Q1 2015 Earnings Summary May 6, 2015 ™ Trademark of Trinseo S.A. or its affiliates Exhibit 99.2 |
Introductions & Disclosure Rules 2 Disclosure Rules Introductions • Chris Pappas, President & CEO • John Feenan, Executive Vice President & CFO • David Stasse, Vice President, Treasury & Investor Relations statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts or guarantees or assurances of future performance. Forward- looking statements may be identified by the use of words like “expect,” “anticipate,” “intend,” “forecast,” “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 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. Factors that might cause such a difference include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2014 under Part I, Item 1A — “Risk Factors” and elsewhere in that report . As a result of these or other factors, our actual results may differ materially from those contemplated by the forward-looking statements. Therefore, we caution you therefore against relying on any of these forward-looking statements. The forward-looking statements included in this presentation 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. This presentation contains financial measures that are not in accordance with generally accepted accounting principles in the US (“GAAP”) including Adjusted EBITDA, Adjusted EBITDA excluding inventory revaluation, Adjusted Net Income (loss), and Adjusted EPS - Diluted. We believe these measures provide relevant and meaningful information to investors and lenders about the ongoing operating results of the Company. Such measures when referenced herein should not be viewed as an alternative to GAAP measures of performance. We have provided a reconciliation of these measures in the Appendix section of this presentation. Cautionary Note on Forward-Looking Statements. This presentation contains forward-looking statements including, without limitation, |
Agenda • Business Overview • Financial Review • Forward Focus • Q&A 3 |
Trinseo Overview 4 Performance Materials Net Sales: $565MM Adj EBITDA: $73MM Adj EBITDA ex Reval: $93MM Basic Plastics & Feedstocks Net Sales: $454MM Adj EBITDA: $59MM Adj EBITDA ex Reval: $81MM Leading Player #3 Polystyrene Globally Synthetic Rubber Net Sales: $129MM Adj EBITDA: $26MM Top 3 SSBR Globally Latex Net Sales: $238MM Adj EBITDA: $21MM #1 Globally in SB Latex End markets Market position Trinseo - World leader in the production of latex, rubber and plastics Americas Styrenics - ~$2 billion in annual net sales, leader in styrene / polystyrene Performance Plastics Net Sales: $197MM Adj EBITDA: $25MM Note: Division and Segment Adjusted EBITDA excludes Corporate Segment Adjusted EBITDA of ($23)MM. Totals may not sum due to rounding. Q1’15 Net Sales: $1,018MM Q1’15 Adj EBITDA: $109MM Q1’15 Adj EBITDA ex Reval: $151MM Appliances Consumer goods Construction/sheet Packaging Automotive Consumer electronics Automotive Consumer electronics Electrical and lighting Medical devices Performance tires Standard tires Polymer modification Technical rubber goods Coated paper and packaging board Carpet and artificial turf backings Tape saturation Cement modification Building products |
Key Styrene Raw Material Trends 5 Europe (1) Source: IHS. (1) Styrene: W. Europe Contract Monthly Market (Delivered W. Europe); Benzene: 50% W. Europe Spot Avg (CIF NW Europe / Basis ARA) and 50% W. Europe Contract – Market (FOB/CIF W. Europe); Ethylene: W. Europe Contract – Market Pipeline (Delivered W. Europe). (2) Styrene: NE Asia Avg Spot Posting (CFR China); Benzene: NE Asia Spot Avg (FOB S. Korea); Ethylene: NE Asia Spot Avg (CFR NE Asia). Margin: Styrene less 80% * Benzene less 30% * Ethylene. Asia (2) Styrene Ethylene Benzene Styrene Ethylene Benzene SM Margin SM Margin 400 600 1,200 1,400 1,600 1,800 2,000 2,200 800 1,000 400 600 1,000 1,200 1,400 1,600 1,800 2,000 800 |
Financial Review John Feenan EVP & CFO ™ Trademark of Trinseo S.A. or its affiliates |
F/(U) vs. (in $millions, unless noted) Q1'15 Q4'14 Q1'14 Q4'14 Q1'14 Volume (MMlbs) 1,411 1,223 1,344 Revenue 1,018 1,122 1,359 (9)% (25)% Volume 13% 5% Price (18)% (23)% FX (4)% (7)% Adj EBITDA 109 32 88 Adj EBITDA ex Inv Reval 151 104 83 Adj EBITDA ex Inv Reval Margin 15% 9% 6% Adj Net Income (loss) 39 (23) 20 Wtd Avg Shares - Diluted (000) 48,851 48,770 37,270 Adjusted EPS - Diluted ($) 0.80 (0.48) 0.53 Trinseo Quarterly Results 7 NOTE: Totals may not sum due to rounding. |
Latex 8 $MM Key Points • Consistent sales volume and EBITDA performance • YoY growth in carpet and paper board; coated paper flat • Continuing to deliver lower cost emulsion technologies NOTE: Totals may not sum due to rounding. Volume in millions of pounds. 305 289 299 Revenue Bridge Volume Price FX Total YoY 2% (24)% (5)% (27)% QoQ 5% (19)% (3)% (17)% $238 $286 $326 $21 $18 $26 $0 $50 $100 $150 $200 $250 $300 $350 Q1'15 Q4'14 Q1'14 Revenue Adjusted EBITDA Volume |
Synthetic Rubber 9 Key Points • Record high sales volume in Q1; SSBR volume up 16% YoY • SSBR volume was 46% of total, enhanced SSBR was 57% of SSBR • Continuing to invest to maintain technology leadership Volume 162 135 155 Revenue Bridge Volume Price FX Total YoY 3% (20)% (11)% (27)% QoQ 19% (17)% (7)% (5)% $MM NOTE: Totals may not sum due to rounding. Volume in millions of pounds. $129 $137 $177 $26 $30 $43 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Q1'15 Q4'14 Q1'14 Revenue Adjusted EBITDA |
Performance Plastics 10 NOTE: Totals may not sum due to rounding. Volume in millions of pounds. Key Points • Record EBITDA in Q1 driven by higher margins • 8% YoY volume growth excluding Latin America • Momentum in consumer electronics, electrical / lighting Volume $MM 150 145 144 Revenue Bridge Volume Price FX Total YoY 6% (2)% (6)% (3)% QoQ 3% (3)% (3)% (2)% $197 $202 $202 $25 $16 $17 $0 $50 $100 $150 $200 $250 Q1'15 Q4'14 Q1'14 Revenue Adjusted EBITDA |
Basic Plastics & Feedstocks 11 Key Points • Polycarbonate breakeven in Q1 due to restructuring and improved market conditions • Healthy styrene monomer margins with benefit of opportunistic sales • Higher sequential styrenic polymer volume and margin – restocking, seasonality, market tightness • Strong Q1 AmSty income of $35 million • Q1 EBITDA of $44 million ex JV and inventory reval $MM Revenue Bridge Volume Price FX Total YoY 6% (29)% (7)% (31)% QoQ 20% (24)% (5)% (9)% 793 585 Volume Segment Polymers 654 490 746 561 $700 $600 $500 $400 $300 $200 $100 $0 Q1’15 Q4’14 Q1’14 $(12) $454 $498 $654 Revenue Adjusted EBITDA $59 $23 $(100) NOTE: Totals may not sum due to rounding. Volume in millions of pounds. Adjusted EBITDA includes earnings and losses from equity affiliates (Americas Styrenics & Sumika Styron). |
Balance Sheet and Cash Flow 12 Liquidity Pro Forma Maturities A/R Securitization Revolver Senior Secured Notes Summary • Q1 free cash flow of $16 million including $28 million of capital expenditures, plus $52 million of interest • $15 million dividend from AmSty in Q1 • Strong quarter-end liquidity of $658 million $MM Unused Borrowing Facilities (2) Cash & Cash Equivalents $MM $MM Free Cash Flow (1) $81 Termination Fees $139 Term Loan B $77 $170 $25 $83 $56 $56 • Latex JV Option • Bain Advisory Agreement $219 $439 $658 Q1'15 $200 $325 $500 $700 $0 $100 $200 $300 $400 $500 $600 $700 $800 (1) Free Cash Flow = cash from operating activities + cash from investing activities – change in restricted cash. 2014 value of $81MM and LTM Q1 ‘15 value of $139MM excludes approximately $56MM of termination fees for Latex JV Option and Bain Advisory Agreement. (2) A/R Securitization facility commitment of $200MM ($148MM available at Q1’15) and Revolving Credit facility commitment of $300MM $0 $50 $100 $150 $200 2012 2013 2014 LTM Q1 '15 $0 $100 $200 $300 $400 $500 $600 $700 2016 2017 2018 2019 2020 2021 2022 ($291MM available) at Q1’15. NOTE: Totals may not sum due to rounding. |
2015 Focus Chris Pappas President & CEO ™ Trademark of Trinseo S.A. or its affiliates |
Styrene Monomer 14 Western Europe Styrene Margins Global Supply / Demand Q2 Western Europe Margin Sequentially Higher (1) Q1 to Q2 +$150/MT Styrene Ethylene Benzene SM Margin Source: IHS, Trinseo. (1) Styrene: W. Europe Contract Monthly Market (Delivered W. Europe); Benzene: 50% W. Europe Spot Avg (CIF NW Europe / Basis ARA) and 50% W. Europe Contract – Market (FOB/CIF W. Europe); Ethylene: W. Europe Contract – Market Pipeline (Delivered W. Europe). 0 100 200 300 400 500 600 0% 2+% 0% 1% 2% 3% Announced Capacity Additions 2014 - 2019 CAGR Demand 2014 - 2019 CAGR 2014 - 2019 Operating Rate: 84% - 87% 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 |
Polycarbonate 15 Source: (1) IHS; (2) Frost & Sullivan. NOTE: Totals may not sum due to rounding. (3) 50% / 50% venture with Sumika Styron. Increasing Margins with Operating Rate (1) Increasing Operating Rate Total Capacity: 1,210kMT Capacity by Region (1) Europe Asia Total Capacity: 2,344kMT North America Total Capacity: 858kMT $776 $174 $266 $228 $368 $407 77% 75% 74% 77% 79% 82% 65% 70% 75% 80% 85% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2011 2012 2013 2014 2015 2016 PC GP Western Europe Margins PC Global Op Rates 2% 5% 0% 1% 2% 3% 4% 5% 6% Supply 2014 - 2019 CAGR(1) Demand 2014 - 2019 CAGR(2) Rising Operating Rate from 2014 to 2019 Bayer 47% SABIC Plastics 40% Trinseo 13% Teijin 12% Mitsubishi Gas Chemical 12% Bayer 12% Bayer Poly Shanghai 9% Formosa Idemitsu 7% LG Polycarbonate 7% ZRCC/Lyondell JV 4% Teijin Polycarb 6% Chi Mei - Asahi 6% Sam Yang 5% Cheil 3% Samsung SDI 3% Sumika Styron (3) 3% Other 7% SABIC Plastics 70% Bayer 30% |
Polystyrene Capacity 16 Europe North America Asia Total Capacity: 2,262kMT Total Capacity: 7,661kMT Total Capacity: 2,736kMT Source: IHS. Note: Totals may not sum due to rounding. (a) 50% / 50% joint venture between Trinseo and Chevron Phillips Chemical Company. Styrolution 31% Trinseo 19% Total 21% Versalis S.p.A 12% BASF SE 6% Synthos Kralupy 4% Other 7% FCFC 8% Jiangsu Laidun 6% Zhenjiang ChiMei Chemical 6% Rentai Chemical 5% PS Japan 5% Trinseo 5% ZRCC/Lyondell JV 4% Secco 4% Total PC 4% Styrolution 3% Kumho Chemicals 2% Other 48% Styrolution 33% Americas Styrenics (a) 28% Total PC 24% Other 15% |
2015 Expectations 17 Performance Materials Basic Plastics & Feedstocks Synthetic Rubber Latex Q2: EBITDA sequentially flat as negative price lag is offset by inventory revaluation 2015: ~$6MM lower than 2014 due mainly to FX Q2: EBITDA sequentially flat as turnaround impact is offset by inventory revaluation 2015: Lower than 2014 by ~$20MM as higher SSBR volume more than offset by FX and technology investments Q2: EBITDA sequentially lower as a decrease in margin is mostly offset by inventory revaluation 2015: ~$20MM higher than 2014 due to product growth and higher margins Q2 : Up vs Q1 due to inventory revaluation; higher SM, PC margins offset by PS & SM turnarounds, AmSty 2015: ~$175MM higher than 2014 excluding inventory revaluation ~$65MM better on restructuring and PC margin rebound Higher styrene and styrenic polymer margins AmSty much better after very strong first half Performance Plastics |
™ Trademark of Trinseo S.A. or its affiliates Q&A |
™ Trademark of Trinseo S.A. or its affiliates Appendix |
US GAAP to Non-GAAP Reconciliation 20 (in $millions, unless noted) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 2013 2014 Net Income (Loss) (9.7) (28.1) 4.9 10.6 17.1 (44.6) (10.1) (29.7) 37.7 (22.2) (67.3) Interest expense, net 32.3 33.7 32.9 33.1 32.8 32.6 30.1 29.4 28.9 132.0 124.9 Provision for (benefit from) income taxes (0.1) 2.2 6.0 13.8 12.8 5.4 3.7 (2.1) 17.9 21.8 19.7 Depreciation and amortization 23.9 24.0 23.2 24.2 23.7 27.2 27.8 24.9 22.5 95.2 103.7 EBITDA 46.4 31.8 67.0 81.7 86.4 20.6 51.5 22.5 107.0 226.8 181.0 Loss on extinguishment of long-term debt 20.7 - - - - - 7.4 - - 20.7 7.4 Other non-recurring items 1.1 - - (0.4) - 32.5 1.9 3.9 1.3 0.8 38.4 Restructuring and other charges - 6.5 2.6 1.8 0.5 2.1 0.8 6.6 0.5 10.8 10.0 Net (gains) / losses on dispositions of businesses and assets - 3.2 1.0 - - - - (0.6) - 4.2 (0.6) Fees paid pursuant to advisory agreement 1.2 1.2 1.2 1.2 1.2 24.2 - - - 4.7 25.4 Asset impairment charges or write-offs - 0.7 - 9.2 - - - - - 9.9 - Adjusted EBITDA 69.4 43.4 71.8 93.5 88.1 79.4 61.6 32.4 108.8 277.9 261.6 Inventory Revaluation (0.2) 26.2 26.4 (12.0) (5.6) (2.6) 0.8 71.8 42.1 40.4 64.4 Adjusted EBITDA Ex Inv Reval 69.3 69.6 98.2 81.5 82.5 76.8 62.3 104.2 150.9 318.3 326.0 Adjusted EBITDA 69.4 43.4 71.8 93.5 88.1 79.4 61.6 32.4 108.8 277.9 261.6 Interest expense, net 32.3 33.7 32.9 33.1 32.8 32.6 30.1 29.4 28.9 132.0 124.9 Provision for (benefit from) income taxes - Adjusted 4.9 3.9 5.2 14.4 12.0 10.1 5.4 1.8 18.3 28.4 29.4 Depreciation and amortization - Adjusted 23.9 23.9 23.2 24.2 23.7 25.8 25.6 24.5 22.3 95.2 99.6 Adjusted Net Income 8.3 (18.1) 10.5 21.8 19.6 10.9 0.5 (23.3) 39.3 22.3 7.7 Wtd Avg Shares - Diluted (000) 37,270 37,270 37,270 37,270 37,270 38,912 48,770 48,770 48,851 37,270 43,476 Adjusted EPS - Diluted ($) 0.22 (0.49) 0.28 0.58 0.53 0.28 0.01 (0.48) 0.80 0.60 0.18 Loss on extinguishment of long-term debt 20.7 - - - - - 7.4 - - 20.7 7.4 Selling, general and administrative expenses 1.2 8.4 3.8 12.2 1.7 26.3 2.7 10.5 1.8 25.5 41.3 Other expense (income), net 1.1 3.2 1.0 (0.4) - 32.5 - (0.6) - 4.9 31.9 Total EBITDA Adjustments 23.0 11.6 4.8 11.8 1.7 58.8 10.1 9.9 1.8 51.1 80.6 Adjustments by Statement of Operations Caption Adjusted EBITDA to Adjusted Net Income |
Selected Segment Information 21 NOTE: Totals may not sum due to rounding. (in $millions, unless noted) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 2013 2014 Latex 307 305 310 288 299 295 309 289 305 1,210 1,193 Synthetic Rubber 137 125 128 133 155 142 136 135 162 523 568 Performance Plastics 140 150 145 144 144 147 145 145 150 579 581 Performance Materials 584 580 583 566 598 584 591 569 617 2,312 2,342 Basic Plastics & Feedstocks 727 731 699 652 746 743 725 654 793 2,810 2,867 Trade Volume (MMLbs) 1,311 1,311 1,282 1,218 1,344 1,327 1,315 1,223 1,411 5,122 5,210 Latex 357 345 332 308 326 321 328 286 238 1,341 1,261 Synthetic Rubber 176 156 142 148 177 165 155 137 129 622 634 Performance Plastics 196 208 201 203 202 210 208 202 197 808 821 Performance Materials 729 709 675 658 705 695 691 624 565 2,771 2,716 Basic Plastics & Feedstocks 663 652 634 587 654 645 614 498 454 2,536 2,412 Net Sales 1,392 1,362 1,309 1,245 1,359 1,341 1,305 1,122 1,018 5,307 5,128 Latex 27 29 27 24 26 27 26 18 21 106 97 Synthetic Rubber 31 28 13 42 43 37 27 30 26 113 137 Performance Plastics 13 10 17 21 17 17 19 16 25 62 69 Performance Materials 71 67 56 87 87 81 72 65 73 281 304 Basic Plastics & Feedstocks 11 8 52 33 23 16 4 (12) 59 103 31 Corporate (13) (31) (37) (27) (21) (17) (15) (20) (23) (107) (73) Adjusted EBITDA 69 43 72 93 88 79 62 32 109 278 262 Performance Materials 71 77 79 77 82 80 73 85 93 304 319 Basic Plastics & Feedstocks 11 23 56 31 22 13 4 40 81 121 79 Corporate (13) (31) (37) (27) (21) (17) (15) (20) (23) (107) (73) Adjusted EBITDA excl Inv Reval 69 70 98 81 83 77 62 104 151 318 326 Basic Plastics & Feedstocks 3 9 15 12 15 5 9 18 37 39 48 Equity in earnings (losses) of affiliates 3 9 15 12 15 5 9 18 37 39 48 |