Trinseo PLC

Good morning, ladies and gentlemen, and welcome to the Trincio Third Quarter 2024 Financial Results Conference Call. We welcome the Trincio management team, Frank Bosich, President and CEO, David Stacey, Executive Vice President and CFO, and Bea Van Kessel, Senior Vice President of Corporate Finance and Investor Relations. Today's conference call will include brief remarks by the management team, followed by a question and answer session. The company distributed its press release along with the presentation slides at close of market Wednesday, November 6. These documents are posted on the company's investor relations website and furnished on a Form 8K filled with the Securities and Exchange Commission. If anyone should require a purchase during the call, please push star then zero on your telephone. I will now hand over to Bea Van Kessel.

Thank you, Gavin, and good morning, everyone. At this time, all participants are in listen-only mode. After our brief remarks, instructions will follow to participate in the question and answer session. Our disclosure rules and cautionary notes on forward-looking statements are noted on slide two. During this presentation, we may make certain forward-looking statements, including issuing guidance and describing our future expectations. We must caution you that actual results could differ materially from what is discussed, described, or implied in these statements. Factors that could cause actual results to differ include but are not limited to risk factors set forth in item 1A of our annual report on Forum 10-K or in our other filings made with the Securities and Exchange Commission. The company undertakes no obligation to update or revise its forward-looking statements. Today's presentation includes certain non-GAAP financial measurements. A reconciliation of these measurements to corresponding GAAP measures is provided in our earnings release and in the appendix of our investor presentation. A replay of the conference call and transcript will be archived on the company's investor relations website shortly after the conference call. The replay will be available until November 7th, 2025. Now, I would like to turn the call over to Frank Bosich.

Thanks, Bea. and welcome to our third quarter 2024 earnings call. Before we get to our Q3 results, I would like to introduce everyone to Bea Van Kessel, who will be moving back into the finance organization with responsibility for investor relations, treasury, and corporate development. Bea brings a wealth of company and industry knowledge with her, as she most recently served as Senior Vice President leading the plastic solutions, polystyrene, and feedstocks business segments. Prior to that, Bea served as Senior Director of Global Business Finance, where she led the business finance organization for all of Trincio's reporting segments. I want to thank Andy Myers for his many years of leading the investor relations group and look forward to continue working with him as he takes on other responsibilities within the finance organization. Andy and Bea will be working closely together over the coming weeks to ensure a smooth transition. Now I'd like to turn to our Q3 results. As expected, market conditions and adjusted EBITDA were similar to the prior quarter. MMA supply dynamics and moderating European input costs continue to support healthier margins in our engineered materials segment. While demand remained weak in many of our end markets, particularly building and construction and consumer durables, we saw significant year-over-year profitability improvement, largely resulting from our earlier restructuring actions. We also had our second consecutive quarter of sequential improvement in free cash flow and anticipate this trend will continue as free cash flow is expected to turn positive in Q4. Our third quarter results were negatively impacted by unplanned outages at two of America's styrenex production facilities during the quarter, which pushed adjusted EBITDA to the lower end of our guidance range. While volumes in the quarter decreased 8% year over year, this was largely driven by our efforts to shed uneconomic sales in Asia and Europe to optimize plant operations and working capital, particularly in polystyrene. However, excluding polystyrene, polystyrene volumes were basically flat versus prior year, while product mix improved as volumes increased in several of our higher margin targeted growth areas. This includes a 36% increase in compounds for consumer electronics applications in engineered materials due to higher demand and new business winds, and a 7% volume increase in case and battery applications. and latex binders. Additionally, sales of recycled content containing products increased 40% in Q3 versus prior year and 57% year to date, demonstrating our continued focus and the success we are seeing in making sustainable offerings a larger part of our portfolio. In fact, sales of recycled content containing products represented 6% of the total company margin in the third quarter. Now, I'd like to discuss several of the strategic actions that we took during the quarter. As the macroeconomic landscape remains uncertain and demand weakness has persisted, we continue to take decisive action to improve our footprint and cost structure. At the end of the third quarter, we announced additional restructuring initiatives in order to better position the business for longer-term growth and to reduce our corporate and functional costs to reflect the smaller footprint we currently operate. This included combining the management of our engineered materials, plastic solutions, and polystyrene businesses, resulting in workforce reductions from the consolidation of the business management roles and support functions. We believe this will result in a more streamlined organizational structure that will fuel our ability to continue growing in our core markets and in our higher value offerings. These actions are expected to result in cost savings of approximately $25 million in 2025 and a full run rate savings of $30 million by the end of 2026. We also announced the decision to exit virgin polycarbonate production at our Stade Germany facility following the discussions with the relevant works councils. Once operations have concluded, we will purchase all of our polycarbonate needs for our downstream differentiated products from external suppliers. As we previously stated, this is expected to increase annual profitability by $15 to $20 million in comparison to producing virgin polycarbonate. We remain committed to developing and investing in our polycarbonate dissolution technology which will replace a portion of our external polycarbonate purchases with our own recycled polycarbonate as that technology continues to grow to commercial scale. Now, Dave will discuss our third quarter results.