Trinseo PLC TSE has announced significant restructuring initiatives that will position the company for long-term growth. These initiatives will improve Trinseo's profitability and increase cash generation.
Trinseo’s Structural Changes
The company is consolidating its Engineered Materials, Plastics Solutions and Polystyrene businesses beginning Oct. 1, 2024. This move will minimize the workforce by consolidating management positions and support roles. Francesca Reverberi, senior vice president of engineered materials , will lead the newly consolidated businesses.
The company expects the restructuring to be substantially complete by the end of 2025.
Trinseo also announced that it would discontinue virgin polycarbonate production at its Stade, Germany facility by January 2025. The company will then purchase polycarbonate from external vendors, resulting in a yearly run rate profitability improvement of $15-20 million.
Financial Impacts of Restructuring on TSE
Trinseo anticipates saving $30 million annually by consolidating the business, with $25 million realized in 2025 and the full benefits by 2026.
However, the restructuring will lead to one-time costs of $23-28 million, comprising $22-26 million in severance packages, and $1-2 million in asset and contract termination fees, mainly related to the Stade, Germany polycarbonate facility.
Trinseo Q2 Top Line Dips Y/Y
The company reported a loss of $1.46 per share in the second quarter of, wider than the Zacks Consensus Estimate of a loss of $1.09. It reported a loss of $1.92 per share a year ago.
The company posted revenues of $920 million for the quarter ended June 2024, missing the Zacks Consensus Estimate of $958 million. The top line fell 4% year over year.
TSE’s Shares Underperform Industry
Shares of Trinseo have lost 37.5% in the past year compared with the industry's fall of 10.5%.
Image Source: Zacks Investment Research
Trinseo’s Zacks Rank & Stocks to Consider
TSE currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Crane Company CR, Flowserve Corporation FLS and RBC Bearings Incorporated RBC. These three companies have a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crane’s 2024 earnings is pegged at $5.07 per share. The consensus estimate for 2024 earnings has moved north by 6% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 11.2%. CR shares have gained 75.2% in a year.
Flowserve has an average trailing four-quarter earnings surprise of 18.2%. The Zacks Consensus Estimate for FLS’s 2024 earnings is pinned at $2.76 per share, which indicates year-over-year growth of 31.6%. The consensus estimate for 2024 earnings has moved north by 4% in the past 60 days. The company’s shares have gained 27.5% in a year.
The Zacks Consensus Estimate for RBC Bearings’ fiscal 2025 earnings is pegged at $9.71 per share. The consensus estimate for 2025 earnings has moved north by 1.4% in the past 60 days. The company has a trailing four-quarter average earnings surprise of 4.7%. RBC shares have gained 27.2% in a year.
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