Trinseo Provides Preliminary Fourth Quarter and Full Year 2017 Financial Results

BERWYN, Pa.–(BUSINESS WIRE)–$TSE #earnings—Trinseo
(NYSE: TSE), a global materials company and manufacturer of plastics,
latex binders and synthetic rubber, today announced that fourth quarter
and full year 2017 results are expected to exceed previously issued
guidance. Net income is expected to exceed previously issued guidance by
approximately $45 million with about $25 million from better than
expected operating performance, primarily from higher margins and
favorable net timing, and about a $20 million one-time gain in the
fourth quarter related to changes made to certain Company pension plans.
In addition, Adjusted EBITDA is expected to exceed previously issued
guidance by approximately $35 million.

Fourth quarter 2017 net income is estimated to be between $117 million
and $121 million; Adjusted EBITDA is estimated to be between $167
million and $172 million. These fourth quarter estimates are above
previous guidance due primarily to higher than expected results in the
Performance Plastics, Latex Binders, and Basic Plastics segments, partly
offset by lower than expected performance in the Synthetic Rubber
segment. In addition, the fourth quarter benefited from a favorable
pre-tax net timing impact of approximately $15 million versus the
minimal expected net timing impact estimate that was previously
communicated.

“We are pleased with the strong finish to 2017 and the momentum carrying
us into 2018 across most of our businesses,” said Chris Pappas,
Trinseo’s President and Chief Executive Officer. “Our cash generation
was in line with previously communicated guidance allowing us to
continue to fund growth initiatives as well as return cash to
shareholders through both dividends and share repurchases.”

Full year 2017 net income is estimated to be between $327 and $331
million; Adjusted EBITDA is estimated to be between $641 million and
$646 million. Full year estimates include an approximately $30 million
favorable impact from unplanned styrene monomer outages, and an
approximately $25 million favorable impact from raw materials in the
Latex Binders segment, both on a pre-tax basis. These impacts were
partially offset by unfavorable impacts of about $15 million for an
extended outage at Americas Styrenics and $10 million unfavorable net
timing, both on a pre-tax basis.

Full year 2017 cash from operations is expected to be between $387
million and $392 million and Free Cash Flow is expected to be between
$240 million and $245 million. In addition, the Company used cash of
approximately $89 million to repurchase nearly 1.4 million shares during
the year, and approximately $24 million to repurchase 329,000 shares
during the fourth quarter.

Previously issued guidance for the fourth quarter 2017 was net income of
$68 million to $77 million and Adjusted EBITDA of $130 million to $140
million; full year guidance was net income of $280 million to $288
million and Adjusted EBITDA of $605 million to $615 million. The Company
had previously expected a minimal net timing impact in the fourth
quarter and an approximately $25 million unfavorable pre-tax net timing
impact for the full year.

Further details will be communicated on Trinseo’s fourth quarter and
full year financial results conference call on February 20, 2018 at 10
am eastern time.

Unaudited financial data for the fiscal quarter and full year ended
December 31, 2017 presented above are preliminary, based upon our good
faith estimates and subject to completion of our financial closing
procedures. We have provided ranges for our expectations described above
because our fiscal quarter closing procedures are not yet complete.
While we expect that our final financial results for the quarterly and
full year periods ended December 31, 2017, following the completion of
our financial closing procedures, will be within the ranges described
above, our actual results may differ materially from these estimates as
a result of the completion of our financial closing procedures as well
as final adjustments and other developments that may arise between now
and the time that our financial results for this quarterly and full year
period are finalized. All of the data presented above has been prepared
by and is the responsibility of management. This summary is not a
comprehensive statement of our financial results for the quarterly
period.

Note 1: Reconciliation of Non-GAAP Performance
Measures to Net income

We present Adjusted EBITDA as a non-GAAP financial performance measure,
which we define as income from continuing operations before interest
expense, net; income tax provision; depreciation and amortization
expense; loss on extinguishment of long-term debt; asset impairment
charges; gains or losses on the dispositions of businesses and assets;
restructuring; acquisition related costs and other items. In doing so,
we are providing management, investors, and credit rating agencies with
an indicator of our ongoing performance and business trends, removing
the impact of transactions and events that we would not consider a part
of our core operations.

Lastly, we present Adjusted Net Income and Adjusted EPS as additional
performance measures. Adjusted Net Income is calculated as Adjusted
EBITDA (defined beginning with net income, above), less interest
expense, less the provision for income taxes and depreciation and
amortization, tax affected for various discrete items, as appropriate.
Adjusted EPS is calculated as Adjusted Net Income per weighted average
diluted shares outstanding for a given period. We believe that Adjusted
Net Income and Adjusted EPS provide transparent and useful information
to management, investors, analysts and other stakeholders in evaluating
and assessing our operating results from period-to-period after removing
the impact of certain transactions and activities that affect
comparability and that are not considered part of our core operations.

There are limitations to using the financial performance measures noted
above. These performance measures are not intended to represent net
income or other measures of financial performance. As such, they should
not be used as alternatives to net income as indicators of operating
performance. Other companies in our industry may define these
performance measures differently than we do. As a result, it may be
difficult to use these or similarly-named financial measures that other
companies may use, to compare the performance of those companies to our
performance. We compensate for these limitations by providing
reconciliations of these performance measures to our net income, which
is determined in accordance with GAAP.

For the reasons discussed above, we are providing the following
reconciliations of expected net income to Adjusted EBITDA and Adjusted
EPS for the three months ended December 31, 2017, and for the full year
ended December 31, 2017. See “Note on Forward-Looking Statements” below
for a discussion of the limitations of these estimates. Amounts below
may not sum due to rounding.

Note 2: Reconciliation of Non-GAAP Liquidity
Measures to Cash from Operations

The Company uses Free Cash Flow to evaluate and discuss its liquidity
position and results. Free Cash Flow is defined as cash from operating
activities, less capital expenditures. We believe that Free Cash Flow
provides an important indicator of the Company’s ongoing ability to
generate cash through core operations, as it excludes the cash impacts
of various financing transactions as well as cash flows from business
combinations that are not considered organic in nature. We also believe
that Free Cash Flow provides management and investors with a useful
analytical indicator of our ability to service our indebtedness, pay
dividends (when declared), and meet our ongoing cash obligations.

Free Cash Flow is not intended to represent cash flows from operations
as defined by GAAP, and therefore, should not be used as an alternative
for that measure. Other companies in our industry may define Free Cash
Flow differently than we do. As a result, it may be difficult to use
this or similarly-named financial measures that other companies may use,
to compare the liquidity and cash generation of those companies to our
own.

For the reasons discussed above, we are providing the following
reconciliation of expected cash provided by operating activities to Free
Cash Flow for the three months ended December 31, 2017, and for the full
year ended December 31, 2017. See “Note on Forward-Looking Statements”
below for a discussion of the limitations of these estimates. Amounts
below may not sum due to rounding.

About Trinseo

Trinseo (NYSE:TSE) is a global materials solutions provider and
manufacturer of plastics, latex binders, and synthetic rubber. We are
focused on delivering innovative and sustainable solutions to help our
customers create products that touch lives every day — products that are
intrinsic to how we live our lives — across a wide range of end-markets,
including automotive, consumer electronics, appliances, medical devices,
lighting, electrical, carpet, paper and board, building and
construction, and tires. Trinseo had approximately $4.4 billion in net
sales in 2017, with 16 manufacturing sites around the world, and nearly
2,200 employees. For more information visit www.trinseo.com

Use of non-GAAP measures

In addition to using standard measures of performance and liquidity
that are recognized in accordance with accounting principles generally
accepted in the United States of America (“GAAP”), we use additional
measures of income excluding certain GAAP items (“non-GAAP measures”),
such as Adjusted EBITDA and, Adjusted EPS and measures of liquidity
excluding certain GAAP items, such as Free Cash Flow. We believe these
measures are useful for investors and management in evaluating business
trends and performance each period. These income measures are
also used to manage our business and assess current period
profitability, as well as to provide an appropriate basis to evaluate
the effectiveness of our pricing strategies. Such measures are not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance or liquidity, as applicable.
The definitions of each of these measures, further discussion of
usefulness, and reconciliations of non-GAAP measures to GAAP measures
are provided herein.

Note on Forward-Looking Statements

This press release may contain “forward-looking statements” within
the meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Words such as “guidance,”
“expect,” “estimate,” “project,” “outlook,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar expressions
are intended to identify such forward-looking statements.
Forward-looking statements in this press release may include, without
limitation, forecasts of financial performance, growth, net sales,
business activity, acquisitions, financings and other matters that
involve known and unknown risks, uncertainties and other factors that
may cause results, levels of activity, performance or achievements to
differ materially from results expressed or implied by this press
release. Such factors include, among others: conditions in the global
economy and capital markets, volatility in costs or disruption in the
supply of the raw materials utilized for our products; loss of market
share to other producers of styrene-based chemical products; compliance
with environmental, health and safety laws; changes in laws and
regulations applicable to our business; our inability to continue
technological innovation and successful introduction of new products;
system security risk issues that could disrupt our internal operations
or information technology services; the loss of customers; the market
price of the Company’s ordinary shares prevailing from time to time; the
nature of other investment opportunities presented to the Company from
time to time; and the Company’s cash flows from operations. Additional
risks and uncertainties are set forth in the Company’s reports filed
with the United States Securities and Exchange Commission, which are
available at http://www.sec.gov/
as well as the Company’s web site at http://www.trinseo.com.
As a result of the foregoing considerations, you are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary statement.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.

Contacts

Press contacts:
Trinseo
Donna St. Germain, +1
610-240-3307
[email protected]
or
Makovsky
Doug
Hesney, +1 212-508-9661
[email protected]
or
Investor
Contact:
Trinseo
David Stasse, +1 610-240-3207
[email protected]