Trinseo PLC · OTC:TSEOQ
Trinseo — Q4 2022 Earnings Presentation
23 slides from Trinseo's earnings presentation, Feb 8, 2023
Slide 1: Fourth Quarter 2022 Financial Results & 2023 Outlook
™Trademark of Trinseo PLC or its affiliates Fourth Quarter 2022 Financial Results & 2023 Outlook February 8, 2023
Slide 2: Introductions & Disclosure Rules
2 Introductions & Disclosure Rules Disclosure Rules Cautionary 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,
Slide 3: Summary: Q4 2022 Results and 2023 Outlook
Summary 2023 Outlook Q4 2022 Results • Q4 cash provided by operations of $34 million led to Free Cash Flow* of negative $20 million - included working capital release of $88 million and $34 million payment for European Commission settlement • 2022 ending cash balance of $212 million with $505 millio
Slide 4: 2022 In Review
2022 In Review • Completed acquisition of plastics collector & recycler Heathland B.V. in January • Announced asset restructuring to improve annual profitability by $60 million versus Q4 2022 run rate • 63% annual volume growth and 69% annual variable margin growth in sustainable products that inclu
Slide 5: Q4 Sustainability Highlights
Q4 Sustainability Highlights Ranked #42 by Newsweek in America’s Most Responsible Companies 2023 list New Curtain Coater Launched at Midland Pilot Coater Plant: Allows for increased collaboration with customers to achieve superior performance while offering sustainable attributes of reduced waste an
Slide 6: Q4 Sales and Volume Summary
Europe 490 U.S. 251 Asia-Pacific 203 Rest of World 31 Q4 Sales and Volume Summary Europe - Elevated energy prices and economic uncertainty led to continued destocking and overall weak demand for most products - Lower cost imports from Asia placing additional pressure on volume U.S. - Lower demand an
Slide 7: Trinseo Q4 2022 Financial Results
7 Trinseo Q4 2022 Financial Results* *From continuing operations; ** See Appendix for a reconciliation of non-GAAP measures • Volume declined versus prior year due to macro factors, exacerbated by year end destocking • Overall margins declined from weak demand and ample supply; globally traded produ
Slide 8: Engineered Materials
8 Engineered Materials • Performance impacted by lower volume and margin from a combination of destocking, lower structural demand and imports of standard-grade products from Asia into Europe and North America as well as a $10 million unfavorable impact from natural gas hedging • Demand impacts most
Slide 9: MMA cost divergence between Europe and Asia
Q1 '20 Q2'20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 USD/MT MMA cost divergence between Europe and Asia has led to significant imports of standard-grade PMMA products into Europe 9 West Europe Total Cash Cost Northeast Asia Total Cash Cost Elevated Europe energy costs a
Slide 10: Engineered Materials Path to Recovery
10 Engineered Materials Path to Recovery Q4 performance included an unfavorable impact from natural gas hedging ($10 million) and several other factors with recovery expected to occur between Q1 2023 and 2024 Adj EBITDA Impact Anticipated Recovery Destocking: short-term destocking including from dec
Slide 11: Key Indicators for Engineered Materials Recovery
11 Key Indicators for Engineered Materials Recovery 1) Bloomberg 2) Composite rate from Spectron Group, GFI Group Limited, Tradition Financial Services, Bloomberg Commodity Fair Value and ICAP; monthly value taken as daily average 46 48 50 52 54 China PMI €0 €50 €100 €150 €200 €250 TTF Natural Gas R
Slide 12: Latex Binders
12 Latex Binders • Earnings in line as volume decline was offset by fixed cost and commercial excellence actions • Lower volumes in all regions and applications from customer de-stocking and extended shutdowns for year-end and Covid impacts • 2022 CASE volumes declined by 10% versus 2021 from lower
Slide 13: Base Plastics
13 Base Plastics • Lower volumes caused by destocking and weak demand in building & construction and consumer durables applications partially offset by mild improvement in automotive demand • Margin contraction on weak demand and ample supply including lower-cost imports into Europe from Asia • $12
Slide 14: Polystyrene
14 Polystyrene • Lower volume as a result of weaker demand in appliances and building & construction applications • Lower price due mainly to passthrough of raw material costs • Margin contraction from weaker demand and improved supply including new capacity in Asia • $5 million negative net timing
Slide 15: Feedstocks & Americas Styrenics
15 Feedstocks & Americas Styrenics • Q4 2022 results includes $8 million negative net timing impact from declining raw material costs • Both styrene production plants in Europe were idled during Q4; Boehlen site to be closed permanently • Q4 2022 results includes $8 million negative net timing impac
Slide 16: Debt and Liquidity Overview
$663 $500 $736 $447 2023 2024 Term Loan 2025 Senior Notes 2026 2027 2028 Term Loan 2029 Senior Notes Debt and Liquidity Overview (as of Dec 31, 2022) 16 $212 $150 $355 Cash and Borrowing Facilities ($millions)* Cash On Hand AR Securitization Revolving Credit Facility *2026 Revolving Credit Facility
Slide 17: Q1 and FY 2023 Earnings Guidance
17 Q1 and FY 2023 Earnings Guidance Full-year 2023 net income from continuing operations of $3 million to $33 million and Adjusted EBITDA* of $375 million to $425 million • Destocking expected to end in the first quarter • Stronger second half performance as conditions are expected to improve over t
Slide 18: FY 2023 Cash Flow Guidance
18 FY 2023 Cash Flow Guidance Cash from Operations of approximately $100 million Free Cash Flow* approximately breakeven • Capital Expenditures: $100 million • Cash Interest: $150 million • Cash Taxes: $40 million • Restructuring: $40 million • Turnarounds: $10 million • Working Capital use of ~$50
Slide 19: Appendix
> TRINSEO. Appendix »
Slide 20: Business Destocking Cycles
(30%) (20%) (10%) 0% 10% 20% Q-2 Q-1 Q Q+1 Q+2 Polystyrene Business Destocking Cycles 20 (30%) (20%) (10%) 0% 10% Q-2 Q-1 Q Q+1 Q+2 Copolymers Q = Q3’22 Q = Q4’18 Q = Q4’15 Q = Q4’12 Q = Q3’22 Q = Q4’18 Q = Q4’15 Q = Q4’12 • Historically, business destocking cycles have lasted ~2 quarters and were f
Slide 21: Selected Segment Information
21 Selected Segment Information (in $millions, unless noted) Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 2020 2021 2022 Engineered Materials 12 10 13 16 16 43 53 58 60 60 50 41 51 170 212 Latex Binders 135 115 133 131 137 139 141 135 132 138 132 117 514 553 520 Base Plast
Slide 22: US GAAP to Non-GAAP Reconciliation
22 US GAAP to Non-GAAP Reconciliation 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 Form 8-K dated February
Slide 23: US GAAP to Non-GAAP Reconciliation: 2023 Outlook
23 US 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