Trinseo Plc Q2 FY2024 earnings call

• Q2 adjusted EBITDA was $67M, in line with expectations, with the highest adjusted EBITDA since Q2 2022 despite $10M unfavorable net timing, and second straight quarter of sequential profitability.
• Issued 14th Annual Sustainability and Corporate Social Responsibility report, showing progress on 2030 goals, including opening of PMMA depolymerization facility in Italy and advancements in polycarbonate dissolution pilot.
• Planned sale of Americas Styrenics joint venture: Procedural steps progressed, joint sales process to kick off this quarter, expected to lead to definitive agreement in first half of 2025.
• Ended Q2 with $108M cash and $352M total liquidity, including entering a new accounts receivable securitization facility extending maturity to Jan 2028.

In the second quarter, the engineered materials segment had its highest sales volumes and adjusted EBITDA since the second quarter of 2022, driven by moderating input costs, normalization of MMA market dynamics, and steady demand for downstream applications. Substantially all year-over-year volume decline in the plastic solutions segment was in polystyrene, where uneconomic volumes in Asia and Europe were shed for optimization. Revenue contribution details for each segment weren't provided in absolute revenue terms but focused on the performance and key initiatives like the PMMA depolymerization facility.

• Expect Q3 adjusted EBITDA to be $65M to $75M, similar to Q2 but with negative impact from Americas Styrenics issues and unplanned outage, but no repeat of Q2's unfavorable net timing.
• Anticipate Q4 profitability to be sequentially lower than Q3 due to year-end seasonality, but free cash flow expected to increase sequentially from Q3 to Q4 due to working capital release.

• Persistent weak end market demand and challenging macroeconomic environment.
• Decreasing styrene margins and unplanned outages impacting Americas Styrenics.
• Prolonged industry downturn requiring continued focus on liquidity preservation.

Q: Free cash flow expectations for the balance of the year A: Expect positive in second half, Q3 fairly neutral, Q4 positive. Current year free cash flow likely negative, but next year expected to improve with lower interest and restructuring costs.

Q: Restructuring spending trend A: Confident of realizing $100M benefit in 2024 from natural gas hedges and closing styrene plants.

Q: Engineered materials end markets A: Automotive steady, building and construction and consumer electronics applications strong, Europe volumes recovered.

Q: PMMA facility in Italy timeline for EBITDA contribution A: No specific timeline yet as it's a demonstration facility for future investment.

Q: Cash interest and PIC option A: Elected pay-in-kind option on term loan to preserve liquidity, influenced by forward rate cuts and market conditions.

Q: Joint AmSty sale attractiveness A: Previous market signals showed preference for owning 100% of AmSty, which minimizes concerns in the current sale process.