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MARKETS LIVE BLOG:

STOCKS SLIDE AFTER META'S REALITY CHECK, DOWNBEAT GDP

Caterpillar sinks 7% after earnings, management sees weakness in Europe, Asia-Pacific

Trinseo (TSE) Earnings Lag Estimates in Q2, Revenues Down Y/Y

Zacks Equity Research

Trinseo S.A. TSE logged a profit of $28 million or 68 cents per share in second-quarter 2019, down around 71% from a profit of $98 million or $2.24 a year ago.

Barring one-time items, earnings were 99 cents a share, down from $2.40 per share a year ago. It trailed the Zacks Consensus Estimate of $1.62.

Revenues fell 23% year over year to $951.8 million in the quarter, hurt by lower volumes across all segments and reduced prices. The company faced challenges from a difficult business environment.

Trinseo S.A. Price, Consensus and EPS Surprise

 

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

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Segment Highlights

Revenues at the Latex Binders segment dropped 18% year over year to $230 million in the reported quarter due to the pass through of lower raw material costs and reduced sales volumes resulting from lower sales to graphical paper and carpet markets.

Revenues at the Synthetic Rubber segment declined 28% year over year to $112 million, impacted by softness in the global tire market and unfavorable currency.

The Performance Plastics segment recorded sales $347 million, down 16% year over year due to reduced prices from the pass through of lower raw material costs.

Sales at the Polystyrene segment were down 27% year over year to $207 million, affected by reduced sales volumes from customer destocking and the pass through of lower styrene cost.

Feedstocks segment sales dropped 46% year over year to $55 million due to lower styrene-related sales and the pass through of reduced market styrene prices.

Financials

Trinseo ended the quarter with cash and cash equivalents of $534.9, up around 18% year over year. Long-term debt was $1,160.5 million, modestly down year over year.

The company recorded cash flow from operating activities of $81 million for the reported quarter. Free cash flow was $58 million for the quarter.

Trinseo also bought back roughly 0.5 million shares in the reported quarter for around $22 million.

Outlook

For 2019, Trinseo sees net income in the range of $148-$177 million and earnings in the band of $3.60-$4.31 per share. Adjusted EBITDA is forecast in the band of $410-$450 million. The company also expects adjusted earnings of $4.15-$4.86 per share for 2019.

Price Performance

Trinseo’s shares have lost 35.4% year to date, underperforming the industry's decline of 9.6%.



 

Zacks Rank & Stocks to Consider

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

Better-ranked stocks worth considering in the basic materials space include Kinross Gold Corporation KGC, NewMarket Corporation NEU and SSR Mining Inc. SSRM.

Kinross has projected earnings growth rate of 140% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have surged around 61% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

NewMarket has an expected earnings growth rate of 16.2% for the current year and carries Zacks Rank #1. Its shares have gained around 17% in the past year.

SSR Mining has an estimated earnings growth rate of 134.8% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 73% in the past year.

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Trinseo S.A. (TSE) : Free Stock Analysis Report
 
NewMarket Corporation (NEU) : Free Stock Analysis Report
 
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
 
Silver Standard Resources Inc. (SSRM) : Free Stock Analysis Report
 
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