Trinseo Announces Asset Restructuring Actions and Settlement of European Commission Matter
December 19 2022 - 4:15PM
Business Wire
Trinseo (NYSE: TSE), a specialty material solutions provider,
today announced updates to its asset restructuring initiatives. In
aggregate, these actions are expected to result in approximately
$60 million of annual profitability improvement versus the fourth
quarter run rate, most of which will be realized in 2023. These
actions consist of the following:
- Closure of manufacturing operations at the styrene production
facility in Boehlen, Germany. The closure is the result of an
uncompetitive position in the global styrene market due to the
site’s subscale size, industry capacity additions and elevated
natural gas prices in Europe.
- Closure of one polycarbonate production line in Stade, Germany
due to an uncompetitive position in the global polycarbonate
market. The Company will continue to produce polycarbonate for use
in its downstream compounding business with the remaining assets.
The line closure is expected to result in lower costs and
significantly less exposure to the cyclical merchant polycarbonate
market.
- Consolidation of the PMMA sheet manufacturing site in
Matamoros, Mexico into the continuous sheet manufacturing operation
of Aristech Surfaces in Florence, Kentucky.
- Capacity reduction of SB latex at the Hamina, Finland site
starting mid-year 2023 due to over-capacity of SB latex in
Europe.
Trinseo expects to incur $79 million to $89 million of pre-tax,
non-recurring charges related to the cessation of manufacturing
activities at these facilities. Of this, $55 million to $61 million
is expected to be incurred in the fourth quarter of 2022, with the
remainder expected to be incurred through 2024. The cash amount of
these charges is expected to be $67 million to $77 million,
including approximately $40 million in 2023, with substantially all
expected to be incurred through 2024. The actual timing and costs
of these actions may differ from the Company’s current expectations
and estimates, and such differences may be material. These charges
are subject to ongoing negotiations with the works councils,
industrial associations and government authorities.
Additionally, on November 29, 2022, the European Commission
issued a final decision imposing a fine to Trinseo in the amount of
€32.6 million related to the commission’s 2018 investigation of
styrene purchasing practices in Europe. This amount was in line
with our previously recorded liability and was paid in full in
December 2022.
About
Trinseo
Trinseo (NYSE: TSE) a specialty material solutions provider,
partners with companies to bring ideas to life in an imaginative,
smart, and sustainability-focused manner by combining its premier
expertise, forward-looking innovations and best-in-class materials
to unlock value for companies and consumers.
From design to manufacturing, Trinseo taps into decades of
experience in diverse material solutions to address customers’
unique challenges in a wide range of industries, including consumer
goods, mobility, building and construction, and medical.
Trinseo’s approximately 3,400 employees bring endless creativity
to reimagining the possibilities with clients all over the world
from the company’s locations in North America, Europe, and Asia
Pacific. Trinseo reported net sales of approximately $4.8 billion
in 2021. Discover more by visiting www.trinseo.com and connecting
with Trinseo on LinkedIn, Twitter, Facebook and WeChat.
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 Net Income,
EBITDA, Adjusted EBITDA and Adjusted EPS and measures of liquidity
excluding certain GAAP items, such as Free Cash Flow. 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 or liquidity, as
applicable. The definitions of each of these measures, further
discussion of usefulness, and reconciliations of non-GAAP measures
to GAAP measures are provided herein.
Cautionary Note on
Forward-Looking Statements
This press release may contain forward-looking statements
including, without limitation, statements concerning plans,
objectives, goals, projections, forecasts, strategies, future
events or performance, and underlying assumptions and other
statements, which are not statements of historical facts or
guarantees or assurances of future performance. Forward-looking
statements may be identified by the use of words like "expect,"
"anticipate," “believe,” "intend," "forecast," "outlook," "will,"
"may," "might," "see," "tend," "assume," "potential," "likely,"
"target," "plan," "contemplate," "seek," "attempt," "should,"
"could," "would" or expressions of similar meaning. Forward-looking
statements reflect management’s evaluation of information currently
available and are based on our current expectations and
assumptions, our business, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Factors that might
cause future results to differ from those expressed by the
forward-looking statements include, but are not limited to, our
ability to reduce operating costs, lower capital expenditures, and
successfully implement proposed asset restructuring initiatives
including the closure of certain plants and product lines, and the
reduction of production capacity; our ability to successfully
execute our transformation strategy and business strategy; our
ability to integrate acquired businesses; global supply chain
volatility and increased costs or disruption in the supply of raw
materials; increased energy costs or costs for transportation of
our products; the nature of investment opportunities presented to
the Company from time to time; the outcome of the European
Commission’s request for information; and those discussed in our
Annual Report on Form 10-K, under Part I, Item 1A —"Risk Factors"
and elsewhere in our other reports, filings and furnishings made
with the U.S. Securities and Exchange Commission from time to time.
As a result of these or other factors, our actual results,
performance or achievements may differ materially from those
contemplated by the forward-looking statements. Therefore, we
caution you against relying on any of these forward-looking
statements. The forward-looking statements included in this press
release are made only as of the date hereof. We undertake no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
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Trinseo Andy Myers Tel : +1 610-240-3221 Email:
aemyers@trinseo.com
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