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Trinseo's (TSE) Earnings Top Estimates in Q1, Sales Up Y/Y

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·4 min read
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Trinseo S.A. TSE recorded a profit of $72 million or $1.81 per share in first-quarter 2021 against a loss of $36 million or 94 cents a year ago.

Barring one-time items, earnings were $3.27 a share, up from 26 cents per share a year ago. The figure topped the Zacks Consensus Estimate of $2.42.

Revenues climbed around 28% year over year to $1,092.6 million in the quarter. The top line was driven by higher prices as well as increased sales volume in all segments barring Feedstocks.

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

Segment Highlights

Revenues at the Latex Binders segment rose 15% year over year to $251 million in the reported quarter due to the pass through of higher raw material costs and increased sales volumes.

Revenues at the Synthetic Rubber segment went up 22% year over year to $124 million, aided by higher volumes. The company witnessed continued demand recovery in the tire market.

The Engineered Materials segment recorded sales $66 million, up 38% year over year, driven by increased sales volume to consumer electronics applications in Asia and TPE applications in Europe.

Revenues at the Base Plastics unit went up 28% year over year to $329 million on higher volume in applications like construction, higher pricing and favorable currency swings.

Sales at the Polystyrene segment climbed 46% year over year to $267 million, due to the passthrough of higher styrene costs and higher sales volumes on increased demand for applications in appliances and consumer electronics.

Feedstocks segment sales rose 25% year over year to $56 million as higher styrene pricing more than offset lower styrene-related sales volume.

The Americas Styrenics unit logged adjusted EBITDA of $23 million for the quarter, up around 134% year over year, driven by higher styrene volume and margin in North America.

Financials

Trinseo ended the quarter with cash and cash equivalents of $618.4 million, up around 41% year over year. Long-term debt was $1,605.1 million, up around 38% year over year.

The company recorded cash flow from operating activities of $51 million for the reported quarter.

Outlook

For 2021, Trinseo sees net income in the range of $303-$343 million. Adjusted EBITDA is forecast in the band of $625-$675 million.

The company expects results for the second quarter to be similar on a sequential comparison basis due to the continuation of similar market trends that include strong demand and margins across many of its segments.

Price Performance

Trinseo’s shares have surged 261.1% over a year, outperforming the industry's rise of 148%.

Zacks Rank & Key Picks

Trinseo currently carries a Zacks Rank #3 (Hold)

Better-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Dow Inc. DOW and Impala Platinum Holdings Limited IMPUY.

Nucor has a projected earnings growth rate of 228.4% for the current year. The company’s shares have rallied around 159% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has a projected earnings growth rate of 261.5% for the current year. The company’s shares have shot up around 103% in a year. It currently sports a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have surged around 230% in the past year. It currently carries a Zacks Rank #1.

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