Trinseo (TSE) 7 Nov 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Trinseo Third Quarter 2024 Financial Results Conference Call. We welcome the Trinseo management team, Frank Bozich, President and CEO; David Stasse, Executive Vice President and CFO; and Van Kessel, Senior Vice President of Corporate Finance and Investor Relations. Today's conference call will include brief remarks by the management team, followed by a question-and-answer session. The company distributed its press release along with the presentation slides at close of market Wednesday, November 6. These documents are posted on the company's Investor Relations website and furnished on a Form 8-K filed with the Securities and Exchange Commission [Operator instructions]. over Kessel. hand now will to Van I

Thank and good morning, everyone. you, Gavin,

disclosure on Slide note and statements Our cautionary on forward-looking rules are noted X.

issuing of described that actual we report forward-looking risk could differ future XA to presentation, includes and cause make include, measurements what company reconciliation results obligation in Commission. be undertakes We but certain guidance is these Relations and corresponding call after be revise to investor to financial no with of from including conference annual its Factors discussed, to, The the expectations. measurements. actual release replay you measures November of limited and Item this in A available our Investor company's of this results our earnings the implied and made will or in until will caution replay During differ must materially A X, is describing transcript Today's Form in website conference or may on call. provided in statements, factors could Exchange certain XXXX. appendix these or presentation. forth the that our The not update set filings XX-K non-GAAP GAAP shortly presentation our on our are statements. forward-looking statements. other Securities archived the

call to Bozich. Frank over the turn to like would I Now

Bee, third Thanks, call. XXXX our and welcome to earnings quarter

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I'd like Now turn to results. our to QX

in MMA conditions support to dynamics market to As and prior quarter. costs and continue similar healthier the our expected, margins were adjusted Materials supply Engineered segment. European input EBITDA moderating

many While improvement, particularly saw consumer resulting year-over-year demand of we profitability building and largely and remained weak in earlier restructuring significant actions. markets, our our from durables, end construction

consecutive our free will this flow turn quarter expected We as second in to positive and in is cash continue of free flow, trend anticipate sequential also had improvement QX. cash

Our unplanned Americas range. X during at third to facilities the EBITDA end guidance results quarter were the of outages which Styrenics negatively adjusted quarter, impacted our lower pushed of by production

sales in capital, While and this X% to polystyrene. and to by operations uneconomic Asia driven efforts year-over-year, in largely volumes working our decreased shed Europe in quarter plant optimize was the particularly

due This electronics excluding applications improved in a business and battery mix in higher-margin Engineered new flat product to X% increased applications wins binders. year, several volumes basically increase demand volumes in growth of and targeted latex for consumer prior However, and compounds higher polystyrene, versus in increase as while areas. our a volume were in case includes Materials XX%

of in a in prior products increased containing our the content larger offerings making we year success portfolio. year-to-date, recycled and and XX% of part sales QX continued our XX% seeing demonstrating Additionally, versus focus are sustainable

recycled of content-containing third total quarter. company the of margin sales in the products fact, In X% represented

quarter. the strategic of during the Now several like to I'd that took discuss actions we

and and uncertain we remains cost has additional of decisive structure. landscape third persisted, we the At restructuring action order business quarter, footprint ability growing more actions our expected footprint the run the XXXX. businesses, in polystyrene to growth to operate. functional $XX our included to macroeconomic we reductions end better and support costs position and reduce and from streamlined and in in will markets corporate the a will full organizational and of to million in higher-value announced of functions. combining by our rate We and currently Engineered result workforce our structure $XX smaller the continue resulting result a savings to cost demand reflect in of of plastic to core business of for the are weakness These the consolidation continue XXXX management This approximately this initiatives improve million believe our our take longer-term that in roles As in the fuel to offerings. management solutions savings Materials, end

Germany Stade, products with We the all our suppliers. Once have the production discussions we external polycarbonate for to councils. virgin from works relevant our facility also concluded, will announced purchase decision differentiated the downstream of at operations needs following our polycarbonate exit

previously recycled portion to polycarbonate polycarbonate continues $XX profitability that to will purchases expected in $XX in investing We we to replace by scale. external technology, polycarbonate stated, this million and a committed own technology of million comparison our developing dissolution grow As to as polycarbonate. our is our to annual to commercial remain producing with increase virgin which

Now Dav results. third our will discuss quarter

Thanks, Frank.

outages provided of had second facilities, income $XX prior operations of included negative $XX the Third was year flow for free million the million, Styrenics, similar by affiliate the quarter improved $XX a at $X $X business capital. cash Cash leading trade impact and which working was EBITDA across resulted higher equity to million X except Year-over-year million. in in than on results quarter. million This all segments, to quarter. which during adjusted unplanned negative quarter decrease during $XX million a Americas

higher ended third improvements. with continues quarter preservation significantly positive top liquidity be of in million free and total liquidity, $XXX $XXX expect million be X priority. of committed the Cash financing quarter seasonal cash our capital cash typical management facilities. We to and our fourth the We turn including and due to flow working to

I'll back Frank. turn the call to over Now

Thanks, Dave.

Looking ahead to expect quarter, to adjusted demand lower seasonally slower EBITDA. market in result we fourth the sequentially

with for are While line we the year. in our anticipate year, pronounced to October typical average compared the volumes a seasonality more year-end

we in well Americas operations However, to compared year of to prior as restructuring Styrenics. expect quarter initiatives benefits of higher at the profitability our full QX the as due

EBITDA $XX million. we to result, a expect QX $XX As of adjusted million

understand our due quarter uncertainty. We are pleased year-end how and and the that expectations will continued the macroeconomic fourth evolved in seasonality line more with challenging the third to quarter be

our core result drive However, at around should innovation for our year lower seasonal capital the liquidity productivity a want focus improvements position despite I the happy working continued their stronger and we're world to to continue in of to now and thank in questions. the profitability. to Trinseo technologies. dedication we the employees sequential your And as end take

your question of first Fermium [Operator from the from Mitsch Research. Instructions] Frank line comes And

us that That's unplanned negative Is smooth process? give sailing I to a on Frank, And take that as I'm in million for outages, going XQ about sales just as far is all appreciate XQ. Dave, there? behind that. and us the AmSty update can -- that $XX the all headwind is an you

maybe So just I'll those. answer both of

sign began CPChem We jointly expect our The the question process the both next QX. restarted contribution -- said see agreement we and from answer joint of contribution to is, market transaction the AmSty in status the a QX, first this us. So that's units, behind before, year. asset. -- The we to the is with we've would look, second -- half yes, and to of those we we a to full in continue have that a the in of process expect simple

it plan And XX any the that to utilize stands of update guess there on process the financing, I notes? Terrific. the And and timing revolver? now, is the sub revolver on May then to extension repay the is regarding as

$XXX $XXX cash next or September on transaction just for would So Frank, that. stub due handle refinancing so hand plan be is we either a the million have look, million, yes, clarity, use in to notes The year. of to --

we We are about to it. publicly at and have something more to look we'll when announce something say continuing concrete both,

the with Your TPH. from line Blair next of Matthew comes question

QX the regarding guide. Just

Plastic you potentially like Solutions tailwinds $XX then So expecting would up, could and provide But in more guess the bit getting in Materials, parts around call explanation pretty And and it, business. color just mentioned more a AmSty I that? be seems million. Engineered little as drop-offs approximately back from imply differentiated that the severe you're it of there'll well. binders latex seasonality some mean, some you I that the

would anticipating like factors conservative? is be there or fourth just net the timing Is just in other this you're So being that also Are seasonality? raw materials headwinds quarter? this any

bridge I'll with yes, you help look, the So that. on

midpoint you're right, of guide, our And the down, let's and million $XX $XX we're of AmSty. quarter-over-quarter. plus call at $XX million, million So it,

what $XX -- similarly. a fixed do and we year cost bridge a bridging that pronounced absorption lot is So explained shutdown our of of season running we're Frank operate by about said, is plants. related this half expect the Like will to million customers more at

fairly a quarter, me, preparing third excuse the building a fourth the up, drain the build So had a whereas the shutdown. we whereas we a inventory in third drain in had -- will buildup quarter, significant in have in quarter, we for

cost that really absorption. of lighter do margin half the demand is explained $XX bridge be to all fixed And due about expect rest is the that, to seasonality. across and just by of So businesses. We volume million just

that's been this during think a season. earnings I consistent theme

see that due timing know, with in or will negative so but standing would million we styrene bridge. should going prices to Matthew, I do I we today, So as just the help that down, $X the well. think, quarter, expect don't here

XXXX That does $XX what And just XXXX the a of cash in discrete other be restructuring a includes parts help. the of thinking flow? free from aside parts restructuring any cost. outlook, some cash EBITDA, should your Thank have with XXXX like there thinking then moving moving we on Do would about million you guidance XXXX? about are you. look flow And free sense

Yes.

XX of facility refer Slide spend where year for out that but expect as to related -- the XXXX. next our for well cash right, in in. that pieces cash spend number that we tailing our we from the the plants do list we on a this the shutdown million the off, So took I similar flow to charts be we $XX free you And corporate Obviously, styrene expect shutdown kick all restructuring. have Matthew, to to the actions the our we have will is I'd as -- year. Sa you're

versus 'XX and similar to So off then on the same other of all to 'XX. But this be drop expect 'XX. would be I materially in the in restructuring in expect pieces I 'XX materially bridge,

And $XXX So cetera. cash all million, those million. So the for will, right? year $XXX taxes, cash CapEx, up, turnaround, you et it's you if is this if add outflows,

of we to would flow EBITDA cash So be breakeven. $XXX million need

line item Now interest. that the I worth think one cash mentioning is is

Clearly, with the now. later have year. have million last an billion We we're -- Fed. But our I said $XXX easing $X.X happens of this on We'll floating think call this see what call, I we debt. cycle afternoon in as rate

reduction our points $XX basis million. interest XXX reduces every by cash So

So I next the $XXX cuts. the interest lower of would on to depending Fed cash year, expect Great. pace be of million

all I a cash drops puts So that our low breakeven up, that mean, XXXs I to like for I flow sum think type more our XXXX. number to think Matthew,

Jefferies the from comes from question final of line Laurence Alexander Your LLC.

you Can the for the sense Any for you some that kind just of innovation pent-up get are next give think of how customers we give how the bridge cycles on Can your once much first products seasonal for sense year? should kind through demand a would seeing side adjustments, for about year-end the next half forward? we about saying be year? demand of they're what pulling

material Laurence, been -- recently they a that at I've QX Monday, that declining customers hearing as as the environment. Yes, is raw see what is of I'm as sort

most there our inventory of general, not -- think so are QX. building for I waiting customers in And

the regulatory results about even I world. and more was the election also the across think environment there uncertainty some broadly

improvement hearing tone customers in our part a -- easing construction. portfolio. of rates modest so they most see I'm from their QX that And in the expect to be that outlooks. stronger And is they of their and interest expect know, they again, building us, construction in and you our pent-up is demand building is stimulate anticipation will big for and that and to Their as

at year, the would year is are say are in from while XXXX. positive bit not will just guidance we're outlook. I the give that next that modestly wins head because we think restructuring there benefits next into that -- the during have if we've I current we giving me Maybe not let known So on for a full about XXXX plus Those I accrue us that anticipate factors build only QX XXXX time, think that we year business achieved the today and initiatives, that achieve will AmSty. for as will support X fully

collectively expect X next are are that for EBITDA things into of year would next would front in those we the have adjusted factoring year. $XXX a be for And So that plus. a certainly the it, million improvement

management participating. would There today. you Thank conclude joining. no team I like Trinseia are and you for further for That thank all questions. does for our to the conference

You may now all disconnect.