WAYNE, PA — Trinseo (NYSE: TSE) announced its financial results for the second quarter of 2024, reporting a net loss of $68 million and earnings per share (EPS) of negative $1.92. Despite the loss, the company saw an improvement in adjusted EBITDA, which reached $67 million, a $10 million increase compared to the previous year.
Trinseo’s second-quarter net sales stood at $920 million, a 4% decrease from the prior year. This decline was primarily due to lower sales volumes in Polystyrene, Plastics Solutions, and Latex Binders. However, higher sales volumes in Engineered Materials partially offset this drop, leading to a 6% decrease in net sales. A rise in prices contributed to a 1% increase.
The company used $42 million in operations and invested $14 million in capital expenditures, resulting in a free cash flow of negative $56 million. The second quarter also saw a $12 million increase in working capital. Trinseo ended the quarter with $108 million in cash, of which $2 million is restricted. The company has an additional $244 million in available liquidity through two committed financing facilities.
A notable development in the second quarter was Trinseo’s entry into a new Accounts Receivable Securitization Facility, extending the maturity date to January 2028. Furthermore, the company opened a PMMA depolymerization plant in Rho, Italy, marking a significant step toward their sustainability goals.
Trinseo and Chevron Phillips Chemical Company LP, co-owners of AmSty, announced plans to pursue a joint sale process, expected to begin in the third quarter and conclude with a definitive agreement in the first half of 2025.
Commenting on the performance, Frank Bozich, President and CEO of Trinseo, said, “The market conditions that we saw at the end of the first quarter continued through the second quarter as expected, resulting in our highest Adjusted EBITDA quarter since the first half of 2022 despite the headwind from unfavorable net timing. We continued to see positive momentum in Engineered Materials.”
Second Quarter Segment Performance
Engineered Materials: Net sales of $230 million increased by 12% year-over-year, driven by higher volumes of MMA and formulated products for automotive, consumer electronics, and lighting applications. Adjusted EBITDA for this segment was $25 million, up by $13 million from the previous year.
Latex Binders: The segment reported net sales of $252 million, a 1% decrease from the prior year. This was due to lower volumes in Europe for paper and carpet applications, partially offset by higher prices of raw materials. Adjusted EBITDA was $26 million, $3 million higher than the previous year.
Plastics Solutions: Net sales were $263 million, a 7% decrease from the previous year. Lower sales volumes and prices impacted the segment. Adjusted EBITDA stood at $16 million, $8 million less than the previous year.
Polystyrene: This segment saw net sales of $175 million, a 21% decrease compared to the prior year. Lower sales volumes due to the closure of the Terneuzen, Netherlands styrene production facility and customer destocking contributed to this decline. Despite this, adjusted EBITDA increased by $5 million to $7 million due to higher margins in Europe.
Americas Styrenics: Adjusted EBITDA for this segment was $16 million, $3 million higher than the previous year.
Outlook for Third Quarter 2024
Trinseo projects a net loss of $42 million to $52 million for the third quarter of 2024. Adjusted EBITDA is expected to be between $65 million and $75 million. Bozich stated, “We expect market conditions and Adjusted EBITDA in the third quarter to be similar to the second quarter. Normalized MMA market dynamics continue to support healthy margins in Engineered Materials while seasonal improvements in building and construction and consumer electronics applications are expected to continue through the third quarter.”
Bozich added, “We are pleased to see a sustained higher level of profitability following the asset and cost optimization actions that we implemented. While operating results have improved and we have more than adequate access to liquidity, we continue to focus on developing additional profit improvement initiatives while prioritizing liquidity preservation.”
With these results and outlook, Trinseo remains focused on cash management, liquidity, and strategic growth initiatives to navigate through the market conditions.
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