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Trinseo's (TSE) Earnings and Revenues Lag Estimates in Q4

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Trinseo S.A. (TSE - Free Report) logged a profit of $6 million or 14 cents per share in fourth-quarter 2019, compared with a loss of $1 million or 2 cents a year ago.

Barring one-time items, earnings were 35 cents a share, up from 23 cents per share a year ago. It, however, trailed the Zacks Consensus Estimate of 44 cents.

Revenues fell around 17% year over year to $888.8 million in the quarter, hurt by lower prices and reduced volumes in Feedstocks, Polystyrene and Synthetic Rubber segments. It also missed the Zacks Consensus Estimate of $933 million. The company continued to face challenging market conditions in the reported quarter.
 

Trinseo S.A. Price, Consensus and EPS Surprise

 

Trinseo S.A. Price, Consensus and EPS Surprise

Trinseo S.A. price-consensus-eps-surprise-chart | Trinseo S.A. Quote

 

Full-Year Results

For 2019, earnings were $2.26 per share, down from $6.70 per share a year ago. Adjusted earnings for the year were $3.13 per share, down from $7.25 a year ago.

Revenues were $3,776 million for the full year, down around 18% year over year, impacted by the pass through of lower raw material costs.

Segment Highlights

Revenues at the Latex Binders segment dropped 14% year over year to $219 million in the reported quarter due to the pass through of lower raw material costs.

Revenues at the Synthetic Rubber segment declined 23% year over year to $100 million, impacted by the pass through of lower raw material costs.

The Performance Plastics segment recorded sales $325 million, down 10% year over year due to reduced prices from the pass through of lower raw material costs and a weak polycarbonate market.

Sales at the Polystyrene segment were down 26% year over year to $176 million, affected by reduced sales volumes in Europe and the pass through of lower styrene cost.

Feedstocks segment sales dropped 13% year over year to $69 million due to the pass through of reduced market styrene prices.

Financials

Trinseo ended 2019 with cash and cash equivalents of $456.2 million, up around 1% year over year. Long-term debt was $1,162.6 million, modestly up year over year.

The company recorded cash flow from operating activities of $48 million for the reported quarter. The same for 2019 was $322 million. Free cash flow was $9 million for the fourth quarter and $212 million for 2019.

Trinseo also bought back roughly 0.5 million shares in the reported quarter for around $21 million.

Outlook

For 2020, Trinseo sees net income in the range of $95-$112 million. Adjusted EBITDA is forecast in the band of $325-$350 million. The company also expects adjusted earnings of $2.40-$2.84 per share for 2020.

The guidance includes an estimated impact of $5-$10 million (pre-tax) from reduced customer demand in China in the first quarter of 2020 associated with the outbreak of coronavirus.

Price Performance

Trinseo’s shares have lost 36.9% over a year, underperforming the industry's decline of 19.8%.



 

 

Zacks Rank & Key Picks

Trinseo currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Royal Gold, Inc. (RGLD - Free Report) and Pretium Resources Inc. (PVG - Free Report) .

Daqo New Energy has projected earnings growth rate of 326.3% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 93% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020 and carries a Zacks Rank #1. The company’s shares have shot up roughly 28% in a year’s time.

Pretium Resources has projected earnings growth rate of 106.9% for 2020 and carries a Zacks Rank #2 (Buy). The company’s shares have rallied around 35% over a year.

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