-
Net Income of $67 million and diluted EPS of $1.43
-
Adjusted EPS of $1.70
-
Adjusted EBITDA of $143 million
-
Cash provided by operating activities of $145 million; free cash flow
of $115 million
-
Received authorization to repurchase an additional 2.7 million shares
BERWYN, Pa.--(BUSINESS WIRE)--
Trinseo (NYSE: TSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
June 30,
|
|
$millions, except per share data
|
|
|
2016
|
|
2015
|
|
2016
|
|
Revenue
|
|
|
935
|
|
1,028
|
|
970
|
|
Net Income
|
|
|
67
|
|
52
|
|
96
|
|
EPS (Diluted) ($)
|
|
|
1.43
|
|
1.06
|
|
2.00
|
|
Adjusted Net Income*
|
|
|
80
|
|
52
|
|
110
|
|
Adjusted EPS ($)*
|
|
|
1.70
|
|
1.07
|
|
2.30
|
|
EBITDA*
|
|
|
126
|
|
116
|
|
168
|
|
Adjusted EBITDA*
|
|
|
143
|
|
116
|
|
182
|
|
Inventory revaluation- favorable / (unfavorable)
|
|
|
7
|
|
(28
|
)
|
13
|
|
_____________________
|
|
|
|
|
|
|
|
*For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted Net
Income to Net Income, as well as a reconciliation of Adjusted EPS, see
note 2 below.
Trinseo
(NYSE: TSE), a global materials company and manufacturer of plastics,
latex binders and synthetic rubber, today reported its third quarter
2016 financial results with revenue of $935 million, net income of $67
million, and earnings per diluted share of $1.43. Additionally, results
for the third quarter included Adjusted EPS of $1.70 and Adjusted EBITDA
of $143 million.
Revenue in the third quarter decreased 9% versus prior year driven
primarily by the pass through of lower raw material costs. Third quarter
net income of $67 million was $15 million higher than prior year driven
primarily by favorable raw material timing, which was partially offset
by restructuring charges in the current period. Adjusted EBITDA in the
third quarter of $143 million was $27 million higher than prior year
driven mainly by favorable raw material timing.
Commenting on the Company’s performance, Chris Pappas, Trinseo President
and Chief Executive Officer, said, “Our third quarter results were
essentially as expected with the exception of styrene margin, which was
down slightly from our prior expectations. We continue to see steady
performance in our Performance Materials division and overall a higher
level of performance in our Basic Plastics & Feedstocks division, even
with a reduced contribution from styrene monomer in the currently low
turnaround season.”
Pappas continued, “We had very strong cash generation during the
quarter, and we continue to return capital to shareholders via our
quarterly cash distribution as well as share buybacks. In the third
quarter we repurchased approximately 1.8 million shares, and since the
beginning of the year we have repurchased about 9% of shares
outstanding. In addition, we recently received authorization to
repurchase the remaining availability (approximately 2.7 million shares)
under the 4.5 million share repurchase authorization received from
shareholders earlier this year. We remain committed to these initiatives
as we view them as an important part of total shareholder return.”
Third Quarter Results and Commentary by Business Segment
-
Latex revenue of $243 million for the quarter decreased 5%
versus prior year primarily driven by the pass through of lower raw
material costs in Europe and Asia. Adjusted EBITDA of $30 million was
$6 million above prior year driven by higher volume to the paper and
carpet markets in North America and Asia, as well as favorable raw
material timing. Sales volume of 318 million pounds was in line with
the quarterly trend over the last two years.
-
Synthetic Rubber revenue of $113 million for the quarter
decreased 11% versus prior year driven by the pass through of lower
raw material costs as well as lower sales volume, particularly in SSBR
due mostly to delayed shipments into the fourth quarter. Overall,
sales volume was the highest quarter of the year. Adjusted EBITDA of
$28 million was $1 million above prior year as higher margin was
mostly offset by lower sales volume.
-
Performance Plastics revenue of $175 million for the quarter
was 3% below prior year due to the pass through of lower raw material
costs. Adjusted EBITDA of $25 million was $10 million above prior year
due to higher margin, particularly in Europe, as well as favorable
inventory timing.
-
Basic Plastics & Feedstocks revenue of $405 million
was 13% below prior year driven by the pass through of lower raw
material costs. Adjusted EBITDA of $86 million was $16 million above
prior year driven by favorable raw material timing, partially offset
by lower styrene margins in Europe and Asia.
Cash Generation
Cash provided by operating activities was $145 million and capital
expenditures were $30 million, resulting in Free Cash Flow for the
quarter of $115 million. This included $40 million in dividends from
Americas Styrenics and $6 million of cash interest payments. At the end
of the quarter, the Company had $466 million of cash, inclusive of the
$100 million third quarter cash outlay for the repurchase of
approximately 1.8 million shares.
New Segmentation & Changes to Use of Non-GAAP Measures
Starting in the fourth quarter of 2016, the Company will realign its
reporting segments to provide increased clarity around the drivers of
its profitability and cash flow. First, the existing Basic Plastics &
Feedstocks segment will be split into three new segments: Basic
Plastics, which includes polystyrene, copolymers, and polycarbonate;
Feedstocks, which is styrene monomer; and Americas Styrenics, to reflect
its share of the results of its 50%-owned polystyrene joint venture. In
addition, certain grades of acrylonitrile-butadiene-styrene (or ABS)
supplied into Performance Plastics markets, which was previously
included in the results of Basic Plastics & Feedstocks, will now be
included in Performance Plastics. Finally, the Latex segment will be
renamed to Latex Binders.
Commenting on the Company's new segmentation, Barry Niziolek, Executive
Vice President and Chief Financial Officer, said, “This new segmentation
will continue Trinseo’s approach to providing investors with additional
clarity on the drivers of its business performance. Primarily, the split
of Basic Plastics & Feedstocks into Basic Plastics, Feedstocks and
Americas Styrenics, will now give investors discrete results on these
individual components.”
In addition, the Company will no longer present Adjusted EBITDA
excluding inventory revaluation as a separate non-GAAP financial
performance measure. The Company will, however, continue to present
Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS as non-GAAP
measures of performance (consistent with our current definitions). In
the future, the Company will continue to separately discuss the impact
that raw material purchase price volatility has on results when
significant. This change is being made to better align our use of
non-GAAP measures with guidance recently received from the U.S.
Securities and Exchange Commission.
Outlook
-
Fourth quarter 2016 net income of $54 million to $62 million, and
earnings per diluted share of $1.19 to $1.36
-
Fourth quarter 2016 Adjusted EBITDA of $115 million to $125 million
and Adjusted EPS of $1.19 to $1.36
-
Full year 2016 net income of $295 million to $303 million, and
earnings per diluted share of $6.22 to $6.39
-
Full year 2016 Adjusted EBITDA of $585 million to $595 million and
Adjusted EPS of $6.84 to $7.01
Commenting on the outlook for the fourth quarter and full year 2016
Pappas said, “We expect our Performance Materials and Basic Plastics
performance to continue to be steady in the fourth quarter, but we also
expect sequentially lower styrene monomer margins due to a lower level
of expected planned turnarounds and continued low global styrenics
inventory levels. Our guidance for the full year will be lower due to
this styrene monomer margin impact which represents a reduction in
margin of about $40 per metric ton across the 1.4 million metric tons of
styrene across our business results.”
Pappas continued, “This full year 2016 performance represents a year
over year improvement in both Performance Materials and Basic Plastics &
Feedstocks, which benefitted from about $60 million of styrene margin in
2015 from unplanned outages. We are pleased with this year-over-year
improvement and are encouraged about the future of Trinseo, which we
will provide detail on in our upcoming investor day conference on
November 11.”
Conference Call and Webcast Information
Trinseo will host a conference call to discuss its Third Quarter 2016
financial results tomorrow, Wednesday, November 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:
|
Participant Toll-Free Dial-In Number: +1 844-717-9660
|
|
Participant International Dial-In Number: +1 661-378-9458
|
|
Conference ID / passcode: 99128660
|
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 Third 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 November 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 solution 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
15 manufacturing sites around the world, and more than 2,200 employees.
For more information visit www.trinseo.com.
Use of non-GAAP measures
In addition to using standard measures of performance and liquidity
that are recognized in accordance with accounting principles generally
accepted in the United States of America (“GAAP”), we use additional
measures of income and liquidity excluding certain GAAP items (“non-GAAP
measures”), such as Adjusted EBITDA, Adjusted EPS, and Free Cash Flow.
We believe these measures are useful for investors and management in
evaluating key business trends and performance each period. These
measures are also used to manage our business and assess current period
profitability, as well as to provide an appropriate basis to evaluate
the effectiveness of our pricing strategies. Such measures are not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. The definitions of each of
these measures, further discussion of usefulness, and reconciliations of
non-GAAP measures to GAAP measures are provided in the Notes to
Condensed Consolidated Financial Information presented herein.
Note on Repurchases
Under the repurchase program approved November 1, 2016, our ordinary
shares may be repurchased periodically in open market transactions at
prevailing market prices in accordance with federal securities laws. The
actual timing, number and value of shares repurchased under the program
will be determined by management at its discretion and will depend on a
number of factors, including the market price of Trinseo’s ordinary
shares, general market and economic conditions, applicable legal
requirements, and other business considerations. Repurchased
shares will become treasury shares and may be utilized for general
corporate purposes, including reissuance pursuant to Trinseo’s
equity-based incentive plan, unless subsequently retired in whole or in
part at a meeting of our shareholders. The share repurchase program does
not obligate the Company to acquire any particular amount of its
ordinary shares, and it may be suspended or terminated at any time in
the Company’s discretion.
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. Statements in this press release regarding the Company’s
intention to repurchase ordinary shares from time to time under its
share repurchase program, the intended use of any repurchased shares,
and the source of funding are also forward-looking statements that are
subject to risks and uncertainties. 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; the
loss of customers; the market price of the Company’s ordinary shares
prevailing from time to time; the nature of other investment
opportunities presented to the Company from time to time; and the
Company’s cash flows from operations. 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
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
Net sales
|
|
|
$
|
935,410
|
|
|
$
|
969,694
|
|
|
$
|
1,027,952
|
|
|
$
|
2,799,188
|
|
|
$
|
3,074,890
|
|
Cost of sales
|
|
|
|
795,026
|
|
|
|
799,954
|
|
|
|
916,390
|
|
|
|
2,349,392
|
|
|
|
2,718,112
|
|
Gross profit
|
|
|
|
140,384
|
|
|
|
169,740
|
|
|
|
111,562
|
|
|
|
449,796
|
|
|
|
356,778
|
|
Selling, general and administrative expenses
|
|
|
|
73,900
|
|
|
|
52,249
|
|
|
|
51,093
|
|
|
|
180,635
|
|
|
|
153,607
|
|
Equity in earnings of unconsolidated affiliates
|
|
|
|
36,686
|
|
|
|
38,602
|
|
|
|
33,489
|
|
|
|
110,314
|
|
|
|
111,037
|
|
Operating income
|
|
|
|
103,170
|
|
|
|
156,093
|
|
|
|
93,958
|
|
|
|
379,475
|
|
|
|
314,208
|
|
Interest expense, net
|
|
|
|
18,832
|
|
|
|
18,814
|
|
|
|
19,489
|
|
|
|
56,542
|
|
|
|
73,945
|
|
Loss on extinguishment of long-term debt
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
95,150
|
|
Other expense, net
|
|
|
|
1,084
|
|
|
|
12,875
|
|
|
|
1,214
|
|
|
|
16,628
|
|
|
|
7,998
|
|
Income before income taxes
|
|
|
|
83,254
|
|
|
|
124,404
|
|
|
|
73,255
|
|
|
|
306,305
|
|
|
|
137,115
|
|
Provision for income taxes
|
|
|
|
16,000
|
|
|
|
28,600
|
|
|
|
21,200
|
|
|
|
66,500
|
|
|
|
46,600
|
|
Net income
|
|
|
$
|
67,254
|
|
|
$
|
95,804
|
|
|
$
|
52,055
|
|
|
$
|
239,805
|
|
|
$
|
90,515
|
|
Weighted average shares- basic
|
|
|
|
45,865
|
|
|
|
46,952
|
|
|
|
48,778
|
|
|
|
47,152
|
|
|
|
48,773
|
|
Net income per share- basic
|
|
|
$
|
1.47
|
|
|
$
|
2.04
|
|
|
$
|
1.07
|
|
|
$
|
5.09
|
|
|
$
|
1.86
|
|
Weighted average shares- diluted
|
|
|
|
46,961
|
|
|
|
47,857
|
|
|
|
48,989
|
|
|
|
48,041
|
|
|
|
48,936
|
|
Net income per share- diluted
|
|
|
$
|
1.43
|
|
|
$
|
2.00
|
|
|
$
|
1.06
|
|
|
$
|
4.99
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of equity per share
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
—
|
|
|
$
|
0.60
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
466,287
|
|
|
|
$
|
431,261
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
|
|
511,624
|
|
|
|
|
494,556
|
|
|
Inventories
|
|
|
|
375,747
|
|
|
|
|
353,097
|
|
|
Other current assets
|
|
|
|
37,832
|
|
|
|
|
10,120
|
|
|
Total current assets
|
|
|
|
1,391,490
|
|
|
|
|
1,289,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in unconsolidated affiliates
|
|
|
|
186,999
|
|
|
|
|
182,836
|
|
|
Property, plant and equipment, net of accumulated depreciation
|
|
|
|
494,927
|
|
|
|
|
518,751
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
31,382
|
|
|
|
|
31,064
|
|
|
Other intangible assets, net
|
|
|
|
177,743
|
|
|
|
|
158,218
|
|
|
Deferred income tax assets—noncurrent
|
|
|
|
40,936
|
|
|
|
|
51,395
|
|
|
Deferred charges and other assets
|
|
|
|
29,300
|
|
|
|
|
27,596
|
|
|
Total other assets
|
|
|
|
279,361
|
|
|
|
|
268,273
|
|
|
Total assets
|
|
|
$
|
2,352,777
|
|
|
|
$
|
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
|
|
|
|
331,887
|
|
|
|
|
324,629
|
|
|
Income taxes payable
|
|
|
|
25,185
|
|
|
|
|
20,804
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
130,867
|
|
|
|
|
98,836
|
|
|
Total current liabilities
|
|
|
|
492,939
|
|
|
|
|
449,269
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized deferred financing fees
|
|
|
|
1,185,873
|
|
|
|
|
1,177,120
|
|
|
Deferred income tax liabilities—noncurrent
|
|
|
|
25,789
|
|
|
|
|
25,764
|
|
|
Other noncurrent obligations
|
|
|
|
224,739
|
|
|
|
|
217,727
|
|
|
Total noncurrent liabilities
|
|
|
|
1,436,401
|
|
|
|
|
1,420,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares, $0.01 nominal value, 50,000,000 shares authorized
(September 30, 2016: 48,778 shares issued and 44,653 shares
outstanding; December 31, 2015: 48,778 shares issued and
outstanding)
|
|
|
|
488
|
|
|
|
|
488
|
|
|
Additional paid-in-capital
|
|
|
|
571,504
|
|
|
|
|
556,532
|
|
|
Treasury shares, at cost (September 30, 2016: 4,125 shares; December
31, 2015: zero shares)
|
|
|
|
(193,165
|
)
|
|
|
|
—
|
|
|
Retained Earnings (accumulated deficit)
|
|
|
|
193,285
|
|
|
|
|
(18,289
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(148,675
|
)
|
|
|
|
(149,717
|
)
|
|
Total shareholders’ equity
|
|
|
|
423,437
|
|
|
|
|
389,014
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
2,352,777
|
|
|
|
$
|
2,258,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2016
|
|
2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
|
$
|
324,698
|
|
|
$
|
205,705
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(82,678
|
)
|
|
|
(79,088
|
)
|
|
Proceeds from capital expenditures subsidy
|
|
|
|
—
|
|
|
|
2,191
|
|
|
Proceeds from the sale of businesses and other assets
|
|
|
|
174
|
|
|
|
689
|
|
|
Distributions from unconsolidated affiliates
|
|
|
|
4,809
|
|
|
|
—
|
|
|
Increase in restricted cash
|
|
|
|
—
|
|
|
|
(413
|
)
|
|
Cash used in investing activities
|
|
|
|
(77,695
|
)
|
|
|
(76,621
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Deferred financing fees
|
|
|
|
—
|
|
|
|
(28,033
|
)
|
|
Short-term borrowings, net
|
|
|
|
(126
|
)
|
|
|
(17,703
|
)
|
|
Repayments of term loans
|
|
|
|
(3,750
|
)
|
|
|
(1,250
|
)
|
|
Purchase of treasury shares
|
|
|
|
(194,079
|
)
|
|
|
—
|
|
|
Repayments of equity on ordinary shares
|
|
|
|
(13,920
|
)
|
|
|
—
|
|
|
Stock-based compensation activity, net
|
|
|
|
129
|
|
|
|
—
|
|
|
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
|
|
|
|
(211,746
|
)
|
|
|
(24,111
|
)
|
|
Effect of exchange rates on cash
|
|
|
|
(231
|
)
|
|
|
(4,988
|
)
|
|
Net change in cash and cash equivalents
|
|
|
|
35,026
|
|
|
|
99,985
|
|
|
Cash and cash equivalents—beginning of period
|
|
|
|
431,261
|
|
|
|
220,786
|
|
|
Cash and cash equivalents—end of period
|
|
|
$
|
466,287
|
|
|
$
|
320,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINSEO S.A.
|
|
|
|
Notes to Condensed Consolidated Financial Information
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
(In thousands)
|
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Latex
|
|
|
$
|
242.6
|
|
$
|
232.5
|
|
$
|
254.9
|
|
$
|
684.6
|
|
$
|
740.7
|
|
Synthetic Rubber
|
|
|
|
112.7
|
|
|
111.4
|
|
|
126.0
|
|
|
326.3
|
|
|
370.7
|
|
Performance Plastics
|
|
|
|
175.4
|
|
|
183.9
|
|
|
179.9
|
|
|
527.9
|
|
|
562.1
|
|
Basic Plastics & Feedstocks
|
|
|
|
404.7
|
|
|
441.9
|
|
|
467.2
|
|
|
1,260.4
|
|
|
1,401.4
|
|
Total Revenue
|
|
|
$
|
935.4
|
|
$
|
969.7
|
|
$
|
1,028.0
|
|
$
|
2,799.2
|
|
$
|
3,074.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 2: Reconciliation of Non-GAAP Performance
Measures to Net income
EBITDA is a non-GAAP financial performance measure that we refer to in
making operating decisions because we believe it provides our management
as well as our investors with meaningful information regarding the
Company’s operational performance. We believe the use of EBITDA as a
metric assists our board of directors, management and investors in
comparing our operating performance on a consistent basis.
We also present Adjusted EBITDA as a non-GAAP financial performance
measure, which we define as income from continuing operations before
interest expense, net; income tax provision; depreciation and
amortization expense; loss on extinguishment of long-term debt; asset
impairment charges; gains or losses on the dispositions of businesses
and assets; restructuring and other items. In doing so, we are providing
both management and investors with a stronger indicator of our ongoing
performance and business trends, removing the impact of transactions and
events that we would not consider a part of our core operations.
Lastly, we present Adjusted Net Income 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 operating results from period-to-period after removing the
impact of certain transactions and activities that affect comparability
and that are not considered part of our core operations.
There are limitations to using the financial performance measures noted
above. These performance measures are not intended to represent net
income or other measures of financial performance. In addition, these
measures are not intended to represent cash flow from operations as
defined by GAAP or other measures of liquidity. As such, they 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 define these performance measures differently than we
do. As a result, it may be difficult to use these or similarly-named
financial measures that other companies may use, to compare the
performance of those companies to our performance. We compensate for
these limitations by providing reconciliations of these performance
measures to our net income, which is determined in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
(In millions, except per share data)
|
|
|
September 30,
2016
|
|
June 30,
2016
|
|
September 30,
2015
|
|
|
|
Net income
|
|
|
$
|
67.3
|
|
|
$
|
95.8
|
|
|
$
|
52.1
|
|
|
|
|
Interest expense, net
|
|
|
|
18.8
|
|
|
|
18.8
|
|
|
|
19.5
|
|
|
|
|
Provision for income taxes
|
|
|
|
16.0
|
|
|
|
28.6
|
|
|
|
21.2
|
|
|
|
|
Depreciation and amortization
|
|
|
|
23.8
|
|
|
|
24.9
|
|
|
|
23.0
|
|
|
|
|
EBITDA
|
|
|
$
|
125.9
|
|
|
$
|
168.1
|
|
|
$
|
115.8
|
|
|
|
|
Net loss on disposition of businesses and assets (a)
|
|
|
|
0.3
|
|
|
|
12.9
|
|
|
|
—
|
|
|
Other expense, net
|
|
Restructuring and other charges (b)
|
|
|
|
16.8
|
|
|
|
1.1
|
|
|
|
0.1
|
|
|
Selling, general, and administrative expenses
|
|
Other items (c)
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
Selling, general, and administrative expenses
|
|
Adjusted EBITDA
|
|
|
$
|
143.3
|
|
|
$
|
182.4
|
|
|
$
|
116.2
|
|
|
|
|
Adjusted EBITDA to Adjusted Net Income:
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
143.3
|
|
|
$
|
182.4
|
|
|
$
|
116.2
|
|
|
|
|
Interest expense, net
|
|
|
|
18.8
|
|
|
|
18.8
|
|
|
|
19.5
|
|
|
|
|
Provision for income taxes — Adjusted (d)
|
|
|
|
21.4
|
|
|
|
28.8
|
|
|
|
22.3
|
|
|
|
|
Depreciation and amortization — Adjusted (e)
|
|
|
|
23.3
|
|
|
|
24.9
|
|
|
|
22.1
|
|
|
|
|
Adjusted Net Income
|
|
|
$
|
79.8
|
|
|
$
|
109.9
|
|
|
$
|
52.3
|
|
|
|
|
Adjusted EPS
|
|
|
$
|
1.70
|
|
|
$
|
2.30
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA by Segment:
|
|
|
|
|
|
|
|
|
|
|
Latex
|
|
|
$
|
29.8
|
|
|
$
|
21.5
|
|
|
$
|
24.4
|
|
|
|
|
Synthetic Rubber
|
|
|
|
28.5
|
|
|
|
30.2
|
|
|
|
27.4
|
|
|
|
|
Performance Plastics
|
|
|
|
25.2
|
|
|
|
30.8
|
|
|
|
14.5
|
|
|
|
|
Basic Plastics & Feedstocks
|
|
|
|
86.2
|
|
|
|
121.0
|
|
|
|
70.4
|
|
|
|
|
Corporate unallocated
|
|
|
|
(26.4
|
)
|
|
|
(21.1
|
)
|
|
|
(20.5
|
)
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
143.3
|
|
|
$
|
182.4
|
|
|
$
|
116.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
Net loss on disposition of businesses and assets for the three month
periods ended September 30, 2016 and June 30, 2016 represents the
impairment charges 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 September
30, 2016 relate primarily to charges incurred in connection with the
decision to cease manufacturing activities at our latex
manufacturing facility in Livorno, Italy, consisting of an
impairment charge for unrecoverable net book value of property,
plant, and equipment and other assets, as well as employee benefit
and contract termination charges. 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.
|
|
(c)
|
|
|
Other items for the three months ended September 30, 2016 and June
30, 2016, respectively, relate to fees incurred in conjunction with
the Company’s secondary offerings.
|
|
(d)
|
|
|
Adjusted to remove the tax impact of the items noted in (a), (b),
(c) and (e). The income tax expense (benefit) related to these items
was determined utilizing either (1) the estimated annual effective
tax rate on our ordinary income based upon our forecasted ordinary
income for the full year, or (2) for items treated discretely for
tax purposes, we utilized the applicable rates in the taxing
jurisdictions in which these adjustments occurred. Additionally, the
three months ended September 30, 2016 excludes both a $0.9 million
tax benefit recognized due to the effective settlement of a tax
audit which allowed for the release of a reserve for an uncertain
tax position and a $0.5 million tax benefit recognized during the
period related to provision to return adjustments. The three months
ended September 30, 2015 also excludes a $0.6 million tax benefit
recognized during that period related to provision to return
adjustments.
|
|
(e)
|
|
|
For the three months ended September 30, 2015, the amount excludes
accelerated depreciation of $0.8 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 the three months and full year ended December 31,
2016, as well as for the full year ended December 31, 2017. See “Note on
forward-looking statements” above for a discussion of the limitations of
these forecasts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
Year Ended
|
|
(In millions, except per share data)
|
|
|
December 31,
2016
|
|
|
December 31,
2016
|
|
December 31,
2017
|
|
Adjusted EBITDA
|
|
|
$
|
115 - 125
|
|
|
$
|
585 - 595
|
|
|
$
|
580
|
|
|
Interest expense, net
|
|
|
|
(19
|
)
|
|
|
(76
|
)
|
|
|
(76
|
)
|
|
Provision for income taxes
|
|
|
|
(17) – (19
|
)
|
|
|
(83) – (85
|
)
|
|
|
(90
|
)
|
|
Depreciation and amortization
|
|
|
|
(25
|
)
|
|
|
(97
|
)
|
|
|
(104
|
)
|
|
Reconciling items to Adjusted EBITDA (f)
|
|
|
|
—
|
|
|
|
(34
|
)
|
|
|
—
|
|
|
Net Income
|
|
|
|
54 - 62
|
|
|
|
295 – 303
|
|
|
|
310
|
|
|
Reconciling items to Adjusted Net Income (f)
|
|
|
|
—
|
|
|
|
29
|
|
|
|
—
|
|
|
Adjusted Net Income
|
|
|
|
54 - 62
|
|
|
|
324 - 332
|
|
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares- diluted (g)
|
|
|
|
45.8
|
|
|
|
47.4
|
|
|
|
|
|
Adjusted EPS
|
|
|
$
|
1.19 - 1.36
|
|
|
$
|
6.84 - 7.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
|
Reconciling items to Adjusted EBITDA and Adjusted Net Income are not
typically forecasted by the Company based on their nature as being
primarily driven by transactions that are not part of the core
operations of the business. As such, 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 (d) and (e) above).
|
|
(g)
|
|
|
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: Reconciliation of Non-GAAP Liquidity
Measures to Cash from Operations
The Company uses Free Cash Flow to evaluate and discuss its liquidity
position and results. Free Cash Flow is defined as cash from operating
activities, less capital expenditures. We believe that Free Cash Flow
provides an important indicator of the Company’s ongoing ability to
generate cash through core operations, as it excludes the cash impacts
of various financing transactions as well as cash flows from business
combinations that are not considered organic in nature. We also believe
that Free Cash Flow provides management and investors with a useful
analytical indicator of our ability to service our indebtedness, make
repayments of equity (when declared), and meet our ongoing cash
obligations.
Free Cash Flow is not intended to represent cash flows from operations
as defined by GAAP, and therefore, should not be used as an alternative
for that measure. Other companies in our industry may define Free Cash
Flow differently than we do. As a result, it may be difficult to use
this or similarly-named financial measures that other companies may use,
to compare the liquidity and cash generation of those companies to our
own. The Company compensates for these limitations by providing the
reconciliation below, which is determined in accordance with GAAP.
Previously, we calculated Free Cash Flow as cash from both operating and
investing activities less the impact of changes in restricted cash. We
have changed how we calculate Free Cash Flow for several reasons. First,
the Company has not reported material restricted cash balances since
2012 (and none are expected based on current practices); therefore, the
impact of restricted cash balances has become less meaningful. In
addition, this change to our Free Cash Flow calculation is expected to
make it easier for our investors to compare the Company to its peers, as
we believe that our revised definition of Free Cash Flow is more aligned
to investors’ common understanding of the meaning of this term.
The table below provides further detail of how Free Cash Flow is derived
for the periods discussed herein. Prior period financial information has
been recast from its previous presentation to reflect the Company’s
current method for calculating Free Cash Flow.
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
(in millions)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Cash provided by operating activities
|
|
|
$
|
145.0
|
|
|
$
|
131.0
|
|
|
$
|
324.7
|
|
|
$
|
205.7
|
|
|
Capital expenditures
|
|
|
|
(29.5
|
)
|
|
|
(35.5
|
)
|
|
|
(82.7
|
)
|
|
|
(79.1
|
)
|
|
Free Cash Flow
|
|
|
$
|
115.5
|
|
|
$
|
95.5
|
|
|
$
|
242.0
|
|
|
$
|
126.6
|
|
|
|
|
|
|
|
|
|
|
|
|
For the same reasons discussed above, we are providing the following
reconciliation of forecasted cash provided by operating activities to
forecasted Free Cash Flow for the full year ended December 31, 2016. See
“Note on forward-looking statements” above for a discussion of the
limitations of this forecast.
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
(in millions)
|
|
|
2016
|
|
Cash provided by operating activities
|
|
|
$
|
485.0
|
|
|
Capital expenditures
|
|
|
|
(135.0
|
)
|
|
Free Cash Flow
|
|
|
$
|
350.0
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101006673/en/
Source: Trinseo