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Trinseo PLC (TSE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 missed the company’s own guidance as Adjusted EBITDA came in at $26M vs prior guide of $40–$50M, driven by unfavorable raw material price timing effects in Polymer Solutions and an additional $15M adverse timing at Americas Styrenics; free cash flow was strong on a seasonal working capital release ($64M) .
  • Net sales declined 2% YoY to $821M, with lower volumes across segments partly offset by pricing/mix; net loss improved to $(118)M from $(265)M on a sharply lower tax provision vs prior year .
  • Liquidity improved: year-end cash was $210M and total liquidity $354M; pro forma for January 2025 refinancing, liquidity was ~$492M with no maturities until 2028, reducing near-term balance sheet risk .
  • Q1 2025 outlook: Adjusted EBITDA $60–$80M, including ~$26M one-time benefit from a polycarbonate technology license; management highlighted seasonally higher volumes but persistent end-market softness and European gas price lag in Engineered Materials .
  • Potential catalysts: resolution/timing on the Americas Styrenics monetization (now expected later than initially anticipated), continued execution on restructuring and circularity initiatives, and delivery against Q1 EBITDA outlook despite input cost/pricing lags .

What Went Well and What Went Wrong

  • What Went Well
    • Seasonal working capital release drove the strongest free cash flow in over two years ($64M FCF; CFO $85M) despite a weaker EBITDA print .
    • Engineered Materials profitability improved significantly YoY (Adj. EBITDA $27M, +$20M YoY) on moderating input costs, stronger PMMA pricing, and higher volumes into consumer electronics; consumer electronics volumes up 61% YoY per call .
    • Balance sheet/liquidity: pro forma liquidity of ~$492M after January refinancing; no maturities until 2028, alleviating near-term refinancing risk .
  • What Went Wrong
    • Negative timing from falling raw material (styrene) prices drove a miss vs guidance: Q4 Adjusted EBITDA $26M vs $40–$50M guided; Americas Styrenics suffered an additional $15M adverse timing .
    • Net loss of $(118)M vs guided $(81)–$(71)M, reflecting lower-than-expected profitability and restructuring/timing factors; YoY tax benefit dynamics made prior-year comps noisy .
    • Management pushed out expectations for signing an Americas Styrenics sale to later in 2025 to seek a better valuation environment, delaying a potential de-leveraging catalyst .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Sales ($USD Millions)$837.5 $867.7 $821.5
Net Loss ($USD Millions)$(265.0) $(87.3) $(117.9)
Diluted EPS ($)$(7.53) $(2.47) $(3.33)
EBITDA ($USD Millions)$0.6 $36.7 $21.3
Adjusted EBITDA ($USD Millions)$20.2 $66.1 $25.8
Gross Profit ($USD Millions)$20.3 $80.6 $56.0
Gross Margin (%)2.4% 9.3% 6.8%
Adjusted EBITDA Margin (%)2.4% 7.6% 3.2%
Net Loss Margin (%)(31.6%) (10.1%) (14.4%)
Cash from Operations ($USD Millions)$17.5 $8.8 $85.1
Capital Expenditures ($USD Millions)$(20.6) $(12.2) $(21.2)
Free Cash Flow ($USD Millions)$(3.1) $(3.4) $63.9

Segment breakdown (Q4 2024 vs Q4 2023):

  • Net Sales by Segment ($USD Millions)
SegmentQ4 2023Q4 2024
Engineered Materials$274.9 $276.1
Latex Binders$215.4 $218.6
Polymer Solutions$347.2 $326.8
Total$837.5 $821.5
  • Adjusted EBITDA by Segment ($USD Millions)
SegmentQ4 2023Q4 2024
Engineered Materials$7.5 $26.5
Latex Binders$17.6 $18.5
Polymer Solutions$8.9 $17.2
Americas Styrenics$13.0 $(10.4)
Corporate Unallocated$(26.8) $(26.0)
Total Adjusted EBITDA$20.2 $25.8

KPIs and liquidity:

  • Ending cash: $209.8M; total liquidity: $354M; pro forma liquidity post-Jan 2025 refinancing: ~$492M .
  • Equity income (Americas Styrenics) swung to a loss: $(10.4)M vs $13.0M YoY, reflecting $15M negative timing and weaker styrene margins .
  • Q4 free cash flow: $63.9M on $85.1M CFO and $21.2M capex .

Vs Estimates

  • Wall Street consensus from S&P Global was unavailable at time of analysis due to data access limits; therefore, we are unable to provide consensus vs actual comparisons for Q4 2024. We note the company missed its own Q4 Adjusted EBITDA guidance (see Guidance Changes) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Adjusted EBITDAQ4 2024$40–$50M (guided Nov 6, 2024) $25.8M actual Lower vs guide (miss)
Net LossQ4 2024$(81)–$(71)M (guided Nov 6, 2024) $(117.9)M actual Lower vs guide (miss)
Adjusted EBITDAQ1 2025N/A$60–$80M, incl. ~$26M from PC license New
Net LossQ1 2025N/A$(60)–$(40)M New
DividendQ1 2025$0.01/share (declared Nov 21, 2024) $0.01/share (no change disclosed) Maintained

Context/driver notes:

  • Q4 miss vs guide primarily due to unfavorable raw material timing (styrene) in Polymer Solutions and additional $15M adverse timing at Americas Styrenics .
  • Q1 guide includes a one-time ~$26M license contribution from the Deepak PC technology transaction .

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
Raw material timing (styrene)$10M unfavorable net timing; expected improvement 2H Expected negative timing in Q4; bridge explained (seasonality, fixed cost absorption) $9M unfavorable timing in core; additional $15M at AmSty; key driver of Q4 miss Persistent headwind in Q4; improves seasonally into Q1
Energy/TTF & hedgingEurope MMA normalization; less hedge losses vs 2023 Commentary on lower hedge losses and moderating input costs Higher TTF created Q1 pricing lag in EM; short-term hedges <50% Monitoring; pricing lag expected to abate after Q1
Americas Styrenics monetizationJoint sale process to begin Q3, aim H1’25 agreement Expect sign in H1’25 Expect improved valuation later in 2025; signing later than originally anticipated Timeline pushed later in 2025
Restructuring/cost savesContinuing actions; $100M 2024 benefit affirmed Announced additional $25M 2025 SG&A saves; PC exit adds $15–$20M run-rate SG&A +$25M benefit in 2025; polycarbonate closure benefits to fully annualize Benefits ramp into 2025
Circularity/tech (PMMA/PC)Opened PMMA depoly plant; PC dissolution advances Continued momentum in recycled content sales Sales of recycled content up 47% YoY in 2024; pilot facilities commissioned Structural growth vector
End markets (auto, B&C, consumer electronics)EM volumes strong; steady demand Weak B&C/appliances; CE comps improving CE volumes +61% YoY; auto/B&C still soft entering Q1 Mixed; CE recovery, auto/B&C soft
Tariffs/macro——Limited tariff exposure; low exports; demand impact uncertain Watching macro/policy risk

Management Commentary

  • “Falling raw material prices resulted in significant negative timing impacts in our Polymer Solutions segment and at Americas Styrenics... which contributed to the highest free cash flow generation in over two years.” .
  • “Pro forma for [January] transaction, we ended 2024 with almost $500 million of available liquidity and no maturities until 2028.” .
  • On Q1: “We expect Q1 adjusted EBITDA of $60 million to $80 million, which includes a one-time $26 million contribution from the polycarbonate technology license agreement.” .
  • On Deepak PC deal: “We view this agreement as mutually beneficial... and see this as the initial steps of a strategic and collaborative partnership with Deepak.” .

Q&A Highlights

  • Cash spend outlook: 2025 cash uses now ~$390M vs “low 300s” previously mainly due to working capital assumptions and slightly higher cash taxes; working capital sensitive to volumes and raw material prices .
  • Timing/Styrene dynamics: Adverse Q4 timing expected to reverse; many product prices indexed to styrene, implying pass-through over time .
  • Energy hedging: European gas hedges in place at <50% for Q1; pricing lag in EM expected in Q1 due to higher TTF; exposure halved vs prior crisis after exiting energy‑intensive assets .
  • AmSty sale: Process continues with JV partner; timing later in 2025 to optimize value; not halted .
  • AR securitization: Borrowing base seasonally low at year-end; $75M drawn of $125M availability in Q4; expected to be higher in Q1 .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 EPS/Revenue/EBITDA was unavailable at time of analysis due to access limits; therefore, we cannot provide comparisons vs consensus. We note that the company’s actual Q4 results were below its own prior guidance (Adj. EBITDA $26M vs $40–$50M; net loss $(118)M vs $(81)–$(71)M) .
  • Where consensus estimates are needed for trading models, please advise and we will refresh when access is restored (S&P Global).

Key Takeaways for Investors

  • Q4 print was weak vs internal guidance due to raw material timing; the negative timing is transitory, but underscores earnings sensitivity to styrene trajectories .
  • Free cash flow inflected positively on seasonal working capital release; watch whether improved cash conversion persists into Q2 as pricing lag fades .
  • Q1 EBITDA guide benefits from a ~$26M one-time license; underlying run-rate (ex-license) suggests mid‑$40Ms, with management expecting Q2/Q3 sequential improvement as energy pricing lag normalizes .
  • Liquidity is adequate post-refinancing; no maturities until 2028 reduces near-term solvency risk while the company pursues AmSty monetization .
  • Structural self-help continues: 2025 SG&A saves (+$25M), polycarbonate exit benefits (+$15–$20M run-rate), and circularity premium products should support margin mix as end markets recover .
  • Watch the timing and valuation of the AmSty sale; management now targets a later‑2025 signing to capture a better market backdrop—key potential de-leveraging catalyst .
  • Macro watch items: European gas/TTF and tariff policy risks; management views direct tariff exposure as limited, but demand effects remain uncertain .