8-K
Trinseo PLC (TSEOF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): **** November 2, 2022
Trinseo PLC
(Exact name of registrant as specified in its charter)
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|---|---|---|---|---|
| Ireland | | 001-36473 | | N/A |
| (State or other jurisdiction<br>of incorporation or organization) | | (Commission<br>File Number) | | (I.R.S. Employer<br>Identification Number) |
440 East Swedesford Road , Suite 301
Wayne , Pennsylvania **** 19087
(Address of principal executive offices, including zip code)
( 610 ) 240-3200
(Telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| | | |
|---|---|---|
| Title of Each Class | Trading symbol | Name of Exchange on which registered |
| Ordinary Shares, par value $0.01 per share | TSE | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02 | Results of Operations and Financial Condition |
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On November 2, 2022, Trinseo PLC, a public limited company existing under the laws of Ireland (the “Company”), issued a press release announcing its financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 hereto. The Company intends to hold an investor call and webcast to discuss these results on Thursday, November 3, 2022 at 10 AM Eastern Time. Ahead of this call the Company is also making available on its website an investor presentation, which will be discussed on the call and is furnished as Exhibit 99.2 hereto.
The information contained herein and in the accompanying exhibits shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| ITEM 9.01. | Financial Statements and Exhibits |
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(d) Exhibits
| ay | | |
|---|---|---|
| Exhibit Number | | Description |
| 99.1 | | Press Release dated November 2, 2022 |
| 99.2 | | Investor Presentation, dated November 2, 2022 |
| 104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| a | | | |
|---|---|---|---|
| | | TRINSEO PLC | |
| | | | |
| | | | |
| | | By: | /s/ David Stasse |
| | | Name: | David Stasse |
| | | Title: | Executive Vice President and Chief Financial Officer |
| | | | |
| Date: November 2, 2022<br><br> | | | |
Exhibit 99.1
| | | |
|---|---|---|
| Contact: | ||
| Trinseo | ||
| Andy Myers | ||
| Tel : +1 610-240-3221 | ||
| Email: aemyers@trinseo.com |
Trinseo Reports Third Quarter 2022 Financial Results; Updates Full-Year Outlook
Third Quarter 2022 and Other Highlights
| ● | Net loss from continuing operations of $118 million and diluted EPS from continuing operations of negative $3.35 |
|---|---|
| ● | Adjusted EBITDA* of negative $37 million, including a $24 million unfavorable impact from net timing, and Adjusted Net Loss* of $103 million |
| --- | --- |
| ● | Cash provided by operations of $98 million and capital expenditures of $39 million resulted in Free Cash Flow* of $59 million; included a working capital release of $166 million mainly from a steep decline in raw material prices and sequentially lower sales in the third quarter |
| --- | --- |
| ● | Third quarter ending cash of $243 million with over $500 million of additional available liquidity under two undrawn, committed financing facilities |
| --- | --- |
| ● | Third quarter year-to-date sales volume of products containing recycled materials increased 65% versus prior year |
| --- | --- |
| | | | | | | |
|---|---|---|---|---|---|---|
| | | Three Months Ended | ||||
| | | September 30, | ||||
| $millions, except per share data | | 2022 | 2021 | |||
| Net Sales | $ | 1,178 | $ | 1,269 | ||
| Net Income (Loss) from continuing operations | | (118) | | 79 | ||
| Diluted EPS from continuing operations ($) | | (3.35) | | 2.01 | ||
| Adjusted Net Income (Loss)* | | (103) | | 80 | ||
| Adjusted EPS ($)* | | (2.91) | | 2.01 | ||
| EBITDA* | | (54) | | 158 | ||
| Adjusted EBITDA* | | (37) | | 173 |
*For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted Net Income (Loss), all of which are non-GAAP measures, to Net Income (Loss), as well as a reconciliation of Free Cash Flow and Adjusted EPS, see Notes 2 and 3 to the financial statements included below.
WAYNE, Pa — November 2, 2022 — Trinseo (NYSE: TSE), a specialty material solutions provider, today reported its third quarter 2022 financial results. Net sales in the third quarter decreased 7% versus prior year. Lower sales volumes resulted in an 18% decrease as economic uncertainty and falling raw material prices led to a high level of customer destocking, particularly in Europe and in applications supporting building & construction and consumer durables. Higher prices resulted in an 11% increase from the passthrough of higher raw material and utility costs.
Third quarter net loss from continuing operations of $118 million was $197 million below prior year and Adjusted EBITDA of negative $37 million was $210 million below prior year. Geopolitical uncertainty in Europe, continued COVID-19 lockdowns in China, a slowdown in U.S. residential construction and minimal improvement in automotive production all led to weak demand, which not only challenged volumes but also pressured margins. Historically high energy costs in Europe created further economic uncertainty for our customers and contributed to negative styrene margins throughout the quarter. In addition, the operating environment in the third quarter led to several headwinds, most notably a pre-tax impact of $24 million for negative net timing from a steep decline in raw material prices and a pre-tax, one-time charge of $23 million related to raw material contract obligations and writedowns for slow-moving inventory.
Commenting on the Company’s third quarter performance, Frank Bozich, President and Chief Executive Officer of Trinseo, said, “Our third quarter results reflect very challenging market conditions in Europe. Historically high energy prices and a declining raw material price environment led to low consumer confidence and significant destocking. Despite this, we were able to generate positive free cash flow during the quarter and I’d like to thank our employees for their efforts in navigating through these challenges.”
Third Quarter Results and Commentary by Business Segment
| ● | Engineered Materials net sales of $243 million for the quarter increased 5% versus prior year. Higher price led to an 8% increase from the passthrough of higher raw material and energy costs while two additional months of results from the Aristech Surfaces acquisition led to an 11% increase. These impacts more than offset a 13% decrease from lower sales volume caused by weaker demand in construction, consumer electronics, wellness and automotive applications. Adjusted EBITDA of $8 million was $25 million below prior year. In addition to lower sales volume, reduced demand led to lower margins due to weak supply / demand dynamics and the inability to fully pass through significantly higher natural gas costs in Europe. North America demand was relatively stable with some weakening observed in construction markets. The integration and synergy realization of the newly acquired businesses remain on track. |
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| ● | Latex Binders net sales of $341 million for the quarter increased 8% versus prior year as a 19% price increase, from the passthrough of higher raw material costs and pricing actions, more than offset lower volumes, mainly in carpet and construction applications. Adjusted EBITDA of $31 million was $6 million lower than prior year primarily from lower volumes in carpet, turf and construction applications while demand for paper & board applications remained steady. Sales volume to CASE applications, which are mainly tied to building & construction, were down 6% year-to-date as growth in Asia was more than offset by demand weakness in Europe. |
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| ● | Base Plastics net sales of $293 million for the quarter were 25% lower than prior year primarily from lower volumes as a result of weaker demand for applications supporting building & construction and consumer durables. Adjusted EBITDA of negative $15 million was $103 million below prior year. Customer destocking from declining raw material prices and overall weaker demand led to lower volumes and margins for polycarbonate and ABS products. Minimal improvement was observed in automotive production in Europe and North America as supply chain issues such as chip shortages persisted. |
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| ● | Polystyrene net sales of $248 million for the quarter were 10% below prior year as higher prices from the passthrough of raw material costs were more than offset by volume declines, particularly in building & construction and appliance applications, and as customers destocked amid falling raw material prices. Adjusted EBITDA of $19 million was $32 million below prior year as weaker demand negatively impacted volumes and margins. An unfavorable net timing variance of $7 million versus prior year also contributed to lower earnings. |
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| ● | Feedstocks Adjusted EBITDA of negative $78 million was $50 million lower than prior year as high utility costs and weak demand combined to create significant margin contraction. Results were also impacted by a $23 million negative net timing variance versus prior year. |
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| ● | Americas Styrenics Adjusted EBITDA of $23 million for the quarter was $6 million higher than prior year as stronger margins offset lower volume. Prior year results included an $8 million headwind related to Hurricane Ida impacts. |
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2022 Full-Year Outlook
| ● | Full-year 2022 net loss from continuing operations of $126 million to $91 million and Adjusted EBITDA of $325 million to $375 million |
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| ● | Full-year 2022 cash from operations of approximately $150 million resulting in approximately breakeven Free Cash Flow |
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Commenting on the outlook for the fourth quarter of 2022, Bozich said, “We expect similar market conditions in the fourth quarter with some level of continued customer destocking, but we anticipate significant sequential earnings improvement as a result of idling styrene production in Europe. Also, the combined $47 million of impacts from raw material obligations, inventory writedowns and unfavorable net timing from the third quarter are not expected to reoccur. In addition, we are evaluating asset optimization initiatives, such as the potential closures of the Boehlen, Germany styrene plant and one production line at the Stade, Germany polycarbonate plant, which would be expected to have a positive financial impact in 2023.”
Bozich continued, “The uncertain economic conditions we’re currently observing only underscores the importance of our strategy shift to a specialty material and sustainable solutions provider. We’re making headway on this transformation as evidenced by the growth of our sustainable and material substitution products and we remain on track to achieve the synergies from the PMMA business and Aristech Surfaces acquisitions. Meanwhile, we are evaluating steps to improve our cost position and optimize our global asset footprint to emerge in an even stronger position when market conditions improve. Despite these challenges, we have ample liquidity and we anticipate cash generation to fund the transformation while providing solid shareholder returns.”
Conference Call and Webcast Information
Trinseo will host a conference call to discuss its third quarter 2022 financial results on Thursday, November 3, 2022 at 10 a.m. Eastern Time.
Commenting on results will be Frank Bozich, President and Chief Executive Officer, David Stasse, Executive Vice President and Chief Financial Officer, and Andy Myers, Director of Investor Relations.
For those interested in asking questions during the Q&A session, please register using the following link:
| ● | Conference Call Registration |
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For those interested in listening only, please register for the webcast using the following link:
| ● | Webcast Registration |
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After registering for the conference call, you will receive a confirmation email with a meeting invitation and information for entry. Registration is open through the live call, but it is advised that you register in advance to ensure you are connected for the full call.
Trinseo has posted its third quarter 2022 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 3, 2023.
About Trinseo
Trinseo (NYSE: TSE) a specialty material solutions provider, partners with companies to bring ideas to life in an imaginative, smart, and sustainability-focused manner by combining its premier expertise, forward-looking innovations and best-in-class materials to unlock value for companies and consumers. From design to manufacturing, Trinseo taps into decades of experience in diverse material solutions to address customers’ unique challenges in a wide range of industries, including consumer goods, mobility, building and construction, and medical. Trinseo’s approximately 3,400 employees bring endless creativity to reimagining the possibilities with clients all over the world from the company’s locations in North America, Europe, and Asia Pacific. Trinseo reported net sales of approximately $4.8 billion in 2021. Discover more by visiting www.trinseo.com and connecting with Trinseo on LinkedIn, Twitter, Facebook and WeChat.
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 excluding certain GAAP items (“non-GAAP measures”), such as Adjusted Net Income, EBITDA, Adjusted EBITDA and Adjusted EPS and measures of liquidity excluding certain GAAP items, such as Free Cash Flow. We believe these measures are useful for investors and management in evaluating 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 or
liquidity, as applicable. 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.
Cautionary Note on Forward-Looking Statements
This press release may contain forward-looking statements including, without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts or guarantees or assurances of future performance. Forward-looking statements may be identified by the use of words like "expect," "anticipate," “believe,” "intend," "forecast," "outlook," "will," "may," "might," "see," "tend," "assume," "potential," "likely," "target," "plan," "contemplate," "seek," "attempt," "should," "could," "would" or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions, our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Factors that might cause future results to differ from those expressed by the forward-looking statements include, but are not limited to, our ability to successfully execute our transformation strategy and business strategy; our ability to integrate acquired businesses; global supply chain volatility and increased costs or disruption in the supply of raw materials; increased energy costs or costs for transportation of our products; the nature of investment opportunities presented to the Company from time to time; the outcome of the European Commission’s request for information; and those discussed in our Annual Report on Form 10-K, under Part I, Item 1A —"Risk Factors" and elsewhere in our other reports, filings and furnishings made with the U.S. Securities and Exchange Commission from time to time. As a result of these or other factors, our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. Therefore, we caution you against relying on any of these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
TRINSEO PLC
Condensed Consolidated Statements of Operations
(In millions, except per share data)
(Unaudited)
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | Nine Months Ended | ||||||||
| | | September 30, | | September 30, | ||||||||
| | 2022 | 2021 | 2022 | 2021 | ||||||||
| Net sales | $ | 1,178.1 | $ | 1,269.3 | $ | 3,990.3 | $ | 3,529.0 | ||||
| Cost of sales | | 1,217.6 | | 1,101.0 | | 3,714.8 | | 2,951.7 | ||||
| Gross profit (loss) | | (39.5) | | 168.3 | | 275.5 | | 577.3 | ||||
| Selling, general and administrative expenses | | 80.5 | | 76.4 | | 262.8 | | 230.4 | ||||
| Equity in earnings of unconsolidated affiliates | | 22.8 | | 17.1 | | 83.8 | | 70.2 | ||||
| Other charges | | | 1.9 | | | 1.2 | | | 39.5 | | | 3.0 |
| Operating income (loss) | | (99.1) | | 107.8 | | 57.0 | | 414.1 | ||||
| Interest expense, net | | 30.4 | | 23.0 | | 77.7 | | 56.6 | ||||
| Acquisition purchase price hedge loss | | — | | — | | — | | 22.0 | ||||
| Other expense (income), net | | | 0.5 | | | (0.1) | | | 1.6 | | | 8.4 |
| Income (loss) from continuing operations before income taxes | | | (130.0) | | | 84.9 | | | (22.3) | | | 327.1 |
| Provision for (benefit from) income taxes | | | (12.1) | | | 5.5 | | | 41.4 | | | 48.9 |
| Net income (loss) from continuing operations | | | (117.9) | | | 79.4 | | | (63.7) | | | 278.2 |
| Net income (loss) from discontinued operations, net of income taxes | | (1.9) | | 13.7 | | (1.9) | | 38.0 | ||||
| Net income (loss) | | $ | (119.8) | | $ | 93.1 | | $ | (65.6) | | $ | 316.2 |
| Weighted average shares- basic | | | 35.2 | | | 38.8 | | | 36.3 | | | 38.7 |
| Net income (loss) per share- basic: | | | | | | | | | | | | |
| Continuing operations | | $ | (3.35) | | $ | 2.04 | | $ | (1.76) | | $ | 7.19 |
| Discontinued operations | | | (0.06) | | | 0.35 | | | (0.05) | | | 0.98 |
| Net income (loss) per share- basic | | $ | (3.41) | | $ | 2.39 | | $ | (1.81) | | $ | 8.17 |
| Weighted average shares- diluted | | 35.2 | | 39.5 | | 36.3 | | 39.6 | ||||
| Net income (loss) per share- diluted: | | | | | | | | | | | | |
| Continuing operations | | $ | (3.35) | | $ | 2.01 | | $ | (1.76) | | $ | 7.03 |
| Discontinued operations | | | (0.06) | | | 0.35 | | | (0.05) | | | 0.96 |
| Net income (loss) per share- diluted | | $ | (3.41) | | $ | 2.36 | | $ | (1.81) | | $ | 7.99 |
TRINSEO PLC
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | September 30, | | December 31, | ||
| | 2022 | | 2021 | |||
| Assets | | | | | ||
| Cash and cash equivalents | | $ | 242.8 | | $ | 573.0 |
| Accounts receivable, net of allowance | | 673.7 | | 740.2 | ||
| Inventories | | 614.0 | | 621.0 | ||
| Other current assets | | 40.5 | | 44.3 | ||
| Investments in unconsolidated affiliates | | 269.2 | | 247.8 | ||
| Property, plant, equipment, goodwill, and other intangible assets, net | | 2,094.9 | | | 2,252.9 | |
| Right-of-use assets - operating, net | | | 74.8 | | | 85.3 |
| Other long-term assets | | 122.0 | | 147.7 | ||
| Total assets | | $ | 4,131.9 | | $ | 4,712.2 |
| Liabilities and shareholders’ equity | | | | | | |
| Current liabilities | | | 717.6 | | | 914.4 |
| Long-term debt, net of unamortized deferred financing fees | | 2,297.8 | | 2,305.6 | ||
| Noncurrent lease liabilities - operating | | | 59.3 | | | 69.2 |
| Other noncurrent obligations | | 359.1 | | 409.9 | ||
| Shareholders’ equity | | | 698.1 | | | 1,013.1 |
| Total liabilities and shareholders’ equity | | $ | 4,131.9 | | $ | 4,712.2 |
TRINSEO PLC
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | Nine Months Ended | ||||
| | | September 30, | ||||
| | 2022 | 2021 | ||||
| Cash flows from operating activities | | | ||||
| Cash provided by operating activities - continuing operations | | $ | 10.8 | | $ | 218.7 |
| Cash provided by (used in) operating activities - discontinued operations | | | (1.4) | | | 19.5 |
| Cash provided by operating activities | | | 9.4 | | | 238.2 |
| | | | | | | |
| Cash flows from investing activities | | | | | | |
| Capital expenditures | | (94.0) | | (64.7) | ||
| Cash paid for asset or business acquisitions, net of cash acquired ($1.0 and $12.1) | | | (22.2) | | | (1,806.6) |
| Proceeds from the sale of businesses and other assets | | 5.3 | | 0.2 | ||
| Proceeds from (payments for) the settlement of hedging instruments | | | 1.9 | | | (14.7) |
| Cash used in investing activities - continuing operations | | | (109.0) | | | (1,885.8) |
| Cash used in investing activities - discontinued operations | | | (0.8) | | | (3.3) |
| Cash used in investing activities | | (109.8) | | (1,889.1) | ||
| | | | | | | |
| Cash flows from financing activities | | | | | | |
| Deferred financing fees | | — | | (35.0) | ||
| Short-term borrowings, net | | (12.2) | | (11.6) | ||
| Purchase of treasury shares | | | (151.9) | | | — |
| Dividends paid | | | (36.3) | | | (9.5) |
| Proceeds from exercise of option awards | | | 2.9 | | | 10.5 |
| Withholding taxes paid on restricted share units | | | (3.1) | | | (0.8) |
| Repurchases and repayments of long-term debt | | | (12.9) | | | (7.1) |
| Net proceeds from issuance of 2028 Term Loan B | | | — | | | 746.3 |
| Net proceeds from issuance of 2029 Senior Notes | | | — | | | 450.0 |
| Proceeds from Accounts Receivable Securitization Facility | | — | | 150.0 | ||
| Repayments of Accounts Receivable Securitization Facility | | — | | (20.0) | ||
| Cash provided by (used in) by financing activities | | (213.5) | | 1,272.8 | ||
| Effect of exchange rates on cash | | (16.3) | | (3.1) | ||
| Net change in cash, cash equivalents, and restricted cash | | (330.2) | | (381.2) | ||
| Cash, cash equivalents, and restricted cash—beginning of period | | 573.0 | | 588.7 | ||
| Cash, cash equivalents, and restricted cash—end of period | | $ | 242.8 | | $ | 207.5 |
| Less: Restricted cash | | | — | | | — |
| Cash and cash equivalents—end of period | | $ | 242.8 | | $ | 207.5 |
TRINSEO PLC
Notes to Condensed Consolidated Financial Information
(Unaudited)
Note 1: Net Sales by Segment
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | Nine Months Ended | ||||||||
| | | September 30, | | September 30, | ||||||||
| (In millions) | | 2022 | 2021 | 2022 | 2021 | |||||||
| Engineered Materials | $ | 242.7 | $ | 230.8 | $ | 839.2 | $ | 477.5 | ||||
| Latex Binders | | 340.9 | | 315.6 | | 1,001.3 | | 877.6 | ||||
| Base Plastics | | | 293.4 | | | 393.3 | | | 1,051.8 | | | 1,119.3 |
| Polystyrene | | 247.7 | | 274.8 | | 877.7 | | 855.0 | ||||
| Feedstocks | | 53.4 | | 54.8 | | 220.3 | | 199.6 | ||||
| Americas Styrenics* | | — | | — | | — | | — | ||||
| Total Net Sales | | $ | 1,178.1 | | $ | 1,269.3 | | $ | 3,990.3 | | $ | 3,529.0 |
* The results of this segment are comprised entirely of earnings from Americas Styrenics, our 50%-owned equity method investment. As such, we do not separately report net sales of Americas Styrenics within our condensed consolidated statements of operations.
Note 2: Reconciliation of Non-GAAP Performance Measures to Net Income
EBITDA is a non-GAAP financial performance measure, which is defined as income from continuing operations before interest expense, net; income tax provision; depreciation and amortization expense. We refer to EBITDA 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 charges; acquisition related costs and benefits, and other items. In doing so, we are providing management, investors, and credit rating agencies with an 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 (Loss) and Adjusted EPS as additional performance measures. Adjusted Net Income (Loss) is calculated as Adjusted EBITDA (defined beginning with net income from continuing operations, 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 stakeholders 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. As such, they should not be used as alternatives to net income as indicators of operating performance. 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 | | ||||
| | | September 30, | | ||||
| (In millions, except per share data) | 2022 | 2021 | | ||||
| Net income (loss) | | $ | (119.8) | $ | 93.1 | | |
| Net income (loss) from discontinued operations | | | (1.9) | | | 13.7 | |
| Net income (loss) from continuing operations | | $ | (117.9) | | $ | 79.4 | |
| Interest expense, net | | 30.4 | | 23.0 | | ||
| Provision for (benefit from) income taxes | | (12.1) | | 5.5 | | ||
| Depreciation and amortization | | 45.9 | | 49.8 | | ||
| EBITDA | | $ | (53.7) | | $ | 157.7 | |
| Restructuring and other charges | | — | | 0.2 | Selling, general, and administrative expenses | ||
| Acquisition transaction and integration net costs (a) | | | 0.4 | | | 13.6 | Cost of goods sold; Selling, general, and administrative expenses |
| Asset impairment charges or write-offs | | | 1.9 | | | 1.2 | Other charges |
| Other items (b) | | 14.8 | | 0.7 | Selling, general, and administrative expenses; Other expense, net | ||
| Adjusted EBITDA | | $ | (36.6) | | $ | 173.4 | |
| Adjusted EBITDA to Adjusted Net Income (Loss): | | | | | | | |
| Adjusted EBITDA | | | (36.6) | | | 173.4 | |
| Interest expense, net | | | 30.4 | | | 23.0 | |
| Provision for (benefit from) income taxes - Adjusted (c) | | | (9.6) | | | 24.7 | |
| Depreciation and amortization - Adjusted (d) | | | 45.1 | | | 46.1 | |
| Adjusted Net Income (Loss) | | $ | (102.5) | | $ | 79.6 | |
| Weighted average shares- diluted | | | 35.2 | | | 39.5 | |
| Adjusted EPS | | $ | (2.91) | | $ | 2.01 | |
| | | | | | | | |
| Adjusted EBITDA by Segment: | | | | | | | |
| Engineered Materials | | $ | 7.5 | | $ | 32.7 | |
| Latex Binders | | | 31.0 | | | 37.1 | |
| Base Plastics | | | (14.9) | | | 87.9 | |
| Polystyrene | | | 18.7 | | | 51.2 | |
| Feedstocks | | | (78.0) | | | (27.6) | |
| Americas Styrenics | | | 22.8 | | | 17.1 | |
| Corporate Unallocated | | | (23.7) | | | (25.0) | |
| Adjusted EBITDA | | $ | (36.6) | | $ | 173.4 | |
| (a) | Acquisition transaction and integration net costs for the three months ended September 30, 2022 and 2021 primarily relate to expenses incurred for the Company’s acquisition and integration of the PMMA business and Aristech Surfaces Acquisitions. |
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| (b) | Other items for the three months ended September 30, 2022 and 2021 primarily relate to fees incurred in conjunction with certain of the Company’s strategic initiatives, as well as costs related to our transition to a new enterprise resource planning system. |
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| (c) | Adjusted to remove the tax impact of the items noted within the table above. 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. |
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| (d) | Amounts for the three months ended September 30, 2022 and 2021 exclude accelerated depreciation of $0.8 million and $3.7 million, respectively, related to the shortening of the useful life of certain IT assets related to the Company’s transition to a new enterprise resource planning system. |
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For the same reasons discussed above, we are providing the following reconciliation of forecasted net income (loss) to forecasted Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS for the full year ended December 31, 2022. See “Note on Forward-Looking Statements” above for a discussion of the limitations of these forecasts.
| | | |
|---|---|---|
| | | Year Ended |
| | | December 31, |
| (In millions, except per share data) | | 2022 |
| Adjusted EBITDA | $ | 325 - 375 |
| Interest expense, net | (113) | |
| Provision for income taxes | (35) - (50) | |
| Depreciation and amortization | (200) | |
| Reconciling items to Adjusted EBITDA (e) | (103) | |
| Net Income (Loss) from continuing operations | (126) - (91) | |
| Reconciling items to Adjusted Net Income (Loss) (e) | 107 | |
| Adjusted Net Income (Loss) | $ | (19) - 16 |
| | | |
| Weighted average shares - diluted (f) | | 36.3 |
| EPS from continuing operations - diluted ($) | $ | (3.47) - (2.51) |
| Adjusted EPS ($) | $ | (0.52) - 0.44 |
| (e) | Reconciling items to Adjusted EBITDA and Adjusted Net Income (Loss) 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 and, as a result, cannot be estimated without unreasonable cost or uncertainty. As such, for the forecasted full year ended December 31, 2022, we have only included known reconciling items incurred through the nine months ended September 30, 2022. We have not included forecasted amounts for the remainder of 2022. |
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| (f) | Weighted average shares presented for the purpose of forecasting EPS and Adjusted EPS assume that the Company will be in a full year 2022 net loss position, and therefore excludes the impact of potentially dilutive shares, as the inclusion of said shares would have an anti-dilutive effect. Further, the weighted average shares presented do not forecast significant future share transactions or events, such as repurchases, significant share-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 EPS and Adjusted EPS during actual future periods. |
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Note 3: Reconciliation of Non-GAAP Liquidity Measures to Cash from Operations
The Company uses certain measures, such as Free Cash Flow as non-GAAP measures, 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 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 useful analytical indicators of our ability to service our indebtedness, pay dividends (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 alternatives 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 following detail, which is determined in accordance with GAAP.
Free Cash Flow
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | Nine Months Ended | ||||||||
| | | September 30, | | September 30, | ||||||||
| (In millions) | | 2022 | | 2021 | | 2022 | 2021 | |||||
| Cash provided by operating activities | $ | 97.6 | $ | 208.2 | $ | 9.4 | $ | 238.2 | ||||
| Capital expenditures | | (38.5) | | (35.7) | | (94.8) | | (68.0) | ||||
| Free Cash Flow | | $ | 59.1 | | $ | 172.5 | | $ | (85.4) | | $ | 170.2 |
For the same reasons discussed above, we are providing the following reconciliation of forecasted cash provided by operations and cash used for capital expenditures to forecasted Free Cash Flow for the year ended December 31, 2022. See “Note on Forward-Looking Statements” above for a discussion of the limitations of these forecasts.
| | | | |
|---|---|---|---|
| | | Year Ended | |
| (In millions) | | December 31, 2022 | |
| Cash provided by operating activities | $ | ~150 | |
| Capital expenditures | | ~(150) | |
| Free Cash Flow | | $ | ~0 |
Exhibit 99.2
| ™Trademark of Trinseo PLC or its affiliates<br>Third Quarter 2022 Financial Results & Full-Year 2022 OutlookNovember 2, 2022 |
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| 2<br>Introductions & Disclosure RulesDisclosure RulesCautionary Note on Forward-Looking Statements.This presentation may contain forward-looking statements including, without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and otherstatements, which are not statements of historical facts or guarantees or assurances of future performance. Forward-looking statements may be identified by the use of words like "expect," "anticipate," "intend," "forecast," "outlook," "will," "may," "might," "see," "tend," "assume," "potential," "likely," "target," "plan," "contemplate," "seek," "attempt," "should," "could," "would" or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent<br>uncertainties, risks and changes in circumstances that are difficult to predict. Factors that might cause future results to differ from those expressed by the forward-looking statements include, but are not limited to, our ability to successfully execute our transformation strategy and business strategy; our ability to integrate acquired businesses;<br>global supply chain volatility and increased costs or disruption in the supply of raw materials; increased energy costs or costsfor transportation of our products; the nature of investment opportunities presented to the Company from time to time; the outcome of the European Commission’s request for information, and those discussed in our Annual Report on Form 10-K, under Part I, Item 1A —"Risk Factors" and elsewhere in our other reports, filings and furnishings made with the U.S. Securities and<br>Exchange Commission from time to time. As a result of these or other factors, our actual results, performance or achievementsmay differ materially from those contemplated by the forward-looking statements. Therefore, we caution you against relying on any of these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.This presentation contains financial measures that are not in accordance with generally accepted accounting principles in theUS(“GAAP”) including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Free Cash Flow. We believe these measures provide relevant and meaningful information to investors and lenders about the ongoing operating results and liquidity position of the Company. Such measures when referenced herein should not beviewed as an alternative to GAAP measures of performance or liquidity, as applicable. We have provided a reconciliation of these measures to the most comparable GAAP metric alongside of the respective measure or otherwise in the Appendix section and in the accompanying press release.Introductions•Frank Bozich, President & CEO•David Stasse, Executive Vice President & CFO•Andy Myers, Director of Investor Relations |
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| Summary<br>2022 Outlook<br>Q3 2022 Results•Q3 cash provided by operations of $98 million led to Free Cash Flow* of $59 million•Working capital release of $166 million attributed mostly to a sharp decline in raw material costs•Q3 ending cash of $243 million with over $500 million of additional available liquidity under<br>two undrawn, committed financing facilitiesCash Generation & Liquidity•Net loss from continuing operations of $126 million to $91 million and Adjusted EBITDA* of $325 million to $375 million•Cash from operations of approximately $150 million and Free Cash Flow* approximately<br>breakeven<br>•Evaluating potential closure of styrene production site in Boehlen, Germany•Optimizing polycarbonate production and supply chain for downstream compounding<br>including potential closure of one PC production line in Stade, Germany –expect lower costs and greatly reduced exposure to the merchant PC market•Evaluating restructuring of PMMA sheet business in North America•Considering capacity reduction of SB latex in Hamina, Finland plant –mid-2023•Styrenicsbusiness sales process remains paused; still integral part of transformationKey Initiatives•Net loss from continuing operations of $118 million; Adjusted EBITDA* of negative $37 million•Economic uncertainty and falling raw material prices caused customer destocking and weak demand, particularly in Europe and in global construction and consumer durable applications•Significant margin pressure in Europe from higher energy costs, reduced demand and ample<br>supply3* See Appendix for a reconciliation of non-GAAP measures |
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| Europe$613 U.S.$313 Asia-Pacific$219 Rest of World$34<br>Q3 Sales and Volume Summary<br>Europe<br>Weaker demand environment from geopolitical uncertainty and inflationary pressure led to<br>destocking especially in building & construction and consumer durable applicationsNorth America<br>Resilient demand in automotive and paper & board with lower demand in building & construction and consumer durable applicationsAsia<br>Sequentially similar demand with no significant improvement as COVID-19 lockdowns persistedSales VolumeYoY: (16%)Sales VolumeYoY: 0%Sales VolumeYoY: (22%)Net SalesGlobal $1,178Sales VolumeYoY: (16%)Net sales in $millionsVolume variances exclude Feedstocks segment4 |
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| Sustainability Highlights<br>PMMA Chemical Recycling Collaboration Announced with Japan Steel Works Europe•Japan Steel Works will supply a depolymerization extruder and technology while<br>Trinseo will source PIR/PCR PMMA waste as feedstock to produce recycled MMA•Recycled MMA will be used in the development of circular PMMA solutions for<br>various applications including automotive, building & construction, lighting, appliances and sanitary wareMemorandum of Understanding signed with Ferroglobeto jointly develop high-silicon anode solutions for electric vehicle batteries•Goal of improving battery performance by optimizing battery charge cycles•Combines Trinseo’s expertise in latex binders solutions with Ferroglobe’stechnology of highly purified silicon powder in micrometer and sub-micrometer sizes<br>Aristech Surfaces named Small Employer of the Year by Disabled American Veterans for its support of military veterans through recruiting, hiring and training practices<br>5 |
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| 6Trinseo Q3 2022 Financial Results**From continuing operations; ** See Appendix for a reconciliation of non-GAAP measures<br>•Lower year-over-year volume caused by a combination of geopolitical uncertainty in Europe, continued COVID-19 shutdowns in China, pullback in residential construction in the U.S. and customer destocking amid a weaker economic landscape and steep declines in raw material prices•Higher energy costs and low demand led to significant margin contraction•Q3 results included $24 million unfavorable negative net timing and one-time charges of $23 million related to raw material contract obligations and write-downs for slow-moving inventory<br>($3.35)($2.91)$2.01 $2.01 Diluted EPSAdj EPS**EPS ($)<br>Q3'22<br>Q3'21<br>$1,178 ($118)$1,269 $79 Net SalesNet Income<br>Net Sales & Net Income ($MM)<br>Q3'22<br>Q3'21<br>Net Sales<br>($37)$173 Q3'22Q3'21Adjusted EBITDA** ($MM)<br>VolPriceFXPortfolioTotal(18%)11%(2%)2%(7%) |
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| 7Engineered Materials<br>•Adjusted EBITDA impacted by reduced demand, particularly in Europe and in building & construction applications, seasonally lower ammonium sulfate sales, as well as lower margin, including the inability to pass through historically high utility costs•Sales volume of PMMA/ABS co-lamination up 20% year-to-date: a differentiated offering that helps customers achieve their sustainability goals<br>$243$231Q3'22Q3'21Net Sales ($MM)<br>$8$33Q3'22Q3'21Adjusted EBITDA ($MM)<br>5053Q3'22Q3'21Volume (kt)<br>VolPriceFXPortfolioTotal(13%)8%(1%)11%5%<br>Excluding portfolio change (Aristech Surfaces), volume declined 11% |
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| 8Latex Binders<br>•Higher pricing from passthrough of raw material costs and commercial excellence actions•Lower year-over-year volume from demand downturn in residential construction impacted carpet and construction applications•Stable demand for paper & board applications•Volume to CASE applications down 6% year-to-date as growth in Asia was more than offset by reduced demand in Europe<br>$341$316<br>Q3'22<br>Q3'21<br>Net Sales ($MM)<br>$31$37<br>Q3'22<br>Q3'21<br>Adjusted EBITDA ($MM)<br>132141Q3'22Q3'21Volume (kt)<br>VolPriceFXTotal(6%)19%(4%)8% |
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| 9Base Plastics<br>•Lower year-over-year volume from reduced demand, particularly in building & construction and consumer durable applications, and improved supply for ABS and polycarbonate products•Europe margins pressured by low demand and available supply; polycarbonate unable to fully pass through higher energy costs<br>$293$393Q3'22Q3'21Net Sales ($MM)<br>($15)$88<br>Q3'22<br>Q3'21<br>Adjusted EBITDA ($MM)<br>100135<br>Q3'22<br>Q3'21<br>Volume (kt)<br>VolPriceFXTotal(27%)5%(4%)(25%) |
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| 10Polystyrene<br>•Lower year-over-year volume and margin due to customer destocking and reduced demand for appliances and building & construction applications as well as improved supply, including new capacity in China•Price increase from the pass through of higher styrene cost•Continued, robust growth in recycled-material-containing offerings with margin premium<br>$248$275Q3'22Q3'21Net Sales ($MM)<br>$19$51Q3'22Q3'21Adjusted EBITDA ($MM)<br>124154Q3'22Q3'21Volume (kt)<br>VolPriceFXTotal(20%)10%0%(10%) |
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| 11Feedstocks & Americas Styrenics<br>•Significantly lower margins from weak demand and historically high energy costs in Europe•$23 million unfavorable net timing impact in Q3<br>2022<br>($78)($28)Q3'22Q3'21Adjusted EBITDA ($MM)<br>FEEDSTOCKS<br>AMERICAS STYRENICS<br>$23$17Q3'22Q3'21Adjusted EBITDA ($MM)<br>•Higher year-over-year margins partially offset by lower volume; prior year results included an $8<br>million impact from Hurricane Ida |
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| $665 $500 $738 $447 202220232024 TermLoan2025SeniorNotes202620272028 TermLoan2029SeniorNotes<br>Debt and Liquidity Overview (as of Sep 30, 2022)12<br>$243 $150 $369<br>Cash and Borrowing Facilities ($millions)*<br>Cash On HandAR SecuritizationRevolvingCreditFacility*2026 Revolving Facility with $375.0 million borrowing capacity and available funds of $369.2 million (net of $5.8 million outstanding letters of credit) as well as the Accounts Receivable Securitization Facility with borrowing capacity of $150.0 million. Debt Maturity Schedule ($millions)<br>SeptemberSeptemberMayApril$762MM Combined Cash and Borrowing Facilities |
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| 13Q4 & FY 2022 Earnings Guidance Update•Full-year 2022 net loss from continuing operations of $126 million to $91 million and Adjusted EBITDA of $325 million to $375 millionFourth Quarter 2022 vs. Prior Quarter<br>•Similar market conditions are expected to continue in Q4, but significant<br>sequential improvement expected due to:•Styrene asset idling with expected sequential benefit of ~$35 million•Non-repeating Q3 charges of $23 million for minimum raw material purchase<br>agreement and inventory write-downs•Minimal net timing expected following negative $24 million impact in Q3*For the definition of Adjusted EBITDA, refer to the accompanying press release furnished as Exhibit 99.1 to our Form 8-K dated November 2, 2022. |
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| 14FY 2022 Cash Flow GuidanceCash from Operations of approximately $150 millionFree Cash Flow* approximately breakeven•Capital Expenditures: $150 million –includes $70 million for ERP implementation and upgrade of plant control rooms•Cash Interest: $110 million•Cash Taxes: $100 million (includes $25 million paid for gain on Synthetic Rubber sale)•Project & One-Time Costs: $60 million •Working capital expected to be positive for full year following large release in the second half of the year from steep raw material price declines, lower sales and inventory control |
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| Appendix |
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| 16Selected Segment Information<br>(in $millions, unless noted)Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21Q1'22Q2'22Q3'22<br>2019202020212022 YTD<br>Engineered Materials1213141512101316164353586060505351170170Latex Binders126128133129135115133131137139141135132138132516514553403Base Plastics152145136141131101139140143142135128134120100575511548355Polystyrene174149151144152171163160163150154145165141124619645612430Feedstocks886686897250596665544955465437329247223137Trade Volume (kt)5525025195185024475075135255285325215395144442,0911,9682,1061,496Engineered Materials495153564838506066181231277295301243210195755839Latex Binders2242302302192191651832002513113163063073543419037671,1831,001Base Plastics3202962722682571512402693293973933793963622931,1569181,4981,052Polystyrene2282071981761831561671932673132752643183122488096991,119878<br>Feedstocks786575785624394773715573709753296166272220<br>Net Sales9008498277987635346797689861,2741,2691,2981,3871,4261,1783,3742,7454,8273,990Engineered Materials579108591282833263534831359576Latex Binders162020212116192117323720302931777710691Base Plastics3026261727(12)4050658288796946(15)99106314100Polystyrene17161661115203347515133452319547918387Feedstocks17(1)(0)(10)(17)(4)10144640(28)(25)414(78)6334(60)Americas Styrenics324026211014182523301722223923119679384Corporate(26)(21)(19)(20)(22)(17)(16)(26)(22)(24)(25)(24)(27)(21)(24)(85)(82)(96)(72)Adjusted EBITDA*918778453817101130184239173133178164(37)301285729305Adj EBITDA Variance AnalysisNet Timing** Impacts - Fav/(Unfav)<br>Engineered Materials(0)(0)(0)(0)(0)(1)0111(0)0(0)0(1)(1)02(1)Latex Binders(0)(1)11(3)(2)(1)0(16)32(2)3(3)71(5)(13)7Base Plastics(0)00(0)(1)(15)235(1)(1)81110(1)0(11)1119Polystyrene2(0)2(3)(4)(3)16510157(6)0(1)65Feedstocks314(5)(7)(8)215140(2)11319(23)31139Net Timing** Impacts - Fav/(Unfav)408(8)(15)(28)32585(1)73233(24)4(16)1940*See this Appendix for a reconciliation of non-GAAP measures**Net Timing is the difference between Raw Material Timing and Price Lag. Raw Material Timing represents the timing of raw material cost changes flowing through cost of goods sold versus current pricing. Price Lag represents the difference in revenue between the current contractual price and the current period price. |
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| 17US GAAP to Non-GAAP Reconciliation<br>NOTE: For definitions of non-GAAP measures as well as descriptions of current period reconciling items from Net Income to Adjusted EBITDA and to Adjusted Net Income, refer to the accompanying press release furnished as Exhibit 99.1 to our<br>Form 8<br>-<br>K dated November 2, 2022. Totals may not sum due to rounding.<br>(in $millions, unless noted)Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21Q1'22Q2'22Q3'22<br>2019202020212022 YTD<br>Net Income (Loss)35.828.022.55.7(36.3)(128.4)105.866.771.5151.693.1123.816.737.4(119.8)92.07.9440.0(65.6)Net Income (Loss) from discontinued operations0.53.7(0.6)1.333.1(154.2)65.60.55.718.613.7122.4(0.4)0.3(1.9)4.9(54.8)160.4(1.9)Net Income (Loss) from continuing operations35.324.323.14.4(69.4)25.840.266.265.8133.079.41.417.137.1(117.9)87.162.7279.6(63.7)Interest expense, net10.29.99.310.010.311.710.011.612.021.623.022.821.925.430.439.343.679.477.7Provision for (benefit from) income taxes11.214.99.8(23.2)42.3(53.0)26.926.520.123.35.522.022.630.8(12.1)12.742.770.941.4Depreciation and amortization22.723.821.923.124.224.321.222.823.138.149.856.453.048.145.991.592.6167.5147.1EBITDA79.472.964.114.37.48.898.3127.1121.0216.0157.7102.6114.6141.4(53.7)230.6241.6597.4202.5Other items11.014.113.316.918.73.02.61.22.14.80.712.023.422.114.855.425.519.560.1Restructuring and other charges0.4(0.3)0.216.51.85.4(0.1)(1.5)0.36.30.22.20.4(1.5)- 16.85.69.0(1.0)Net gain on disposition of businesses and assets(0.2)--(0.5)(0.4)---(0.2)--(0.4)(0.3)(1.5)- (0.7)(0.4)(0.6)(1.8)Acquisition transaction and integration net costs-0.70.6(2.2)0.1(0.4)-9.46.043.213.612.53.22.70.4(0.9)9.175.36.2Acquisition purchase price hedge loss (gain)-------(7.3)55.0(33.0)---- - -(7.3)22.0-European Commission request for information------------35.6- - 35.6Asset impairment charges or write-offs----10.3--0.7-1.81.23.80.71.31.9-11.06.83.9Adjusted EBITDA90.687.478.245.037.916.8100.8129.6184.2239.1173.4132.7177.6164.5(36.6)301.2285.1729.4305.5Adjusted EBITDA to Adjusted Net Income<br>Adjusted EBITDA90.687.478.245.037.916.8100.8129.6184.2239.1173.4132.7177.6164.5(36.6)301.2285.1729.4305.5Interest expense, net10.29.99.310.010.311.710.011.612.021.623.022.821.925.430.439.343.679.477.7Provision for (benefit from) income taxes - Adjusted13.118.220.21.247.6(54.7)26.825.326.133.524.724.425.625.7(9.6)52.744.9108.741.7Depreciation and amortization - Adjusted22.222.320.822.723.023.021.222.823.037.446.152.950.947.245.188.090.1159.3143.2Adjusted Net Income45.137.027.911.1(43.0)36.842.869.9123.1146.679.632.679.266.2(102.5)121.2106.5382.043.0Wtd Avg Shares - Diluted (000)41,76241,10440,41039,43438,63238,28938,42138,95439,47939,64739,51739,48338,13936,99635,17640,71038,58139,57336,927Adjusted EPS - Diluted ($) 1.080.900.690.28(1.11)0.961.111.793.123.702.010.832.081.79(2.91)2.982.769.651.16Adjustments by Statement of Operations Caption<br>Cost of sales---0.4-----10.13.53.5--- 0.40.017.1-SG&A and Other Charges11.414.514.133.330.98.41.510.48.441.514.727.063.324.217.973.451.291.6105.2Acquisition purchase price hedge (gain) loss-------(7.3)55.0(33.0)---0.00.0-(7.3)22.0-Other expense (income), net(0.2)--(3.0)(0.4)(0.4)1.0(0.6)(0.2)4.5(2.5)(0.4)(0.3)(1.1)(0.8)(3.2)(0.4)1.4(2.2)Total EBITDA Adjustments11.214.514.130.730.58.02.52.563.223.115.730.163.023.117.170.643.5132.1103.0Free Cash Flow Reconciliation<br>Cash provided by (used in) operating activities153.280.840.947.6(5.8)81.651.9127.651.0(21.0)208.2214.4(5.1)(83.0)97.6322.5255.4452.79.4Capital expenditures(25.0)(22.6)(23.6)(38.9)(24.3)(23.8)(12.7)(21.4)(12.6)(19.7)(35.7)(55.4)(24.8)(31.5)(38.5)(110.1)(82.3)(123.5)(94.8)Free Cash Flow128.258.217.38.7(30.1)57.839.2106.238.4(40.7)172.5159.0(29.9)(114.5)59.1212.4173.1329.2(85.4) |
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| 18US GAAP to Non-GAAP Reconciliation(1)Reconciling items to Adjusted EBITDA and Adjusted Net Income (Loss) 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 and, as a result, cannot be estimated without unreasonable cost or uncertainty. For potential reconciling items to Adjusted EBITDA and Adjusted Net Income (Loss) during 2022 are not reflected.ProfitabilityOutlookCashOutlookNOTE: For definitions of non-GAAP measures as well as descriptions of current period reconciling items from Net Income (Loss) toAdjusted EBITDA and to Adjusted Net Income (Loss), refer to the accompanying press release furnished as Exhibit 99.1 to our Form 8-K dated November 2, 2022. Totals may not sum due to rounding.<br>Year Ended(In $millions, unless noted)<br>Dec 31, 2022<br>Adjusted EBITDA325 - 375Interest expense, net(113)Provision for income taxes(35) - (50)Depreciation and amortization(200)<br>Reconciling items to Adjusted EBITDA(1)(103)<br>Net Income (loss) from continuing operations(126) - (91)<br>Reconciling items to Adjusted Net Income (Loss) (1)107<br>Adjusted Net Income (Loss)(19) - 16Weighted avg shares - diluted (MM)36.3EPS - diluted ($)(3.47) - (2.51)Adjusted EPS ($)(0.52) - 0.44<br>Year EndedDec 31, 2022<br>Cash From Operations~150Capex<br>~(150)Free Cash Flow~0 |
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