Full-Year 2022 Summary
- Net loss from continuing operations of $428 million and diluted
EPS from continuing operations of negative $11.91
- Adjusted EBITDA* of $312 million, including a $21 million
favorable impact from net timing, and Adjusted EPS* of negative
$0.48
- Cash from operations of $44 million and capital expenditures of
$149 million resulted in Free Cash Flow* of negative $105
million
- Sales volume and variable margin of products containing
recycled materials increased 63% and 69% respectively versus prior
year; in 2022 these products represented 1% and 3% of total company
sales volume and variable margin, respectively
Fourth Quarter 2022
Highlights
- Net loss from continuing operations of $364 million and diluted
EPS from continuing operations of negative $10.42
- Adjusted EBITDA* of $6 million, including a $19 million
unfavorable impact from net timing and a $15 million negative
impact from natural gas hedges established in the second half of
the year, and Adjusted Net Loss* of $60 million
- Cash provided by operations of $34 million and capital
expenditures of $54 million resulted in Free Cash Flow* of negative
$20 million with an $88 million working capital release; results
included a $34 million payment for settlement of the European
Commission’s 2018 investigation of the Company’s styrene purchasing
practices in Europe
- Fourth quarter ending cash of $212 million with approximately
$505 million† of additional available liquidity under two undrawn,
committed financing facilities
- Began implementing previously announced asset restructuring
initiatives including the closure of the Boehlen, Germany styrene
plant and one line at the Stade, Germany polycarbonate plant;
expected to result in a $60 million profitability improvement in
comparison to the fourth quarter run rate
Three Months Ended
Year Ended
December 31,
December 31,
$millions, except per share
data
2022
2021
2022
2021
Net Sales
$
975
$
1,298
$
4,966
$
4,827
Net Income (Loss) from continuing
operations
(364
)
1
(428
)
280
Diluted EPS from continuing operations
($)
(10.42
)
0.04
(11.91
)
7.07
Adjusted Net Income (Loss)*
(60
)
33
(17
)
382
Adjusted EPS ($)*
(1.72
)
0.83
(0.48
)
9.65
EBITDA*
(322
)
103
(120
)
597
Adjusted EBITDA*
6
133
312
729
__________________________ *For a reconciliation of EBITDA,
Adjusted EBITDA, and Adjusted Net Income (Loss), all of which are
non-GAAP measures, to Net Income (Loss), as well as a
reconciliation of Free Cash Flow and Adjusted EPS, see Notes 2 and
3 to the financial statements included below.
†This amount varies from the Company’s available liquidity
stated in its press release announcing preliminary fourth quarter
2022 results, dated January 26, 2023, based on the completion of
financial covenant calculations under its debt agreements. The
Company had $354.7 million available under its revolving credit
facility at the end of fourth quarter 2022 and expects availability
under such facility to be approximately $102 million at the end of
the first quarter 2023.
Trinseo (NYSE: TSE), a
specialty material solutions provider, today reported its fourth
quarter and full-year 2022 financial results. Net sales in the
fourth quarter decreased 25% versus prior year due mostly to lower
sales volume across all reporting segments caused by continued
customer destocking exacerbated by extended year-end shutdowns at
many customer sites, Covid-19 impacts in China, and underlying
demand weakness stemming from an uncertain economic and
geopolitical macroenvironment. Additionally, elevated energy prices
in Europe, weak demand in China and easing shipping constraints
created a temporary arbitrage window for lower-cost imports from
Asia into Europe. This negatively impacted volumes and created
margin pressure for globally traded products such as ABS,
polycarbonate, MMA and PMMA sheets.
Fourth quarter net loss from continuing operations of $364
million was $365 million below prior year and Adjusted EBITDA of $6
million was $127 million below prior year. Net loss included a
non-cash impairment charge of $297 million related to the PMMA
business and Aristech Surfaces reporting units goodwill balances.
Additional variances were mainly from lower volume and margin
caused by weak underlying demand, customer destocking and increased
imports from Asia. Results also included a $26 million unfavorable
net timing variance as well as a $15 million unfavorable impact
from natural gas hedging.
Net sales in the full year increased 3% versus prior year.
Higher prices from the passthrough of higher input costs resulted
in an 11% increase which was more than offset by a 13% decrease
caused by lower volumes, mostly in the second half of the year.
Sales grew 8% from portfolio additions including four additional
months of the PMMA business and eight additional months of Aristech
Surfaces.
Full-year net loss from continuing operations of $428 million,
including the fourth quarter non-cash impairment charge of $297
million, was $708 million below prior year and full-year Adjusted
EBITDA of $312 million was $417 million below prior year.
Significantly elevated energy costs along with the geopolitical
conflict in Europe, Covid-19 shutdowns in China and a rapid rise in
interest rates in an inflationary environment all combined to
adversely impact volume and margin across most products.
Commenting on the Company’s fourth quarter performance, Frank
Bozich, President and Chief Executive Officer of Trinseo, said,
“During the fourth quarter we observed a similar sequential
operating environment including lower global demand and elevated
natural gas prices in Europe. However, our results improved
sequentially as we made proactive operating decisions that will
continue to reduce our exposure to cyclical commodity markets. I
want to commend our employees for navigating these challenging
business conditions while delivering another exemplary year of
EH&S performance as well as staying focused on our growth
programs including those in specialty applications and products
containing recycled materials.”
Fourth Quarter Results and
Commentary by Business Segment
- Engineered Materials net sales of $205 million for the
quarter decreased 26% versus prior year and Adjusted EBITDA of
negative $5 million was $31 million lower than prior year. Sales
volume was lower across all products due to weak underlying demand
and continued customer destocking, particularly in building &
construction, consumer electronics and wellness applications. In
addition, both volume and margins were pressured as elevated
natural gas and ammonia prices in Europe and low demand in China
created a temporary arbitrage window for lower-cost, standard-grade
products from Asia to be more heavily imported into Europe and
North America. This predominantly impacted the non-formulated
products in the product portfolio including MMA and PMMA sheets.
Margins were also negatively impacted by natural gas hedges which
led to a $10 million headwind. The integration and synergy
realization of the newly acquired businesses remains on schedule
and the PMMA business completed its ERP implementation in November
which was a major step in exiting the Arkema transition service
agreements.
- Latex Binders net sales of $255 million for the quarter
decreased 17% versus prior year. Lower volumes caused a 14%
reduction as most products and regions experienced a stepdown in
demand. Adjusted EBITDA of $20 million was flat to prior year as
lower volume was offset by pricing and fixed cost initiatives.
Volume for CASE products declined by 18% in the fourth quarter and
by 10% for the full year caused by customer destocking and reduced
demand in building & construction applications. Despite a
slowdown in 2022, CASE volumes still ended the year 15% higher than
2019 and 9% higher than 2020.
- Base Plastics net sales of $271 million for the quarter
were 28% lower than prior year primarily due to lower volumes for
building & construction, industrial and consumer durables
applications. Adjusted EBITDA of negative $9 million was $88
million below prior year. Weaker demand led to lower sales volume
and also pressured margins in polycarbonate and ABS products.
Europe products also faced increased competition from lower-cost
imports from Asia. Volumes supporting automotive applications
improved modestly versus prior year as production and supply chain
constraints eased. Results included a $12 million negative net
timing variance versus prior year.
Starting in 2023, the Base Plastics segment will be renamed to
Plastics Solutions to better reflect Trinseo’s strategic focus on
providing solutions in areas such as sustainability and material
substitution.
- Polystyrene net sales of $216 million for the quarter
were 18% below prior year. Lower volume led to an 8% decrease in
sales and lower price, primarily from the pass through of lower
styrene costs, led to a 10% decrease in sales. Adjusted EBITDA of
$12 million was $21 million below prior year as weaker demand in
appliance and building & construction applications led to lower
volumes and contracted margins. Results included a $5 million
negative net timing variance versus prior year.
- Feedstocks Adjusted EBITDA of negative $16 million was
$9 million higher than prior year. Both styrene production plants
were idled throughout the quarter due to low styrene demand and
elevated natural gas prices in Europe. Results were impacted by a
$9 million negative net timing variance versus prior year. During
the fourth quarter the Company announced its decision to
permanently close the Boehlen, Germany styrene facility. The
Terneuzen styrene facility in the Netherlands was restarted in late
January due to improving styrene economics.
- Americas Styrenics Adjusted EBITDA of $18 million for
the quarter was $4 million lower than prior year as lower demand
was partially offset by higher polystyrene margin.
2023 Full-Year
Outlook
- Full-year 2023 net income from continuing operations of $3
million to $33 million and Adjusted EBITDA of $375 million to $425
million
- Full-year 2023 cash from operations of approximately $100
million resulting in breakeven Free Cash Flow
- Full-year 2023 capital spending of approximately $100 million
reflects a pause of the legacy ERP upgrade and includes funding for
growth and productivity initiatives
Commenting on the outlook for 2023, Bozich said, “We are
expecting underlying demand to remain challenged as we begin 2023
but we are increasingly confident that we will see the end of
destocking early in the year. We anticipate first quarter sales
volumes will be seasonally stronger than fourth quarter with
continued improvement through the year as demand in China recovers
and energy prices in Europe moderate which will hinder significant
import opportunities from Asia.”
Bozich continued, “During 2023 we’ll focus on completing our
asset restructuring initiatives which we expect will improve
results in 2023 and position us well when normal order patterns
resume. We’ll look to make further progress on our growth platforms
including material substitution applications as well as products
containing recycled or bio-based materials. Even under a reduced
capital expenditure plan, we are able to still fund these programs
which delivered solid results in 2022 and will continue our
evolution to a specialty material and sustainable solutions
provider. We’re confident in the talent of our employees, our
ability to generate cash and in our liquidity position to navigate
a subdued economic environment while delivering on our
transformation strategy.”
Conference Call and Webcast
Information
Trinseo will host a conference call to discuss its fourth
quarter and full year 2022 financial results on Thursday, Februrary
9, 2023 at 10 a.m. Eastern Time.
Commenting on results will be Frank Bozich, President and Chief
Executive Officer, David Stasse, Executive Vice President and Chief
Financial Officer, and Andy Myers, Director of Investor
Relations.
For those interested in asking questions during the Q&A
session, please register using the following link:
- Conference Call Registration
For those interested in listening only, please register for the
webcast using the following link:
After registering for the conference call, you will receive a
confirmation email with a meeting invitation and information for
entry. Registration is open through the live call, but it is
advised that you register in advance to ensure you are connected
for the full call.
Trinseo has posted its fourth quarter and full year 2022
financial results on the Company’s Investor Relations
website. The presentation slides will also be made available in the
webcast player prior to the conference call. The Company will also
furnish copies of the financial results press release and
presentation slides to investors by means of a Form 8-K filing with
the U.S. Securities and Exchange Commission.
A replay of the conference call and transcript will be archived
on the Company’s Investor Relations website shortly
following the conference call. The replay will be available until
Februrary 9, 2024.
About
Trinseo
Trinseo (NYSE: TSE), a specialty material solutions provider,
partners with companies to bring ideas to life in an imaginative,
smart, and sustainably-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 $5.0 billion in 2022. 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 in the Notes to Condensed
Consolidated Financial Information presented 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 successfully execute our business and transformation
strategy; increased costs or disruption in the supply of raw
materials; increased energy costs; our ability to successfully
generate cost savings and increase profitability through asset
restructuring initiatives; compliance with laws and regulations
impacting our business; conditions in the global economy and
capital markets; 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.
TRINSEO PLC
Condensed Consolidated
Statements of Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2022
2021
2022
2021
Net sales
$
975.2
$
1,298.5
$
4,965.5
$
4,827.5
Cost of sales
978.4
1,176.9
4,693.2
4,128.6
Gross profit (loss)
(3.2
)
121.6
272.3
698.9
Selling, general and administrative
expenses
136.1
93.1
398.8
323.4
Equity in earnings of unconsolidated
affiliates
18.4
22.5
102.2
92.7
Impairment and other charges
300.1
3.8
339.6
6.8
Operating income (loss)
(421.0
)
47.2
(363.9
)
461.4
Interest expense, net
35.3
22.8
112.9
79.4
Acquisition purchase price hedge loss
—
—
—
22.0
Other expense (income), net
(9.0
)
1.0
(7.2
)
9.5
Income (loss) from continuing operations
before income taxes
(447.3
)
23.4
(469.6
)
350.5
Provision for (benefit from) income
taxes
(83.0
)
22.0
(41.6
)
70.9
Net income (loss) from continuing
operations
(364.3
)
1.4
(428.0
)
279.6
Net income (loss) from discontinued
operations, net of income taxes
(1.0
)
122.4
(2.9
)
160.4
Net income (loss)
$
(365.3
)
$
123.8
$
(430.9
)
$
440.0
Weighted average shares- basic
35.0
38.7
35.9
38.7
Net income (loss) per share- basic:
Continuing operations
$
(10.42
)
$
0.04
$
(11.91
)
$
7.22
Discontinued operations
(0.02
)
3.16
(0.08
)
4.15
Net income (loss) per share- basic
$
(10.44
)
$
3.20
$
(11.99
)
$
11.37
Weighted average shares- diluted
35.0
39.5
35.9
39.6
Net income (loss) per share- diluted:
Continuing operations
$
(10.42
)
$
0.04
$
(11.91
)
$
7.07
Discontinued operations
(0.02
)
3.10
(0.08
)
4.05
Net income (loss) per share- diluted
$
(10.44
)
$
3.14
$
(11.99
)
$
11.12
TRINSEO PLC
Condensed Consolidated Balance
Sheets
(In millions)
(Unaudited)
December 31,
December 31,
2022
2021
Assets
Cash and cash equivalents
$
211.7
$
573.0
Accounts receivable, net of allowance
586.0
740.2
Inventories
553.6
621.0
Other current assets
39.4
44.3
Investments in unconsolidated
affiliates
255.1
247.8
Property, plant, equipment, goodwill, and
other intangible assets, net
1,873.5
2,252.9
Right-of-use assets - operating, net
76.1
85.3
Other long-term assets
164.8
147.7
Total assets
$
3,760.2
$
4,712.2
Liabilities and shareholders’
equity
Current liabilities
689.4
914.4
Long-term debt, net of unamortized
deferred financing fees
2,301.6
2,305.6
Noncurrent lease liabilities -
operating
60.2
69.2
Other noncurrent obligations
288.7
409.9
Shareholders’ equity
420.3
1,013.1
Total liabilities and shareholders’
equity
$
3,760.2
$
4,712.2
TRINSEO PLC
Condensed Consolidated
Statements of Cash Flows
(In millions)
(Unaudited)
Year Ended
December 31,
2022
2021
Cash flows from operating
activities
Cash provided by operating activities -
continuing operations
$
46.4
$
456.0
Cash used in operating activities -
discontinued operations
(2.9
)
(3.3
)
Cash provided by operating activities
43.5
452.7
Cash flows from investing
activities
Capital expenditures
(148.2
)
(117.7
)
Cash paid for asset or business
acquisitions, net of cash acquired ($1.0 and $12.1)
(22.2
)
(1,804.0
)
Proceeds from the sale of businesses and
other assets
5.3
0.2
Proceeds from (payments for) the
settlement of hedging instruments
1.9
(14.7
)
Cash used in investing activities -
continuing operations
(163.2
)
(1,936.2
)
Cash provided by (used in) investing
activities - discontinued operations
(0.8
)
396.5
Cash used in investing activities
(164.0
)
(1,539.7
)
Cash flows from financing
activities
Deferred financing fees
—
(35.4
)
Short-term borrowings, net
(17.5
)
(14.6
)
Purchase of treasury shares
(151.9
)
(48.1
)
Dividends paid
(47.5
)
(21.9
)
Proceeds from exercise of option
awards
3.0
11.0
Withholding taxes paid on restricted share
units
(3.2
)
(0.9
)
Repurchases and repayments of long-term
debt
(16.6
)
(10.7
)
Net proceeds from issuance of 2028 Term
Loan B
—
746.3
Net proceeds from issuance of 2029 Senior
Notes
—
450.0
Proceeds from Accounts Receivable
Securitization Facility
—
150.0
Repayments of Accounts Receivable
Securitization Facility
—
(150.0
)
Cash provided by (used in) by financing
activities
(233.7
)
1,075.7
Effect of exchange rates on cash
(7.1
)
(4.4
)
Net change in cash, cash equivalents, and
restricted cash
(361.3
)
(15.7
)
Cash, cash equivalents, and restricted
cash—beginning of period
573.0
588.7
Cash, cash equivalents, and restricted
cash—end of period
$
211.7
$
573.0
Less: Restricted cash
—
—
Cash and cash equivalents—end of
period
$
211.7
$
573.0
TRINSEO PLC
Notes to Condensed
Consolidated Financial Information
(Unaudited)
Note 1: Net Sales by
Segment
Three Months Ended
Year Ended
December 31,
December 31,
(In millions)
2022
2021
2022
2021
Engineered Materials
$
205.1
$
277.3
$
1,044.4
$
755.0
Latex Binders
255.2
305.7
1,256.5
1,183.4
Base Plastics
271.2
378.8
1,323.0
1,497.9
Polystyrene
215.5
263.8
1,093.1
1,118.8
Feedstocks
28.2
72.9
248.5
272.4
Americas Styrenics*
—
—
—
—
Total Net Sales
$
975.2
$
1,298.5
$
4,965.5
$
4,827.5
________________________________ * The results of this segment
are comprised entirely of earnings from Americas Styrenics, our
50%-owned equity method investment. As such, we do not separately
report net sales of Americas Styrenics within our condensed
consolidated statements of operations.
Note 2: Reconciliation of
Non-GAAP Performance Measures to Net Income
EBITDA is a non-GAAP financial performance measure, which is
defined as income from continuing operations before interest
expense, net; income tax provision; depreciation and amortization
expense. We refer to EBITDA in making operating decisions because
we believe it provides our management as well as our investors with
meaningful information regarding the Company’s operational
performance. We believe the use of EBITDA as a metric assists our
board of directors, management and investors in comparing our
operating performance on a consistent basis.
We also 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 charges;
acquisition related costs and benefits, 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 (Loss) and Adjusted EPS
as additional performance measures. Adjusted Net Income (Loss) is
calculated as Adjusted EBITDA (defined beginning with net income
from continuing operations, 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 (Loss) per weighted average
diluted shares outstanding for a given period. We believe that
Adjusted Net Income (Loss) 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.
Three Months Ended
Year Ended
December 31,
December 31,
(In millions, except per share
data)
2022
2021
2022
2021
Net income (loss)
$
(365.3
)
$
123.8
$
(430.9
)
$
440.0
Net income (loss) from discontinued
operations
(1.0
)
122.4
(2.9
)
160.4
Net income (loss) from continuing
operations
$
(364.3
)
$
1.4
$
(428.0
)
$
279.6
Interest expense, net
35.3
22.8
112.9
79.4
Provision for (benefit from) income
taxes
(83.0
)
22.0
(41.6
)
70.9
Depreciation and amortization
89.8
56.4
236.9
167.5
EBITDA
$
(322.2
)
$
102.6
$
(119.8
)
$
597.4
Net gain on disposition of businesses and
assets
—
(0.4
)
(1.8
)
(0.6
)
Selling, general, and administrative
expenses; Other expense, net
Restructuring and other charges (a)
17.0
2.2
15.9
9.0
Selling, general, and administrative
expenses
Acquisition transaction and integration
net costs (b)
0.4
12.5
6.6
75.3
Cost of goods sold; Selling, general, and
administrative expenses
Acquisition purchase price hedge loss
(c)
—
—
—
22.0
Acquisition purchase price hedge (gain)
loss
Asset impairment charges or write-offs
(d)
2.4
3.8
6.3
6.8
Impairment and other charges
European Commission request for
information (e)
0.6
—
36.2
—
Impairment and other charges
Goodwill impairment charge (f)
297.1
—
297.1
—
Impairment and other charges
Other items (g)
11.0
12.0
71.2
19.5
Selling, general, and administrative
expenses; Other expense, net
Adjusted EBITDA
$
6.3
$
132.7
$
311.7
$
729.4
Adjusted EBITDA to
Adjusted Net Income (Loss):
Adjusted EBITDA
6.3
132.7
311.7
729.4
Interest expense, net
35.3
22.8
112.9
79.4
Provision for (benefit from) income taxes
- Adjusted (h)
(18.8
)
24.4
22.8
108.7
Depreciation and amortization - Adjusted
(i)
49.9
52.9
193.1
159.3
Adjusted Net Income (Loss)
$
(60.1
)
$
32.6
$
(17.1
)
$
382.0
Weighted average shares- diluted
35.0
39.5
35.9
39.6
Adjusted EPS
$
(1.72
)
$
0.83
$
(0.48
)
$
9.65
Adjusted EBITDA by
Segment:
Engineered Materials
$
(4.6
)
$
26.3
$
71.6
$
94.8
Latex Binders
20.2
20.3
110.8
106.5
Base Plastics
(8.8
)
79.1
91.0
314.2
Polystyrene
12.4
33.5
99.3
183.1
Feedstocks
(15.5
)
(24.7
)
(75.2
)
33.7
Americas Styrenics
18.4
22.5
102.2
92.7
Corporate Unallocated
(15.8
)
(24.3
)
(88.0
)
(95.6
)
Adjusted EBITDA
$
6.3
$
132.7
$
311.7
$
729.4
(a) Restructuring and other charges for the 2022 periods
primarily relate to employee termination benefit charges as well as
decommissioning and other charges incurred in connection with the
Company’s asset restructuring plan. Restructuring and other charges
for the 2021 periods primarily relate to employee termination
benefit charges as well as contract termination charges incurred in
connection with the Company’s transformational and corporate
restructuring programs.
(b)
Acquisition transaction and integration net costs for the 2022 and
2021 periods primarily relate to expenses incurred for the
Company’s acquisition and integration of the PMMA business and
Aristech Surfaces Acquisitions.
(c)
Acquisition purchase price hedge loss for the 2021 period relates
to the change in fair value of the Company’s forward currency hedge
arrangement that economically hedges the euro-denominated purchase
price of the acquisition of the Arkema PMMA business.
(d)
Acquisition purchase price hedge loss for the 2021 period relates
to the change in fair value of the Company’s forward currency hedge
arrangement that economically hedges the euro-denominated purchase
price of the acquisition of the Arkema PMMA business.
(e)
Amounts for the 2022 periods relate to the liability recorded in
connection with the European Commission request for information,
adjusted for foreign exchange rate impacts, which was subsequently
paid in full in December 2022.
(f)
Amounts for the 2022 periods relate to the PMMA business and
Aristech Surfaces reporting units’ goodwill impairment charge
resulting from annual impairment testing. (g) Other items for the
2022 and 2021 periods primarily relate to fees incurred in
conjunction with certain of the Company’s strategic initiatives, as
well as costs related to our transition to a new enterprise
resource planning system. (h)
Adjusted to remove the tax impact of the
items noted within the table above. For the three months and full
year periods, the income tax expense (benefit) related to these
items was determined utilizing the applicable rates in the taxing
jurisdictions in which these adjustments occurred.
The year ended December 31, 2022 excludes
$4.3 million of tax expense, primarily related to the revaluation
of the Company’s net deferred tax assets in Switzerland, partially
offset by a benefit from the release of a valuation allowance in
one of the Company’s subsidiaries in Luxembourg. The three months
ended December 31, 2021 excludes $2.5 million of tax expense,
primarily related to adjustments in accruals related to outstanding
tax audits. The year ended December 31, 2021 excludes $14.1 million
of tax benefit, primarily related to the release of a valuation
allowance for the Company’s subsidiaries in China.
(i) Amounts for the three months and year ended December 31, 2022
exclude accelerated depreciation of $39.9 million and $43.8
million, respectively, and the amounts for the three months and
year ended December 31, 2021 exclude accelerated deprecation of
$3.7 million and $8.1 million, respectively. These charges for the
2022 periods were primarily related to the shortening of the useful
life of certain assets related to the asset restructuring plan. The
2022 and 2021 periods also include charges related to the
shortening of the useful life of certain IT assets related to the
Company’s transition to a new enterprise resource planning system.
For the same reasons discussed above, we are providing the
following reconciliation of forecasted net income (loss) to
forecasted Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted
EPS for the full year ended December 31, 2023. See “Note on
Forward-Looking Statements” above for a discussion of the
limitations of these forecasts.
Year Ended
December 31,
(In millions, except per share
data)
2023
Adjusted EBITDA
$
375 – 425
Interest expense, net
(150
)
Provision for income taxes
(22) - (42
)
Depreciation and amortization
(200
)
Reconciling items to Adjusted EBITDA
(j)
—
Net Income from continuing
operations
3 - 33
Reconciling items to Adjusted Net Income
(j)
—
Adjusted Net Income
$
3 – 33
Weighted average shares - diluted (k)
36.5
EPS from continuing operations - diluted
($)
$
0.09 – 0.90
Adjusted EPS ($)
$
0.09 – 0.90
(j)
Reconciling items to Adjusted EBITDA and
Adjusted Net Income (Loss) 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 and, as a result, cannot be estimated without unreasonable
cost or uncertainty. As such, for the forecasted full year ended
December 31, 2023, we have not included estimates for these
items.
(k)
Weighted average shares presented for the
purpose of forecasting EPS and Adjusted EPS do not forecast
significant future share transactions or events, such as
repurchases, significant share-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 EPS and
Adjusted EPS during actual future periods.
Note 3: Reconciliation of
Non-GAAP Liquidity Measures to Cash from
Operations
The Company uses certain measures, such as Free Cash Flow as
non-GAAP measures, to evaluate and discuss its liquidity position
and results. Free Cash Flow is defined as cash from operating
activities, less capital expenditures. We believe that Free Cash
Flow provides an indicator of the Company’s ongoing ability to
generate cash through core operations, as it excludes the cash
impacts of various financing transactions as well as cash flows
from business combinations that are not considered organic in
nature. We also believe that Free Cash Flow provides management and
investors with useful analytical indicators of our ability to
service our indebtedness, pay dividends (when declared), and meet
our ongoing cash obligations.
Free Cash Flow is not intended to represent cash flows from
operations as defined by GAAP, and therefore, should not be used as
alternatives for that measure. Other companies in our industry may
define Free Cash Flow differently than we do. As a result, it may
be difficult to use this or similarly-named financial measures that
other companies may use, to compare the liquidity and cash
generation of those companies to our own. The Company compensates
for these limitations by providing the following detail, which is
determined in accordance with GAAP.
Free Cash Flow
Three Months Ended
Year Ended
December 31,
December 31,
(In millions)
2022
2021
2022
2021
Cash provided by operating activities
$
34.0
$
214.4
$
43.5
$
452.7
Capital expenditures
(54.2
)
(55.4
)
(149.0
)
(123.5
)
Free Cash Flow
$
(20.2
)
$
159.0
$
(105.5
)
$
329.2
For the same reasons discussed above, we are providing the
following reconciliation of forecasted cash provided by operations
and cash used for capital expenditures to forecasted Free Cash Flow
for the year ended December 31, 2023. See “Note on Forward-Looking
Statements” above for a discussion of the limitations of these
forecasts.
Year Ended
(In millions)
December 31, 2023
Cash provided by operating activities
$
~100
Capital expenditures
~(100)
Free Cash Flow
$
~0
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version on businesswire.com: https://www.businesswire.com/news/home/20230208005928/en/
Andy Myers Tel : +1
610-240-3221 Email: aemyers@trinseo.com
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