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Trinseo PLC (TSE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue fell 13% YoY to $784.8M as Trinseo intentionally reduced low‑margin polystyrene volumes and faced broad end‑market weakness; Adjusted EBITDA rose 44% YoY to $64.8M, aided by $26M of polycarbonate technology licensing income and restructuring savings .
  • Versus S&P Global consensus, Trinseo significantly missed on revenue but modestly beat on Adjusted/Normalized EPS: Revenue $784.8M vs $980.0M estimate*, Adjusted/Normalized EPS −$1.37 vs −$1.50 estimate*; the company withdrew prior full‑year guidance and issued Q2 Adjusted EBITDA guidance of $55–$70M, with approximately breakeven FCF .
  • Sequentially, revenue declined from Q4 2024 while Adjusted EBITDA improved (Q4: $25.8M), reflecting licensing income and cost actions; free cash flow was −$118.9M on seasonal working capital build and $25M refinancing costs .
  • Near‑term stock narrative hinges on: (1) sustainability of specialty growth (consumer electronics +43% volume; battery binders traction), (2) tariff/macro uncertainty and demand elasticity, (3) AmSty earnings normalization, and (4) cash/liquidity runway with $421M total liquidity .

What Went Well and What Went Wrong

  • What Went Well

    • Specialty momentum despite macro: EM consumer electronics volumes +43% YoY; Asia PMMA resin volumes nearly doubled; recycled‑content product volumes +33% YoY .
    • Structural self‑help delivered: Adjusted EBITDA +$20M YoY to $64.8M on $26M licensing income and restructuring savings; 7th straight quarter of YoY Adj. EBITDA improvement .
    • Clear profitability levers: Management emphasized growth via geographic expansion (India, China), material substitution, and sustainability; Deepak PC licensing recognized $26M in Q1 with an additional $21M cash collected in April for Q2 .

  • What Went Wrong

    • Top‑line pressure: Revenue −13% YoY to $784.8M on broad end‑market weakness and intentional polystyrene volume reductions; Americas Styrenics EBITDA −$2M on timing/outages .
    • Free cash outflow: FCF −$118.9M on seasonal working capital build and $25M refinancing costs; cash from operations −$110.2M .
    • Macro/tariffs uncertainty: Management withdrew all full‑year 2025 guidance furnished during the refinancing, citing demand unpredictability (especially China/auto) .

Financial Results

Key P&L metrics (oldest → newest):

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$867.7 $821.5 $784.8
Net Loss ($M)$(87.3) $(117.9) $(79.0)
Diluted EPS ($)$(2.47) $(3.33) $(2.22)
Adjusted EPS ($)$(1.62) $(2.67) $(1.37)
Adjusted EBITDA ($M)$66.1 $25.8 $64.8

Q1 2025 actual vs S&P Global consensus:

MetricQ1 2025 ActualQ1 2025 Consensus
Revenue ($M)$784.8 $980.0*
Adjusted/Normalized EPS ($)$(1.37) $(1.50)*

Values retrieved from S&P Global*

Segment performance (Q1 2025 vs Q1 2024):

SegmentNet Sales Q1’25 ($M)Net Sales Q1’24 ($M)Adj. EBITDA Q1’25 ($M)Adj. EBITDA Q1’24 ($M)
Engineered Materials277.3 282.5 25.7 10.4
Latex Binders209.3 241.5 24.5 25.7
Polymer Solutions298.2 380.0 44.5 29.1
Americas Styrenics— — (1.8) 6.2

Cash and liquidity KPIs:

KPIQ1 2025
Cash used in operations ($M)$(110.2)
Capital expenditures ($M)$8.7
Free Cash Flow ($M)$(118.9)
Cash & equivalents ($M)$126.1
Total liquidity ($M)$421.0

Context and drivers:

  • Revenue decline reflected 14% global sales volume contraction, partially offset by +2% price/mix and −2% FX; deliberate pullback from uneconomic polystyrene volumes weighed on Polymer Solutions sales, though licensing income lifted segment EBITDA .
  • Non‑GAAP adjustments: Adjusted EBITDA excludes $24.9M loss on financing transactions, $7.4M restructuring and other items; Adjusted EPS excludes these items and D&A adjustments .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Loss ($M)Q2 2025n/a$(61) to $(46) New
Adjusted EBITDA ($M)Q2 2025n/a$55 to $70 New
Free Cash FlowQ2 2025n/aApproximately breakeven; includes $21M PC license cash in April New
Full‑Year 2025 (all metrics)FY 2025Previously furnished with debt refinancingWithdrawn due to macro/tariff uncertainty Withdrawn
Cash Interest ($M)FY 2025n/a$195 (modeling component) Informational
Capital Expenditures ($M)FY 2025n/a$65 (≈$40M maintenance) Informational
Cash Taxes ($M)FY 2025n/a$35 Informational
Restructuring Costs ($M)FY 2025n/a$45 Informational
Turnarounds ($M)FY 2025n/a$10 Informational
Working Capital/Other ($M)FY 2025n/a$20 Informational
DividendQ1 2025$0.01 per shareBoard declared $0.01 per share; payable Apr 24, 2025 Maintained

Management also highlighted modeling sensitivities (e.g., 1% volume ≈ ~$10M FY impact; 1% EUR/USD ≈ ~$1M) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q‑2 and Q‑1)Current Period (Q1 2025)Trend
Specialty growth (consumer electronics, PMMA, sustainability)Q3: EM strength on CE/PMMA; restructuring tailwinds . Q4: EM margins improved; CE volumes +61% .CE volumes +43%; recycled‑content +33%; Asia PMMA nearly doubled .Positive, sustained mix upgrade
Tariffs/macro demandQ3: Weak demand persisted . Q4: Energy intensity halved; hedging cautious; demand recovery not assumed .Direct tariff impact limited given regional production, but China demand softer; withdrew FY guide .Elevated uncertainty
AmSty performance and saleQ3: AmSty hurt by outages, lower margins . Q4: Sale timing likely later; expect normalization vs 2024 .Q1: −$2M EBITDA; ~$10M timing/outage headwind; better in Q2; sale when valuation improves .Improving from weak base
Polycarbonate license/India strategyQ3/Q4: Deepak license agreed ($52M); strategic India expansion .$26M license recognized in Q1; $21M cash received in April; projects on track .Executing, cash benefit
Battery binders (CASE/Energy Storage)Q4: CASE mix benefit; no binder details .Anode binders volumes >3.5x YoY; grid storage and mobility opportunities .Early but high‑growth niche
Working capital/FCF disciplineQ3: FCF −$3M; WC −$16M; liquidity focus . Q4: FCF +$64M on WC; liquidity improved .Q1 FCF −$118.9M on seasonal WC build and refi costs; Q2 ~breakeven; H2 positive targeted .Seasonal low, improving path

Management Commentary

  • “Core business results in the first quarter were in line with expectations and sequentially higher... the first quarter was Trinseo’s seventh consecutive quarter of improved year‑over‑year adjusted EBITDA” .
  • “We anticipate Adjusted EBITDA of $55 million to $70 million in Q2... and improved AmSty performance offsetting the first quarter polycarbonate technology license income” .
  • On China/India strategy: “In China… specialty PMMA and sustainable CE solutions delivered 50% volume growth… we’re adding resources for further growth. In India… the Deepak projects are on track” .
  • On tariffs: “Over 95% of our product sales are produced within the region in which they are sold, so we anticipate little direct impact… The largest unknown… is their impact on overall demand” .
  • On free cash flow cadence: “We expect free cash flow in the second quarter to be about breakeven and then positive in the second half of 2025” .

Q&A Highlights

  • Sustainability of CE strength and tariffs: Management saw no evidence of pre‑buying ahead of tariffs; Q1 demand continued into Q2; recycled content wins underpin CE growth .
  • Q2 FCF confidence and license cash: Company confident in ~breakeven FCF; collected $21M from the Deepak license in April, included in outlook .
  • AmSty headwinds and outlook: ~$8M timing impact and ~$2M turnaround drove Q1 weakness; outages resolved; Q2 expected “significantly better”; sale timing tied to improved valuations .
  • Battery binders: Building a global anode binder franchise across grid storage and mobility; low penetration today with significant runway .
  • Pricing lag and energy: Q1 EM margins affected by natural gas‑linked pricing lag; expect non‑recurrence after Q1 .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue miss and EPS beat — Revenue $784.8M vs $980.0M estimate*; Adjusted/Normalized EPS −$1.37 vs −$1.50 estimate* .
  • Estimate revisions likely: Withdrawal of FY guide and macro/tariff uncertainty may pressure top‑line estimates; management’s Q2 EBITDA guide ($55–$70M) frames near‑term profitability trajectory .
  • Consensus visibility is thin (limited estimate counts: 1 on revenue; 3 on EPS for Q1), increasing dispersion risk*.

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Mix upgrade is working: Specialty exposure (EM, CE, sustainability) is driving margin resilience despite volume pressure; monitor stickiness of CE demand and PMMA growth .
  • One‑time license income aided Q1; watch Q2 comp: Absent the $26M license, profitability leans on seasonality, EM cost tailwinds, and AmSty normalization .
  • Guidance reset elevates macro sensitivity: Full‑year 2025 guide withdrawn; tariff and China/auto demand uncertainty shift focus to quarter‑by‑quarter execution .
  • Liquidity runway intact but FCF needs improvement: $421M liquidity and extended maturities vs sizable FY cash interest ($195M) and capex ($65M) underscore importance of H2 FCF inflection .
  • AmSty is a potential upside swing factor: Normalization toward multi‑year average EBITDA and a value‑accretive sale would be meaningful catalysts .
  • Trading setup: Near‑term stock moves likely tied to Q2 delivery vs $55–$70M EBITDA guide, tariff headlines, and CE/battery binder demand updates; negative reaction risk from top‑line misses offset by specialty margin narrative .

Appendix: Additional Detail

  • Q1 2025 condensed financials (revenue $784.8M; net loss $(79.0)M; cash from operations $(110.2)M; capex $8.7M) .
  • Segment net sales (Q1 2025): EM $277.3M; Latex $209.3M; Polymer Solutions $298.2M .
  • Non‑GAAP reconciliations and segment Adj. EBITDA: EM $25.7M; Latex $24.5M; Polymer Solutions $44.5M; AmSty $(1.8)M .
  • Dividend declared: $0.01 per share payable April 24, 2025 .