Trinseo PLC Q3 FY2024 earnings call

• Restructuring initiatives announced to better position the business, combining management of engineered materials, plastic solutions, and polystyrene businesses, expected to save $25 million in 2025 and $30 million by end of 2026.
• Decision to exit virgin polycarbonate production at Erstad, Germany, expected to increase annual profitability by $15-$20 million.
• Q3 results negatively impacted by unplanned outages at two Americas styrenics facilities, pushing adjusted EBITDA to lower end of guidance range.
• Volumes decreased 8% Y/Y, but excluding polystyrene were flat Y/Y; product mix improved with higher margin areas like 36% increase in compounds for consumer electronics in engineered materials.
• Second consecutive quarter of sequential improvement in free cash flow, anticipating positive free cash flow in Q4.

Engineered Materials segment had healthier margins due to MMA supply dynamics and moderating European input costs. Americas Styrenics was negatively impacted by unplanned outages. Latex binders saw a 7% volume increase in case and battery applications. Recycled content containing product sales increased 40% in Q3 vs prior year and 57% YTD, representing 6% of total company margin. In absolute terms, third quarter adjusted EBITDA was $66 million, cash provided by operations was $9 million with free cash flow negative $3 million.

• Expect Q4 adjusted EBITDA to be $40 million to $50 million, anticipating higher profitability due to restructuring initiatives and full quarter of operations at Americas Styrenics.
• 2025 free cash flow outlook includes similar restructuring costs to 2024, with restructuring expected to drop off materially in 2026.
• Anticipate Q1 2025 to be stronger with modest improvement in outlooks, driven by easing interest rates potentially stimulating pent-up demand in building and construction.

• Macroeconomic landscape uncertainty and demand weaknesses in end markets like building and construction and consumer durables.
• Unplanned outages at production facilities can impact adjusted EBITDA.
• Factors causing actual results to differ from forward-looking statements, as outlined in item 1A of annual report on Form 10-K or other SEC filings.

Q: Give an update on the AmSty sales process and the $10 million negative headwind for Q3.

A: The $10 million headwind is behind us, units have restarted and expected to contribute fully in Q4. AmSty sales process has a joint agreement with CP Chem, process began in Q3 and expect to sign transaction in first half of next year.

Q: Update on timing and process regarding extension of May 2026 revolver and plan to utilize it to repay stub notes.

A: Stub notes are $115 million due in September next year. Plan is to use cash on hand or refinancing transaction, continuing to look at both and will announce when concrete.

Q: More explanation on Q4 guide, tailwinds from AmSty and seasonality.

A: Midpoint of Q4 guide is $45 million, down ~20% QoQ. $10 million from AmSty, half of $30 million bridge explained by fixed cost absorption due to shutdown season, rest from volume and margin across businesses, and negative timing due to styrene prices down.

Q: Sense on customers' pent-up demand and innovation cycles for first half of next year.

A: Customers see Q4 as declining raw material environment, expect Q1 2025 to be stronger with modest improvement in outlooks, easing interest rates expected to stimulate pent-up demand in building and construction; restructuring initiatives, known business wins, and full year benefits from AmSty to support next year.