WYNYARD, UK, Feb. 21, 2020 /PRNewswire/ --
Fourth Quarter 2019 Highlights
- Net loss attributable to Venator of $174
million and an adjusted net loss of $10 million; Diluted loss per share of
$1.63 and adjusted diluted loss per
share of $0.09
- Adjusted EBITDA of $23
million
- Net cash provided by operating activities was $69 million and free cash flow was $20 million in the fourth quarter
Full-Year 2019 Highlights
- Net loss attributable to Venator of $175
million and adjusted net income of $26 million; Diluted loss per share of
$1.64 and adjusted diluted earnings
per share of $0.24
- Adjusted EBITDA of $194
million
- Delivered $20 million of adjusted
EBITDA improvements as part of our Business Improvement Program in
2019 including $5 million in the
fourth quarter
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
September 30,
2019
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
464
|
|
|
$
|
484
|
|
|
$
|
526
|
|
|
$
|
2,130
|
|
|
$
|
2,265
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Venator(a)
|
|
$
|
(174)
|
|
|
$
|
(69)
|
|
|
$
|
(19)
|
|
|
$
|
(175)
|
|
|
$
|
(163)
|
|
Adjusted net (loss)
income(a)(2)
|
|
$
|
(10)
|
|
|
$
|
19
|
|
|
$
|
8
|
|
|
$
|
26
|
|
|
$
|
235
|
|
Adjusted
EBITDA(a)(2)
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
50
|
|
|
$
|
194
|
|
|
$
|
436
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share(a)
|
|
$
|
(1.63)
|
|
|
$
|
(0.65)
|
|
|
$
|
(0.18)
|
|
|
$
|
(1.64)
|
|
|
$
|
(1.53)
|
|
Adjusted diluted
(loss) earnings per share(a)(2)
|
|
$
|
(0.09)
|
|
|
$
|
0.18
|
|
|
$
|
0.08
|
|
|
$
|
0.24
|
|
|
$
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
69
|
|
|
$
|
(24)
|
|
|
$
|
14
|
|
|
$
|
33
|
|
|
$
|
282
|
|
Free cash
flow(b)(4)
|
|
$
|
20
|
|
|
$
|
(79)
|
|
|
$
|
(5)
|
|
|
$
|
(117)
|
|
|
$
|
(38)
|
|
|
(a) Includes an $8
million and $11 million benefit in the three months ended September
30, 2019 and twelve months ended December 31, 2019 respectively,
due to a change in plant utilization rates, which increased our
overhead absorption and corresponding inventory valuation at
certain facilities
|
(b) Does not include
a $15 million benefit from monetizing cross-currency interest rate
swaps in the three months ended September 30, 2019 and twelve
months ended December 31, 2019
|
See end of press
release for numbered footnote explanations
|
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
fourth quarter 2019 results with revenues of $464 million, net loss attributable to Venator of
$174 million, adjusted net loss of
$10 million and adjusted EBITDA of
$23 million.
Simon Turner, President and
CEO of Venator, commented:
"In 2019 we accelerated our Business Improvement Program and
delivered $20 million of adjusted
EBITDA benefits, double our original target. In addition, we
advanced our customer-tailored approach to reduce our overall
TiO2 price volatility.
"We expect a challenging macroeconomic environment in 2020. We
are committed to further improving our cost competitiveness and
have made considerable progress on our transfer of specialty and
differentiated TiO2 products, strengthening our
leadership position in these high value applications. We continue
to take meaningful steps to reduce our cash uses and improve free
cash flow."
Segment Analysis for 4Q19 Compared to 4Q18
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $354 million in
the three months ended December 31,
2019, a decrease of $12
million, or 3%, compared to the same period in 2018. The
decrease was primarily due to a 4% decrease in the average
TiO2 selling price, a 2% unfavorable impact due to mix
and other and a 2% unfavorable impact of foreign currency
translation, partially offset by a 5% increase in sales volumes.
The decline in the average TiO2 selling price was
primarily a result of a lower average TiO2 price in
Europe and Asia and more stable prices in North America. Sales volumes increased
compared to the prior year quarter primarily as a result of
increased sales of new products.
Adjusted EBITDA for the Titanium Dioxide segment was
$30 million in the three months ended
December 31, 2019, a decrease of
$22 million compared to the same
period in 2018. The decline was primarily a result of a lower
average TiO2 selling price and higher raw material costs
which drove lower TiO2 margins and a lower contribution
of certain specialty TiO2 products. This was partially
offset by higher TiO2 sales volumes and a $3 million benefit from our 2019 Business
Improvement Program.
Performance Additives
The Performance Additives
segment generated revenues of $110
million in the three months ended December 31, 2019, a decline of $8 million, or 7%, compared to the same period in
2018. The decrease was primarily due to a 5% decline in sales
volumes and a 2% unfavorable impact from foreign currency
translation. The average selling price was stable compared to the
prior year period. The decline in sales volumes was primarily a
result of weaker demand for products used in automotive coatings,
plastics and construction end-use applications and the impact of
portfolio optimization.
Adjusted EBITDA for the Performance Additives segment was
$4 million in the three months ended
December 31, 2019, an increase of
$1 million compared to the same
period in 2018 as lower raw material and other costs and a
$1 million benefit from our 2019
Business Improvement Program offset the impact of lower sales
volumes.
Corporate and Other
Corporate and other represents
expenses which are not allocated to our segments. Losses from
Corporate and other were $11 million,
or $1 million higher for the three
months ended December 31, 2019
compared to the same period in 2018. We expect Corporate and other
to be approximately $55 million for
the full year 2020.
Tax Items
We recorded an income tax expense of
$150 million and $150 million for the three and twelve months
ended December 31, 2019,
respectively, compared to an income tax benefit of $18 million and $8
million for the three and twelve months ended December 31, 2018, respectively. The fourth
quarter and full year 2019 include a $157
million tax expense in connection with recognizing a full
valuation allowance against certain net deferred tax assets. Our
adjusted effective tax rate was 35% for the full year 2019 compared
to 11% for the full year 2018.
Our income taxes are significantly affected by the mix of income
and losses in tax jurisdictions and valuation allowances in certain
jurisdictions in which we operate. As a result, in 2020, we expect
to see an adjusted effective tax rate of approximately 35%. We
continue to expect our adjusted long-term effective tax rate will
be approximately 15% to 20%. We expect our near-term cash tax rate
will be between 10% to 15%.
Liquidity and Capital Resources
As of December 31, 2019, we had cash and cash
equivalents of $55 million compared
with $165 million as of December 31, 2018. In addition, we have in place
an undrawn asset based revolving credit facility available for our
working capital needs and general corporate purposes with an
availability of $252 million as of December 31, 2019. As of December 31, 2019, net debt was $695 million compared to $583 million as of December 31, 2018.
In the fourth quarter of 2019, capital expenditures totaled
$42 million. In 2019, capital
expenditures totaled $152 million, of which $37 million was related to project wind-down and
closure costs at our Pori, Finland TiO2 manufacturing
facility. In 2020, we expect total capital expenditures, including
spending related to the transfer of production from Pori to other
sites in our network, to be $80
million to $90 million.
Earnings Conference Call Information
We will hold a
conference call to discuss our fourth quarter and full-year 2019
results on Friday, February 21, 2020
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/10138583
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 21, 2020 and ending
February 28, 2020.
Call-in numbers for
the replay:
|
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10138583
|
Upcoming Conferences
During the first quarter of 2020,
a member of management is expected to present at the J.P. Morgan
Global High Yield & Leveraged Finance Conference on
February 25, the Bank of America
Merrill Lynch Global Agriculture and Materials Conference on
February 26 and the 10th Annual
Alembic Global Conference on February
27-28. 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)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
464
|
|
|
$
|
484
|
|
|
$
|
2,130
|
|
|
$
|
2,265
|
|
Cost of goods
sold(1)
|
|
431
|
|
|
440
|
|
|
1,892
|
|
|
1,550
|
|
Operating
expenses
|
|
42
|
|
|
64
|
|
|
192
|
|
|
218
|
|
Restructuring,
impairment, and plant closing and transition costs
|
|
9
|
|
|
55
|
|
|
33
|
|
|
628
|
|
Operating (loss)
income
|
|
(18)
|
|
|
(75)
|
|
|
13
|
|
|
(131)
|
|
Interest expense,
net
|
|
(10)
|
|
|
(10)
|
|
|
(41)
|
|
|
(40)
|
|
Other income
(expense)
|
|
5
|
|
|
(2)
|
|
|
8
|
|
|
6
|
|
Loss before income
taxes
|
|
(23)
|
|
|
(87)
|
|
|
(20)
|
|
|
(165)
|
|
Income tax (expense)
benefit
|
|
(150)
|
|
|
18
|
|
|
(150)
|
|
|
8
|
|
Net
loss
|
|
(173)
|
|
|
(69)
|
|
|
(170)
|
|
|
(157)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
—
|
|
|
(5)
|
|
|
(6)
|
|
Net loss
attributable to Venator
|
|
$
|
(174)
|
|
|
$
|
(69)
|
|
|
$
|
(175)
|
|
|
$
|
(163)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
194
|
|
|
$
|
436
|
|
Adjusted net
(loss) income(2)
|
|
$
|
(10)
|
|
|
$
|
19
|
|
|
$
|
26
|
|
|
$
|
235
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
|
$
|
(1.63)
|
|
|
$
|
(0.65)
|
|
|
$
|
(1.64)
|
|
|
$
|
(1.53)
|
|
Diluted loss per
share
|
|
$
|
(1.63)
|
|
|
$
|
(0.65)
|
|
|
$
|
(1.64)
|
|
|
$
|
(1.53)
|
|
Adjusted earnings
per share(2)
|
|
$
|
(0.09)
|
|
|
$
|
0.18
|
|
|
$
|
0.24
|
|
|
$
|
2.21
|
|
Adjusted diluted
earnings per share(2)
|
|
$
|
(0.09)
|
|
|
$
|
0.18
|
|
|
$
|
0.24
|
|
|
$
|
2.20
|
|
|
|
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
106.6
|
|
|
106.4
|
|
|
106.5
|
|
|
106.4
|
|
Diluted
shares
|
|
106.6
|
|
|
106.5
|
|
|
106.5
|
|
|
106.7
|
|
|
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)
|
|
2019
|
|
2018
|
|
(Worse)
|
|
2019
|
|
2018
|
|
(Worse)
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
354
|
|
|
$
|
366
|
|
|
(3)%
|
|
$
|
1,614
|
|
|
$
|
1,666
|
|
|
(3)%
|
Performance
Additives
|
|
110
|
|
|
118
|
|
|
(7)%
|
|
516
|
|
|
599
|
|
|
(14)%
|
Total
|
|
$
|
464
|
|
|
$
|
484
|
|
|
(4)%
|
|
$
|
2,130
|
|
|
$
|
2,265
|
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
30
|
|
|
$
|
52
|
|
|
(42)%
|
|
$
|
197
|
|
|
$
|
417
|
|
|
(53)%
|
Performance
Additives
|
|
4
|
|
|
3
|
|
|
33%
|
|
47
|
|
|
62
|
|
|
(24)%
|
Corporate and
other
|
|
(11)
|
|
|
(10)
|
|
|
(10)%
|
|
(50)
|
|
|
(43)
|
|
|
(16)%
|
Total
|
|
$
|
23
|
|
|
$
|
45
|
|
|
(49)%
|
|
$
|
194
|
|
|
$
|
436
|
|
|
(56)%
|
|
See end of press
release for footnote explanations
|
Table 3 — Factors
Impacting Sales Revenue
|
|
|
Three months
ended
|
|
December 31, 2019
vs. 2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(4)%
|
|
(2)%
|
|
(2)%
|
|
5%
|
|
(3)%
|
Performance
Additives
|
—%
|
|
(2)%
|
|
—%
|
|
(5)%
|
|
(7)%
|
Total
Company
|
(3)%
|
|
(2)%
|
|
(2)%
|
|
3%
|
|
(4)%
|
|
|
|
Twelve months
ended
|
|
December 31, 2019
vs. 2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(7)%
|
|
(3)%
|
|
—%
|
|
7%
|
|
(3)%
|
Performance
Additives
|
—%
|
|
(2)%
|
|
—%
|
|
(12)%
|
|
(14)%
|
Total
Company
|
(5)%
|
|
(3)%
|
|
—%
|
|
2%
|
|
(6)%
|
|
(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
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per Share(1)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
loss
|
|
$
|
(173)
|
|
|
$
|
(69)
|
|
|
$
|
(173)
|
|
|
$
|
(69)
|
|
|
$
|
(1.62)
|
|
|
$
|
(0.65)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
Net loss
attributable to Venator
|
|
(174)
|
|
|
(69)
|
|
|
(174)
|
|
|
(69)
|
|
|
(1.63)
|
|
|
(0.65)
|
|
Interest expense,
net
|
|
10
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
150
|
|
|
(18)
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
28
|
|
|
30
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration (adjustments) expenses
|
|
(4)
|
|
|
11
|
|
|
(4)
|
|
|
11
|
|
|
(0.04)
|
|
|
0.10
|
|
Separation (expense)
income, net
|
|
(3)
|
|
|
1
|
|
|
(3)
|
|
|
1
|
|
|
(0.03)
|
|
|
0.01
|
|
Certain legal
settlements and related expenses
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
5
|
|
|
3
|
|
|
5
|
|
|
0.03
|
|
|
0.05
|
|
Net plant incident
costs
|
|
3
|
|
|
20
|
|
|
3
|
|
|
20
|
|
|
0.03
|
|
|
0.19
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
9
|
|
|
55
|
|
|
9
|
|
|
55
|
|
|
0.08
|
|
|
0.52
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
—
|
|
|
155
|
|
|
(4)
|
|
|
1.46
|
|
|
(0.04)
|
|
Adjusted(2)
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
(10)
|
|
|
$
|
19
|
|
|
$
|
(0.09)
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
benefit(3)
|
|
|
|
|
|
$
|
(5)
|
|
|
$
|
(14)
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
1
|
|
|
—
|
|
|
|
|
|
Adjusted pre-tax
(loss) income(2)
|
|
|
|
|
|
$
|
(14)
|
|
|
$
|
5
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
(280)
|
%
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2019
|
|
2019
|
Net
loss
|
|
$
|
(17)
|
|
|
$
|
(17)
|
|
|
$
|
(0.16)
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
(2)
|
|
|
(0.02)
|
|
Net loss
attributable to Venator
|
|
(19)
|
|
|
(19)
|
|
|
(0.18)
|
|
Interest expense,
net
|
|
10
|
|
|
|
|
|
Income tax
benefit
|
|
8
|
|
|
|
|
|
Depreciation and
amortization
|
|
27
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
2
|
|
|
2
|
|
|
0.02
|
|
Loss on disposition
of business/assets
|
|
1
|
|
|
1
|
|
|
0.01
|
|
Certain legal
settlements and related expenses
|
|
2
|
|
|
2
|
|
|
0.02
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
3
|
|
|
0.03
|
|
Net plant incident
costs
|
|
4
|
|
|
4
|
|
|
0.04
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
12
|
|
|
12
|
|
|
0.11
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
3
|
|
|
0.03
|
|
Adjusted(2)
|
|
$
|
50
|
|
|
$
|
8
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
$
|
5
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
2
|
|
|
|
Adjusted pre-tax
income(2)
|
|
|
|
$
|
15
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
35
|
%
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per Share(1)
|
|
|
Twelve months
ended
|
|
Twelve months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
loss
|
|
$
|
(170)
|
|
|
$
|
(157)
|
|
|
$
|
(170)
|
|
|
$
|
(157)
|
|
|
$
|
(1.60)
|
|
|
$
|
(1.47)
|
|
Net income
attributable to noncontrolling interests
|
|
(5)
|
|
|
(6)
|
|
|
(5)
|
|
|
(6)
|
|
|
(0.04)
|
|
|
(0.06)
|
|
Net loss
attributable to Venator
|
|
(175)
|
|
|
(163)
|
|
|
(175)
|
|
|
(163)
|
|
|
(1.64)
|
|
|
(1.53)
|
|
Interest expense,
net
|
|
41
|
|
|
40
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
150
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
110
|
|
|
132
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration (adjustments) expenses
|
|
(1)
|
|
|
20
|
|
|
(1)
|
|
|
20
|
|
|
(0.01)
|
|
|
0.19
|
|
Separation (expense)
income, net
|
|
(3)
|
|
|
2
|
|
|
(3)
|
|
|
2
|
|
|
(0.03)
|
|
|
0.02
|
|
Loss on disposition
of business/assets
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
0.01
|
|
|
0.02
|
|
Certain legal
settlements and related expenses
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
14
|
|
|
15
|
|
|
14
|
|
|
15
|
|
|
0.13
|
|
|
0.14
|
|
Net plant incident
costs (credits)
|
|
20
|
|
|
(232)
|
|
|
20
|
|
|
(232)
|
|
|
0.19
|
|
|
(2.17)
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
33
|
|
|
628
|
|
|
33
|
|
|
628
|
|
|
0.31
|
|
|
5.88
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
—
|
|
|
133
|
|
|
(37)
|
|
|
1.24
|
|
|
(0.35)
|
|
Adjusted(2)
|
|
$
|
194
|
|
|
$
|
436
|
|
|
$
|
26
|
|
|
$
|
235
|
|
|
$
|
0.24
|
|
|
$
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
|
|
$
|
17
|
|
|
$
|
29
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
5
|
|
|
6
|
|
|
|
|
|
Adjusted pre-tax
income(2)
|
|
|
|
|
|
$
|
48
|
|
|
$
|
270
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
11
|
%
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 5 — Selected
Balance Sheet Items
|
|
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2019
|
|
2018
|
Cash
|
|
$
|
55
|
|
|
$
|
40
|
|
|
$
|
165
|
|
Accounts and notes
receivable, net
|
|
321
|
|
|
366
|
|
|
351
|
|
Inventories
|
|
513
|
|
|
496
|
|
|
538
|
|
Prepaid and other
current assets
|
|
88
|
|
|
88
|
|
|
71
|
|
Property, plant and
equipment, net
|
|
989
|
|
|
936
|
|
|
994
|
|
Other
assets
|
|
299
|
|
|
404
|
|
|
366
|
|
Total
assets
|
|
$
|
2,265
|
|
|
$
|
2,330
|
|
|
$
|
2,485
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
351
|
|
|
$
|
287
|
|
|
$
|
400
|
|
Other current
liabilities
|
|
124
|
|
|
116
|
|
|
135
|
|
Current portion of
debt
|
|
13
|
|
|
16
|
|
|
8
|
|
Long-term
debt
|
|
737
|
|
|
737
|
|
|
740
|
|
Non-current payable
to affiliates
|
|
30
|
|
|
34
|
|
|
34
|
|
Other
liabilities
|
|
337
|
|
|
295
|
|
|
313
|
|
Total
equity
|
|
673
|
|
|
845
|
|
|
855
|
|
Total liabilities
and equity
|
|
$
|
2,265
|
|
|
$
|
2,330
|
|
|
$
|
2,485
|
|
Table 6 —
Outstanding Debt
|
|
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2019
|
|
2018
|
Debt:
|
|
|
|
|
|
|
Senior
Notes
|
|
$
|
371
|
|
|
$
|
371
|
|
|
$
|
370
|
|
Term Loan
Facility
|
|
361
|
|
|
362
|
|
|
365
|
|
Other debt
|
|
18
|
|
|
20
|
|
|
13
|
|
Total
debt
|
|
$
|
750
|
|
|
$
|
753
|
|
|
$
|
748
|
|
Total cash
|
|
55
|
|
|
40
|
|
|
165
|
|
Net
debt
|
|
$
|
695
|
|
|
$
|
713
|
|
|
$
|
583
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Total cash at
beginning of period(a)
|
|
$
|
40
|
|
|
$
|
251
|
|
|
$
|
165
|
|
|
$
|
238
|
|
Net cash provided by
(used in) operating activities(a)
|
|
69
|
|
|
(24)
|
|
|
33
|
|
|
282
|
|
Net cash used in
investing activities(a)
|
|
(49)
|
|
|
(55)
|
|
|
(150)
|
|
|
(321)
|
|
Net cash (used in)
provided by financing activities(a)
|
|
(6)
|
|
|
(1)
|
|
|
7
|
|
|
(18)
|
|
Effect of exchange
rate changes on cash
|
|
1
|
|
|
(6)
|
|
|
—
|
|
|
(16)
|
|
Total cash at end
of period(a)
|
|
$
|
55
|
|
|
$
|
165
|
|
|
$
|
55
|
|
|
$
|
165
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
—
|
|
|
$
|
(5)
|
|
|
$
|
(41)
|
|
|
$
|
(46)
|
|
Cash paid for income
taxes
|
|
(4)
|
|
|
(6)
|
|
|
(8)
|
|
|
(34)
|
|
Capital
expenditures
|
|
(42)
|
|
|
(54)
|
|
|
(152)
|
|
|
(326)
|
|
Depreciation and
amortization
|
|
28
|
|
|
30
|
|
|
110
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
50
|
|
|
39
|
|
|
22
|
|
|
25
|
|
Inventories
|
|
(6)
|
|
|
(36)
|
|
|
21
|
|
|
(103)
|
|
Accounts
payable
|
|
43
|
|
|
(9)
|
|
|
(29)
|
|
|
(27)
|
|
Total cash provided
by (used in) primary working capital
|
|
$
|
87
|
|
|
$
|
(6)
|
|
|
$
|
14
|
|
|
$
|
(105)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Free cash
flow(4):
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
69
|
|
|
$
|
(24)
|
|
|
$
|
33
|
|
|
$
|
282
|
|
Capital
expenditures
|
|
(42)
|
|
|
(54)
|
|
|
(152)
|
|
|
(326)
|
|
Other investing
activities
|
|
(7)
|
|
|
(2)
|
|
|
2
|
|
|
4
|
|
Non-recurring
separation costs(a)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Total free cash
flow(4)
|
|
$
|
20
|
|
|
$
|
(79)
|
|
|
$
|
(117)
|
|
|
$
|
(38)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
194
|
|
|
$
|
436
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(42)
|
|
|
(42)
|
|
|
(115)
|
|
|
(114)
|
|
Cash paid for
interest
|
|
—
|
|
|
(5)
|
|
|
(41)
|
|
|
(46)
|
|
Cash paid for income
taxes
|
|
(4)
|
|
|
(6)
|
|
|
(8)
|
|
|
(34)
|
|
Primary working
capital change
|
|
87
|
|
|
(6)
|
|
|
14
|
|
|
(105)
|
|
Restructuring
|
|
(4)
|
|
|
(9)
|
|
|
(26)
|
|
|
(37)
|
|
Maintenance & other
|
|
(31)
|
|
|
(17)
|
|
|
(71)
|
|
|
(78)
|
|
Net cash flows
associated with Pori
|
|
(9)
|
|
|
(39)
|
|
|
(64)
|
|
|
(60)
|
|
Total free cash
flow(4)
|
|
$
|
20
|
|
|
$
|
(79)
|
|
|
$
|
(117)
|
|
|
$
|
(38)
|
|
|
See end of press
release for numbered footnote explanations
|
(a) Represents
payments associated with our separation from Huntsman
|
Footnotes
|
|
(1)
|
Cost of goods sold
for the twelve month period ended December 31, 2019 increased by
$342 million from the same period in the prior year primarily as a
result of the recognition of $325 million of insurance proceeds
which was an offset to cost of goods sold in 2018.
|
|
|
(2)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income/loss before interest income/expense, net,
income tax expense/benefit, depreciation and amortization, and net
income attributable to noncontrolling interests, as well as
eliminating the following adjustments: (a) business acquisition and
integration expenses/adjustments; (b) separation expense/gain, net;
(c) U.S. income tax reform; (d) net income/loss of
discontinued operations, net of tax; (e) loss/gain on disposition
of business/assets; (f) certain legal settlements and related
expenses/gains; (g) amortization of pension and postretirement
actuarial losses/gains; (h) net plant incident costs/credits; and
(i) restructuring, impairment, and plant closing and transition
costs/credits. 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.
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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.
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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.
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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/ adjustments; (b) separation expense/gain, net;
(c) U.S. income tax reform; (d) net income/loss of
discontinued operations, net of tax; (e) loss/gain on disposition
of business/assets; (f) certain legal settlements and related
expenses/gains; (g) amortization of pension and postretirement
actuarial losses/gains; (h) net plant incident costs/credits; and
(i) restructuring, impairment, and plant closing and transition
costs/credits. 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.
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Adjusted net income
(loss) and adjusted net earnings (loss) per share amounts are
presented solely as supplemental information. These measures
exclude similar noncash items as Adjusted EBITDA in order to assist
our investors in comparing our performance from period to period
and as such, bear similar risks as Adjusted EBITDA as documented
above. For that reason, adjusted net income and the related per
share amounts, should not be considered in isolation and should be
considered only to supplement analysis of U.S. GAAP
results.
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(3)
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Prior to the second
quarter of 2019, the income tax impacts, if any, of each adjusting
item represented 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.
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Beginning in the
three- and six-month periods ended June 30, 2019, income tax
expense is adjusted by the amount of additional tax expense or
benefit that we would accrue if we used non-GAAP results instead of
GAAP results in the calculation of our tax liability, taking into
consideration our tax structure. We use a normalized effective tax
rate of 35%, which reflects the weighted average tax rate
applicable under the various jurisdictions in which we operate.
This non-GAAP tax rate eliminates the effects of non-recurring and
period specific items which are often attributable to restructuring
and acquisition decisions and can vary in size and frequency. This
rate is subject to change over time for various reasons, including
changes in the geographic business mix, valuation allowances, and
changes in statutory tax rates.
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We eliminate the
effect of significant changes to income tax valuation allowances
from our presentation of adjusted net income to allow investors to
better compare our ongoing financial performance from period to
period. We do not adjust for insignificant changes in tax valuation
allowances because we do not believe it provides more meaningful
information than is provided under GAAP. We believe that our
revised approach enables a clearer understanding of the long term
impact of our tax structure on post tax earnings.
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(4)
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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.
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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. Based in
Wynyard, U.K., Venator employs
approximately 4,000 associates and sells its 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 global economic conditions, our ability to
maintain sufficient working capital, our ability to access capital
markets on favorable terms, 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, or interruptions in raw materials and energy,
industry production capacity and operating rates, the supply demand
balance for our products and that of competing products, pricing
pressures, technological developments, legal claims by or against
us, changes in government regulations, including increased
manufacturing, labeling and waste disposal regulations and the
classification of TiO2 as a carcinogen in the EU,
geopolitical events, cyberattacks and public health crises such as
coronavirus.
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