10-Q 1 tse-20220331x10q.htm 10-Q
http://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpense0000-0000000Large Accelerated Filer2500025000http://fasb.org/us-gaap/2021-01-31#OtherAssetsCurrent0P1Yhttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpense00015190612022falseQ1--12-310001519061us-gaap:TreasuryStockCommonMember2022-01-012022-03-310001519061us-gaap:CommonStockMember2022-01-012022-03-310001519061us-gaap:CommonStockMember2021-01-012021-03-310001519061us-gaap:RetainedEarningsMember2022-03-310001519061us-gaap:AdditionalPaidInCapitalMember2022-03-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310001519061us-gaap:RetainedEarningsMember2021-12-310001519061us-gaap:AdditionalPaidInCapitalMember2021-12-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310001519061us-gaap:RetainedEarningsMember2021-03-310001519061us-gaap:AdditionalPaidInCapitalMember2021-03-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-03-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310001519061us-gaap:RetainedEarningsMember2020-12-310001519061us-gaap:AdditionalPaidInCapitalMember2020-12-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310001519061tse:HeathlandB.v.Member2021-01-012021-03-310001519061tse:RestOfWorldMembertse:LatexMember2022-01-012022-03-310001519061tse:RestOfWorldMembertse:EngineeredMaterialsMember2022-01-012022-03-310001519061tse:RestOfWorldMembertse:BasePlasticsMember2022-01-012022-03-310001519061srt:EuropeMembertse:PolystyreneMember2022-01-012022-03-310001519061srt:EuropeMembertse:LatexMember2022-01-012022-03-310001519061srt:EuropeMembertse:FeedstocksMember2022-01-012022-03-310001519061srt:EuropeMembertse:EngineeredMaterialsMember2022-01-012022-03-310001519061srt:EuropeMembertse:BasePlasticsMember2022-01-012022-03-310001519061srt:AsiaPacificMembertse:PolystyreneMember2022-01-012022-03-310001519061srt:AsiaPacificMembertse:LatexMember2022-01-012022-03-310001519061srt:AsiaPacificMembertse:EngineeredMaterialsMember2022-01-012022-03-310001519061srt:AsiaPacificMembertse:BasePlasticsMember2022-01-012022-03-310001519061country:UStse:LatexMember2022-01-012022-03-310001519061country:UStse:FeedstocksMember2022-01-012022-03-310001519061country:UStse:EngineeredMaterialsMember2022-01-012022-03-310001519061country:UStse:BasePlasticsMember2022-01-012022-03-310001519061tse:RestOfWorldMember2022-01-012022-03-310001519061srt:EuropeMember2022-01-012022-03-310001519061srt:AsiaPacificMember2022-01-012022-03-310001519061country:US2022-01-012022-03-310001519061tse:RestOfWorldMembertse:LatexMember2021-01-012021-03-310001519061tse:RestOfWorldMembertse:EngineeredMaterialsMember2021-01-012021-03-310001519061tse:RestOfWorldMembertse:BasePlasticsMember2021-01-012021-03-310001519061srt:EuropeMembertse:PolystyreneMember2021-01-012021-03-310001519061srt:EuropeMembertse:LatexMember2021-01-012021-03-310001519061srt:EuropeMembertse:FeedstocksMember2021-01-012021-03-310001519061srt:EuropeMembertse:EngineeredMaterialsMember2021-01-012021-03-310001519061srt:EuropeMembertse:BasePlasticsMember2021-01-012021-03-310001519061srt:AsiaPacificMembertse:PolystyreneMember2021-01-012021-03-310001519061srt:AsiaPacificMembertse:LatexMember2021-01-012021-03-310001519061srt:AsiaPacificMembertse:EngineeredMaterialsMember2021-01-012021-03-310001519061srt:AsiaPacificMembertse:BasePlasticsMember2021-01-012021-03-310001519061country:UStse:LatexMember2021-01-012021-03-310001519061country:UStse:FeedstocksMember2021-01-012021-03-310001519061country:UStse:EngineeredMaterialsMember2021-01-012021-03-310001519061country:UStse:BasePlasticsMember2021-01-012021-03-310001519061tse:RestOfWorldMember2021-01-012021-03-310001519061srt:EuropeMember2021-01-012021-03-310001519061srt:AsiaPacificMember2021-01-012021-03-310001519061country:US2021-01-012021-03-310001519061us-gaap:EmployeeSeveranceMember2022-03-310001519061us-gaap:EmployeeSeveranceMember2021-12-310001519061us-gaap:EmployeeSeveranceMembertse:TransformationalRestructuringProgramMember2022-01-012022-03-310001519061tse:TransformationalRestructuringProgramMember2022-01-012022-03-310001519061tse:IndividuallyInsignificantRestructuringPlansMember2022-01-012022-03-310001519061tse:IndividuallyInsignificantRestructuringPlansMember2021-01-012021-03-310001519061srt:MaximumMemberus-gaap:EmployeeSeveranceMembertse:TransformationalRestructuringProgramMember2022-03-310001519061us-gaap:EmployeeSeveranceMembertse:TransformationalRestructuringProgramMember2022-03-310001519061tse:TransformationalRestructuringProgramMember2022-03-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-03-310001519061us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-03-310001519061srt:MaximumMembertse:HeathlandB.v.Member2022-01-032022-01-030001519061us-gaap:EmployeeSeveranceMember2022-01-012022-03-310001519061tse:DecommissioningAndOtherMember2022-01-012022-03-310001519061us-gaap:InterestRateSwapMember2022-01-012022-03-310001519061us-gaap:InterestRateSwapMember2021-01-012021-03-310001519061us-gaap:ForeignExchangeForwardMember2021-01-012021-03-310001519061us-gaap:CurrencySwapMember2022-01-012022-03-310001519061us-gaap:CurrencySwapMember2021-01-012021-03-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-03-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-03-310001519061us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-03-310001519061us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001519061us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-03-310001519061srt:MinimumMember2022-01-012022-03-310001519061srt:MaximumMember2022-01-012022-03-310001519061tse:SeniorNotesMaturingIn2029Memberus-gaap:FairValueInputsLevel2Member2022-03-310001519061tse:SeniorNotesMaturingIn2025Memberus-gaap:FairValueInputsLevel2Member2022-03-310001519061tse:SeniorCreditFacility2028TermLoanBMemberus-gaap:FairValueInputsLevel2Member2022-03-310001519061tse:SeniorCreditFacility2024TermLoanBMemberus-gaap:FairValueInputsLevel2Member2022-03-310001519061us-gaap:FairValueInputsLevel2Member2022-03-310001519061tse:SeniorNotesMaturingIn2029Memberus-gaap:FairValueInputsLevel2Member2021-12-310001519061tse:SeniorNotesMaturingIn2025Memberus-gaap:FairValueInputsLevel2Member2021-12-310001519061tse:SeniorCreditFacility2028TermLoanBMemberus-gaap:FairValueInputsLevel2Member2021-12-310001519061tse:SeniorCreditFacility2024TermLoanBMemberus-gaap:FairValueInputsLevel2Member2021-12-310001519061us-gaap:FairValueInputsLevel2Member2021-12-310001519061tse:TermLoanBMember2022-03-310001519061tse:SeniorCreditFacility2026RevolvingCreditFacilityMember2022-01-012022-03-310001519061us-gaap:InterestRateSwapMembertse:NonoperatingInterestIncomeExpenseNetCaptionMember2022-01-012022-03-310001519061us-gaap:InterestRateSwapMembertse:NonoperatingInterestIncomeExpenseNetCaptionMember2021-01-012021-03-310001519061us-gaap:CorporateNonSegmentMember2022-01-012022-03-310001519061tse:NonoperatingInterestIncomeExpenseNetCaptionMember2022-01-012022-03-310001519061us-gaap:CorporateNonSegmentMember2021-01-012021-03-310001519061tse:NonoperatingInterestIncomeExpenseNetCaptionMember2021-01-012021-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-03-310001519061tse:BoehlenLocationMember2022-01-012022-03-310001519061tse:PolystyreneMember2022-03-310001519061tse:LatexMember2022-03-310001519061tse:EngineeredMaterialsMember2022-03-310001519061tse:BasePlasticsMember2022-03-310001519061tse:PolystyreneMember2021-12-310001519061tse:LatexMember2021-12-310001519061tse:EngineeredMaterialsMember2021-12-310001519061tse:BasePlasticsMember2021-12-310001519061tse:GainLossOnDerivativeInstrumentsNetPretaxMember2021-01-012021-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CostOfSalesMember2021-01-012021-03-310001519061tse:AmericasStyrenicsMember2022-03-310001519061tse:InvestmentOneMember2021-01-012021-03-310001519061tse:InvestmentOneMember2022-03-310001519061tse:InvestmentOneMember2021-12-310001519061tse:InvestmentOneMember2022-01-012022-03-310001519061us-gaap:EmployeeStockOptionMember2022-03-310001519061us-gaap:RestrictedStockUnitsRSUMember2022-03-310001519061us-gaap:PerformanceSharesMember2022-03-310001519061us-gaap:RetainedEarningsMember2022-01-012022-03-310001519061us-gaap:RetainedEarningsMember2021-01-012021-03-310001519061us-gaap:ForeignExchangeForwardMember2022-01-012022-03-310001519061currency:TWDus-gaap:ShortMember2022-03-310001519061currency:MXNus-gaap:ShortMember2022-03-310001519061currency:EURus-gaap:ShortMember2022-03-310001519061currency:CNYus-gaap:ShortMember2022-03-310001519061currency:CHFus-gaap:LongMember2022-03-310001519061us-gaap:CurrencySwapMember2017-09-010001519061us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:CurrencySwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:AccountsPayableMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2022-03-310001519061us-gaap:InterestRateSwapMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:CurrencySwapMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:AccountsPayableMemberus-gaap:InterestRateSwapMember2022-03-310001519061us-gaap:AccountsPayableMemberus-gaap:CurrencySwapMember2022-03-310001519061us-gaap:AccountsPayableMember2022-03-310001519061us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:CurrencySwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:InterestRateSwapMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:CurrencySwapMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:OtherNonoperatingIncomeExpenseMember2022-01-012022-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMembertse:GainLossOnDerivativeInstrumentsNetPretaxMember2022-01-012022-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMembertse:GainLossOnDerivativeInstrumentsNetPretaxMember2021-01-012021-03-310001519061us-gaap:OtherNonoperatingIncomeExpenseMember2022-01-012022-03-310001519061us-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-03-310001519061us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:FairValueMeasurementsRecurringMember2022-03-310001519061us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:FairValueMeasurementsRecurringMember2021-12-310001519061us-gaap:InterestRateSwapMember2022-03-310001519061us-gaap:CurrencySwapMember2022-03-310001519061us-gaap:AccountsPayableMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2021-12-310001519061us-gaap:AccountsPayableMemberus-gaap:InterestRateSwapMember2021-12-310001519061us-gaap:AccountsPayableMemberus-gaap:CurrencySwapMember2021-12-310001519061us-gaap:InterestRateSwapMember2021-12-310001519061us-gaap:CurrencySwapMember2021-12-310001519061us-gaap:AccountsPayableMember2021-12-310001519061us-gaap:AccountsReceivableMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2021-12-310001519061us-gaap:AccountsReceivableMember2021-12-310001519061us-gaap:CurrencySwapMember2022-04-072022-04-070001519061us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2022-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2022-03-310001519061us-gaap:AccountsReceivableMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2022-03-310001519061us-gaap:AccountsReceivableMember2022-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2021-12-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2021-12-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2022-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember2021-12-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001519061tse:U.sPlanAndNonU.sPlanMember2022-01-012022-03-310001519061tse:U.sPlanAndNonU.sPlanMember2021-01-012021-03-310001519061srt:MaximumMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-03-310001519061tse:PMMaBusinessMembercountry:USus-gaap:PensionPlansDefinedBenefitMember2021-01-012021-03-310001519061srt:MaximumMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-03-310001519061country:USus-gaap:PensionPlansDefinedBenefitMember2022-01-012022-03-3100015190612022-12-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2022-01-012022-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2021-01-012021-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-01-012022-03-310001519061us-gaap:ForeignPlanMemberus-gaap:PensionPlansDefinedBenefitMember2022-01-012022-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-01-012021-03-310001519061us-gaap:ForeignPlanMemberus-gaap:PensionPlansDefinedBenefitMember2021-01-012021-03-310001519061tse:SeniorCreditFacility2026RevolvingCreditFacilityMember2022-03-310001519061tse:SeniorNotesMaturingIn2025Member2020-02-260001519061tse:SeniorNotesMaturingIn2025Member2017-09-010001519061us-gaap:CostOfSalesMember2022-01-012022-03-310001519061us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-03-310001519061us-gaap:CostOfSalesMember2021-01-012021-03-310001519061us-gaap:TreasuryStockCommonMember2022-03-310001519061us-gaap:CommonStockMember2022-03-310001519061us-gaap:TreasuryStockCommonMember2021-12-310001519061us-gaap:CommonStockMember2021-12-310001519061us-gaap:TreasuryStockCommonMember2021-03-310001519061us-gaap:CommonStockMember2021-03-310001519061us-gaap:TreasuryStockCommonMember2020-12-310001519061us-gaap:CommonStockMember2020-12-310001519061tse:DeferredOrdinarySharesMember2022-03-310001519061tse:DeferredOrdinarySharesMember2021-12-3100015190612020-12-3100015190612021-03-310001519061tse:HeathlandB.v.Memberus-gaap:TradeNamesMember2022-01-030001519061tse:HeathlandB.v.Memberus-gaap:DevelopedTechnologyRightsMember2022-01-030001519061tse:HeathlandB.v.Memberus-gaap:CustomerRelationshipsMember2022-01-030001519061tse:PMMaBusinessMember2022-01-012022-03-310001519061tse:AristechSurfacesLLCMember2022-01-012022-01-310001519061tse:AristechSurfacesLLCMember2021-09-012021-09-010001519061tse:PMMaBusinessMember2021-05-032021-05-030001519061tse:AristechSurfacesLLCMember2021-09-010001519061tse:PMMaBusinessMember2021-05-030001519061tse:BoehlenLocationMembertse:PropertyPlantAndEquipmentAtFairValueMember2022-03-310001519061tse:BoehlenLocationMembertse:PropertyPlantAndEquipmentAtFairValueMember2021-12-310001519061us-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001519061us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001519061us-gaap:PerformanceSharesMember2022-01-012022-03-310001519061us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001519061us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001519061us-gaap:PerformanceSharesMember2021-01-012021-03-310001519061us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001519061us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001519061us-gaap:TreasuryStockCommonMember2021-01-012021-03-310001519061us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001519061us-gaap:CurrencySwapMembertse:NonoperatingInterestIncomeExpenseNetCaptionMember2022-01-012022-03-310001519061us-gaap:CurrencySwapMembertse:NonoperatingInterestIncomeExpenseNetCaptionMember2021-01-012021-03-310001519061us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001519061us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembertse:SyntheticRubberMember2021-12-010001519061us-gaap:DiscontinuedOperationsHeldforsaleMembertse:SyntheticRubberMember2022-01-012022-03-310001519061us-gaap:DiscontinuedOperationsHeldforsaleMembertse:SyntheticRubberMember2021-01-012021-03-310001519061us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembertse:SyntheticRubberMember2022-01-012022-03-310001519061tse:SeniorCreditFacility2024TermLoanBMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310001519061tse:SeniorNotesMaturingIn2029Member2022-03-310001519061tse:SeniorNotesMaturingIn2025Member2022-03-310001519061tse:SeniorCreditFacility2028TermLoanBMember2022-03-310001519061tse:SeniorCreditFacility2024TermLoanBMember2022-03-310001519061tse:OtherIndebtednessMember2022-03-310001519061tse:AccountsReceivableSecuritizationFacilityMember2022-03-310001519061tse:SeniorNotesMaturingIn2029Member2021-12-310001519061tse:SeniorNotesMaturingIn2025Member2021-12-310001519061tse:SeniorCreditFacility2028TermLoanBMember2021-12-310001519061tse:SeniorCreditFacility2024TermLoanBMember2021-12-310001519061tse:OtherIndebtednessMember2021-12-310001519061tse:AccountsReceivableSecuritizationFacilityMember2021-12-3100015190612022-03-3100015190612021-12-310001519061us-gaap:CurrencySwapMember2020-02-262020-02-260001519061us-gaap:CurrencySwapMember2017-09-012017-09-010001519061tse:HeathlandB.v.Member2022-01-030001519061tse:HeathlandB.v.Member2022-01-032022-01-030001519061tse:PolystyreneMember2022-01-012022-03-310001519061tse:LatexMember2022-01-012022-03-310001519061tse:FeedstocksMember2022-01-012022-03-310001519061tse:EngineeredMaterialsMember2022-01-012022-03-310001519061tse:BasePlasticsMember2022-01-012022-03-310001519061tse:AmericasStyrenicsMember2022-01-012022-03-310001519061tse:PolystyreneMember2021-01-012021-03-310001519061tse:LatexMember2021-01-012021-03-310001519061tse:FeedstocksMember2021-01-012021-03-310001519061tse:EngineeredMaterialsMember2021-01-012021-03-310001519061tse:BasePlasticsMember2021-01-012021-03-310001519061tse:AmericasStyrenicsMember2021-01-012021-03-3100015190612021-01-012021-03-3100015190612022-04-2900015190612022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:puretse:itemiso4217:USDxbrli:sharesiso4217:EURxbrli:sharesiso4217:EUR

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)                                                                                                                                                                                         

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-36473

Trinseo PLC

(Exact name of registrant as specified in its charter)

Ireland

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1000 Chesterbrook Boulevard

Suite 300

Berwyn, PA 19312

(Address of Principal Executive Offices)

(610) 240-3200

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading symbol

Name of Exchange on which registered

Ordinary Shares, par value $0.01 per share

TSE

New York Stock Exchange

As of April 29, 2022, there were 36,151,314 of the registrant’s ordinary shares outstanding.

 

 

 

TABLE OF CONTENTS

`

    

    

    

    

 

    

    

Page

Part I

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (Unaudited)

Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2022 and 2021 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

41 

Item 4.

Controls and Procedures

41 

Part II

Other Information

Item 1.

Legal Proceedings

41 

Item 1A.

Risk Factors

42 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43 

Item 3.

Defaults Upon Senior Securities

43 

Item 4.

Mine Safety Disclosures

44 

Item 5.

Other Information

44 

Item 6.

Exhibits

44 

Exhibit Index

Signatures

2

Trinseo PLC

Quarterly Report on Form 10-Q

For the quarterly period ended March 31, 2022

Unless otherwise indicated or required by context, as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the term “Trinseo” refers to Trinseo PLC (NYSE: TSE), a public limited company existing under the laws of Ireland, and not its subsidiaries. The terms “Company,” “we,” “us” and “our” refer to Trinseo and its consolidated subsidiaries, taken as a consolidated entity. Trinseo PLC is the surviving entity of a cross-border merger with our predecessor company, Trinseo S.A., which merger was approved by shareholders in June 2021 and completed in October 2021. All financial data provided in this Quarterly Report is the financial data of Trinseo PLC, unless otherwise indicated. Prior to the formation of the Company, our business was wholly owned by The Dow Chemical Company (together with other affiliates, “Dow”). The Company may distribute cash to shareholders under Irish law via dividends or distributions made out of distributable profits.

Definitions of capitalized terms not defined herein appear within our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022.

Cautionary Note on Forward-Looking Statements

This Quarterly Report contains, without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. Forward-looking statements may be identified by the use of words like “expect,” “anticipate,” “intend,” “forecast,” ”estimate,” “see,” “outlook,” “will,” “may,” “might,” “potential,” “likely,” “target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would,” or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.

Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements. Factors that might cause such a difference include, but are not limited to, our ability to complete the sale of our Styrenics business; our ability to successfully execute our transformation strategy and business strategy; our ability to integrate acquired businesses; global supply chain volatility, increased costs or disruption in the supply of raw materials or increased costs for transportation of our products; the European Commission request for information; the nature of investment opportunities presented to the Company from time to time; and those discussed in our Annual Report filed with the SEC on February 23, 2022 under Part I, Item IA— “Risk Factors,” within this Quarterly Report and in other filings and furnishings made by the Company with the SEC from time to time.

As a result of these or other factors, our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on these forward-looking statements. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge through the Investor Relations section of our website, www.trinseo.com, as soon as reasonably practicable after the reports are electronically filed or furnished with the SEC. We provide this website and information contained in or connected to it for informational purposes only. That information is not a part of this Quarterly Report.

3

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

TRINSEO PLC

Condensed Consolidated Balance Sheets

(In millions, except per share data)

(Unaudited)

March 31, 

December 31, 

    

2022

2021

Assets

    

    

Current assets

Cash and cash equivalents

$

448.7

$

573.0

Accounts receivable, net of allowance

814.3

740.2

Inventories

 

682.0

 

621.0

Other current assets

 

41.4

 

44.3

Total current assets

 

1,986.4

 

1,978.5

Investments in unconsolidated affiliates

 

262.0

 

247.8

Property, plant and equipment, net

 

692.7

719.0

Other assets

Goodwill

 

727.4

 

710.1

Other intangible assets, net

 

814.5

 

823.8

Right-of-use assets - operating, net

81.4

85.3

Deferred income tax assets

 

73.3

 

77.6

Deferred charges and other assets

 

62.4

 

70.1

Total other assets

 

1,759.0

 

1,766.9

Total assets

$

4,700.1

$

4,712.2

Liabilities and shareholders’ equity

Current liabilities

Short-term borrowings and current portion of long-term debt

$

18.2

$

18.5

Accounts payable

 

600.8

 

590.3

Current lease liabilities - operating

18.3

18.4

Income taxes payable

 

57.4

 

52.1

Accrued expenses and other current liabilities

 

245.8

 

235.1

Total current liabilities

 

940.5

 

914.4

Noncurrent liabilities

Long-term debt, net of unamortized deferred financing fees

 

2,304.3

 

2,305.6

Noncurrent lease liabilities - operating

65.1

69.2

Deferred income tax liabilities

 

109.5

 

103.2

Other noncurrent obligations

 

307.9

 

306.7

Total noncurrent liabilities

 

2,786.8

 

2,784.7

Commitments and contingencies (Note 13)

Shareholders’ equity

Ordinary shares, $0.01 nominal value, 4,000.0 shares authorized (March 31, 2022: 39.1 shares issued and 37.2 shares outstanding; December 31, 2021: 38.9 shares issued and 37.9 shares outstanding)

0.4

0.4

Preferred shares, €0.01 nominal value, 1,000.0 shares authorized (no shares issued or outstanding)

Deferred ordinary shares, 1.00 nominal value, 0.025 shares authorized (March 31, 2022: 0.025 shares issued and outstanding; December 31, 2021: 0.025 shares issued and outstanding)

Additional paid-in-capital

 

475.7

 

468.1

Treasury shares, at cost (March 31, 2022: 1.9 shares; December 31, 2021: 1.0 shares)

(100.0)

(50.0)

Retained earnings

 

746.4

 

741.8

Accumulated other comprehensive loss

 

(149.7)

 

(147.2)

Total shareholders’ equity

 

972.8

 

1,013.1

Total liabilities and shareholders’ equity

$

4,700.1

$

4,712.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

TRINSEO PLC

Condensed Consolidated Statements of Operations

(In millions, except per share data)

(Unaudited)

Three Months Ended

March 31, 

 

2022

    

2021

    

 

Net sales

$

1,386.7

    

$

986.0

Cost of sales

 

1,210.7

 

797.1

Gross profit

 

176.0

 

188.9

Selling, general and administrative expenses

 

96.7

 

56.5

Equity in earnings of unconsolidated affiliates

 

21.6

 

22.9

Other charges

36.3

Operating income

 

64.6

 

155.3

Interest expense, net

 

21.9

 

12.0

Acquisition purchase price hedge loss

 

 

55.0

Other expense, net

3.0

2.4

Income from continuing operations before income taxes

 

39.7

 

85.9

Provision for income taxes

 

22.6

 

20.1

Net income from continuing operations

17.1

65.8

Net income (loss) from discontinued operations, net of income taxes

(0.4)

5.7

Net income

$

16.7

$

71.5

Weighted average shares- basic

37.3

38.5

Net income (loss) per share- basic:

Continuing operations

$

0.46

$

1.71

Discontinued operations

(0.01)

0.15

Net income per share- basic

$

0.45

$

1.86

Weighted average shares- diluted

 

38.1

 

39.5

Net income (loss) per share- diluted:

Continuing operations

$

0.45

$

1.67

Discontinued operations

(0.01)

0.14

Net income per share- diluted

$

0.44

$

1.81

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

TRINSEO PLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)

Three Months Ended

March 31, 

    

2022

    

2021

Net income

    

$

16.7

    

$

71.5

    

Other comprehensive income (loss), net of tax:

Cumulative translation adjustments

(4.3)

 

0.4

Net gain on cash flow hedges

1.5

4.6

Pension and other postretirement benefit plans:

Amounts reclassified from accumulated other comprehensive income

0.3

1.1

Total other comprehensive income (loss), net of tax

 

(2.5)

 

6.1

Comprehensive income

$

14.2

$

77.6

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

TRINSEO PLC

Condensed Consolidated Statements of Shareholders’ Equity

(In millions, except per share data)

(Unaudited)

    

Shares

    

Shareholders' Equity

  

Ordinary Shares Outstanding

Treasury Shares

Deferred Ordinary Shares

  

Ordinary Shares

Deferred Ordinary Shares

Additional
Paid-In Capital

  

Treasury Shares

  

Accumulated Other Comprehensive Income (Loss)

  

Retained Earnings

  

Total

Balance at December 31, 2021

 

37.9

1.0

$

0.4

$

$

468.1

$

(50.0)

$

(147.2)

$

741.8

$

1,013.1

Net income

 

16.7

 

16.7

Other comprehensive loss

 

(2.5)

 

(2.5)

Share-based compensation activity

 

0.2

7.6

 

7.6

Purchase of treasury shares

(0.9)

0.9

(50.0)

(50.0)

Dividends on ordinary shares ($0.32 per share)

(12.1)

(12.1)

Balance at March 31, 2022

 

37.2

1.9

$

0.4

$

$

475.7

$

(100.0)

$

(149.7)

$

746.4

$

972.8

Balance at December 31, 2020

 

38.4

10.4

$

0.5

$

$

579.6

$

(542.9)

$

(186.1)

$

739.2

$

590.3

Net income

 

 

 

 

 

 

71.5

 

71.5

Other comprehensive income

 

 

 

 

 

6.1

 

 

6.1

Share-based compensation activity

 

0.3

(0.3)

 

 

(1.1)

 

12.9

 

 

 

11.8

Dividends on ordinary shares ($0.08 per share)

(3.4)

(3.4)

Balance at March 31, 2021

 

38.7

10.1

$

0.5

$

$

578.5

$

(530.0)

$

(180.0)

$

807.3

$

676.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

TRINSEO PLC

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

Three Months Ended

March 31, 

    

2022

    

2021

Cash flows from operating activities

    

    

    

    

    

Net income

$

16.7

$

71.5

Less: Net income (loss) from discontinued operations

(0.4)

5.7

Net income from continuing operations

17.1

65.8

Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities - continuing operations

Depreciation and amortization

 

53.0

 

23.1

Amortization of deferred financing fees and issuance discount

 

2.3

 

1.2

Deferred income tax

 

9.0

 

6.6

Share-based compensation expense

 

8.3

 

3.4

Earnings of unconsolidated affiliates, net of dividends

 

(14.1)

 

(7.9)

Unrealized net gain on foreign exchange forward contracts

 

(2.6)

 

(21.8)

Acquisition purchase price hedge loss

55.0

Gain on sale of businesses and other assets

 

(0.3)

(0.2)

Asset impairment charges or write-offs

 

0.7

Changes in assets and liabilities

Accounts receivable

 

(79.8)

 

(138.8)

Inventories

 

(66.2)

 

(82.5)

Accounts payable and other current liabilities

 

42.0

 

114.9

Income taxes payable

 

5.9

 

4.9

Other assets, net

 

12.7

 

4.7

Other liabilities, net

 

6.8

 

12.3

Cash provided by (used in) operating activities - continuing operations

 

(5.2)

 

40.7

Cash provided by operating activities - discontinued operations

0.2

10.3

Cash provided by (used in) operating activities

(5.0)

51.0

Cash flows from investing activities

Capital expenditures

 

(23.9)

 

(11.2)

Cash paid for asset or business acquisitions, net of cash acquired ($1.0 and $0.0)

(22.2)

Cash used in investing activities - continuing operations

 

(46.1)

 

(11.2)

Cash used in investing activities - discontinued operations

(0.9)

(1.4)

Cash used in investing activities

(47.0)

(12.6)

Cash flows from financing activities

Deferred financing fees

 

 

(1.3)

Short-term borrowings, net

 

(3.6)

 

(2.8)

Purchase of treasury shares

(51.9)

Dividends paid

(12.4)

(3.3)

Proceeds from exercise of option awards

1.7

9.0

Withholding taxes paid on restricted share units

(0.8)

(0.8)

Repayments of 2024 Term Loan B and 2028 Term Loan B

(3.6)

Net proceeds from issuance of 2029 Senior Notes

450.0

Cash provided by (used in) financing activities

 

(70.6)

 

450.8

Effect of exchange rates on cash

 

(1.7)

 

(9.5)

Net change in cash, cash equivalents, and restricted cash

 

(124.3)

 

479.7

Cash, cash equivalents, and restricted cash—beginning of period

 

573.0

 

588.7

Cash, cash equivalents, and restricted cash—end of period

$

448.7

$

1,068.4

Less: Restricted cash

(450.0)

Cash and cash equivalents—end of period

$

448.7

$

618.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

TRINSEO PLC

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, unless otherwise stated)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Trinseo PLC and its subsidiaries (the “Company”) as of and for the periods ended March 31, 2022 and 2021 were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are considered necessary for the fair statement of the results for the periods presented. Because they cover interim periods, the statements and related notes to the financial statements do not include all disclosures normally provided in annual financial statements, and therefore, these statements should be read in conjunction with the 2021 audited consolidated financial statements included within the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022. The Company’s condensed consolidated financial statements presented herein reflect the latest estimates and assumptions made by management that affect the reported amounts and related disclosures as of and for the period ended March 31, 2022. However, actual results could differ from these estimates and assumptions.

The December 31, 2021 condensed consolidated balance sheet data presented herein was derived from the Company’s December 31, 2021 audited consolidated financial statements, but does not include all disclosures required by GAAP for annual periods.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications pertain primarily to the Company’s entry into an agreement during the second quarter of 2021 to sell its Synthetic Rubber business, as a result of which the Company reclassified its Synthetic Rubber assets and liabilities as held-for-sale and reclassified the operating results of its Synthetic Rubber business, net of taxes, as discontinued operations for all periods presented. The sale of the Synthetic Rubber business was completed in December 2021. Refer to Note 4 for further information. Throughout this Quarterly Report, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

NOTE 2—RECENT ACCOUNTING GUIDANCE

As of March 31, 2022, there was no recently issued accounting standards which would have a material effect on the Company’s condensed consolidated financial statements.

NOTE 3—ACQUISITIONS

Acquisition of Heathland B.V.

On January 3, 2022, the Company completed the acquisition of Heathland B.V. (“Heathland”) from Heathland Holding B.V. (“Heathland Holding”), through the purchase of all issued and outstanding shares (the “Heathland Acquisition”). The Heathland Acquisition was completed pursuant to the Sale and Purchase Agreement dated December 3, 2021 (“Heathland Agreement”), by and between the Company and Heathland Holding. Heathland is a leading collector and recycler of post-consumer and post-industrial plastic wastes in Europe. The total purchase price consideration is estimated to be $29.3 million, including an initial cash purchase price of $22.9 million, subject to customary working capital and other closing adjustments, as well as $6.4 million of contingent cash consideration, representing the fair value of certain earn-out payments. The maximum amount of potential earn-out payments is $6.8 million, which amounts will become payable to Heathland Holding as and when the related performance milestones or thresholds are achieved over the three-year period following the date of acquisition. The Heathland Acquisition was funded through existing cash on hand.

9

Additionally, the Heathland Agreement includes a service fee of approximately $4.5 million, payable to Heathland Holdings contingent upon the continued employment of certain Heathland employees for three years following the acquisition date. The Company has not included this service fee as part of the estimated purchase price and instead will accrue for the service fee as compensation expense over the three-year period in which it is earned.

The Company accounted for the acquisition as a business combination pursuant to ASC 805. In accordance with ASC 805, fair values are assigned to tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that was available as of the acquisition date. The Company believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed for the acquisition, however, preliminary measurements of fair value, are subject to change during the measurement period.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill.

The table below summarizes the purchase price allocation for the assets acquired and liabilities assumed, based on their relative fair values, which have been assessed as of the January 3, 2022 acquisition date:

January 3,

    

2022

Cash and cash equivalents

$

1.0

Other current assets

1.3

Other intangible assets (1)

Customer relationships

 

5.1

Tradenames

 

0.9

Developed technology

0.2

Other assets

1.0

Total fair value of assets acquired

9.5

Current liabilities

 

(1.3)

Noncurrent liabilities

(1.6)

Total fair value of liabilities assumed

(2.9)

Net identifiable assets acquired

6.6

Purchase price consideration

29.3

Goodwill (2)

$

22.7

(1)The expected weighted average useful life of the acquired intangible assets are 7 years for customer relationships, tradenames and developed technology.
(2)Goodwill largely consists of strategic and synergistic opportunities resulting from combining Heathland with the Company’s existing businesses and is allocated entirely to the Base Plastics segment. No goodwill related to this acquisition is expected to be deductible for income tax purposes.

Pro forma results of operations information have not been presented as the effect of the acquisition is not material. The operating results of the Heathland acquisition are included within the Company's condensed consolidated statements of operations since the acquisition date of January 3, 2022 and were not material for the three months ended March 31, 2022. Pursuant to GAAP, costs incurred to complete the Heathland Acquisition as well as costs incurred to integrate into the Company’s operations are expensed as incurred. Transaction-related costs incurred, which are included within “Selling, general, and administrative expenses” in the condensed consolidated statements of operations, were not material for the three months ended March 31, 2022.

10

Acquisition of Aristech Surfaces

On September 1, 2021, the Company completed its previously announced acquisition of Aristech Surfaces LLC (“Aristech Surfaces”) from SK AA Holdings LLC (“SK AA Holdings”), the sole member of Aristech Surfaces, through purchase of 100% membership interest and intellectual property (the “Aristech Surfaces Acquisition”). The purchase price consideration for the Aristech Surfaces Acquisition amounted to was $449.5 million, all of which was paid for during the year ended December 31, 2021 (noting no cash flows during the three months ended March 31, 2021). Aristech Surfaces is a leading North America manufacturer and global provider of PMMA continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets, whose results are included within the Engineered Materials segment. Aristech Surfaces’ products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Refer to the Annual Report for further information. During the first quarter of 2022, there were no changes to the purchase price allocation for the acquisition of the Aristech Surfaces business. However, further adjustments may be necessary as a result of the Company’s on-going assessment of additional information that existed as of the acquisition date related to the fair value of assets acquired and liabilities assumed, including goodwill, during the measurement period.

Acquisition of the PMMA Business

On May 3, 2021, the Company completed its previously-announced acquisition of the polymethyl methacrylates (“PMMA”) and activated methyl methacrylates (“MMA”) business (together, the “PMMA business”) from Arkema S.A., (“Arkema”) through the purchase of 100% of the shares of certain subsidiaries of Arkema (the “PMMA Acquisition”). The purchase price consideration for the PMMA Acquisition was $1,364.9 million, all of which was paid for during the year ended December 31, 2021 (noting no cash flows during the three months ended March 31, 2021). PMMA is a transparent and rigid plastic with a wide range of end uses, and is an attractive adjacent chemistry which complements Trinseo’s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics. PMMA results are included within the Engineered Materials segment.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Refer to the Annual Report for further information. During the first quarter of 2022, there were no changes to the purchase price allocation for the acquisition of the PMMA business. However, further adjustments may be necessary as a result of the Company’s on-going assessment of additional information that existed as of the acquisition date related to the fair value of assets acquired and liabilities assumed, including goodwill, during the measurement period.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the consolidated results of operations of the Company with the PMMA business and Aristech Surfaces for the three months ended March 31, 2021 as if these acquisitions had occurred on January l, 2021. The proforma results were calculated by combining the results of Trinseo with the PMMA business and Aristech Surfaces but do not include adjustments related to cost savings or other synergies that are anticipated as a result of these acquisitions. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions had occurred as of January 1, 2021, nor are they indicative of future results of operations.

Three Months Ended

March 31, 

    

2021

Net sales

    

$

1,194.1

Net income

$

78.8

Income from continuing operations

$

73.1

11

NOTE 4—DIVESTITURES AND DISCONTINUED OPERATIONS

On December 1, 2021, the Company completed the divestiture of its Synthetic Rubber business to Synthos S.A. and certain of its subsidiaries (together, “Synthos”) for a purchase price of $402.4 million, which reflected a reduction of approximately $41.6 million for the assumption of pension liabilities by Synthos and $47.0 million for net working capital (excluding inventory) retained by Trinseo. Refer to the Annual Report for further information. At closing, the Company and Synthos executed a long-term supply agreement, in which Trinseo will supply Synthos certain raw materials used in the Synthetic Rubber business subsequent to the sale. For the three months ended March 31, 2022, the Company recorded $19.1 million in net sales and $16.2 million in cost of sales related to the supply agreement, which is recorded in continuing operations.

The following table summarizes the results of the Synthetic Rubber business for the three months ended March 31, 2022 and 2021, which are reflected as discontinued operations in the Company’s condensed consolidated statements of operations:

Three Months Ended

March 31, 

    

2022

    

2021

    

Net sales

    

$

0.1

    

$

124.2

    

Cost of sales

 

0.7

 

111.1

Gross profit (loss)

 

(0.6)

 

13.1

Selling, general and administrative expenses

 

(0.2)

 

6.2

Operating income (loss)

 

(0.4)

 

6.9

Other expense, net

0.2

Income (loss) from discontinued operations before income taxes

 

(0.4)

 

6.7

Provision for income taxes

 

 

1.0

Net income (loss) from discontinued operations

$

(0.4)

$

5.7

Amounts for operating net sales and costs of sales which had previously been eliminated in consolidation related to intercompany sales of styrene monomer to the Synthetic Rubber business are now reflected on a gross basis as a component of net sales and costs of sales from continuing operations for all periods presented. The Company has recast these amounts because upon completion of the sale of the Synthetic Rubber business, the Company will continue to have these ongoing transactions with Synthos, under a supply agreement executed in conjunction with the divestiture. Refer to Note 5 for recast segment net sales reflecting this adjustment.

Additionally, the Company previously allocated certain corporate management overhead costs to the former Synthetic Rubber segment which may no longer be allocated to discontinued operations under the relevant authoritative accounting guidance. Accordingly, the Company has recast its segment reporting results to reflect the reattribution of these expenses in all periods presented. Refer to Note 16 for recast segment results reflecting this adjustment.

NOTE 5—NET SALES

Refer to the Annual Report for information on the Company's accounting policies and further background related to its net sales.

The following table provides disclosure of net sales to external customers by primary geographical market (based on the location where sales originated), by segment for the three months ended March 31, 2022 and 2021. Prior period balances in this table have been recast to reflect current period presentation, as described in Notes 1 and 4, including

12

updates for the classification of the Company’s former Synthetic Rubber segment as discontinued operations and the Company’s prior year resegmentation.

Engineered

Latex

Base

 

Three Months Ended

Materials

Binders

Plastics

Polystyrene

Feedstocks

Total

 

March 31, 2022

United States

$

138.4

$

82.2

$

84.5

$

$

3.9

$

309.0

Europe

 

118.7

 

150.9

 

246.6

 

214.6

 

66.4

 

797.2

Asia-Pacific

 

35.3

 

71.7

 

37.2

 

103.4

 

 

247.6

Rest of World

 

2.8

 

1.9

 

28.2

 

 

 

32.9

Total

$

295.2

$

306.7

$

396.5

$

318.0

$

70.3

$

1,386.7

March 31, 2021

United States

$

10.3

$

67.8

$

62.5

$

$

3.4

$

144.0

Europe

 

21.0

 

117.5

197.9

 

149.3

 

70.0

 

555.7

Asia-Pacific

 

34.2

 

63.9

48.8

 

117.6

 

264.5

Rest of World

 

0.3

 

1.8

19.7

 

 

 

21.8

Total

$

65.8

$

251.0

$

328.9

$

266.9

$

73.4

$

986.0

NOTE 6—INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Company is currently supplemented by one joint venture, Americas Styrenics LLC (“Americas Styrenics,” a styrene and polystyrene joint venture with Chevron Phillips Chemical Company LP), which is accounted for using the equity method. The results of Americas Styrenics are included within its own reporting segment.

Americas Styrenics is a privately held company; therefore, a quoted market price for its equity interests is not available. The summarized financial information of the Company’s unconsolidated affiliate is shown below.

Three Months Ended

March 31, 

    

2022

    

2021

    

Sales

    

$

524.4

    

$

423.0

Gross profit

$

48.1

$

65.4

Net income

$

36.1

$

51.1

As of March 31, 2022 and December 31, 2021, the Company’s investment in Americas Styrenics was $262.0 million and $247.8 million, respectively, which was $13.0 million and $9.4 million greater than the Company’s 50% share of the underlying net assets of Americas Styrenics, respectively. This amount represents the difference between the book value of assets held by the joint venture and the Company’s 50% share of the total recorded value of the joint venture’s assets, inclusive of certain adjustments to conform with the Company’s accounting policies. This difference is being amortized over a weighted average remaining useful life of approximately 2.7 years as of March 31, 2022. The Company received dividends of $7.5 million and $15.0 million from Americas Styrenics during the three months ended March 31, 2022 and 2021, respectively.

NOTE 7—INVENTORIES

Inventories consisted of the following:

March 31, 

December 31,

    

2022

2021

Finished goods

    

$

309.7

    

$

279.2

Raw materials and semi-finished goods

 

334.3

 

303.9

Supplies

 

38.0

 

37.9

Total

$

682.0

$

621.0

13

NOTE 8—DEBT

Refer to the Annual Report for definitions of capitalized terms not included herein and further background on the Company’s debt structure discussed below. The Company was in compliance with all debt related covenants as of March 31, 2022 and December 31, 2021.

As of March 31, 2022 and December 31, 2021, debt consisted of the following: