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): July 19, 2021
Trinseo S.A.
(Exact name of registrant as specified in its charter)
| Luxembourg | 001-36473 | N/A |
|---|---|---|
| (State or other jurisdiction<br>of incorporation or organization) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification Number) |
1000 Chesterbrook Boulevard, Suite 300,
Berwyn, Pennsylvania 19312
(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<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
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. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| OrdinaryShares, par value $0.01 per share | TSE | New York Stock Exchange |
Item 7.01. Regulation FD Disclosure.
On July 19, 2021 Trinseo S.A., a public limited liability company (société anonyme) existing under the laws of Luxembourg (the “Company”), issued a press release announcing its entry into an agreement with SK AA Holdings, LLC, a Delaware limited liability company and the sole member of Aristech Surfaces LLC, a Kentucky limited liability company (“Aristech”), for the acquisition of the issued and outstanding membership interests of Aristech (the “Acquisition”). A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The Company announced that it will hold an investor call and webcast on Tuesday, July 20, 2021 at 8:00 a.m. Eastern Time to discuss the Acquisition. Ahead of this call the Company is also making available on its website an investor presentation which will be discussed on the call and which is furnished as Exhibit 99.2 hereto.
The information contained in Item 7.01 of this Current Report 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 Exhibits.
| ExhibitNumber | Description |
|---|---|
| 99.1 | Press Release dated July 19, 2021 |
| 99.2 | Investor Presentation dated July 19, 2021 |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRINSEO S.A. **** | ||
|---|---|---|
| By: | /s/ David Stasse | |
| Name: | David Stasse | |
| Title: | Executive Vice President and Chief Financial Officer | |
| Date: July 19, 2021 |
Exhibit 99.1
| Press Contact: | Investor Contact: |
|---|---|
| Trinseo | Trinseo |
| Dina Pokedoff | Andy Myers |
| Tel : +1 610-240-3307 | Tel : +1 610-240-3221 |
| Email: dpokedoff@trinseo.com | Email: aemyers@trinseo.com |
Trinseo to Acquire Aristech Surfaces LLC asPart of its Transformation to a Specialty Materials and Sustainable Solutions Provider
| · | Strengthens Trinseo’s strong position in acrylic solutions and drives expansion into wellness, niche leisure and architectural<br>end markets in key geographies, including Asia |
|---|---|
| · | Purchase price of $445 million; implied purchase multiple of 7.0x enterprise value / 2021 estimated Adjusted EBITDA including $50<br>million tax benefit from basis step-up and $10 million annual run-rate cost synergies |
| --- | --- |
| · | Transaction is expected to be growth, margin and cash flow accretive |
| --- | --- |
BERWYN, Pa — July19, 2021 — Trinseo (NYSE: TSE), a global materials company and manufacturer of plastics, latex binders and synthetic rubber, today announced its entry into an agreement with SK AA Holdings, LLC, an affiliate of Falcon Private Holdings, LLC (“Falcon”), to acquire Aristech Surfaces LLC (“Aristech”), a leading North America manufacturer and global provider of polymethyl methacrylates (PMMA) continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets.
“The acquisition of Aristech allows us to provide a full offering of PMMA technologies and innovative products that serve customers in new, high-growth markets,” said Frank Bozich, Trinseo President and Chief Executive Officer. “This is an important next step towards our goal of becoming a global specialty materials and sustainable solutions provider. We are eager to welcome the Aristech team and we believe the complementary technical capabilities and focus on customer relationships will drive superior results for the PMMA business globally.”
The transaction is expected to generate approximately $10 million in annual pretax cost synergies by 2024 and additional revenue synergies by leveraging Trinseo’s footprint and customer relationships in North America, Europe and Asia. The collective technical and commercial teams will work together to accelerate growth and deliver meaningful value to shareholders.
Aristech is a global leading producer of continuous cast acrylic sheet for the wellness, architectural, transportation and industrial markets. Aristech’s products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles. Aristech’s high margin profile and strong cash flow conversion is expected to drive long-term value for shareholders. The business will become part of Trinseo’s Engineered Materials segment.
The transaction is expected to be funded with cash on hand and existing credit facilities. Trinseo expects its net leverage ratio to be in the low-2x range at the end of the year, including proforma adjustments for the Synthetic Rubber divestiture and the Aristech and Arkema PMMA acquisitions. Trinseo anticipates the transaction will close by year-end 2021 subject to customary closing conditions and regulatory approvals.
Centerview Partners LLC is serving as financial advisor and Reed Smith LLP is serving as legal advisor to Trinseo in connection with the transaction. The Valence Group of Piper Sandler is acting as financial advisor and Morgan Lewis is acting as legal counsel to Falcon and Aristech.
Conference Call and Webcast Information
Trinseo will host a conference call to further discuss this announcement on Tuesday, July 20, 2021 at 8:00 a.m. Eastern Time.
Commenting on the call 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<br> Call Registration |
|---|
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.
For those interested in listening only, please register for the webcast using the following link:
| · | Webcast<br> Registration (available 20 minutes before the call) |
|---|
The presentation slides will be posted on the Company’s Investor Relations website and they will also be available in the webcast player prior to the conference call. The Company will also furnish copies of the 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 July 20, 2022.
About Trinseo
Trinseo (NYSE:TSE) is a global materials solutions provider and manufacturer of plastics, latex binders and synthetic rubber with a focus on delivering innovative, sustainable, and value-creating products that are intrinsic to our daily lives. Trinseo is dedicated to making a positive impact on society by partnering with like-minded stakeholders, and supporting the sustainability goals of our customers in a wide range of end-markets including automotive, consumer electronics, appliances, medical devices, packaging, footwear, carpet, paper and board, building and construction, and tires. Trinseo had approximately $3.0 billion in net sales in 2020. With the May 2021 acquisition of the PMMA business, the Company has 24 manufacturing sites around the world, and approximately 3,500 employees. For more information, please visit: www.trinseo.com.
Use of non-GAAP measures and Aristech financial information
In addition to using standard measures of performance and liquiditythat 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 EBITDA and measuresof liquidity excluding certain GAAP items, such as Free Cash Flow. We believe these measures are useful for investors and management inevaluating business trends and performance each period. These measures are also used to manage our business and assess current periodprofitability, as well as to provide an appropriate basis to evaluate the effectiveness of our pricing strategies. Such measures are notrecognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance or liquidity, as applicable.
Adjusted EBITDA is a non-GAAP financial performance measure, whichwe 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; restructuringcharges; acquisition related costs and benefits, and other items. In doing so, we are providing management, investors, and credit ratingagencies with an indicator of our ongoing performance and business trends, removing the impact of transactions and events that we wouldnot consider a part of our core operations.
Free Cash Flow is defined as cash from operating activities, lesscapital expenditures. We believe that Free Cash Flow provides an indicator of the Company’s ongoing ability to generate cash throughcore operations, as it excludes the cash impacts of various financing transactions as well as cash flows from business combinations thatare not considered organic in nature. We also believe that Free Cash Flow provides management and investors with useful analytical indicatorsof our ability to service our indebtedness, pay dividends (when declared), and meet our ongoing cash obligations.
The financial information of Aristech provided herein is unauditedand is derived from information provided to Trinseo by Aristech management in conjunction with ongoing due diligence procedures, includingprojected financial information of Aristech, for which the accompanying projected GAAP information was not provided to Trinseo managementas part of our due diligence procedures. This information has not been conformed to the accounting policies followed by Trinseo. Further,the definitions of performance and liquidity measures of Aristech, such as Adjusted EBITDA and Free Cash Flow, may not align with thedefinitions of Trinseo. As a result, it may be difficult to use these financial measures to compare the performance of Aristech and Trinseo’sperformance.
Cautionary Note on Forward-Looking Statements
This press release may contain forward-looking statements including,without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlyingassumptions and other statements, which are not statements of historical facts or guarantees or assurances of future performance. Forward-lookingstatements 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 evaluationof information currently available and are based on our current expectations and assumptions regarding the estimated and future resultsof operations, expected margins, growth potential and synergies relating to the acquisition of Aristech, and the timing and completionof the acquisition, our business, the economy and other future conditions. Because forward-looking statements relate to the future, theyare subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Factors that might cause sucha difference include, but are not limited to, our ability to successfully complete the Aristech acquisition or meet the conditions toclosing, including regulatory approvals, our ability to successfully integrate Aristech and its employees, to generate expected cost andrevenue synergies and expected margins, and to profitably grow the Aristech business, as well as those factors discussed in our AnnualReport on Form 10-K, under Part I, Item 1A —"Risk Factors" and elsewhere in our other reports, filings and furnishingsmade with the U.S. Securities and Exchange Commission from time to time. As a result of these or other factors, our actual results maydiffer materially from those contemplated by the forward-looking statements. Therefore, we caution you against relying on any of theseforward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. We undertakeno obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, exceptas otherwise required by law.
Exhibit 99.2
ΠTrademark of Trinseo S.A. or its affiliates Acquisition of Aristech Surfaces July 19, 2021
2 Presenters & Disclosure Rules Presenters • Frank Bozich, President & CEO • David Stasse, Executive Vice President & CFO • Andy Myers, Director of Investor Relations Disclosure Rules Cautionary Note on Forward - Looking Statements. This presentation may contain forward - looking statements including, without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underl yin g assumptions and other statements, which are not statements of historical facts or guarantees or assurances of future performa nce . 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," "c ould," "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 the estimated and future results of operations, expected margins, growth potential and synergies relating to the acquisition of Aristech Surfaces LLC (“Aristech”), and the t imi ng and completion of the acquisition, 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 pr edi ct. Factors that might cause such a difference include, but are not limited to, our ability to successfully complete the Aristech acquisi tio n or meet the conditions to closing, including regulatory approvals, our ability to successfully integrate Aristech and its employ ees , to generate expected cost and revenue synergies and expected margins, and to profitably grow the Aristech business, as well as those factors 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 thes e o r other factors, our actual results 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 stateme nt as a result of new information, future events or otherwise, except as otherwise required by law.
3 Disclosure (continued) Use of non - GAAP measures and Aristech financial information In addition to using standard measures of performance and liquidity that are recognized in accordance with accounting princip les generally accepted in the United States of America (“GAAP”), we use additional measures of income excluding certain GAAP item s (“non - GAAP measures”), such as Adjusted EBITDA and Adjusted EBITDA Margin and measures of liquidity excluding certain GAAP items, such as Free Cash Flow and Free Cash Flow Conversion. 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 pric ing 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. Adjusted EBITDA is 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; as set impairment charges; gains or losses on the dispositions of businesses and assets; restructuring charges; acquisition related cos ts and benefits, and other items. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue. 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. Free Cash Flow is defined as cash from operating activities, less capital expenditures. Free Cash Flow Conversion is defined as Adjusted EBITDA less Capital Expenditures, divided by Adjusted EBITDA. We believe that Free Cash Flow and Free Cash Flow Conversion provide an indicator of the Company’s ongoing ability to generate cash through core operations, as it excludes the ca sh impacts of various financing transactions as well as cash flows from business combinations that are not considered organic in nature. We also believe that these measures provide management and investors with useful analytical indicators of our ability to service our indebtedness, pay dividends (when declared), and meet our ongoing cash obligations. On July 19, 2021, Trinseo announced its entry into an agreement with SK AA Holdings, LLC, an affiliate of Falcon Private Holdings , LLC, to acquire Aristech Surfaces LLC, a leading North America manufacturer and global provider of polymethyl methacrylates (PMMA) continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets. The financial information of Aristech provided herein is unaudited and is derived from information provided to Trinseo by Aristec h management in conjunction with ongoing due diligence procedures, including projected financial information of Aristech, for w hic h the accompanying projected GAAP information was not provided to Trinseo management as part of our due diligence procedures. This information has not been conformed to the accounting policies followed by Trinseo. Further, the definitions of performan ce and liquidity measures of Aristech, such as Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Free Cash Flow Conversion, may not align with the definitions of Trinseo. As a result, it may be difficult to use these financial measures t o c ompare the performance of Aristech and Trinseo’s performance.
4 Third Step in Major Transformation to Become a Specialty Materials & Sustainable Solutions Provider Accelerates Growth in Asia Pacific Market and Drives Supply Chain Optimization Accretive to Earnings, Margins and Cash Flow in Year 1 Expansion into Wellness, Niche Leisure and Architectural Markets and Enables Full Offering of PMMA Sheet Technologies Continued Commitment to Strong Balance Sheet Acquisition Rationale
5 Financial Profile Terms & Valuation Financing Timing & Closing Conditions ▪ $445 million all cash acquisition ▪ 7.0x 2021E Adj EBITDA including tax basis step - up and run - rate synergies (1)(2) ▪ Transaction will be funded with cash on hand and existing credit facilities ▪ Expected net leverage ratio in the low 2x range at year - end 2021 (3) ▪ Transaction expected to close by year - end 2021 ▪ Subject to customary closing conditions and regulatory approvals ▪ Aristech 2021 estimated financials: – Revenue of $194 million – Adjusted EBITDA of $46 million – Adjusted EBITDA Margin of 24% – Free Cash Flow Conversion of 82% ▪ Tax basis step - up of approximately $50 million ▪ Expected $10 million annual run - rate pretax cost synergies achieved by 3rd year 1. Includes a reduction in purchase price value of $50 million for tax basis step - up. 2. Includes annual run - rate pretax cost synergies of $10 million. 3. Includes adjustments for Synthetic Rubber divestiture and Aristech and Arkema PMMA acquisitions. Transaction Summary
6 Leading producer of continuous cast acrylic sheet, operating 4 of 5 production lines in North America Specialized applications in niche high - end and high - margin markets, including wellness market, with sustainable, long - term growth; high correlation with building & construction High quality and highly differentiated continuous cast technology and material manufacturing process Strong track record of innovation and deep pipeline for continued growth Loyal customer relationships and powerful supply chain partnerships Acquisition Highlights Low capital expenditures leads to excellent margin profile and free cash flow conversion
7 ▪ Leading North America manufacturer of continuous cast acrylic and solid surface sheets – Continuous cast technology provides a unique capability to manufacture many sheets at a wide range of thickness & width ▪ Products are used primarily in the Wellness (hot tub, bath, swim spa), Architectural, and Transportation & Industrial markets ▪ Two manufacturing facilities located in Florence, KY & Belen, NM – The Florence facility is one of the largest continuous cast acrylic operations in the world with four continuous cast machines ▪ 290 total employees ▪ Long - tenured relationships with 90% of top 25 global customers under contract and ~80% of annual sales covered by multi - year supply agreements Aristech Overview Product Type 2021E Revenue Segmentation Geography Segment Americas 76% Asia 18% EMEA 6% Acrylic Sheet 80% Solid Surface 20% Wellness 76% Architectural 21% T&I 2% Key Highlights Other 1% Industry Leading Brands
8 Markets Architectural Transportation & Industrial Product Description Segment Key Growth Drivers ▪ Bath ▪ Acrylic sheets and reels with stain resistance and chemical protection ▪ Product Innovation Wellness Aristech End Market Overview Highly advanced, technical acrylic sheet serves applications and markets that often cannot be supported by other materials or manufacturing technologies ▪ Solid surface products for countertops and acrylic sheets for skylights, signs and walls ▪ Extending Core Channels ▪ Cross Selling ▪ Expanding Product Mix ▪ Countertops ▪ Signage ▪ Skylights ▪ Hot Tub ▪ Acrylic sheets and reels with enhanced thermoforming properties ▪ Growth in China ▪ Outdoor Leisure Market ▪ Swim Spa ▪ Acrylic sheets with superior sanitary properties and unique cross - linking to eliminate heat stress in polymerization ▪ Health & Wellness Trends ▪ Growth in China ▪ Continuous cast and modified acrylic for applications in transportation, electric vehicles and partitions ▪ RV ▪ Rail ▪ Aerospace ▪ Product Innovation
9 Third Step in Major Transformation to Become a Specialty Materials & Sustainable Solutions Provider Accelerates Growth in Asia Pacific Market and Drives Supply Chain Optimization Accretive to Earnings, Margins and Cash Flow in Year 1 Expansion into Wellness, Niche Leisure and Architectural Markets and Enables Full Offering of PMMA Sheet Technologies Continued Commitment to Strong Balance Sheet Closing Summary – Investment Thesis