Trinseo Q2 Report 2023

Trinseo (NYSE: TSE), a specialty material solutions provider, today reported its second quarter 2023 financial results. Net sales in the second quarter decreased 32% versus prior year. Lower sales volume across all reporting segments caused by continued customer destocking and underlying demand weakness led to a 16% decrease. Lower price, from the pass-through of lower raw material costs, led to a 17% decrease.

Second quarter net loss from continuing operations of $349 million was $386 million below prior year. Adjusted EBITDA of $57 million was $107 million below prior year. In addition to the goodwill impairment, the reduced year-over-year profitability was driven by lower volume across all segments as well as lower margin, including an unfavorable $48 million net timing variance, as well as lower equity affiliate income from Americas Styrenics. Second quarter results included unfavorable impacts of $16 million from net timing, $12 million from natural gas hedging as well as $4 million from manufacturing cost under absorption.

• Engineered Materials net sales of $206 million for the quarter decreased 32% versus prior year including an 18% impact from lower volume across all products from weak underlying demand and continued customer destocking, particularly in building & construction, consumer electronics and wellness applications, as well as a 13% impact from lower price due to raw material pass-through. Adjusted EBITDA of $12 million was $22 million below prior year mainly from lower sales volume. Results included unfavorable impacts of $6 million from natural gas hedging and $9 million from net timing. Sequentially, Adjusted EBITDA increased $24 million from lower raw material cost as well as higher volume mainly to consumer electronics applications.
• Latex Binders net sales of $254 million for the quarter decreased 28% versus prior year including a 17% impact from lower volumes across all regions and applications and a 12% impact from lower price from the pass-through of lower raw material costs. Adjusted EBITDA of $25 million was $4 million below prior year as lower volumes and fixed cost under absorption were mostly offset by pricing initiatives. Volume for CASE applications declined by 7% in the second quarter compared to prior year, a better result in comparison to other applications, and represented 16% of segment revenue during the quarter, a record-high proportion. Adjusted EBITDA was flat on a sequential basis.
• Plastics Solutions net sales of $272 million for the quarter were 25% below prior year including a 14% decrease in price from the pass-through of lower raw material costs and an 11% decrease from lower volumes. Sales decreased in polycarbonate from the announced shutdown of one production line as well as in copolymers for building & construction, industrial and consumer durables applications. Sales volume to automotive applications was in line with prior year. Adjusted EBITDA of $25 million was $21 million below prior year primarily from ABS, as weaker demand led to lower sales volume and also pressured margins. Results included an $11 million negative net timing variance versus prior year. Adjusted EBITDA was in line with prior quarter.
• Polystyrene net sales of $193 million for the quarter were 38% below prior year. Lower price, primarily from the pass-through of lower styrene costs, led to a 25% decrease and lower volume, from weaker demand in appliance and building & construction applications, led to a 14% decrease. Adjusted EBITDA of $6 million was $17 million below prior year from lower sales volume, lower margin from an $8 million net timing variance, as well as fixed cost under absorption. Sequentially, Adjusted EBITDA decreased $10 million from an unfavorable net timing variance of $3 million as well as lower volume and fixed cost under absorption.
• Feedstocks net sales of $37 million for the quarter were 61% below prior year from a 33% impact from lower volume and a 28% impact from lower price. Adjusted EBITDA of negative $7 million was $21 million below prior year from lower styrene margin, including an unfavorable net timing variance of $23 million and a natural gas hedge loss of $5 million.
• Americas Styrenics Adjusted EBITDA of $13 million for the quarter was $26 million below prior year from lower styrene margins compared to very high levels in the prior year. Adjusted EBITDA decreased $5 million versus prior quarter due to lower styrene and polystyrene margin from weaker economic conditions.