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Trinseo Announces Its Repayment and Share Repurchase Plan

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Dec. 4 2020, Updated 10:42 a.m. ET

Price movement of Trinseo

Trinseo (TSE) has a market cap of $2.3 billion. It rose by 1.5% to close at $47.45 per share on June 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.0%, 7.0%, and 68.3%, respectively, on the same day.

This means that TSE is trading 0.32% below its 20-day moving average, 5.6% above its 50-day moving average, and 44.7% above its 200-day moving average.

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Related ETF and peers

The Vanguard Materials ETF (VAW) invests 0.05% of its holdings in Trinseo. The ETF tracks a very broad market-cap-weighted index of US materials companies. The YTD price movement of VAW was 11.7% on June 22, 2016.

The market caps of Trinseo’s competitors are as follows:

  • Dow Chemical (DOW) — $58.9 billion
  • Eastman Chemical (EMN) — $10.6 billion
  • Westlake Chemical (WLK) — $5.6 billion

Trinseo’s new announcements

Trinseo (TSE) has declared a quarterly repayment of $0.30 per share on its common stock. The first repayment of equity will be a cash distribution paid on July 20, 2016, to shareholders of record at the close of business on July 6, 2016.

Trinseo has announced the repurchase of up to $100 million of its common stock.

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Performance of Trinseo in fiscal 1Q16

Trinseo reported fiscal 1Q16 net sales of $894.1 million, a fall of 12.2% as compared to net sales of $1 billion in fiscal 1Q15. Sales from the Latex, Synthetic Rubber, Performance Plastics, and Basic Plastics and Feedstocks segments fell by 12.1%, 21.0%, 14.4%, and 8.8%, respectively, in fiscal 1Q16 over fiscal 1Q15.

The company’s cost of sales as a percentage of net sales fell by 6.7%. Its operating income rose by 36.6% in fiscal 1Q16 compared to the prior year period.

Trinseos net income and EPS (earnings per share) rose to $76.7 million and $1.56, respectively, in fiscal 1Q16. This compares to $37.7 million and $0.77, respectively, in fiscal 1Q15. The company reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] of $143.2 million in fiscal 1Q16, a rise of 31.6% over fiscal 1Q15.

Trinseo’s cash and cash equivalents and inventories rose by 1.6% and 4.0%, respectively, in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio rose to 2.9x, and its long-term debt-to-equity ratio fell to 3.4x in fiscal 1Q16. This compares to a current ratio and long-term debt-to-equity ratio of ~2.9x and 3.7x, respectively, in fiscal 4Q15.

The company reported a free cash flow of $63.3 million in fiscal 1Q16, as compared to $15.8 million in fiscal 1Q15.

Projections

Trinseo (TSE) has made the following projections for fiscal 2Q16:

  • adjusted EBITDA of $140 million–$150 million, excluding inventory revaluation
  • Performance Materials division adjusted EBITDA of $70 million–$75 million
  • Basic Plastics and Feedstocks division adjusted EBITDA of $90 million–$100 million, which is below fiscal 1Q16 due to planned styrenics turnarounds

The company has also made the following projections for fiscal 2016:

  • adjusted EBITDA of $570 million–$590 million, excluding inventory revaluation—a projection includes zero or minimal impact from the fly-up styrene margin due to sustainable, structural improvements in the styrenics and polycarbonate markets
  • adjusted EPS of $6.40–$6.70

 In the next part, we’ll look at Brunswick Corporation.

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