Second Quarter 2016 Summary
-
Record Net Income of $96 million and diluted EPS of $2.00
-
Adjusted EPS of $2.30, inclusive of a $0.22 favorable impact from
inventory revaluation
-
Record Adjusted EBITDA of $182 million ($169 million excluding
inventory revaluation)
-
Cash provided by operating activities of $95 million; cash used in
investing activities of $27 million
-
Free Cash Flow of $68 million
BERWYN, Pa.--(BUSINESS WIRE)--
Trinseo
(NYSE: TSE):
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
$millions, except per share data
|
|
2016
|
|
2015
|
|
2016
|
|
Revenue
|
|
970
|
|
1,029
|
|
894
|
|
Net Income
|
|
96
|
|
1
|
|
77
|
|
EPS (Diluted) ($)
|
|
2.00
|
|
0.02
|
|
1.56
|
|
|
|
|
|
|
|
|
|
EBITDA*
|
|
168
|
|
56
|
|
141
|
|
Adjusted EBITDA*
|
|
182
|
|
151
|
|
143
|
|
Adjusted EBITDA, excluding inventory revaluation*
|
|
169
|
|
122
|
|
153
|
|
Adjusted Net Income*
|
|
110
|
|
79
|
|
79
|
|
Adjusted EPS ($)*
|
|
2.30
|
|
1.61
|
|
1.62
|
*For a reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA
excluding inventory revaluation, and Adjusted Net Income to Net Income,
as well as a reconciliation of Adjusted EPS, see note 2 below.
Trinseo, a global materials company and manufacturer of plastics, latex
binders and synthetic rubber, today reported its second quarter 2016
financial results with revenue of $970 million and net income of $96
million.
Additionally, results for the second quarter included Adjusted EPS of
$2.30 per diluted share and Adjusted EBITDA of $182 million; these
included a favorable inventory revaluation impact of $0.22 and $13
million, respectively.
Commenting on the Company’s performance, Chris Pappas, Trinseo President
and Chief Executive Officer, said, “I am very pleased with our
performance in the second quarter, as we exceeded our Adjusted EBITDA
and Adjusted EPS guidance. We continue to see a higher level of
profitability driven by good results in the Performance Materials
division as well as sustainable, structural improvements in the Basic
Plastics & Feedstocks division. We repurchased an additional 800,000
shares during the quarter, bringing our year-to-date purchases to almost
2.4 million, or about 5% of shares outstanding. In addition, we received
Board approval for an annual cash distribution of $1.20 per share, and
the first quarterly distribution was paid on July 20.”
Pappas continued, “Our Performance Materials division delivered $76
million of Adjusted EBITDA excluding inventory revaluation in the second
quarter, slightly ahead of guidance, and keeping it on track to deliver
at least 5% EBITDA growth in 2016. Our Basic Plastics & Feedstocks
division had a record quarter with $115 million of Adjusted EBITDA
excluding inventory revaluation. This result exceeded our guidance due
mainly to higher than expected styrene margins.”
Revenue in the second quarter decreased 6% versus prior year driven
primarily by the pass through of lower raw material costs, which was
partially offset by higher sales volume as well as currency, as the euro
strengthened in comparison to the U.S. dollar. Second quarter net income
of $96 million was $95 million higher than prior year. Adjusted EBITDA
excluding inventory revaluation in the second quarter of $169 million
was $47 million higher than prior year.
Second Quarter Results and Commentary by Business Segment
-
Latex revenue of $232 million for the quarter decreased 6%
versus prior year primarily driven by the pass through of lower raw
material costs in Europe and Asia. Adjusted EBITDA of $21 million was
$6 million above prior year driven by price increases in North America
as well as fixed cost reductions. Sales volume of 310 million pounds
was in line with the quarterly trend over the last two years.
-
Synthetic Rubber revenue of $111 million for the quarter
decreased 3% versus prior year driven by the pass through of lower raw
material costs as well as lower sales volume, particularly in
Nickel-PBR. SSBR sales volume was the second highest quarter on
record. Adjusted EBITDA of $30 million was $12 million above prior
year primarily driven by an inventory draw and higher maintenance
costs in the prior year due to a planned turnaround.
-
Performance Plastics revenue of $184 million for the quarter
was 1% below prior year due to the pass through of lower raw material
costs. Adjusted EBITDA of $31 million was $10 million above prior year
due mostly to higher volume and margin in automotive and an
unfavorable price lag impact in the prior year. Sales volume to the
automotive market during the quarter was a record high driven by a
strong automotive market as well as our actions to increase market
share.
-
Basic Plastics & Feedstocks revenue of $442 million
was 8% below prior year driven by the pass through of lower raw
material costs. Adjusted EBITDA of $121 million was nearly flat to
prior year. Adjusted EBITDA excluding inventory revaluation of $115
million was $16 million higher than prior year driven by higher
polycarbonate margins as well as lower fixed costs from prior year
turnarounds.
Free Cash Flow and Leverage
Cash provided by operating activities was $95 million. Cash used in
investing activities was $27 million, resulting in Free Cash Flow for
the quarter of $68 million. This included $30 million in dividends from
Americas Styrenics, $27 million of capital expenditures, and $30 million
of cash interest payments. At the end of the quarter we had record
liquidity of $904 million, which included $465 million of cash,
inclusive of the $37 million cash outlay for the repurchase of 800,000
shares.
As expected, our net leverage ratio continued to decrease due to higher
EBITDA and cash generation, and was 1.3 times at the end of the quarter,
compared to approximately 2.8 times at the end of the second quarter of
2015.
Outlook
-
Third quarter 2016 net income of $73 million to $80 million
-
Third quarter 2016 Adjusted EBITDA of $140 million to $150 million and
Adjusted EPS of $1.55 to $1.70
-
Full year 2016 net income of $316 million to $323 million
-
Full year 2016 Adjusted EBITDA of $605 million to $615 million and
Adjusted EPS of $6.95 to $7.10
Commenting on the outlook for the third quarter and full year 2016
Pappas said, “We expect third quarter results to be more in line with
those from the first quarter, with an estimate of $140 to $150 million
of Adjusted EBITDA excluding inventory revaluation. The Performance
Materials division should deliver at least $75 million of Adjusted
EBITDA excluding inventory revaluation. The Basic Plastics & Feedstocks
division Adjusted EBITDA excluding inventory revaluation is expected to
be between $85 and $95 million, close to the first quarter result, and
sequentially lower following the spring styrene turnaround season.”
Commenting on the outlook for the full year of 2016 Pappas said,
“Adjusted EBITDA excluding inventory revaluation was $322 million for
the first half of the year. We believe the second half of the year will
continue to show sustained EBITDA strength, and therefore, we are
increasing our full-year guidance to $605 to $615 million of Adjusted
EBITDA excluding inventory revaluation which translates into an expected
Adjusted EPS range of $6.95 to $7.10.”
Conference Call and Webcast Information
Trinseo will host a conference call to discuss its second quarter 2016
financial results tomorrow, Tuesday, August 2, 2016 at 10 AM Eastern
Time.
Commenting on results will be Chris Pappas, President and Chief
Executive Officer, Barry Niziolek, Executive Vice President and Chief
Financial Officer, and David Stasse, Vice President, Treasury and
Corporate Finance. The conference call will be available by phone at:
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Participant Toll-Free Dial-In Number: 1-661-378-9458
|
|
Participant International Dial-In Number: +1 844-717-9660
|
|
Conference ID / passcode: 46408667
|
|
|
The Company will also offer a live Webcast of the conference call with
question and answer session via the registration
page of the Trinseo Investor
Relations website.
Trinseo has posted its second quarter 2016 financial results on the
Company’s Investor Relations website. The presentation slides will also
be made available in the webcast player prior to the conference call.
The Company will also furnish copies of the financial results press
release and presentation slides to investors by means of a Form 8-K
filing with the U.S. Securities and Exchange Commission.
A replay of the conference call and transcript will be archived on the
Company’s Investor Relations website shortly following the conference
call. The replay will be available until August 2, 2017.
About Trinseo
Trinseo
(NYSE:TSE) is a global materials solutions provider and 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, medical devices, 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 more than 2,200 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.
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
2016
|
|
March 31,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
Net sales
|
|
$
|
969,694
|
|
$
|
894,084
|
|
$
|
1,028,673
|
|
$
|
1,863,778
|
|
$
|
2,046,938
|
|
Cost of sales
|
|
799,954
|
|
754,412
|
|
886,536
|
|
1,554,366
|
|
1,801,722
|
|
Gross profit
|
|
169,740
|
|
139,672
|
|
142,137
|
|
309,412
|
|
245,216
|
|
Selling, general and administrative expenses
|
|
52,249
|
|
54,486
|
|
50,739
|
|
106,735
|
|
102,514
|
|
Equity in earnings of unconsolidated affiliates
|
|
38,602
|
|
35,026
|
|
40,841
|
|
73,628
|
|
77,548
|
|
Operating income
|
|
156,093
|
|
120,212
|
|
132,239
|
|
276,305
|
|
220,250
|
|
Interest expense, net
|
|
18,814
|
|
18,896
|
|
25,600
|
|
37,710
|
|
54,456
|
|
Loss on extinguishment of long-term debt
|
|
—
|
|
—
|
|
95,150
|
|
—
|
|
95,150
|
|
Other expense, net
|
|
12,875
|
|
2,669
|
|
3,233
|
|
15,544
|
|
6,784
|
|
Income before income taxes
|
|
124,404
|
|
98,647
|
|
8,256
|
|
223,051
|
|
63,860
|
|
Provision for income taxes
|
|
28,600
|
|
21,900
|
|
7,500
|
|
50,500
|
|
25,400
|
|
Net income
|
|
$
|
95,804
|
|
$
|
76,747
|
|
$
|
756
|
|
$
|
172,551
|
|
$
|
38,460
|
|
Weighted average shares- basic
|
|
46,952
|
|
48,655
|
|
48,771
|
|
47,803
|
|
48,770
|
|
Net income per share- basic
|
|
$
|
2.04
|
|
$
|
1.58
|
|
$
|
0.02
|
|
$
|
3.61
|
|
$
|
0.79
|
|
Weighted average shares- diluted
|
|
47,857
|
|
49,086
|
|
48,907
|
|
48,554
|
|
48,896
|
|
Net income per share- diluted
|
|
$
|
2.00
|
|
$
|
1.56
|
|
$
|
0.02
|
|
$
|
3.55
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of equity per share
|
|
$
|
0.30
|
|
|
—
|
|
|
—
|
|
$
|
0.30
|
|
|
—
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
465,213
|
|
|
$
|
431,261
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
534,860
|
|
|
494,556
|
|
|
Inventories
|
|
365,139
|
|
|
353,097
|
|
|
Other current assets
|
|
27,096
|
|
|
10,120
|
|
|
Total current assets
|
|
1,392,308
|
|
|
1,289,034
|
|
|
|
|
|
|
|
|
|
|
Investments in unconsolidated affiliates
|
|
190,314
|
|
|
182,836
|
|
|
Property, plant and equipment, net of accumulated depreciation
|
|
505,319
|
|
|
518,751
|
|
|
Other assets
|
|
|
|
|
|
|
|
Goodwill
|
|
31,169
|
|
|
31,064
|
|
|
Other intangible assets, net
|
|
171,644
|
|
|
158,218
|
|
|
Deferred income tax assets—noncurrent
|
|
42,705
|
|
|
51,395
|
|
|
Deferred charges and other assets
|
|
29,168
|
|
|
27,596
|
|
|
Total other assets
|
|
274,686
|
|
|
268,273
|
|
|
Total assets
|
|
$
|
2,362,627
|
|
|
$
|
2,258,894
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
Accounts payable
|
|
330,413
|
|
|
324,629
|
|
|
Income taxes payable
|
|
20,229
|
|
|
20,804
|
|
|
Accrued expenses and other current liabilities
|
|
107,828
|
|
|
98,836
|
|
|
Total current liabilities
|
|
463,470
|
|
|
449,269
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized deferred financing fees
|
|
1,183,287
|
|
|
1,177,120
|
|
|
Deferred income tax liabilities—noncurrent
|
|
27,979
|
|
|
25,764
|
|
|
Other noncurrent obligations
|
|
224,478
|
|
|
217,727
|
|
|
Total noncurrent liabilities
|
|
1,435,744
|
|
|
1,420,611
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
Ordinary shares, $0.01 nominal value, 50,000,000 shares authorized
(June 30, 2016: 48,778 shares issued and 46,403 shares outstanding ;
December 31, 2015: 48,778 shares issued and outstanding)
|
|
488
|
|
|
488
|
|
|
Additional paid-in-capital
|
|
565,590
|
|
|
556,532
|
|
|
Treasury shares, at cost (June 30, 2016: 2,374 shares; December 31,
2015: zero shares)
|
|
(93,676
|
)
|
|
—
|
|
|
Retained Earnings (accumulated deficit)
|
|
139,427
|
|
|
(18,289
|
)
|
|
Accumulated other comprehensive loss
|
|
(148,416
|
)
|
|
(149,717
|
)
|
|
Total shareholders’ equity
|
|
463,413
|
|
|
389,014
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
2,362,627
|
|
|
$
|
2,258,894
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
$
|
179,707
|
|
|
$
|
74,746
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(53,153
|
)
|
|
(43,594
|
)
|
|
Proceeds from capital expenditures subsidy
|
|
—
|
|
|
2,191
|
|
|
Proceeds from the sale of businesses and other assets
|
|
129
|
|
|
689
|
|
|
Distributions from unconsolidated affiliates
|
|
4,809
|
|
|
—
|
|
|
Cash used in investing activities
|
|
(48,215
|
)
|
|
(40,714
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Deferred financing fees
|
|
—
|
|
|
(27,661
|
)
|
|
Short-term borrowings, net
|
|
(126
|
)
|
|
(15,823
|
)
|
|
Repayments of term loans
|
|
(2,500
|
)
|
|
—
|
|
|
Purchase of treasury shares
|
|
(94,362
|
)
|
|
—
|
|
|
Stock-based compensation activity, net
|
|
13
|
|
|
—
|
|
|
Net proceeds from issuance of 2021 Term Loan B
|
|
—
|
|
|
498,750
|
|
|
Net proceeds from issuance of 2022 Senior Notes
|
|
—
|
|
|
716,625
|
|
|
Repayments of 2019 Senior Notes
|
|
—
|
|
|
(1,192,500
|
)
|
|
Proceeds from Accounts Receivable Securitization Facility
|
|
—
|
|
|
25,000
|
|
|
Repayments of Accounts Receivable Securitization Facility
|
|
—
|
|
|
(25,000
|
)
|
|
Cash used in financing activities
|
|
(96,975
|
)
|
|
(20,609
|
)
|
|
Effect of exchange rates on cash
|
|
(565
|
)
|
|
(3,104
|
)
|
|
Net change in cash and cash equivalents
|
|
33,952
|
|
|
10,319
|
|
|
Cash and cash equivalents—beginning of period
|
|
431,261
|
|
|
220,786
|
|
|
Cash and cash equivalents—end of period
|
|
$
|
465,213
|
|
|
$
|
231,105
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
Notes to Condensed Consolidated Financial Information
|
|
(Unaudited)
|
|
|
|
Note 1: Revenue by Segment
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
(In thousands)
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Latex
|
|
$
|
232.5
|
|
$
|
209.5
|
|
$
|
247.5
|
|
$
|
442.0
|
|
$
|
485.8
|
|
Synthetic Rubber
|
|
111.4
|
|
102.2
|
|
115.4
|
|
213.6
|
|
244.8
|
|
Performance Plastics
|
|
183.9
|
|
168.6
|
|
185.3
|
|
352.5
|
|
382.2
|
|
Basic Plastics & Feedstocks
|
|
441.9
|
|
413.8
|
|
480.5
|
|
855.7
|
|
934.1
|
|
Total Revenue
|
|
$
|
969.7
|
|
$
|
894.1
|
|
$
|
1,028.7
|
|
$
|
1,863.8
|
|
$
|
2,046.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 2: Reconciliation of Non-GAAP Performance
Measures to Net income
EBITDA is a non-GAAP financial measure that we refer to in making
operating decisions because we believe it provides our investors with
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; gains or
losses on the dispositions of businesses and assets; restructuring and
other items.
We present Adjusted EBITDA excluding inventory revaluation in order to
facilitate the comparability of results by investors 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 and Adjusted EPS as additional
performance measures. Adjusted Net Income is calculated as Adjusted
EBITDA (defined beginning with Net income, 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 per weighted average
diluted shares outstanding for a given period. We believe that Adjusted
Net Income 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, which is determined in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
(In millions, except per share data)
|
|
June 30,
2016
|
|
|
March 31,
2016
|
|
|
June 30,
2015
|
|
|
|
|
Net income
|
|
$
|
95.8
|
|
|
$
|
76.7
|
|
|
$
|
0.8
|
|
|
|
|
Interest expense, net
|
|
18.8
|
|
|
18.9
|
|
|
25.6
|
|
|
|
|
Provision for income taxes
|
|
28.6
|
|
|
21.9
|
|
|
7.5
|
|
|
|
|
Depreciation and amortization
|
|
24.9
|
|
|
23.2
|
|
|
21.7
|
|
|
|
|
EBITDA
|
|
$
|
168.1
|
|
|
$
|
140.7
|
|
|
$
|
55.6
|
|
|
|
|
Loss on extinguishment of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
95.2
|
|
|
Loss on extinguishment of long-term debt
|
|
Net loss on disposition of businesses and assets (a)
|
|
|
12.9
|
|
|
|
—
|
|
|
|
—
|
|
|
Other expense, net
|
|
Restructuring and other charges (b)
|
|
|
1.1
|
|
|
|
0.7
|
|
|
|
(0.1
|
)
|
|
Selling, general, and administrative expenses
|
|
Other items (c)
|
|
|
0.3
|
|
|
|
1.8
|
|
|
|
0.6
|
|
|
Selling, general, and administrative expenses
|
|
Adjusted EBITDA
|
|
$
|
182.4
|
|
|
$
|
143.2
|
|
|
$
|
151.3
|
|
|
|
|
Inventory revaluation (d)
|
|
(12.9
|
)
|
|
9.7
|
|
|
(29.4
|
)
|
|
|
|
Adjusted EBITDA excluding inventory revaluation
|
|
$
|
169.5
|
|
|
$
|
152.9
|
|
|
$
|
121.9
|
|
|
|
|
Adjusted EBITDA to Adjusted Net Income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
182.4
|
|
|
$
|
143.2
|
|
|
$
|
151.3
|
|
|
|
|
Interest expense, net
|
|
18.8
|
|
|
18.9
|
|
|
25.6
|
|
|
|
|
Provision for income taxes — Adjusted (e)
|
|
28.8
|
|
|
22.4
|
|
|
25.5
|
|
|
|
|
Depreciation and amortization — Adjusted (f)
|
|
24.9
|
|
|
22.6
|
|
|
21.6
|
|
|
|
|
Adjusted Net Income (loss)
|
|
$
|
109.9
|
|
|
$
|
79.3
|
|
|
$
|
78.6
|
|
|
|
|
Adjusted EPS
|
|
$
|
2.30
|
|
|
$
|
1.62
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA by Segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Latex
|
|
$
|
21.5
|
|
|
$
|
18.8
|
|
|
$
|
14.9
|
|
|
|
|
Synthetic Rubber
|
|
30.2
|
|
|
23.1
|
|
|
18.5
|
|
|
|
|
Performance Plastics
|
|
30.8
|
|
|
30.0
|
|
|
21.3
|
|
|
|
|
Basic Plastics & Feedstocks
|
|
121.0
|
|
|
96.6
|
|
|
122.2
|
|
|
|
|
Corporate unallocated
|
|
(21.1
|
)
|
|
(25.3
|
)
|
|
(25.6
|
)
|
|
|
|
Adjusted EBITDA
|
|
$
|
182.4
|
|
|
$
|
143.2
|
|
|
$
|
151.3
|
|
|
|
|
__________________
|
|
(a)
|
|
Net loss on disposition of businesses and other assets for the three
months ended June 30, 2016 represents the impairment charge recorded
for the estimated loss on sale of our latex and automotive
businesses in Brazil, primarily related to the unrecoverable net
book value of property, plant, and equipment along with certain
working capital balances.
|
|
|
|
|
|
(b)
|
|
Restructuring and other charges for the three months ended June 30,
2016 relate to charges incurred in connection with the decision to
divest our operations in Brazil as well as the closure of our
Allyn’s Point manufacturing facility in Gales Ferry, Connecticut.
Charges for the three months ended March 31, 2016 relate solely to
the closure of the Allyn’s Point facility.
|
|
|
|
|
|
(c)
|
|
Other items for the three months ended June 30, 2016 and the three
months ended March 31, 2016 relate to fees incurred in conjunction
with the Company’s secondary offerings completed during the periods
above. Other items for the three months ended June 30, 2015
represent costs related to the process of changing our corporate
name from Styron to Trinseo.
|
|
|
|
|
|
(d)
|
|
See the discussion above this table for a description of inventory
revaluation.
|
|
|
|
|
|
(e)
|
|
Adjusted to remove the tax impact of the loss on extinguishment of
debt and the related items noted in (a), (b), (c) and (f).
|
|
|
|
|
|
(f)
|
|
For the three months ended March 31, 2016, this amount excludes
accelerated depreciation of $0.5 million related to the closure of
our Allyn’s Point facility.
|
|
|
|
|
For the same reasons discussed above, we are providing the following
reconciliation of forecasted net income to forecasted Adjusted EBITDA
and Adjusted EPS for three months ended September 30, 2016 and the full
year ended December 31, 2016. See “Note on forward-looking statements”
above for a discussion of the limitations of these forecasts.
The reconciliation below assumes no impact from the effects of inventory
revaluation, as the impact is not expected to be significant to these
periods. However, it should be noted that the impacts of inventory
revaluation are difficult to predict, and could therefore have a
significant impact on the Company’s results during these periods.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
(In millions, except per share data)
|
|
September 30,
2016
|
|
|
December 31,
2016
|
|
|
|
Adjusted EBITDA excluding inventory revaluation
|
|
$
|
140 - 150
|
|
|
$
|
605 - 615
|
|
|
|
Interest expense, net
|
|
(20
|
)
|
|
(76
|
)
|
|
|
Provision for income taxes
|
|
(21) – (24
|
)
|
|
(94) – (97
|
)
|
|
|
Depreciation and amortization
|
|
(26
|
)
|
|
(102
|
)
|
|
|
Reconciling items to Adjusted EBITDA (g)
|
|
—
|
|
|
(17
|
)
|
|
|
Net Income
|
|
73 - 80
|
|
|
316 - 323
|
|
|
|
Reconciling items to Adjusted Net Income (g)
|
|
—
|
|
|
17
|
|
|
|
Adjusted Net Income
|
|
73 - 80
|
|
|
333 - 340
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares- diluted (h)
|
|
47.3
|
|
|
47.9
|
|
|
|
Adjusted EPS
|
|
$
|
1.55 - 1.70
|
|
|
$
|
6.95 – 7.10
|
|
|
|
|
|
|
|
(g)
|
|
Reconciling items to Adjusted EBITDA and Adjusted Net Income are
typically one-time items that are not forecasted by the Company. As
such, for the forecasted three months ended September 30, 2016, no
amounts have been included above. For the same reason, for the
forecasted year-end December 31, 2016, we have only included actual,
previously disclosed reconciling items, which we have aggregated
into a single caption. The reconciling items to Adjusted Net Income
include all reconciling items to Adjusted EBITDA, tax effected,
along with adjustments to depreciation and amortization related to
restructuring activities (see notes (e) and (f) above).
|
|
|
|
|
|
(h)
|
|
Weighted average shares calculated for the purpose of forecasting
Adjusted EPS do not forecast significant future share transactions
or events, such as repurchases, significant stock-based compensation
award grants, and changes in the Company’s share price. These are
all factors which could have a significant impact on the calculation
of Adjusted EPS during actual future periods.
|
|
|
|
|
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
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
(in millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Cash provided by operating activities
|
|
$
|
94.8
|
|
|
$
|
31.8
|
|
|
$
|
179.7
|
|
|
$
|
74.7
|
|
|
Cash used in investing activities
|
|
(26.6
|
)
|
|
(13.6
|
)
|
|
(48.2
|
)
|
|
(40.7
|
)
|
|
Impact of changes in restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
68.2
|
|
|
$
|
18.2
|
|
|
$
|
131.5
|
|
|
$
|
34.0
|
|
|
|
|
|
|
|
|
Liquidity
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
(In millions)
|
|
2016
|
|
2015
|
|
Cash and cash equivalents
|
|
$
|
465.2
|
|
$
|
431.3
|
|
Available borrowings under accounts receivable securitization
agreement
|
|
129.7
|
|
123.4
|
|
Available borrowings under the revolving facility
|
|
308.9
|
|
311.5
|
|
Liquidity
|
|
$
|
903.8
|
|
$
|
866.2
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160801006136/en/
Source: Trinseo