Trinseo has reported its third quarter 2021 financial results. Net sales in the third quarter increased 87% versus prior year. Higher prices resulted in a 61% increase, mainly due to the pass through of higher raw material costs such as styrene and butadiene. The remainder of the increase was primarily from the addition of the acquired businesses within the Engineered Materials segment, including one month of results from Aristech Surfaces. Third quarter net income from continuing operations of $79 million was $39 million above prior year and third quarter Adjusted EBITDA of $173 million was $72 million above prior year. The increase in earnings can be attributed to higher margins due to strong demand in all segments, tight supply and additional earnings from the newly acquired businesses within the Engineered Materials segment.

 

Cash provided by operating activities in the third quarter was $208 million and capital expenditures were $36 million, resulting in Free Cash Flow of $173 million including a working capital source of $30 million. For a reconciliation of Free Cash Flow to cash provided by operating activities, see Note 3 below.

 

Commenting on the Company’s third quarter performance, Frank Bozich, President and Chief Executive Officer of Trinseo, said, “We had another quarter of solid earnings despite some challenging industry operating conditions that included supply chain and energy constraints. We observed healthy demand across all of our segments and saw strong margins amid tight supply as we continued to implement commercial excellence initiatives. I want to highlight the exemplary job of our employees, whose hard work and dedication ensured product delivery to our customers with minimal interruption despite a difficult supply chain and production environment.”

 

Commenting on the outlook for the remainder of 2021, Bozich said, “We expect to finish the year with another strong quarter leading to a record year of earnings. We also expect to generate significant cash and we are reaffirming our Adjusted EBITDA guidance despite numerous industry headwinds such as high energy prices and multiple supply chain challenges.”

 

Trinseo has begun work to explore the divestiture of its styrenics businesses and plans to launch a formal sales process in the first quarter of 2022. The scope of this potential divestiture is expected to include the Feedstocks and Polystyrene reporting segments as well as the Company’s 50% ownership of Americas Styrenics. Bozich stated “The separation of the styrenics businesses would represent another key step in our transformation toward becoming a specialty materials and sustainable solutions provider. We will continue to prioritize investments in higher growth, higher margin and lower earnings volatility areas such as Engineered Materials and CASE with an ongoing focus on sustainability, including the continued decrease in our CO2 intensity through various initiatives including the transformation of our portfolio.”