Earnings call transcript: Trinseo Q3 2025 misses forecasts, stock fluctuates

Trinseo SA reported its third-quarter 2025 earnings, revealing a greater-than-expected loss per share and a revenue shortfall. The company posted an actual EPS of -$2.41, missing the forecasted -$2.01. Revenue reached $743 million, falling short of the anticipated $791 million. Following the earnings announcement, Trinseo's stock experienced volatility, with a premarket decline of 3.97% to $1.21 per share, though it later showed a modest recovery.

Key Takeaways

• Trinseo's EPS and revenue both missed analyst expectations.
• The company's stock showed initial decline but later recovered slightly.
• Trinseo is focusing on product innovation, particularly in recycled materials.
• Operational restructuring is expected to improve EBITDA by $30 million next year.
• The company foresees positive free cash flow in the next quarter.

Company Performance

Trinseo's performance in Q3 2025 was marked by financial challenges, with significant impacts from unfavorable raw material timing and operational disruptions at Americus Styrenics. Despite these setbacks, Trinseo is making strides in product innovation, particularly in recycled content plastics and battery binders, which have shown impressive growth. The company is also making strategic moves to discontinue certain operations in Europe to streamline costs and improve future earnings.

Financial Highlights

• Revenue: $743 million, down from the forecasted $791 million.
• Earnings per share: -$2.41, below the expected -$2.01.
• Adjusted EBITDA: $30 million, impacted by $9 million in unfavorable raw material timing.
• Free cash flow: Negative $38 million, with expectations of a positive $20 million in Q4.

Earnings vs. Forecast

Trinseo's actual EPS of -$2.41 was 19.9% below the forecast of -$2.01, marking a significant miss. Revenue also fell short by 6.07%, indicating challenges in meeting market expectations. This performance contrasts with previous quarters where Trinseo had generally aligned more closely with forecasts.

Market Reaction

Following the earnings report, Trinseo's stock initially dropped by 3.97% in premarket trading, reflecting investor disappointment. However, the stock later showed signs of recovery, closing at $1.26, a 2.78% increase from the previous close. This movement is within the context of its 52-week range, with a low of $1.15 and a high of $6.85, indicating ongoing volatility.

Outlook & Guidance

Trinseo projects a Q4 2025 adjusted EBITDA of $30-40 million, alongside positive free cash flow of $20 million. The company is optimistic about several potential demand improvement triggers, including trade certainty and macroeconomic factors such as Federal Reserve interest rate cuts.

Executive Commentary

CEO Frank Bozich highlighted the company's focus on product innovation and market positioning: "At 10% volume increase across the portfolio results in about $100 million of EBITDA." Bozich also emphasized the strategic importance of reassuring demand, even at slight premiums, and noted the European Parliament's recent vehicle end-of-life directive.

Risks and Challenges

• Supply chain disruptions, particularly in raw materials, could continue to impact profitability.
• Market volatility and economic uncertainty may affect demand for Trinseo's products.
• Increased competition from Asian imports could pressure market share and pricing.
• Potential restructuring costs as the company closes certain production facilities.

Q&A

During the earnings call, analysts raised questions about trade flow dynamics and the structural versus transitory nature of import changes. Trinseo's management addressed these concerns, emphasizing the challenges in Asian polymer markets and the uncertainty surrounding market recovery.

Full transcript - Trinseo SA (TSE) Q3 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to Trinseo's Third Quarter twenty twenty five Financial Results Conference Call. We welcome the Trinseo management team Frank Bozich, President and CEO David Stasi, Executive Vice President and CFO and B. Van Kessel, Senior Vice President, Corporate Finance and Investor Relations. Today's conference call will include brief remarks by management team followed by a question and answer session. The company's distributed its press release along with its presentation slides after close of market on Thursday, November 6.

These documents are posted on the company's Investor Relations website and furnished on Form eight ks filed with the Securities and Exchange Commission. I will now hand the call over to Bea Van Kessel. Please go ahead.

B. Van Kessel, Senior Vice President, Corporate Finance and Investor Relations, Trinseo: Thank you, Calvin, and hello, 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 Form 10 ks 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 following the conference call. The replay will be available until 11/07/2026. Now I would like to turn the call over to Frank Bodich.

Frank Bozich, President and CEO, Trinseo: Thanks, Bea, and welcome to our third quarter twenty twenty five earnings call. I'd like to begin by sharing some information on trade flows in our chemistries, as we believe this is instructive for understanding how the end markets we serve have reacted to tariff uncertainties. We've included some of this information on slide four of our presentation materials. In general, we saw a sharp increase in imports of Asian polymers to both The U. S.

And Europe beginning in Q1. We believe this was a reaction to the threatened tariff levels that ultimately were announced in early April and an attempt to fill supply chains in The U. S. Ahead of the tariffs being implemented and the redirection of trade flows to Europe from Asia because of slowing demand in China. With respect to The U.

S. On slide four, you can clearly see a significant increase in imports of ABS primarily from Asian producers beginning in the first quarter get ahead of the tariff implementation. Exports from The U. S. Of both ABS and PMMA decreased versus prior year and the decrease was most pronounced in the exports to Canada and Mexico.

Similar dynamic occurred in Europe where Asian material that is typically consumed in China was redirected to the European market putting margin pressure on the more standard grades of ABS and PMMA. These industry trade flow dynamics continued into the third quarter resulting in lower volumes versus prior year, but similar volumes quarter over quarter. Whether these new levels of demand are transitory or structural remains to be seen. However late in the third quarter and into the fourth quarter we are seeing an increased run rate of sales of our more formulated higher margin products that is higher than year to date the year to date average and prior year levels. In the case of our more formulated PMMA resins the year over year increase in volumes was over 10% beginning in late Q3 and this has continued into Q4.

We do believe there is a drive to reassure demand even at slight premiums to the import parity price to derisk longer Asian supply chains and address potential tariff impacts in both Europe and The U. S. Concerning our focus on sustainability, I want to highlight the fact that the European Parliament finalized its vehicle end of life directive in September. This mandates that new vehicles must contain 20% recycled plastic within six years, 15% of which must come from end of life vehicles and this increases to 25% within ten years. This action formalizes the EU's drive for greater product supply chain circularity.

We have remained committed to pursuing investments to scale up our technology for our circular recycled content containing platforms and expect these regulations to drive demand in the near term. Our pilot plants for recycled polycarbonate, ABS and the MMA are sold out. The volumes are still small, but will become more meaningful as we ramp up. Year to date our recycled content containing plastic sales grew 2% across all applications with our recycled solutions and engineered materials growing at 12%. Before I hand the call over to Dave, let me comment on our press release from the October 6 in which we announced the discontinuation of virgin MMA production in Italy and the intention to close our polystyrene production facility in Germany.

We took this difficult decision after carefully considering our options and the impact on our employees. However, it is clear to us that these assets will not be competitive in the long term. Our Roe Italy site will remain focused on PMMA resin production and will also be the site for our investments in recycled MMA. Pending works council negotiations in Germany, these projects should lead to $30,000,000 of EBITDA improvement next year and the cash savings will exceed restructuring costs beginning in 2026. Now I'd like to turn the call over to Dave.

David Stasi, Executive Vice President and CFO, Trinseo: Thanks, Frank. We ended the third quarter with $30,000,000 of adjusted EBITDA, which was impacted by $9,000,000 of unfavorable raw material timing and negative equity affiliate earnings from Americus Styrenics due to an $8,000,000 headwind from repair and other costs related to an unplanned outage that occurred in June. At the segment level, Engineered Materials adjusted EBITDA was flat versus prior year as fixed cost improvements and slightly higher volumes in PMMA resin for building and construction and automotive applications were offset by lower volumes in medical. On medical sales, I want to remind you that we reported increased sales last year related to the closure of our Stott polycarbonate site and customers stocking up prior to the shutdown. Latex Binders adjusted EBITDA was $9,000,000 below prior year, mainly driven by lower volume in Europe paper and board applications as well as significant pricing pressure in Europe and Asia.

Our higher margin targeted growth platforms in case and battery binders continue to outperform the market. Sales volume in battery binders were up 27% versus prior year for the quarter as we continue to enhance our portfolio, including new customer wins and anode binder applications. We are currently working closely with five of the 15 largest lithium ion battery producers in the world. Lastly, Polymer Solutions adjusted EBITDA was $19,000,000 below prior year, driven by $9,000,000 of unfavorable timing, lower ABS volumes and unfavorable mix related to the closure of our polycarbonate plant. Third quarter free cash flow was negative $38,000,000 and we ended the third quarter with $346,000,000 of available liquidity.

The fourth quarter is typically our seasonally strongest quarter for free cash flow due to a working capital release. We expect our free cash flow in the fourth quarter to be positive $20,000,000 and our year end liquidity to be over $350,000,000 Now I'll turn the call back over to Frank.

Frank Bozich, President and CEO, Trinseo: Thanks, Dave. Looking forward, we expect fourth quarter twenty twenty five adjusted EBITDA of roughly 30,000,000 to $40,000,000 and as Dave mentioned positive free cash flow of $20,000,000 This forecast assumes a continuation of the year to date market dynamics and a somewhat exaggerated seasonal year end effect as well as 5,000,000 to $10,000,000 of negative raw material timing. We will remain intensely focused on what's under our control including improving our free cash flow in the short and long term through continued inventory management, restructuring activities and other actions. Additionally, we continue to believe that there are at least five triggers that could improve the demand environment. First, trade certainty in any form would improve consumer confidence and provide the landscape for new investments.

Second, a continuation of Federal Reserve interest rate cuts which will lower our own interest expense and improve demand for housing and consumer durables third, a resolution of the conflict in Ukraine fourth is a rationalization of higher cost less environmentally sound chemical assets in Asia. And lastly stronger support for the EU chemical industry as outlined in the EU chemical industry action plan. Thank you and now we're happy to take your questions.

Conference Operator: Your first question comes from the line of Alex Kelsey of Wells Fargo. Please go ahead.

Alex Kelsey, Analyst, Wells Fargo: Hey, everybody. Thanks for hosting the call and taking the question. I wanted to start with Slide four on the trade flows. I think one of the dynamics we've seen among another among excuse me, a number of chemicals companies is just structurally higher imports of China products into Western markets that's just structurally depressed pricing and influenced demand. So I'm just curious, is it your view that this is transitory in nature, just getting ahead of tariffs?

Or are you seeing just a structural difference in how China is behaving with regard to your markets?

Frank Bozich, President and CEO, Trinseo: So we yes, thanks for the question. Actually, the we don't know whether it's structural or transitory. It's too early to tell as we said in the prepared comments. But I would tell you that the in our chemistries, the biggest I guess the more problematic dynamics or the countries that are we're seeing the most increase in inflows are actually Taiwan and Korea. And in our chemistries, we believe that those their domestic markets don't support the significant capacity that's been built over the years and where they used to have an outlet to supply China that volume or that surplus capacity is now being redirected to Europe and North America.

And I would point out that at least our analysis would indicate that those are higher cost assets in these chemistries. The other thing I would point out that's problematic from a trade flow standpoint is the use of using imports of resin produced in China and Korea into Mexico that can be compounded relatively lightly compounded locally and then brought into The U. S. Under the USMCA tariff convention tariff free. Now our understanding is from our trade associations and our discussions that this sort of pathway or loophole in USMCA is a goal to be closed by the administration, but it would that would be helpful in our value chains.

And that's where China Chinese products, we see more of the impact of Chinese flow into Mexico.

Alex Kelsey, Analyst, Wells Fargo: Do you have any perspective of like within PMMA and ABS maybe this is a tricky one, but how much of the market TaiwanKoreaChina represents today versus, I don't know, twelve months ago, twenty four months ago, whatever the right time frame might be?

Frank Bozich, President and CEO, Trinseo: Well, I can't precisely answer what share of the market that they represent. But what I would tell you is that the import volumes on for example the percentage increase in imports to for example from into Europe from South Korea in the 2025 was up 18% over prior year. And in Q2, it went up to 26% increase over prior year. The and they are by far the biggest importer of ABS into Europe. In the case of PMMA imports from South Korea were up marginally in the first half into Europe.

But in the case of imports into The U. S, the biggest import increase in the imports sorry, the biggest imports increase in imports came from South Korea and Taiwan for ABS where it was approximately 23% increase, but then Mexican product increased 75%. So that was that pathway that we were talking about. Now I want to point out though that remember we make mass ABS and these are basic generally basic grade or standard grade polymers that are coming in under these conventions that are more broadly used in the less specified or formulated products.

Alex Kelsey, Analyst, Wells Fargo: Got it. Okay. And then on the PMMA comment, the formulated PMMA comment about the commentary about seeing sequential ramp into Q4 was positive. One, has just something changed in that market from a supply or demand dynamic to suggest we're at trough and rising off trough levels? And then within the EM segment, like what percentage of that is formulated PMMA?

So,

Frank Bozich, President and CEO, Trinseo: yes, I think it's too early to we don't know that the market dynamic is changing necessarily. It's too early to tell. And like I said this is a late Q3 early Q4 dynamic that we observed and we're watching it and trying to understand it. We believe that there is an effort on behalf of many of the customers in North America and Europe to derisk their supply chain from a complexity standpoint and also with regard to potential tariffs or trade barriers in North America and Europe. So I guess at this point that's we're watching it.

But it again, was good to see that increase over prior year.

Alex Kelsey, Analyst, Wells Fargo: And then to that second question that I asked, in terms of however you want to define it, like what percentage of revenueEBITDAvolume in EM would you define as formulated?

Frank Bozich, President and CEO, Trinseo: Yes. Wouldn't disclose that specifically. It's a material part of our EM segment and but I we wouldn't share that information generally.

Alex Kelsey, Analyst, Wells Fargo: Okay. And then on Amstai, have one question maybe accounting related, but if the shutdown unplanned maintenance was taken in Q2, I'm curious why there's an impact on Q3 EBITDA? And then more generically, can you just talk about what's being done within the AMPSTA to sort of rightsize that business, just given how underperforming it's been this year?

David Stasi, Executive Vice President and CFO, Trinseo: Alex, this is Dave. So the unplanned outage occurred at the end of the second quarter in June. But when it was related to the production of styrene, so what that forces them, which is obviously upstream to polystyrene. So what they have to do then is go out and buy styrene, obviously, at a cost higher than what they can make it for. And those increase that increased cost of goods sold in this case goes through the P and L in the second in the third quarter, right?

So there's both repair costs that are included in the so the total impact for the year for Amsty was $10,000,000 or excuse me, the total impact to our equity income was 10,000,002 million dollars of it was in June and $8,000,000 of it was in the third quarter. And the composition of that is both the cost of repair, but also the higher cost raw materials from the styrene that they had to buy going through the P and L. Related to the second question about what are we doing to right size it. I mean, look, I don't think we're doing I don't think anything is necessary to right size the business. They've got two styrene units that are very competitively positioned on the global cost curve for styrene.

70% of the styrene they produce, they consume internally in poly styrene downstream and the other 30% goes in the merchant market. But again, they're on the from the left side of the cost curve. So look, I don't think there's anything necessary to do there from a rightsizing perspective. Clearly, styrene is long globally. I mean, it's why we exited our European plants.

So styrene margins are lower, a lot lower than they used to be. But I don't think a necessary step there is going to be any capacity rationalization.

Alex Kelsey, Analyst, Wells Fargo: Okay. That's helpful. And then last one for me. If we like when we were entering 2025 and I understand things have changed, the expectation was flat volumes kind of started us at $200,000,000 ish of EBITDA plus cost saves got us to something closer to 300,000,000 if I'm remembering correctly. I know it's probably early on 2026, but again, it feels like we're lower for longer and maybe troughing.

But if you kind of take some of that same analogy, where the business is forecasted to be at the 2025, like all else equal in like a up 10% volume environment, down 10% flat, any range of outcomes for what we could think about for 2026?

Frank Bozich, President and CEO, Trinseo: So yes, maybe let me tackle the last thing first. So we've said this consistently that at 10% volume increase across the portfolio results in about $100,000,000 of EBITDA. And so again, we're not prepared to talk about we don't have a view on 2026 or prepared to give any guidance for 2026. But I think it might be helpful to go back to how we were as we entered the year how we thought about it and our expectation for significant increase was really in 2025 over 2024 was driven by five factors. One was stable volume.

Number two was the disposition the sale of our polycarbonate assets to Deepak. The also known business wins that we had as well as a more normalized earnings from Amstai as well as the cost savings initiatives that we announced last year. What I would tell you is that we got the known business wins or the incremental business wins in our downstream markets. We delivered the cost savings and we executed on the DPAC sale where we've had a shortfall versus our expectation was on the more normalized earnings from Amstai and then the volume development that occurred what we would attribute to really global tariff uncertainty. So again, I think what's in our control we've done a good job of managing, but that's sort of how this year developed.

Again, too premature it's premature for us to give you guidance for next year.

Conference Operator: There are no further questions at And this with that ladies and gentlemen, concludes today's call. We thank you for participating. You may now disconnect your lines.

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