UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36473

Trinseo ~~S.A.~~PLC

(Exact name of registrant as specified in its charter)

~~Luxembourg~~Ireland

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1000 Chesterbrook Boulevard

Suite 300

Berwyn, PA 19312

(Address of Principal Executive Offices)

(610) 240-3200

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	☒	Accelerated filer	◻

Non-accelerated filer	◻	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Ordinary Shares, par value $0.01 per share	TSE	New York Stock Exchange

As of August ~~2, 2021,~~5, 2022, there were ~~38,827,828~~34,972,646 of the registrant’s ordinary shares outstanding.

Table of Contents

TABLE OF CONTENTS

`
		Page

Part I	Financial Information

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (Unaudited)	4

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	6

	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3632

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5147

Item 4.	Controls and Procedures	5147

Part II	Other Information

Item 1.	Legal Proceedings	5147

Item 1A.	Risk Factors	5248

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5449

Item 3.	Defaults Upon Senior Securities	5450

Item 4.	Mine Safety Disclosures	5450

Item 5.	Other Information	5450

Item 6.	Exhibits	5450

Exhibit Index

Signatures

Table of Contents

Trinseo ~~S.A.~~PLC

Quarterly Report on Form 10-Q

For the quarterly period ended June 30, ~~2021~~2022

Unless otherwise indicated or required by context, as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the term “Trinseo” refers to Trinseo ~~S.A.~~PLC (NYSE: TSE), a public limited ~~liability~~ company ~~(société anonyme)~~ existing under the laws of ~~Luxembourg,~~Ireland, and not its subsidiaries. The terms “Company,” “we,” “us” and “our” refer to Trinseo and its consolidated subsidiaries, taken as a consolidated entity. Trinseo PLC is the surviving entity of a cross-border merger with our predecessor company, Trinseo S.A., which merger was approved by shareholders in June 2021 and completed in October 2021. All financial data provided in this Quarterly Report is the financial data of ~~the Company,~~Trinseo PLC, unless otherwise indicated. Prior to the formation of the Company, our business was wholly owned by The Dow Chemical Company (together with other affiliates, “Dow”). The Company may distribute cash to shareholders under Irish law via dividends or distributions made out of distributable profits.

Definitions of capitalized terms not defined herein appear within our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2021.~~The Company may distribute cash to shareholders under Luxembourg law via repayments of equity or an allocation of statutory profits. All distributions prior to 2020 were considered repayments of equity under Luxembourg law.23, 2022.

Cautionary Note on Forward-Looking Statements

This Quarterly Report contains, ~~forward-looking statements including,~~ without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. Forward-looking statements may be identified by the use of words like “expect,” “anticipate,” “intend,” “forecast,” ”estimate,” “see,” “outlook,” “will,” “may,” “might,” “potential,” “likely,” “target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would,” or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions regarding the timing of the acquisition of Aristech Surfaces LLC (“Aristech Surfaces”), and the results of operations, expected margins and synergies from the acquisition, the timing of the proposed sale of our Synthetic Rubber business and expected proceeds of the proposed sale, our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.

Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements. Factors that might cause such a difference include, but are not limited to, our ability to successfully ~~complete the Aristech Surfaces acquisition~~execute our transformation strategy and ~~meet the conditions to closing, including regulatory approvals,~~business strategy; our ability to ~~successfully~~ integrate ~~Aristech Surfaces and its employees, generate expected cost and revenue synergies and expected margins, and profitably grow~~acquired businesses; global supply chain volatility, increased costs or disruption in the ~~Aristech Surfaces business, our ability to complete the sale~~supply of raw materials; increased energy costs or costs for transportation of our ~~Synthetic Rubber business or obtain necessary regulatory approvals,~~products; the outcome of the European Commission request for information; the nature of investment opportunities presented to the Company from time to time; and those discussed in our Annual Report filed with the SEC on February ~~22, 2021~~23, 2022 under Part I, Item IA— “Risk Factors,” within this Quarterly Report and in other filings and furnishings made by the Company with the SEC from time to time.

As a result of these or other factors, our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on these forward-looking statements. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge through the Investor Relations section of our website, www.trinseo.com, as soon as reasonably practicable after the reports are electronically filed or furnished with the SEC. We provide this website and information contained in or connected to it for informational purposes only. That information is not a part of this Quarterly Report.

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

TRINSEO ~~S.A.~~PLC

Condensed Consolidated Balance Sheets

(In millions, except per share data)

(Unaudited)

June 30,

December 31,


2021

2020

Assets




Current assets

Cash and cash equivalents

$
367.0

$
588.7

Accounts receivable, net of allowance for doubtful accounts (June 30, 2021: $4.5; December 31, 2020: $5.6)

769.0

469.5

Inventories

562.9

324.1

Other current assets

30.2

14.5

Current assets held-for-sale

383.0

120.3

Total current assets

2,112.1

1,517.1

Investments in unconsolidated affiliates

253.2

240.1

Property, plant and equipment, net of accumulated depreciation (June 30, 2021: $546.9; December 31, 2020: $524.7)

641.3

431.1

Other assets

Goodwill

623.5

62.1

Other intangible assets, net

649.4

162.6

Right-of-use assets - operating, net

81.2

77.8

Deferred income tax assets

78.5

90.2

Deferred charges and other assets

65.5

36.0

Noncurrent assets held-for-sale

—

228.2

Total other assets

1,498.1

656.9

Total assets

$
4,504.7

$
2,845.2

Liabilities and shareholders’ equity

Current liabilities

Short-term borrowings and current portion of long-term debt

$
19.1

$
12.2

Accounts payable

495.1

325.9

Current lease liabilities - operating

18.2

15.5

Income taxes payable

26.3

10.0

Accrued expenses and other current liabilities

168.9

127.5

Current liabilities held-for-sale

86.4

42.2

Total current liabilities

814.0

533.3

Noncurrent liabilities

Long-term debt, net of unamortized deferred financing fees

2,310.1

1,158.1

Noncurrent lease liabilities - operating

65.5

65.5

Deferred income tax liabilities

90.7

60.7

Other noncurrent obligations

394.6

395.0

Noncurrent liabilities held-for-sale

—

42.3

Total noncurrent liabilities

2,860.9

1,721.6

Commitments and contingencies (Note 13)

Shareholders’ equity

Ordinary shares, $0.01 nominal value, 50,000.0 shares authorized (June 30, 2021: 48.8 shares issued and 38.8 shares outstanding; December 31, 2020: 48.8 shares issued and 38.4 shares outstanding)

0.5

0.5

Additional paid-in-capital

578.7

579.6

Treasury shares, at cost (June 30, 2021: 10.0 shares; December 31, 2020: 10.4 shares)

(525.3)

(542.9)

Retained earnings

955.8

739.2

Accumulated other comprehensive loss

(179.9)

(186.1)

Total shareholders’ equity

829.8

590.3

Total liabilities and shareholders’ equity

$
4,504.7

$
2,845.2


	June 30,		December 31,
	2022		2021
Assets
Current assets
Cash and cash equivalents	$	264.4	$	573.0
Accounts receivable, net of allowance for doubtful accounts (June 30, 2022: $6.0; December 31, 2021: $4.1)		849.5		740.2
Inventories		759.7		621.0
Other current assets		36.2		44.3
Total current assets		1,909.8		1,978.5
Investments in unconsolidated affiliates		271.4		247.8
Property, plant and equipment, net of accumulated depreciation (June 30, 2022: $580.3; December 31, 2021: $556.5)		665.3		719.0
Other assets
Goodwill		709.4		710.1
Other intangible assets, net		785.3		823.8
Right-of-use assets - operating, net		82.5		85.3
Deferred income tax assets		56.9		77.6
Deferred charges and other assets		57.5		70.1
Total other assets		1,691.6		1,766.9
Total assets	$	4,538.1	$	4,712.2
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings and current portion of long-term debt	$	17.7	$	18.5
Accounts payable		561.7		590.3
Current lease liabilities - operating		18.6		18.4
Income taxes payable		32.3		52.1
Accrued expenses and other current liabilities		229.0		235.1
Total current liabilities		859.3		914.4
Noncurrent liabilities
Long-term debt, net of unamortized deferred financing fees		2,302.3		2,305.6
Noncurrent lease liabilities - operating		66.1		69.2
Deferred income tax liabilities		101.8		103.2
Other noncurrent obligations		284.0		306.7
Total noncurrent liabilities		2,754.2		2,784.7
Commitments and contingencies (Note 13)
Shareholders’ equity
Ordinary shares, $0.01 nominal value, 4,000.0 shares authorized (June 30, 2022: 39.2 shares issued and 36.3 shares outstanding; December 31, 2021: 38.9 shares issued and 37.9 shares outstanding)		0.4		0.4
Preferred shares, €0.01 nominal value, 1,000.0 shares authorized (0 shares issued or outstanding)		—		—
Deferred ordinary shares, €1.00 nominal value, 0.025 shares authorized (June 30, 2022: 0.025 shares issued and outstanding; December 31, 2021: 0.025 shares issued and outstanding)		—		—
Additional paid-in-capital		480.1		468.1
Treasury shares, at cost (June 30, 2022: 2.9 shares; December 31, 2021: 1.0 shares)		(150.0)		(50.0)
Retained earnings		772.0		741.8
Accumulated other comprehensive loss		(177.9)		(147.2)
Total shareholders’ equity		924.6		1,013.1
Total liabilities and shareholders’ equity	$	4,538.1	$	4,712.2

The accompanying notes are an integral part of these condensed consolidated financial ~~statements~~.statements.

Table of Contents

TRINSEO ~~S.A.~~PLC

Condensed Consolidated Statements of Operations

(In millions, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Net sales	$	1,273.7	$	534.3	$	2,259.7	$	1,297.3	$	1,425.5	$	1,273.7	$	2,812.2	$	2,259.7
Cost of sales		1,053.7		510.9		1,850.8		1,216.2		1,286.4		1,053.7		2,497.1		1,850.8
Gross profit		220.0		23.4		408.9		81.1		139.1		220.0		315.1		408.9
Selling, general and administrative expenses		97.3		52.9		153.8		125.7		85.6		97.3		182.3		153.8
Equity in earnings of unconsolidated affiliates		30.1		14.4		53.0		24.2		39.4		30.1		61.0		53.0
Impairment charges		1.8		—		1.8		10.3
Operating income (loss)		151.0		(15.1)		306.3		(30.7)
Other charges										1.3		1.8		37.6		1.8
Operating income										91.6		151.0		156.2		306.3
Interest expense, net		21.6		11.7		33.6		22.0		25.4		21.6		47.3		33.6
Acquisition purchase price hedge (gain) loss		(33.0)		—		22.0		—		—		(33.0)		—		22.0
Loss on extinguishment of long-term debt		0.5		—		0.5		—
Other expense, net		5.6		0.4		8.0		1.7
Income (loss) from continuing operations before income taxes		156.3		(27.2)		242.2		(54.4)
Provision for (benefit from) income taxes		23.3		(53.0)		43.4		(10.8)
Net income (loss) from continuing operations		133.0		25.8		198.8		(43.6)
Net income (loss) from discontinued operations, net of income taxes		18.6		(154.2)		24.3		(121.1)
Net income (loss)	$	151.6	$	(128.4)	$	223.1	$	(164.7)
Other expense (income), net										(1.7)		6.1		1.3		8.5
Income from continuing operations before income taxes										67.9		156.3		107.6		242.2
Provision for income taxes										30.8		23.3		53.4		43.4
Net income from continuing operations										37.1		133.0		54.2		198.8
Net income from discontinued operations, net of income taxes										0.3		18.6		—		24.3
Net income									$	37.4	$	151.6	$	54.2	$	223.1
Weighted average shares- basic		38.8		38.2		38.6		38.4		36.3		38.8		36.8		38.6
Net income (loss) per share- basic:
Net income per share- basic:
Continuing operations	$	3.43	$	0.68	$	5.15	$	(1.14)	$	1.02	$	3.43	$	1.47	$	5.15
Discontinued operations		0.48		(4.04)		0.62		(3.15)		0.01		0.48		—		0.62
Net income (loss) per share- basic	$	3.91	$	(3.36)	$	5.77	$	(4.29)
Net income per share- basic									$	1.03	$	3.91	$	1.47	$	5.77
Weighted average shares- diluted		39.6		38.3		39.6		38.4		37.0		39.6		37.6		39.6
Net income (loss) per share- diluted:
Net income per share- diluted:
Continuing operations	$	3.35	$	0.67	$	5.02	$	(1.14)	$	1.00	$	3.35	$	1.44	$	5.02
Discontinued operations		0.47		(4.02)		0.61		(3.15)		0.01		0.47		—		0.61
Net income (loss) per share- diluted	$	3.82	$	(3.35)	$	5.63	$	(4.29)
Net income per share- diluted									$	1.01	$	3.82	$	1.44	$	5.63

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRINSEO ~~S.A.~~PLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Net income (loss)	$	151.6	$	(128.4)	$	223.1	$	(164.7)
Net income									$	37.4	$	151.6	$	54.2	$	223.1
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments		(0.7)		(1.1)		(0.3)		9.6
Net gain (loss) on cash flow hedges		(0.2)		(1.3)		4.4		(5.0)
Cumulative translation adjustments (net of tax of $3.9, $0.0, $3.9, $0.0)										(34.8)		(0.7)		(39.1)		(0.3)
Net gain (loss) on cash flow hedges (net of tax of $0.6, $0.0, $0.6, $0.0)										0.3		(0.2)		1.8		4.4
Pension and other postretirement benefit plans:
Net gain arising during period (net of tax of $0.0, $0.0, $0.0, and $0.1)		—		—		—		0.6
Net gain arising during period (net of tax of $0.9, $0.0, $0.9, $0.0)										7.7		—		7.7		—
Amounts reclassified from accumulated other comprehensive income		1.0		0.5		2.1		1.1		(1.4)		1.0		(1.1)		2.1
Total other comprehensive income (loss), net of tax		0.1		(1.9)		6.2		6.3		(28.2)		0.1		(30.7)		6.2
Comprehensive income (loss)	$	151.7	$	(130.3)	$	229.3	$	(158.4)
Comprehensive income									$	9.2	$	151.7	$	23.5	$	229.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

TRINSEO ~~S.A.~~PLC

Condensed Consolidated Statements of Shareholders’ Equity

(In millions, except per share data)

(Unaudited)

Shares

Shareholders' Equity


Ordinary Shares Outstanding

Treasury Shares

Ordinary Shares

Additional
Paid-In Capital

Treasury Shares

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Total
Balance at December 31, 2020

38.4

10.4

$
0.5

$
579.6

$
(542.9)

$
(186.1)

$
739.2

$
590.3
Net income

—

—

—

—

—

—

71.5

71.5
Other comprehensive income

—

—

—

—

—

6.1

—

6.1
Share-based compensation activity

0.3

(0.3)

—

(1.1)

12.9

—

—

11.8
Dividends on ordinary shares ($0.08 per share)

—

—

—

—

—

—

(3.4)

(3.4)
Balance at March 31, 2021

38.7

10.1

$
0.5

$
578.5

$
(530.0)

$
(180.0)

$
807.3

$
676.3
Net income

—

—

—

—

—

—

151.6

151.6
Other comprehensive income

—

—

—

—

—

0.1

—

0.1
Share-based compensation activity

0.1

(0.1)

—

0.2

4.7

—

—

4.9
Dividends on ordinary shares ($0.08 per share)

—

—

—

—

—

—

(3.1)

(3.1)
Balance at June 30, 2021

38.8

10.0

$
0.5

$
578.7

$
(525.3)

$
(179.9)

$
955.8

$
829.8


	Shares			Shareholders' Equity
	Ordinary Shares Outstanding	Treasury Shares	Deferred Ordinary Shares	Ordinary Shares		Deferred Ordinary Shares		Additional Paid-In Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2021	37.9	1.0	—	$	0.4	$	—	$	468.1	$	(50.0)	$	(147.2)	$	741.8	$	1,013.1
Net income	—	—	—		—		—		—		—		—		16.7		16.7
Other comprehensive loss	—	—	—		—		—		—		—		(2.5)		—		(2.5)
Share-based compensation activity	0.2	—	—		—		—		7.6		—		—		—		7.6
Purchase of treasury shares	(0.9)	0.9			—				—		(50.0)		—		—		(50.0)
Dividends on ordinary shares ($0.32 per share)	—	—	—		—		—		—		—		—		(12.1)		(12.1)
Balance at March 31, 2022	37.2	1.9	—	$	0.4	$	—	$	475.7	$	(100.0)	$	(149.7)	$	746.4	$	972.8
Net income	—	—	—		—		—		—		—		—		37.4		37.4
Other comprehensive loss	—	—	—		—		—		—		—		(28.2)		—		(28.2)
Share-based compensation activity	0.1	—	—		—		—		4.4		—		—		—		4.4
Purchase of treasury shares	(1.0)	1.0			—				—		(50.0)		—		—		(50.0)
Dividends on ordinary shares ($0.32 per share)	—	—	—		—		—		—		—		—		(11.8)		(11.8)
Balance at June 30, 2022	36.3	2.9	—	$	0.4	$	—	$	480.1	$	(150.0)	$	(177.9)	$	772.0	$	924.6

Shares

Shareholders' Equity


Ordinary Shares Outstanding

Treasury Shares

Ordinary Shares

Additional
Paid-In Capital

Treasury Shares

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Total
Balance at December 31, 2019

39.0

9.8

$
0.5

$
574.7

$
(524.9)

$
(162.4)

$
781.0

$
668.9
Net loss

—

—

—

—

—

—

(36.3)

(36.3)
Other comprehensive income

—

—

—

—

—

8.2

—

8.2
Share-based compensation activity

—

—

—

1.0

1.7

—

—

2.7
Purchase of treasury shares

(0.8)

0.8

—

—

(25.0)

—

—

(25.0)
Dividends on ordinary shares ($0.40 per share)

—

—

—

—

—

—

(15.5)

(15.5)
Balance at March 31, 2020

38.2

10.6

$
0.5

$
575.7

$
(548.2)

$
(154.2)

$
729.2

$
603.0
Net loss

—

—

—

—

—

—

(128.4)

(128.4)
Other comprehensive loss

—

—

—

—

—

(1.9)

—

(1.9)
Share-based compensation activity

0.1

(0.1)

—

0.6

0.9

—

—

1.5
Dividends on ordinary shares ($0.40 per share)

—

—

—

—

—

—

(15.4)

(15.4)
Balance at June 30, 2020

38.3

10.5

$
0.5

$
576.3

$
(547.3)

$
(156.1)

$
585.4

$
458.8


	Shares			Shareholders' Equity
	Ordinary Shares Outstanding	Treasury Shares	Deferred Ordinary Shares	Ordinary Shares		Deferred Ordinary Shares		Additional Paid-In Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2020	38.4	10.4	—	$	0.5		—	$	579.6	$	(542.9)	$	(186.1)	$	739.2	$	590.3
Net income	—	—	—		—		—		—		—		—		71.5		71.5
Other comprehensive income	—	—	—		—		—		—		—		6.1		—		6.1
Share-based compensation activity	0.3	(0.3)	—		—		—		(1.1)		12.9		—		—		11.8
Dividends on ordinary shares ($0.08 per share)	—	—	—		—		—		—		—		—		(3.4)		(3.4)
Balance at March 31, 2021	38.7	10.1	—	$	0.5		—	$	578.5	$	(530.0)	$	(180.0)	$	807.3	$	676.3
Net income	—	—	—		—		—		—		—		—		151.6		151.6
Other comprehensive income	—	—	—		—		—		—		—		0.1		—		0.1
Share-based compensation activity	0.1	(0.1)	—		—		—		0.2		4.7		—		—		4.9
Dividends on ordinary shares ($0.08 per share)	—	—	—		—		—		—		—		—		(3.1)		(3.1)
Balance at June 30, 2021	38.8	10.0	—	$	0.5		—	$	578.7	$	(525.3)	$	(179.9)	$	955.8	$	829.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO ~~S.A.~~PLC

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2022		2021
Cash flows from operating activities
Net income (loss)	$	223.1	$	(164.7)
Less: Net income (loss) from discontinued operations		24.3		(121.1)
Net income (loss) from continuing operations		198.8		(43.6)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities - continuing operations
Net income					$	54.2	$	223.1
Less: Net income from discontinued operations						—		24.3
Net income from continuing operations						54.2		198.8
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities - continuing operations
Depreciation and amortization		61.2		48.6		101.1		61.2
Amortization of deferred financing fees, issuance discount, and excluded component of hedging instruments		3.2		1.6
Amortization of deferred financing fees and issuance discount						4.6		3.2
Deferred income tax		3.6		(12.0)		9.8		3.6
Share-based compensation expense		7.0		6.1		12.2		7.0
Earnings of unconsolidated affiliates, net of dividends		(13.1)		(24.2)		(23.5)		(13.1)
Unrealized net gain on foreign exchange forward contracts		(31.5)		(2.0)		(4.5)		(31.5)
Acquisition purchase price hedge loss		22.0		—		—		22.0
Loss on extinguishment of long-term debt		0.5		—
Pension curtailment and settlement gain						(1.7)		—
Gain on sale of businesses and other assets		(0.2)		(0.4)		(1.8)		(0.2)
Asset impairment charges or write-offs		1.8		10.3		2.0		1.8
Changes in assets and liabilities
Accounts receivable		(268.0)		87.8		(135.1)		(296.2)
Inventories		(165.4)		112.2		(166.7)		(167.6)
Accounts payable and other current liabilities		196.5		(115.4)		15.8		199.7
Income taxes payable		16.2		54.0		(17.4)		16.2
Other assets, net		(8.5)		(7.9)		20.9		(8.9)
Other liabilities, net		20.2		3.3		41.2		22.1
Cash provided by operating activities - continuing operations		44.3		118.4
Cash used in operating activities - discontinued operations		(14.3)		(42.6)
Cash provided by operating activities		30.0		75.8
Cash provided by (used in) operating activities - continuing operations						(88.9)		18.1
Cash provided by operating activities - discontinued operations						0.8		11.9
Cash provided by (used in) operating activities						(88.1)		30.0
Cash flows from investing activities
Capital expenditures		(30.0)		(38.2)		(55.4)		(30.0)
Cash received (paid) for asset or business acquisitions, net of cash acquired ($10.4)		(1,358.6)		0.1
Cash paid for asset or business acquisitions, net of cash acquired ($1.0 and $10.4)						(22.2)		(1,358.6)
Proceeds from the sale of businesses and other assets		0.2		11.9		5.3		0.2
Proceeds from (payments for) the settlement of hedging instruments		(14.7)		51.6		1.9		(14.7)
Cash provided by (used in) investing activities - continuing operations		(1,403.1)		25.4
Cash used in investing activities - continuing operations						(70.4)		(1,403.1)
Cash used in investing activities - discontinued operations		(2.4)		(10.0)		(0.8)		(2.4)
Cash provided by (used in) investing activities		(1,405.5)		15.4
Cash used in investing activities						(71.2)		(1,405.5)
Cash flows from financing activities
Deferred financing fees		(35.0)		—		—		(35.0)
Short-term borrowings, net		(6.2)		(5.4)		(7.5)		(6.2)
Purchase of treasury shares		—		(25.0)		(101.9)		—
Dividends paid		(6.4)		(31.2)		(24.6)		(6.4)
Proceeds from exercise of option awards		10.5		—		2.9		10.5
Withholding taxes paid on restricted share units		(0.8)		(0.6)		(2.5)		(0.8)
Repayments of 2024 Term Loan B		(3.5)		(3.4)
Repayments of 2024 Term Loan B and 2028 Term Loan B						(7.2)		(3.5)
Net proceeds from issuance of 2028 Term Loan B		746.3		—		—		746.3
Net proceeds from issuance of 2029 Senior Notes		450.0		—		—		450.0
Proceeds from draw on 2022 Revolving Facility		—		100.0
Cash provided by financing activities		1,154.9		34.4
Cash provided by (used in) financing activities						(140.8)		1,154.9
Effect of exchange rates on cash		(1.1)		(0.5)		(8.5)		(1.1)
Net change in cash, cash equivalents, and restricted cash		(221.7)		125.1		(308.6)		(221.7)
Cash, cash equivalents, and restricted cash—beginning of period		588.7		457.4		573.0		588.7
Cash, cash equivalents, and restricted cash—end of period	$	367.0	$	582.5	$	264.4	$	367.0
Less: Restricted cash		—		(0.7)		—		—
Cash and cash equivalents—end of period	$	367.0	$	581.8	$	264.4	$	367.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO ~~S.A.~~PLC

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, unless otherwise stated)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Trinseo ~~S.A.~~PLC and its subsidiaries (the “Company”) as of and for the periods ended June 30, ~~2021~~2022 and ~~2020~~2021 were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are considered necessary for the fair statement of the results for the periods presented. Because they cover interim periods, the statements and related notes to the financial statements do not include all disclosures normally provided in annual financial statements, and therefore, these statements should be read in conjunction with the ~~2020~~2021 audited consolidated financial statements included within the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2021.~~23, 2022. The Company’s condensed consolidated financial statements presented herein reflect the latest estimates and assumptions made by management that affect the reported amounts and related disclosures as of and for the period ended June 30, ~~2021.~~2022. However, actual results could differ from these estimates and assumptions.

The December 31, ~~2020~~2021 condensed consolidated balance sheet data presented herein was derived from the Company’s December 31, ~~2020~~2021 audited consolidated financial statements, but does not include all disclosures required by GAAP for annual periods.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications pertain primarily to the Company’s entry into an agreement during the second quarter of 2021 to sell its Synthetic Rubber business, as a result of which the Company reclassified its Synthetic Rubber assets and liabilities as held-for-sale and reclassified the operating results of its Synthetic Rubber business, net of taxes, as discontinued operations for all periods presented. Refer to Note 4 for further information. Throughout this Quarterly Report, unless otherwise indicated, amounts and activity are presented on a continuing operations basis. ~~Additionally, the condensed consolidated financial statements herein reflect reclassifications related to the Company’s resegmentation effective October 1, 2020, as described in Note 16.~~

NOTE 2—RECENT ACCOUNTING GUIDANCE

~~In December 2019, the FASB~~As of June 30, 2022, there was no recently issued ~~guidance that simplifies the~~ accounting for income taxes. The amended guidance includes removal of certain exceptions to the general principles of Accounting Standards Codification (“ASC”) 740, Income Taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. ~~The Company adopted the guidance effective January 1, 2021, noting that adoption did not~~standards which would have a material ~~impact~~effect on ~~its~~the Company’s condensed consolidated financial statements.

NOTE 3—ACQUISITIONS

Acquisition of Heathland B.V.

On January 3, 2022, the ~~Arkema~~Company completed the acquisition of Heathland B.V. (“Heathland”) from Heathland Holding B.V. (“Heathland Holding”), through the purchase of all issued and outstanding shares (the “Heathland Acquisition”). The Heathland Acquisition was completed pursuant to the Sale and Purchase Agreement dated December 3, 2021 (“Heathland Agreement”), by and between the Company and Heathland Holding. Heathland is a leading collector and recycler of post-consumer and post-industrial plastic wastes in Europe. The total purchase price consideration is estimated to be $29.3 million, including an initial cash purchase price of $22.9 million, as well as $6.4 million of contingent cash consideration, representing the fair value of certain earn-out payments. The maximum amount of potential earn-out payments is $6.8 million, which amounts will become payable to Heathland Holding as and when the related performance milestones or thresholds are achieved over the three-year period following the date of acquisition. The Heathland Acquisition was funded through existing cash on hand.

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Additionally, the Heathland Agreement includes a service fee of approximately $4.5 million, payable to Heathland Holdings contingent upon the continued employment of certain Heathland employees for three years following the acquisition date. The Company has not included this service fee as part of the estimated purchase price and instead will accrue for the service fee as compensation expense over the three-year period in which it is earned.

The Company accounted for the acquisition as a business combination pursuant to ASC 805. In accordance with ASC 805, fair values are assigned to tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that was available as of the acquisition date.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill. During the second quarter of 2022, there were no material changes to the purchase price allocation for the Heathland acquisition.

The table below summarizes the purchase price allocation for the assets acquired and liabilities assumed, based on their relative fair values, which have been assessed as of the January 3, 2022 acquisition date:


	January 3,
	2022
Cash and cash equivalents	$	1.0
Other current assets		1.2
Other intangible assets ⁽¹⁾
Customer relationships		5.1
Tradenames		0.9
Developed technology		0.2
Other assets		1.0
Total fair value of assets acquired		9.4

Current liabilities		(1.3)
Noncurrent liabilities		(1.6)
Total fair value of liabilities assumed		(2.9)
Net identifiable assets acquired		6.5
Purchase price consideration		29.3
Goodwill ⁽²⁾	$	22.8

(1)

The expected weighted average useful life of the acquired intangible assets are 7 years for customer relationships, tradenames and developed technology.

(2)

Goodwill largely consists of strategic and synergistic opportunities resulting from combining Heathland with the Company’s existing businesses and is allocated entirely to the Base Plastics segment. No goodwill related to this acquisition is expected to be deductible for income tax purposes.

Pro forma results of operations information have not been presented as the effect of the acquisition is not material. The operating results of the Heathland acquisition are included within the Company's condensed consolidated statements of operations since the acquisition date of January 3, 2022 and were not material for the three and six months ended June 30, 2022. Pursuant to GAAP, costs incurred to complete the Heathland Acquisition as well as costs incurred to integrate into the Company’s operations are expensed as incurred. Transaction-related costs incurred, which are included within “Selling, general, and administrative expenses” in the condensed consolidated statements of operations, were not material for the three and six months ended June 30, 2022.

Acquisition of Aristech Surfaces

On September 1, 2021, the Company completed its previously announced acquisition of Aristech Surfaces LLC (“Aristech Surfaces”) from SK AA Holdings LLC (“SK AA Holdings”), the sole member of Aristech Surfaces, through purchase of 100% membership interest and intellectual property (the “Aristech Surfaces Acquisition”). The purchase

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price consideration for the Aristech Surfaces Acquisition was $449.5 million, all of which was paid during the year ended December 31, 2021 (noting no cash flows during the six months ended June 30, 2021). Aristech Surfaces is a leading North America manufacturer and global provider of PMMA continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets, whose results are included within the Engineered Materials segment. Aristech Surfaces’ products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Refer to the Annual Report for further information. During the second quarter of 2022, there were 0 changes to the purchase price allocation for the acquisition of the Aristech Surfaces business. However, further adjustments may be necessary as a result of the Company’s on-going assessment of additional information that existed as of the acquisition date related to the fair value of assets acquired and liabilities assumed, including goodwill, during the measurement period.

Acquisition of the PMMA Business

On May 3, 2021, the Company completed its previously-announced acquisition of the polymethyl methacrylates (“PMMA”) and activated methyl methacrylates (“MMA”) business (together, the “PMMA business”) from Arkema S.A., (“Arkema”) through the purchase of 100% of the shares of certain subsidiaries of Arkema (the ~~“Acquisition”~~“PMMA Acquisition”). The purchase price consideration for the PMMA Acquisition was ~~completed pursuant to~~$1,364.9 million, all of which was paid during the ~~Share Purchase Agreement, dated March 19,~~year ended December 31, 2021 ~~(the “SPA”), by and between~~(of which $1,358.6 million was paid during the ~~Company and Arkema.~~six months ended June 30, 2021). PMMA is a transparent and rigid plastic with a wide range of end uses, and is an attractive adjacent chemistry which complements Trinseo’s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics.

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~~The following table illustrates each component of~~ PMMA results are included within the ~~purchase price consideration related to the Acquisition:~~

Initial cash purchase price paid ⁽¹⁾

$
1,369.0
Known purchase price adjustment, not yet paid ⁽²⁾

1.7
Total purchase price consideration

$
1,370.7

~~(1)~~

The Acquisition had an initial purchase price consideration of $1,370.7 million, of which $1,369.0 million was paid during the second quarter of 2021. This initial purchase price consideration is subject to customary working capital and other closing adjustments.

~~(2)~~

Known purchase price adjustment not yet paid relates primarily to consideration for certain assets at the Porto Marghera, Italy manufacturing site which will be legally transferred to Trinseo at a later date due to local transfer restrictions; however, the Company has the benefits and risks of ownership during the period from May 3, 2021 until the site legally transfers. This purchase price consideration is expected to be paid in the second half of 2021.

The Acquisition was funded using the net proceeds from the Company’s new financing arrangements, including $450.0 million from its 2029 Senior Notes issued on March 24, 2021 and $750.0 million of incremental borrowings under the 2028 Term Loan B entered into in conjunction with closing of the transaction, as well as available cash. Refer to Note 8 for further information on the financing arrangements used to fund the Acquisition.

The Company accounted for the Acquisition as a business combination pursuant to ASC 805. In accordance with ASC 805, fair values are assigned to tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that was available as of that date. The Company believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed for the Acquisition; however, preliminary measurements of fair value, including, but not limited to, inventory, intangible assets, property, plant and equipment, pension and postretirement obligations, contingent liabilities, including environmental remediation obligations, and deferred tax assets and liabilities are subject to change during the measurement period, and such changes could be material. The Company expects to finalize the valuation and accounting for the Acquisition as soon as practicable, but no later than one year after the acquisition date. During the measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date, the Company will revise the preliminary purchase price allocation. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings.Engineered Materials segment.

The Company allocated the purchase price of the ~~Acquisition~~acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. ~~The excess of~~Refer to the Annual Report for further information. During the six months ended June 30, 2022, there were 0 changes to the purchase price ~~over~~allocation for the ~~aggregate fair values was recorded as goodwill. The Company calculated the fair value~~acquisition of the ~~assets acquired using~~PMMA business. As of June 30, 2022, the ~~income~~acquisition measurement period for the PMMA business has ended and ~~cost approaches (or a combination thereof). Fair~~the values were determined based on various inputs including estimated future cash flows, discount rates, royalty rates, growth rates, sales projections, customer retention rates and terminal values. The fair value of pension liabilities assumed was determined in accordance with ASC 715 using key inputs including, but not limitedassigned to ~~discount rates, expected rates of return on plan assets, and future compensation growth rates. The various inputs used in the asset and pension valuations require significant management judgment.~~

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~~The table below summarizes the preliminary purchase price allocation for~~ the assets acquired and liabilities assumed ~~based on their relative fair values, which have been assessed as of the May 3, 2021 acquisition date:~~are final.

May 3,

2021
Cash and cash equivalents

$
10.4
Accounts receivable

19.1
Inventories ⁽¹⁾

78.6
Other current assets

8.7
Property, plant and equipment

236.0
Other intangible assets ⁽²⁾

Customer relationships

326.6
Developed technology

133.0
Tradenames

46.0
Other amortizable intangible assets

0.4
Right-of-use assets - operating

4.1
Deferred charges and other assets

27.9
Total fair value of assets acquired

890.8

Accounts payable

(15.0)
Current lease liabilities - operating

(1.7)
Income taxes payable

(0.1)
Accrued expenses and other current liabilities

(11.7)
Noncurrent lease liabilities - operating

(2.5)
Deferred income tax liabilities

(34.3)
Other noncurrent obligations ⁽³⁾

(22.5)
Total fair value of liabilities assumed

(87.8)
Net identifiable assets acquired

803.0
Purchase price consideration

1,370.7
Goodwill ⁽⁴⁾

567.7

~~(1)~~

Fair value of finished goods inventory acquired included a step-up in the value of approximately $10.1 million, which was fully amortized during the second quarter of 2021 within "Cost of sales" on the condensed consolidated statements of operations as the related inventory was sold to customers.

~~(2)~~

~~The expected weighted average useful life of the acquired intangible assets are~~ ~~13 years~~ ~~for customer relationships,~~ ~~10 years~~ ~~for developed technology,~~ ~~16 years~~ ~~for tradenames, and~~ 1-5 ~~years for other amortizable intangible assets.~~

~~(3)~~

~~Includes $18.2 million of net pension and other employee benefits assumed as part of the Acquisition.~~

~~(4)~~

~~Goodwill largely consists of strategic and synergistic opportunities resulting from combining the PMMA business with the Company’s existing businesses and is allocated entirely to the~~ ~~Engineered~~ ~~Materials segment. Approximately $310.0 million of goodwill related to this acquisition will be deductible for income tax purposes based on the preliminary purchase price.~~

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the ~~condensed~~ consolidated results of operations of the Company ~~including~~with the PMMA business and Aristech Surfaces for the three and six months ended June 30, 2021 ~~and 2020, respectively,~~ as if ~~the Acquisition~~these acquisitions had occurred on January ~~1, 2020.~~l, 2021. The ~~proforma~~pro forma results were calculated by combining the results of Trinseo with the PMMA business and Aristech Surfaces but do not include adjustments related to cost savings or other synergies that are anticipated as a result of ~~the Acquisition.~~these acquisitions. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the ~~Acquisition~~acquisitions had occurred as of January 1, ~~2020,~~2021, nor are they indicative of future results of operations.

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	Three Months Ended				Six Months Ended				Three Months Ended		Six Months Ended
	June 30,				June 30,				June 30,		June 30,
	2021		2020		2021		2020		2021		2021
Net sales	$	1,324.7	$	676.0	$	2,474.4	$	1,580.7	$	1,369.4	$	2,563.6
Net income (loss)	$	162.4	$	(126.2)	$	250.6	$	(177.9)
Income (loss) from continuing operations	$	143.8	$	28.0	$	226.3	$	(56.8)
Net income									$	185.5	$	261.1
Income from continuing operations									$	166.9	$	236.8

Net sales and net loss of the PMMA business between the May 3, 2021 acquisition date and June 30, 2021 were $107.4 million and $3.8 million, respectively, and are recognized within the Company's condensed consolidated statements of operations for the three and six months ended June 30, 2021.

~~Transaction-related costs~~

Pursuant to GAAP, costs incurred to complete the Acquisition as well as costs incurred to integrate into our operations are expensed as incurred. The Company incurred $18.2 million and $19.8 million of transaction-related costs for the three and six months ended June 30, 2021, respectively. The amount was recorded within “Selling, general and administrative expenses” in the Company’s condensed consolidated statements of operations, and are reflected in the six months ended June 30, 2020 in the supplemental pro forma information above.

In connection with the Acquisition, the Company entered into certain customary transitional services agreements with Arkema to provide for the orderly separation and transition of various functions and processes. These services will be provided by Arkema to the Company for up to ~~18 months~~ after closing, with certain extension options available. These services include information technology, accounting and finance, procurement, supply chain, and other services, while we assume the operations of the PMMA business.

Additionally, the Company paid Arkema $10.6 million for certain information technology separation costs in order to support the transition services agreements entered into at the time of close. These payments have not been included as a component of consideration transferred, and instead have been capitalized as prepaid assets within ~~“Other~~ current assets” on the condensed consolidated balance sheets. The cost will be recognized as expense over the period in which the services are expected to be rendered under the transition services agreements.

~~Subsequent Event – Announced Agreement to Acquire Aristech Surfaces~~

On July 19, 2021, the Company entered into an agreement with SK AA Holdings, LLC, the sole member of Aristech Surfaces LLC (“Aristech Surfaces”), to acquire Aristech Surfaces, a leading North America manufacturer and global provider of PMMA continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets, for a preliminary purchase price of $445.0 million, subject to customary working capital and other closing adjustments. Aristech Surfaces’ products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles. The business will become part of the Company’s Engineered Materials segment. The transaction will be funded with cash on hand and existing credit facilities. The Company anticipates the transaction will close by year-end 2021 subject to customary closing conditions and regulatory approvals.

NOTE 4—DIVESTITURES AND DISCONTINUED OPERATIONS

On ~~May 21,~~December 1, 2021, the Company ~~and~~completed the divestiture of its Synthetic Rubber business to Synthos S.A. and certain of its subsidiaries (together, “Synthos”) ~~entered into an Asset Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company has agreed to sell its Synthetic Rubber business to Synthos in an all-cash transaction~~ for ~~an aggregate~~a purchase price of ~~$449.4~~$402.4 million, which ~~reflects~~reflected a reduction of approximately $41.6 million for the assumption of pension liabilities by Synthos ~~subject to certain adjustments related to~~and $47.0 million for net working capital ~~and~~(excluding inventory) retained by Trinseo. Refer to the ~~exercise of certain option rights related to equity investments held by~~Annual Report for further information. At closing, the Company. This sale is expected to close in the first half of 2022, subject to customary closing conditions and regulatory approvals. As a result of entering into the Purchase Agreement, the assets and liabilities of the Company’s Synthetic Rubber business were classified as held-for-sale during the second quarter of 2021 in the condensed consolidated balance sheets and the associated operating results of the Synthetic Rubber business, net of income tax, have been

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~~classified as discontinued operations~~Company and Synthos executed a long-term supply agreement, in which Trinseo will supply Synthos certain raw materials used in the ~~condensed consolidated statements~~Synthetic Rubber business subsequent to the sale. For the three and six months ended June 30, 2022, the Company recorded $22.7 million and $41.8 million, respectively, in net sales, and $15.6 million and $31.8 million, respectively, in cost of ~~operations and statements of cash flows for all periods presented,~~sales related to the supply agreement, which is recorded in ~~accordance with the guidance in ASC 205-20, Discontinued Operations.~~continuing operations.

The following table summarizes the ~~assets~~results of the Synthetic Rubber business for the three and ~~liabilities classified as held-for-sale at~~six months ended June 30, 2022 and 2021, ~~and December 31, 2020:~~which are reflected as discontinued operations in the Company’s condensed consolidated statements of operations:

June 30,

December 31,


2021

2020

Assets




Current assets

Accounts receivable, net of allowance

$
85.7

$
59.7

Inventories and other current assets

89.2

60.6

Total current assets

174.9

120.3

Property, plant and equipment, net

154.6

170.3

Other assets

Goodwill

11.7

12.1

Other intangible assets, net

17.9

20.2

Deferred charges and other assets

23.9

25.6

Total other assets

53.5

57.9

Total assets held-for-sale ⁽¹⁾

$
383.0

$
348.5

Liabilities

Current liabilities

Accounts payable

33.7

29.5

Accrued expenses and other current liabilities

10.3

12.7

Total current liabilities

44.0

42.2

Noncurrent liabilities

Other noncurrent obligations

42.4

42.3

Total noncurrent liabilities

42.4

42.3

Total liabilities held-for-sale ⁽¹⁾

$
86.4

$
84.5

~~(1)~~

All balance sheet amounts as of June 30, 2021 have been classified as current within the condensed consolidated balance sheets, as the sale is expected to occur within one year of the balance sheet date.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net sales	$	—	$	135.7	$	0.1	$	259.9
Cost of sales		0.8		108.2		1.4		219.3
Gross profit (loss)		(0.8)		27.5		(1.3)		40.6
Selling, general and administrative expenses		(0.1)		5.6		(0.3)		11.8
Operating income (loss)		(0.7)		21.9		(1.0)		28.8
Gain on sale of businesses and other assets		1.2		—		1.2		—
Other expense, net		—		0.8		—		1.0
Income from discontinued operations before income taxes		0.5		21.1		0.2		27.8
Provision for income taxes		0.2		2.5		0.2		3.5
Net income from discontinued operations	$	0.3	$	18.6	$	—	$	24.3

~~Table of Contents~~

The following table summarizes the results of the Synthetic Rubber business for the three and six months ended June 30, 2021 and 2020, which are reflected as discontinued operations in the Company’s condensed consolidated statements of operations:

Three Months Ended

Six Months Ended

June 30,

June 30,


2021

2020

2021

2020
Net sales

$
135.7

$
36.4

$
259.9

$
138.1
Cost of sales

108.2

66.9

219.3

156.5
Gross profit (loss)

27.5

(30.5)

40.6

(18.4)
Selling, general and administrative expenses

5.6

5.4

11.8

10.3
Impairment charges

—

—

—

28.0
Operating income (loss)

21.9

(35.9)

28.8

(56.7)
Other expense, net

0.8

0.6

1.0

0.8
Income (loss) from discontinued operations before income taxes

21.1

(36.5)

27.8

(57.5)
Provision for income taxes

2.5

117.7

3.5

63.6
Net income (loss) from discontinued operations

$
18.6

$
(154.2)

$
24.3

$
(121.1)

Amounts for operating net sales and costs of sales which had previously been eliminated in consolidation related to intercompany sales of styrene monomer to the Synthetic Rubber business are now reflected on a gross basis as a component of net sales and costs of sales from continuing operations for all periods presented. The Company has recast these amounts because upon completion of the sale of the Synthetic Rubber business, the Company will continue to have these ongoing transactions with Synthos, under a supply agreement executed in conjunction with the divestiture. Refer to Note 5 for recast segment net sales reflecting this adjustment.

Additionally, the Company previously allocated certain corporate management overhead costs to the former Synthetic Rubber segment which may no longer be allocated to discontinued operations under the relevant authoritative accounting guidance. Accordingly, the Company has recast its segment reporting results to reflect the reattribution of these expenses in all periods presented. Refer to Note 16 for recast segment results reflecting this adjustment.

NOTE 5—NET SALES

Refer to the Annual Report for information on the Company's accounting policies and further background related to its net sales.

The following table provides disclosure of net sales to external customers by primary geographical market (based on the location where sales originated), by segment for the three and six months ended June 30, ~~2021~~2022 and 2020. Prior period balances in this table have been recast to reflect current period presentation, as described in Notes 1 and 4, including updates for the classification of the Company’s former Synthetic Rubber segment as discontinued operations and the Company’s prior year resegmentation.2021.


	Engineered		Latex		Base
Three Months Ended	Materials		Binders		Plastics		Polystyrene		Feedstocks		Total
June 30, 2022
United States	$	150.7	$	102.5	$	106.1	$	—	$	4.6	$	363.9
Europe		108.9		169.4		198.5		215.9		92.0		784.7
Asia-Pacific		38.2		79.3		31.6		96.0		—		245.1
Rest of World		3.5		2.5		25.7		0.1		—		31.8
Total	$	301.3	$	353.7	$	361.9	$	312.0	$	96.6	$	1,425.5
June 30, 2021
United States	$	60.9	$	74.1	$	71.6	$	—	$	3.3	$	209.9
Europe		80.3		160.5		253.8		199.8		68.0		762.4
Asia-Pacific		37.8		74.3		51.9		113.5		—		277.5
Rest of World		2.0		2.3		19.6		—		—		23.9
Total	$	181.0	$	311.2	$	396.9	$	313.3	$	71.3	$	1,273.7

1412

Table of Contents

Latex

Engineered

Base

Three Months Ended

Binders

Materials

Plastics

Polystyrene

Feedstocks

Total

June 30, 2021

United States

$
74.1

$
60.9

$
71.6

$
—

$
3.3

$
209.9

Europe

160.5

80.3

253.8

199.8

68.0

762.4

Asia-Pacific

74.3

37.8

51.9

113.5

—

277.5

Rest of World

2.3

2.0

19.6

—

—

23.9

Total

$
311.2

$
181.0

$
396.9

$
313.3

$
71.3

$
1,273.7

June 30, 2020

United States

$
50.9

$
7.4

$
30.0

$
—

$
1.3

$
89.6

Europe

72.3

8.7

89.1

95.1

21.6

286.8

Asia-Pacific

40.4

21.3

26.8

60.7

1.7

150.9

Rest of World

1.3

0.1

5.6

—

—

7.0

Total

$
164.9

$
37.5

$
151.5

$
155.8

$
24.6

$
534.3

~~Placeholder~~


	Latex		Engineered		Base								Engineered		Latex		Base
Six Months Ended	Binders		Materials		Plastics		Polystyrene		Feedstocks		Total		Materials		Binders		Plastics		Polystyrene		Feedstocks		Total
June 30, 2022
United States													$	289.1	$	184.7	$	190.6	$	—	$	8.5	$	672.9
Europe														227.6		320.3		445.1		430.5		158.4		1,581.9
Asia-Pacific														73.5		151.0		68.8		199.4		—		492.7
Rest of World														6.3		4.4		53.9		0.1		—		64.7
Total													$	596.5	$	660.4	$	758.4	$	630.0	$	166.9	$	2,812.2
June 30, 2021
United States	$	141.9	$	71.1	$	134.2	$	—	$	6.7	$	353.9	$	71.1	$	141.9	$	134.2	$	—	$	6.7	$	353.9
Europe		278.1		101.4		451.7		349.0		138.1		1,318.3		101.4		278.1		451.7		349.0		138.1		1,318.3
Asia-Pacific		138.1		72.1		100.6		231.1		—		541.9		72.1		138.1		100.6		231.1		—		541.9
Rest of World		4.1		2.2		39.3		—		—		45.6		2.2		4.1		39.3		—		—		45.6
Total	$	562.2	$	246.8	$	725.8	$	580.1	$	144.8	$	2,259.7	$	246.8	$	562.2	$	725.8	$	580.1	$	144.8	$	2,259.7
June 30, 2020
United States	$	113.1	$	17.4	$	90.7	$	—	$	3.9	$	225.1
Europe		174.2		23.6		239.2		204.9		61.8		703.7
Asia-Pacific		92.8		44.2		53.6		133.7		14.8		339.1
Rest of World		3.9		0.1		25.4		—		—		29.4
Total	$	384.0	$	85.3	$	408.9	$	338.6	$	80.5	$	1,297.3

NOTE 6—INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Company is currently supplemented by 1 joint venture, Americas Styrenics LLC (“Americas Styrenics,” a styrene and polystyrene joint venture with Chevron Phillips Chemical Company LP), which is accounted for using the equity method. The results of Americas Styrenics are included within its own reporting segment.

Americas Styrenics is a privately held company; therefore, a quoted market price for its equity interests is not available. The summarized financial information of the Company’s unconsolidated affiliate is shown below.


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Sales	$	495.6	$	225.4	$	918.5	$	547.5	$	594.6	$	495.6	$	1,119.0	$	918.5
Gross profit	$	74.5	$	31.3	$	139.9	$	38.4	$	93.5	$	74.5	$	141.6	$	139.9
Net income	$	63.6	$	20.1	$	114.6	$	11.8	$	80.1	$	63.6	$	116.2	$	114.6

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s investment in Americas Styrenics was ~~$253.2~~$271.4 million and ~~$240.1~~$247.8 million, respectively, which was ~~$12.0~~$12.3 million and ~~$16.3~~$9.4 million greater than the Company’s 50% share of the underlying net assets of Americas Styrenics, respectively. This amount represents the difference between the book value of assets ~~contributed to~~held by the joint venture ~~at the time of formation (May 1, 2008)~~ and the Company’s 50% share of the total recorded value of the joint venture’s assets, ~~and~~inclusive of certain adjustments to conform with the Company’s accounting policies. This difference is being amortized over ~~the~~a weighted average remaining useful life of ~~the contributed assets of~~

~~Table of Contents~~

approximately ~~2.8~~2.5 years as of June 30, ~~2021.~~2022. The Company received dividends of ~~$25.0~~$30.0 million and ~~$40.0~~$37.5 million from Americas Styrenics during the three and six months ended June 30, ~~2021,~~2022, respectively, ~~while 0 dividends were received~~and $25.0 million and $40.0 million during the three and six months ended June 30, ~~2020.~~2021, respectively.

NOTE 7—INVENTORIES

Inventories consisted of the following:


	June 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
Finished goods	$	262.3	$	132.9	$	352.9	$	279.2
Raw materials and semi-finished goods		262.8		161.7		370.1		303.9
Supplies		37.8		29.5		36.7		37.9
Total	$	562.9	$	324.1	$	759.7	$	621.0

Table of Contents

NOTE 8—DEBT

Refer to the Annual Report for definitions of capitalized terms not included herein and further background on the Company’s debt structure discussed below. The Company was in compliance with all debt related covenants as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, debt consisted of the following:


			June 30, 2021						December 31, 2020								June 30, 2022						December 31, 2021
	Interest Rate as of June 30, 2021	Maturity Date	Carrying Amount		Unamortized Deferred Financing Fees ⁽¹⁾		Total Debt, Less Unamortized Deferred Financing Fees		Carrying Amount		Unamortized Deferred Financing Fees ⁽¹⁾		Total Debt, Less Unamortized Deferred Financing Fees		Interest Rate as of June 30, 2022	Maturity Date	Carrying Amount		Unamortized Deferred Financing Fees ⁽¹⁾		Total Debt, Less Unamortized Deferred Financing Fees		Carrying Amount		Unamortized Deferred Financing Fees ⁽¹⁾		Total Debt, Less Unamortized Deferred Financing Fees
Senior Credit Facility
2024 Term Loan B	2.104%	September 2024	$	673.9	$	(9.5)	$	664.4	$	677.3	$	(10.8)	$	666.5	3.666%	September 2024	$	666.9	$	(6.6)	$	660.3	$	670.4	$	(8.0)	$	662.4
2028 Term Loan B	2.604%	May 2028		746.3		(18.3)		728.0		—		—		—	4.166%	May 2028		739.3		(15.7)		723.6		742.8		(17.0)		725.8
2026 Revolving Facility⁽²⁾	Various	May 2026		—		—		—		—		—		—	Various	May 2026		—		—		—		—		—		—
2029 Senior Notes	5.125%	April 2029		450.0		(15.5)		434.5		—		—		—	5.125%	April 2029		450.0		(13.8)		436.2		450.0		(14.7)		435.3
2025 Senior Notes	5.375%	September 2025		500.0		(5.6)		494.4		500.0		(6.2)		493.8	5.375%	September 2025		500.0		(4.4)		495.6		500.0		(5.0)		495.0
Accounts Receivable Securitization Facility⁽³⁾	Various	September 2021		0		0		0		0		0		0	Various	November 2024		0		0		0		0		0		0
Other indebtedness	Various	Various		7.9		—		7.9		10.0		—		10.0	Various	Various		4.3		—		4.3		5.6		—		5.6
Total debt			$	2,378.1	$	(48.9)	$	2,329.2	$	1,187.3	$	(17.0)	$	1,170.3			$	2,360.5	$	(40.5)	$	2,320.0	$	2,368.8	$	(44.7)	$	2,324.1
Less: current portion⁽⁴⁾								(19.1)						(12.2)								(17.7)						(18.5)
Total long-term debt, net of unamortized deferred financing fees							$	2,310.1					$	1,158.1							$	2,302.3					$	2,305.6

(1)

This caption does not include deferred financing fees related to the Company’s revolving facilities, which are included within “Deferred charges and other assets” on the condensed consolidated balance sheets.

(2)

On May 3, 2021, in conjunction with the Acquisition, the Company extended its Revolving Facility (previously the “2022 Revolving Facility,” now the “2026 Revolving Facility”), originally maturing in September 2022, to May 2026, as described further below. As of June 30, ~~2021,~~2022, under the 2026 Revolving Facility, the Company had a capacity of $375.0 million and funds available for borrowing of ~~$360.4~~$368.9 million (net of ~~$14.6~~$6.1 million outstanding letters of credit). Additionally, the Company is required to pay a quarterly commitment fee in respect of any unused commitments under this facility equal to 0.375% per annum.

(3)

As of June 30, ~~2021,~~2022, this facility had a borrowing capacity of $150.0 million, and the Company had approximately $150.0 million of accounts receivable available to support this facility, based on the pool of eligible accounts receivable. ~~In regard to outstanding borrowings, fixed interest charges are 1.95% plus variable commercial paper rates, while for available, but undrawn commitments, fixed interest charges are 1.00%.~~

~~Table of Contents~~

(4)

~~As of June 30, 2021, the~~The current portion of long-term debt was primarily related to $14.5 million of the scheduled future principal payments on both the 2024 Term Loan B and 2028 Term Loan ~~B. As~~B as of June 30, 2022 and December 31, ~~2020, the current portion of long-term debt was primarily related to $7.0 million of the scheduled future principal payments on the 2024 Term Loan B.~~2021.

~~2029 Senior Notes~~

On March 24, 2021, Trinseo Materials Operating S.C.A. and Trinseo Materials Finance, Inc. (together, the “Issuers”), each an indirect, wholly-owned subsidiary of the Company, executed an indenture pursuant to which they issued $450.0 million aggregate principal amount of 5.125% senior notes due 2029 (the “2029 Senior Notes”) in a 144A private transaction exempt from the registration requirements of the Securities Act of 1933, as amended. Interest on the 2029 Senior Notes is payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2021. The 2029 Senior Notes mature on April 1, 2029. The net proceeds from the 2029 Senior Notes offering were used as a portion of the funding needed for the Acquisition, in addition to fees and expenses related to the offering and the Acquisition. The gross proceeds from the 2029 Senior Notes offering were released upon satisfaction of certain escrow release conditions, including closing of the Acquisition, which was completed on May 3, 2021.

At any time prior to April 1, 2024, the Issuers may redeem the 2029 Senior Notes in whole or in part, at their option, at a redemption price equal to 100% of the principal amount of such notes plus the relevant applicable premium as of, and accrued and unpaid interest to, but not including, the redemption date. At any time and from time to time after April 1, 2024, the Issuers may redeem the 2029 Senior Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the notes redeemed to, but not including, the redemption date:

12-month period commencing April 1 in Year

Percentage

2024

102.563
%
2025

101.281
%
2026 and thereafter

100.000
%

At any time prior to April 1, 2024, the Issuers may redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes at a redemption price equal to 105.125%, plus accrued and unpaid interest to, but not including, the redemption date, with the aggregate gross proceeds from certain equity offerings.

The 2029 Senior Notes are the Issuers’ senior unsecured obligations and rank equally in right of payment with all of the Issuers’ existing and future indebtedness that is not expressly subordinated in right of payment thereto. The 2029 Senior Notes will be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto and effectively junior to (a) the Issuers’ existing and future secured indebtedness, including the Company’s accounts receivable facility and the Issuers’ Credit Facility, to the extent of the value of the collateral securing such indebtedness and (b) all existing and future liabilities of the Issuers’ non-guarantor subsidiaries.

The Indenture contains customary covenants, including restrictions on the Issuers’ and certain of its subsidiaries’ ability to incur additional indebtedness and guarantee indebtedness; pay dividends on, redeem or repurchase capital stock; make investments; prepay certain indebtedness; create liens; enter into transactions with the Issuers’ affiliates; designate the Issuers’ subsidiaries as Unrestricted Subsidiaries (as defined in the Indenture); and consolidate, merge, or transfer all or substantially all of the Issuers’ assets. The covenants are subject to a number of exceptions and qualifications. Certain of these covenants, excluding without limitation those relating to transactions with the Issuers’ affiliates and consolidation, merger, or transfer of all or substantially all of the Issuers’ assets, will be suspended during any period of time that (1) the 2029 Senior Notes have Investment Grade Status (as defined in the Indenture) and (2) no default has occurred and is continuing under the Indenture. In the event that the 2029 Senior Notes are downgraded to below an Investment Grade Status, the Issuers and certain subsidiaries will again be subject to the suspended covenants with respect to future events. ~~As of June 30, 2021, the Company was in compliance with all debt covenant requirements under the Indenture.~~

Total fees incurred in connection with the issuance of the 2029 Senior Notes were $15.9 million, which were capitalized and recorded within “Long-term debt, net of unamortized deferred financing fees” on the condensed

~~Table of Contents~~

~~consolidated balance sheet, and are being amortized into “Interest expense, net” in the condensed consolidated statements of operations over their~~ ~~eight-year~~ ~~term using the effective interest method.~~

~~Senior Credit Facility~~

On May 3, 2021, the Issuers entered into (i) an amendment to the existing credit agreement dated as of September 6, 2017 in which the Issuers borrowed a new tranche of term loans in an aggregate amount of $750.0 million senior secured term loan B facility maturing in May 2028 (the “2028 Term Loan B”), used to finance a portion of the purchase price of the Acquisition, and (ii) an amendment to the existing credit agreement, pursuant to which the existing revolving credit facility has been refinanced with a new revolving credit facility in an aggregate amount of $375.0 million, with a $25.0 million swingline subfacility and a $35.0 million letter of credit subfacility, maturing in May 2026. Amounts under the 2026 Revolving Facility are available in U.S. dollars and euros. The terms under the 2026 Revolving Facility are substantially unchanged from the 2022 Revolving Facility. Refer to the Annual Report for the terms of the 2022 Revolving Facility. As a result of amending the revolving credit facility, during the three and six months ended June 30, 2021, the Company recognized a $0.5 million loss on extinguishment of long-term debt related to the write-off of a portion of the existing unamortized deferred financing fees.

The 2028 Term Loan B bears an interest rate of LIBOR plus 2.50%, subject to a 0.00% LIBOR floor, and was issued at a 0.5% original issue discount. Further, the 2028 Term Loan B requires scheduled quarterly payments in amounts equal to 0.25% of the original principal amount of the 2028 Term Loan B, with the balance to be paid at maturity.

The 2026 Revolving Facility contains a financial covenant that requires compliance with a springing first lien net leverage ratio test. If the outstanding balance under the 2026 Revolving Facility exceeds 30% of the $375.0 million borrowing capacity (excluding undrawn letters of credit up to $10.0 million and cash collateralized letters of credit) at a quarter end, then the Borrowers’ first lien net leverage ratio may not exceed 3.50 to 1.00. As of June 30, 2021, the Company was in compliance with all debt covenant requirements under the Senior Credit Facility.

Fees incurred in connection with the issuance of the 2028 Term Loan B were $18.7 million, which were capitalized and recorded within “Long-term debt, net of unamortized deferred financing fees” on the condensed consolidated balance sheet, and are being amortized into “Interest expense, net” in the condensed consolidated statements of operations over their ~~seven-year~~ ~~term using the effective interest method.~~

Fees incurred in connection with the 2026 Revolving Facility were $0.4 million, which were capitalized and recorded within “Deferred charges and other assets” on the condensed consolidated balance sheet, and are being amortized along with the remaining $0.8 million of unamortized deferred financing fees from the Company’s former revolving credit facility (“2022 Revolving Facility”) into “Interest expense, net” in the condensed consolidated statements of operations over the ~~five-year~~ ~~term of the facility using the straight-line method.~~

NOTE 9—GOODWILL

The following table shows changes in the carrying amount of goodwill, by segment, from December 31, ~~2020~~2021 to June 30, ~~2021:~~2022:

Latex

Engineered

Base

Americas


Binders

Materials

Plastics

Polystyrene

Feedstocks

Styrenics

Total

Balance at December 31, 2020

$
17.1

$
16.0

$
24.2

$
4.8

$
—

$
—

$
62.1

Acquisitions (Note 3)

—

567.7

—

—

—

—

567.7

Foreign currency impact

(0.6)

(4.8)

(0.8)

(0.1)

—

—

(6.3)

Balance at June 30, 2021

$
16.5

$
578.9

$
23.4

$
4.7

$
—

$
—

$
623.5


	Engineered		Latex		Base						Americas
	Materials		Binders		Plastics		Polystyrene		Feedstocks		Styrenics		Total
Balance at December 31, 2021	$	667.3	$	15.9	$	22.4	$	4.5	$	—	$	—	$	710.1
Acquisitions (Note 3)		—		—		22.8		—		—		—		22.8
Foreign currency impact		(17.6)		(1.6)		(3.8)		(0.5)		—		—		(23.5)
Balance at June 30, 2022	$	649.7	$	14.3	$	41.4	$	4.0	$	—	$	—	$	709.4

1814

Table of Contents

NOTE 10—DERIVATIVE INSTRUMENTS

The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates and interest rate risk. To manage these risks, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts and interest rate swap agreements. The Company does not hold or enter into financial instruments for trading or speculative purposes. All derivatives are recorded on the condensed consolidated balance sheets at fair value.

Foreign Exchange Forward Contracts

Certain subsidiaries have assets and liabilities denominated in currencies other than their respective functional currencies, which creates foreign exchange risk. The Company’s principal strategy in managing its exposure to changes in foreign currency exchange rates is to naturally hedge the foreign currency-denominated liabilities on its balance sheet against corresponding assets of the same currency, such that any changes in liabilities due to fluctuations in exchange rates are offset by changes in their corresponding foreign currency assets. In order to further reduce this exposure, the Company also uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on assets and liabilities denominated in certain foreign currencies. The Company entered into a specific such foreign exchange forward contract in December 2020 in order to economically hedge the euro-denominated purchase price of the Arkema PMMA business, which was acquired on May 3, 2021, as discussed in Note 3. These derivative contracts are not designated for hedge accounting treatment.

As of June 30, ~~2021,~~2022, the Company had open foreign exchange forward contracts with a notional U.S. dollar equivalent absolute value of ~~$1,185.3~~$689.6 million. The following table displays the notional amounts of the most significant net foreign exchange hedge positions outstanding as of June 30, ~~2021:~~2022:


	June 30,		June 30,
Buy / (Sell)	2021		2022
Euro	$	(1,046.0)	$	(564.7)
Chinese Yuan	$	(50.9)	$	(48.7)
Swiss Franc	$	31.1
Mexican Peso	$	(15.3)
New Taiwan Dollar	$	12.2	$	16.4
Swedish Krona			$	12.6
South Korean Won			$	(12.4)

Open foreign exchange forward contracts as of June 30, ~~2021~~2022 had maturities occurring over a period of two months.

Foreign Exchange Cash Flow Hedges

The Company also enters into forward contracts, as deemed appropriate, with the objective of managing the currency risk associated with forecasted U.S. dollar-denominated raw materials purchases by 1 of its subsidiaries whose functional currency is the euro. By entering into these forward contracts, which are designated as cash flow hedges, the Company buys a designated amount of U.S. dollars and sells euros at the prevailing market rate to mitigate the risk associated with the fluctuations in the euro-to-U.S. dollar foreign currency exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in Accumulated Other Comprehensive Income (“AOCI”) to the extent effective, and reclassified to cost of sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

~~Open~~The Company had 0 open foreign exchange cash flow hedges as of June 30, ~~2021 had maturities occurring over a period of six months, and had a net notional U.S. dollar equivalent of $48.0 million.~~2022.

Interest Rate Swaps

On September 6, 2017, the Company issued the 2024 Term Loan B, which currently bears an interest rate of LIBOR plus 2.00%, subject to a 0.00% LIBOR floor. In order to reduce the variability in interest payments associated with the Company’s variable rate debt, during 2017 the Company entered into certain interest rate swap agreements to convert a portion of these variable rate borrowings into a fixed rate obligation. These interest rate swap agreements are designated as cash flow hedges, and as such, the contracts are marked-to-market at each reporting date and any

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unrealized gains or losses are included in AOCI to the extent effective, and reclassified to interest expense in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

As of June 30, ~~2021,~~2022, the Company had open interest rate swap agreements with a net notional U.S. dollar equivalent of $200.0 million which had an effective date of September 29, 2017 and mature in September 2022. Under the terms of the swap agreements, the Company is required to pay the counterparties a stream of fixed interest payments at a rate of 1.81%, and in turn, receives variable interest payments based on 1-month LIBOR ~~(0.10%~~(1.67% as of June 30, ~~2021)~~2022) from the counterparties.

Net Investment Hedge

The Company accounts for its cross currency swaps (“CCS”) under the spot method, meaning that changes in the fair value of the hedge included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded within AOCI, where they remain until either the sale or substantially complete liquidation of the subsidiary subject to the hedge. Additionally, the initial value of any component excluded from the assessment of effectiveness is recognized in income using a systematic and rational method over the life of the hedging instrument and any difference between the change in the fair value of the excluded component and amounts recognized in income under that systematic and rational method is recognized in AOCI. ~~The~~When applicable, the Company amortizes any initial excluded component value of a CCS as a reduction of “Interest expense, net” in the condensed consolidated statements of operations using the straight-line method over the remaining term of the related CCS. Additionally, interest receipts and payments are accrued under the terms of the Company’s CCS and are recognized within “Interest expense, net” in the condensed consolidated statements of operations.

The Company entered into a CCS arrangement (the “2017 CCS”) on September 1, 2017, swapping U.S. dollar principal and interest payments of $500.0 million at an interest rate of 5.375% on its 2025 Senior Notes for euro-denominated payments of €420.0 million at a weighted average interest rate of 3.45% for approximately five years. The 2017 CCS was initially designated under the forward method and then redesignated under the spot method effective April 1, 2018. At the time of redesignation, the 2017 CCS had a cumulative foreign currency translation loss in AOCI of $38.0 million. The excluded component value related to the 2017 CCS at April 1, 2018 was $23.6 million, which was being amortized over its remaining term. On February 26, 2020, the Company settled its 2017 CCS and replaced it with a new CCS arrangement (the “2020 CCS”) that carried substantially the same terms as the 2017 CCS. Upon settlement of the 2017 CCS, the Company realized net cash proceeds of $51.6 million. The remaining $13.8 million unamortized balance of the initial excluded component related to the 2017 CCS at the time of settlement will remain in AOCI until either the sale or substantially complete liquidation of the relevant subsidiaries. Under the 2020 CCS, the Company notionally exchanged $500.0 million at an interest rate of 5.375% for €459.3 million at a weighted average interest rate of 3.672% for approximately 2.7 years, with a final maturity of November 3, 2022. The cash flows under the 2020 CCS are aligned with the Company’s principal and interest obligations on its 5.375% 2025 Senior Notes.Refer to the Annual Report for further information.

On April 7, 2022, the Company settled its existing 2020 CCS, which were set to mature in November 2022. Upon settlement of the 2020 CCS, the Company realized net cash proceeds of $1.9 million.

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Summary of Derivative Instruments

The following table presents the effect of the Company’s derivative instruments, including those not designated for hedge accounting treatment, on the condensed consolidated statements of operations for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

Location and Amount of Gain (Loss) Recognized in
Statements of Operations

Three Months Ended

Three Months Ended

June 30, 2021

June 30, 2020

Cost of
sales

Interest expense, net

Acquisition purchase price hedge gain (loss)

Other expense, net

Cost of
sales

Interest expense, net

Acquisition purchase price hedge gain (loss)

Other expense, net

Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded

$
(1,053.7)

$
(21.6)

$
33.0

$
(5.6)

$
(510.9)

$
(11.7)

$
—

$
(0.4)

The effects of cash flow hedge instruments:

Foreign exchange cash flow hedges

Amount of gain reclassified from AOCI into income

$
—

$
—

$
—

$
—

$
0.5

$
—

$
—

$
—

Interest rate swaps

Amount of loss reclassified from AOCI into income

$
—

$
(0.9)

$
—

$
—

$
—

$
(0.7)

$
—

$
—

The effects of net investment hedge instruments:

Cross currency swaps (CCS)

Amount of gain excluded from effectiveness testing

$
—

$
1.7

$
—

$
—

$
—

$
2.0

$
—

$
—

The effects of derivatives not designated as hedge instruments:

Foreign exchange forward contracts

Amount of gain (loss) recognized in income ⁽¹⁾

$
—

$
—

$
33.0

$
0.4

$
—

$
—

$
—

$
(8.1)


	Location and Amount of Gain (Loss) Recognized in Statements of Operations
	Three Months Ended						Three Months Ended
	June 30, 2022						June 30, 2021
	Cost of sales		Interest expense, net		Other (expense) income, net		Cost of sales		Interest expense, net		Acquisition purchase price hedge gain (loss)		Other (expense) income, net
Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded	$	(1,286.4)	$	(25.4)	$	1.7	$	(1,053.7)	$	(21.6)	$	33.0	$	(6.1)

The effects of cash flow hedge instruments:
Foreign exchange cash flow hedges
Amount of gain (loss) reclassified from AOCI into income	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest rate swaps
Amount of loss reclassified from AOCI into income	$	—	$	(0.6)	$	—	$	—	$	(0.9)	$	—	$	—

The effects of net investment hedge instruments:
Cross currency swaps (CCS)
Amount of gain excluded from effectiveness testing	$	—	$	0.3	$	—	$	—	$	1.7	$	—	$	—

The effects of derivatives not designated as hedge instruments:
Foreign exchange forward contracts
Amount of gain recognized in income ⁽¹⁾	$	—	$	—	$	39.1	$	—	$	—	$	33.0	$	0.4

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Location and Amount of Gain (Loss) Recognized in
Statements of Operations

Six Months Ended

Six Months Ended

June 30, 2021

June 30, 2020


Cost of
sales

Interest expense, net

Acquisition purchase price hedge gain (loss)

Other expense, net

Cost of
sales

Interest expense, net

Acquisition purchase price hedge gain (loss)

Other expense, net

Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded

$
(1,850.8)

$
(33.6)

$
(22.0)

$
(8.0)

$
(1,216.2)

$
(22.0)

$
—

$
(1.7)

Effects of cash flow hedge instruments:

Foreign exchange cash flow hedges

Amount of gain (loss) reclassified from AOCI into income

$
(0.3)

$
—

$
—

$
—

$
0.6

$
—

$
—

$
—

Interest rate swaps

Amount of loss reclassified from AOCI into income

$
—

$
(1.7)

$
—

$
—

$
—

$
(0.7)

$
—

$
—

Effects of net investment hedge instruments:

Cross currency swaps

Amount of gain excluded from effectiveness testing ⁽²⁾

$
—

$
3.6

$
—

$
—

$
—

$
5.4

$
—

$
—

Effects of derivatives not designated as hedge instruments:

Foreign exchange forward contracts

Amount of gain (loss) recognized in income ⁽¹⁾

$
—

$
—

$
(22.0)

$
20.1

$
—

$
—

$
—

$
5.7


	Location and Amount of Gain (Loss) Recognized in Statements of Operations
	Six Months Ended						Six Months Ended
	June 30, 2022						June 30, 2021
	Cost of sales		Interest expense, net		Other (expense) income, net		Cost of sales		Interest expense, net		Acquisition purchase price hedge gain (loss)		Other (expense) income, net
Total amount of income and (expense) line items presented in the statements of operations in which the effects of derivative instruments are recorded	$	(2,497.1)	$	(47.3)	$	(1.3)	$	(1,850.8)	$	(33.6)	$	(22.0)	$	(8.5)

The effects of cash flow hedge instruments:
Foreign exchange cash flow hedges
Amount of gain (loss) reclassified from AOCI into income	$	—	$	—	$	—	$	(0.3)	$	—	$	—	$	—
Interest rate swaps
Amount of loss reclassified from AOCI into income	$	—	$	(1.4)	$	—	$	—	$	(1.7)	$	—	$	—

The effects of net investment hedge instruments:
Cross currency swaps (CCS)
Amount of gain excluded from effectiveness testing	$	—	$	2.4	$	—	$	—	$	3.6	$	—	$	—

The effects of derivatives not designated as hedge instruments:
Foreign exchange forward contracts
Amount of gain recognized in income ⁽¹⁾	$	—	$	—	$	47.9	$	—	$	—	$	(22.0)	$	20.1

(1)

The $33.0 million gain and $22.0 million loss incurred from the change in fair value of the forward currency hedge arrangement on the euro-denominated purchase price of the Arkema PMMA business during the three and six months ended June 30, 2021, respectively, is presented separately in the condensed consolidated statements of operations from the gains recorded on the Company’s other foreign exchange forward contracts.

~~(2)~~

Amounts for the three and six months ended June 30, 2020 represents both the 2017 CCS through its settlement on February 26, 2020 and the 2020 CCS from when it was entered into on February 26, 2020 through June 30, 2020.

The following table presents the effect of cash flow and net investment hedge accounting on AOCI for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

`

Gain (Loss) Recognized in AOCI on Balance Sheet

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020
Designated as Cash Flow Hedges

Foreign exchange cash flow hedges

$
(1.0)

$
(1.2)

$
2.7

$
0.9
Interest rate swaps

0.8

(0.1)

1.7

(5.9)
Total

$
(0.2)

$
(1.3)

$
4.4

$
(5.0)
Designated as Net Investment Hedges

Cross currency swaps (CCS) ⁽¹⁾

$
(7.1)

$
(10.3)

$
19.1

$
12.6
Total

$
(7.1)

$
(10.3)

$
19.1

$
12.6


`	Gain (Loss) Recognized in AOCI on Balance Sheet
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Designated as Cash Flow Hedges
Foreign exchange cash flow hedges	$	—	$	(1.0)	$	—	$	2.7
Interest rate swaps		0.9		0.8		2.4		1.7
Total	$	0.9	$	(0.2)	$	2.4	$	4.4
Designated as Net Investment Hedges
Cross currency swaps (CCS)	$	9.7	$	(7.1)	$	15.8	$	19.1
Total	$	9.7	$	(7.1)	$	15.8	$	19.1

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~~(1)~~

Amount for the six months ended June 30, 2020 represents both the 2017 CCS through its settlement on February 26, 2020 and the 2020 CCS from when it was entered into on February 26, 2020 through June 30, 2021.


	Gain (Loss) Recognized in Other expense, net in Statement of Operations								Gain (Loss) Recognized in Other expense, net in Statement of Operations
	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Settlements and changes in the fair value of forward contracts (not designated as hedges) ⁽¹⁾	$	0.4	$	(8.1)	$	20.1	$	5.7	$	39.1	$	0.4	$	47.9	$	20.1
Remeasurement of foreign currency-denominated assets and liabilities	$	0.6	$	9.0	$	(19.3)	$	(5.1)	$	(37.8)	$	0.6	$	(48.0)	$	(19.3)
	$	1.0	$	0.9	$	0.8	$	0.6
Total									$	1.3	$	1.0	$	(0.1)	$	0.8

(1)

~~Amounts do~~Amount does not include the ~~gains~~gain of $33.0 million and ~~losses~~loss of $22.0 million recorded from the change in fair value of the forward currency hedge arrangement on the euro-denominated purchase price of the Arkema PMMA business during the three and six months ended June 30, 2021, respectively.

The Company expects to reclassify in the next twelve months an approximate ~~$2.9~~$0.2 million net ~~loss~~gain from AOCI into earnings related to the Company’s outstanding ~~foreign exchange cash flow hedges and~~ interest rate swaps as of June 30, ~~2021 based on current foreign exchange rates.~~2022.

The following tables summarize the gross and net unrealized gains and losses, as well as the balance sheet classification, of outstanding derivatives recorded in the condensed consolidated balance sheets:


	June 30, 2021										June 30, 2022
	Foreign		Foreign								Foreign
	Exchange		Exchange		Interest		Cross				Exchange		Interest
Balance Sheet	Forward		Cash Flow		Rate		Currency				Forward		Rate
Classification	Contracts		Hedges		Swaps		Swaps		Total		Contracts		Swaps		Total
Asset Derivatives:
Accounts receivable, net of allowance	$	25.4	$	0.5	$	—	$	5.6	$	31.5	$	18.2	$	0.2	$	18.4
Deferred charges and other assets		—		—		—		—		—
Gross derivative asset position		25.4		0.5		—		5.6		31.5		18.2		0.2		18.4
Less: Counterparty netting		(0.9)		—		—		—		(0.9)		(0.7)		—		(0.7)
Net derivative asset position	$	24.5	$	0.5	$	—	$	5.6	$	30.6	$	17.5	$	0.2	$	17.7
Liability Derivatives:
Accounts payable	$	(1.3)	$	—	$	(3.4)	$	—	$	(4.7)	$	(1.3)	$	—	$	(1.3)
Other noncurrent obligations		—		—		(0.8)		(48.1)		(48.9)
Gross derivative liability position		(1.3)		—		(4.2)		(48.1)		(53.6)		(1.3)		—		(1.3)
Less: Counterparty netting		0.9		—		—		—		0.9		0.6		—		0.6
Net derivative liability position	$	(0.4)	$	—	$	(4.2)	$	(48.1)	$	(52.7)	$	(0.7)	$	—	$	(0.7)
Total net derivative position	$	24.1	$	0.5	$	(4.2)	$	(42.5)	$	(22.1)	$	16.8	$	0.2	$	17.0

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	December 31, 2020										December 31, 2021
	Foreign		Foreign								Foreign
	Exchange		Exchange		Interest		Cross				Exchange		Interest		Cross
Balance Sheet	Forward		Cash Flow		Rate		Currency				Forward		Rate		Currency
Classification	Contracts		Hedges		Swaps		Swaps		Total		Contracts		Swaps		Swaps		Total
Asset Derivatives:
Accounts receivable, net of allowance ⁽¹⁾	$	8.2	$	—	$	—	$	5.0	$	13.2	$	2.3	$	—	$	—	$	2.3
Deferred charges and other assets		—		—		—		—		—
Gross derivative asset position		8.2		—		—		5.0		13.2		2.3		—		—		2.3
Less: Counterparty netting		(6.5)		—		—		—		(6.5)		(0.1)		—		—		(0.1)
Net derivative asset position	$	1.7	$	—	$	—	$	5.0	$	6.7	$	2.2	$	—	$	—	$	2.2
Liability Derivatives:
Accounts payable ⁽¹⁾	$	(8.3)	$	(2.1)	$	(3.4)	$	—	$	(13.8)
Other noncurrent obligations		—		—		(2.5)		(66.5)		(69.0)
Accounts payable											$	(1.3)	$	(2.2)	$	(17.4)	$	(20.9)
Gross derivative liability position		(8.3)		(2.1)		(5.9)		(66.5)		(82.8)		(1.3)		(2.2)		(17.4)		(20.9)
Less: Counterparty netting		6.5		—		—		—		6.5		0.1		—		—		0.1
Net derivative liability position	$	(1.8)	$	(2.1)	$	(5.9)	$	(66.5)	$	(76.3)	$	(1.2)	$	(2.2)	$	(17.4)	$	(20.8)
Total net derivative position	$	(0.1)	$	(2.1)	$	(5.9)	$	(61.5)	$	(69.6)	$	1.0	$	(2.2)	$	(17.4)	$	(18.6)

~~(1)~~

Balance as of December 31, 2020 includes a $7.3 million receivable representing the fair value of the forward currency hedge arrangement on the euro-denominated purchase price of the Arkema PMMA business.

Forward contracts, interest rate swaps, and cross currency swaps are entered into with a limited number of counterparties, each of which allows for net settlement of all contracts through a single payment in a single currency in the event of a default on or termination of any one contract. As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis by counterparty within the condensed consolidated balance sheets.

Refer to Notes 11 and 18 of the condensed consolidated financial statements for further information regarding the fair value of the Company’s derivative instruments and the related changes in AOCI.

NOTE 11—FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.

Level 1—Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

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The following table summarizes the basis used to measure certain assets and liabilities at fair value on a recurring basis in the condensed consolidated balance sheets as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


	June 30, 2021								June 30, 2022
	Quoted Prices in Active Markets for Identical Items		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Items		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets (Liabilities) at Fair Value	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Foreign exchange forward contracts—Assets	$	—	$	24.5	$	—	$	24.5	$	—	$	17.5	$	—	$	17.5
Foreign exchange forward contracts—(Liabilities)		—		(0.4)		—		(0.4)		—		(0.7)		—		(0.7)
Foreign exchange cash flow hedges—Assets		—		0.5		—		0.5
Interest rate swaps—(Liabilities)		—		(4.2)		—		(4.2)
Cross currency swaps—Assets		—		5.6		—		5.6
Cross currency swaps—(Liabilities)		—		(48.1)		—		(48.1)
Interest rate swaps—Assets										—		0.2		—		0.2
Total fair value	$	—	$	(22.1)	$	—	$	(22.1)	$	—	$	17.0	$	—	$	17.0


	December 31, 2020								December 31, 2021
	Quoted Prices in Active Markets for Identical Items		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Items		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets (Liabilities) at Fair Value	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Foreign exchange forward contracts—Assets	$	—	$	1.7	$	—	$	1.7	$	—	$	2.2	$	—	$	2.2
Foreign exchange forward contracts—(Liabilities)		—		(1.8)		—		(1.8)		—		(1.2)		—		(1.2)
Foreign exchange cash flow hedges—(Liabilities)		—		(2.1)		—		(2.1)
Interest rate swaps—(Liabilities)		—		(5.9)		—		(5.9)		—		(2.2)		—		(2.2)
Cross currency swaps—Assets		—		5.0		—		5.0
Cross currency swaps—(Liabilities)		—		(66.5)		—		(66.5)		—		(17.4)		—		(17.4)
Total fair value	$	—	$	(69.6)	$	—	$	(69.6)	$	—	$	(18.6)	$	—	$	(18.6)

The Company uses an income approach to value its derivative instruments, utilizing discounted cash flow techniques, considering the terms of the contract and observable market information available as of the reporting date, such as interest rate yield curves and currency spot and forward rates. Significant inputs to the valuation for these derivative instruments are obtained from broker quotations or from listed or over-the-counter market data, and are classified as Level 2 in the fair value hierarchy.

~~Table of Contents~~

Nonrecurring Fair Value Measurements

The Company measured certain financial assets at fair value on a nonrecurring basis during the year ended December 31, ~~2020,~~2021, which were still held as of June 30, ~~2021.~~2022. These financial assets represent the Company’s styrene monomer assets in Boehlen, Germany, which it continues to operate. These assets were measured at fair value using underlying fixed asset records in conjunction with the use of industry experience and available market data, which are classified as Level 3 significant unobservable inputs in the fair value hierarchy. ~~As a result of the fair value measurements performed, the Company recorded impairment charges on the Boehlen styrene monomer assets of $10.3 million during the first quarter of 2020.~~ During the three and six months ended June 30, ~~2021,~~2022, the Company recorded additional impairment charges of ~~$1.8~~$1.3 million and $2.0 million, respectively, related to capital expenditures at the Boehlen styrene monomer facility that it determined to be impaired, which are also included within ~~“Impairment~~“Other charges” on the condensed consolidated statements of operations. Refer to the Company’s Annual Report for further information. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the value of the Boehlen styrene monomer assets are recorded at ~~$3.5~~$3.1 million and ~~$3.7~~$3.4 million, respectively, within the Company’s condensed consolidated balance sheets herein.

The Company’s polybutadiene rubber (“PBR,” specifically nickel and neodymium PBR) assets in Schkopau, Germany, which were mothballed in 2020, had also been measured on a nonrecurring basis during the year ended December 31, 2020, resulting in impairment charges of $28.0 million being recorded during the first quarter of 2020. However, as the Schkopau PBR assets are part of the Synthetic Rubber business, during the second quarter of 2021 they were classified as held-for-sale and their operating results were classified as discontinued operations for all periods presented, along with the rest of the Synthetic Rubber business. Refer to Note 4 for further information.

There were no0 other financial assets or liabilities measured at fair value on a nonrecurring basis as of December 31, ~~2020.~~2021.

Table of Contents

Fair Value of Debt Instruments

The following table presents the estimated fair value of the Company’s outstanding debt not carried at fair value as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


	As of		As of		As of		As of
	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
2029 Senior Notes	$	460.3	$	—	$	323.5	$	460.2
2028 Term Loan B		741.7		—		700.1		737.4
2025 Senior Notes		513.0		513.5		426.7		509.4
2024 Term Loan B		667.5		674.0		634.0		667.5
Total fair value	$	2,382.5	$	1,187.5	$	2,084.3	$	2,374.5

The fair value of the Company’s debt facilities above (each Level 2 securities) is determined using over-the-counter market quotes and benchmark yields received from independent vendors. Fair value amount presented reflect the Company’s carrying value of debt, net of original issuance discount.

There were no other significant financial instruments outstanding as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

NOTE 12—PROVISION FOR INCOME TAXES


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Effective income tax rate		14.9	%		195.0	%		17.9	%		19.8	%		45.4	%		14.9	%		49.7	%		17.9	%

Provision for income taxes for the three and six months ended June 30, 2022 totaled $30.8 million and $53.4 million, respectively, resulting in an effective tax rate of 45.4% and 49.7%, respectively. Provision for income taxes for the three and six months ended June 30, 2021 totaled $23.3 million and $43.4 million, respectively, resulting in an effective tax rate of 14.9% and 17.9%, respectively. ~~Benefit from~~

The most significant driver of the increase in the effective income ~~taxes~~tax rate for the three and six months ended June 30, ~~2020 totaled $53.0 million and $10.8 million, respectively, resulting in an effective tax rate of 195.0% and 19.8%, respectively.~~

~~The effective income tax rate for~~2022 compared to the ~~three months ended June 30, 2020~~prior year was ~~primarily driven by~~ the change in the Company’s forecasted jurisdictional mix of earnings, ~~from first quarter 2020 estimates. The second quarter 2020 forecast~~

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~~anticipated a greater amount of income from continuing operations~~where losses expected to be generated in lower rate jurisdictions are being more than ~~was previously estimated, resulting~~offset by income expected to be generated in ~~a significant increase to the second quarter 2020 effective~~higher tax ~~rate.~~ jurisdictions.

Also impacting the effective tax rate for the three and six months ended June 30, ~~2020~~2022 was the revaluation of the Company’s net deferred tax assets in Switzerland, which were originally established as part of the Swiss cantonal tax reform measures enacted in 2019. This revaluation resulted in a one-time deferred tax ~~benefit~~expense of $15.3 million recorded in the second quarter of 2022. This expense was partially offset by the release of a valuation allowance of $8.5 million during the second quarter of 2022, as a result of improvements in actual and projected future results in one of the Company’s subsidiaries in Luxembourg.

Lastly, the effective income tax rate for the six months ended June 30, 2022 increased compared to the prior year due to a $35.6 million charge recorded in the first quarter of 2022 related to the ~~impairment charges recorded during the period related to the Company’s assets in Boehlen, Germany. Refer to~~European Commission request for information, as described within Note 913 in the condensed consolidated financial statements, for ~~further~~which the Company estimates 0 tax benefit based on currently available information.

NOTE 13—COMMITMENTS AND CONTINGENCIES

Environmental Matters

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law, existing technologies and other information. Pursuant to the terms of the agreement associated with the Company’s formation, the pre-closing environmental liabilities were retained by Dow, and Dow agreed, subject to temporal, monetary, and other limitations to indemnify the Company from and against environmental liabilities incurred or relating to the predecessor periods. Other than certain

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immaterial environmental liabilities assumed as part of the PMMA Acquisition noand the Aristech Surfaces Acquisition, 0 environmental claims have been asserted or threatened against the ~~Company, and the~~Company. The Company is not a potentially responsible party for any material amounts at any Superfund Sites. As of June 30, 2022 and December 31, 2021, the Company had ~~$5.0~~$3.8 million and $4.4 million, respectively, of accrued obligations for environmental remediation or restoration costs, which were recorded at fair value within the opening balance ~~sheet~~sheets of the ~~acquired~~ PMMA business and Aristech Surfaces during ~~the second quarter~~ 2021. ~~The Company had no accrued obligations for environmental remediation or restoration costs as of December 31, 2020.~~

Inherent uncertainties exist in the Company’s potential environmental liabilities primarily due to unknown conditions, whether future claims may fall outside the scope of the indemnity, changing governmental regulations and legal standards regarding liability, and evolving technologies for handling site remediation and restoration. In connection with the Company’s existing indemnification, the possibility is considered remote that environmental remediation costs will have a material adverse impact on the condensed consolidated financial statements over the next 12 months.

Purchase Commitments

In the normal course of business, the Company has certain raw material purchase contracts where it is required to purchase certain minimum volumes at current market prices. These commitments range from one to ~~seven~~five years. In certain raw material purchase contracts, the Company has the right to purchase less than the required minimums and pay a liquidated damages fee, or, in case of a permanent plant shutdown, to terminate the contracts. In such cases, these obligations would be less than the annual commitment as disclosed in the Notes to Consolidated Financial Statements included in the Annual Report.

Litigation Matters

From time to time, the Company may be subject to various legal claims and proceedings incidental to the normal conduct of business, relating to such matters as employees, product liability, antitrust/competition, past waste disposal practices and release of chemicals into the environment. While it is impossible at this time to determine with certainty the ultimate outcome of these routine claims, the Company does not believe that the ultimate resolution of these claims will have a material adverse effect on the Company’s results of operations, financial condition or cash flow. Legal costs, including those legal costs expected to be incurred in connection with a loss contingency, are expensed as incurred.

European Commission Request for Information

On June 6, 2018, Trinseo Europe GmbH, a subsidiary of the Company, received a ~~Request~~request for ~~Information~~information in the form of a letter from the European Commission Directorate General for Competition (the “European Commission”) related to styrene monomer commercial activity in the European Economic Area. The Company subsequently commenced an internal investigation into these commercial activities and discovered instances of inappropriate activity.

On October 28, 2019, a supplemental request for information was received from the European Commission. This request was limited to historical employment, entity, and organizational structures, along with certain financial, styrene purchasing, and styrene market information, as well as certain spot styrene purchase contracts. The Company has provided ~~this~~all information requested and continues to fully cooperate with the European Commission.

As a result of further developments in this matter, during the first quarter of 2022, the Company recorded a charge of $35.6 million which is included within “Other charges” on the condensed consolidated statements of operations. As of June 30, 2022, the estimated liability recorded on the balance sheet related to this matter was $33.4 million, adjusted for foreign exchange rate impacts. The ~~proceedings with~~Company is unable to predict the ~~European Commission continue and its~~ultimate outcome of this matter, which remains ~~open.~~ongoing. Based on its findings, the

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European Commission may decide ~~to: (i) require further information; (ii) conduct unannounced raids of the Company’s premises; (iii)~~to adopt a final decision imposing additional fines and/or request certain behavioral or structural commitments from the Company; or (iv) in view of defense arguments by the Company close the proceedings. As a result of the above factors, the Company is unable to predict the ultimate outcome of this matter or estimate the range of reasonably possible losses that could be incurred.Company. However, any additional potential losses incurred could be material to the Company’s results of operations, balance sheet, and cash ~~flows for the period in which they are resolved or become probable and reasonably estimable.~~flows.

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NOTE 14—PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic benefit costs for all significant plans were as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Three Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		Non-U.S. Defined Benefit Pension Plans				U.S. Defined Benefit Pension ⁽¹⁾
Defined Benefit Pension Plans ⁽¹⁾
									2022		2021		2022		2021
Net periodic benefit cost
Service cost	$	4.1	$	3.1	$	8.2	$	6.5	$	3.1	$	4.0	$	0.3	$	0.1
Interest cost		0.5		0.7		1.0		1.4		0.6		0.4		0.1		0.1
Expected return on plan assets		(0.3)		(0.3)		(0.3)		(0.6)		—		(0.1)		(0.3)		(0.2)
Amortization of prior service credit		(0.2)		(0.3)		(0.4)		(0.6)		(0.1)		(0.2)		—		—
Amortization of net loss		1.6		1.0		3.1		2.0		0.6		1.6		—		—
Settlement and curtailment gain										(1.9)		—		—		—
Net periodic benefit cost	$	5.7	$	4.2	$	11.6	$	8.7	$	2.3	$	5.7	$	0.1	$	—


	Six Months Ended				Six Months Ended
	June 30,				June 30,
	Non-U.S. Defined Benefit Pension Plans				U.S. Defined Benefit Pension ⁽¹⁾
	2022		2021		2022		2021
Net periodic benefit cost
Service cost	$	6.3	$	8.1	$	0.5	$	0.1
Interest cost		1.3		0.9		0.3		0.1
Expected return on plan assets		(0.1)		(0.1)		(0.5)		(0.2)
Amortization of prior service credit		(0.2)		(0.4)		—		—
Amortization of net loss		1.3		3.1		—		—
Settlement and curtailment gain		(1.9)		—		—		—
Net periodic benefit cost	$	6.7	$	11.6	$	0.3	$	—

(1)

~~All amounts represent components of net periodic~~The Company’s U.S. defined benefit ~~costs.~~pension plans were acquired in 2021, primarily in conjunction with the PMMA Acquisition.

The Company had less than $0.1 million of net periodic benefit costs for its other postretirement plans for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

Service cost related to the Company’s defined benefit pension plans and other postretirement plans is included within “Cost of sales” and “Selling, general and administrative expenses,” whereas all other components of net periodic benefit cost are included within “Other expense, net” in the condensed consolidated statements of operations. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s benefit obligations included primarily in “Other noncurrent obligations” in the condensed consolidated balance sheets were ~~$307.6~~$249.4 million and ~~$294.4~~$274.7 million, respectively.

The Company made cash contributions and benefit payments to unfunded plans of approximately ~~$2.0~~$2.1 million and ~~$3.6~~$4.6 million during the three and six months ended June 30, ~~2021,~~2022, respectively. The Company expects to make additional cash contributions, including benefit payments to unfunded plans, of approximately ~~$2.9~~$4.2 million to its defined benefit plans for the remainder of ~~2021.~~2022.

NOTE 15—SHARE-BASED COMPENSATION

Refer to the Annual Report for definitions of capitalized terms not included herein and further background on the ~~Company’s share-based compensation programs included in the tables below.~~

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Company’s share-based compensation programs included in the tables below.

The following table summarizes the Company’s share-based compensation expense for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, as well as unrecognized compensation cost as of June 30, ~~2021:~~2022:


									As of											As of
	Three Months Ended				Six Months Ended				June 30, 2021			Three Months Ended				Six Months Ended				June 30, 2022
	June 30,				June 30,				Unrecognized		Weighted	June 30,				June 30,				Unrecognized		Weighted
	2021		2020		2021		2020		Compensation Cost		Average Years	2022		2021		2022		2021		Compensation Cost		Average Years
RSUs	$	1.9	$	1.7	$	3.6	$	3.3	$	13.9	2.0	$	2.4	$	1.9	$	7.0	$	3.6	$	13.7	1.9
Options		1.1		0.8		2.2		1.8		4.7	1.5		0.7		1.1		3.8		2.2		3.4	1.6
PSUs		0.7		0.5		1.2		1.0		4.4	2.1		0.7		0.7		1.4		1.2		5.1	2.2
Total share-based compensation expense	$	3.7	$	3.0	$	7.0	$	6.1				$	3.8	$	3.7	$	12.2	$	7.0

The following table summarizes awards granted and the respective weighted average grant date fair value for the six months ended June 30, ~~2021:~~2022:


	Six Months Ended				Six Months Ended
	June 30, 2021				June 30, 2022
	Awards Granted		Weighted Average Grant Date Fair Value per Award		Awards Granted		Weighted Average Grant Date Fair Value per Award
RSUs		166,575	$	60.96		196,071	$	52.31
Options		240,412		23.35		192,175		22.52
PSUs		49,463		61.06		63,317		57.47

Option Awards

The following are the weighted average assumptions used within the Black-Scholes pricing model for the Company’s option awards granted during the six months ended June 30, ~~2021:~~2022:


	Six Months Ended
	June 30, ~~2021~~2022
Expected term (in years)	5.50
Expected volatility	48.72	%
Risk-free interest rate	~~0.75~~1.97	%
Dividend yield	~~1.78~~2.00	%

The expected volatility assumption is determined based on the historical volatility of the Company’s publicly traded ordinary shares. The expected term of option awards represents the period of time that option awards granted are expected to be outstanding. For the option awards granted during the six months ended June 30, ~~2021,~~2022, the simplified method was used to calculate the expected term, given the Company’s limited historical exercise data. The risk-free interest rate for the periods within the expected term of option awards is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is estimated based on historical and expected dividend activity.

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Performance Share Units (PSUs)

The following are the weighted average assumptions used within the Monte Carlo valuation model for PSUs granted during the six months ended June 30, ~~2021:~~2022:


		Six Months Ended			Six Months Ended
		June 30, 2021			June 30, 2022
Expected term (in years)		3.00			3.00
Expected volatility		58.00	%		57.30	%
Risk-free interest rate		0.20	%		1.73	%
Share price	$	61.06		$	58.64

Determining the fair value of PSUs requires considerable judgment, including estimating the expected volatility of the price of the Company’s ordinary shares, the correlation between the Company’s share price and that of its peer companies, and the expected rate of interest. The expected volatility for each grant is determined based on the historical volatility of the Company’s ordinary shares. The expected term of PSUs represents the length of the performance period. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a duration equivalent to the performance period. The share price is the closing price of the Company’s ordinary shares on the grant date.

NOTE 16—SEGMENTS

~~Beginning in the second quarter of 2021, the~~The Company reported the results of the Synthetic Rubber business as discontinued operations in the condensed consolidated statements of operations for all periods presented, and therefore it is no longer presented as a separate reportable segment. Refer to Note 4 for further information. Additionally, as discussed in the Annual Report, the Company realigned its reporting segments effective October 1, 2020, as a result of which the Company’s former Performance Plastics segment was reorganized into 2 standalone reportingoperates under 6 segments: Engineered Materials, Latex Binders, Base Plastics, Polystyrene, Feedstocks, and ~~Base Plastics. There were no changes to~~Americas Styrenics. The Engineered Materials segment includes the Company’s ~~remaining 4 segments. Refer to~~compounds and blends products sold into higher growth and value applications, such as consumer electronics and medical, as well as soft thermoplastic elastomers (“TPEs”) products which are sold into markets such as footwear and automotive. Additionally, following the ~~Annual Report for further information~~PMMA Acquisition on May 3, 2021 and the ~~resegmentation. The information in~~Aristech Surfaces Acquisition on September 1, 2021, the ~~tables below has been retroactively adjusted to reflect these changes in reporting segments.~~

Engineered Materials segment also includes PMMA and MMA products, which are sold into a variety of applications including automotive, building & construction, medical, consumer electronics, and wellness, among others. The Latex Binders segment produces styrene-butadiene latex (“SB latex”) and other latex polymers and binders, primarily for coated paper and packaging board, carpet and artificial turf backings, as well as a number of performance latex binders applications, such as adhesive, building and construction and the technical textile paper market. The Engineered Materials segment includes the Company’s compounds and blends products sold into higher growth and value applications, such as consumer electronics and medical, as well as soft thermoplastic elastomers (“TPEs”) products which are sold into markets such as footwear and automotive. Additionally, ~~following the Acquisition on May 3, 2021, the Engineered Materials segment also includes~~ ~~PMMA and MMA products, which are sold into a variety of applications including automotive, building & construction, medical and consumer electronics. The~~ Base Plastics segment contains the results of the acrylonitrile-butadiene-styrene (“ABS”), styrene-acrylonitrile (“SAN”), and polycarbonate (“PC”) businesses, as well as compounds and blends for automotive and other applications. The Base Plastics segment also includes the results of Heathland, which was acquired in the first quarter of 2022. The Polystyrene segment includes a variety of general purpose polystyrenes (“GPPS”) and polystyrene that has been modified with polybutadiene rubber to increase its impact resistant properties (“HIPS”). The Feedstocks segment includes the Company’s production and procurement of styrene monomer outside of North America, which is used as a key raw material in many of the Company’s products, including polystyrene, SB latex, and ABS resins. Lastly, the Americas Styrenics segment consists solely of the operations of the Company’s 50%-owned joint venture, Americas Styrenics, a producer of both styrene monomer and polystyrene in North America.

The following table provides disclosure of the Company’s segment Adjusted EBITDA, which is used to measure segment operating performance and is defined below, for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021. Asset and intersegment sales information by reporting segment is not regularly reviewed or included with the Company’s reporting to the chief operating decision maker. Therefore, this information has not been disclosed below. Refer to Note ~~5 for the Company’s net sales to external customers by segment for the three and six months ended June 30, 2021 and 2020.~~

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Latex

Engineered

Base

Americas

Three Months Ended ⁽¹⁾

Binders

Materials

Plastics

Polystyrene

Feedstocks

Styrenics

June 30, 2021

$
32.2

$
27.8

$
82.0

$
51.1

$
39.8

$
30.1

June 30, 2020

$
16.1

$
4.8

$
(11.7)

$
14.6

$
(3.9)

$
14.4

5 for the Company’s net sales to external customers by segment for the three and six months ended June 30, 2022 and 2021.


	Latex		Engineered		Base						Americas		Engineered		Latex		Base						Americas
Six Months Ended ⁽¹⁾	Binders		Materials		Plastics		Polystyrene		Feedstocks		Styrenics
Three Months Ended ⁽¹⁾													Materials		Binders		Plastics		Polystyrene		Feedstocks		Styrenics
June 30, 2022													$	34.0	$	29.4	$	46.1	$	23.0	$	14.2	$	39.4
June 30, 2021	$	49.0	$	35.8	$	147.5	$	98.4	$	86.1	$	53.0	$	27.8	$	32.2	$	82.0	$	51.1	$	39.8	$	30.1
June 30, 2020	$	36.7	$	12.9	$	15.2	$	26.0	$	(20.8)	$	24.2


	Engineered		Latex		Base						Americas
Six Months Ended ⁽¹⁾	Materials		Binders		Plastics		Polystyrene		Feedstocks		Styrenics
June 30, 2022	$	68.7	$	59.6	$	114.7	$	68.3	$	18.3	$	61.0
June 30, 2021	$	35.8	$	49.0	$	147.5	$	98.4	$	86.1	$	53.0

(1)

The Company’s primary measure of segment operating performance is Adjusted EBITDA, which is defined as income from continuing operations before interest expense, net; provision for income taxes; depreciation and amortization expense; loss on extinguishment of long-term debt; asset impairment charges; gains or losses on the dispositions of businesses and assets; restructuring charges; acquisition related costs and benefits and other items. Segment Adjusted EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts, and prior year financial results, providing a measure that management believes reflects core operating performance by removing the impact of transactions and events that would not be considered a part of core operations. Other companies in the industry may define segment Adjusted EBITDA differently than the Company, and as a result, it may be difficult to use segment Adjusted EBITDA, or similarly named financial measures, that other companies may use to compare the performance of those companies to the Company’s segment performance.

The reconciliation of income ~~(loss)~~ from continuing operations before income taxes to segment Adjusted EBITDA is as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Income (loss) from continuing operations before income taxes	$	156.3	$	(27.2)	$	242.2	$	(54.4)
Income from continuing operations before income taxes									$	67.9	$	156.3	$	107.6	$	242.2
Interest expense, net		21.6		11.7		33.6		22.0		25.4		21.6		47.3		33.6
Depreciation and amortization		38.1		24.3		61.2		48.6		48.1		38.1		101.1		61.2
Corporate Unallocated⁽²⁾		23.9		17.5		46.4		39.5		21.6		23.9		48.5		46.4
Adjusted EBITDA Addbacks⁽³⁾		23.1		8.0		86.4		38.5		23.1		23.1		86.1		86.4
Segment Adjusted EBITDA	$	263.0	$	34.3	$	469.8	$	94.2	$	186.1	$	263.0	$	390.6	$	469.8

(2)

Corporate unallocated includes corporate overhead costs and certain other income and expenses.

(3)

Adjusted EBITDA addbacks for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Loss on extinguishment of long-term debt (Note 8)

$
0.5

$
—

$
0.5

$
—

Net gain on disposition of businesses and assets

—

—

(0.2)

(0.4)

Restructuring and other charges (Note 17)

6.3

5.4

6.7

7.2

Acquisition transaction and integration net costs ^(a)

43.2

(0.4)

49.2

(0.3)

Acquisition purchase price hedge (gain) loss (Note 10)

(33.0)

—

22.0

—

Asset impairment charges or write-offs (Note 11)

1.8

—

1.8

10.3

Other items ^(b)

4.3

3.0

6.4

21.7

Total Adjusted EBITDA Addbacks

$
23.1

$
8.0

$
86.4

$
38.5

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~~(a)~~

Amounts for the three months ended June 30, 2021 include $18.2 million of acquisition costs, $10.4 million of integration costs, $10.1 million related to amortization of the fair-value step-up to inventory, and $4.5 million of transfer taxes associated with the Acquisition. Amounts for the six months ended June 30, 2021 include $19.8 million of acquisition costs, $14.8 million of integration costs, $10.1 million related to amortization of the fair-value step-up to inventory, and $4.5 million of transfer taxes associated with the Acquisition. Refer to Note 3 for further information.

~~(b)~~

Other items for the three and six months ended June 30, 2021 primarily relate to fees incurred in conjunction with certain of the Company’s strategic initiatives. Other items for the three and six months ended June 30, 2020 primarily relate to advisory and professional fees incurred in conjunction with the Company’s initiative to transition business services from Dow, including certain administrative services such as accounts payable, logistics, and IT services, which was substantially completed in 2020, as well as fees incurred in conjunction with certain of the Company’s strategic initiatives.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net gain on disposition of businesses and assets	$	(1.5)	$	—	$	(1.8)	$	(0.2)
Restructuring and other charges (Note 17)		(1.5)		6.3		(1.0)		6.7
Acquisition transaction and integration net costs (Note 3)		2.7		43.2		5.9		49.2
Acquisition purchase price hedge (gain) loss (Note 10)		—		(33.0)		—		22.0
Asset impairment charges or write-offs (Note 11)		1.3		1.8		2.0		1.8
European Commission request for information (Note 13)		—		—		35.6		—
Other items ^(a)		22.1		4.8		45.4		6.9
Total Adjusted EBITDA Addbacks	$	23.1	$	23.1	$	86.1	$	86.4

(a)

Other items for the three and six months ended June 30, 2022 primarily relate to fees incurred in conjunction with certain of the Company’s strategic initiatives, as well as our transition to a new enterprise resource planning system. Other items for the three and six months ended June 30, 2021 primarily relate to fees incurred in conjunction with certain of the Company’s strategic initiatives.

NOTE 17—RESTRUCTURING

Refer to the Annual Report for further details regarding the Company’s previously announced restructuring activities included in the tables below. Restructuring charges are included within “Selling, general and administrative expenses” in the condensed consolidated statements of operations.

The following table provides detail of the Company’s restructuring charges for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended				Six Months Ended				Cumulative			Three Months Ended				Six Months Ended				Cumulative
	June 30,				June 30,				Life-to-date			June 30,				June 30,				Life-to-date
	2021		2020		2021		2020		Charges		Segment	2022		2021		2022		2021		Charges		Segment
Corporate Restructuring Program
Accelerated depreciation	$	(0.4)	$	1.2	$	(0.4)	$	2.5	$	2.5
Employee termination benefits		0.1		4.1		0.5		4.4		20.0
Contract terminations		—		1.2		—		2.4		2.8
Decommissioning and other		—		—		—		—		0.2
Corporate Program Subtotal	$	(0.3)	$	6.5	$	0.1	$	9.3	$	25.5	N/A⁽¹⁾
Transformational Restructuring Program
Employee termination benefits	$	6.2	$	—	$	6.2	$	—	$	6.2	N/A⁽²⁾	$	(0.2)	$	6.2	$	0.1	$	6.2	$	8.8	N/A⁽¹⁾
Transformational Program Subtotal	$	6.2	$	—	$	6.2	$	—	$	6.2
Transformational Restructuring Program Subtotal												$	(0.2)	$	6.2	$	0.1	$	6.2	$	8.8
Other Restructurings		—		0.1		—		0.4			Various		(1.3)		(0.3)		(1.1)		0.1			Various
Total Restructuring Charges	$	5.9	$	6.6	$	6.3	$	9.7				$	(1.5)	$	5.9	$	(1.0)	$	6.3

(1)

In November 2019, the Company announced a corporate restructuring program associated with the Company’s shift to a global functional structure and business excellence initiatives to drive greater focus on business process optimization and efficiency, which continued through the three and six months ended June 30, 2021. The Company expects to incur a limited amount of incremental employee termination benefit charges through the end of 2021, and the majority of these benefits are expected to be paid by the end of 2021. As this was identified as a corporate-related activity, the charges related to this restructuring program were not allocated to a specific segment, but rather included within corporate unallocated.

~~Table of Contents~~

~~(2)~~

In May 2021, the Company approved a transformational restructuring program associated with the Company’s recent strategic initiatives. ~~In connection with this restructuring program, during the second quarter of 2021, the Company incurred initial employee termination benefits charges of $6.2 million.~~ The Company expects to incur incremental employee termination benefit charges related to impacted employees as of June 30, ~~2021~~2022 of less than $1.0 million, the majority of which are expected to be paid by ~~June 30,~~December 31, 2022. As this was identified as a corporate-related activity, the charges related to this restructuring program were not allocated to a specific segment, but rather included within corporate unallocated.

Table of Contents

The following table provides a roll forward of the liability balances associated with the Company’s restructuring activities as of June 30, ~~2021.~~2022. Employee termination benefit and contract termination charges are primarily recorded within “Accrued expenses and other current liabilities” in the condensed consolidated balance sheets.


	Balance at						Balance at		Balance at						Balance at
	December 31, 2020		Expenses		Deductions⁽¹⁾		June 30, 2021		December 31, 2021		Expenses		Deductions⁽¹⁾		June 30, 2022
Employee termination benefits	$	7.9	$	6.7	$	(4.3)	$	10.3	$	10.0	$	(1.4)	$	(3.2)	$	5.4
Contract terminations		0.1		—		—		0.1
Decommissioning and other										—		0.1		(0.1)		—
Total	$	8.0	$	6.7	$	(4.3)	$	10.4	$	10.0	$	(1.3)	$	(3.3)	$	5.4

(1)

Primarily includes payments made against the existing accrual, as well as immaterial impacts of foreign currency remeasurement.

~~NOTE 18—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)~~

~~The components of AOCI, net of income taxes, consisted of:~~

Cumulative

Pension & Other


Translation

Postretirement Benefit

Cash Flow

Three Months Ended June 30, 2021 and 2020

Adjustments

Plans, Net


Hedges, Net

Total

Balance as of March 31, 2021

$
(108.6)

$
(70.8)

$
(0.6)

$
(180.0)

Other comprehensive loss

(0.7)

—

(1.1)

(1.8)

Amounts reclassified from AOCI to net income⁽¹⁾

—

1.0

0.9

1.9

Balance as of June 30, 2021

$
(109.3)

$
(69.8)

$
(0.8)

$
(179.9)

Balance as of March 31, 2020

$
(96.0)

$
(55.1)

$
(3.1)

$
(154.2)

Other comprehensive loss

(1.1)

—

(1.5)

(2.6)

Amounts reclassified from AOCI to net income ⁽¹⁾

—

0.5

0.2

0.7

Balance as of June 30, 2020

$
(97.1)

$
(54.6)

$
(4.4)

$
(156.1)

~~Table of Contents~~

NOTE 18—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of AOCI, net of income taxes, consisted of:


	Cumulative		Pension & Other
	Translation		Postretirement Benefit			Cash Flow
Three Months Ended June 30, 2022 and 2021	Adjustments		Plans, Net			Hedges, Net	Total
Balance as of March 31, 2022	$	(118.6)	$	(33.3)	$	2.2	$	(149.7)
Other comprehensive income (loss)		(34.8)		7.7		—		(27.1)
Amounts reclassified from AOCI to net income⁽¹⁾		—		(1.4)		0.3		(1.1)
Balance as of June 30, 2022	$	(153.4)	$	(27.0)	$	2.5	$	(177.9)

Balance as of March 31, 2021	$	(108.6)	$	(70.8)	$	(0.6)	$	(180.0)
Other comprehensive income (loss)		(0.7)		—		(1.1)		(1.8)
Amounts reclassified from AOCI to net income ⁽¹⁾		—		1.0		0.9		1.9
Balance as of June 30, 2021	$	(109.3)	$	(69.8)	$	(0.8)	$	(179.9)


	Cumulative		Pension & Other						Cumulative		Pension & Other
	Translation		Postretirement Benefit		Cash Flow				Translation		Postretirement Benefit		Cash Flow
Six Months Ended June 30, 2021 and 2020	Adjustments		Plans, Net		Hedges, Net		Total
Six Months Ended June 30, 2022 and 2021									Adjustments		Plans, Net		Hedges, Net		Total
Balance as of December 31, 2021									$	(114.3)	$	(33.6)	$	0.7	$	(147.2)
Other comprehensive income (loss)										(39.1)		7.7		0.7		(30.7)
Amounts reclassified from AOCI to net income⁽¹⁾										—		(1.1)		1.1		—
Balance as of June 30, 2022									$	(153.4)	$	(27.0)	$	2.5	$	(177.9)

Balance as of December 31, 2020	$	(109.0)	$	(71.9)	$	(5.2)	$	(186.1)	$	(109.0)	$	(71.9)	$	(5.2)	$	(186.1)
Other comprehensive income (loss)		(0.3)		—		2.4		2.1		(0.3)		—		2.4		2.1
Amounts reclassified from AOCI to net income⁽¹⁾		—		2.1		2.0		4.1		—		2.1		2.0		4.1
Balance as of June 30, 2021	$	(109.3)	$	(69.8)	$	(0.8)	$	(179.9)	$	(109.3)	$	(69.8)	$	(0.8)	$	(179.9)

Balance as of December 31, 2019	$	(106.7)	$	(56.3)	$	0.6	$	(162.4)
Other comprehensive income (loss)		9.6		0.6		(5.1)		5.1
Amounts reclassified from AOCI to net income ⁽¹⁾		—		1.1		0.1		1.2
Balance as of June 30, 2020	$	(97.1)	$	(54.6)	$	(4.4)	$	(156.1)

(1)

The following is a summary of amounts reclassified from AOCI to net income (loss) for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

Three Months Ended

Six Months Ended

June 30,

June 30,

Statements of Operations

AOCI Components

2021

2020

2021

2020

Classification

Cash flow hedging items

Foreign exchange cash flow hedges

$
—

$
(0.5)

$
0.3

$
(0.6)

Cost of sales

Interest rate swaps

0.9

0.7

1.7

0.7

Interest expense, net

Total before tax

0.9

0.2

2.0

0.1

Tax effect

—

—

—

—

Provision for (benefit from) income taxes

Total, net of tax

$
0.9

$
0.2

$
2.0

$
0.1

Amortization of pension and other postretirement benefit plan items

Prior service credit

$
(0.2)

$
(0.3)

$
(0.5)

$
(0.6)

(a)

Net actuarial loss

1.7

1.1

3.6

2.3

(a)

Total before tax

1.5

0.8

3.1

1.7

Tax effect

(0.5)

(0.3)

(1.0)

(0.6)

Provision for (benefit from) income taxes

Total, net of tax

$
1.0

$
0.5

$
2.1

$
1.1

Table of Contents


	Three Months Ended				Six Months Ended
	June 30,				June 30,				Statements of Operations
AOCI Components	2022		2021		2022		2021		Classification
Cash flow hedging items
Foreign exchange cash flow hedges	$	—	$	—	$	—	$	0.3	Cost of sales
Interest rate swaps		0.6		0.9		1.4		1.7	Interest expense, net
Total before tax		0.6		0.9		1.4		2.0
Tax effect		(0.3)		—		(0.3)		—	Provision for income taxes
Total, net of tax	$	0.3	$	0.9	$	1.1	$	2.0

Amortization of pension and other postretirement benefit plan items
Prior service credit	$	(0.1)	$	(0.2)	$	(0.2)	$	(0.5)	(a)
Net actuarial loss		0.6		1.7		1.2		3.6	(a)
Net curtailment and settlement gain		(1.9)		—		(1.9)		—	(a)
Total before tax		(1.4)		1.5		(0.9)		3.1
Tax effect		—		(0.5)		(0.2)		(1.0)	Provision for income taxes
Total, net of tax	$	(1.4)	$	1.0	$	(1.1)	$	2.1

(a)

These AOCI components are included in the computation of net periodic benefit costs (see Note 14).

NOTE 19—EARNINGS PER SHARE

Basic earnings per ordinary share (“basic EPS”) is computed by dividing net income available to ordinary shareholders by the weighted average number of the Company’s ordinary shares outstanding for the applicable period. Diluted earnings per ordinary share (“diluted EPS”) is calculated using net income available to ordinary shareholders divided by diluted weighted average ordinary shares outstanding during each period, which includes unvested RSUs, option awards, and PSUs. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss from continuing operations because the inclusion of the potential ordinary shares would have an anti-dilutive effect.

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The following table presents basic EPS and diluted EPS for the three and six months ended June 30, ~~2021~~2022 and ~~2020. Amounts have been recast to reflect the Company’s classification of its Synthetic Rubber business as discontinued operations for all periods presented.~~2021.

Three Months Ended

Six Months Ended

June 30,

June 30,

(in millions, except per share data)

2021

2020

2021

2020

Earnings:

Net income (loss) from continuing operations

$
133.0

$
25.8

$
198.8

$
(43.6)

Net income (loss) from discontinued operations

18.6

(154.2)

24.3

(121.1)

Net income (loss)

$
151.6

$
(128.4)

$
223.1

$
(164.7)

Shares:

Weighted average ordinary shares outstanding

38.8

38.2

38.6

38.4

Dilutive effect of RSUs, option awards, and PSUs⁽¹⁾

0.8

0.1

1.0

—

Diluted weighted average ordinary shares outstanding

39.6

38.3

39.6

38.4

Income (loss) per share:

Income (loss) per share—basic:

Continuing operations

3.43

0.68

5.15

(1.14)

Discontinued operations

0.48

(4.04)

0.62

(3.15)

Income (loss) per share—basic

$
3.91

$
(3.36)

$
5.77

$
(4.29)

Income (loss) per share—diluted:

Continuing operations

3.35

0.67

5.02

(1.14)

Discontinued operations

0.47

(4.02)

0.61

(3.15)

Income (loss) per share—diluted

$
3.82

$
(3.35)

$
5.63

$
(4.29)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)	2022		2021		2022		2021
Earnings:
Net income from continuing operations	$	37.1	$	133.0	$	54.2	$	198.8
Net income from discontinued operations		0.3		18.6		—		24.3
Net income	$	37.4	$	151.6	$	54.2	$	223.1
Shares:
Weighted average ordinary shares outstanding		36.3		38.8		36.8		38.6
Dilutive effect of RSUs, option awards, and PSUs⁽¹⁾		0.7		0.8		0.8		1.0
Diluted weighted average ordinary shares outstanding		37.0		39.6		37.6		39.6
Income per share:
Income per share—basic:
Continuing operations	$	1.02	$	3.43	$	1.47	$	5.15
Discontinued operations		0.01		0.48		—		0.62
Income per share—basic	$	1.03	$	3.91	$	1.47	$	5.77
Income per share—diluted:
Continuing operations	$	1.00	$	3.35	$	1.44	$	5.02
Discontinued operations		0.01		0.47		—		0.61
Income per share—diluted	$	1.01	$	3.82	$	1.44	$	5.63

(1)

Refer to Note 15 for discussion of RSUs, option awards, and PSUs granted to certain Company directors and employees. There were ~~0.6~~1.0 million and 0.9 million anti-dilutive shares that have been excluded from the computation of diluted earnings per share for the three and six months ended June 30, ~~2021. There were 1.9~~2022, respectively, and 0.6 million ~~anti-dilutive shares that have been excluded from the computation of diluted earnings per share~~ for the three ~~months ended June 30, 2020. As the Company recorded a net loss from continuing operations for the~~and six months ended June 30, ~~2020, potential shares related to equity-based awards have been excluded from the calculation of diluted EPS, as doing so would be anti-dilutive.~~2021.

~~lder~~

NOTE 20—OTHER CHARGES

Other charges consisted of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Asset impairment charges or write-offs (Note 11)	$	1.3	$	1.8	$	2.0	$	1.8
European Commission request for information (Note 13)		—		—		35.6		—
Total	$	1.3	$	1.8	$	37.6	$	1.8

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~2021~~2022 Year-to-Date Highlights

During the three and six months ended June 30, ~~2021,~~2022, Trinseo recognized net income from continuing operations of ~~$133.0~~$37.1 million and ~~$198.8~~$54.2 million, respectively and Adjusted EBITDA of ~~$239.1~~$164.5 million and ~~$423.4~~$342.1 million, ~~respectively, representing very strong performance throughout the first half of the year.~~respectively. These solid results were achieved despite an increasingly challenging operating environment that is forcing both Trinseo and our customers to contend with issues including COVID-19 lockdowns in China, cautious spending and softening demand in Europe from an uncertain geopolitical situation, high raw material and energy costs, and persistent supply chain constraints. Refer to the discussion below for further information and refer to “Non-GAAP Performance Measures” for discussion of our use of non-GAAP measures in evaluating our performance and a reconciliation of these measures. Other highlights for the year are described below.

European Commission Request for Information

In 2018, Trinseo received a request for information from the European Commission Directorate General for Competition (the “European Commission”) related to styrene monomer commercial activity in the European Economic Area, as well as subsequent requests for information. Trinseo has fully responded to all information requests from the European Commission and continues to fully cooperate on this matter, which remains ongoing. As a result of further developments in this matter, during the first quarter of 2022, Trinseo recorded a charge of $35.6 million which is included within “Other charges” on the condensed consolidated statements of operations. Refer to Note 13 in the condensed consolidated financial statements for more information.

Acquisition of ~~the Arkema PMMA Business~~Heathland

On ~~May~~January 3, ~~2021,~~2022, the Company closed on the previously-announced acquisition of ~~the PMMA and MMA businesses (together, referred to herein as the PMMA business) from Arkema~~Heathland B.V. (“Heathland”) for an ~~initial~~estimated purchase price ~~consideration~~ of ~~$1,370.7~~$29.3 million, including an initial cash purchase price of $22.9 million, as well as $6.4 million of ~~which $1,369.0 million was paid during~~contingent cash consideration, representing the ~~second quarter~~fair value of ~~2021, subject to customary working capital~~certain earn-out payments (the “Heathland Acquisition”). Heathland is based in Utrecht, the Netherlands, and is focused on converting post-consumer and post-industrial PMMA, PC, ABS, polystyrene, and other ~~closing adjustments. The Acquisition was funded primarily using proceeds from new debt financing arrangements as described below. PMMA is a transparent and rigid plastic with~~thermoplastic waste for use in a wide range of ~~end uses,~~high-end applications. The acquisition of Heathland is consistent with Trinseo’s strategy and ~~complements Trinseo’s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics.~~enhances our footprint as a sustainable solutions provider. Refer to Note 3 in the condensed consolidated financial statements for ~~further~~more information.

Process Pause for Divestiture of Styrenics Business

In November 2021, the Company announced that it had begun work to explore the divestiture of our styrenics business and subsequently launched a formal sales process in the first quarter of 2022. The scope of the potential divestiture was expected to include the Feedstocks and Polystyrene reporting segments as well as our 50% ownership of Americas Styrenics. While this process generated broad and significant interest from both strategic and financial parties, the deterioration of financing markets and the economic uncertainty created by the war in Ukraine, particularly in European energy markets, has impeded the Company’s ability to obtain full value for the styrenics business. As a result, the Company has decided to pause the sale process.

This pause does not change the Company’s transformation strategy of becoming a higher growth, higher margin, and less volatile specialty material and sustainable solutions provider. The Company intends to reevaluate a potential sale of the styrenics business when macroeconomic conditions improve.

~~New Financing Arrangements~~

On March 24, 2021, the Company issued $450.0 million aggregate principal amount of 5.125% senior notes due 2029 (the “2029 Senior Notes”). Further, on May 3, 2021, in conjunction with the closing of the Acquisition, the Company entered into $750.0 million in incremental term loan borrowings (“2028 Term Loan B”) under our existing senior secured credit facility. The net proceeds from the 2029 Senior Notes and the 2028 Term Loan B, as well as available cash, were used to fund the Acquisition. Refer to Note 8 in the condensed consolidated financial statements for further details on these new financing arrangements.

~~Divestiture of Synthetic Rubber Business~~

On May 21, 2021, the Company and Synthos S.A. and certain of its subsidiaries (together, “Synthos”) entered into an Asset Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company has agreed to sell our Synthetic Rubber business to Synthos in an all-cash transaction for an aggregate purchase price of $449.4 million, which reflects a reduction of approximately $41.6 million for the assumption of pension liabilities by Synthos, subject to certain adjustments related to working capital and the exercise of certain option rights. The transaction is expected to close in the first half of 2022, subject to customary closing conditions and regulatory approvals. Additionally, Trinseo and Synthos have agreed to enter into a long term supply agreement, in which we will supply Synthos with certain raw materials used in the Synthetic Rubber business as of the date the transaction closes.

As a result of entering into the Purchase Agreement, the assets and liabilities of the Company’s Synthetic Rubber business were classified as held-for-sale during the second quarter of 2021 in the condensed consolidated balance sheets and the associated operating results of the Synthetic Rubber business, net of income tax, have been classified as discontinued operations in the condensed consolidated statements of operations and statements of cash flows for all periods presented. Refer to Note 4 in the condensed consolidated financial statements for further information.

~~Redomiciliation to Ireland~~

In April 2021, in the filing of our preliminary proxy statement with the Securities Exchange Commission (“SEC”), we announced our intention to effect a cross-border merger transaction that will, effectively, move the legal domicile of our parent company from Luxembourg to Ireland (the “Redomiciliation”). The Redomiciliation is expected to provide Trinseo with a favorable legal and regulatory infrastructure, while continuing to allow access to financial markets and customers, without impacting our business operations or our shareholders. The Redomiciliation, which received shareholder approval in June 2021, is expected to be completed in the fourth quarter 2021, subject to approval from the High Court of Ireland. Upon completion of the Redomiciliation, each shareholder will own the same number of shares of

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the new Irish parent company that such shareholder owned immediately prior to completion of the Redomiciliation. Trinseo will continue to conduct the same business operations as were conducted prior to the Redomiciliation, but with the new Irish entity as the parent company. We expect the ordinary shares of Trinseo PLC to be listed on the New York Stock Exchange (“NYSE”) under the symbol "TSE," the same symbol under which shares in Trinseo S.A. are currently listed. Following the Redomiciliation, we will remain subject to the SEC reporting requirements and the applicable corporate governance rules of the NYSE, and we will continue to report our financial results in U.S. dollars and GAAP.

~~Entry into Agreement to Acquire Aristech Surfaces~~

On July 19, 2021, the Company entered into an agreement with SK AA Holdings, LLC, the sole member of Aristech Surfaces LLC (“Aristech Surfaces”), to acquire Aristech Surfaces, a leading North America manufacturer and global provider of PMMA continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets, for a preliminary purchase price of $445.0 million, subject to customary working capital and other closing adjustments. Aristech Surfaces’ products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles. Upon closing, the business will become part of the Company’s Engineered Materials segment. The transaction is expected to be funded with cash on hand and existing credit facilities. The Company anticipates the transaction will close by year-end 2021 subject to customary closing conditions and regulatory approvals.

Results of Operations

Results of Operations for the Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Three Months Ended

Six Months Ended

June 30,

June 30,

(in millions)

2021

%

2020

%

2021

%

2020

%

Net sales

$
1,273.7

100
%

$
534.3

100
%

$
2,259.7

100
%

$
1,297.3

100
%

Cost of sales

1,053.7

83
%

510.9

96
%

1,850.8

82
%

1,216.2

94
%

Gross profit

220.0

17
%

23.4

4
%

408.9

18
%

81.1

6
%

Selling, general and administrative expenses

97.3

8
%

52.9

10
%

153.8

7
%

125.7

10
%

Equity in earnings of unconsolidated affiliates

30.1

2
%

14.4

3
%

53.0

2
%

24.2

2
%

Impairment charges

1.8

—
%

—

—
%

1.8

—
%

10.3

1
%

Operating income (loss)

151.0

11
%

(15.1)

(3)
%

306.3

13
%

(30.7)

(3)
%

Interest expense, net

21.6

2
%

11.7

2
%

33.6

1
%

22.0

2
%

Acquisition purchase price hedge (gain) loss

(33.0)

(3)
%

—

—
%

22.0

1
%

—

—
%

Loss on extinguishment of long-term debt

0.5

—

—

—

0.5

—
%

—

—
%

Other expense, net

5.6

—
%

0.4

—
%

8.0

—
%

1.7

—
%

Income (loss) from continuing operations before income taxes

156.3

12
%

(27.2)

(5)
%

242.2

11
%

(54.4)

(5)
%

Provision for (benefit from) income taxes

23.3

2
%

(53.0)

(10)
%

43.4

2
%

(10.8)

(1)
%

Net income (loss) from continuing operations

$
133.0

10
%

$
25.8

5
%

$
198.8

9
%

$
(43.6)

(4)
%

Net income (loss) from discontinued operations, net of income taxes

18.6

2
%

(154.2)

(29)
%

24.3

1
%

(121.1)

(9)
%

Net income (loss)

$
151.6

12
%

$
(128.4)

(24)
%

$
223.1

10
%

$
(164.7)

(13)
%

~~Table of Contents~~


	Three Months Ended								Six Months Ended
	June 30,								June 30,
(in millions)	2022		%		2021		%		2022		%		2021		%
Net sales	$	1,425.5	100	%	$	1,273.7	100	%	$	2,812.2	100	%	$	2,259.7	100	%
Cost of sales		1,286.4	90	%		1,053.7	83	%		2,497.1	89	%		1,850.8	82	%
Gross profit		139.1	10	%		220.0	17	%		315.1	11	%		408.9	18	%
Selling, general and administrative expenses		85.6	6	%		97.3	8	%		182.3	6	%		153.8	7	%
Equity in earnings of unconsolidated affiliates		39.4	3	%		30.1	2	%		61.0	2	%		53.0	2	%
Other charges		1.3	—	%		1.8	—	%		37.6	1	%		1.8	—	%
Operating income		91.6	7	%		151.0	11	%		156.2	6	%		306.3	13	%
Interest expense, net		25.4	2	%		21.6	2	%		47.3	2	%		33.6	1	%
Acquisition purchase price hedge (gain) loss		—	—	%		(33.0)	(3)	%		—	—	%		22.0	1	%
Other expense (income), net		(1.7)	—	%		6.1	—	%		1.3	—	%		8.5	—	%
Income from continuing operations before income taxes		67.9	5	%		156.3	12	%		107.6	4	%		242.2	11	%
Provision for income taxes		30.8	2	%		23.3	2	%		53.4	2	%		43.4	2	%
Net income from continuing operations	$	37.1	3	%	$	133.0	10	%	$	54.2	2	%	$	198.8	9	%
Net income from discontinued operations, net of income taxes		0.3	—	%		18.6	2	%		—	—	%		24.3	1	%
Net income	$	37.4	3	%	$	151.6	12	%	$	54.2	2	%	$	223.1	10	%

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

Net Sales

Of the ~~138%~~12% increase in net sales, ~~95%~~14% was attributable to increased selling prices, mainly due to the pass through of higher raw material costs, ~~20% was due~~such as styrene, along with higher energy costs. Also contributing to the ~~addition of~~increase was the contributions from our acquisitions in 2021, including the PMMA ~~business~~Acquisition, which closed on May 3, 2021, and the Aristech Surfaces Acquisition, which closed on September 1, 2021. These increases were partially offset by lower volumes across several segments mainly from less demand to ~~our portfolio,~~building & construction, automotive, appliance and ~~17% was due to increased sales volumes. An additional 6% increase was due to currency impacts as~~consumer electronics applications, including the ~~euro strengthened~~impact of COVID-19 lockdowns in ~~comparison to the U.S. dollar during the period.~~China.

Cost of Sales

The ~~106%~~22% increase in cost of sales was primarily attributable to a ~~63%~~20% increase in raw material costs ~~a 21% increase due to the addition of the PMMA business to our portfolio,~~ and a ~~13%~~9% increase ~~in sales volumes. Also contributing to the increase was a 5% increase due to currency impacts. Additionally, there was an increase of $10.1 million, or 2%,~~ related to the ~~amortization~~PMMA Acquisition and Aristech Surfaces Acquisition. Partially offsetting these increases was a decrease of ~~the fair-value step-up~~7% due to ~~inventory acquired as part of the Acquisition, discussed in Note 3 to the condensed consolidated financial statements.~~lower volumes.

Gross Profit

The ~~increase~~decrease in gross profit of ~~840%~~37% was primarily attributable to ~~higher~~lower margins ~~due~~compared to ~~strong demand~~the very high levels observed in the second quarter of 2021 in Feedstocks and ~~tight supply in styrene, polystyrene, ABS and polycarbonate, and higher volume, particularly in automotive.~~Polystyrene, as well as lower sales volume. These impacts were partially offset by additional gross profit from the 2021 acquisitions. See the segment discussion below for further information.

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Selling, General and Administrative Expenses (SG&A)

The ~~$44.4~~$11.7 million, or ~~84%~~12%, ~~increase~~decrease in SG&A was primarily due to ~~the $33.1~~a decrease of $40.5 million ofrelated to acquisition transaction and integration costs incurred, ~~for~~primarily in connection with the ~~Acquisition during the second quarter of 2021. Also contributing to the increase~~PMMA Acquisition. Offsetting these costs was ~~a $1.6~~an $18.1 million increase in costs associated with the Company’s strategic ~~initiatives.~~initiatives, including the exploration of a potential divestiture of our styrenics business, a $4.9 million increase in employee compensation, particularly from newly acquired businesses, and $0.9 million of costs incurred in connection with the Company’s enterprise resource planning system upgrade.

Equity in Earnings of Unconsolidated Affiliates

The increase in equity earnings of ~~$15.7~~$9.3 million was due to higher equity earnings from Americas Styrenics ~~mainly attributable~~due to ~~increased polystyrene~~higher styrene profitability, which was partially offset by lower sales volume ~~and higher~~that resulted from the styrene ~~margins~~production outages in ~~North America.~~the current period.

~~Impairment~~Other Charges

During the three months ended June 30, 2022 and 2021, the Company recorded impairment charges of $1.3 million and $1.8 million, respectively, related to ~~capital expenditures at the~~our Boehlen styrene monomer ~~facility that were previously determined to be impaired. Refer to~~assets, as described within Note 11 in the condensed consolidated financial ~~statements for further information.~~statements.

Interest Expense, Net

The increase in interest expense, net of ~~$9.9~~$3.8 million, or ~~85%~~18%, was primarily attributable to the Company’s issuance of the ~~2029 Senior Notes in the first quarter of 2021 and the~~ 2028 Term Loan B, ~~during~~issued in the second quarter of 2021. Refer to Note 8 in the condensed consolidated financial statements for further information.

Acquisition Purchase Price Hedge (Gain) Loss

The $33.0 million acquisition purchase price hedge gain for the three months ended June 30, 2021 was due to the change in fair value of the Company’s forward currency hedge arrangement on the euro-denominated purchase price of the ~~Arkema~~ PMMA business.

Other Expense (Income), Net

Other income, net for the three months ended June 30, 2022 was $1.7 million, which included a $1.0 million of income related to the non-service cost components of net periodic benefit cost, as well as foreign exchange transaction gains of $1.3 million. These net foreign exchange transaction gains included $37.8 million of losses primarily from the remeasurement of our euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, partially offset by $39.1 million of gains from our foreign exchange forward contracts.

Other expense, net for the three months ended June 30, 2021 was ~~$5.6~~$6.1 million, which included $1.6 million of expense related to the non-service cost components of net periodic benefit cost and $4.5 million of transfer taxes associated with the PMMA Acquisition. These expense amounts were partially offset by foreign exchange transaction gains of $1.0 million, which included $0.6 million of foreign exchange transaction gains primarily from the remeasurement of

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our ~~euro denominated~~euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, in addition to $0.4 million of gains from our foreign exchange forward contracts, excluding the acquisition purchase price hedge.

Other expense, net for the three months ended June 30, 2020 was $0.4 million, which primarily included $1.1 million of expense related to the non-service cost components of net periodic benefit cost as well as offsetting foreign exchange transaction gains of $0.9 million. Net foreign transaction gains included $9.0 million of gains primarily from the remeasurement of our euro denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, partially offset by $8.1 million of losses from our foreign exchange forward contracts.

Provision for ~~(Benefit from)~~ Income Taxes

~~Provision for income taxes for the three months ended June 30, 2021 totaled $23.3~~Despite a year-over-year decrease of $88.4 million ~~resulting in an effective tax rate of 14.9%.~~ ~~Benefit from income taxes for the three months ended June 30, 2020 totaled $53.0 million, resulting in an effective tax rate of 195.0%.~~

~~The increase in provision for income taxes is primarily driven by the $183.5 million increase~~ in income from continuing operations before income taxes, the provision for income taxes increased from $23.3 million in the prior year to $30.8 million in the three months ended June 30, 2022. The most significant driver of this increase in provision for income taxes was the change in the Company’s forecasted jurisdictional mix of earnings, where losses expected to be generated in lower rate jurisdictions are being more than offset by income expected to be generated in higher tax jurisdictions.

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Also increasing the provision for income taxes in the current year was the revaluation of the Company’s net deferred tax assets in Switzerland, which were originally established as part of the Swiss cantonal tax reform measures enacted in 2019. This revaluation resulted in a one-time deferred tax expense of $15.3 million recorded in the second quarter of 2022. This expense was partially offset by the release of a valuation allowance of $8.5 million during the second quarter of 2022, as a result of improvements in actual and projected future results in one of the Company’s subsidiaries in Luxembourg.

Net Income ~~(Loss)~~ from Discontinued Operations, Net of Income Taxes

Net income ~~(loss)~~ from discontinued operations, net of ~~tax~~income taxes during the three months ended June 30, 2022 and 2021 ~~and 2020~~ was ~~$18.6~~$0.3 million and ~~$(154.2)~~$18.6 million, respectively, and was related the results and sale of our Synthetic Rubber business, which were reclassified as discontinued operations for all periods presented in connection with the Company’s entry into an agreement to sell the business during the second quarter of 2021.business. Refer to Note 4 in the condensed consolidated financial statements for further information.

Six Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

Net Sales

Of the ~~74%~~24% increase in net sales, ~~52%~~19% was attributable to increased selling prices, mainly due to the pass through of higher raw material costs, ~~9% was due to increased volumes, and 8%~~such as styrene, along with higher energy costs. An additional 15% increase was due to the ~~addition of~~contributions from our acquisitions in 2021, including the PMMA ~~business to our portfolio. An additional 5% increase was~~Acquisition, which closed on May 3, 2021, and the Aristech Surfaces Acquisition, which closed on September 1, 2021. These increases were partially offset by a 7% decrease due to ~~currency impacts~~lower volumes across all segments due to softening demand in several applications as well as the ~~euro strengthened~~impacts of COVID-19 in ~~comparison to the U.S. dollar during the period.~~China.

Cost of Sales

The ~~52%~~35% increase in cost of sales was primarily attributable to a ~~28%~~21% increase in raw material costs ~~a 9% increase in volumes,~~ and a 9%17% increase related to the PMMA Acquisition and Aristech Surfaces Acquisition. Partially offsetting these increases was a decrease of 7% due to ~~the addition of the PMMA business to our portfolio. Also contributing to the increase was a 4% increase due to currency impacts.~~lower volumes.

Gross Profit

The ~~increase~~decrease in gross profit of ~~404%~~23% was primarily attributable to ~~higher~~lower margins ~~due~~compared to ~~strong demand~~the very high levels observed in the first half of 2021 in Feedstocks and ~~tight supply in styrene, polystyrene, ABS and polycarbonate, and higher~~Polystyrene, as well as lower sales volume ~~particularly in automotive.~~as described above. These impacts were partially offset by additional gross profit from the 2021 acquisitions. See the segment discussion below for further information.

Selling, General and Administrative Expenses (SG&A)

The ~~$28.1~~$28.5 million, or ~~22%~~19%, increase in SG&A was primarily due to a $37.2 million increase in costs associated with the ~~$39.1~~Company’s strategic initiatives, including the exploration of a potential divestiture of our styrenics business, as well as $3.1 million of costs incurred in connection with the Company’s enterprise resource planning system upgrade. Also contributing to the increase was an $11.7 million increase in salaries, wages and fringe costs due to the addition of personnel from acquisitions, a $3.7 million increase in additional depreciation and amortization expense from the PMMA Acquisition and the Aristech Surfaces Acquisition, a $2.8 million increase in travel, and a $3.0 million increase in bad debt expense. Partially offsetting these increases was a decrease of $43.3 million related to acquisition transaction and integration costs incurred for the Acquisition during 2021. Partially offsetting this increase was a decrease of $17.1 million of advisory and professional fees, mainly related to the Company’s transition of business and technical services from Dow, which was largely completed in the ~~first quarter of 2020.~~prior year, primarily in connection with the PMMA Acquisition.

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Equity in Earnings of Unconsolidated Affiliates

The increase in equity earnings of ~~$28.8~~$8.0 million was due to higher equity earnings from Americas Styrenics ~~mainly attributable~~due to ~~increased~~higher styrene profitability, which was partially offset by lower sales volume ~~and higher~~that resulted from the styrene ~~margins~~production outages in ~~North America.~~the current period.

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~~Impairment~~Other Charges

During the six months ended June 30, ~~2021 and 2020,~~2022, the Company recorded a charge of $35.6 million related to the European Commission request for information, as described within Note 13 in the condensed consolidated financial statements. The Company also recorded impairment charges of $2.0 million and $1.8 million related to our Boehlen styrene monomer ~~assets. Refer to~~assets during the six months ended June 30, 2022 and 2021, respectively, as described within Note 11 in the condensed consolidated financial ~~statements for further information.~~statements.

Interest Expense, Net

The increase in interest expense, net of ~~$11.6~~$13.7 million, or ~~53%~~41%, was primarily attributable to the Company’s issuance of the 2029 Senior Notes, ~~during~~which were not issued until late in the first quarter of 2021 and the 2028 Term Loan B, ~~during~~issued in the second quarter of 2021. Refer to Note 8 in the condensed consolidated financial statements for further information.

Acquisition Purchase Price Hedge (Gain) Loss

The $22.0 million acquisition purchase price hedge loss for the six months ended June 30, 2021 was due to the change in fair value of the Company’s forward currency hedge arrangement on the euro-denominated purchase price of the ~~Arkema~~ PMMA business.

Other Expense, Net

Other expense, net for the six months ended June 30, 2022 was $1.3 million, which included $0.2 million of expense related to the non-service cost components of net periodic benefit cost as well as foreign exchange transaction losses of $0.1 million. These net foreign exchange transaction losses included $48.0 million of losses primarily from the remeasurement of our euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, partially offset by $47.9 million of gains from our foreign exchange forward contracts.

Other expense, net for the six months ended June 30, 2021 was ~~$8.0~~$8.5 million, which included $3.4 million of expense related to the non-service cost components of net periodic benefit cost and $4.5 million of transfer taxes associated with the PMMA Acquisition. These expense amounts were partially offset by foreign exchange transaction gains of $0.8 million, which included $19.3 million of foreign exchange transaction losses primarily from the remeasurement of our ~~euro denominated~~euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, offset by $20.1 million of gains from our foreign exchange forward contracts, excluding the acquisition purchase price hedge.

Other expense, net for the six months ended June 30, 2020 was $1.7 million, which included $2.3 million of expense related to the non-service cost components of net periodic benefit cost, partially offset by foreign exchange transaction gains of $0.6 million. Net foreign transaction gains included $5.1 million of losses primarily from the remeasurement of our euro denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, offset by $5.7 million of gains from our foreign exchange forward contracts.

Provision for ~~(Benefit from)~~ Income Taxes

~~Provision for income taxes for the six months ended June 30, 2021 totaled $43.4~~Despite a year-over-year decrease of $134.6 million ~~resulting in an effective tax rate of 17.9%.~~ ~~Benefit from income taxes for the six months ended June 30, 2020 totaled $10.8 million, resulting in an effective tax rate of 19.8%.~~

~~The increase in provision for income taxes is primarily driven by the $296.6 million increase~~ in income from continuing operations before income taxes, the provision for income taxes increased from $43.4 million in the prior year to $53.4 million in the six months ended June 30, 2022. The most significant driver of this increase in provision for income taxes was the Company’s forecasted jurisdictional mix of earnings, where losses expected to be generated in lower rate jurisdictions are being more than offset by income expected to be generated in higher tax jurisdictions.

.Also increasing the provision for income taxes in the current year was the revaluation of the Company’s net deferred tax assets in Switzerland, which were originally established as part of the Swiss cantonal tax reform measures enacted in 2019. This revaluation resulted in a one-time deferred tax expense of $15.3 million recorded in the second quarter of 2022. This expense was partially offset by the release of a valuation allowance of $8.5 million during the second quarter of 2022, as a result of improvements in actual and projected future results in one of the Company’s subsidiaries in Luxembourg.

Net Income ~~(Loss)~~ from Discontinued Operations, Net of Income Taxes

Net income ~~(loss)~~ from discontinued operations, net of ~~tax~~income taxes during the six months ended June 30, 2021 ~~and 2020~~ was $24.3 million, and ~~$(121.1) million, respectively, and~~ was related to the results and sale of our Synthetic Rubber ~~business, which were reclassified as~~business. There was no net income from discontinued operations, ~~for all periods presented in connection with the Company’s entry into an agreement to sell the business~~net of income taxes during the ~~second quarter of 2021.~~six months ended June 30, 2022. Refer to Note 4 in the condensed consolidated financial statements for further information.

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Outlook

~~Bolstered by favorable market conditions~~As the second quarter progressed, increased uncertainty due to the ongoing war in Ukraine and the ~~acquisition~~associated increase in material and energy prices began to negatively influence demand in Europe. We are assuming this demand slowdown we’ve observed over the last two months will continue for the duration of the ~~PMMA business, which closed~~year putting downward pressure on ~~May 3, 2021 as~~styrene monomer margins in the region. Volume and margins for most of our derivative products will also be impacted by this downward pressure, particularly in building & construction and appliance applications. Therefore, we expect sequentially lower profitability in the second half of 2022.

As discussed ~~above~~within Liquidity and Capital Resources below, sharp increases in ~~“2021 Highlights,” the Company had strong earnings performance in~~raw material prices, like benzene, along with record levels of energy prices led to a significant working capital build and cash flow use during the first half of ~~2021.~~2022. In the second half of 2022, we expect a significant working capital release and positive cash flow from inventory control, expectations that raw material prices have largely peaked, and seasonally lower sales in the fourth quarter. We also expect to continue returning cash to ~~strategically pursue opportunities~~our shareholders in ~~higher growth~~the second half of 2022 via share repurchases and less cyclical product offerings, including through our ongoing integration of the newly acquired PMMA business into our portfolio and our recently announced entry into an agreement to acquire Aristech Surfaces. Through these actions and our enduring focus on our business excellence program, we are continuing our transformation into a specialty materials and sustainable solutions provider.dividends.

Selected Segment Information

The following sections describe net sales, Adjusted EBITDA, and Adjusted EBITDA margin by segment for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021. Inter-segment sales have been eliminated. Refer to Note 16 in the condensed consolidated financial statements for further information on our segments, as well as for a detailed definition of Adjusted EBITDA and a reconciliation of income from continuing operations before income taxes to segment Adjusted EBITDA. ~~Beginning~~

Engineered Materials Segment

Our Engineered Materials segment consists of rigid thermoplastic compounds and blends products sold into high growth and high value applications in markets such as consumer electronics and medical, as well as soft thermoplastic elastomers (“TPEs”) products which are sold into markets such as footwear and automotive. The Engineered Materials segment also includes polymethyl methacrylates (“PMMA”) and activated methyl methacrylates (“MMA”) products, which are sold into a variety of applications including automotive, building & construction, medical, consumer electronics, and wellness, among others.


	Three Months Ended								Six Months Ended
	June 30,								June 30,
($ in millions)	2022			2021			% Change		2022			2021			% Change
Net sales	$	301.3		$	181.0		66	%	$	596.5		$	246.8		142	%
Adjusted EBITDA	$	34.0		$	27.8		22	%	$	68.7		$	35.8		92	%
Adjusted EBITDA margin		11	%		15	%				12	%		15	%

Three Months Ended – June 30, 2022 vs. June 30, 2021

The 66% increase in net sales was primarily attributable to the contribution from the PMMA business and the Aristech Surfaces acquisitions, which led to a 57% increase year-over-year. In addition, sales price, primarily from the pass through of higher raw materials and energy costs, increased net sales by 16%. These increases were partially offset by a 5% decrease due to lower sales volumes from reduced demand for products supporting consumer electronics and appliances following the strong demand conditions in the ~~second quarter of 2021,~~prior year, as well as COVID-19 related lockdowns in China in the ~~Company reported the results~~current year.

Adjusted EBITDA increased $6.2 million, or 22%, year-over-year. Our recent acquisitions of the ~~Synthetic Rubber~~PMMA business and Aristech Surfaces contributed a $20.0 million, or 72%, increase from the prior year. This increase was partially offset by a $3.7 million, or 13%, decrease due to lower sales volume as ~~discontinued operations~~described above, as well as a $10.6 million, or 38%, decrease due to lower margins, which included a one-time charge of approximately $4.0 million related to a contract review with a significant supplier.

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Six Months Ended – June 30, 2022 vs. June 30, 2021

The 142% increase in net sales was primarily attributable to the contribution from the PMMA business and the Aristech Surfaces acquisitions, which led to a 135% increase year-over-year. In addition, sales price, primarily from the pass through of higher raw materials and energy costs, increased net sales by 17%. These increases were partially offset by a 9% decrease due to lower sales volumes as demand declined from very high levels in the ~~condensed consolidated statement~~prior year and also from COVID-19 lockdowns in China in the current year.

Adjusted EBITDA increased $32.9 million, or 92%, year-over-year. Our recent acquisitions of ~~operations for all periods presented,~~the PMMA business and ~~therefore, it is no longer presented~~Aristech Surfaces contributed a $51.2 million, or 143%, increase from the prior year. This increase was partially offset by a $7.2 million, or 20%, decrease due to lower sales volume as described above, as well as a ~~separate reportable segment. Refer~~$10.4 million, or 29%, decrease due to ~~Note 4 in the condensed consolidated financial statements for further information. Additionally, prior period segment amounts herein have been recast in conjunction~~lower margins, which included a one-time charge of approximately $4.0 million related to a contract review with ~~the Company’s segment realignment that occurred during the fourth quarter of 2020, as described in Notes 4 and 16 of the condensed consolidated financial statements.~~a significant supplier.

Latex Binders Segment

Our Latex Binders segment produces styrene-butadiene latex (“SB latex”) and other latex polymers and binders primarily for coated paper and packaging board, carpet and artificial turf backings, as well as a broad range of performance latex binders products, including SB latex, styrene-acrylate latex (“SA latex”), and vinylidene chloride latex for coatings, adhesives, sealants, and elastomers (“CASE”) applications.


	Three Months Ended								Six Months Ended								Three Months Ended								Six Months Ended
	June 30,								June 30,								June 30,								June 30,
($ in millions)	2021			2020			% Change		2021			2020			% Change		2022			2021			% Change		2022			2021			% Change
Net sales	$	311.2		$	164.9		89	%	$	562.2		$	384.0		46	%	$	353.7		$	311.2		14	%	$	660.4		$	562.2		17	%
Adjusted EBITDA	$	32.2		$	16.1		100	%	$	49.0		$	36.7		34	%	$	29.4		$	32.2		(9)	%	$	59.6		$	49.0		22	%
Adjusted EBITDA margin		10	%		10	%				9	%		10	%				8	%		10	%				9	%		9	%

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

The ~~89%~~14% increase in net sales was primarily due to ~~a 70%~~an 18% increase in pricing from the pass through of raw material ~~costs. Additionally, there was an increase of 13% due to increased sales volume for the period, which was driven~~costs, mainly styrene and butadiene, as well as pricing actions, slightly offset by ~~higher sales following headwinds in the prior year from COVID-19, and an increase of 6%~~a 4% decrease due to foreign exchange rate impacts.

The ~~$16.1~~$2.8 million, or ~~100%~~9%, decrease in Adjusted EBITDA was primarily due to a decrease of $3.1 million, or 10%, due to foreign exchange rate impacts, slightly offset by an increase of $0.7 million, or 2%, due to higher sales volumes, specifically in North America to paper & board and CASE applications.

Six Months Ended – June 30, 2022 vs. June 30, 2021

The 17% increase in net sales was primarily due to a 23% increase in pricing from the pass through of raw material costs, mainly styrene and butadiene, as well as pricing actions, slightly offset by a 4% decrease due to foreign exchange rate impacts.

The $10.6 million, or 22%, increase in Adjusted EBITDA was primarily due to an increase of ~~$11.5 million, or 72%, attributable to increased sales volume, as noted above. The increase was also due to higher margins of $6.2~~$19.2 million, or 39%, ~~as well as an~~attributable to higher margins which was a result of favorable net timing and pricing actions. This increase ~~of $2.6 million, or 16%, caused by foreign exchange rate impacts. These increases were~~was partially offset by a ~~decrease of $4.0~~$4.9 million, or ~~25%~~10%, ~~due to higher fixed costs.~~

~~Six Months Ended – June 30, 2021 vs. June 30, 2020~~

~~The 46% increase in net sales was primarily due to a 39% increase in pricing from the pass through of raw material costs. Additionally, there was an increase of 5%~~decrease due to foreign exchange rate impacts, ~~and an increase of 3% due to increased sales volume for the period, which was attributable to higher sales following headwinds in the prior year from COVID-19.~~

~~The $12.3 million, or 34%, increase in Adjusted EBITDA was primarily due to an increase of $14.0 million, or 38%, attributable to increased sales volume, as noted above,~~ as well as ~~an increase of $4.7~~a $3.6 million, or ~~13%~~7%, decrease due to higher fixed costs.

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foreign exchange rate impacts. These increases were partially offset by a decrease from higher fixed costs of $4.4 million, or 12% as well as lower margins of $1.5 million, or 4%, which was a result of unfavorable net timing.

~~Engineered Materials Segment~~

Our Engineered Materials segment consists of rigid thermoplastic compounds and blends products sold into high growth and high value applications in markets such as consumer electronics and medical, as well as soft thermoplastic elastomers (“TPEs”) products which are sold into markets such as footwear and automotive. Additionally, ~~following the Acquisition on May 3, 2021, the Engineered Materials segment also includes~~ ~~PMMA and MMA products, which are sold into a variety of applications including automotive, building & construction, medical and consumer electronics.~~

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in millions)


2021


2020


% Change

2021


2020

% Change

Net sales

$
181.0


$
37.5


383
%

$
246.8


$
85.3


189
%
Adjusted EBITDA

$
27.8

$
4.8

479
%

$
35.8

$
12.9


178
%
Adjusted EBITDA margin

15
%

13
%

15
%

15
%

~~Three Months Ended – June 30, 2021 vs. June 30, 2020~~

The segment’s quarterly results include two months of the newly acquired PMMA business. This addition resulted in 287% of the 383% increase in net sales. Excluding the PMMA business, sales volume positively impacted net sales by 69% due to COVID-19 impacts during the prior year.

Adjusted EBITDA increased $23.0 million, or 479%, of which 457% can be attributed to the addition of the PMMA business. Excluding the PMMA business, the volume gains from the legacy portion of the business were partially offset by lower margin from higher raw material costs.

~~Six Months Ended – June 30, 2021 vs. June 30, 2020~~

The 189% increase in net sales was primarily due to the addition of the PMMA business for two months in the second quarter. Additionally, there was an increase of 8% due to higher pricing as well as an increase of 5% due to foreign exchange rate impacts.

Adjusted EBITDA increased $22.9 million, or 178%, of which 169% can be attributed to the addition of the PMMA business during the second quarter. The remaining favorability is covered by volume gains following negative COVID-19 impacts in the prior year offset by lower margins from higher raw material costs.

Base Plastics Segment

Our Base Plastics segment consists of a variety of compounds and blends, the majority of which are for automotive applications. The segment also includes our acrylonitrile-butadiene-styrene (“ABS”), styrene-acrylonitrile (“SAN”), and polycarbonate (“PC”) businesses. The Base Plastics segment also includes the results of Heathland, which was acquired in the first quarter of 2022. However, this did not have a material impact on sales or Adjusted EBITDA for the period.


	Three Months Ended								Six Months Ended								Three Months Ended								Six Months Ended
	June 30,								June 30,								June 30,								June 30,
($ in millions)	2021			2020			% Change		2021			2020			% Change		2022			2021			% Change		2022			2021			% Change
Net sales	$	396.9		$	151.5		162	%	$	725.8		$	408.9		78	%	$	361.9		$	396.9		(9)	%	$	758.4		$	725.8		4	%
Adjusted EBITDA	$	82.0		$	(11.7)		(801)	%	$	147.5		$	15.2		870	%	$	46.1		$	82.0		(44)	%	$	114.7		$	147.5		(22)	%
Adjusted EBITDA margin		21	%		(8)	%				20	%		4	%				13	%		21	%				15	%		20	%

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

~~Of the 162% increase in net~~Net sales ~~109% was~~decreased by 9% year-over-year, primarily due to lower sales volume, mainly in ABS, from softening demand to building & construction and appliance applications, which contributed to an 18% decrease. This decrease was partially offset by a 12% increase from higher pricing due to the pass through of raw material cost.

The $35.9 million, or 44%, decrease in Adjusted EBITDA was primarily due to a $22.5 million, or 27%, decrease from lower sales volumes as described above. In addition to lower sales volumes, Adjusted EBITDA decreased by $7.0 million, or 8%, due to a margin decline from higher raw material and utility costs and a softer demand environment. Foreign exchange rate impacts also contributed to a $4.7 million, or 6%, decrease.

Six Months Ended – June 30, 2022 vs. June 30, 2021

Net sales increased by 4% year-over-year. Higher pricing from the pass through of higher raw material costs ~~and commercial excellence actions. An additional 40%~~led to a 20% increase in net sales from the prior year. This was ~~attributable~~partially offset by a 12% decrease due to ~~increased~~lower sales volume infrom weaker demand to automotive and building & construction applications,

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~~like construction, appliances, and especially in automotive where COVID-19 caused production shutdowns in the prior year, and~~ as well as a ~~14% increase was~~4% decrease due to foreign exchange rate impacts.

The ~~$93.7~~$32.8 million, or ~~801%~~22%, ~~increase~~decrease in Adjusted EBITDA was primarily due to ~~higher margins~~lower sales volume of ~~$59.8~~$28.4 million, or ~~513%~~19%, ~~particularly in ABS and polycarbonate products attributable to commercial excellence initiatives~~ as ~~well as tight supply and strong demand.~~described above. Also contributing to the overall decrease was ~~an increase~~unfavorable foreign exchange rate impacts of ~~$23.7~~$9.1 million, or ~~203%~~6%, and a decrease of $7.0 million, or 5%, due to higher ~~sales volume as well as an increase of $10.7 million, or 92%, due to foreign exchange rate impacts.~~

~~Six Months Ended – June 30, 2021 vs. June 30, 2020~~

~~Of the 78% increase in net sales, 49% was due to higher pricing from the pass through of raw material~~fixed costs. An additional 19% increase was attributable to higher sales volume in applications like construction and in automotive where COVID-19 caused production shutdowns in the prior year, and a 9% increase was due to foreign exchange rate impacts.

~~The $132.3 million, or 870%, increase~~These decreases in Adjusted EBITDA ~~was primarily due to~~were partially offset by higher margins of ~~$76.9~~$10.9 million, or 507%, particularly in ABS and polycarbonate products. Also contributing was an increase of $30.4 million, or 200%, due to higher sales volume, an increase of $19.2 million, or 127%, due to foreign exchange rate impacts, and an increase of $5.8 million, or 39%, due to lower fixed costs primarily from higher fixed cost absorption in comparison to the prior year.7%.

Polystyrene Segment

Our product offerings in our Polystyrene segment include a variety of general purpose polystyrenes (“GPPS”) and polystyrene that has been modified with polybutadiene rubber to increase its impact resistant properties (“HIPS”). These products provide customers with performance and aesthetics at a low cost across applications, including appliances, packaging, including food packaging and food service disposables, consumer electronics, and building and construction materials. In April 2021, the Company announced our plans to build a full commercial scale polystyrene recycling plant in Tessenderlo, Belgium, which is expected to be operational in 2023.


	Three Months Ended								Six Months Ended
	June 30,								June 30,
($ in millions)	2022			2021			% Change		2022			2021			% Change
Net sales	$	312.0		$	313.3		(0)	%	$	630.0		$	580.1		9	%
Adjusted EBITDA	$	23.0		$	51.1		(55)	%	$	68.3		$	98.4		(31)	%
Adjusted EBITDA margin		7	%		16	%				11	%		17	%

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Three Months Ended

Six Months Ended

June 30,

June 30,

($ in millions)


2021


2020


% Change

2021


2020

% Change

Net sales

$
313.3


$
155.8


101
%

$
580.1


$
338.6


71
%
Adjusted EBITDA

$
51.1

$
14.6

250
%

$
98.4

$
26.0


278
%
Adjusted EBITDA margin

16
%

9
%

17
%

8
%

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

OfNet sales were essentially flat year-over-year. Higher pricing, primarily from the ~~101%~~pass through of higher styrene costs, resulted in a $14.5 million, or 5%, increase in net ~~sales, 113%~~sales. This increase was offset by lower volumes, caused by lower demand in China for appliances.

The $28.1 million, or 55%, decrease in Adjusted EBITDA was primarily due to a decrease of ~~the~~$28.4 million, or 56%, due to lower margins primarily from raw material volatility in Europe. In addition, a decrease of $4.0 million, or 8%, was due to lower volumes as described above. These effects were partially offset by an increase due to lower fixed costs of $3.5 million, or 7%.

Six Months Ended – June 30, 2022 vs. June 30, 2021

The 9% increase in net sales was due to higher pricing primarily from the pass through of higher styrene costs to our customers. This increase was slightly offset by decreased sales volume of 12%, following the extremely high demand in the prior year related to COVID-19 essential applications such as packaging.costs.

The ~~$36.5~~$30.1 million, or ~~250%~~31%, ~~increase~~decrease in Adjusted EBITDA was ~~primarily~~ due to ~~higher margins resulting from commercial excellence initiatives and very tight market conditions, which resulted in an increase~~a decrease of ~~$44.4~~$27.9 million, or ~~305%.~~28%, from lower margins primarily from raw material volatility in Europe. In addition, a decrease of $5.0 million, or 5%, was due to lower volumes. These effects were partially offset by ~~a decrease~~an increase of ~~$4.1~~$2.0 million, or ~~28%, from lower sales volume, a decrease of $2.2 million, or 15%, from higher fixed costs, and a decrease of $1.6 million, or 11%,~~2% due to favorable foreign exchange rate impacts.

~~Six Months Ended – June 30, 2021 vs. June 30, 2020~~

Of the 71% increase in net sales, 74% of the increase was due to higher pricing primarily from the pass through of higher styrene costs to our customers. This increase was slightly offset by a 3% decrease in sales volume.

The $72.4 million, or 278%, increase in Adjusted EBITDA was primarily due to higher margins resulting from commercial excellence initiatives, strong market conditions, and favorable net raw material timing, which resulted in an increase of $77.2 million, or 297%. These effects were partially offset by a $2.6 million, or 10%, decrease due to foreign exchange rate impacts and a $2.4 million, or 9%, decrease attributable to lower sales volume.

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Feedstocks Segment

The Feedstocks segment includes the Company’s production and procurement of styrene monomer outside of North America, which is used as a key raw material for the production of polystyrene, expandable polystyrene, SAN resins, SA latex, SB latex, ABS resins, unsaturated polyethylene resins, and styrene-butadiene rubber.


	Three Months Ended								Six Months Ended								Three Months Ended								Six Months Ended
	June 30,								June 30,								June 30,								June 30,
($ in millions)	2021			2020			% Change		2021			2020			% Change		2022			2021			% Change		2022			2021			% Change
Net sales	$	71.3		$	24.6		190	%	$	144.8		$	80.5		80	%	$	96.6		$	71.3		35	%	$	166.9		$	144.8		15	%
Adjusted EBITDA	$	39.8		$	(3.9)		(1,121)	%	$	86.1		$	(20.8)		514	%	$	14.2		$	39.8		(64)	%	$	18.3		$	86.1		(79)	%
Adjusted EBITDA margin		56	%		(16)	%				59	%		(26)	%				15	%		56	%				11	%		59	%

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

~~Of the 190%~~The 35% increase in net sales ~~184%~~ was driven almost entirely from higher styrene prices.

The decrease of $25.6 million in Adjusted EBITDA was primarily attributed to a $29.6 million, or 74%, decrease due to lower styrene margins including impacts from higher ~~pricing from the pass through~~utility costs caused by rise in natural gas prices in Europe. Slightly offsetting this decrease was an increase of ~~higher~~$4.7 million, or 12%, due to foreign exchange impacts.

Six Months Ended – June 30, 2022 vs. June 30, 2021

Net sales increased 15% year-over-year. Higher styrene ~~prices. This effect was~~prices resulted in a 31% increase in net sales, which were partially offset by a 6%16% decrease due to lower styrene-related sales volume.

The ~~increase~~decrease of ~~$43.7~~$67.8 million in Adjusted EBITDA was primarily attributed to a $77.6 million, or 90%, decrease due to ~~higher~~lower styrene margins including impacts from higher utility costs caused by a rise in ~~Europe from strong demand and tight supply, which resulted~~natural gas prices in Europe. Slightly offsetting this decrease was an increase of ~~$47.5 million. Partially offsetting this effect was a decrease of $3.1~~$8.3 million, or 10%, due to foreign exchange rate impacts.

~~Six Months Ended – June 30, 2021 vs. June 30, 2020~~

Of the 80% increase in net sales, 83% was due to higher pricing from the pass through of higher styrene prices. This effect was partially offset by a 3% decrease due to lower styrene-related sales volume.

The increase of $106.9 million in Adjusted EBITDA was primarily due to higher styrene margins in Europe from strong demand and tight supply, which resulted in an increase of $114.5 million. Partially offsetting this effect was a decrease of $5.9 million due to foreign exchange rate impacts.

Americas Styrenics Segment

This segment consists solely of the equity earnings from of our 50%-owned joint venture, Americas Styrenics, a producer of both styrene monomer and polystyrene in North America. Styrene monomer is a basic building block of plastics and a key input to many of the Company’s products, as well as a key raw material for the production of polystyrene. Major applications for the polystyrene products Americas Styrenics produces include appliances, food packaging, food service disposables, consumer electronics, and building and construction materials.

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Three Months Ended

Six Months Ended

June 30,

June 30,

($ in millions)


2021


2020


% Change

2021


2020

% Change

Adjusted EBITDA*

$
30.1

$
14.4

109
%

$
53.0

$
24.2


119
%


	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions)	2022		2021		% Change		2022		2021		% Change
Adjusted EBITDA*	$	39.4	$	30.1	31	%	$	61.0	$	53.0	15	%

*The results of this segment are comprised entirely of earnings from Americas Styrenics, our equity method investment. As such, Adjusted EBITDA related to this segment is included within “Equity in earnings of unconsolidated affiliates” in the condensed consolidated statements of operations.

Three Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

The increase in Adjusted EBITDA was mainly due to ~~increased polystyrene~~higher styrene profitability, which was partially offset by lower sales volume ~~and higher~~that resulted from the styrene ~~margins in North America, primarily attributable to COVID-19 related impacts~~production outages in the ~~prior year as well as strong demand and styrene industry outages caused by weather related and other events.~~current period.

Six Months Ended – June 30, ~~2021~~2022 vs. June 30, ~~2020~~2021

The increase in Adjusted EBITDA was mainly due to ~~increased~~higher styrene profitability, which was partially offset by lower sales volume ~~and higher~~that resulted from the styrene ~~margins~~production outages in ~~North America, primarily attributable to strong demand and industry outages caused by weather related and other events.~~the current period.

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Non-GAAP Performance Measures

We present Adjusted EBITDA as a non-GAAP financial performance measure, which we define as income from continuing operations before interest expense, net; provision for income taxes; depreciation and amortization expense; loss on extinguishment of long-term debt; asset impairment charges; gains or losses on the dispositions of businesses and assets; restructuring charges; acquisition related costs and other items. In doing so, we are providing management, investors, and credit rating agencies with an indicator of our ongoing performance and business trends, removing the impact of transactions and events that we would not consider a part of our core operations.

There are limitations to using the financial performance measures such as Adjusted EBITDA. This performance measure is not intended to represent net income or other measures of financial performance. As such, it should not be used as an alternative to net income as an indicator of operating performance. Other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use this or similarly-named financial measures that other companies may use, to compare the performance of those companies to our performance. We compensate for these limitations by providing a reconciliation of this performance measure to our net income, which is determined in accordance with GAAP.

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Adjusted EBITDA is calculated as follows for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
(in millions)	2021		2020		2021		2020		2022		2021		2022		2021
Net income (loss)	$	151.6	$	(128.4)	$	223.1	$	(164.7)
Net income (loss) from discontinued operations		18.6		(154.2)		24.3		(121.1)
Net income (loss) from continuing operations		133.0		25.8		198.8		(43.6)
Net income									$	37.4	$	151.6	$	54.2	$	223.1
Net income from discontinued operations										0.3		18.6		—		24.3
Net income from continuing operations										37.1		133.0		54.2		198.8
Interest expense, net		21.6		11.7		33.6		22.0		25.4		21.6		47.3		33.6
Provision for (benefit from) income taxes		23.3		(53.0)		43.4		(10.8)
Provision for income taxes										30.8		23.3		53.4		43.4
Depreciation and amortization		38.1		24.3		61.2		48.6		48.1		38.1		101.1		61.2
EBITDA^(a)	$	216.0	$	8.8	$	337.0	$	16.2	$	141.4	$	216.0	$	256.0	$	337.0
Loss on extinguishment of long-term debt		0.5		—		0.5		—
Net gain on disposition of businesses and assets		—		—		(0.2)		(0.4)		(1.5)		—		(1.8)		(0.2)
Restructuring and other charges^(b)		6.3		5.4		6.7		7.2		(1.5)		6.3		(1.0)		6.7
Acquisition transaction and integration net costs^(c)		43.2		(0.4)		49.2		(0.3)		2.7		43.2		5.9		49.2
Acquisition purchase price hedge (gain) loss^(d)		(33.0)		—		22.0		—		—		(33.0)		—		22.0
Asset impairment charges or write-offs^(e)		1.8		—		1.8		10.3		1.3		1.8		2.0		1.8
European Commission request for information^(f)										—		—		35.6		—
Other items^(f)(g)		4.3		3.0		6.4		21.7		22.1		4.8		45.4		6.9
Adjusted EBITDA	$	239.1	$	16.8	$	423.4	$	54.7	$	164.5	$	239.1	$	342.1	$	423.4

(a)

EBITDA is a non-GAAP financial performance measure that we refer to in making operating decisions because we believe it provides our management as well as our investors and credit agencies with meaningful information regarding the Company’s operational performance. We believe the use of EBITDA as a metric assists our board of directors, management and investors in comparing our operating performance on a consistent basis. Other companies in our industry may define EBITDA differently than we do. As a result, it may be difficult to use EBITDA, or similarly-named financial measures that other companies may use, to compare the performance of those companies to our performance. We compensate for these limitations by providing reconciliations of our EBITDA results to our net income, which is determined in accordance with GAAP.

(b)

Restructuring and other charges for the three and six months ended June 30, 2022 and 2021 primarily relate to ~~the employee termination benefit~~ charges incurred in connection with the Company’s ~~transformational~~ restructuring program, announced in the second quarter of 2021. Restructuring and other charges for the three and six months ended June 30, 2020 primarily relate to employee termination benefit charges as well as contract termination charges incurred in connection with the Company’s corporate restructuring program announced in the fourth quarter of 2019.programs. Refer to Note 17 in the condensed consolidated financial statements for further information regarding restructuring activities.

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(c)

Amounts for the three ~~months ended June 30, 2021 include $18.2 million of acquisition costs, $10.4 million of integration costs, $10.1 million related to the amortization of the fair-value step-up to inventory,~~ and ~~$4.5 million of transfer taxes associated with the Acquisition. Amounts for the~~ six months ended June 30, 2022 and 2021 ~~include $19.8 million of~~relate to expenses incurred for the Company’s acquisition ~~costs, $14.8 million of~~and integration ~~costs, $10.1 million related to the amortization~~ of the ~~fair-value step-up to inventory,~~PMMA business and ~~$4.5 million of transfer taxes associated with the Acquisition.~~Aristech Surfaces Acquisitions. Refer to Note 3 in the condensed consolidated financial statements for further information.

(d)

Acquisition purchase price hedge (gain) loss for the three and six months ended June 30, 2021 was due to the change in fair value of the Company’s forward currency hedge arrangement on the euro-denominated purchase price of the ~~Arkema~~ PMMA business. Refer to Note 10 in the condensed consolidated financial statements for further information.

(e)

~~Asset impairment charges or write-offs~~Amount for the three and six months ended June 30, 2022 and 2021 ~~and the six months ended June 30, 2020~~primarily relate to the impairment of the Company’s styrene monomer assets in Boehlen, ~~Germany. Refer to~~Germany, as described within Note 11 in the condensed consolidated financial ~~statements for further information.~~statements.

(f)	Amount for the six months ended June 30, 2022 relate to the estimated liability recorded in connection with the European Commission request for information, as described in Note 13 in the condensed consolidated financial statements.

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(g)

Other items for the three and six months ended June 30, 2022 and 2021 primarily relate to fees incurred in conjunction with certain of the Company’s strategic initiatives. ~~Other items for the~~The three and six months ended June 30, ~~2020 primarily relate~~2022 also include costs related to ~~advisory and professional fees incurred in conjunction with~~ our ~~initiative~~transition to transition business services from Dow, including certain administrative services such as accounts payable, logistics, and IT services, which was substantially completed in 2020, as well as fees incurred in conjunction with certain of the Company’s strategic initiatives.a new enterprise resource planning system.

Liquidity and Capital Resources

Cash Flows

The table below summarizes our primary sources and uses of cash for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021. We have derived the summarized cash flow information from our unaudited financial statements.


	Six Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2022		2021
Net cash provided by (used in):
Operating activities - continuing operations	$	44.3	$	118.4	$	(88.9)	$	18.1
Operating activities - discontinued operations		(14.3)		(42.6)		0.8		11.9
Operating activities		30.0		75.8		(88.1)		30.0
Investing activities - continuing operations		(1,403.1)		25.4		(70.4)		(1,403.1)
Investing activities - discontinued operations		(2.4)		(10.0)		(0.8)		(2.4)
Investing activities		(1,405.5)		15.4		(71.2)		(1,405.5)
Financing activities		1,154.9		34.4		(140.8)		1,154.9
Effect of exchange rates on cash		(1.1)		(0.5)		(8.5)		(1.1)
Net change in cash, cash equivalents, and restricted cash	$	(221.7)	$	125.1	$	(308.6)	$	(221.7)

Operating Activities

Net cash used in operating activities from continuing operations during the six months ended June 30, 2022 totaled $88.9 million. Solid earnings, including $37.5 million of dividends received from Americas Styrenics, were more than offset by a significant working capital build during the quarter. This working capital build, and resulting negative impact on cash flow, was driven by a rapid and significant increase in raw material prices experienced in the first half of 2022, especially in benzene. Also contributing to the working capital build were historically high energy prices. Net cash provided by operating activities from discontinued operations during the six months ended June 30, 2022 totaled $0.8 million.

Net cash provided by operating activities from continuing operations during the six months ended June 30, 2021 totaled ~~$44.3~~$18.1 million, driven by very strong earnings, ~~during the quarter,~~ and inclusive of dividends received from Americas Styrenics of $40.0 million. Partially offsetting these factors was a ~~$209.0~~$235.2 million reduction in operating cash from net working capital changes during the period, which were primarily attributable to significant increases in raw material costs, including the cost of benzene in Europe nearly doubling from February to May, and an increase in inventory ahead of third quarter planned maintenance. activities. Net cash ~~used in~~provided by operating activities from discontinued operations during the six months ended June 30, 2021 totaled ~~$14.3~~$11.9 million, which was also primarily attributable to raw material cost increases and higher inventory related to discontinued operations.

Net cash provided by operating activities from continuing operations during the six months ended June 30, 2020 totaled $118.4 million. This increase in cash was driven by a $134.0 million increase in operating cash generated from

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net working capital changes during the period, which were primarily attributable to the Company’s liquidity-focused actions during the period, including reduced capital spending, operating expenses, and working capital, as well as the impact of lower raw material prices and sales volumes. Net cash used in operating activities from discontinued operations during the six months ended June 30, 2020 totaled $42.6 million, and was also driven by the Company’s liquidity-focused actions during the period.

Investing Activities

Net cash used in investing activities from continuing operations during the six months ended June 30, 2022 totaled $70.4 million, which was primarily attributable to net cash paid for asset or business acquisitions of $22.2 million (see Note 3), and capital expenditures, including cash spent for our ongoing enterprise resource planning system upgrade, of $55.4 million. Net cash used in investing activities from discontinued operations during the six months ended June 30, 2022 totaled $0.8 million.

Net cash used in investing activities from continuing operations during the six months ended June 30, 2021 totaled $1,403.1 million, which was primarily attributable to net cash paid for asset or business acquisitions of $1,358.6 million, ~~(see Note 3),~~ capital expenditures of $30.0 million, and payments for the settlement of hedging instruments of $14.7 million (related

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to the acquisition purchase price ~~hedge – see Note 10)~~hedge). Net cash used in investing activities from discontinued operations during the six months ended June 30, 2021 totaled $2.4 million, which was entirely attributable to capital expenditures.

Financing Activities

Net cash ~~provided by investing~~used in financing activities ~~from continuing operations~~ during the six months ended June 30, ~~2020~~2022 totaled ~~$25.4~~$140.8 million. This activity was primarily due to $101.9 million ~~primarily resulting from proceeds from~~of payments related to the ~~settlement~~repurchase of ~~hedging instruments~~ordinary shares, $24.6 million of ~~$51.6~~dividends paid, $7.5 million ~~(see Note 10) as well as proceeds from the sale~~ of ~~businesses~~net repayments of short-term borrowings, and ~~other assets (primarily~~$7.2 million of net principal payments related to our land in Livorno, Italy that was sold in January 2020) of $11.9 million. These impacts were partially offset by capital expenditures of $38.2 million, which management has taken specific actions to control2024 Term Loan B and ~~reduce in response to COVID-19. Net cash used in investing activities from discontinued operations~~2028 Term Loan B during the ~~six months ended June 30, 2020 totaled $10.0 million, which was entirely attributable to capital expenditures.~~

~~Financing Activities~~period.

Net cash provided by financing activities during the six months ended June 30, 2021 totaled $1,154.9 million. This activity was primarily due to $746.3 million in proceeds from the issuance of the 2028 Term Loan B, $450.0 million in proceeds from the issuance of the 2029 Senior Notes, and $10.5 million in proceeds from exercise of option awards. This activity was partially offset by $35.0 million of deferred financing fees primarily related to the issuance of our 2028 Term Loan, $6.4 million of dividend payments, $6.2 million of net repayments of short-term borrowings, and $3.5 ~~million of net principal payments related to our 2024 Term Loan B during the period.~~

Net cash provided by financing activities during the six months ended June 30, 2020 totaled $34.4 million. This activity was primarily due to proceeds of $100.0 million from the draw on the Company’s 2022 Revolving Facility. This was partially offset by $25.0 million of payments related to the repurchase of ordinary shares, $31.2 million of dividends paid, $5.4 million of net repayments of short-term borrowings, and $3.4 million of net principal payments related to our 2024 Term Loan B during the period.

Free Cash Flow

We use Free Cash Flow as a non-GAAP measures to evaluate and discuss the Company’s liquidity position and results. Free Cash Flow is defined as cash from operating activities, less capital expenditures. We believe that Free Cash Flow provides an indicator of the Company’s ongoing ability to generate cash through core operations, as it excludes the cash impacts of various financing transactions as well as cash flows from business combinations that are not considered organic in nature. We also believe that Free Cash Flow provides management and investors with useful analytical indicator of our ability to service our indebtedness, pay dividends (when declared), and meet our ongoing cash obligations.

Free Cash Flow is not intended to represent cash flows from operations as defined by GAAP, and therefore, should not be used as an alternative for that measure. Other companies in our industry may define Free Cash Flow differently than we do. As a result, it may be difficult to use this or similarly-named financial measures that other companies may use, to compare the liquidity and cash generation of those companies to our own. We compensate for these limitations by providing a reconciliation to cash provided by operating activities from continuing operations, which is determined in accordance with GAAP.

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	Six Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2022		2021
Cash provided by operating activities	$	30.0	$	75.8
Cash provided by (used in) operating activities					$	(88.1)	$	30.0
Capital expenditures		(32.4)		(48.2)		(56.2)		(32.4)
Free Cash Flow	$	(2.4)	$	27.6	$	(144.3)	$	(2.4)

Refer to the discussion above for significant impacts to cash provided by operating activities for the six months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

Capital Resources and Liquidity

We require cash principally for day-to-day operations, to finance capital investments and other initiatives, to purchase materials, to service our outstanding indebtedness, and to fund the return of capital to shareholders via dividend payments and ordinary share repurchases, when deemed appropriate. Our sources of liquidity include cash on hand, cash flow from operations from continuing operations, and amounts available under the Senior Credit Facility and the Accounts Receivable Securitization Facility (discussed further below).

~~As of~~At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$2,378.1~~$2,360.5 million and ~~$1,187.3~~$2,368.8 million, respectively, in outstanding indebtedness and ~~$1,001.5~~$1,050.5 million and ~~$905.7~~$1,064.1 million, respectively, in working capital (calculated as current assets from continuing operations less current liabilities from continuing operations). In addition, as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$100.6~~$262.7 million and ~~$172.8~~$560.6 million, respectively, of foreign cash and cash equivalents on our balance sheet, outside of Ireland, our country of domicile, ~~of Luxembourg,~~ all of which is readily convertible into

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other foreign currencies, including the U.S. dollar. Our intention is not to permanently reinvest our foreign cash and cash equivalents. Accordingly, we record deferred income tax liabilities related to the unremitted earnings of our subsidiaries.

As discussed in Note 8 of the condensed consolidated financial statements, the Company completed a senior note issuance during the first quarter of 2021, and both borrowed a new tranche of term loans and refinanced our revolving credit facility during the second quarter of 2021. The results of these new financings are reflected in the table below.

The following table outlines our outstanding indebtedness as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 and the associated interest expense, including amortization of deferred financing fees and debt discounts. Effective interest rates for the borrowings included in the table below exclude the impact of deferred financing fee amortization, certain other fees charged to interest expense (such as fees for unused commitment fees during the period), and the impacts of derivatives designated as hedging instruments. For definitions of capitalized terms not included herein, refer to our Annual Report on Form 10-K (“Annual Report”).

~~Table of Contents~~


	As of and for the Six Months Ended						As of and for the Year Ended						As of and for the Six Months Ended						As of and for the Year Ended
	June 30, 2021						December 31, 2020						June 30, 2022						December 31, 2021
			Effective						Effective						Effective						Effective
			Interest		Interest				Interest		Interest				Interest		Interest				Interest		Interest
($ in millions)	Balance		Rate		Expense		Balance		Rate		Expense		Balance		Rate		Expense		Balance		Rate		Expense
Senior Credit Facility
2024 Term Loan B	$	673.9	2.1	%	$	10.3	$	677.3	2.6	%	$	23.3	$	666.9	2.5	%	$	11.0	$	670.4	2.1	%	$	20.6
2028 Term Loan B		746.3	2.6	%		3.7		—	—			—		739.3	3.0	%		12.6		742.8	2.6	%		15.2
2026 Revolving Facility		—	—	%		1.2		—	—			3.7		—	—	%		0.9		—	—	%		2.1
2029 Senior Notes		450.0	5.1	%		6.6		—	—			—		450.0	5.1	%		12.4		450.0	5.1	%		19.0
2025 Senior Notes		500.0	5.4	%		10.4		500.0	5.4	%		19.5		500.0	5.4	%		11.7		500.0	5.4	%		20.7
Accounts Receivable Securitization Facility		—	—			0.8		—	—			1.5		—	—	%		0.7		—	2.0	%		1.8
Other indebtedness*		7.9	2.5	%		—		10.0	2.4	%		0.1		4.3	0.8	%		—		5.6	2.2	%		—
Total	$	2,378.1			$	33.0	$	1,187.3			$	48.1	$	2,360.5			$	49.3	$	2,368.8			$	79.4

*For the six months ended June 30, ~~2021,~~2022, interest expense on “Other indebtedness” totaled less than $0.1 million.

As of June 30, ~~2021,~~2022, our Senior Credit Facility included the 2026 Revolving Facility, which is scheduled to mature in May 2026 and had a borrowing capacity of $375.0 million. As of June 30, ~~2021,~~2022, the Company had ~~$360.4~~$368.9 million of funds available for borrowing (net of ~~$14.6~~$6.1 million outstanding letters of credit) under the 2026 Revolving Facility. Further, as of June 30, ~~2021,~~2022, the Company is required to pay a quarterly commitment fee in respect of any unused commitments under the 2026 Revolving Facility equal to 0.375% per annum.

Also included in our Senior Credit Facility is our 2024 Term Loan B (with original principal of $700.0 million, maturing in September 2024), and our 2028 Term Loan B (with original principal of $750.0 million, maturing in May 2028), each of which requires scheduled quarterly payments in amounts equal to 0.25% of the original principal. The stated interest rate on our 2024 Term Loan B is London Interbank Offered Rate (“LIBOR”) plus 2.00% (subject to a 0.00% LIBOR floor). The stated interest rate on our 2028 Term Loan B is LIBOR plus 2.50% (subject to a 0.00% LIBOR floor). The Company made net principal payments of $3.5 million on the 2024 Term Loan B during the six months ended June 30, 2021, with an additional $14.5 million of scheduled future payments classified within current debt on the Company’s condensed consolidated balance sheet as of June 30, 2021 related to both the 2024 Term Loan B and 2028 Term Loan B.

Our 2025 Senior Notes, as issued under the Indenture executed in 2017, include $500.0 million aggregate principal amount of 5.375% senior notes that mature on September 1, 2025. Interest on the 2025 Senior Notes is payable semi-annually on May 3 and November 3 of each year, which commenced on May 3, 2018. These Notes may be redeemed prior to their maturity at the option of the Company under certain circumstances at specific redemption prices. Refer to our Annual Report for further information.

Our 2029 Senior Notes, as issued under the Indenture executed in 2021, include $450.0 million aggregate principal amount of 5.125% senior notes that mature on April 1, 2029. Interest on the 2029 Senior Notes is payable semi-annually on February 15 and August 15 of each year, which commences on August 15, 2021. These Notes may be redeemed prior to their maturity at the option of the Company under certain circumstances at specific redemption prices.

We also continue to maintain our Accounts Receivable Securitization Facility, which matures in November 2024 and has aan outstanding borrowing capacity of $150.0 ~~million and matures in September 2021.~~million. As of June 30, ~~2021,~~2022, there were no amounts outstanding under this facility and the Company had approximately $150.0 million of accounts receivable available to support this facility, based on the pool of eligible accounts receivable.Refer to Note 8 in the consolidated financial statements for further information on the facility.

Our ability to raise additional financing and our borrowing costs may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios.

We and our subsidiaries, affiliates or significant shareholders may from time to time seek to retire or purchase our outstanding debt through cash purchases in the open market, privately negotiated transactions, exchange transactions or

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otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Trinseo Materials Operating S.C.A. and Trinseo Materials Finance, Inc. (the “Issuers” of our 2029 Senior Notes and 2025 Senior Notes and “Borrowers” under our Senior Credit Facility) are dependent upon the cash generation and receipt of distributions and dividends or other payments from our subsidiaries and joint venture in order to satisfy their debt obligations. There are no known significant restrictions by third parties on the ability of subsidiaries of the Company to disburse or dividend funds to the Issuers and the Borrowers in order to satisfy these obligations. However, as the Company’s subsidiaries are located in a variety of jurisdictions, the Company can give no assurances that our subsidiaries will not face transfer restrictions in the future due to regulatory or other reasons beyond our control.

The Senior Credit Facility and Indentures also limit the ability of the Borrowers and Issuers, respectively, to pay dividends or make other distributions to Trinseo ~~S.A.,~~PLC, which could then be used to make distributions to shareholders. During the six months ended June 30, ~~2021,~~2022, the Company declared dividends of ~~$0.16~~$0.64 per ordinary share, totaling ~~$6.4~~$23.9 million, of which ~~$4.3~~$12.8 million was accrued as of June 30, ~~2021 and~~2022, the majority of which was paid in July ~~2021.~~2022. These dividends are well within the available capacity under the terms of the restrictive covenants contained in the Senior Credit Facility and Indentures. Further, additional capacity continues to be available under the terms of these covenants to support expected future dividends to shareholders, should the Company continue to declare them.

Our ability to generate cash from operations to pay our indebtedness and meet other liquidity needs is subject to certain risks described herein and under Part I, Item 1A-“Risk Factors” of our Annual Report, as well as the risk factors included in Part II, Item 1A herein. As of June 30, ~~2021,~~2022, we were in compliance with all the covenants and default provisions under our debt agreements. Refer to our Annual Report for further information on the details of the covenant requirements.

The ongoing war in Ukraine and the corresponding sanctions and other measures being imposed by various governments have impacted global markets, particularly in Europe, leading to: (i) high volatility and increasing prices for natural gas and other energy supplies, (ii) changing trade flow patterns, and (iii) increasing levels of economic and geopolitical uncertainty globally. We do not have manufacturing operations in Ukraine, Russia or Belarus, and we have temporarily suspended sales and deliveries to Russia and Belarus, which sales do not constitute a material portion of our business. However, a significant escalation or expansion of economic disruption caused by this conflict, including supply disruptions, higher costs of raw materials or energy could have a material adverse effect on our results of operations, financial condition and cash flows. We are actively monitoring the broader economic impact from the crisis, in particular on the price and availability of raw materials and energy.

Contractual Obligations and Commercial Commitments

During the first and second quarter of 2021, the Company entered into new financing arrangements in connection with our acquisition of Arkema’s PMMA business, including the $450.0 million 2029 Senior Notes issued on March 24, 2021 and the $750.0 million 2028 Term Loan B entered into on May 3, 2021 upon closing of the transaction. Refer to Notes 3 and 8 of the condensed consolidated financial statements and the “Capital Resources and Liquidity” section of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for details on these contractual obligations entered into subsequent to December 31, 2020.

Additionally during the second quarter of 2021, the Company entered into a long-term contract to purchase benzene directly from Dow Europe’s facilities for use at the Company’s Terneuzen location. This contract has a term of two years with an automatic two-year renewal provision, and contains annual minimum purchase and maximum sale volume commitments.

There have been no ~~other~~ material revisions outside the ordinary course of business to our contractual obligations as described within “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commercial Commitments” within our Annual Report.

Critical Accounting Policies and Estimates

Our unaudited interim condensed consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses at the date of and during the reporting period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results.

We describe our significant accounting policies in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report, while we discuss our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report. There have been no material revisions to the significant accounting policies or critical accounting policies and estimates as filed in our Annual Report.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

We describe the impact of recent accounting pronouncements in Note 2 of our condensed consolidated financial statements, included elsewhere within this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As discussed in “Quantitative and Qualitative Disclosures About Market Risk” within our Annual Report, we are exposed to changes in interest rates and foreign currency exchange rates as well as changes in the prices of certain commodities that we use in production. There have been no material changes in our exposure to market risks from the information provided within our Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining internal controls designed to provide reasonable assurance that information required to be disclosed by us in our reports that we file or submit under the Exchange Act (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, with the participation of our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, ~~2021.~~2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report were effective to provide the reasonable level of assurance described above.

Changes in Internal Control over Financial Reporting

As discussed in Note 3 to the condensed consolidated financial statements, in May 2021, the Company completed the ~~acquisition of the~~ PMMA ~~business from Arkema.~~Acquisition. As permitted by the SEC, management ~~has~~ elected to exclude this acquisition from its assessment of the effectiveness of its internal control over financial reporting as of December 31, 2021. ~~The~~In May 2022, the Company ~~began to integrate~~completed the integration of the PMMA business into ~~our~~its internal control ~~over financial reporting structure subsequent to the acquisition date and expects to complete this integration within one year of the acquisition.~~

~~Aside from the PMMA business changes discussed above,~~environment. Otherwise, there ~~have been~~were no additional changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be subject to various legal claims and proceedings incidental to the normal conduct of business, relating to such matters as product liability, antitrust, competition, waste disposal practices, release of chemicals into the environment and other matters that may arise in the ordinary course of our business. WeOther than the European Commission request for information described in Note 13 – Commitments and Contingencies, we currently believe that there is no litigation pending that is likely to have a material adverse effect on our business. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. For information regarding material developments in legal proceedings during the quarter ended June 30, 2022, see “Litigation Matters” and “European Commission Request for Information” in Note 13 to our condensed consolidated financial statements.

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Item 1A. Risk Factors

Our business faces various risks. Certain important factors may have a material adverse effect on our business prospects, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the risk factors related to our ordinary shares as well those risk factors related to our business and industry which have been previously disclosed in Part 1, Item 1A of our Annual Report for the year ended December 31, ~~2020.~~2021. Certain material updates to these risk factors are included below.

We encourage you to consider these risks, in their entirety, in addition to other information contained in or incorporated by reference into this Quarterly Report and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations. ~~Production at our manufacturing facilities could be disrupted for a variety of reasons. Disruptions could expose us to significant losses or liabilities.~~

Risks Related to ~~Acquisitions and Dispositions~~Our Operations

~~We may fail to realize~~Volatility in the ~~anticipated benefits~~cost of raw materials, logistics services, or transportation utilized for our products, or disruption in the supply of the ~~Acquisition~~raw materials utilized for our products, may adversely affect our financial condition and results of operations or ~~such benefits may take longer~~cause our financial results to ~~realize than expected. We may also encounter difficulty integrating~~differ materially from our forecasts.

Our results of operations can be directly affected, positively and negatively, by volatility in the ~~PMMA business into our operations.~~

~~On May 3, 2021, we announced the closing~~cost of our ~~acquisition from Arkema S.A. (“Arkema”)~~raw materials, which are subject to global supply and demand and other factors beyond our control. Our principal raw materials (benzene, ethylene, butadiene, BPA, MMA, and styrene) together represent approximately 81% of ~~its polymethyl methacrylates (“PMMA”)~~our total cost of goods sold. Crude oil prices also impact our raw material and ~~activated methyl methacrylates (“MMA”) businesses (together, referred~~energy costs. Generally, higher crude oil prices lead to ~~herein as~~higher costs of natural gas and raw materials, although some raw materials are impacted less than others. Volatility in the ~~“PMMA business”) for~~cost of energy or raw materials makes it more challenging to manage pricing and pass the increases on to our customers in a ~~purchase price of €1.137 billion (the “Acquisition”).~~

~~Our ability to realize~~timely manner. We believe that rapid changes in pricing also can affect the ~~anticipated benefits of the Acquisition will depend on~~volume our ~~ability to integrate the PMMA business into ours. Combining these businesses will be a complex and time-consuming process.~~customers consume. As a result, ~~we expect to devote significant attention~~our gross profit and resources preparing for and then integrating the operations, systems, processes, procedures and personnel of the acquired PMMA business. This integration process may be disruptive to our ongoing business, and, if we fail to effectively integrate, or if integration takes longer or is more costly than expected, wemargins could lose or diminish the expected benefits of the Acquisition. Even if we are able to integrate the PMMA business successfully, this integration may not result in the realization of the synergies and benefits that we currently expect, nor can we give assurances that these benefits will be achieved when expected or at all.

We also face risks that we fail to meet our financial and strategic goals, due to, among other things, inability to grow and manage growth profitability, maintain relationships with customers or retain key employees. We may also be adversely affected byand our financial results may differ materially from our forecasts.

We are dependent on third-party freight carriers to transport many of our products. Our access to third-party freight carriers is not guaranteed, and we may be unable to transport our products at economically attractive rates in certain circumstances, particularly during disruptions to transportation infrastructure. Our business, financial position, results of operations or cash flows could be materially and adversely affected if we are unable to pass all of the cost increases on to our customers, or if freight carrier capacity in our geographic markets were to decline significantly or otherwise become unavailable.

We have supply agreements with Dow for ethylene, benzene, butadiene, and MMA, which are critical raw materials to our business. These raw materials and other ~~economic, business, and/~~less critical materials amount to approximately 22% of our total raw materials acquired in 2021, based on aggregate purchase price. The remainder is purchased via other third-party suppliers on a global basis. As these and other third-party supply agreements expire, we may be unable to renegotiate or ~~competitive factors~~renew these contracts, or obtain new long-term supply agreements on terms comparable or favorable to us, or at all, which may ~~not have existed at the time of closing. Such conditions could materially adversely~~significantly impact our ~~business~~operations. See Part 1, Item 1—Business— Sources and ~~results~~Availability of ~~operations.~~

~~We face risks concerning~~Raw Materials of our ~~proposed acquisition of Aristech Surfaces, and may fail to realize~~Annual Report for the ~~anticipated benefits of the Aristech Surfaces acquisition.~~

~~In July~~year ended December 31, 2021 we entered into an agreement to purchase the issued and outstanding membership interests of Aristech Surfaces. The acquisition is expected to close in 2021, subject to customary closing conditions including regulatory approvals. It is possible that certain events may prevent, delay or otherwise materially adversely affect the completion of the acquisition. If the acquisition does not receive the required regulatory approvals, if a material adverse change occurs, or if another event occurs that delays or prevents the acquisition, our ability to complete the acquisition could materially impacted and, to the extent that the current price of the Company’s common shares reflects an assumption that the acquisition will be completed, the price of the Company’s common shares could be negatively impacted.for additional information.

If the ~~acquisition~~availability of ~~Aristech Surfaces~~any of our principal raw materials is ~~completed,~~limited, we may ~~face difficulties realizing~~be unable to produce some of our products in the ~~anticipated benefits~~quantities demanded by our customers, which could have an adverse effect on plant utilization and our sales of ~~the acquisition. We~~products requiring such raw materials. Suppliers may ~~fail to realize anticipated cost and revenue synergies~~have temporary limitations preventing them from ~~the transaction, reach expected margins,~~meeting our requirements, and we may not be ~~successful~~able to obtain substitute alternative suppliers in ~~expanding~~a timely manner or ~~growing~~on favorable terms.

Continued supply constraints and increases in the ~~business profitability. We may also fail to maintain relationships with customers or retain and integrate~~cost of energy, including as a result of the ~~employees of Aristech Surfaces. Aristech Surfaces may also be adversely affected by other economic, business, and/or competitive factors which may not exist at the time of closing. Such conditions~~ongoing conflict in Ukraine, could ~~materially~~ adversely impact our ~~business and~~ results of operations.

We use natural gas and electricity to operate our facilities and generate heat and steam for our various manufacturing processes, and these operations can be directly affected by volatility in the cost and availability of energy, which is often subject to factors outside of our control. The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to high volatility and increased prices for natural gas and other

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energy supplies. Reductions in the supply of natural gas from Russia to Europe has led to ongoing supply shortages in Europe, and European Union member states have recently agreed to a voluntary short-term reduction of natural gas usage as a result of these shortages. Continued natural gas supply shortages, or a shutdown of natural gas supply from Russia, could lead to additional price increases, energy supply rationing, or temporary reduction in operations or closure of our manufacturing plants, which could have a material adverse impact on our business or results of operations.

Risks Related to ~~Our Indebtedness~~Regulation

~~Our current and future level of indebtedness~~Trinseo Europe GmbH, one of our subsidiaries, ~~including~~received a Request for Information from the ~~incurrence~~European Commission Directorate General for Competition, involving commercial activity for styrene monomer. To the extent the European Commission’s inquiry would lead to a finding that the Company’s subsidiary violated the law, the results of ~~additional indebtedness~~this finding could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

On June 6, 2018, Trinseo Europe GmbH, a subsidiary of the Company, received a Request for Information in the form of a letter from the European Commission Directorate General for Competition (the “European Commission”) related to ~~fund~~styrene monomer commercial activity in the ~~Acquisition, could adversely affect our financial condition.~~European Economic Area. In addition, the Company commenced an internal investigation into the matter and has discovered instances of inappropriate activity. We have provided all information requested and continue to fully cooperate with the Request for Information.

As a result of ~~December 31, 2020, our indebtedness totaled approximately $1.2 billion. Additionally, as~~further developments in this matter, during the first quarter of ~~December 31, 2020, we had $360.0~~2022, the Company recorded a reserve for an estimated liability of $35.6 million, (net of $15.0 million outstanding letters of credit) of funds available for borrowings under our Senior Credit Facility, as well as $150.0 million of funds available for borrowings under our accounts receivable securitization facility (the “Accounts Receivable Securitization Facility”).

~~Additionally, in connection with~~which remains ongoing and the Acquisition, our Trinseo Materials Operating S.C.A. and Trinseo Materials Finance Inc. subsidiaries issued $450.0 million principal amount of 5.125% Senior Notes due 2029 (the “2029 Senior Notes”) and borrowed an additional $750.0 million in term loans under our Senior Credit Facility, the proceedsoutcome of which ~~were used~~remains unknown. Trinseo Europe GmbH may be subject to ~~pay~~fines and/or certain behavioral or structural commitments imposed by the European Commission. If Trinseo Europe GmbH is found to have violated one or more laws, it could also be subject to additional actions by local competition authorities. European Commission inquiries or investigations can continue over a ~~portion~~long period of time, which can divert the ~~purchase price of the Acquisition.~~

~~Our current level of indebtedness, as well as future borrowings or other indebtedness, could have significant consequences for our business, including but not limited to:~~

●

~~increasing our vulnerability to economic downturns and adverse industry, competitive, or market conditions;~~

●

requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund capital expenditures and future business opportunities and returning cash to our shareholders in the form of dividends or share repurchases;

●

~~limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, and general corporate or other purposes;~~

●

compromising our flexibility to capitalize on business opportunities or other strategic acquisitions, and to react to competitive pressures, as compared to our competitors, or forcing us to make nonstrategic divestitures;

●

~~placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt at more favorable interest rates; and~~

●

~~increasing our cost of borrowing.~~

~~Although the terms~~attention of our ~~senior secured credit agreement (the “Credit Agreement”) governing~~management from day-to-day operations and impose significant administrative burdens. Any of these consequences could damage our ~~senior secured financing facility of up to $1,075.0 million (the “Senior Credit Facility”),~~reputation and ~~the note indentures governing~~ ~~the 2029 Senior Notes and our~~ ~~5.375% senior notes due 2025~~ (the “Indentures”), contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and the indebtedness incurred in compliance with these restrictions could be substantial. Also, we are not prevented from incurring obligations that do not constitute “indebtedness” as defined in the Senior Credit Facility or the Indentures, such as operating leases and trade payables. If new debt is added to our subsidiaries’ current debt levels, the risks related to indebtedness that we now face could intensify.

In addition, a substantial portion of our subsidiaries’ current indebtedness is secured by substantially all of our assets, which may make it more difficult to secure additional borrowings at reasonable costs. If we default or declare bankruptcy, after these obligations are met, there may not be sufficient funds or assets to satisfy our subordinate interests, including those of our shareholders.

~~The terms of our subsidiaries’ indebtedness may restrict our current and future operations, particularly~~impair our ability to ~~respond to change or to take certain actions.~~

~~The Indentures and the Credit Agreement governing our Senior Credit Facility contain~~conduct business, which could have a ~~number of covenants imposing certain restrictions~~material adverse effect on our ~~subsidiaries’ businesses. These restrictions may affect our ability to operate our~~ business, financial condition, results of operations, and ~~may limit our ability to take advantage of business opportunities. These agreements restrict, among other things, our subsidiaries’ ability to:~~

●

~~sell or assign assets;~~

●

~~incur additional indebtedness;~~

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●

~~pay dividends to Trinseo S.A.;~~

●

~~make investments or acquisitions;~~

●

~~incur liens;~~

●

~~repurchase or redeem capital shares;~~

●

~~engage in mergers or consolidations;~~

●

~~materially alter the business they conduct;~~

●

~~engage in transactions with affiliates; and~~

●

~~consolidate, merge or transfer all or substantially all of their assets.~~

The ability of our subsidiaries to comply with the covenants and financial ratios and tests contained in the Indenture and Credit Agreement, to pay interest on indebtedness, fund working capital, and make anticipated capital expenditures depends on our future performance, which is subject to general economic conditions and other factors, some of which are beyond our control. There can be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available under our Senior Credit Facility to fund liquidity needs in an amount sufficient to enable them to service their indebtedness. Furthermore, if we need additional capital for general corporate purposes or to execute on an expansion strategy, there can be no assurance that this capital will be available on satisfactory terms or at all.

A failure to repay amounts owed under the Senior Credit Facility, or the notes issued under our Indentures, at maturity would result in a default. In addition, a breach of any of the covenants in the Credit Agreement or Indentures or our inability to comply with the required financial ratios or limits could result in a default. If a default occurs, lenders may refuse to lend us additional funds and the lenders or noteholders could declare all of the debt and any accrued interest and fees immediately due and payable. A default under one of our subsidiaries’ debt agreements may trigger a cross-default under our other debt agreements.

flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)

Recent sales of unregistered securities

None.

(b)

Use of Proceeds from registered securities

None.

(c)

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~Under shareholder authorization granted at~~The following table contains information regarding purchases of our ~~annual generally meeting held on June 9, 2020, the Company is authorized to repurchase up to 3.6 million~~ ordinary shares over the next two years at a price per share of not less than $1.00 and not more than $1,000.00. In December 2020, the Company announced our decision to suspend the share repurchase program. There were no share repurchasesmade during the ~~three months~~quarter ended June 30, ~~2021. There are 3.6~~2022 by or on behalf of the Company or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Secuirites Exchange Act of 1934:


Issuer Purchases of Equity Securities
Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate number of shares that may yet be purchased under the plans or programs
April 1 - April 30, 2022	1,026,963	$	48.69	1,026,963	1,201,833	⁽¹⁾
May 1 - May 31, 2022	—	$	—	—	—	⁽¹⁾
June 1 - June 30, 2022	—	$	—	—	—	⁽¹⁾
Total	1,026,963	$	—	1,026,963

(1)

On December 2, 2021, the board of directors of the Company unanimously approved the authorization of a share repurchase program where the Company may repurchase up to $200.0 million of our ordinary shares,

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subject to certain parameters defined by the board of directors. The repurchase authorization expires after 18 months and repurchases may be effected through open market purchases, 10b5-1 plans or by other means.

Approximate number of shares ~~available for repurchase~~that may yet be purchased under the ~~2020~~plan is calculated using the average price paid per share ~~repurchase authorization as of June 30,~~ during the quarter.

~~2021.~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See Exhibit Index.

5450

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EXHIBIT INDEX


Exhibit No.	Description

3.1	~~Amended~~Memorandum and ~~Restated~~ Articles of Association of Trinseo ~~S.A.,~~PLC, as amended (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed on June 17, ~~2021)~~2022).

4.1	Form of Specimen Share Certificate of Trinseo S.A. (incorporated herein by reference to Exhibit 4.1 to Amendment No. 3 to the Registration Statement filed on Form S-1, File No. 333-194561, filed May 16, 2014).


~~4.2~~	Indenture among Trinseo Materials Operating S.C.A., Trinseo Materials Finance, Inc. and The Bank of New York Mellon, as Trustee, dated as of August 29, 2017 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed September 5, 2017)..

~~4.3~~4.2	Indenture among Trinseo Materials Operating S.C.A., Trinseo Materials Finance, Inc. and The Bank of New York Mellon, as Trustee, dated as of March 24, 2021 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed March 24, 2021)..

10.1*†	Amendment, dated May 9, 2022, to the Employment Agreement between Trinseo LLC and Frank Bozich dated December 11, 2018.

10.2*†	Amendment, dated May 9, 2022, to the Employment Agreement between Trinseo LLC and David Stasse dated April 29, 2019.

~~10.1~~10.3*†	~~2021 Incremental~~ Amendment, dated May 9, 2022, to ~~Credit~~the Employment Agreement between Trinseo LLC and Angelo Chaclas dated ~~September 6, 2017, among, inter alios,~~January 1, 2020.

10.4*†	Amendment, dated May 9, 2022, to the Employment Agreement between Trinseo ~~Materials Operating S.C.A.,~~Europe GmbH and Andre Lanning dated October 1, 2021.

10.5*†	Amendment, dated May 9, 2022, to the Employment Agreement between Trinseo ~~Materials Finance, Inc.~~Europe GmbH and ~~Deutsche Bank AG New York Bank,~~Francesca Reverberi dated ~~as of May 3, 2021~~October 1, 2021.

10.6*	Trinseo PLC Amended and Restated 2014 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed ~~May 5, 2021).~~

~~10.2~~	2021 Revolver Amendment to Credit Agreement dated September 6, 2017, among, inter alios, Trinseo Materials Operating S.C.A., Trinseo Materials Finance, Inc. and Deutsche Bank AG New York Bank, dated as of May 3, 2021 (incorporated by reference to Exhibit 10.2 to the Current Report on ~~Form 8-K filed May 5, 2021).~~

10.3*	~~Benzene Sales Contract, between Dow Europe GmbH and Trinseo Europe GmbH, dated May 6, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 14, 2021).~~

10.4**	Asset Purchase Agreement, by and between Trinseo S.A., Trinseo Deutschland GmbH, Trinseo Europe GmbH, Trinseo Belgium B.V.B.A., Trinseo Export GmbH, and Synthos S.A., Blitz F21-410 GmbH, and Synthos Dwory 7 dated May 21, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 25, 2021)June 17, 2022).

31.1†	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1†	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS†	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†	XBRL Taxonomy Extension Schema Document

101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†	XBRL Taxonomy Extension Label Linkbase Document

101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document

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104†	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Certain portions of this exhibit were redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause us competitive harm if publicly disclosed. We agree to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission on its request; provided, however that the Company may request confidential treatment of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.Compensatory plan or arrangement.

** Certain schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Trinseo S.A. hereby agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.† Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized.

Date: August ~~5, 2021~~9, 2022

	TRINSEO ~~S.A.~~PLC

	By:	/s/ Frank Bozich
	Name:	Frank Bozich
	Title:	President, Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ David Stasse
	Name:	David Stasse
	Title:	Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)



Initial cash purchase price paid ⁽¹⁾	$	1,369.0
Known purchase price adjustment, not yet paid ⁽²⁾		1.7
Total purchase price consideration	$	1,370.7


	May 3,
	2021
Cash and cash equivalents	$	10.4
Accounts receivable		19.1
Inventories ⁽¹⁾		78.6
Other current assets		8.7
Property, plant and equipment		236.0
Other intangible assets ⁽²⁾
Customer relationships		326.6
Developed technology		133.0
Tradenames		46.0
Other amortizable intangible assets		0.4
Right-of-use assets - operating		4.1
Deferred charges and other assets		27.9
Total fair value of assets acquired		890.8

Accounts payable		(15.0)
Current lease liabilities - operating		(1.7)
Income taxes payable		(0.1)
Accrued expenses and other current liabilities		(11.7)
Noncurrent lease liabilities - operating		(2.5)
Deferred income tax liabilities		(34.3)
Other noncurrent obligations ⁽³⁾		(22.5)
Total fair value of liabilities assumed		(87.8)
Net identifiable assets acquired		803.0
Purchase price consideration		1,370.7
Goodwill ⁽⁴⁾		567.7


12-month period commencing April 1 in Year	Percentage
2024	102.563	%
2025	101.281	%
2026 and thereafter	100.000	%