• Full Year Adjusted EBITDA: Improved by $50 million.
• Energy Intensity: Decreased by approximately 45% compared to the first half of 2022.
• Maintenance CapEx: Decreased by more than 35% compared to the first half of 2022.
• Total Headcount: Reduced by approximately 20% compared to the first half of 2022.
• Recycled Content Sales: Increased by 47% year-over-year, representing 4% of total company variable margin in 2024.
• Latex Binder Segment Sales Volumes: Accounted for 11% of total segment sales volumes and 18% of total segment variable margin in 2024.
• Engineered Material Segment PMMA Resins Volumes: Increased by 3% year-over-year.
• Fourth Quarter Adjusted EBITDA: $26 million, $6 million higher than the prior year.
• Fourth Quarter Cash Provided by Operations: $85 million.
• Fourth Quarter Free Cash Flow: $64 million.
• Available Liquidity at Year-End 2024: Almost $500 million.
• Q1 2025 Adjusted EBITDA Guidance: $60 million to $80 million, including a one-time $26 million contribution from the polycarbonate technology license agreement.

• Warning! GuruFocus has detected 4 Warning Signs with TSE.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Trinseo PLC (NYSE:TSE) achieved outstanding safety milestones, with 19 facilities receiving a 000 award for zero recordable injuries, spills, and process safety events.
• The company improved its full-year adjusted EBITDA by $50 million despite challenging market conditions.
• Trinseo PLC (NYSE:TSE) successfully reduced its energy intensity by approximately 45% and maintenance CapEx by more than 35%.
• Sales of recycled content products increased by 47% year-over-year, now representing 4% of the total company variable margin.
• The company extended its near-term debt maturity to 2028 and improved liquidity, ending 2024 with almost $500 million of available liquidity.

Negative Points

• Geopolitical uncertainty, elevated inflation, and high interest rates negatively impacted consumer confidence, particularly in Europe and China.
• Falling raw material prices led to significant negative timing impacts in the polymer solution segment and at Americas Styrenics.
• The company does not anticipate meaningful demand recovery in major markets for 2025.
• Fourth-quarter results were negatively impacted by $15 million of unfavorable net timing at Americas Styrenics due to falling raw material costs.
• Trinseo PLC (NYSE:TSE) experienced a slower start to the year than typical, with pricing lag issues in Q1 due to rising European natural gas prices.

Q & A Highlights

Q: Can you explain the increase in expected cash spend for 2025 compared to previous estimates? A: The increase is primarily due to changes in working capital, which is influenced by volume and raw material prices. Predicting these factors is challenging, and the $40 million outflow is based on current forecasts. Additionally, cash taxes are slightly higher due to increased profitability. - David Stasse, CFO

Q: How do lower Styrenic monomer prices affect your profitability? A: Our pricing for Styrenic-containing products is generally indexed to the Styrenic price, so it acts as a pass-through. While lower prices negatively impacted Q4, they also reduced working capital, contributing to higher free cash flow. - Frank Bozich, CEO

Q: What impact do rising European natural gas prices have on your Q1 guidance, and do you have any hedges in place? A: There is a pricing lag due to natural gas price increases, mainly affecting our Engineering Materials segment. We have some short-term hedges in place, but are cautious about long-term hedges due to geopolitical uncertainties. Our energy intensity has decreased significantly, reducing our exposure. - David Stasse, CFO

Q: Can you provide more details on the 61% increase in volumes for consumer electronics in the Engineering Materials segment? A: The increase is partly due to a low base in 2023 and successful diversification of our customer base. We've developed bespoke products with high recycled content, which are resilient and in demand. - Frank Bozich, CEO

Q: How should we think about 2025 earnings given the current guidance and market uncertainties? A: We expect positive earnings momentum in 2025, driven by contributions from the Deepak agreement, SG&A reductions, and normalized earnings from AmSty. However, we're cautious about providing full-year guidance due to market uncertainties. - Frank Bozich, CEO

Q: What is the status of your cost-cutting initiatives, and what should we expect in 2025? A: We've reduced fixed costs by over $100 million in the past two years. In 2025, we'll realize full benefits from SG&A reductions and polycarbonate savings. We'll follow up with more detailed analysis. - David Stasse, CFO

Q: Can you discuss the potential impact of tariffs on your business? A: We expect minimal impact from tariffs as our purchases from affected countries are small, and we can switch suppliers. Most US production is consumed domestically, with low single-digit exports to Canada and Mexico. The end-market demand impact is uncertain. - Frank Bozich, CEO

Q: What is the status of the AmSty sale process? A: The process is ongoing, and we are working closely with our partner to optimize value. We anticipate a better valuation environment later this year, which may delay the sale. - Frank Bozich, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.