Trinseo (NYSE: TSE), a global materials company and manufacturer
of plastics, latex binders and synthetic rubber, today announced
preliminary expected operating results for the third quarter of
2017 to be about $50 million above previously issued guidance, on a
pre-tax basis, and updated its outlook for the full year of
2017.
The updated guidance primarily reflects an increase in global
styrene margins from unplanned supply outages. This favorable
impact is primarily in the Feedstocks segment, and includes an
approximately $15 million favorable impact from Hurricane
Harvey.
“As a result of Hurricane Harvey as well as additional unplanned
styrene outages, global styrene margins in the third quarter
increased above our prior expectations and this continued into the
fourth quarter,” said Chris Pappas, Trinseo’s President and Chief
Executive Officer. “In addition, strong fundamentals across our
segments continue, and therefore, we are updating our full-year
outlook.”
As previously announced in August, the company executed a
successful debt refinancing which is expected to reduce annual cash
interest by about $25 million. The company now expects third
quarter net income of between $32 million and $37 million which
includes a pre-tax charge of approximately $66 million from this
recent debt refinancing. This updated estimate compares to the
previously guided net income range of $50 million to $58 million,
which did not reflect a charge for debt refinancing.
Trinseo is updating its third quarter Adjusted EBITDA estimate
to between $162 million and $168 million which compares to the
previously guided range of $110 million to $120 million.
Additionally, the company now expects an approximately $25 million
unfavorable net timing impact in the third quarter in comparison to
the $30 million unfavorable net timing impact estimate that was
previously communicated.
Trinseo expects a full year 2017 improvement in operating
results in comparison to previously issued guidance. This includes
an updated net income outlook of $282 million to $290 million
(including a $66 million pre-tax charge related to debt
refinancing) versus previous guidance of $294 million to $302
million, which did not reflect a charge for debt refinancing. The
updated Adjusted EBITDA outlook of $605 million to $615 million,
which includes a net unfavorable timing impact of about $25
million, compares to previous guidance of $550 million to $560
million, which included a net unfavorable timing impact of about
$30 million.
Further details will be communicated on Trinseo’s third quarter
financial results conference call on November 3, 2017.
Unaudited financial data for the fiscal quarter ended September
30, 2017 presented above are preliminary, based upon our good faith
estimates and subject to completion of our financial closing
procedures. We have provided ranges for our expectations described
above because our fiscal quarter closing procedures are not yet
complete. While we expect that our final financial results for the
quarterly period ended September 30, 2017, following the completion
of our financial closing procedures, will be within the ranges
described above, our actual results may differ materially from
these estimates as a result of the completion of our financial
closing procedures as well as final adjustments and other
developments that may arise between now and the time that our
financial results for this quarterly period are finalized. All of
the data presented above has been prepared by and is the
responsibility of management. PricewaterhouseCoopers LLP has not
audited, reviewed, compiled or performed any procedures with
respect to the accompanying financial data. Accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other
form of assurance with respect thereto. This summary is not a
comprehensive statement of our financial results for the quarterly
period.
Note 1: Reconciliation of Non-GAAP
Performance Measures to Net income
We present Adjusted EBITDA as a non-GAAP financial performance
measure, which we define as income from continuing operations
before interest expense, net; income tax provision; depreciation
and amortization expense; loss on extinguishment of long-term debt;
asset impairment charges; gains or losses on the dispositions of
businesses and assets; restructuring; acquisition related costs and
other items. In doing so, we are providing management, investors,
and credit rating agencies with an indicator of our ongoing
performance and business trends, removing the impact of
transactions and events that we would not consider a part of our
core operations.
Lastly, we present Adjusted Net Income and Adjusted EPS as
additional performance measures. Adjusted Net Income is calculated
as Adjusted EBITDA (defined beginning with net income, above), less
interest expense, less the provision for income taxes and
depreciation and amortization, tax affected for various discrete
items, as appropriate. Adjusted EPS is calculated as Adjusted Net
Income per weighted average diluted shares outstanding for a given
period. We believe that Adjusted Net Income and Adjusted EPS
provide transparent and useful information to management,
investors, analysts and other stakeholders in evaluating and
assessing our operating results from period-to-period after
removing the impact of certain transactions and activities that
affect comparability and that are not considered part of our core
operations.
There are limitations to using the financial performance
measures noted above. These performance measures are not intended
to represent net income or other measures of financial performance.
As such, they should not be used as alternatives to net income as
indicators of operating performance. Other companies in our
industry may define these performance measures differently than we
do. As a result, it may be difficult to use these or
similarly-named financial measures that other companies may use, to
compare the performance of those companies to our performance. We
compensate for these limitations by providing reconciliations of
these performance measures to our net income, which is determined
in accordance with GAAP.
For the reasons discussed above, we are
providing the following reconciliation of forecasted net income to
forecasted Adjusted EBITDA and Adjusted EPS for the three months
ended September 30, 2017, as well as for the full year ended
December 31, 2017. See “Note on Forward-Looking Statements”
below for a discussion of the limitations of these forecasts.
Amounts below may not sum due to rounding.
Three Months Ended Year Ended (In
millions, except per share data)
September 30,2017
December 31,2017
Adjusted EBITDA
$
162 - 168
$
605 - 615 Interest expense, net (18) (70) Provision for income
taxes (6) - (7) (73) - (75) Depreciation and amortization (29)
(109) Reconciling items to Adjusted EBITDA (a) (77) (71)
Net
Income 32 - 37 282 - 290 Reconciling items to Adjusted Net
Income (a) 65 59 Adjusted Net Income 96 - 101 341 - 350
Weighted average shares- diluted (b) 44.8 45.0 EPS (Diluted)
$
0.71 - 0.82
$
6.27 - 6.45 Adjusted EPS
$
2.15 - 2.27
$
7.59 - 7.77
_________________________
(a) Reconciling items to Adjusted EBITDA and Adjusted Net
Income for the three months ended September 30, 2017 reflect the
Company’s preliminary estimate of adjustments for the period, and
primarily reflect the impacts of the Company’s debt refinancing
during the quarter along with certain restructuring and
acquisition-related charges. Furthermore, reconciling items to
Adjusted EBITDA and Adjusted Net Income are not typically
forecasted by the Company based on their nature as being primarily
driven by transactions that are not part of the core operations of
the business. As such, for the forecasted full year ended December
31, 2017, we have only included impacts of reconciling items
previously disclosed or estimated for the three months ended
September 30, 2017. We have not included estimates for these items
during the fourth quarter. (b) Weighted average shares
calculated for the purpose of forecasting Adjusted EPS do not
forecast significant future share transactions or events, such as
repurchases, significant stock-based compensation award grants, and
changes in the Company’s share price. These are all factors which
could have a significant impact on the calculation of Adjusted EPS
during actual future periods.
About Trinseo
Trinseo (NYSE:TSE) is a global materials solutions provider and
manufacturer of plastics, latex binders, and synthetic rubber. We
are focused on delivering innovative and sustainable solutions to
help our customers create products that touch lives every day —
products that are intrinsic to how we live our lives — across a
wide range of end-markets, including automotive, consumer
electronics, appliances, medical devices, lighting, electrical,
carpet, paper and board, building and construction, and tires.
Trinseo had approximately $3.7 billion in net sales in 2016, with
16 manufacturing sites around the world, and nearly 2,200
employees. For more information visit www.trinseo.com.
Use of non-GAAP measures
In addition to using standard measures of performance and
liquidity that are recognized in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), we use additional measures of income excluding certain
GAAP items (“non-GAAP measures”), such as Adjusted EBITDA and
Adjusted EPS. We believe these measures are useful for investors
and management in evaluating business trends and performance each
period. These measures are also used to manage our business and
assess current period profitability, as well as to provide an
appropriate basis to evaluate the effectiveness of our pricing
strategies. Such measures are not recognized in accordance with
GAAP and should not be viewed as an alternative to GAAP measures of
performance. The definitions of each of these measures, further
discussion of usefulness, and reconciliations of non-GAAP measures
to GAAP measures are provided herein.
Note on Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the safe harbor provisions of the United
States Private Securities Litigation Reform Act of 1995. Words such
as “guidance,” “expect,” “estimate,” “project,” “outlook,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “believes,” “predicts,” “potential,”
“continue,” and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements in this
press release may include, without limitation, forecasts of
financial performance, growth, net sales, business activity,
acquisitions, financings and other matters that involve known and
unknown risks, uncertainties and other factors that may cause
results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such factors include, among others: conditions in the global
economy and capital markets, volatility in costs or disruption in
the supply of the raw materials utilized for our products; loss of
market share to other producers of styrene-based chemical products;
compliance with environmental, health and safety laws; changes in
laws and regulations applicable to our business; our inability to
continue technological innovation and successful introduction of
new products; system security risk issues that could disrupt our
internal operations or information technology services; the loss of
customers; the market price of the Company’s ordinary shares
prevailing from time to time; the nature of other investment
opportunities presented to the Company from time to time; and the
Company’s cash flows from operations. Additional risks and
uncertainties are set forth in the Company’s reports filed with the
United States Securities and Exchange Commission, which are
available at http://www.sec.gov/ as well as the Company’s web site
at http://www.trinseo.com. As a result of the foregoing
considerations, you are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. All forward-looking statements are qualified
in their entirety by this cautionary statement. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20171012006305/en/
Press contacts:TrinseoDonna St. Germain, +1
610-240-3307stgermain@trinseo.comorMakovskyDoug Hesney, +1
212-508-9661dhesney@makovsky.comorInvestor
Contact:TrinseoDavid Stasse, +1
610-240-3207dstasse@trinseo.com
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