BERWYN, Pa.--(BUSINESS WIRE)--
Trinseo:
Year Ended 2015 Summary
-
Net Income of $134 million
-
Record Adjusted EPS of $4.59, inclusive of $0.94 unfavorable impact
from inventory revaluation
-
Record Adjusted EBITDA of $492 million and Adjusted EBITDA excluding
inventory revaluation of $550 million
-
Record free cash flow of $316 million excluding $69 million of call
premiums
Fourth Quarter 2015 Summary
-
Net Income of $43 million
-
Adjusted EPS of $1.11, inclusive of $0.28 unfavorable impact from
inventory revaluation
-
Adjusted EBITDA of $116 million ($133 million excluding inventory
revaluation)
-
Free cash flow of $117 million
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
$millions, except per share data
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
|
Revenue
|
|
897
|
|
1,122
|
|
1,028
|
|
3,972
|
|
5,128
|
|
Net Income (loss)
|
|
43
|
|
(30)
|
|
52
|
|
134
|
|
(67)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
115
|
|
23
|
|
116
|
|
394
|
|
181
|
|
Adjusted EBITDA
|
|
116
|
|
32
|
|
116
|
|
492
|
|
262
|
|
Adjusted EBITDA, excluding inventory revaluation
|
|
133
|
|
104
|
|
144
|
|
550
|
|
326
|
|
Adjusted Net Income (loss)
|
|
54
|
|
(23)
|
|
52
|
|
225
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS (Basic) ($)
|
|
0.88
|
|
(0.61)
|
|
1.07
|
|
2.74
|
|
(1.55)
|
|
EPS(Diluted) ($)
|
|
0.88
|
|
(0.61)
|
|
1.06
|
|
2.73
|
|
(1.55)
|
|
Adjusted EPS ($)
|
|
1.11
|
|
(0.48)
|
|
1.07
|
|
4.59
|
|
0.18
|
|
|
|
|
|
|
|
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Trinseo
(NYSE: TSE), a global materials company and manufacturer of plastics,
latex binders and synthetic rubber, today reported its fourth quarter
and full year 2015 financial results with revenue of $897 million and
$3,972 million, respectively, and net income of $43 million and $134
million, respectively.
Additionally, results for the fourth quarter included Adjusted EPS of
$1.11 per diluted share and Adjusted EBITDA of $116 million; these
included an unfavorable inventory revaluation impact of $0.28 and $17
million, respectively. Results for full year 2015 included Adjusted EPS
of $4.59 per diluted share and Adjusted EBITDA of $492 million; these
included an unfavorable inventory revaluation impact of $0.94 and $58
million, respectively.
Commenting on the Company’s performance, Chris Pappas, Trinseo President
and Chief Executive Officer, said, “Trinseo finished the year with
another strong quarter, delivering fourth quarter Adjusted EBITDA and
Adjusted EPS which exceeded our guidance, excluding the impact of
inventory revaluation.”
Commenting on full year 2015, Pappas continued, “I am very proud of what
we accomplished during the year. We delivered record Adjusted EBITDA
excluding inventory revaluation and record free cash flow. The Basic
Plastics & Feedstocks division delivered a record $356 million of
Adjusted EBITDA excluding inventory revaluation, and the Performance
Materials division continued to deliver steady results, with $284
million of Adjusted EBITDA excluding inventory revaluation. We had
record sales volume in Synthetic Rubber and record EBITDA in Performance
Plastics. We commissioned our new latex reactor in China to meet growing
demand, and we closed our latex plant in Gales Ferry, CT as part of a
plan to reduce costs by $5 million per year. In addition, we
successfully refinanced our debt, resulting in significantly lower
interest expense, and we ended the year with a net leverage ratio of 1.6
times.”
Revenue in the fourth quarter decreased 20% versus prior year due to the
pass through of lower raw material costs, with the significant decline
in the overall energy complex, and currency, as the euro weakened in
comparison to the U.S. dollar.
Fourth quarter Adjusted EBITDA of $116 million included a $17 million
unfavorable impact from inventory revaluation. Adjusted EBITDA excluding
inventory revaluation of $133 million was $29 million higher than prior
year primarily due to higher margins in the Basic Plastics & Feedstocks
division, including styrenic polymers and polycarbonate, as well as
higher equity earnings from Americas Styrenics.
Fourth Quarter Results and Commentary by Business Segment
-
Latex revenue of $226 million for the quarter decreased 21%
versus prior year due to the pass through of lower raw material costs
as well as currency. Higher volume partially offset these impacts,
increasing revenue by 6%, driven by higher sales to the paper and
board markets in Europe. Adjusted EBITDA of $18 million was flat to
prior year as higher volume was offset by currency and lower margins
in Asia. Sales volume of 308 million pounds was the highest fourth
quarter result since 2011. We expect higher profitability in this
segment in 2016 as we realize the impacts of our $5 million annual
cost reduction plan and as our announced price increases take effect.
-
Synthetic Rubber revenue of $104 million for the quarter
decreased 24% versus prior year due to the pass through of lower raw
material costs as well as currency. Adjusted EBITDA of $21 million was
$9 million below prior year driven by currency as well as a
significant inventory build in the prior year following the third
quarter 2014 turnaround. Full year 2015 sales volume was a record high
for the segment, and was 6% above prior year, including 14% growth in
the higher margin SSBR product line.
-
Performance Plastics revenue of $181 million for the quarter
was 10% below prior year due to the pass through of lower raw material
costs as well as currency. Adjusted EBITDA of $22 million was $6
million above prior year due mostly to higher margins from decreasing
raw material costs. Sales volume was flat versus prior year, as growth
in the North America and Europe automotive markets was offset by
weakness in Brazil. Excluding Latin America, full year 2015 sales
volume was up 4% versus prior year.
-
Basic Plastics & Feedstocks revenue of $387 million
was 22% below prior year due to the pass through of lower raw material
costs as well as currency. Higher sales volume increased revenue by 5%
due mainly to higher polystyrene sales in Europe. Adjusted EBITDA of
$75 million was $87 million higher than prior year. Adjusted EBITDA
excluding inventory revaluation of $83 million was $43 million higher
than prior year driven by higher styrenic polymer and polycarbonate
margins as well as higher equity earnings from Americas Styrenics.
These impacts were partially offset by lower styrene monomer margin.
Free Cash Flow and Leverage
Free cash flow for the quarter was $117 million, inclusive of a $37.5
million dividend from Americas Styrenics, $30 million of capital
expenditures, and $30 million of cash interest payments. At the end of
the quarter we had record liquidity of $866 million, which included $431
million of cash. For full year 2015, we had free cash flow of $316
million excluding $69 million for the call premium associated with the
second quarter refinancing. The full year result included $107 million
of capital spending and $58 million of cash taxes.
As expected, our net leverage ratio continued to decrease due to higher
EBITDA and cash generation, and was 1.6 times at the end of the year,
compared to approximately 4.0 times at the end of 2013 and 2014.
Outlook
Commenting on the outlook for the first quarter and full year 2016
Pappas said, “The 2015 full year results represented a step change in
profitability for the company, driven by a $277 million increase in
Basic Plastics & Feedstocks’ Adjusted EBITDA excluding inventory
revaluation. More than three-quarters of this increase was due to
ongoing structural improvements in the styrenic polymers, styrene
monomer, and polycarbonate markets, which benefitted both Trinseo and
our Americas Styrenics joint venture.”
Pappas continued, “We expect first quarter Adjusted EBITDA to be between
$125 and $135 million, with the Performance Materials division improving
to the $75 to $80 million range, and the Basic Plastics & Feedstocks
division delivering between $75 and $85 million. These expectations
assume only a minimal impact from inventory revaluation and no fly-up
styrene margin driven by unplanned outages. In addition, I am pleased to
report that we are increasing our full year 2016 Adjusted EBITDA
expectation to $510 to $520 million, and Adjusted EPS to $5.25 to $5.45.”
Conference Call and Webcast Information
Trinseo will host a conference call to discuss its Fourth Quarter and
Year Ended December 31, 2015 financial results tomorrow, Thursday,
March 3, 2016 at 10 AM Eastern Time.
Commenting on results will be Trinseo’s Chris Pappas, President and
Chief Executive Officer, and David Stasse, Vice President, Treasury and
Investor Relations. The conference call will be available by phone at:
Participant Toll-Free Dial-In Number: 877-372-0878
Participant
International Dial-In Number: +1 253-237-1169
Conference ID /
passcode: 42529410
The Company will also offer a live Webcast of the conference call with
question and answer session via registration
page on the Trinseo Investor Relations website.
Trinseo will distribute its Fourth Quarter and Full Year 2015 financial
results via press release on Business Wire and post the release and
presentation slides on the Company’s
Investor Relations website on Wednesday, March 2, 2016 after the
market close. 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 March 3, 2017.
About Trinseo
Trinseo
(NYSE:TSE) is a global materials solutions provider, and a manufacturer
of plastics, latex binders, and synthetic rubber. We are focused on
delivering innovative and sustainable solutions to help our customers
create products that touch lives every day - products that are intrinsic
to how we live our lives - across a wide range of end-markets, including
automotive, consumer electronics, appliances, lighting, electrical,
carpet, paper and board, building and construction, and tires. Trinseo
had approximately $4.0 billion in revenue in 2015, with 18 manufacturing
sites around the world, and approximately 2,100 employees.
Use of non-GAAP measures
Trinseo management believes that measures of income excluding certain
items (“non-GAAP” measures) provide relevant and meaningful information
to investors about the ongoing operating results of the Company. Such
measurements are not recognized in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) and should
not be viewed as an alternative to GAAP measures of performance.
Reconciliations of non-GAAP measures to GAAP measures are provided in
the Notes to Condensed Consolidated Financial Information.
Note on Forward-Looking Statements
This press release may contain “forward-looking statements” within
the meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Words such as “expect,”
“estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,”
“plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,”
“potential,” “continue,” and similar expressions are intended to
identify such forward-looking statements. Forward-looking statements in
this press release may include, without limitation, forecasts of growth,
revenues, business activity, acquisitions, financings and other matters
that involve known and unknown risks, uncertainties and other factors
that may cause results, levels of activity, performance or achievements
to differ materially from results expressed or implied by this press
release. Such risk factors include, among others: conditions in the
global economy and capital markets, volatility in costs or disruption in
the supply of the raw materials utilized for our products; loss of
market share to other producers of styrene-based chemical products;
compliance with environmental, health and safety laws; changes in laws
and regulations applicable to our business; our inability to continue
technological innovation and successful introduction of new products;
system security risk issues that could disrupt our internal operations
or information technology services; and the loss of customers.
Additional risks and uncertainties are set forth in the Company’s
reports filed with the United States Securities and Exchange Commission,
which are available at http://www.sec.gov/
as well as the Company’s web site at http://www.trinseo.com.
As a result of the foregoing considerations, you are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary statement.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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TRINSEO S.A.
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
Net sales
|
|
$
|
897,012
|
|
$
|
1,027,952
|
|
$
|
1,122,401
|
|
|
$
|
3,971,902
|
|
$
|
5,127,961
|
|
|
Cost of sales
|
|
784,688
|
|
916,390
|
|
1,084,355
|
|
|
3,502,800
|
|
4,830,640
|
|
|
Gross profit
|
|
112,324
|
|
111,562
|
|
38,046
|
|
|
469,102
|
|
297,321
|
|
|
Selling, general and administrative expenses
|
|
54,357
|
|
51,093
|
|
60,235
|
|
|
207,964
|
|
232,586
|
|
|
Equity in earnings of unconsolidated affiliates
|
|
29,141
|
|
33,489
|
|
18,154
|
|
|
140,178
|
|
47,749
|
|
|
Operating income (loss)
|
|
87,108
|
|
93,958
|
|
(4,035
|
)
|
|
401,316
|
|
112,484
|
|
|
Interest expense, net
|
|
19,252
|
|
19,489
|
|
29,405
|
|
|
93,197
|
|
124,923
|
|
|
Loss on extinguishment of long-term debt
|
|
—
|
|
—
|
|
—
|
|
|
95,150
|
|
7,390
|
|
|
Other expense (income), net
|
|
1,115
|
|
1,214
|
|
(1,622
|
)
|
|
9,113
|
|
27,784
|
|
|
Income (loss) before income taxes
|
|
66,741
|
|
73,255
|
|
(31,818
|
)
|
|
203,856
|
|
(47,613
|
)
|
|
Provision for (benefit from) income taxes
|
|
23,609
|
|
21,200
|
|
(2,131
|
)
|
|
70,209
|
|
19,719
|
|
|
Net income (loss)
|
|
$
|
43,132
|
|
$
|
52,055
|
|
$
|
(29,687
|
)
|
|
$
|
133,647
|
|
$
|
(67,332
|
)
|
|
Weighted average shares- basic
|
|
48,778
|
|
48,778
|
|
48,770
|
|
|
48,774
|
|
43,476
|
|
|
Net income (loss) per share- basic
|
|
$
|
0.88
|
|
$
|
1.07
|
|
$
|
(0.61
|
)
|
|
$
|
2.74
|
|
$
|
(1.55
|
)
|
|
Weighted average shares- diluted
|
|
49,067
|
|
48,989
|
|
48,770
|
|
|
48,970
|
|
43,476
|
|
|
Net income (loss) per share- diluted
|
|
$
|
0.88
|
|
$
|
1.06
|
|
$
|
(0.61
|
)
|
|
$
|
2.73
|
|
$
|
(1.55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2015
|
|
2014
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
431,261
|
|
|
$
|
220,786
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
494,556
|
|
|
601,066
|
|
|
Inventories
|
|
353,097
|
|
|
473,861
|
|
|
Deferred income tax assets
|
|
—
|
|
|
11,786
|
|
|
Other current assets
|
|
10,120
|
|
|
15,164
|
|
|
Total current assets
|
|
1,289,034
|
|
|
1,322,663
|
|
|
|
|
|
|
|
|
Investments in unconsolidated affiliates
|
|
182,836
|
|
|
167,658
|
|
|
Property, plant and equipment, net of accumulated depreciation
|
|
518,751
|
|
|
556,697
|
|
|
Other assets
|
|
|
|
|
|
Goodwill
|
|
31,064
|
|
|
34,574
|
|
|
Other intangible assets, net
|
|
158,218
|
|
|
165,358
|
|
|
Deferred income tax assets—noncurrent
|
|
51,395
|
|
|
46,812
|
|
|
Deferred charges and other assets
|
|
53,274
|
|
|
62,354
|
|
|
Total other assets
|
|
293,951
|
|
|
309,098
|
|
|
Total assets
|
|
$
|
2,284,572
|
|
|
$
|
2,356,116
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
5,000
|
|
|
$
|
7,559
|
|
|
Accounts payable
|
|
324,629
|
|
|
434,692
|
|
|
Income taxes payable
|
|
20,804
|
|
|
9,413
|
|
|
Deferred income tax liabilities
|
|
—
|
|
|
1,413
|
|
|
Accrued expenses and other current liabilities
|
|
98,836
|
|
|
120,928
|
|
|
Total current liabilities
|
|
449,269
|
|
|
574,005
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
Long-term debt
|
|
1,202,798
|
|
|
1,194,648
|
|
|
Deferred income tax liabilities—noncurrent
|
|
25,764
|
|
|
27,311
|
|
|
Other noncurrent obligations
|
|
217,727
|
|
|
239,287
|
|
|
Total noncurrent liabilities
|
|
1,446,289
|
|
|
1,461,246
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
Ordinary shares, $0.01 nominal value, 50,000,000 shares authorized
at December 31, 2015 and December 31, 2014, 48,778 and 48,770 shares
issued and outstanding at December 31, 2015 and December 31, 2014,
respectively
|
|
488
|
|
|
488
|
|
|
Additional paid-in-capital
|
|
556,532
|
|
|
547,530
|
|
|
Accumulated deficit
|
|
(18,289
|
)
|
|
(151,936
|
)
|
|
Accumulated other comprehensive loss
|
|
(149,717
|
)
|
|
(75,217
|
)
|
|
Total shareholders’ equity
|
|
389,014
|
|
|
320,865
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
2,284,572
|
|
|
$
|
2,356,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2015
|
|
2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
Cash provided by operating activities
|
|
$
|
353,249
|
|
|
$
|
117,221
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Capital expenditures
|
|
(109,267
|
)
|
|
(98,606
|
)
|
|
Proceeds from capital expenditures subsidy
|
|
2,191
|
|
|
—
|
|
|
Proceeds from the sale of businesses and other assets
|
|
818
|
|
|
6,257
|
|
|
Payment for working capital adjustment from sale of business
|
|
—
|
|
|
(700
|
)
|
|
Distributions from unconsolidated affiliates
|
|
—
|
|
|
978
|
|
|
Increase in restricted cash
|
|
(413
|
)
|
|
(533
|
)
|
|
Cash used in investing activities
|
|
(106,671
|
)
|
|
(92,604
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from initial public offering, net of offering costs
|
|
—
|
|
|
198,087
|
|
|
Deferred financing fees
|
|
(28,197
|
)
|
|
—
|
|
|
Short-term borrowings, net
|
|
(18,396
|
)
|
|
(56,901
|
)
|
|
Repayments of Term Loan B
|
|
(2,500
|
)
|
|
—
|
|
|
Net proceeds from issuance of Term Loan B
|
|
498,750
|
|
|
—
|
|
|
Net proceeds from issuance of 2022 Senior Notes
|
|
716,625
|
|
|
—
|
|
|
Repayments of 2019 Senior Notes
|
|
(1,192,500
|
)
|
|
(132,500
|
)
|
|
Proceeds from Accounts Receivable Securitization Facility
|
|
25,000
|
|
|
308,638
|
|
|
Repayments of Accounts Receivable Securitization Facility
|
|
(25,000
|
)
|
|
(309,205
|
)
|
|
Cash provided by (used in) financing activities
|
|
(26,218
|
)
|
|
8,119
|
|
|
Effect of exchange rates on cash
|
|
(9,885
|
)
|
|
(8,453
|
)
|
|
Net change in cash and cash equivalents
|
|
210,475
|
|
|
24,283
|
|
|
Cash and cash equivalents—beginning of period
|
|
220,786
|
|
|
196,503
|
|
|
Cash and cash equivalents—end of period
|
|
$
|
431,261
|
|
|
$
|
220,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
Notes to Condensed Consolidated Financial Information
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Note 1: Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
(In thousands)
|
|
2015
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Latex
|
|
$
|
225,503
|
|
$
|
254,938
|
|
$
|
285,755
|
|
$
|
966,209
|
|
$
|
1,261,137
|
|
|
|
|
|
|
Synthetic Rubber
|
|
103,887
|
|
125,956
|
|
136,891
|
|
474,617
|
|
633,983
|
|
|
|
|
|
|
Performance Plastics
|
|
180,722
|
|
179,861
|
|
201,590
|
|
742,831
|
|
821,053
|
|
|
|
|
|
|
Basic Plastics & Feedstocks
|
|
386,900
|
|
467,197
|
|
498,165
|
|
1,788,245
|
|
2,411,788
|
|
|
|
|
|
|
Total Revenue
|
|
$
|
897,012
|
|
$
|
1,027,952
|
|
$
|
1,122,401
|
|
$
|
3,971,902
|
|
$
|
5,127,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 2: Reconciliation of Non-GAAP Performance
Measures to Net income (loss)
EBITDA is a non-GAAP financial measure that we refer to in making
operating decisions because we believe it provides meaningful
supplemental information regarding the Company’s operational
performance. We present EBITDA because we believe that it is useful for
investors to analyze disclosures of our operating results on the same
basis as that used by our management. 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 because it
removes the impact of our capital structure (such as interest expense),
asset base (such as depreciation and amortization) and tax structure.
We also believe that the presentation of Adjusted EBITDA provides
investors with a useful analytical indicator of our performance and of
our ability to service our indebtedness. We define Adjusted EBITDA as
income (loss) from continuing operations before interest expense, net;
income tax provision; depreciation and amortization expense; loss on
extinguishment of long-term debt; asset impairment charges; advisory
fees paid to affiliates of Bain Capital; gains or losses on the
dispositions of businesses and assets; restructuring and other
non-recurring items.
We present Adjusted EBITDA excluding inventory revaluation in order to
facilitate the comparability of results from period to period by
adjusting cost of sales to reflect the cost of raw materials during the
period, which is often referred to as the replacement cost method of
inventory valuation. We believe this measure minimizes the impact of raw
material purchase price volatility in evaluating our performance. Our
approach to calculating inventory revaluation is intended to represent
the difference between the results under the FIFO and the replacement
cost methods. However, our calculation could differ from the replacement
cost method if the monthly raw material standards are different from the
actual raw material prices during the month and production and purchase
volumes differ from sales volumes during the month. These factors could
have a significant impact on the inventory revaluation calculation.
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 (loss),
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 parties in evaluating and assessing our core operating results
from period-to-period after removing the impact of unusual,
non-operational or restructuring-related activities that affect
comparability.
There are limitations to using financial measures such as those
discussed above. These performance measures are not intended to
represent cash flow from operations as defined by GAAP and should not be
used as alternatives to net income as indicators of operating
performance or to cash flow as measures of liquidity. Other companies in
our industry may use 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 (loss), which is determined in accordance
with GAAP.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
(In millions, except per share data)
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
Net income (loss)
|
|
$
|
43.1
|
|
|
$
|
52.1
|
|
|
$
|
(29.7
|
)
|
|
$
|
133.6
|
|
|
$
|
(67.3
|
)
|
|
|
|
Interest expense, net
|
|
|
19.3
|
|
|
|
19.5
|
|
|
|
29.4
|
|
|
|
93.2
|
|
|
|
124.9
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
|
23.6
|
|
|
|
21.2
|
|
|
|
(2.1
|
)
|
|
|
70.2
|
|
|
|
19.7
|
|
|
|
|
Depreciation and amortization
|
|
|
29.5
|
|
|
|
23.0
|
|
|
|
24.9
|
|
|
|
96.8
|
|
|
|
103.7
|
|
|
|
|
EBITDA
|
|
$
|
115.5
|
|
|
$
|
115.8
|
|
|
$
|
22.5
|
|
|
$
|
393.8
|
|
|
$
|
181.0
|
|
|
|
|
Loss on extinguishment of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
95.2
|
|
|
|
7.4
|
|
|
Loss on extinguishment of long-term debt
|
|
Restructuring and other charges (a)
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
6.6
|
|
|
|
0.8
|
|
|
|
10.0
|
|
|
Selling, general, and administrative expenses
|
|
Net gain on disposition of businesses and assets (b)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.6
|
)
|
|
|
—
|
|
|
|
(0.6
|
)
|
|
Other expense (income), net
|
|
Fees paid pursuant to advisory agreement (c)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25.4
|
|
|
Selling, general, and administrative expenses
|
|
Other non-recurring items (d)
|
|
|
—
|
|
|
|
0.3
|
|
|
|
3.9
|
|
|
|
2.2
|
|
|
|
38.4
|
|
|
Selling, general, and administrative expenses; Other expense
(income), net
|
|
Adjusted EBITDA
|
|
$
|
115.7
|
|
|
$
|
116.2
|
|
|
$
|
32.4
|
|
|
$
|
492.0
|
|
|
$
|
261.6
|
|
|
|
|
Inventory revaluation (e)
|
|
|
17.3
|
|
|
|
28.3
|
|
|
|
71.8
|
|
|
|
58.3
|
|
|
|
64.4
|
|
|
|
|
Adjusted EBITDA, excluding inventory revaluation
|
|
$
|
133.0
|
|
|
$
|
144.5
|
|
|
$
|
104.2
|
|
|
$
|
550.3
|
|
|
$
|
326.0
|
|
|
|
|
Adjusted EBITDA to Adjusted Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
115.7
|
|
|
$
|
116.2
|
|
|
$
|
32.4
|
|
|
$
|
492.0
|
|
|
$
|
261.6
|
|
|
|
|
Interest expense, net
|
|
|
19.3
|
|
|
|
19.5
|
|
|
|
29.4
|
|
|
|
93.2
|
|
|
|
124.9
|
|
|
|
|
Provision for income taxes — Adjusted (f)
|
|
|
18.7
|
|
|
|
22.3
|
|
|
|
1.8
|
|
|
|
84.9
|
|
|
|
29.4
|
|
|
|
|
Depreciation and amortization — Adjusted (g)
|
|
|
23.4
|
|
|
|
22.1
|
|
|
|
24.5
|
|
|
|
89.3
|
|
|
|
99.6
|
|
|
|
|
Adjusted Net Income (Loss)
|
|
$
|
54.3
|
|
|
$
|
52.3
|
|
|
$
|
(23.3
|
)
|
|
$
|
224.6
|
|
|
$7.7
|
|
|
|
|
Adjusted EPS
|
|
$
|
1.11
|
|
|
$
|
1.07
|
|
|
$
|
(0.48
|
)
|
|
$
|
4.59
|
|
|
$0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA by Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latex
|
|
$
|
18.3
|
|
|
$
|
24.4
|
|
|
$
|
18.3
|
|
|
$
|
79.0
|
|
|
$
|
97.2
|
|
|
|
|
Synthetic Rubber
|
|
|
21.0
|
|
|
|
27.4
|
|
|
|
30.3
|
|
|
|
93.0
|
|
|
137.0
|
|
|
|
|
Performance Plastics
|
|
|
22.1
|
|
|
|
14.5
|
|
|
|
16.0
|
|
|
|
83.0
|
|
|
69.3
|
|
|
|
|
Basic Plastics & Feedstocks
|
|
|
74.9
|
|
|
|
70.4
|
|
|
|
(11.9
|
)
|
|
|
326.8
|
|
|
30.7
|
|
|
|
|
Corporate unallocated
|
|
|
(20.6
|
)
|
|
|
(20.5
|
)
|
|
|
(20.3
|
)
|
|
|
(89.8
|
)
|
|
(72.6
|
)
|
|
|
|
Adjusted EBITDA
|
|
$
|
115.7
|
|
|
$
|
116.2
|
|
|
$
|
32.4
|
|
|
$
|
492.0
|
|
|
$261.6
|
|
|
|
|
___________________
|
|
(a)
|
|
Restructuring and other charges for the year ended December 31,
2015 relate primarily to the polycarbonate restructuring within
our Basic Plastics & Feedstocks segment and charges incurred in
connection with the closure of our Allyn’s Point manufacturing
facility in Gales Ferry, Connecticut. Charges for the three month
periods ended December 31, 2015 and September 30, 2015 related to
the Allyn’s Point plant closure noted above. Charges for the three
months and year ended December 31, 2014 were incurred primarily in
connection with the shutdown of our latex manufacturing plant in
Altona, Australia and the restructuring within our Basic Plastics
& Feedstocks segment noted above.
|
|
|
|
|
|
(b)
|
|
Net gain on disposition of businesses and assets for the three
months and year ended December 31, 2014 of $0.6 million relates to
the sale of the Company’s EPS business, which closed in September
2013, and for which a contingent gain of $0.6 million was recorded
during the fourth quarter of 2014.
|
|
|
|
|
|
(c)
|
|
Represents fees paid under the terms of our advisory agreement with
Bain Capital. For the year ended December 31, 2014, this includes a
charge of $23.3 million for fees incurred in connection with the
termination of the Advisory Agreement, pursuant to its terms, upon
consummation of the Company’s IPO in June 2014.
|
|
|
|
|
|
(d)
|
|
Other non-recurring items recognized throughout 2015 stem from costs
incurred related to the process of changing our corporate name from
Styron to Trinseo. For the year ended December 31, 2014, these
charges include a one-time $32.5 million termination payment made to
Dow in connection with the termination of our Latex JV Option
Agreement, and additional non-recurring items such as the name
change costs mentioned above and severance charges incurred during
the fourth quarter of 2014 due to the termination of certain key
employees.
|
|
|
|
|
|
(e)
|
|
See the discussion above this table for a description of inventory
revaluation.
|
|
|
|
|
|
(f)
|
|
Adjusted to remove the tax impact of the loss on extinguishment of
long-term debt and the related items noted above in (a) - (d).
Additionally, the three months and year ended December 31, 2015
exclude $6.6 million for the discrete impact of a valuation
allowance recognized in China during the fourth quarter as well as
$0.6 million of tax expense related to provision to return
adjustments. The year ended December 31, 2015 also excludes a $0.6
million tax benefit recognized during the third quarter related to
provision to return adjustments. The year ended December 31, 2014
excludes a $0.6 million tax benefit recognized during the fourth
quarter due to the release of a reserve for an uncertain tax
position, a $2.7 million tax benefit recognized during the second
quarter related to a previously unrecognized tax benefit resulting
from the effective settlement of a 2010 and 2011 audit with the IRS
and a $1.0 million tax loss recognized during the first quarter
related to a valuation allowance recognized in Greece.
|
|
|
|
|
|
(g)
|
|
For the three months ended September 30, 2015 and December 31, 2015,
and the full year ended December 31, 2015, the amount excludes
accelerated depreciation of $0.8 million, $5.9 million, and $6.7
million, respectively, related to the closure of our Allyn’s Point
facility. For the year ended December 31, 2014, the amount excludes
accelerated depreciation of $3.5 million related to the termination
of our contract manufacturing agreement with Dow at Dow’s Freeport,
Texas facility.
|
|
|
|
|
Note 3: Defining Certain Liquidity Measures
The Company uses a number of measures to evaluate and discuss its
liquidity position and performance, including Free Cash Flow and
Liquidity. Free Cash Flow is defined as cash from both operating and
investing activities, less the impact of changes in restricted cash.
Liquidity is defined as total cash and cash equivalents plus unused
borrowing capacity on the Company’s revolving debt and accounts
receivable securitization facility.
Free Cash Flow and Liquidity are not intended to represent cash flows
from operations as defined by GAAP, and therefore, should not be used as
an alternative for that measure. Other companies in our industry may
define Free Cash Flow and Liquidity 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. The Company compensates for these
limitations by providing the following detail, which is determined in
accordance with GAAP and the terms of related borrowing agreements.
The following provides further detail of how these amounts are derived
for the periods discussed herein:
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
(In millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Cash provided by operating activities
|
|
$
|
147.5
|
|
|
$
|
115.6
|
|
|
$
|
353.2
|
|
|
$
|
117.2
|
|
|
Cash used in investing activities
|
|
(30.1
|
)
|
|
(29.9
|
)
|
|
(106.7
|
)
|
|
(92.6
|
)
|
|
Impact of changes in restricted cash
|
|
—
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
117.4
|
|
|
$
|
86.2
|
|
|
$
|
246.9
|
|
|
$
|
25.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
|
|
|
|
|
|
|
|
December 31,
|
|
(In millions)
|
|
2015
|
|
2014
|
|
Cash and cash equivalents
|
|
$
|
431.3
|
|
$
|
220.8
|
|
Available borrowings under accounts receivable securitization
facility
|
|
123.4
|
|
136.1
|
|
Available borrowings under the revolving facility
|
|
311.5
|
|
293.3
|
|
Liquidity
|
|
$
|
866.2
|
|
$
|
650.2
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160302006357/en/
Source: Trinseo