Third Quarter 2023 and Other
Highlights
- Cash provided by operations of $29 million and capital
expenditures of $13 million resulted in Free Cash Flow* of $16
million including a $52 million decrease in working capital
- Third quarter ending cash of $279 million with approximately
$216 million of additional available liquidity under two undrawn,
committed financing facilities
- Net loss from continuing operations of $38 million and diluted
EPS from continuing operations of negative $1.09; net loss included
a pre-tax charge of approximately $14 million related to the
Company’s PMMA sheet optimization and Corporate restructuring
initiatives
- Adjusted EBITDA* of $41 million was $78 million higher than
prior year
- Announced the closure of the Terneuzen, the Netherlands styrene
plant, which, when combined with other recent restructuring actions
and lower natural gas hedge losses, is expected to result in a
sequential profitability improvement of approximately $100 million
in 2024
- As previously announced, the company successfully refinanced
the entirety of its outstanding 2024 term loan and $385 million of
its existing $500 million 2025 Senior Notes during the quarter
Trinseo (NYSE: TSE):
Three Months Ended
September 30,
$millions, except per share
data
2023
2022
Net Sales
$
879
$
1,178
Net Loss from continuing operations
(38
)
(118
)
Diluted EPS from continuing operations
($)
(1.09
)
(3.35
)
Adjusted Net Loss*
(36
)
(103
)
Adjusted EPS ($)*
(1.03
)
(2.91
)
EBITDA*
29
(54
)
Adjusted EBITDA*
41
(37
)
*For a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted
Net Income (Loss), all of which are non-GAAP measures, to Net
Income (Loss), as well as a reconciliation of Free Cash Flow and
Adjusted EPS, see Notes 2 and 3 to the financial statements
included below.
Trinseo (NYSE: TSE), a specialty material solutions provider,
today reported its third quarter 2023 financial results. Net sales
in the third quarter decreased 25% versus prior year. Lower price
from the pass-through of lower raw material costs led to a 20%
decrease. Lower sales volume across all reporting segments except
Feedstocks, caused by underlying persistent market demand weakness,
led to an 8% decrease.
Third quarter net loss from continuing operations of $38 million
was $80 million above prior year and included a charge of $14
million related to the Company’s PMMA sheet optimization and
Corporate restructuring initiatives. Adjusted EBITDA of $41 million
was $78 million above prior year. The higher year-over-year
profitability was largely in the Feedstocks and Plastics Solutions
segments from higher styrene and polycarbonate margins. Third
quarter results included unfavorable impacts of $15 million from an
unplanned styrene outage as well as $4 million from net timing and
$11 million from natural gas hedging.
Commenting on the Company’s third quarter performance, Frank
Bozich, President and Chief Executive Officer of Trinseo, said, “As
expected, we saw sequentially similar market conditions. However,
we had another quarter of positive cash generation and we’ve taken
additional operational steps to provide meaningful profitability
improvement in 2024. In addition, we successfully refinanced all of
our 2024 and most of our 2025 debt maturities. I wish to thank our
employees for their continued efforts in executing these
initiatives in this challenging environment.”
Third quarter Results and Commentary by
Business Segment
- Engineered Materials net sales of $186 million for the
quarter decreased 23% versus prior year including a 15% impact from
lower price due to raw material pass-through as well as a 10%
impact from lower sales volume primarily in PMMA sheet for wellness
applications and engineered compounds for consumer electronics
applications. Adjusted EBITDA of $5 million was $3 million below
prior year including an unfavorable net timing variance of $5
million. Lower volume as described above was more than offset by
higher margin from lower raw material costs.
- Latex Binders net sales of $222 million for the quarter
decreased 35% versus prior year including a 21% impact from lower
price from the pass-through of lower raw material costs and a 15%
impact from lower volumes across all regions and applications.
Adjusted EBITDA of $23 million was $8 million below prior year
including a $9 million unfavorable variance from net timing. Lower
sales volume was offset by pricing initiatives and lower fixed
costs. Volume for higher-margin CASE applications declined by 2% in
the third quarter compared to prior year, showing better demand
resilience in comparison to other applications.
- Plastics Solutions net sales of $246 million for the
quarter were 16% below prior year from lower price due to the
pass-through of lower raw material costs. Adjusted EBITDA of $22
million was $37 million above prior year primarily from higher
polycarbonate margin including impacts from the previously
announced restructuring actions in Stade, Germany.
- Polystyrene net sales of $175 million for the quarter
were 29% below prior year. Lower price, primarily from the
pass-through of lower styrene costs, led to a 25% decrease and
lower volume, from weaker demand in appliance and building &
construction applications, led to a 7% decrease. Adjusted EBITDA of
$9 million was $10 million below prior year from lower volume and
margin due to weaker market conditions.
- Feedstocks net sales of $50 million for the quarter were
6% below prior year from a 19% impact from lower price which was
partially offset by higher volume and favorable currency. Adjusted
EBITDA of negative $19 million was $59 million above prior year
from higher styrene margin, including a favorable net timing
variance of $27 million.
- Americas Styrenics Adjusted EBITDA of $19 million for
the quarter was $4 million below prior year as lower polystyrene
margins were partially offset by higher styrene margins.
2023 Outlook
- Full-year 2023 net loss from continuing operations of $509
million to $499 million and Adjusted EBITDA of $175 million to $185
million (prior outlook of net loss from continuing operations of
approximately $460 million and Adjusted EBITDA of approximately
$215 million†). Adjusted EBITDA is below the prior outlook
primarily from unfavorable net timing and styrene-related impacts
in the third quarter as well as a more pronounced seasonality
impact in the fourth quarter.
- Full-year 2023 cash from operations of approximately $165
million resulting in Free Cash Flow of approximately $75 million
(prior outlook of cash from operations of approximately $190
million and Free Cash Flow of approximately $100 million†); lower
Free Cash Flow as higher cash interest and lower profitability is
partially offset by working capital reductions.
Commenting on the outlook for 2023, Bozich said, “Our forecast
assumes a constrained demand environment, similar to what we’ve
seen throughout the year. Amid this environment, we continue to
take actions to improve our cost position and cash generation.”
Bozich continued, “Our most recent cost reduction initiatives,
along with lower natural gas hedge losses, are expected to result
in a $100 million year-over-year profitability improvement in 2024.
This enables us to continue investing in transformation projects
such as polycarbonate dissolution, which offer significant growth
potential even in current markets.”
†For the prior outlook, refer to the Company’s press release,
furnished on its Form 8-K dated August 3, 2023, for a
reconciliation of non-GAAP measures to their corresponding GAAP
measures.
Conference Call and Webcast
Information
Trinseo will host a conference call to discuss its third quarter
2023 financial results on Monday, November 6, 2023 at 10 a.m.
Eastern Time.
Commenting on results will be Frank Bozich, President and Chief
Executive Officer, David Stasse, Executive Vice President and Chief
Financial Officer, and Andy Myers, Director of Investor
Relations.
For those interested in asking questions during the Q&A
session, please register using the following link:
- Conference Call Registration
For those interested in listening only, please register for the
webcast using the following link:
After registering for the conference call, you will receive a
confirmation email with a meeting invitation and information for
entry. Registration is open through the live call, but it is
advised that you register in advance to ensure you are connected
for the full call.
Trinseo has posted its third quarter 2023 financial results on
the Company’s Investor Relations website. The presentation slides
will also be made available in the webcast player prior to the
conference call. The Company will also furnish copies of the
financial results press release and presentation slides to
investors by means of a Form 8-K filing with the U.S. Securities
and Exchange Commission.
A replay of the conference call and transcript will be archived
on the Company’s Investor Relations website shortly following the
conference call. The replay will be available until November 6,
2024.
About Trinseo
Trinseo (NYSE: TSE), a specialty material solutions provider,
partners with companies to bring ideas to life in an imaginative,
smart and sustainably focused manner by combining its premier
expertise, forward-looking innovations and best-in-class materials
to unlock value for companies and consumers.
From design to manufacturing, Trinseo taps into decades of
experience in diverse material solutions to address customers’
unique challenges in a wide range of industries, including building
and construction, consumer goods, medical and mobility.
Trinseo’s approximately 3,300 employees bring endless creativity
to reimagining the possibilities with clients all over the world
from the company’s locations in North America, Europe and Asia
Pacific. Trinseo reported net sales of approximately $5.0 billion
in 2022. Discover more by visiting www.trinseo.com and connecting
with Trinseo on LinkedIn, Twitter, Facebook and WeChat.
Use of non-GAAP measures
In addition to using standard measures of performance and
liquidity that are recognized in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), we use additional measures of income excluding certain
GAAP items (“non-GAAP measures”), such as Adjusted Net Income,
EBITDA, Adjusted EBITDA and Adjusted EPS and measures of liquidity
excluding certain GAAP items, such as Free Cash Flow. We believe
these measures are useful for investors and management in
evaluating business trends and performance each period. These
measures are also used to manage our business and assess current
period profitability, as well as to provide an appropriate basis to
evaluate the effectiveness of our pricing strategies. Such measures
are not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance or liquidity, as
applicable. The definitions of each of these measures, further
discussion of usefulness, and reconciliations of non-GAAP measures
to GAAP measures are provided in the Notes to Condensed
Consolidated Financial Information presented herein.
Cautionary Note on Forward-Looking
Statements
This press release may contain 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 or
guarantees or assurances of future performance. Forward-looking
statements may be identified by the use of words like "expect,"
"anticipate," “believe,” "intend," "forecast," "outlook," "will,"
"may," "might," "see," "tend," "assume," "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, our current indebtedness, 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 future results to differ from those expressed by
the forward-looking statements include, but are not limited to, our
ability to successfully implement proposed restructuring
initiatives, including the closure of certain plants and product
lines, and to successfully generate cost savings and increase
profitability; our ability to successfully execute our business and
transformation strategy; increased costs or disruption in the
supply of raw materials; increased energy costs; compliance with
laws and regulations impacting our business; conditions in the
global economy and capital markets; our ability to meet the
covenants under our existing indebtedness; our ability to
successfully investigate and remediate chemical releases on or from
our sites, make related capital expenditures, reimburse third-party
cleanup costs or settle potential regulatory penalties or other
claims; and those discussed in our Annual Report on Form 10-K,
under Part I, Item 1A —"Risk Factors" and elsewhere in our other
reports, filings and furnishings made with the U.S. Securities and
Exchange Commission 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. Therefore, we caution you against relying on any of
these forward-looking statements. The forward-looking statements
included in this press release 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.
TRINSEO PLC
Condensed Consolidated
Statements of Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net sales
$
879.0
$
1,178.1
$
2,837.9
$
3,990.3
Cost of sales
847.7
1,217.6
2,715.9
3,714.8
Gross profit (loss)
31.3
(39.5
)
122.0
275.5
Selling, general and administrative
expenses
66.6
80.5
205.1
262.8
Equity in earnings of unconsolidated
affiliate
19.0
22.8
49.2
83.8
Impairment and other charges
0.1
1.9
349.5
39.5
Operating income (loss)
(16.4
)
(99.1
)
(383.4
)
57.0
Interest expense, net
46.6
30.4
125.1
77.7
(Gain) loss on extinguishment of long-term
debt
6.3
(0.8
)
6.3
(0.8
)
Other expense (income), net
(13.2
)
1.3
(19.0
)
2.4
Loss from continuing operations before
income taxes
(56.1
)
(130.0
)
(495.8
)
(22.3
)
Provision for (benefit from) income
taxes
(17.7
)
(12.1
)
(59.5
)
41.4
Net loss from continuing operations
(38.4
)
(117.9
)
(436.3
)
(63.7
)
Net loss from discontinued operations, net
of income taxes
—
(1.9
)
—
(1.9
)
Net loss
$
(38.4
)
$
(119.8
)
$
(436.3
)
$
(65.6
)
Weighted average shares- basic
35.2
35.2
35.1
36.3
Net loss per share- basic:
Continuing operations
$
(1.09
)
$
(3.35
)
$
(12.42
)
$
(1.76
)
Discontinued operations
—
(0.06
)
—
(0.05
)
Net loss per share- basic
$
(1.09
)
$
(3.41
)
$
(12.42
)
$
(1.81
)
Weighted average shares- diluted
35.2
35.2
35.1
36.3
Net loss per share- diluted:
Continuing operations
$
(1.09
)
$
(3.35
)
$
(12.42
)
$
(1.76
)
Discontinued operations
—
(0.06
)
—
(0.05
)
Net loss per share- diluted
$
(1.09
)
$
(3.41
)
$
(12.42
)
$
(1.81
)
TRINSEO PLC
Condensed Consolidated Balance
Sheets
(In millions)
(Unaudited)
September 30,
December 31,
2023
2022
Assets
Cash and cash equivalents
$
278.6
$
211.7
Accounts receivable, net of allowance
542.1
586.0
Inventories
445.9
553.6
Other current assets
39.7
39.4
Investments in unconsolidated
affiliate
249.2
255.1
Property, plant, equipment, goodwill, and
other intangible assets, net
1,409.2
1,873.5
Right-of-use assets - operating, net
65.3
76.1
Other long-term assets
241.2
164.8
Total assets
$
3,271.2
$
3,760.2
Liabilities and shareholders’
equity
Current liabilities
691.5
689.4
Long-term debt, net of unamortized
deferred financing fees
2,274.2
2,301.6
Noncurrent lease liabilities -
operating
52.4
60.2
Other noncurrent obligations
274.5
288.7
Shareholders’ equity
(21.4)
420.3
Total liabilities and shareholders’
equity
$
3,271.2
$
3,760.2
TRINSEO PLC
Condensed Consolidated
Statements of Cash Flows
(In millions)
(Unaudited)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities
Cash provided by operating activities -
continuing operations
$
131.2
$
10.8
Cash used in operating activities -
discontinued operations
—
(1.4
)
Cash provided by operating activities
131.2
9.4
Cash flows from investing
activities
Capital expenditures
(49.1
)
(94.0
)
Cash paid for asset or business
acquisitions, net of cash acquired ($0.0 and $1.0)
—
(22.2
)
Proceeds from the sale of businesses and
other assets
38.0
5.3
Proceeds from the settlement of hedging
instruments
—
1.9
Cash used in investing activities -
continuing operations
(11.1
)
(109.0
)
Cash used in investing activities -
discontinued operations
—
(0.8
)
Cash used in investing activities
(11.1
)
(109.8
)
Cash flows from financing
activities
Proceeds from initial public offering, net
of offering costs
Deferred financing fees
(9.5
)
—
Short-term borrowings, net
(8.9
)
(12.2
)
Purchase of treasury shares
—
(151.9
)
Dividends paid
(17.6
)
(36.3
)
Proceeds from exercise of option
awards
0.1
2.9
Withholding taxes paid on restricted share
units
(2.0
)
(3.1
)
Acquisition-related contingent
consideration payment
(1.2
)
—
Net proceeds from issuance of 2028
Refinance Term Loans
1,044.9
—
Repurchases and repayments of long-term
debt
(1,054.0
)
(12.9
)
Cash used in by financing activities
(48.2
)
(213.5
)
Effect of exchange rates on cash
(5.0
)
(16.3
)
Net change in cash, cash equivalents, and
restricted cash
66.9
(330.2
)
Cash, cash equivalents, and restricted
cash—beginning of period
211.7
573.0
Cash, cash equivalents, and restricted
cash—end of period
$
278.6
$
242.8
Less: Restricted cash
—
—
Cash and cash equivalents—end of
period
$
278.6
$
242.8
TRINSEO PLC
Notes to Condensed
Consolidated Financial Information
(Unaudited)
Note 1: Net Sales
by Segment
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2023
2022
2023
2022
Engineered Materials
$
186.0
$
242.7
$
598.4
$
839.2
Latex Binders
222.0
340.9
724.1
1,001.3
Plastics Solutions
245.8
293.4
807.8
1,051.8
Polystyrene
175.1
247.7
577.0
877.7
Feedstocks
50.1
53.4
130.6
220.3
Americas Styrenics*
—
—
—
—
Total Net Sales
$
879.0
$
1,178.1
$
2,837.9
$
3,990.3
* The results of this segment are comprised entirely of earnings
from Americas Styrenics, our 50%-owned equity method investment. As
such, we do not separately report net sales of Americas Styrenics
within our condensed consolidated statements of operations.
Note 2: Reconciliation of Non-GAAP
Performance Measures to Net Income
EBITDA is a non-GAAP financial performance measure, which is
defined as income from continuing operations before interest
expense, net; income tax provision; depreciation and amortization
expense. We refer to EBITDA in making operating decisions because
we believe it provides our management as well as our investors 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.
We also present Adjusted EBITDA as a non-GAAP financial
performance measure, which we define as income from continuing
operations before interest expense, net; income tax provision;
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. 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.
Lastly, we present Adjusted Net Income (Loss) and Adjusted EPS
as additional performance measures. Adjusted Net Income (Loss) is
calculated as Adjusted EBITDA (defined beginning with net income
from continuing operations, above), less interest expense, less the
provision for income taxes and depreciation and amortization, tax
affected for various discrete items, as appropriate. Adjusted EPS
is calculated as Adjusted Net Income (Loss) per weighted average
diluted shares outstanding for a given period. We believe that
Adjusted Net Income (Loss) and Adjusted EPS provide transparent and
useful information to management, investors, analysts and other
stakeholders in evaluating and assessing our operating results from
period-to-period after removing the impact of certain transactions
and activities that affect comparability and that are not
considered part of our core operations.
There are limitations to using the financial performance
measures noted above. These performance measures are not intended
to represent net income or other measures of financial performance.
As such, they should not be used as alternatives to net income as
indicators of operating performance. Other companies in our
industry may define these performance measures differently than we
do. As a result, it may be difficult to use these 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
these performance measures to our net income, which is determined
in accordance with GAAP.
Three Months Ended
September 30,
(In millions, except per share
data)
2023
2022
Net loss
$
(38.4
)
$
(119.8
)
Net loss from discontinued operations
—
(1.9
)
Net loss from continuing operations
$
(38.4
)
$
(117.9
)
Interest expense, net
46.6
30.4
Benefit from income taxes
(17.7
)
(12.1
)
Depreciation and amortization
38.2
45.9
EBITDA
$
28.7
$
(53.7
)
Net gain on disposition of businesses and
assets
(9.3
)
—
Selling, general, and administrative
expenses; Other expense (income), net
Restructuring and other charges (a)
13.8
—
Selling, general, and administrative
expenses
Acquisition transaction and integration
net costs (b)
—
0.4
Cost of goods sold; Selling, general, and
administrative expenses
Asset impairment charges or write-offs
0.5
1.9
Cost of goods sold; Impairment and other
charges
Other items (c)
7.2
14.8
Selling, general, and administrative
expenses; (Gain) loss on extinguishment of long-term debt; Other
expense (income), net
Adjusted EBITDA
$
40.9
$
(36.6
)
Adjusted EBITDA to
Adjusted Net Loss:
Adjusted EBITDA
40.9
(36.6
)
Interest expense, net
46.6
30.4
Provision for (benefit from) income taxes
- Adjusted (d)
(18.6
)
(9.6
)
Depreciation and amortization - Adjusted
(e)
49.2
45.1
Adjusted Net Loss
$
(36.3
)
$
(102.5
)
Weighted average shares- diluted
35.2
35.2
Adjusted EPS
$
(1.03
)
$
(2.91
)
Adjusted EBITDA by
Segment:
Engineered Materials
$
4.8
$
7.5
Latex Binders
22.8
31.0
Plastics Solutions
22.0
(14.9
)
Polystyrene
9.2
18.7
Feedstocks
(19.4
)
(78.0
)
Americas Styrenics
19.0
22.8
Corporate Unallocated
(17.5
)
(23.7
)
Adjusted EBITDA
$
40.9
$
(36.6
)
- Restructuring and other charges for the 2023 period primarily
relates to contract termination costs as well as decommissioning
and other charges incurred in connection with the Company’s asset
restructuring plan. Restructuring and other charges for the 2022
period primarily relates to employee termination benefit charges
incurred in connection with the Company’s transformational
restructuring program.
- Acquisition transaction and integration net costs for the 2022
period primarily relates to expenses incurred for the Company’s
acquisition and integration of the PMMA business and Aristech
Surfaces Acquisitions.
- Other items for the three months ended September 30, 2023
primarily relate to loss on extinguishment of debt and 2022
primarily relate to fees incurred in conjunction with certain of
the Company’s strategic initiatives, as well as costs related to
our transition to a new enterprise resource planning system.
- Adjusted to remove the tax impact of the items noted within the
table above. The income tax expense (benefit) related to these
items was determined utilizing either (1) the estimated annual
effective tax rate on our ordinary income based upon our forecasted
ordinary income for the full year or, (2) for items treated
discretely for tax purposes we utilized the applicable rates in the
taxing jurisdictions in which these adjustments occurred.
- Amounts for the three months ended September 30, 2023 and 2022
excludes accelerated depreciation of $11.0 million and $0.8
million, respectively. The 2023 period charges are primarily
related to the shortening of the useful life of certain assets
related to the asset restructuring plan. The 2023 and 2022 periods
also include charges related to the shortening of the useful life
of certain IT assets related to the Company’s transition to a new
enterprise resource planning system.
For the same reasons discussed above, we are providing the
following reconciliation of forecasted net loss to forecasted
Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS for the full
year ended December 31, 2023. See “Note on Forward-Looking
Statements” above for a discussion of the limitations of these
forecasts. Totals may not sum due to rounding.
Year Ended
December 31,
(In millions, except per share
data)
2023
Adjusted EBITDA
$
175 – 185
Interest expense, net
(185
)
Benefit from income taxes
54
Depreciation and amortization
(195
)
Reconciling items to Adjusted EBITDA
(f)
(358
)
Net Loss from continuing
operations
(509) – (499
)
Reconciling items to Adjusted Net Loss
(f)
297
Adjusted Net Loss
$
(212) – (202
)
Weighted average shares - diluted (g)
35.1
EPS from continuing operations - diluted
($)
$
(14.49) – (14.20)
Adjusted EPS ($)
$
(6.03) – (5.75)
(f) Reconciling items to Adjusted EBITDA and Adjusted Net Income
(Loss) are not typically forecasted by the Company based on their
nature as being primarily driven by transactions that are not part
of the core operations of the business and, as a result, cannot be
estimated without unreasonable cost or uncertainty. As such, for
the forecasted full year ended December 31, 2023, we have only
included known reconciling items incurred through the nine months
ended September 30, 2023. We have not included forecasted amounts
for the remainder of 2023.
(g) Weighted average shares presented for the purpose of
forecasting EPS and Adjusted EPS assume that the Company will be in
a net loss position for the full year 2023, and therefore excludes
the impact of potentially dilutive shares, as the inclusion of said
shares would have an anti-dilutive effect. Further, the weighted
average shares presented do not forecast significant future share
transactions or events, such as repurchases, significant
share-based compensation award grants, and changes in the Company’s
share price. These are all factors which could have a significant
impact on the calculation of EPS and Adjusted EPS during actual
future periods.
Note 3: Reconciliation of Non-GAAP
Liquidity Measures to Cash from Operations
The Company uses certain measures, such as Free Cash Flow as
non-GAAP measures, to evaluate and discuss its 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 indicators 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
alternatives 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. The Company compensates
for these limitations by providing the following detail, which is
determined in accordance with GAAP.
Free Cash Flow
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2023
2022
2023
2022
Cash provided by operating activities
$
29.3
$
97.6
$
131.2
$
9.4
Capital expenditures
(13.5
)
(38.5
)
(49.1
)
(94.8
)
Free Cash Flow
$
15.8
$
59.1
$
82.1
$
(85.4
)
For the same reasons discussed above, we are providing the
following reconciliation of forecasted cash provided by operations
and cash used for capital expenditures to forecasted Free Cash Flow
for the year ended December 31, 2023. See “Note on Forward-Looking
Statements” above for a discussion of the limitations of these
forecasts.
Year Ended
(In millions)
December 31, 2023
Cash provided by operating activities
$
165
Capital expenditures
(90
)
Free Cash Flow
$
75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231103256152/en/
Andy Myers Tel : +1 610-240-3221 Email: aemyers@trinseo.com
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