WYNYARD, UK, May 9, 2019 /PRNewswire/ --
First Quarter 2019 Highlights
- Net loss attributable to Venator of $3
million and adjusted net income attributable to Venator of
$14 million compared to a net loss
attributable to Venator of $69
million and adjusted net income attributable to Venator of
$19 million in the prior quarter
- Adjusted EBITDA of $60 million
compared to $45 million in 4Q18
- Diluted loss per share of $0.03
and adjusted diluted earnings per share of $0.13
- Net cash used in operating activities was $29 million and free cash flow was a use of
$82 million
- Specialty TiO2 price and volume trends remain strong
globally
Recent Developments
- Completed the acquisition of European TiO2 paper
laminates business from Tronox on April 26,
2019
|
|
Three months
ended
|
|
|
March
31,
|
|
December
31, 2018
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
Revenues
|
|
$
|
562
|
|
|
$
|
622
|
|
|
$
|
484
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Venator
|
|
$
|
(3)
|
|
|
$
|
78
|
|
|
$
|
(69)
|
|
Adjusted net income
attributable to Venator(1)
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
19
|
|
Adjusted
EBITDA(1)
|
|
$
|
60
|
|
|
$
|
157
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share(1)
|
|
$
|
(0.03)
|
|
|
$
|
0.73
|
|
|
$
|
(0.65)
|
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(29)
|
|
|
$
|
51
|
|
|
$
|
(24)
|
|
Free cash
flow(3)
|
|
$
|
(82)
|
|
|
$
|
(15)
|
|
|
$
|
(79)
|
|
See end of press release for footnote explanations
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
first quarter 2019 results with revenues of $562 million, net loss attributable to Venator of
$3 million, adjusted net income
attributable to Venator of $14
million and adjusted EBITDA of $60
million.
Simon Turner, President and
CEO of Venator, commented:
"In the first quarter, we generated $60
million of adjusted EBITDA, growth of $15 million compared to the fourth quarter of
2018. We continue to execute on our strategy to enhance our
specialty TiO2 leadership position while taking action
to deliver on our $40 million
Business improvement Program.
"Our titanium dioxide segment delivered year-on-year volume
growth. While we observed clear regional differences in demand for
functional products, specialty TiO2 remains robust with
11% growth. We believe customer destocking has largely run its
course and expect TiO2 volumes to reflect historical
seasonal growth patterns in the second half of 2019.
"We continue to be encouraged by underlying industry
fundamentals, despite challenging global economic conditions. We
are intensely focused on advancing our strategy of improving our
cash flow generation across the cycle and delivering shareholder
value."
Segment Analysis for 1Q19 Compared to 1Q18
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $425 million in
the three months ended March 31, 2019, a decrease of
$31 million, or 7%, compared to the
same period in 2018. The decrease was primarily due to a 6% decline
in average selling prices and a 4% unfavorable impact from foreign
currency translation partially offset by a 3% increase in sales
volumes. The decrease in average selling prices was primarily
attributable to a convergence of higher European selling prices
towards North American prices and softer business conditions in
Asia Pacific, partially offset by
continued strength in pricing for our specialty TiO2
products globally. Sales volumes of functional TiO2
products increased in Europe
primarily due to the impact of accelerated purchases by certain
customers relating to Brexit and modest growth. Volumes of
functional TiO2 products increased modestly in
North America and decreased in
Asia Pacific. Specialty
TiO2 volumes increased 11% due to higher production for
certain products.
Adjusted EBITDA for the Titanium Dioxide segment was
$61 million, a decrease of
$82 million for the three months
ended March 31, 2019 compared to the same period in 2018, or a
decrease of $64 million after
excluding $18 million of lost
earnings attributable to our Pori, Finland TiO2
manufacturing facility, which were reimbursed through insurance
proceeds in 2018. The decrease was primarily a result of lower
average TiO2 selling prices, higher raw material and
energy costs, the aforementioned lost earnings attributable to our
Pori, Finland manufacturing
facility and $7 million from the sale
of carbon credits in the prior year period and partially offset by
higher sales volumes and a $2 million
benefit from our 2019 Business Improvement Program.
Performance Additives
The Performance Additives
segment generated $137 million of
revenue in the three months ended March 31, 2019, a decline of
$29 million, or 17%, compared to the
same period in 2018. This resulted from a 14% decrease in volumes,
a 2% decrease in average selling prices and a 2% decrease due to
the unfavorable impact of foreign currency translation and
partially offset by a 1% increase from mix and other. The decline
in volumes was primarily as a result of lower demand for certain
products, principally in construction-related applications driven
by adverse weather conditions in North
America, the impact of plant shutdowns as part of prior
restructuring actions and customer destocking. Average selling
prices declined due to the composition of sales within our color
pigments and functional additives businesses.
Adjusted EBITDA in the Performance Additives segment was
$15 million, a decrease of
$9 million for the three months ended
March 31, 2019 compared to the same period in 2018, primarily
due to lower average selling prices and lower sales volumes,
partially offset by lower raw material and energy costs, lower
selling, general and administrative costs and a $1 million benefit from our 2019 Business
Improvement Program.
Corporate and Other
Corporate and other represents
expenses which are not allocated to our segments. Losses from
Corporate and other were $16 million,
or $6 million higher in the three
months ended March 31, 2019 compared to the same period in
2018, primarily as a result of the unfavorable impact of foreign
currency translation arising from weakness in the Euro versus the
U.S. dollar.
Tax Items
We recorded income tax expense of
$1 million for the three months ended
March 31, 2019, compared to income tax expense of $20 million for the three months ended
March 31, 2018. Our adjusted
effective tax rate was 38% for the three months ended March
31, 2019 compared to 19% for the same period in 2018.
Our tax expense is significantly affected by the mix of income
and losses in tax jurisdictions in which we operate and valuation
allowances in certain jurisdictions. As a result, we expect to see
higher short to medium-term effective tax rates with significant
variation by quarter. We continue to expect our adjusted long-term
effective tax rate will be approximately 15% to 20% and we expect
our near-term cash tax rate will be between 10% to 15%.
Liquidity and Capital Resources
As of March
31, 2019, we had cash and cash equivalents of $80 million compared with $165 million as of December 31, 2018. We have in place an undrawn
asset based revolving credit facility with an available borrowing
base of $264 million. As of March
31, 2019, net debt was $666
million compared to $583
million as of December 31,
2018.
In the first quarter of 2019, total capital expenditures were
$52 million, of which $24 million were related to project wind-down and
closure costs at our Pori, Finland TiO2 manufacturing
facility. We continue to expect total capital expenditures,
including capital expenditures related to the specialty
TiO2 transfer program, to be approximately $130 million in 2019.
Earnings Conference Call Information
We will hold a
conference call to discuss our first quarter 2019 results on
Thursday, May 9, 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/10130689
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 May 9, 2019 and ending
May 16, 2019.
Call-in numbers for
the replay:
|
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10130689
|
Upcoming Conferences
During the second quarter of
2019, a member of management is expected to present at the Goldman
Sachs Industrials & Materials Conference on May 15, 2019 and Deutsche Bank's 10th Annual
Global Industrials & Materials Summit on June 5-6, 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
|
|
|
March
31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
562
|
|
|
$
|
622
|
|
Cost of goods
sold
|
|
486
|
|
|
454
|
|
Operating
expenses
|
|
55
|
|
|
51
|
|
Restructuring,
impairment and plant closing and transition costs
|
|
12
|
|
|
9
|
|
Operating
income
|
|
9
|
|
|
108
|
|
Interest expense,
net
|
|
(11)
|
|
|
(10)
|
|
Other
income
|
|
1
|
|
|
2
|
|
(Loss) income
before income taxes
|
|
(1)
|
|
|
100
|
|
Income tax
expense
|
|
(1)
|
|
|
(20)
|
|
Net (loss)
income
|
|
(2)
|
|
|
80
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(2)
|
|
Net (loss) income
attributable to Venator
|
|
$
|
(3)
|
|
|
$
|
78
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
60
|
|
|
$
|
157
|
|
Adjusted net
income(1)
|
|
$
|
14
|
|
|
$
|
91
|
|
|
|
|
|
|
Basic (loss)
earnings per share
|
|
$
|
(0.03)
|
|
|
$
|
0.73
|
|
Diluted (loss)
earnings per share
|
|
$
|
(0.03)
|
|
|
$
|
0.73
|
|
Adjusted earnings
per share(1)
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
Basic shares
outstanding
|
|
106.5
|
|
|
106.4
|
|
Diluted
shares
|
|
106.8
|
|
|
106.8
|
|
See end of press release for footnote explanations
Table 2 — Results
of Operations by Segment
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
March
31,
|
|
Favorable
/
|
(In millions)
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
Segment
Revenues:
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
425
|
|
|
$
|
456
|
|
|
(7)
|
%
|
Performance
Additives
|
|
137
|
|
|
166
|
|
|
(17)
|
%
|
Total
|
|
$
|
562
|
|
|
$
|
622
|
|
|
(10)
|
%
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
61
|
|
|
$
|
143
|
|
|
(57)
|
%
|
Performance
Additives
|
|
15
|
|
|
24
|
|
|
(38)
|
%
|
Corporate and
other
|
|
(16)
|
|
|
(10)
|
|
|
(60)
|
%
|
Total
|
|
$
|
60
|
|
|
$
|
157
|
|
|
(62)
|
%
|
See end of press release for footnote explanations
Table 3 — Factors
Impacting Sales Revenue
|
|
|
|
Three months
ended
|
|
March 31, 2019 vs.
2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(6)
|
%
|
|
(4)
|
%
|
|
—
|
%
|
|
3
|
%
|
|
(7)
|
%
|
Performance
Additives
|
(2)
|
%
|
|
(2)
|
%
|
|
1
|
%
|
|
(14)
|
%
|
|
(17)
|
%
|
Total
Company
|
(5)
|
%
|
|
(4)
|
%
|
|
—
|
%
|
|
(1)
|
%
|
|
(10)
|
%
|
|
|
|
(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(2)
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net (loss)
income
|
|
$
|
(2)
|
|
|
$
|
80
|
|
|
|
|
|
|
$
|
(2)
|
|
|
$
|
80
|
|
|
$
|
(0.02)
|
|
|
$
|
0.75
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(2)
|
|
|
|
|
|
|
(1)
|
|
|
(2)
|
|
|
(0.01)
|
|
|
(0.02)
|
|
Net (loss) income
attributable to Venator
|
|
(3)
|
|
|
78
|
|
|
|
|
|
|
(3)
|
|
|
78
|
|
|
(0.03)
|
|
|
0.73
|
|
Interest expense,
net
|
|
11
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
1
|
|
|
20
|
|
|
(1)
|
|
|
(20)
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
26
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
2
|
|
|
2
|
|
|
(1)
|
|
|
(1)
|
|
|
1
|
|
|
1
|
|
|
0.01
|
|
|
0.01
|
|
Separation expense,
net
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
Amortization of
pension and postretirement actuarial losses
|
|
4
|
|
|
3
|
|
|
(1)
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
0.03
|
|
|
0.02
|
|
Net plant incident
costs
|
|
7
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
0.05
|
|
|
—
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
12
|
|
|
9
|
|
|
(4)
|
|
|
(1)
|
|
|
8
|
|
|
8
|
|
|
0.07
|
|
|
0.07
|
|
Adjusted(1)
|
|
$
|
60
|
|
|
$
|
157
|
|
|
$
|
(9)
|
|
|
$
|
(22)
|
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
|
|
|
|
$
|
9
|
|
|
$
|
22
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
1
|
|
|
2
|
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
|
|
|
|
$
|
24
|
|
|
$
|
115
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
38
|
%
|
|
19
|
%
|
|
|
|
|
|
|
EBITDA
|
|
Income Tax Benefit
(Expense)(2)
|
|
Net Income
(Loss)
|
|
Diluted Earnings
(Loss) Per Share(1)
|
|
|
Three months ended
December 31,
|
|
Three months ended
December 31,
|
|
Three months ended
December 31,
|
|
Three months
ended
December 31,
|
(In millions, except per share amounts)
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
Net
loss
|
|
$
|
(69)
|
|
|
|
|
$
|
(69)
|
|
|
(0.65)
|
|
Net income
attributable to noncontrolling interests
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
Net loss
attributable to Venator
|
|
(69)
|
|
|
|
|
(69)
|
|
|
(0.65)
|
|
Interest expense,
net
|
|
10
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
(18)
|
|
|
18
|
|
|
|
|
|
Depreciation and
amortization
|
|
30
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
11
|
|
|
—
|
|
|
11
|
|
|
0.10
|
|
Separation expense,
net
|
|
1
|
|
|
—
|
|
|
1
|
|
|
0.01
|
|
Significant change to
income tax valuation allowance(2)
|
|
—
|
|
|
(5)
|
|
|
(5)
|
|
|
(0.05)
|
|
Amortization of
pension and postretirement actuarial losses
|
|
5
|
|
|
2
|
|
|
7
|
|
|
0.07
|
|
Net plant incident
costs
|
|
20
|
|
|
(3)
|
|
|
17
|
|
|
0.16
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
55
|
|
|
2
|
|
|
57
|
|
|
0.53
|
|
Adjusted(1)
|
|
$
|
45
|
|
|
$
|
14
|
|
|
$
|
19
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
$
|
(14)
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
—
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
5
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
(280)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See end of press release for footnote explanations
Table 5 — Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
80
|
|
|
$
|
165
|
|
Accounts and notes
receivable, net
|
|
410
|
|
|
351
|
|
Inventories
|
|
503
|
|
|
538
|
|
Prepaid expenses and
other current assets
|
|
70
|
|
|
71
|
|
Property, plant and
equipment, net
|
|
985
|
|
|
994
|
|
Other
assets
|
|
418
|
|
|
366
|
|
Total
assets
|
|
$
|
2,466
|
|
|
$
|
2,485
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
346
|
|
|
$
|
400
|
|
Other current
liabilities
|
|
134
|
|
|
135
|
|
Current portion of
debt
|
|
7
|
|
|
8
|
|
Long-term
debt
|
|
739
|
|
|
740
|
|
Non-current payable
to affiliates
|
|
34
|
|
|
34
|
|
Other non-current
liabilities
|
|
334
|
|
|
313
|
|
Total
equity
|
|
872
|
|
|
855
|
|
Total liabilities
and equity
|
|
$
|
2,466
|
|
|
$
|
2,485
|
|
|
|
Table 6 —
Outstanding Debt
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Debt:
|
|
|
|
|
Senior
Notes
|
|
$
|
370
|
|
|
$
|
370
|
|
Term Loan
Facility
|
|
363
|
|
|
365
|
|
Other debt
|
|
13
|
|
|
13
|
|
Total debt -
excluding affiliates
|
|
746
|
|
|
748
|
|
Total cash
|
|
80
|
|
|
165
|
|
Net debt -
excluding affiliates
|
|
$
|
666
|
|
|
$
|
583
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
(In millions)
|
|
2019
|
|
2018
|
Total cash at
beginning of period
|
|
$
|
165
|
|
|
$
|
238
|
|
Net cash (used in)
provided by operating activities
|
|
(29)
|
|
|
51
|
|
Net cash used in
investing activities
|
|
(53)
|
|
|
(67)
|
|
Net cash used in
financing activities
|
|
(3)
|
|
|
(8)
|
|
Effect of exchange
rate changes on cash
|
|
—
|
|
|
9
|
|
Total cash at end
of period
|
|
$
|
80
|
|
|
$
|
223
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(18)
|
|
|
$
|
(19)
|
|
Cash paid for income
taxes
|
|
(1)
|
|
|
(15)
|
|
Capital
expenditures
|
|
(52)
|
|
|
(73)
|
|
Depreciation and
amortization
|
|
26
|
|
|
34
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
Accounts
receivable
|
|
(61)
|
|
|
(50)
|
|
Inventories
|
|
35
|
|
|
(12)
|
|
Accounts
payable
|
|
(22)
|
|
|
7
|
|
Total cash used in
primary working capital
|
|
$
|
(48)
|
|
|
$
|
(55)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
(In
millions)
|
|
2019
|
|
2018
|
Free cash
flow(3):
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(29)
|
|
|
$
|
51
|
|
Capital
expenditures
|
|
(52)
|
|
|
(73)
|
|
Cash (investment in)
received from unconsolidated affiliates, net
|
|
(1)
|
|
|
6
|
|
Non-recurring
separation costs(a)
|
|
—
|
|
|
1
|
|
Total free cash
flow
|
|
$
|
(82)
|
|
|
$
|
(15)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
60
|
|
|
$
|
157
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(28)
|
|
|
(20)
|
|
Cash paid for
interest
|
|
(18)
|
|
|
(19)
|
|
Cash paid for income
taxes
|
|
(1)
|
|
|
(15)
|
|
Primary working
capital change
|
|
(48)
|
|
|
(55)
|
|
Restructuring
|
|
(7)
|
|
|
(9)
|
|
Maintenance & other
|
|
(4)
|
|
|
(16)
|
|
Net cash flows
associated with Pori
|
|
(36)
|
|
|
(38)
|
|
Total free cash
flow(3)
|
|
$
|
(82)
|
|
|
$
|
(15)
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for numbered footnote explanations
|
|
(a)
|
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) net income of discontinued operations net of tax; (d) loss
on disposition of business/assets; (e) certain legal
settlements and related expenses; (f) amortization of pension and
postretirement actuarial losses; (g) net plant incident costs
(credits); and (h) restructuring, impairment, 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) net income of discontinued operations; (d) loss on
disposition of business/assets; (e) certain legal settlements
and related expenses; (f) amortization of pension and
postretirement actuarial losses; (g) net plant incident costs
(credits); (h) restructuring, impairment, 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 earnings (loss) and adjusted net earnings (loss) per share
amounts are presented solely as supplemental
information.
|
|
|
(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 do not adjust for 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:
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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 global
economic conditions, 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, our ability to
realize financial and operational benefits from our business
improvement plans and initiatives, 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, legal claims against us, changes in
government regulations, geopolitical events and cyberattacks.
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,
2018 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