WYNYARD, UK, May 6, 2020 /PRNewswire/ --
First Quarter 2020 Highlights
- Net income attributable to Venator of $7
million; adjusted net income attributable to Venator of
$12 million
- Adjusted EBITDA of $57 million
compared to $60 million in 1Q19 and
$23 million in 4Q19
- Diluted earnings per share of $0.07 and adjusted diluted earnings per share of
$0.11
- Average TiO2 pricing was stable compared to the
fourth quarter of 2019; volumes increased in-line with historical
seasonality
- Delivered $4 million of adjusted
EBITDA benefit from our 2019 Business Improvement Program in the
first quarter
- At the end of the quarter, we had $25
million of cash supplemented by $191
million of availability under our ABL
- Implementing a range of actions to reduce costs and cash uses
in response to COVID-19
|
|
Three months
ended
|
|
|
March
31,
|
|
December 31,
2019
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
|
Revenues
|
|
$
|
532
|
|
|
$
|
562
|
|
|
$
|
464
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Venator(a)
|
|
$
|
7
|
|
|
$
|
(3)
|
|
|
$
|
(174)
|
|
Adjusted net income
(loss) attributable to Venator(1)(a)
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
(10)
|
|
Adjusted
EBITDA(1)(a)
|
|
$
|
57
|
|
|
$
|
60
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share(a)
|
|
$
|
0.07
|
|
|
$
|
(0.03)
|
|
|
$
|
(1.63)
|
|
Adjusted diluted
earnings (loss) per share(1)(a)
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
$
|
(0.09)
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(58)
|
|
|
$
|
(29)
|
|
|
$
|
69
|
|
Free cash
flow(3)
|
|
$
|
(85)
|
|
|
$
|
(82)
|
|
|
$
|
20
|
|
|
(a) Includes a $3
million benefit in the three months ended December 31, 2019, due to
a change in plant utilization rates, which increased our overhead
absorption and corresponding inventory valuation at certain
facilities
|
See end of press
release for footnote explanations
|
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
first quarter 2020 results with revenues of $532 million, net income attributable to Venator
of $7 million, adjusted net income
attributable to Venator of $12
million and adjusted EBITDA of $57
million.
Simon Turner, President and
CEO of Venator, commented:
"I am pleased with our first quarter results. Prices remained
stable across our portfolio and our TiO2 volumes
improved 13% compared to the fourth quarter of 2019. As the
coronavirus pandemic unfolded, we took swift and decisive actions
to prioritize and protect the health and safety of our employees
and the integrity of our operations, all of which continue to
operate to meet customer demand.
"While the impact on our first quarter earnings was limited, we
expect COVID-19 will have a meaningful impact on demand in the
second quarter. We estimate that TiO2 volumes could
decline 15% to 20% in the second quarter compared to the first
quarter. We remain focused on delivering on our self-help
initiatives and are implementing a range of immediate cost actions
that we expect will yield approximately $20
million of adjusted EBITDA benefit in 2020. In addition, we
are taking steps to reduce our cash uses and improve our liquidity,
including reducing planned capital expenditures by approximately
$25 million. We believe these actions
will better position Venator to navigate the impact of the pandemic
and we will continue to assess the need for additional
actions."
Segment Analysis for 1Q20 Compared to 1Q19
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $402 million in
the three months ended March 31,
2020, a decrease of $23
million, or 5%, compared to the same period in 2019. The
decrease was primarily due to a 1% decline in the average
TiO2 selling price, a 2% unfavorable impact from foreign
currency translation, a 1% decrease in sales volumes, and a 1%
unfavorable impact due to mix and other. The decline in the average
TiO2 selling price was primarily attributable to a lower
global average functional TiO2 price. Sequentially, the
average TiO2 selling price remained stable. Sales
volumes declined compared to the prior year period primarily in
certain specialty applications and were partially offset by higher
demand for new products and for plastics applications.
Adjusted EBITDA for the Titanium Dioxide segment was
$46 million for the three months
ended March 31, 2020, a decrease of
$15 million compared to the same
period in 2019. The decline was primarily a result of a lower
average TiO2 selling price, higher ore costs and a
decline in overall TiO2 volumes. This was partially
offset by lower selling, general and administrative costs, a
decline in other raw materials and energy costs and a $3 million benefit from our 2019 Business
Improvement Program.
Performance Additives
The Performance Additives
segment generated $130 million of
revenues in the three months ended March 31,
2020, a decline of $7 million,
or 5%, compared to the same period in 2019. The decline was
primarily due to a 4% decrease in sales volumes, a 1% unfavorable
impact of foreign currency translation and a 1% unfavorable impact
of mix and other, partially offset by a 1% increase in the average
selling price. The decline in sales volumes was primarily a result
of lower demand for certain coatings and construction-related
products and portfolio optimization in color pigments and timber
treatment.
Adjusted EBITDA in the Performance Additives segment was
$22 million, an increase of
$7 million for the three months ended
March 31, 2020 compared to the same
period in 2019. The increase was primarily due to a favorable mix
of sales within the businesses, lower selling, general and
administrative costs, lower raw material, energy and other costs
and a $1 million benefit from our
2019 Business Improvement Program, partially offset by a decline in
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 $5 million lower in the three
months ended March 31, 2020 compared
to the same period in 2019. This was primarily as a result of
favorable foreign currency translation and lower costs in various
corporate functions. We expect Corporate and other to be
approximately $50 million for the
full year 2020.
Tax Items
We recorded an income tax benefit of
$2 million for the three months ended
March 31, 2020, compared to an income tax expense of
$1 million for the three months ended
March 31, 2019. Our adjusted effective tax rate was 35% for
the three months ended March 31, 2020 compared to 38% for the
same period in 2019.
Our income taxes are significantly affected by the mix of income
and losses in the tax jurisdictions in which we operate, as
impacted by the presence of valuation allowances in certain tax
jurisdictions. In 2020, we expect an adjusted effective tax rate of
approximately 35%. We expect cash taxes in 2020 to be less than
$5 million and we continue to expect
our adjusted effective tax rate in the long-term will be
approximately 15% to 20%.
Liquidity and Capital Resources
As of March
31, 2020, we had cash and cash equivalents of $25 million compared to $55 million as of December
31, 2019. In addition, we have in place an asset-based
revolving credit facility available for our working capital needs
and general corporate purposes with an availability of
$191 million as of March 31, 2020. As of March
31, 2020, net debt was $781
million compared to $695
million as of December 31,
2019.
In the first quarter of 2020, capital expenditures totaled
$31 million. In 2020, we expect total
capital expenditures to be approximately $60
million compared to our prior estimate of $80 million to $90
million.
Earnings Conference Call Information
We will hold a
conference call to discuss our first quarter 2020 results on
Wednesday, May 6, 2020 at 10:00 a.m. ET.
Call-in numbers for
the conference call:
|
U.S.
participants
|
1-800-367-2403
|
International
participants
|
1-334-777-6978
|
(No passcode
required)
|
|
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
May 6, 2020 and ending May 13, 2020.
Call-in numbers for
the replay:
|
U.S.
participants
|
1-888-203-1112
|
International
participants
|
1-719-457-0820
|
Passcode
|
5191172
|
Upcoming Conferences
During the second quarter of 2020, a member of management is
expected to present at the KeyBanc Industrials & Basic
Materials conference on May 26-29,
2020, the Deutsche Bank Global Industrials & Materials
Summit on June 8-9, 2020 and the BMO
Chemical & Packaging conference on June
24, 2020. 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
|
|
|
March
31,
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
Revenues
|
|
$
|
532
|
|
|
$
|
562
|
|
Cost of goods
sold
|
|
471
|
|
|
486
|
|
Operating
expenses
|
|
42
|
|
|
55
|
|
Restructuring,
impairment and plant closing and transition costs
|
|
7
|
|
|
12
|
|
Operating
income
|
|
12
|
|
|
9
|
|
Interest expense,
net
|
|
(10)
|
|
|
(11)
|
|
Other
income
|
|
4
|
|
|
1
|
|
Income (loss)
before income taxes
|
|
6
|
|
|
(1)
|
|
Income tax benefit
(expense)
|
|
2
|
|
|
(1)
|
|
Net income
(loss)
|
|
8
|
|
|
(2)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(1)
|
|
Net income (loss)
attributable to Venator
|
|
$
|
7
|
|
|
$
|
(3)
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
57
|
|
|
$
|
60
|
|
Adjusted net
income(1)
|
|
$
|
12
|
|
|
$
|
14
|
|
|
|
|
|
|
Basic earnings
(loss) per share
|
|
$
|
0.07
|
|
|
$
|
(0.03)
|
|
Diluted earnings
(loss) per share
|
|
$
|
0.07
|
|
|
$
|
(0.03)
|
|
Adjusted earnings
per share(1)
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
Adjusted diluted
earnings per share(1)
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
Basic shares
outstanding
|
|
106.7
|
|
|
106.5
|
|
Diluted
shares
|
|
106.7
|
|
|
106.8
|
|
|
See end of press
release for footnote explanations
|
Table 2 — Results
of Operations by Segment
|
|
|
|
Three months
ended
|
|
|
|
|
March
31,
|
|
Favorable
/
|
(In millions)
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
Segment
Revenues:
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
402
|
|
|
$
|
425
|
|
|
(5)%
|
Performance
Additives
|
|
130
|
|
|
137
|
|
|
(5)%
|
Total
|
|
$
|
532
|
|
|
$
|
562
|
|
|
(5)%
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
46
|
|
|
$
|
61
|
|
|
(25)%
|
Performance
Additives
|
|
22
|
|
|
15
|
|
|
47%
|
Corporate and
other
|
|
(11)
|
|
|
(16)
|
|
|
31%
|
Total
|
|
$
|
57
|
|
|
$
|
60
|
|
|
(5)%
|
|
See end of press
release for footnote explanations
|
Table 3 — Factors
Impacting Sales Revenue
|
|
|
Three months
ended
|
|
March 31, 2020 vs.
2019
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(1)%
|
|
(2)%
|
|
(1)%
|
|
(1)%
|
|
(5)%
|
Performance
Additives
|
1%
|
|
(1)%
|
|
(1)%
|
|
(4)%
|
|
(5)%
|
Total
Company
|
(1)%
|
|
(1)%
|
|
(1)%
|
|
(2)%
|
|
(5)%
|
|
(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
|
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
|
$
|
8
|
|
|
$
|
(2)
|
|
|
$
|
8
|
|
|
$
|
(2)
|
|
|
$
|
0.08
|
|
|
$
|
(0.02)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Net income (loss)
attributable to Venator
|
|
7
|
|
|
(3)
|
|
|
7
|
|
|
(3)
|
|
|
0.07
|
|
|
(0.03)
|
|
Interest expense,
net
|
|
10
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(2)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
28
|
|
|
26
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
0.01
|
|
|
0.02
|
|
Loss on disposal of
businesses/assets
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
4
|
|
|
3
|
|
|
4
|
|
|
0.03
|
|
|
0.04
|
|
Net plant incident
costs
|
|
1
|
|
|
7
|
|
|
1
|
|
|
7
|
|
|
0.01
|
|
|
0.06
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
7
|
|
|
12
|
|
|
7
|
|
|
12
|
|
|
0.06
|
|
|
0.11
|
|
Income tax
adjustments(2)
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
(8)
|
|
|
(0.09)
|
|
|
(0.07)
|
|
Adjusted(1)
|
|
$
|
57
|
|
|
$
|
60
|
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
7
|
|
|
9
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
1
|
|
|
1
|
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
20
|
|
|
$
|
24
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35%
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted Earnings
(Loss) Per Share(1)
|
|
|
Three months ended
December 31,
|
|
Three months ended
December 31,
|
|
Three months ended
December 31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2019
|
|
2019
|
Net
loss
|
|
$
|
(173)
|
|
|
$
|
(173)
|
|
|
$
|
(1.62)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(1)
|
|
|
(0.01)
|
|
Net loss
attributable to Venator
|
|
(174)
|
|
|
(174)
|
|
|
(1.63)
|
|
Interest expense,
net
|
|
10
|
|
|
|
|
|
Income tax
expense
|
|
150
|
|
|
|
|
|
Depreciation and
amortization
|
|
28
|
|
|
|
|
|
Business acquisition
and integration adjustments
|
|
(4)
|
|
|
(4)
|
|
|
(0.04)
|
|
Separation expense,
net
|
|
(3)
|
|
|
(3)
|
|
|
(0.03)
|
|
Certain legal
settlements and related expenses
|
|
1
|
|
|
1
|
|
|
0.01
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
3
|
|
|
0.03
|
|
Net plant incident
costs
|
|
3
|
|
|
3
|
|
|
0.03
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
9
|
|
|
9
|
|
|
0.08
|
|
Income tax
adjustments(2)
|
|
—
|
|
|
155
|
|
|
1.46
|
|
Adjusted(1)
|
|
$
|
23
|
|
|
$
|
(10)
|
|
|
$
|
(0.09)
|
|
|
|
|
|
|
|
|
Adjusted income tax
benefit(2)
|
|
|
|
$
|
(5)
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
1
|
|
|
|
Adjusted pre-tax
loss
|
|
|
|
$
|
(14)
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
35
|
%
|
|
|
|
See end of press
release for footnote explanations
|
Table 5 — Selected
Balance Sheet Items
|
|
|
|
March
31,
|
|
December
31,
|
(In millions)
|
|
2020
|
|
2019
|
Cash and cash
equivalents
|
|
$
|
25
|
|
|
$
|
55
|
|
Accounts and notes
receivable, net
|
|
377
|
|
|
321
|
|
Inventories
|
|
492
|
|
|
513
|
|
Prepaid expenses and
other current assets
|
|
74
|
|
|
88
|
|
Property, plant and
equipment, net
|
|
948
|
|
|
989
|
|
Other
assets
|
|
307
|
|
|
299
|
|
Total
assets
|
|
$
|
2,223
|
|
|
$
|
2,265
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
301
|
|
|
$
|
351
|
|
Other current
liabilities
|
|
112
|
|
|
124
|
|
Current portion of
debt
|
|
70
|
|
|
13
|
|
Long-term
debt
|
|
736
|
|
|
737
|
|
Non-current payable
to affiliates
|
|
30
|
|
|
30
|
|
Other non-current
liabilities
|
|
315
|
|
|
337
|
|
Total
equity
|
|
659
|
|
|
673
|
|
Total liabilities
and equity
|
|
$
|
2,223
|
|
|
$
|
2,265
|
|
Table 6 —
Outstanding Debt
|
|
|
|
March
31,
|
|
December
31,
|
(In millions)
|
|
2020
|
|
2019
|
Debt:
|
|
|
|
|
Senior
Notes
|
|
$
|
371
|
|
|
$
|
371
|
|
Term Loan
Facility
|
|
361
|
|
|
361
|
|
Other debt
|
|
74
|
|
|
18
|
|
Total debt -
excluding affiliates
|
|
806
|
|
|
750
|
|
Total cash
|
|
25
|
|
|
55
|
|
Net debt -
excluding affiliates
|
|
$
|
781
|
|
|
$
|
695
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
Three months
ended
|
|
|
March
31,
|
(In millions)
|
|
2020
|
|
2019
|
Total cash at
beginning of period
|
|
$
|
55
|
|
|
$
|
165
|
|
Net cash used in
operating activities
|
|
(58)
|
|
|
(29)
|
|
Net cash used in
investing activities
|
|
(27)
|
|
|
(53)
|
|
Net cash provided by
(used in) financing activities
|
|
56
|
|
|
(3)
|
|
Effect of exchange
rate changes on cash
|
|
(1)
|
|
|
—
|
|
Total cash at end
of period
|
|
$
|
25
|
|
|
$
|
80
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(14)
|
|
|
$
|
(18)
|
|
Cash paid for income
taxes
|
|
—
|
|
|
(1)
|
|
Capital
expenditures
|
|
(31)
|
|
|
(52)
|
|
Depreciation and
amortization
|
|
28
|
|
|
26
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
Accounts
receivable
|
|
(62)
|
|
|
(61)
|
|
Inventories
|
|
9
|
|
|
35
|
|
Accounts
payable
|
|
(20)
|
|
|
(22)
|
|
Total cash used in
primary working capital
|
|
$
|
(73)
|
|
|
$
|
(48)
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
(In
millions)
|
|
2020
|
|
2019
|
Free cash
flow(3):
|
|
|
|
|
Net cash used in
operating activities
|
|
$
|
(58)
|
|
|
$
|
(29)
|
|
Capital
expenditures
|
|
(31)
|
|
|
(52)
|
|
Other investing
activities
|
|
4
|
|
|
(1)
|
|
Total free cash
flow(3)
|
|
$
|
(85)
|
|
|
$
|
(82)
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
57
|
|
|
$
|
60
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(30)
|
|
|
(28)
|
|
Cash paid for
interest
|
|
(14)
|
|
|
(18)
|
|
Cash paid for income
taxes
|
|
—
|
|
|
(1)
|
|
Primary working
capital change
|
|
(73)
|
|
|
(48)
|
|
Restructuring
|
|
(4)
|
|
|
(7)
|
|
Maintenance & other
|
|
(20)
|
|
|
(4)
|
|
Net cash flows
associated with Pori
|
|
(1)
|
|
|
(36)
|
|
Total free cash
flow(3)
|
|
$
|
(85)
|
|
|
$
|
(82)
|
|
|
See end of press
release for numbered footnote explanations
|
Footnotes
|
|
(1)
|
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) loss/gain on disposition of
business/assets; (c) amortization of pension and postretirement
actuarial losses/gains; (d) net plant incident costs/credits; and
(e) restructuring, impairment, and plant closing and transition
costs/credits; (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.
|
|
|
|
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.
|
|
|
|
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) loss/gain on disposition of
business/assets; (c) amortization of pension and postretirement
actuarial losses/gains; (d) net plant incident costs/credits; and
(e) restructuring, impairment, and plant closing and transition
costs/credits; (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.
|
|
|
|
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.
|
|
|
(2)
|
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.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
(3)
|
Management internally
uses a free cash flow measure: (a) to evaluate the Company's
liquidity, (b) to evaluate strategic investments and
(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
condensed consolidated 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. 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 the impacts
and duration of the global outbreak of the Coronavirus Disease 2019
pandemic on the global economy and all aspects of our business,
including our employees, customers, suppliers, partners, results of
operations, financial condition and liquidity, 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,
2019 filed with the SEC, and in its Quarterly Reports on
Form 10-Q for the three months ended March
31, 2020 filed with the SEC. 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