WYNYARD, UK, Feb. 23, 2018 /PRNewswire/ --
Fourth Quarter 2017 Highlights
- Net income attributable to Venator of $68 million compared to a net loss of
$6 million in the prior year
period
- Adjusted EBITDA of $118 million
compared to $39 million in the prior
year period
- Diluted earnings per share of $0.64 and adjusted diluted earnings per share of
$0.61
- Net cash provided by operating activities from continuing
operations was $157 million, free
cash flow was $80 million
Full Year 2017 Highlights
- $24 million of EBITDA benefit
from our Business Improvement Program, ahead of expectations for
the year
- Net cash provided by operating activities was $337 million, free cash flow was $212 million
- Net debt reduced to $519 million
as of December 31, 2017
Subsequent Developments
- Pori specialty capacity rebuild on schedule but recently
experiencing increasing estimates for costs exceeding insurance
proceeds
|
|
Three months
ended
|
Twelve months
ended
|
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
In millions, except
per share amounts
|
|
2017
|
|
2016
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 528
|
|
$
491
|
|
$ 582
|
|
$ 2,209
|
|
$ 2,139
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Venator
|
|
$
68
|
|
$
(6)
|
|
$
51
|
|
$
134
|
|
$
(87)
|
Adjusted net income
(loss)(1)
|
|
$
65
|
|
$
-
|
|
$
75
|
|
$
186
|
|
$
(67)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share(1)
|
|
$ 0.64
|
|
$ (0.06)
|
|
$ 0.48
|
|
$
1.26
|
|
$ (0.82)
|
Adjusted diluted
earnings (loss) per share(1)
|
|
$ 0.61
|
|
$
-
|
|
$ 0.70
|
|
$
1.74
|
|
$ (0.63)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$ 118
|
|
$
39
|
|
$
134
|
|
$
395
|
|
$
77
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities from continuing operations
|
|
$ 157
|
|
$
(7)
|
|
$
180
|
|
$
337
|
|
$
80
|
Free cash
flow(3)
|
|
$
80
|
|
$
(35)
|
|
$
132
|
|
$
212
|
|
$
(20)
|
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
fourth quarter 2017 results with revenues of $528 million, net income attributable to Venator
of $68 million and adjusted EBITDA of
$118 million.
Simon Turner, President and
CEO of Venator, commented:
"Our strong fourth quarter results were driven by significant
price capture and accelerated gains from our $90 million business improvement program. We exit
a very successful 2017 as a public company with earnings more than
triple the prior year.
We remain positive about titanium dioxide industry
fundamentals and have started 2018 with tremendous momentum.
Margins are set to increase as higher selling prices should outpace
our cost advantaged ores. Additionally, 2018 will see $30 million further of combined benefit from our
business improvement program in our Titanium Dioxide and
Performance Additives segments.
We continue to see an elongated TiO2 cycle and
despite significant rebuild cost escalation, we remain on schedule
to restore our specialty business capacity, and ultimately full
operation of the remaining capacity as economic conditions warrant
at our Pori, Finland
site."
Segment Analysis for 4Q17 Compared to 4Q16
Titanium Dioxide
The $30
million, or 8%, increase in revenues in our Titanium Dioxide
segment for the three months ended December
31, 2017 compared to the same period of 2016 was primarily
due to an increase in average selling prices, partially offset by a
decrease in sales volumes. The improvement in selling prices
reflected continued improvement in business conditions for
TiO2, allowing for an increase in prices globally, and
improvement from favorable exchange rates, primarily against the
Euro. Sales volumes decreased primarily as a result of the fire at
our Pori, Finland manufacturing
facility. Excluding the impact of the fire at our Pori plant, sales
volumes increased by 1%.
Segment adjusted EBITDA of our Titanium Dioxide segment
increased by $86 million for the
three months ended December 31, 2017
compared to the same period in 2016. This improvement was primarily
a result of higher average selling prices and a $9 million EBITDA benefit from our Business
Improvement Program, partially offset by increases in raw material
and other direct costs.
Performance Additives
The increase in revenues in our Performance Additives segment of
$7 million, or 5%, for the three
months ended December 31, 2017
compared to the same period in 2016 was due to an increase in
average selling prices. The improvement in selling prices was
primarily in certain color pigment and functional additives product
lines, where we successfully raised prices to offset increases in
raw material costs.
Segment adjusted EBITDA in our Performance Additives segment
increased by $2 million, or 15%, due
to higher selling prices.
Corporate and Other
Segment adjusted EBITDA for
Corporate and other represented a $16
million loss for the fourth quarter 2017. Although we expect
our annual run-rate to be around $50
million a year, the fourth quarter included certain
operational expenses that are not expected to recur.
Update on Pori
Construction for the specialty and
differentiated products portion of the facility is on pace and we
expect it to be complete by the end of 2018, however we are paying
a fast-track premium. Prior to the fire, this part of the facility
represented 60% of site capacity and contributed, on average, 75%
of the site EBITDA. Current TiO2 business conditions are
favorable and provide compelling economics for the rebuild of the
remaining 40% commodity portion of site capacity. However, this
part of the rebuild program will not be accelerated and capacity
will be reintroduced to the market no sooner than 2020.
Based on current estimates, we expect the total cost to rebuild
the Pori facility (including the commodity portion) will exceed the
limits of our insurance policy by as much as $325 million, or up to $375 million when providing additional
contingency for the upper limits of our current design and
construction cost estimates. This amount includes increased costs
associated with the faster than normal build schedule of the
specialty and differentiated products portion of the facility, and
greater equipment replacement costs than we previously estimated.
We expect to account for our uncovered costs as capital
expenditures. Based on current and anticipated market conditions,
we currently expect our business interruption losses to be fully
reimbursed within our insurance policy limits.
Tax Items
We recorded income tax expense of
$24 million and income tax benefit of $9 million for the
three months ended December 31, 2017 and 2016,
respectively.
In 2017, our adjusted effective tax rate was 18%. Our tax
expense is significantly affected by the mix of income and losses
in tax jurisdictions in which we operate. We expect our adjusted
long-term effective tax rate will be approximately 15% to 20%. We
believe the impact of the U.S. Tax Cuts and Jobs Act of 2017 ("2017
Tax Act") on our adjusted long-term effective tax rate will not be
material, given the low percentage of our global pre-tax income
earned in the United States. As a
result of the 2017 Tax Act we have recorded a provisional decrease
of $3 million to our net deferred tax
assets with a corresponding net tax expense of $3 million. Also due to the 2017 Tax Act, other
income for the quarter and year ended December 31, 2017 increased by $34 million as a result of the decrease in the
future expected payments to Huntsman pursuant to the tax matters
agreement entered into as part of our separation. We expect our
cash tax rate will be between 10% to 15% in 2018.
Liquidity and Capital Resources
As of December 31, 2017, we had cash and cash
equivalents of $238 million compared with $186 million as
of September 30, 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 a borrowing base of $243
million.
In December 2017, we entered into
three cross-currency interest rate contracts to exchange an
aggregate notional $200 million for
an aggregate notional €169 million. The swaps reduce our overall
weighted average cost of debt to 4.4% from 5.0%, with annual
interest savings of approximately $5
million, or approximately $21
million by maturity in July
2022.
As of December 31, 2017, net debt
was $519 million, compared with
$565 million as of September 30, 2017.
Earnings Conference Call Information
We will hold a
conference call to discuss our fourth quarter and full year 2017
results on Friday, February 23, 2018
at 9:00 a.m. ET.
Call-in numbers for the conference call:
U.S.
participants
|
1-866-807-9684
|
International
participants
|
1-412-317-5415
|
(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/10116202
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 23,
2018 and ending March 2,
2018.
Call-in numbers for the replay:
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10116202
|
Upcoming Conferences
During the first quarter of
2018, a member of management is expected to present at the JP
Morgan Global High Yield and Leveraged Finance Conference on
February 27, 2018, the BofA Merrill
Lynch Global Agriculture & Materials Conference on February 28, 2018 and the Alembic Global Advisors
Chemical & Industrial Conference on March 1-2, 2018. 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
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 528
|
|
$
491
|
|
$ 2,209
|
|
$ 2,139
|
Cost of goods
sold
|
|
387
|
|
440
|
|
1,738
|
|
1,987
|
Gross
profit
|
|
141
|
|
51
|
|
471
|
|
152
|
Operating
expenses
|
|
68
|
|
45
|
|
228
|
|
180
|
Restructuring,
impairment and plant closing costs
|
|
3
|
|
4
|
|
52
|
|
35
|
Operating income
(loss)
|
|
70
|
|
2
|
|
191
|
|
(63)
|
Interest
expense
|
|
(11)
|
|
(13)
|
|
(40)
|
|
(44)
|
Other
income
|
|
35
|
|
(2)
|
|
35
|
|
(1)
|
Income (loss)
before income taxes
|
|
94
|
|
(13)
|
|
186
|
|
(108)
|
Income tax (expense)
benefit
|
|
(24)
|
|
9
|
|
(50)
|
|
23
|
Income (loss) from
continuing operations
|
|
70
|
|
(4)
|
|
136
|
|
(85)
|
Income from
discontinued operations, net of tax
|
|
-
|
|
-
|
|
8
|
|
8
|
Net income
(loss)
|
|
70
|
|
(4)
|
|
144
|
|
(77)
|
Net income (loss)
attributable to noncontrolling interests, net of tax
|
|
(2)
|
|
(2)
|
|
(10)
|
|
(10)
|
Net income (loss)
attributable to Venator
|
|
$ 68
|
|
$ (6)
|
|
$ 134
|
|
$ (87)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$ 118
|
|
$ 39
|
|
$ 395
|
|
$ 77
|
Adjusted net
income(1)
|
|
$
65
|
|
$
-
|
|
$ 186
|
|
$ (67)
|
|
|
|
|
|
|
|
|
|
Basic earnings
(losses) per share
|
|
$ 0.64
|
|
$ (0.06)
|
|
$
1.26
|
|
$ (0.82)
|
Diluted earnings
(losses) per share(1)
|
|
$ 0.64
|
|
$ (0.06)
|
|
$
1.26
|
|
$ (0.82)
|
Adjusted earnings
(losses) per share(1)
|
|
$ 0.61
|
|
$
-
|
|
$
1.75
|
|
$ (0.63)
|
Adjusted diluted
earnings (losses) per share(1)
|
|
$ 0.61
|
|
$
-
|
|
$
1.74
|
|
$ (0.63)
|
|
|
|
|
|
|
|
|
|
Common share
information(1):
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
106.3
|
|
106.3
|
|
106.3
|
|
106.3
|
Diluted
shares
|
|
106.7
|
|
106.3
|
|
106.7
|
|
106.3
|
|
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
|
|
2017
|
|
2016
|
|
(Worse)
|
|
2017
|
|
2016
|
|
(Worse)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$ 387
|
|
$ 357
|
|
8%
|
|
$ 1,604
|
|
$ 1,554
|
|
3%
|
Performance
Additives
|
|
141
|
|
134
|
|
5%
|
|
605
|
|
585
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 528
|
|
$ 491
|
|
8%
|
|
$ 2,209
|
|
$ 2,139
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$ 119
|
|
$ 33
|
|
261%
|
|
$
387
|
|
$
61
|
|
534%
|
Performance
Additives
|
|
15
|
|
13
|
|
15%
|
|
72
|
|
69
|
|
4%
|
Corporate and
other
|
|
(16)
|
|
(7)
|
|
(129)%
|
|
(64)
|
|
(53)
|
|
(21)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 118
|
|
$ 39
|
|
203%
|
|
$
395
|
|
$
77
|
|
413%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 3 – Factors Impacting Sales Revenue
|
|
Three months
ended
|
|
|
December 31, 2017
vs. 2016
|
|
|
Average Selling
Price(a)
|
|
|
|
|
|
|
|
|
Local
|
|
Exchange
|
|
Sales
Mix
|
|
Sales
|
|
|
|
|
Currency
|
|
Rate
|
|
&
Other
|
|
Volume(b)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
21%
|
|
4%
|
|
0%
|
|
(17)%(c)
|
|
8%
|
Performance
Additives
|
|
3%
|
|
2%
|
|
0%
|
|
0%
|
|
5%
|
Total
Company
|
|
16%
|
|
3%
|
|
(1)%
|
|
(11)%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended
|
|
|
December 31, 2017
vs. 2016
|
|
|
Average Selling
Price(a)
|
|
|
|
|
|
|
|
|
Local
|
|
Exchange
|
|
Sales
Mix
|
|
Sales
|
|
|
|
|
Currency
|
|
Rate
|
|
&
Other
|
|
Volume(b)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
18%
|
|
1%
|
|
(2)%
|
|
(14)%(d)
|
|
3%
|
Performance
Additives
|
|
1%
|
|
0%
|
|
0%
|
|
2%
|
|
3%
|
Total
Company
|
|
13%
|
|
0%
|
|
(1)%
|
|
(9)%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes revenues
from tolling arrangements, by-products and raw materials
|
(b) Excludes sales
volumes of by-products and raw materials
|
(c) Adjusting for the
impact of the Pori fire, the impact of volume on sales revenue was
an increase of 1%
|
(d) Adjusting for the
impact of the Pori fire, the impact of volume on sales revenue was
a decrease of 2%
|
Table 4 – Reconciliation of U.S. GAAP to Non-GAAP
Measures
|
|
|
|
|
|
Income
Tax
|
|
|
|
|
|
Diluted
Earnings (Loss)
|
|
|
EBITDA
|
|
(Expense)
Benefit(2)
|
|
Net Income
(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
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 70
|
|
$
(4)
|
|
|
|
|
|
$ 70
|
|
$ (4)
|
|
$ 0.66
|
|
$ (0.04)
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
(2)
|
|
|
|
|
|
(2)
|
|
(2)
|
|
(0.02)
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Venator
|
|
68
|
|
(6)
|
|
|
|
|
|
68
|
|
(6)
|
|
0.64
|
|
(0.06)
|
Interest
expense
|
|
11
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) from continuing operations
|
|
24
|
|
(9)
|
|
(24)
|
|
9
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
32
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
3
|
|
-
|
|
(1)
|
|
-
|
|
2
|
|
-
|
|
0.02
|
|
-
|
Separation (gain)
expense, net
|
|
7
|
|
-
|
|
-
|
|
-
|
|
7
|
|
-
|
|
0.07
|
|
-
|
U.S. tax
reform
|
|
(34)
|
|
-
|
|
16
|
|
-
|
|
(18)
|
|
-
|
|
(0.17)
|
|
-
|
Loss on disposition of
businesses/assets
|
|
-
|
|
1
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
Net income of
discontinued operations
|
|
-
|
|
-
|
|
N/A
|
|
N/A
|
|
-
|
|
-
|
|
-
|
|
-
|
Certain legal
settlements and related expenses
|
|
-
|
|
1
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
Amortization of pension
and postretirement actuarial losses
|
|
4
|
|
2
|
|
-
|
|
(1)
|
|
4
|
|
1
|
|
0.04
|
|
0.01
|
Net plant incident
(credits) costs
|
|
-
|
|
3
|
|
-
|
|
(1)
|
|
-
|
|
2
|
|
-
|
|
0.02
|
Restructuring,
impairment, plant closing and transition costs (credits)
|
|
3
|
|
4
|
|
(1)
|
|
(1)
|
|
2
|
|
3
|
|
0.02
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$ 118
|
|
$ 39
|
|
$ (10)
|
|
$ 4
|
|
$ 65
|
|
$ -
|
|
$ 0.61
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense (benefit)(2)
|
|
|
|
|
|
|
|
|
|
$ 10
|
|
$ (4)
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income (loss)(1)
|
|
|
|
|
|
|
|
|
|
$ 77
|
|
$ (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
13%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax
|
|
|
|
|
|
Diluted
Earnings (Loss)
|
|
|
EBITDA
|
|
(Expense)
Benefit(2)
|
|
Net
Income
|
|
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
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ 53
|
|
|
|
|
|
|
|
$ 53
|
|
|
|
$ 0.50
|
|
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
|
|
|
|
|
|
(2)
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Venator
|
|
51
|
|
|
|
|
|
|
|
51
|
|
|
|
0.48
|
|
|
Interest
expense
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense from
continuing operations
|
|
14
|
|
|
|
(14)
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
4
|
|
|
|
(1)
|
|
|
|
3
|
|
|
|
0.03
|
|
|
Separation gain
(expense), net
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
U.S. income tax
reform
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Gain on disposition of
businesses/assets
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net income from
discontinued operations before taxes
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Certain legal
settlements and related expenses
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Amortization of pension
and postretirement actuarial losses
|
|
5
|
|
|
|
-
|
|
|
|
5
|
|
|
|
0.05
|
|
|
Net plant incident
costs (credits)
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
0.01
|
|
|
Restructuring,
impairment and plant closing and transition costs
(credits)
|
|
16
|
|
|
|
(1)
|
|
|
|
15
|
|
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$ 134
|
|
|
|
$ (16)
|
|
|
|
$ 75
|
|
|
|
$ 0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
|
|
|
|
$ 16
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$ 93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax
|
|
|
|
|
|
Diluted
Earnings (Loss)
|
|
|
EBITDA
|
|
(Expense)
Benefit(2)
|
|
Net Income
(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
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 144
|
|
$ (77)
|
|
|
|
|
|
$ 144
|
|
$
(77)
|
|
$ 1.35
|
|
$ (0.72)
|
Net income attributable
to noncontrolling interests
|
|
(10)
|
|
(10)
|
|
|
|
|
|
(10)
|
|
(10)
|
|
(0.09)
|
|
(0.09)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Venator
|
|
134
|
|
(87)
|
|
|
|
|
|
134
|
|
(87)
|
|
1.26
|
|
(0.82)
|
Interest
expense
|
|
40
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) from continuing operations
|
|
50
|
|
(23)
|
|
(50)
|
|
23
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
127
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
5
|
|
11
|
|
(2)
|
|
(5)
|
|
3
|
|
6
|
|
0.03
|
|
0.06
|
Separation (gain)
expense, net
|
|
7
|
|
-
|
|
-
|
|
-
|
|
7
|
|
-
|
|
0.07
|
|
-
|
U.S. income tax
reform
|
|
(34)
|
|
-
|
|
16
|
|
-
|
|
(18)
|
|
-
|
|
(0.17)
|
|
-
|
Loss (gain) on
disposition of businesses/assets
|
|
-
|
|
(22)
|
|
-
|
|
5
|
|
-
|
|
(17)
|
|
-
|
|
(0.16)
|
Net income of
discontinued operations
|
|
(8)
|
|
(8)
|
|
N/A
|
|
-
|
|
(8)
|
|
(8)
|
|
(0.07)
|
|
(0.08)
|
Certain legal
settlements and related expenses
|
|
1
|
|
2
|
|
-
|
|
(1)
|
|
1
|
|
1
|
|
0.01
|
|
0.01
|
Amortization of pension
and postretirement actuarial losses
|
|
17
|
|
10
|
|
-
|
|
-
|
|
17
|
|
10
|
|
0.16
|
|
0.09
|
Net plant incident
(credits) costs
|
|
4
|
|
1
|
|
(1)
|
|
(1)
|
|
3
|
|
-
|
|
0.03
|
|
-
|
Restructuring,
impairment, plant closing and transition costs (credits)
|
|
52
|
|
35
|
|
(5)
|
|
(7)
|
|
47
|
|
28
|
|
0.44
|
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$ 395
|
|
$ 77
|
|
$ (42)
|
|
$ 14
|
|
$ 186
|
|
$ (67)
|
|
$1.74
|
|
$ (0.63)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense (benefit)(2)
|
|
|
|
|
|
|
|
|
|
$ 42
|
|
$ (14)
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
10
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income (loss)(1)
|
|
|
|
|
|
|
|
|
|
$ 238
|
|
$ (71)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
18%
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 5 – Selected Balance Sheet Items
|
|
December
31,
|
|
September
30,
|
|
|
December
31,
|
In
millions
|
|
2017
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ 238
|
|
$ 186
|
|
|
$ 29
|
Accounts and notes
receivable, net
|
|
392
|
|
420
|
|
|
490
|
Inventories
|
|
454
|
|
431
|
|
|
426
|
Prepaid and other
current assets
|
|
85
|
|
84
|
|
|
154
|
Property, plant and
equipment, net
|
|
1,367
|
|
1,264
|
|
|
1,178
|
Other
assets
|
|
311
|
|
339
|
|
|
384
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ 2,847
|
|
$ 2,724
|
|
|
$ 2,661
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ 401
|
|
$ 334
|
|
|
$ 992
|
Other current
liabilities
|
|
244
|
|
213
|
|
|
173
|
Current portion of
debt
|
|
14
|
|
4
|
|
|
10
|
Long-term
debt
|
|
743
|
|
747
|
|
|
13
|
Long-term debt to
affiliates
|
|
-
|
|
-
|
|
|
882
|
Non-current payable
to affiliates
|
|
34
|
|
73
|
|
|
-
|
Other
liabilities
|
|
306
|
|
337
|
|
|
414
|
|
|
|
|
|
|
|
|
Total
equity
|
|
1,105
|
|
1,016
|
|
|
177
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$ 2,847
|
|
$ 2,724
|
|
|
$ 2,661
|
|
|
|
|
|
|
|
|
Table 6 – Outstanding Debt
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
In
millions
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
Term loan
facility
|
|
$ 367
|
|
$ 368
|
|
$ -
|
Senior notes
|
|
370
|
|
370
|
|
-
|
Amounts outstanding
under A/R programmes
|
|
-
|
|
-
|
|
-
|
Other debt
|
|
20
|
|
13
|
|
23
|
|
|
|
|
|
|
|
Total debt -
excluding affiliates
|
|
757
|
|
751
|
|
23
|
|
|
|
|
|
|
|
Total cash
|
|
238
|
|
186
|
|
29
|
|
|
|
|
|
|
|
Net debt -
excluding affiliates
|
|
$ 519
|
|
$ 565
|
|
$ (6)
|
Table 7 – Summarized Statement of Cash Flows
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
In
millions
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Total cash at
beginning of period(a)
|
|
$ 186
|
|
$ 20
|
|
$ 30
|
|
$ 22
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities(a)
|
|
157
|
|
4
|
|
338
|
|
97
|
Net cash used in
investing activities(a)
|
|
(84)
|
|
(13)
|
|
(12)
|
|
(118)
|
Net cash (used in)
provided by financing activities(a)
|
|
(24)
|
|
20
|
|
(123)
|
|
30
|
Effect of exchange rate
changes on cash
|
|
3
|
|
(1)
|
|
5
|
|
(1)
|
|
|
|
|
|
|
|
|
|
Total cash at end
of period(a)
|
|
$ 238
|
|
$ 30
|
|
$ 238
|
|
$ 30
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
(4)
|
|
$
(1)
|
|
$ (28)
|
|
$
(5)
|
Cash paid for income
taxes
|
|
(10)
|
|
(1)
|
|
(21)
|
|
(7)
|
Capital
expenditures
|
|
(100)
|
|
(27)
|
|
(197)
|
|
(103)
|
Depreciation and
amortization
|
|
32
|
|
30
|
|
127
|
|
114
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
$ 30
|
|
$
(7)
|
|
$ (24)
|
|
$ (12)
|
Inventories
|
|
(14)
|
|
(7)
|
|
8
|
|
106
|
Accounts
payable
|
|
43
|
|
11
|
|
51
|
|
17
|
|
|
|
|
|
|
|
|
|
Total cash provided by
(used in) primary working capital
|
|
$ 59
|
|
$
(3)
|
|
$ 35
|
|
$ 111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Free cash
flow(3):
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities from continuing operations
|
|
$ 157
|
|
$
(7)
|
|
$ 337
|
|
$ 80
|
Capital
expenditures
|
|
(100)
|
|
(27)
|
|
(197)
|
|
(103)
|
(Investment in) cash
received from unconsolidated affiliates, net
|
|
(10)
|
|
(1)
|
|
(6)
|
|
3
|
Other investing
activities excluding transactions with former parent and cash flows
related to sales of businesses/assets
|
|
26
|
|
-
|
|
71
|
|
-
|
Non-recurring
separation costs(b)
|
|
7
|
|
-
|
|
7
|
|
-
|
|
|
|
|
|
|
|
|
|
Total free cash
flow
|
|
$ 80
|
|
$ (35)
|
|
$ 212
|
|
$ (20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$ 118
|
|
$ 39
|
|
$ 395
|
|
$ 77
|
Capital Expenditures
excluding cash paid for Pori rebuild
|
|
(45)
|
|
(27)
|
|
(103)
|
|
(103)
|
Cash paid for
interest
|
|
(4)
|
|
(1)
|
|
(28)
|
|
(5)
|
Cash paid for income
taxes
|
|
(10)
|
|
(1)
|
|
(21)
|
|
(7)
|
Primary working capital
change
|
|
59
|
|
(3)
|
|
35
|
|
111
|
Restructuring
|
|
(10)
|
|
(14)
|
|
(33)
|
|
(58)
|
Maintenance &
other
|
|
(28)
|
|
(28)
|
|
(33)
|
|
(35)
|
|
|
|
|
|
|
|
|
|
Total free cash
flow(3)
|
|
$ 80
|
|
$ (35)
|
|
$ 212
|
|
$ (20)
|
|
|
|
|
|
|
|
|
|
See end of press
release for numbered footnote explanations
|
|
(a) Includes
discontinued operations
|
(b) Represents
payments associated with our separation from Huntsman
|
(c) These are
transactions with our former parent that will no longer occur after
our separation
|
Footnotes
(1)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income (loss) before interest expense, income tax
(benefit) from continuing operations, depreciation and
amortization, and net income attributable to noncontrolling
interests, as well as eliminating the following adjustments:
(a) business acquisition and integration expenses; (b)
separation (gain) expense, net; (c) U.S. income tax reform; (d)
(gain) loss on disposition of businesses/assets (e) net income
of discontinued operations net of tax; (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, plant
closing and transition costs. We believe that net income (loss) 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 (gain) expense, net; (c) U.S. income tax
reform; (d) (gain) loss on disposition of businesses/assets; (e)
net income of discontinued operations; (f) certain legal
settlements and related expenses; (g) amortization of pension and
postretirement actuarial losses; (h) net plant incident (credits)
costs; (i) restructuring, impairment, plant closing and transition
costs. Basic adjusted net earnings (losses) 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 (losses) per share reflects all
potential dilutive common 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 common 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 (losses) and adjusted net earnings
(losses) 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 27 facilities, employ
approximately 4,500 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 any delays
in reconstruction of our Pori, Finland manufacturing facility or losses for
business interruption or construction costs that exceed our
coverage limit applicable to the fire at that facility.
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 the prospectus filed
with the SEC in connection with the sale of our ordinary shares in
December 2017. The risk factors and
other factors noted in the prospectus could cause its actual
results to differ materially from those contained in any
forward-looking statement.
View original content with
multimedia:http://www.prnewswire.com/news-releases/venator-announces-fourth-quarter-and-full-year-2017-results-reports-strong-earnings-and-cash-generation-300603298.html
SOURCE Venator Materials PLC