20 Sep

Bain Capital Is Selling Its Trinseo Shares

WRITTEN BY Gabriel Kane FEATURED IN Company News, Insights, & Analysis

Price movements

Trinseo (TSE) has a market cap of $2.6 billion. It rose 0.13% to close at $55.76 per share on September 19, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.6%, -3.0%, and 99.1%, respectively, on the same day.

TSE is trading 1.1% below its 20-day moving average, 4.8% above its 50-day moving average, and 40.7% above its 200-day moving average.

Bain Capital Is Selling Its Trinseo Shares

Related ETF and peers

The Vanguard Materials ETF (VAW) invests 0.18% of its holdings in Trinseo. The ETF tracks a very broad market cap–weighted index of US materials companies. The YTD price movement of VAW was 12.3% on September 19.

The market caps of Trinseo’s competitors are as follows:

  • Dow Chemical Company (DOW) — $59.9 billion
  • Eastman Chemical Company (EMN) — $9.7 billion
  • Westlake Chemical (WLK) — $6.5 billion

Latest news on Trinseo

Bain Capital Everest Manager Holding SCA will sell 10.7 million ordinary shares of Trinseo as part of its secondary offering and will receive all the net proceeds from this secondary offering. The book-running manager for this offering is Morgan Stanley.

Performance of Trinseo in 2Q16

Trinseo reported 2Q16 net sales of $969.7 million, a fall of 5.7% compared to net sales of $1.0 billion in 2Q15. Sales from the company’s latex, synthetic rubber, performance plastics, and basic plastics & feedstocks segments fell 6.1%, 3.5%, 0.76%, and 8.0%, respectively, in 2Q16 compared to 2Q15. The company’s gross profit margin and operating income rose 26.7% and 29.9%, respectively, in 2Q16, compared to the prior year’s period.

Trinseo’s net income and EPS (earnings per share) rose to $95.8 million and $2.00, respectively, in 2Q16, compared to $0.76 million and $0.02, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $182.0 million and $2.30, respectively, in 2Q16, rises of 20.5% and 42.9%, respectively, compared to 2Q15.

TSE’s cash and cash equivalents and inventories rose 7.9% and 3.4%, respectively, in 2Q16 compared to 4Q15. Its current ratio rose to 3.0x, and its long-term debt-to-equity ratio fell to 3.1x in 2Q16, compared to its current and long-term debt-to-equity ratios of 2.9x and 3.7x, respectively, in 4Q15.

Projections

Trinseo has made the following projections for 3Q16:

  • adjusted EBITDA in the range of $140 million–$150 million, excluding inventory revaluation
  • adjusted EBITDA of at least ~$75 million in its performance materials division
  • net income in the range of $73 million–$80 million
  • adjusted EPS in the range of $1.55–$1.70

The company has made the following projections for 2016:

  • adjusted EBITDA in the range of $605 million–$615 million
  • adjusted EPS in the range of $6.95–$7.10
  • net income in the range of $316 million–$323 million

In the next article, we’ll take a look at Kellogg Company (K).

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