Trinseo PLC · OTC:TSEOQ
Trinseo — Debt Investor Presentation (March 2021)
46 slides from Trinseo's debt investor presentation, Mar 10, 2021
Slide 1: Public Lenders Presentation March 10th, 2021
Public Lenders Presentation March 10th, 2021 ™Trademark of Trinseo S.A. or its affiliates
Slide 2: Disclaimer
Disclaimer Disclosure Rules Cautionary Note on Forward-Looking Statements. This presentation contains forward-looking statements including, without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other
Slide 3: Management Presenters
Management Presenters 3 [Pic] Frank Bozich President & Chief Executive Officer ▪Years of experience: 37 ▪Years at Trinseo: 2 [Pic] David Stasse Executive Vice President & Chief Financial Officer ▪Years of experience: 27 ▪Years at Trinseo: 7 [Pic] Ryan Leib Vice President & Treasurer ▪Years of experi
Slide 4: Table of Contents
Table of Contents 4 Appendix Section 6: Syndication Overview Section 5: Financial Overview Section 4: Key Investment Highlights Section 3: Transaction Rationale Section 2: Trinseo and PMMA Business Overview Section 1: Transaction Overview
Slide 5: Section 1: Transaction Overview
Section 1: Transaction Overview ™Trademark of Trinseo S.A. or its affiliates
Slide 6: Transaction Summary
Transaction Summary ▪ Trinseo S.A. (“Trinseo” or the “Company”) (NYSE: TSE) is a global materials company and manufacturer of plastics, latex binders and synthetic rubber with 2020 net sales and Adjusted EBITDA* of $3.0 billion and $299 million, respectively (9.9% Adjusted EBITDA margin*) On Decembe
Slide 7: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization (US$ in millions) 1. Reflects base purchase price of €1,137 million, less €20.3 million of estimated contractual reductions to the purchase price, including assumed pension liabilities, amount which is subject to change based upon the actual assets and lia
Slide 8: Section 2: Trinseo and PMMA Business Overview
Section 2: Trinseo and Overview PMMA Business ™Trademark of Trinseo S.A. or its affiliates
Slide 9: Trinseo Overview
Trinseo Overview ‘20 Adjusted EBITDA contribution*(2) • 32 manufacturing plants in 12 countries (USA, Germany, Belgium, South Korea, The Netherlands, etc.) 9 R&D facilities globally, including technology and innovation development centers Products are sold to customers in c.80 countries Holds leadin
Slide 10: PMMA Business Overview
PMMA Business Overview % Vol. (2019) • 7 plants across 5 countries (USA, Italy, France, Denmark, Mexico) End Market Applications • • • 2 R&D facilities in Europe and 1 in America c.300 customers across Americas and Europe Robust portfolio of brands with Plexiglas®, Altuglas®, Solarkote® and Oroglas®
Slide 11: PMMA Business – Product Segment Overview
PMMA Business – Product Segment Overview MMA PMMA Resins PMMA Sheets • • MMA is the raw material for PMMA and chemical intermediate PMMA is an engineering polymer: a transparent thermoplastic that can be processed in Resins or in Sheets (cast or extruded) Description • • • Production geographies USA
Slide 12: PMMA Resins Portfolio Snapshot
PMMA Resins Portfolio Snapshot Source: Derived from information provided by Arkema during transaction due diligence 12 Standard grades Differentiated products Upcoming products CatalogueCustomized CatalogueCustomized CatalogueCustomized Key products / applications • V grade – standard molding and ex
Slide 13: Automotive Applications for PMMA Products
Automotive Applications for PMMA Products Outdoor components Interior components PMMA technological PC as a competitor Levels of differentiation and need for specialty grades: (1) High Medium-High Low-Medium Low Mature Growing application Long term opportunity 1. 2. 3. Opportunities that will need m
Slide 14: Overview of PMMA Business' Asset Base
Overview of PMMA Business’ Asset Base High Quality Plant Key investments ’16-19 Plant Key investments ’16-19 • • • • • New sheet extrusion line NOx compliance Process safety Spare parts & DCS upgrade Infrastructure upgrade • • • • • Extruders overhaul / spare parts Pelletizing system replacement Con
Slide 15: Combined Company Snapshot (with synergies)
Combined Company Snapshot (with synergies)(1) (with synergies)(1) 55% Asia Pacific 0.3% 16% 1% AmSty Latex 16% Polystyrene Polystyrene Automotive Sheets MMA 3% 12% Construction / MMA 4% 17% Optical & Sheet Note: 1. Figures may not sum due to rounding Includes $50mm of estimated run-rate cost synergi
Slide 16: Combined Company Snapshot (continued)
Combined Company Snapshot (continued) •North America America 1. Excludes $50mm of estimated run-rate cost synergies; excludes $82mm of corporate segment Adjusted EBITDA * Refer to the appendix for definitions and reconciliations of non-GAAP measures Source: Company information 16 Feedstocks Polystyr
Slide 17: Shared Commitment to ESG
Shared Commitment to ESG ▪ ▪ ▪ ▪ Established ambitious 2030 Sustainability Goals Announced collaboration with Tyre Recycling Solutions Received Mass Balance Certification from ISCC On track to open first, commercial scale polystyrene recycling plant based on depolymerization in 2023 Formed Trinseo S
Slide 18: Section 3: Transaction Rationale
Section 3: Transaction Rationale ™Trademark of Trinseo S.A. or its affiliates
Slide 19: Acquisition Rationale
Acquisition Rationale 19 Commitment to Strong Balance Sheet and Disciplined Capital Allocation Significant Cost and Revenue Synergies and Triggers Transformation of IT Systems Highly Accretive to Earnings, Margins, Growth and Cash Flow, and Reduces Volatility Accelerates Growth in High Value Enginee
Slide 20: Trinseo's Transformation to a Downstream Specialty Solutions Provider
Trinseo’s Transformation to a Downstream Specialty Solutions Provider Building a Leading Specialties Business • Embarking on major transformation focused on becoming a downstream specialty solutions provider • Committed to higher growth, higher margin and less volatile portfolio PMMA Business Acquis
Slide 21: Defining the Transformation
Defining the Transformation Specialty businesses become ~50% of portfolio 0.3% 1% 13% 16% 16% 21% 33% 22% 16% Margin(1) Synthetic Rubber • PMMA business broadens and deepens the Engineered Materials product portfolio and shifts towards higher growth and margins vs. existing plastics portfolio PMMA b
Slide 22: Creates Value and Drives Significant Cost Savings and Business Process Transformation
Creates Value and Drives Significant Cost Savings and Business Process Transformation 3 Vectors of Synergy Value Creation ~$50mm Cost Synergies(1) (Manufacturing, supply chain, commercial, G&A, etc.) At least $25mm IT Optimization(2) (Implementation of ERP / IT systems upgrade and one-time optimizat
Slide 23: Significant Cost Synergies from PMMA Acquisition
Significant Cost Synergies from PMMA Acquisition Synergies are distributed across a broad range of functional areas run-rate Total Cost to • Cost avoidance through organizational leverage Implemented Business Excellence program, consisting of Commercial Excellence, Operational Excellence, Functional
Slide 24: Section 4: Key Investment Highlights
Section 4: Key Investment Highlights ™Trademark of Trinseo S.A. or its affiliates
Slide 25: Key Investment Highlights
Key Investment Highlights 1 Global leadership position across key business segments 2 Transformational plastics portfolio shifting into sustainable, high value engineered materials 3 Highly diversified customer base with strong, long-standing relationships 4 Complementary end markets with favorable
Slide 26: Global Leadership Position across Key Business Segments
Global Leadership Position across Key 1 Business Segments Top 4 Suppliers: 90% Other Top 4 Suppliers: 88% Other Rohm 27% 12% 10% Mitsubishi Chemical 9% Aristech Surfaces 11% Rohm 39% PMMA 19% PMMA 24% Plaskolite 27% Schweiter Technologies / 3A Composites 23% Americas Europe Molding / Cast Extruded M
Slide 27: Transformational Plastics Portfolio Shifting into Sustainable, High Value Engineered Materials
Transformational Plastics Portfolio Shifting into 2 Sustainable, High Value Engineered Materials • • • Broadens and deepens performance plastics product portfolio Bolsters market positions and elevates profile as leader in engineered materials Higher growth and margin vs. existing plastics portfolio
Slide 28: Highly Diversified Customer Base with Strong, Long-standing Relationships
Highly Diversified Customer Base with Strong, 3 Long-standing Relationships Top Customer Top Customer 6% 10% Top 2 - 5 Top 2 - 5 18% Top 6 - 10 9% Top 6 - 10 61% 62% Top 11 - 20 Rest Rest Trinseo and the PMMA business have strong and long-standing relationships with top manufacturers Trusted partner
Slide 29: Complementary End Markets with Favorable Growth Outlook
Complementary End Markets with Favorable 4 Growth Outlook Light vehicle sales Light vehicle production Industry perspectives (millions of units) (millions of units) In 2020, the Automotive industry was heavily impacted by COVID-19 due to the global shutdown of production facilities and decline in ve
Slide 30: Complementary End Markets with Favorable Growth Outlook (continued)
Complementary Growth Outlook End Markets with (continued) Favorable 4 Global building and construction market value Residential vs. nonresidential outlook Industry perspectives (US$ in billions) 2019 market value: $6,588bn The global building and construction industry is expected to grow at a CAGR o
Slide 31: High-Quality Asset Base Strategically Located Near Customers and in High Growth Regions
High-Quality Asset Base Strategically Located Near Customers and in High Growth Regions Production capabilities include 39 manufacturing plants across 15 countries with 12 R&D facilities Dow and Arkema heritage assets with strong track record of safety across plants, quality metrics and efficiency R
Slide 32: Technology Leadership with a Focus on Innovation
Technology Leadership with a Focus Innovation on 6 Selected achievements Long history of technology differentiation with formulation and compounding expertise 9 R&D facilities globally supported by technology and innovation centers including pilot plants, mini-plants and a plastics research center a
Slide 33: Attractive Financial Profile with Robust Cash Generation
Attractive Financial Profile Generation with Robust Cash 7 2020 Adjusted EBITDA margin* 13.5%(1) 74.6% 79.5% $391 $384 2019 PMMA business 2020 Trinseo Pro forma combined Trinseo Run-rate synergies Cash conversion*(2) 2020 cash conversion*(2) Trinseo’s margin profile stands to meaningfully benefit fr
Slide 34: Section 5: Financial Overview
Section 5: Financial Overview ™Trademark of Trinseo S.A. or its affiliates
Slide 35: Recent Trinseo Historical Performance
Recent Trinseo Historical Performance (US$ in millions) $3,776 $1,013 $952 $922 $889 $860 $854 Q1 Q2 Q3 Q4 2019 2020 2019 2020 $149 $352 $88 NM Q1 Q2 Q3 Q4 2019 2020 2019 2020 * Refer to the appendix for definitions and reconciliations of non-GAAP measures Source: Company information 35 9.3% $299 9.
Slide 36: PMMA Business Historical Financial Performance
PMMA Business Historical Financial Performance (EUR in millions) €541 €496 2019 2020 €152 2019 2020 Adjusted EBITDA % Adjusted EBITDA Margin 1. Includes estimated Adjusted EBITDA adjustments made by Trinseo to reflect the PMMA business on the same basis as Trinseo * Refer to the appendix for definit
Slide 37: Pro Forma Financial Profile
Pro Forma Financial Profile (US$ in millions) (1) $484 $3,595 $3,036 Trinseo Pro forma combined Trinseo Pro forma combined % Adjusted EBITDA margin* $384 $100 7% Trinseo Pro forma combined Trinseo Pro forma combined Cash conversion(2) % of Revenue Note: EUR / USD exchange rate of 1.138 for 2020 1. 2
Slide 38: Trinseo Business Update
Trinseo Business Update 38 •Strong demand environment from Q4 2020 has continued in all segments in Q1 2021 •Supply chain disruptions globally caused by unplanned outages, weather impacts in US Gulf Coast •Expect volume impact of these disruptions will be more than offset by higher margins in Q1 202
Slide 39: Section 6: Syndication Overview
Section 6: Syndication Overview ™Trademark of Trinseo S.A. or its affiliates
Slide 40: Summary Terms – Incremental Term Loan Facility
Summary Terms Incremental Term Loan Facility refinancing debt); and 50% of annual excess cash flow with step downs that match the existing credit agreement (same as 40 Borrower: Trinseo Materials Operating S.C.A. (the “Borrower”) (same as existing) Guarantees: The Incremental Term Loan Facility shal
Slide 41: Syndication Timeline
Syndication Timeline 41 DateEvents March 10th Lender conference call March 18th Lender commitments due (5pm ET) March 19th Pricing and allocation of term loan facility 1H May Targeted closing and funding May 2021 MonTuesWedThursFri 3 4 5 6 7 10 11 12 13 14 17 18 19 20 21 24 25 26 27 28 31 April 2021
Slide 42: Appendix
> ‘TRINSEO. Appendix
Slide 43: Trinseo – Non-GAAP Reconciliations
Trinseo – Non-GAAP Reconciliations Reconciling items to Adjusted EBITDA 72 76 Adjusted EBITDA Margin 9.3% 9.9% Cash Conversion 68.7% 72.5% Note: Amounts may not foot or recalculate due to rounding 1. For details of reconciling items to Adjusted EBITDA for the years ended December 31, 2020 and 2019,
Slide 44: PMMA business – Non-GAAP Reconciliations
PMMA business – Non-GAAP Reconciliations Note: Amounts may not foot or recalculate due to rounding 1. Includes estimated Adjusted EBITDA adjustments made by Trinseo to reflect the PMMA business on the same basis as Trinseo. These adjustments principally reflect (i) the elimination of Adjusted EBITDA
Slide 45: Pro forma – Non-GAAP Reconciliations
Pro forma – Non-GAAP Reconciliations Note: Amounts may not foot or recalculate due to rounding 1. Includes Trinseo's reconciling items to Adjusted EBITDA for the year ended December 31, 2020, as described within its Annual Report on Form 10-K, filed with the SEC on February 22, 2021 as well as other
Slide 46: Trinseo Quarterly Non-GAAP Reconciliations
Trinseo Quarterly Non-GAAP Reconciliations March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 Reconciling items to Adjusted EBITDA 59 9 5 4 Adjusted EBITDA Margin 6.7% (1.4%) 13.5% 17.3% Reconciling items to Adjusted EBITDA 11 15 14 32 Adjusted EBITDA Margin 10.1% 10.8% 9.6% 6.6% Note