WAYNE, PA — Trinseo (NYSE: TSE), a global materials solutions provider and manufacturer of plastics, latex binders, and synthetic rubber, recently reported its third quarter financial results for 2023. The company reported a decrease in net sales by 25% compared to the same period last year. This decrease was attributed to a 20% decrease due to lower prices from the pass-through of lower raw material costs and an 8% decrease due to lower sales volume across all reporting segments except Feedstocks, which was caused by persistent market demand weakness.
Despite these challenging market conditions, Trinseo’s President and Chief Executive Officer, Frank Bozich, highlighted the company’s strategic response, stating, “As expected, we saw sequentially similar market conditions. However, we had another quarter of positive cash generation and we’ve taken additional operational steps to provide meaningful profitability improvement in 2024. In addition, we successfully refinanced all of our 2024 and most of our 2025 debt maturities. I wish to thank our employees for their continued efforts in executing these initiatives in this challenging environment.”
Key highlights of Trinseo’s third quarter performance include cash provided by operations amounting to $29 million and capital expenditures of $13 million, resulting in Free Cash Flow* of $16 million. This includes a $52 million decrease in working capital. The company also reported an ending cash balance of $279 million, with approximately $216 million of additional available liquidity under two undrawn, committed financing facilities.
However, the company reported a net loss from continuing operations of $38 million and diluted EPS from continuing operations of negative $1.09. This net loss included a pre-tax charge of approximately $14 million related to the Company’s PMMA sheet optimization and Corporate restructuring initiatives. Despite this, Adjusted EBITDA* of $41 million was $78 million higher than the prior year.
In response to these challenges, Trinseo announced the closure of its styrene plant in Terneuzen, the Netherlands. This move, combined with other recent restructuring actions and lower natural gas hedge losses, is expected to result in a sequential profitability improvement of approximately $100 million in 2024.
Moreover, during the quarter, Trinseo successfully refinanced the entirety of its outstanding 2024 term loan and $385 million of its existing $500 million 2025 Senior Notes. This strategic move further strengthens the company’s financial position.
The company’s reporting segments also experienced varied performance. Engineered Materials and Latex Binders reported decreases in net sales by 23% and 35% respectively, while Plastics Solutions reported a decrease in net sales by 16%. However, Adjusted EBITDA increased by $37 million attributed to higher polycarbonate margin from restructuring actions.
Looking ahead to 2023, the outlook for net loss from continuing operations is projected to be between $509 – $499 million, which is lower than the prior outlook of a net loss of $460 million. Adjusted EBITDA is estimated to be between $175 – $185 million, down from the previous outlook of $215 million.
Despite the challenging market conditions, Trinseo’s strategic response, including cost-cutting initiatives and debt refinancing, suggests a robust plan to navigate these challenges and improve profitability in 2024.
More information is available at www.trinseo.com.
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