 31,
2017. In the fourth quarter of 2018, capital expenditures,
excluding Pori, were $42 million or
$114 million for the twelve months
ended December 31, 2018. We expect total capital expenditures,
including spending related to the transfer of production from Pori
to other sites in our network, to be approximately $130 million in 2019. We are taking steps to
increase our liquidity to help fund the capital requirements for
the Pori transfer and shutdown and other general corporate
purposes.
Earnings Conference Call Information
We will hold a conference call to discuss our fourth quarter and
full-year 2018 results on Wednesday,
February 20, 2019 at 8:00 a.m. ET.
Call-in numbers for
the conference call:
|
|
U.S.
participants
|
1-833-366-1118
|
International
participants
|
1-412-902-6770
|
(No passcode
required)
|
|
In order to facilitate the registration process, you may use the
following link to pre-register for the conference call. Callers who
pre-register will be given a unique PIN and separate call-in number
to gain immediate access to the call and bypass the live operator.
To pre-register, please go to:
http://dpregister.com/10128193
Webcast Information
The conference call will be available via webcast and can be
accessed from the company's website at
venatorcorp.com/investor-relations.
Replay Information
The conference call will be available for replay beginning
February 20, 2019 and ending February
27, 2019.
Call-in numbers for
the replay:
|
|
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10128193
|
Upcoming Conferences
During the first quarter of 2019, a member of management is
expected to present at the JP Morgan 2019 Global High Yield &
Leveraged Finance Conference on February
26, the Bank of America Merrill Lynch 2019 Global
Agriculture and Materials Conference on February 27 and the 9th Annual Alembic Global
Advisors Deer Valley Conference on February
28-March 1, 2019. A webcast of the presentations, if
applicable, along with accompanying materials will be available at
venatorcorp.com/investor-relations.
Table 1 — Results
of Operations
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
|
$
|
484
|
|
|
$
|
528
|
|
|
$
|
2,265
|
|
|
$
|
2,209
|
|
Cost of goods
sold
|
|
440
|
|
|
387
|
|
|
1,550
|
|
|
1,744
|
|
Operating
expenses
|
|
64
|
|
|
68
|
|
|
218
|
|
|
226
|
|
Restructuring,
impairment, and plant closing and transition costs
|
|
55
|
|
|
3
|
|
|
628
|
|
|
52
|
|
Operating (loss)
income
|
|
(75)
|
|
|
70
|
|
|
(131)
|
|
|
187
|
|
Interest expense,
net
|
|
(10)
|
|
|
(11)
|
|
|
(40)
|
|
|
(40)
|
|
Other
income
|
|
(2)
|
|
|
35
|
|
|
6
|
|
|
39
|
|
(Loss) income
before income taxes
|
|
(87)
|
|
|
94
|
|
|
(165)
|
|
|
186
|
|
Income tax benefit
(expense)
|
|
18
|
|
|
(24)
|
|
|
8
|
|
|
(50)
|
|
(Loss) income from
continuing operations
|
|
(69)
|
|
|
70
|
|
|
(157)
|
|
|
136
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Net (loss)
income
|
|
(69)
|
|
|
70
|
|
|
(157)
|
|
|
144
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
—
|
|
|
(2)
|
|
|
(6)
|
|
|
(10)
|
|
Net (loss) income
attributable to Venator
|
|
$
|
(69)
|
|
|
$
|
68
|
|
|
$
|
(163)
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
45
|
|
|
$
|
118
|
|
|
$
|
436
|
|
|
$
|
395
|
|
Adjusted net
income(1)
|
|
$
|
19
|
|
|
$
|
65
|
|
|
$
|
235
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)
earnings per share
|
|
$
|
(0.65)
|
|
|
$
|
0.64
|
|
|
$
|
(1.53)
|
|
|
$
|
1.26
|
|
Diluted (loss)
earnings per share(1)
|
|
$
|
(0.65)
|
|
|
$
|
0.64
|
|
|
$
|
(1.53)
|
|
|
$
|
1.26
|
|
Adjusted earnings
per share(1)
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
$
|
2.21
|
|
|
$
|
1.75
|
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
$
|
2.20
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
Ordinary share
information(1):
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
106.4
|
|
|
106.3
|
|
|
106.4
|
|
|
106.3
|
|
Diluted
shares
|
|
106.5
|
|
|
106.7
|
|
|
106.7
|
|
|
106.7
|
|
See end of press release for footnote explanations
Table 2 — Results
of Operations by Segment
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
Twelve months
ended
|
|
|
|
|
December
31,
|
|
Better
/
|
|
December
31,
|
|
Better
/
|
(In millions)
|
|
2018
|
|
2017
|
|
(Worse)
|
|
2018
|
|
2017
|
|
(Worse)
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
366
|
|
|
$
|
387
|
|
|
(5)
|
%
|
|
$
|
1,666
|
|
|
$
|
1,604
|
|
|
4
|
%
|
Performance
Additives
|
|
118
|
|
|
141
|
|
|
(16)
|
%
|
|
599
|
|
|
605
|
|
|
(1)
|
%
|
Total
|
|
$
|
484
|
|
|
$
|
528
|
|
|
(8)
|
%
|
|
$
|
2,265
|
|
|
$
|
2,209
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
52
|
|
|
$
|
119
|
|
|
(56)
|
%
|
|
$
|
417
|
|
|
$
|
387
|
|
|
8
|
%
|
Performance
Additives
|
|
3
|
|
|
15
|
|
|
(80)
|
%
|
|
62
|
|
|
72
|
|
|
(14)
|
%
|
Corporate and
other
|
|
(10)
|
|
|
(16)
|
|
|
38
|
%
|
|
(43)
|
|
|
(64)
|
|
|
33
|
%
|
Total
|
|
$
|
45
|
|
|
$
|
118
|
|
|
(62)
|
%
|
|
$
|
436
|
|
|
$
|
395
|
|
|
10
|
%
|
See end of press release for footnote explanations
Table 3 — Factors
Impacting Sales Revenue
|
|
|
|
Three months
ended
|
|
December 31, 2018
vs. 2017
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
1
|
%
|
|
(1)
|
%
|
|
1
|
%
|
|
(6)
|
%
|
|
(5)
|
%
|
Performance
Additives
|
(1)
|
%
|
|
(1)
|
%
|
|
(1)
|
%
|
|
(13)
|
%
|
|
(16)
|
%
|
Total
Company
|
—
|
%
|
|
(1)
|
%
|
|
—
|
%
|
|
(8)
|
%
|
|
(9)
|
%
|
|
Twelve months
ended
|
|
December 31, 2018
vs. 2017
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
13
|
%
|
|
3
|
%
|
|
1
|
%
|
|
(13)
|
%
|
|
4
|
%
|
Performance
Additives
|
3
|
%
|
|
2
|
%
|
|
(2)
|
%
|
|
(4)
|
%
|
|
(1)
|
%
|
Total
Company
|
10
|
%
|
|
3
|
%
|
|
—
|
%
|
|
(11)
|
%
|
|
2
|
%
|
|
(a)
|
Excludes revenues
from tolling arrangements, by-products and raw materials
|
(b)
|
Excludes sales
volumes of by-products and raw materials
|
Table 4 —
Reconciliation of U.S. GAAP to Non-GAAP Measures
|
|
|
|
EBITDA
|
|
Income Tax
(Expense)
Benefit(2)
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net (loss)
income
|
|
$
|
(69)
|
|
|
$
|
70
|
|
|
|
|
|
|
$
|
(69)
|
|
|
$
|
70
|
|
|
$
|
(0.65)
|
|
|
$
|
0.66
|
|
Net income
attributable to noncontrolling interests
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(0.02)
|
|
Net (loss) income
attributable to Venator
|
|
(69)
|
|
|
68
|
|
|
|
|
|
|
(69)
|
|
|
68
|
|
|
(0.65)
|
|
|
0.64
|
|
Interest expense,
net
|
|
10
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense from continuing operations
|
|
(18)
|
|
|
24
|
|
|
18
|
|
|
(24)
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
30
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
11
|
|
|
3
|
|
|
—
|
|
|
(1)
|
|
|
11
|
|
|
2
|
|
|
0.10
|
|
|
0.02
|
|
Separation expense,
net
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
7
|
|
|
0.01
|
|
|
0.07
|
|
U.S. income tax
reform
|
|
—
|
|
|
(34)
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
(18)
|
|
|
—
|
|
|
(0.17)
|
|
Significant changes
to income tax valuation allowances(2)
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(0.05)
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
5
|
|
|
4
|
|
|
2
|
|
|
—
|
|
|
7
|
|
|
4
|
|
|
0.07
|
|
|
0.04
|
|
Net plant incident
costs
|
|
20
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
0.16
|
|
|
—
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
55
|
|
|
3
|
|
|
2
|
|
|
(1)
|
|
|
57
|
|
|
2
|
|
|
0.53
|
|
|
0.02
|
|
Adjusted(1)
|
|
$
|
45
|
|
|
$
|
118
|
|
|
$
|
14
|
|
|
$
|
(10)
|
|
|
$
|
19
|
|
|
$
|
65
|
|
|
$
|
0.18
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
(benefit) expense(2)
|
|
|
|
|
|
|
|
|
|
$
|
(14)
|
|
|
$
|
10
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
—
|
|
|
2
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
$
|
77
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
(280)
|
%
|
|
13
|
%
|
|
|
|
|
|
|
EBITDA
|
Income Tax
(Expense)
Benefit(2)
|
Net Income
(Loss)
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Three months
ended
|
Three months
ended
|
Three months
ended
|
Three months
ended
|
|
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
(In millions, except per share amounts)
|
|
2018
|
2018
|
2018
|
2018
|
Net
loss
|
|
$
|
(366)
|
|
|
|
|
$
|
(366)
|
|
|
$
|
(3.43)
|
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
|
|
(2)
|
|
|
(0.02)
|
|
|
Net loss
attributable to Venator
|
|
(368)
|
|
|
|
|
(368)
|
|
|
(3.45)
|
|
|
Interest expense,
net
|
|
10
|
|
|
|
|
|
|
|
|
Income tax benefit
from continuing operations
|
|
(55)
|
|
|
55
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
33
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
5
|
|
|
(1)
|
|
|
4
|
|
|
0.04
|
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
(1)
|
|
|
2
|
|
|
0.02
|
|
|
Net plant incident
costs
|
|
21
|
|
|
(3)
|
|
|
18
|
|
|
0.17
|
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
428
|
|
|
(50)
|
|
|
378
|
|
|
3.54
|
|
|
Adjusted(1)
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
—
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
2
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
36
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
—
|
%
|
|
|
|
|
|
EBITDA
|
|
Income Tax
(Expense)
Benefit(2)
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Twelve months
ended
|
|
Twelve months
ended
|
|
Twelve months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net (loss)
income
|
|
$
|
(157)
|
|
|
$
|
144
|
|
|
|
|
|
|
$
|
(157)
|
|
|
$
|
144
|
|
|
$
|
(1.47)
|
|
|
$
|
1.35
|
|
Net income
attributable to noncontrolling interests
|
|
(6)
|
|
|
(10)
|
|
|
|
|
|
|
(6)
|
|
|
(10)
|
|
|
(0.06)
|
|
|
(0.09)
|
|
Net (loss) income
attributable to Venator
|
|
(163)
|
|
|
134
|
|
|
|
|
|
|
(163)
|
|
|
134
|
|
|
(1.53)
|
|
|
1.26
|
|
Interest expense,
net
|
|
40
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense from continuing operations
|
|
(8)
|
|
|
50
|
|
|
8
|
|
|
(50)
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
132
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
20
|
|
|
5
|
|
|
(3)
|
|
|
(2)
|
|
|
17
|
|
|
3
|
|
|
0.16
|
|
|
0.03
|
|
Separation expense,
net
|
|
2
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
7
|
|
|
0.02
|
|
|
0.07
|
|
U.S. income tax
reform
|
|
—
|
|
|
(34)
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
(18)
|
|
|
—
|
|
|
(0.17)
|
|
Significant changes
to income tax valuation allowances(2)
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(0.05)
|
|
|
—
|
|
Net income of
discontinued operations
|
|
—
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
—
|
|
|
(0.07)
|
|
Loss on disposition
of business/assets
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Certain legal
settlements and related expenses
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
Amortization of
pension and postretirement actuarial losses
|
|
15
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
17
|
|
|
0.14
|
|
|
0.16
|
|
Net plant incident
(credits) costs
|
|
(232)
|
|
|
4
|
|
|
47
|
|
|
(1)
|
|
|
(185)
|
|
|
3
|
|
|
(1.73)
|
|
|
0.03
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
628
|
|
|
52
|
|
|
(76)
|
|
|
(5)
|
|
|
552
|
|
|
47
|
|
|
5.17
|
|
|
0.44
|
|
Adjusted(1)
|
|
$
|
436
|
|
|
$
|
395
|
|
|
$
|
(29)
|
|
|
$
|
(42)
|
|
|
$
|
235
|
|
|
$
|
186
|
|
|
$
|
2.20
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
|
|
|
|
$
|
29
|
|
|
$
|
42
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
6
|
|
|
10
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$
|
270
|
|
|
$
|
238
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
11
|
%
|
|
18
|
%
|
|
|
|
|
See end of press release for footnote explanations
Table 5 — Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2018
|
|
2018
|
|
2017
|
Cash
|
|
$
|
165
|
|
|
$
|
251
|
|
|
$
|
238
|
|
Accounts and notes
receivable, net
|
|
351
|
|
|
398
|
|
|
392
|
|
Inventories
|
|
538
|
|
|
513
|
|
|
454
|
|
Prepaid and other
current assets
|
|
71
|
|
|
100
|
|
|
85
|
|
Property, plant and
equipment, net
|
|
994
|
|
|
1,022
|
|
|
1,367
|
|
Other
assets
|
|
366
|
|
|
308
|
|
|
311
|
|
Total
assets
|
|
$
|
2,485
|
|
|
$
|
2,592
|
|
|
$
|
2,847
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
400
|
|
|
$
|
389
|
|
|
$
|
401
|
|
Other current
liabilities
|
|
135
|
|
|
161
|
|
|
244
|
|
Current portion of
debt
|
|
8
|
|
|
7
|
|
|
14
|
|
Long-term
debt
|
|
740
|
|
|
741
|
|
|
743
|
|
Non-current payable
to affiliates
|
|
34
|
|
|
34
|
|
|
34
|
|
Other
liabilities
|
|
313
|
|
|
281
|
|
|
306
|
|
Total
equity
|
|
855
|
|
|
979
|
|
|
1,105
|
|
Total liabilities
and equity
|
|
$
|
2,485
|
|
|
$
|
2,592
|
|
|
$
|
2,847
|
|
Table 6 —
Outstanding Debt
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2018
|
|
2018
|
|
2017
|
Debt:
|
|
|
|
|
|
|
Senior
Notes
|
|
$
|
370
|
|
|
$
|
370
|
|
|
$
|
370
|
|
Term Loan
Facility
|
|
365
|
|
|
365
|
|
|
367
|
|
Other debt
|
|
13
|
|
|
13
|
|
|
20
|
|
Total debt -
excluding affiliates
|
|
748
|
|
|
748
|
|
|
757
|
|
Total cash
|
|
165
|
|
|
251
|
|
|
238
|
|
Net debt -
excluding affiliates
|
|
$
|
583
|
|
|
$
|
497
|
|
|
$
|
519
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total cash at
beginning of period(a)
|
|
$
|
251
|
|
|
$
|
186
|
|
|
$
|
238
|
|
|
$
|
30
|
|
Net cash provided by
operating activities(a)
|
|
(24)
|
|
|
157
|
|
|
282
|
|
|
338
|
|
Net cash (used in)
provided by investing activities(a)
|
|
(55)
|
|
|
(84)
|
|
|
(321)
|
|
|
(12)
|
|
Net cash used in
financing activities(a)
|
|
(1)
|
|
|
(24)
|
|
|
(18)
|
|
|
(123)
|
|
Effect of exchange
rate changes on cash
|
|
(6)
|
|
|
3
|
|
|
(16)
|
|
|
5
|
|
Total cash at end
of period(a)
|
|
$
|
165
|
|
|
$
|
238
|
|
|
$
|
165
|
|
|
$
|
238
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(5)
|
|
|
$
|
(4)
|
|
|
$
|
(46)
|
|
|
$
|
(28)
|
|
Cash paid for income
taxes
|
|
(6)
|
|
|
(10)
|
|
|
(34)
|
|
|
(21)
|
|
Capital
expenditures
|
|
(54)
|
|
|
(100)
|
|
|
(326)
|
|
|
(197)
|
|
Depreciation and
amortization
|
|
30
|
|
|
32
|
|
|
132
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
39
|
|
|
30
|
|
|
25
|
|
|
(24)
|
|
Inventories
|
|
(36)
|
|
|
(14)
|
|
|
(103)
|
|
|
8
|
|
Accounts
payable
|
|
(9)
|
|
|
43
|
|
|
(27)
|
|
|
51
|
|
Total cash
provided by (used in) primary working capital
|
|
$
|
(6)
|
|
|
$
|
59
|
|
|
$
|
(105)
|
|
|
$
|
35
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Free cash
flow(3):
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities from continuing operations
|
|
$
|
(24)
|
|
|
$
|
157
|
|
|
$
|
282
|
|
|
$
|
337
|
|
Capital
expenditures
|
|
(54)
|
|
|
(100)
|
|
|
(326)
|
|
|
(197)
|
|
Cash received from
(investment in) unconsolidated affiliates, net
|
|
(2)
|
|
|
(10)
|
|
|
4
|
|
|
(6)
|
|
Other investing
activities excluding transactions with former parent and cash flows
related to sales of businesses/assets
|
|
—
|
|
|
26
|
|
|
—
|
|
|
71
|
|
Non-recurring
separation costs(b)
|
|
1
|
|
|
7
|
|
|
2
|
|
|
7
|
|
Total free cash
flow
|
|
$
|
(79)
|
|
|
$
|
80
|
|
|
$
|
(38)
|
|
|
$
|
212
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
45
|
|
|
$
|
118
|
|
|
$
|
436
|
|
|
$
|
395
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(42)
|
|
|
(45)
|
|
|
(114)
|
|
|
(103)
|
|
Cash paid for
interest
|
|
(5)
|
|
|
(4)
|
|
|
(46)
|
|
|
(28)
|
|
Cash paid for income
taxes
|
|
(6)
|
|
|
(10)
|
|
|
(34)
|
|
|
(21)
|
|
Primary working
capital change
|
|
(6)
|
|
|
59
|
|
|
(105)
|
|
|
35
|
|
Restructuring
|
|
(9)
|
|
|
(10)
|
|
|
(37)
|
|
|
(33)
|
|
Maintenance & other
|
|
(17)
|
|
|
(23)
|
|
|
(78)
|
|
|
(2)
|
|
Net cash flows
associated with Pori
|
|
(39)
|
|
|
(5)
|
|
|
(60)
|
|
|
(31)
|
|
Total free cash
flow(3)
|
|
$
|
(79)
|
|
|
$
|
80
|
|
|
$
|
(38)
|
|
|
$
|
212
|
|
|
See end of press
release for numbered footnote explanations
|
|
|
(a)
|
Includes discontinued
operations
|
(b)
|
Represents payments
associated with our separation from Huntsman
|
Footnotes
(1)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income before interest expense, net, income tax
expense from continuing operations, depreciation and amortization,
and net income attributable to noncontrolling interests, after
eliminating the following: (a) business acquisition and
integration expenses; (b) separation expense, net; (c) U.S.
income tax reform; (d) net income of discontinued operations,
net of tax; (e) loss (gain) on disposition of
businesses/assets; (f) certain legal settlements and
related expenses; (g) amortization of pension and
postretirement actuarial losses; (h) net plant incident
(credits) costs; and (i) restructuring, impairment and plant
closing and transition costs. We believe that net income is the
performance measure calculated and presented in accordance with
U.S. GAAP that is most directly comparable to adjusted
EBITDA.
|
|
|
|
We believe adjusted
EBITDA is useful to investors in assessing our ongoing financial
performance and provides improved comparability between periods
through the exclusion of certain items that management believes are
not indicative of our operational profitability and that may
obscure underlying business results and trends. However, this
measure should not be considered in isolation or viewed as a
substitute for net income or other measures of performance
determined in accordance with U.S. GAAP. Moreover, adjusted
EBITDA as used herein is not necessarily comparable to other
similarly titled measures of other companies due to potential
inconsistencies in the methods of calculation. Our management
believes this measure is useful to compare general operating
performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities
analysts, lenders and others in their evaluation of different
companies because it excludes certain items that can vary widely
across different industries or among companies within the same
industry. For example, interest expense can be highly dependent on
a company's capital structure, debt levels and credit ratings.
Therefore, the impact of interest expense on earnings can vary
significantly among companies. In addition, the tax positions of
companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
various jurisdictions in which they operate. As a result, effective
tax rates and tax expense can vary considerably among companies.
Finally, companies employ productive assets of different ages and
utilize different methods of acquiring and depreciating such
assets. This can result in considerable variability in the relative
costs of productive assets and the depreciation and amortization
expense among companies.
|
|
|
|
Nevertheless, our
management recognizes that there are limitations associated with
the use of adjusted EBITDA in the evaluation of us as compared to
net income. Our management compensates for the limitations of using
adjusted EBITDA by using this measure to supplement U.S. GAAP
results to provide a more complete understanding of the factors and
trends affecting the business rather than U.S. GAAP results
alone.
|
|
|
|
In addition to the
limitations noted above, adjusted EBITDA excludes items that may be
recurring in nature and should not be disregarded in the evaluation
of performance. However, we believe it is useful to exclude such
items to provide a supplemental analysis of current results and
trends compared to other periods because certain excluded items can
vary significantly depending on specific underlying transactions or
events, and the variability of such items may not relate
specifically to ongoing operating results or trends and certain
excluded items, while potentially recurring in future periods, may
not be indicative of future results. For example, while EBITDA from
discontinued operations is a recurring item, it is not indicative
of ongoing operating results and trends or future
results.
|
|
|
|
Adjusted net income
is computed by eliminating the after-tax amounts related to the
following from net income attributable to Venator Materials PLC
ordinary shareholders: (a) business acquisition and integration
expenses; (b) separation expense, net; (c) U.S. income tax reform;
(d) significant changes to income tax valuation allowances; (e) net
income of discontinued operations; (f) loss (gain) on disposition
of businesses/assets; (g) certain legal settlements and
related expenses; (h) amortization of pension and postretirement
actuarial losses; (i) net plant incident (credits) costs; (j)
restructuring, impairment and plant closing and transition
costs. Basic adjusted net earnings per share excludes
dilution and is computed by dividing adjusted net income by the
weighted average number of shares outstanding during the period.
Adjusted diluted net earnings per share reflects all potential
dilutive ordinary shares outstanding during the period increased by
the number of additional shares that would have been outstanding as
dilutive securities. For the periods prior to our IPO, the average
number of ordinary shares outstanding used to calculate basic and
diluted adjusted net income per share was based on the ordinary
shares that were outstanding at the time of
our IPO.
|
|
|
|
Adjusted net income
(loss) and adjusted net income (loss) per share amounts are
presented solely as supplemental information. These measures
exclude similar non-cash item as Adjusted EBITDA in order to assist
our investors in comparing our performance from period to period
and as such, bear similar risks as Adjusted EBITDA as documented in
above. For that reason, adjusted net income and the related per
share amounts, should not be considered in isolation and should be
considered only to supplement analysis of U.S. GAAP
results.
|
|
|
(2)
|
The income tax
impacts, if any, of each adjusting item represent a ratable
allocation of the total difference between the unadjusted tax
expense and the total adjusted tax expense, computed without
consideration of any adjusting items using a with and without
approach. We eliminated the effect of significant changes to income
tax valuation allowances from our presentation of adjusted net
income to allow investors to better compare our ongoing financial
performance from period to period. We do not adjust for
insignificant changes in tax valuation allowances because we do not
believe it provides more meaningful information than is provided
under U.S. GAAP.
|
|
|
(3)
|
Management internally
uses a free cash flow measure: (a) to evaluate the Company's
liquidity, (b) to evaluate strategic investments, (c) to
evaluate the Company's ability to incur and service debt. Free cash
flow is not a defined term under U.S. GAAP, and it should not be
inferred that the entire free cash flow amount is available for
discretionary expenditures. The Company defines free cash flow as
cash flows provided by (used in) operating activities from
continuing operations and used in investing activities. Free cash
flow is typically derived directly from the Company's consolidated
and combined statement of cash flows; however, it may be adjusted
for items that affect comparability between periods. Free cash flow
is presented as supplemental information.
|
About Venator
Venator is a global manufacturer and marketer of chemical products
that comprise a broad range of pigments and additives that bring
color and vibrancy to buildings, protect and extend product life,
and reduce energy consumption. We market our products globally to a
diversified group of industrial customers through two segments:
Titanium Dioxide, which consists of our
TiO2 business, and Performance Additives, which
consists of our functional additives, color pigments, timber
treatment and water treatment businesses. We operate 24
facilities, employ approximately 4,300 associates worldwide and
sell our products in more than 110 countries.
Social Media:
Twitter: www.twitter.com/VenatorCorp
Facebook: www.facebook.com/venatorcorp
LinkedIn: www.linkedin.com/company/venator-corp
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press release constitute
"forward looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These forward looking
statements represent Venator's expectations or beliefs concerning
future events, and it is possible that the expected results
described in this press release will not be achieved. These forward
looking statements are subject to risks, uncertainties and other
factors, many of which are outside of Venator's control, that could
cause actual results to differ materially from the results
discussed in the forward looking statements, including our ability
to transfer technology and manufacturing capacity from our Pori,
Finland manufacturing facility to
other sites in our manufacturing network, the costs associated with
such transfer and the closure of our Pori facility, impacts on TiO2
markets and the broader global economy from the imposition of
tariffs by the U.S. and other countries, changes in raw material
and energy prices, access to capital markets, industry production
capacity and operating rates, the supply demand balance for our
products and that of competing products, pricing pressures,
technological developments, changes in government regulations, and
geopolitical events.
Any forward looking statement speaks only as of the date on
which it is made, and, except as required by law, Venator does not
undertake any obligation to update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for Venator to predict all such factors. When considering
these forward looking statements, you should keep in mind the risk
factors and other cautionary statements in Venator's Annual Report
on Form 10 K for the year ended December 31,
2017 filed with the SEC, and in its Quarterly Reports on
Form 10 Q and Current Reports on Form 8 K. The risk factors and
other factors noted therein could cause its actual results to
differ materially from those contained in any forward looking
statement.
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SOURCE Venator Materials PLC