Trinseo 2025 Q1 Earnings Misses Targets as Net Loss Widens 4.6%

Trinseo (TSE) reported its fiscal 2025 Q1 earnings on May 08th, 2025. Despite a challenging economic climate, Trinseo's Q1 2025 results fell short of expectations with a revenue miss of $785 million against the forecasted $912.5 million, although EPS outperformed projections at -$1.37. The company adjusted its guidance for Q2 2025, indicating a net loss forecast between $61 million and $46 million. Trinseo withdrew its full-year guidance due to macroeconomic uncertainties, focusing solely on the second quarter outlook.

Revenue

In Q1 2025, Trinseo saw a 13.2% decline in total revenue, reaching $784.80 million compared to $904 million in Q1 2024. The Engineered Materials segment recorded $278 million, reflecting a slight decrease from the previous year, while the Latex Binders segment witnessed a sharp decline to $209 million due to reduced paper application volumes in Asia and Europe. Meanwhile, Polymer Solutions faced a significant drop to $298 million as the company intentionally reduced low-margin polystyrene sales.

Earnings/Net Income

Trinseo's financial results showed an increased net loss of $79 million in Q1 2025, up from $75.50 million in Q1 2024. The company posted a loss per share of $2.22, deepening from the $2.14 loss per share in the previous year's first quarter, reflecting a deteriorating EPS performance.

Post Earnings Price Action Review

The strategy of purchasing Trinseo shares post-revenue rise quarter-over-quarter and holding for 30 days yielded a substantial total shareholder return (TSR) of 191% over the past five years, outperforming the share price return of 159%. This indicates that TSR offers a broader perspective on investment performance by encompassing dividends and other corporate actions alongside capital gains. Despite facing a tough environment with declining earnings and revenue over five years, Trinseo showed resilience through operational enhancements. When compared to the S&P 500's return of 94.86% over the same timeframe, Trinseo's performance stands out. Ultimately, the strategy of investing in Trinseo following a revenue increase and holding for 30 days generated strong returns due to the company's internal progress and favorable market sentiment, highlighting the importance of evaluating total shareholder return rather than solely focusing on share price returns.

CEO Commentary

Frank Bozich, President and Chief Executive Officer of Trinseo, remarked that core business results in the first quarter met expectations and showed sequential improvement due to customer destocking and seasonality. He noted that despite ongoing market weaknesses, this marked Trinseo's seventh consecutive quarter of year-over-year Adjusted EBITDA improvement, attributed to proactive management actions taken early in the industry downturn.

Guidance

For the second quarter of 2025, Trinseo expects a net loss ranging from $61 million to $46 million and an Adjusted EBITDA between $55 million and $70 million. The company anticipates approximately breakeven Free Cash Flow, which includes $21 million from polycarbonate technology licensing income collected in the quarter. Due to macroeconomic uncertainty, all previous full-year guidance has been withdrawn.

Additional News

Within the last three weeks, Trinseo has not announced any major mergers or acquisitions nor any significant changes in its executive team. The company has continued to focus on its strategic initiatives and operational improvements amid challenging market conditions. In terms of shareholder returns, there has been no recent announcement regarding dividends or share buyback programs. Trinseo remains committed to navigating the current economic landscape by leveraging its expertise in specialty material solutions to drive long-term growth and sustainability. Investors are keenly watching for any developments in Trinseo's business strategy and market positioning, as the company adapts to ongoing industry challenges.