WYNYARD, UK, Aug. 6, 2019 /PRNewswire/ --
Second Quarter 2019 Highlights
- Net income attributable to Venator of $21 million and adjusted net income attributable
to Venator of $14 million compared to
a net loss attributable to Venator of $3
million and adjusted net income attributable to Venator of
$14 million in the first quarter of
2019
- Adjusted EBITDA of $61 million
compared to $60 million in the first
quarter of 2019
- Diluted earnings per share of $0.20 and adjusted diluted earnings per share of
$0.13
- Net cash used in operating activities was $21 million and free cash flow was a use of
$50 million
- Specialty TiO2 price and volume trends remain stable
globally
- Average TiO2 pricing was flat compared to the first
quarter of 2019 and volumes improved, offset by higher costs
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
March 31,
2019
|
|
June
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
578
|
|
|
$
|
626
|
|
|
$
|
562
|
|
|
$
|
1,140
|
|
|
$
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Venator
|
|
$
|
21
|
|
|
$
|
196
|
|
|
$
|
(3)
|
|
|
$
|
18
|
|
|
$
|
274
|
|
Adjusted net income
attributable to Venator(2)
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
14
|
|
|
$
|
28
|
|
|
$
|
183
|
|
Adjusted
EBITDA(2)
|
|
$
|
61
|
|
|
$
|
157
|
|
|
$
|
60
|
|
|
$
|
121
|
|
|
$
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
$
|
0.20
|
|
|
$
|
1.84
|
|
|
$
|
(0.03)
|
|
|
$
|
0.17
|
|
|
$
|
2.57
|
|
Adjusted diluted
earnings per share(2)
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
$
|
0.13
|
|
|
$
|
0.26
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(21)
|
|
|
$
|
254
|
|
|
$
|
(29)
|
|
|
$
|
(50)
|
|
|
$
|
305
|
|
Free cash
flow(4)
|
|
$
|
(50)
|
|
|
$
|
159
|
|
|
$
|
(82)
|
|
|
$
|
(132)
|
|
|
$
|
144
|
|
See end of press release for footnote explanations
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
second quarter 2019 results with revenues of $578 million, net income attributable to Venator
of $21 million, adjusted net income
attributable to Venator of $14
million and adjusted EBITDA of $61
million.
Simon Turner, President and
CEO of Venator, commented:
"Second quarter performance was largely in-line with our
expectations notwithstanding a difficult global macroeconomic
backdrop. Our Titanium Dioxide business delivered flat sequential
TiO2 pricing as we continued to manage our supply
network and tailor our customer approach to reduce price
volatility. We also benefited from modest demand, augmented by a
solid contribution from our industry leading specialty
TiO2 business.
"The current macroeconomic challenges are poised to persist in
the second half of 2019. We are committed to managing these
headwinds by delivering on our Business Improvement Program and
restoring our specialty TiO2 business which will enhance
our competitiveness throughout the TiO2 cycle."
Segment Analysis for 2Q19 Compared to 2Q18
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $439 million in
the three months ended June 30, 2019, a decrease of
$16 million, or 4%, compared to the
same period in 2018. The decrease was primarily due to a 9% decline
in the average TiO2 selling price and a 4% unfavorable
impact from foreign currency translation partially offset by a 9%
increase in sales volumes. The decrease in the average selling
price was primarily attributable to lower European prices and
softer business conditions in Asia
Pacific. Sales volumes of functional and specialty
TiO2 products increased globally and broadly across
end-use applications due to higher availability of certain products
and increased sales of new products.
Adjusted EBITDA for the Titanium Dioxide segment was
$55 million for the three months
ended June 30, 2019, a decrease of $92
million compared to the same period in 2018, or a decrease
of $69 million after excluding
$23 million of lost earnings
attributable to our Pori, Finland TiO2 manufacturing
facility, which were reimbursed through insurance proceeds in 2018.
The decrease was primarily a result of lower TiO2
margins due to a lower average TiO2 selling price,
higher raw material costs and $6
million from the sale of carbon credits in the prior year
period, partially offset by higher sales volumes and a $3 million benefit from our 2019 Business
Improvement Program.
Performance Additives
The Performance Additives
segment generated $139 million of
revenues in the three months ended June 30, 2019, a decline of
$32 million, or 19%, compared to the
same period in 2018. The decline was primarily due to a 16%
decrease in sales volumes, a 3% unfavorable impact of foreign
currency translation and a 1% decrease in the average selling
price, partially offset by a 1% increase from mix and other. The
decline in sales volumes was attributable to lower construction
activity in North America and
Europe, lower demand for certain
products used in automotive, electronics and plastics applications
and a discontinuation of sales of a product to a Timber Treatment
customer. The average selling price declined due to the composition
of sales within our functional additives and color pigments
businesses.
Adjusted EBITDA in the Performance Additives segment was
$16 million, a decrease of
$7 million for the three months ended
June 30, 2019 compared to the same period in 2018, primarily
due to lower sales volumes and a lower average selling price,
partially offset by lower costs and a $1
million benefit from our 2019 Business Improvement
Program.
Corporate and Other
Corporate and other represents
expenses which are not allocated to our segments. Losses from
Corporate and other were $10 million,
or $3 million lower in the three
months ended June 30, 2019 compared to the same period in
2018, primarily as a result of the timing of corporate costs.
Tax Items
We recorded an income tax benefit of
$9 million for the three months ended
June 30, 2019, compared to an income tax expense of
$45 million for the three months
ended June 30, 2018. Our adjusted
effective tax rate was 35% for the three months ended June
30, 2019.
Our tax expense is significantly affected by the mix of income
and losses in tax jurisdictions in which we operate and valuation
allowances in certain jurisdictions. As a result, in 2019, we
expect to see a higher adjusted effective tax rate of approximately
35% and a cash tax rate of 10 to 15%. We continue to expect our
adjusted effective tax rate will be approximately 15% to 20% in the
long-term and a cash tax rate of 10 to 15%.
Liquidity and Capital Resources
As of June
30, 2019, we had cash and cash equivalents of $50 million compared with $165 million as of December 31, 2018. In the second quarter, we
increased the aggregate principal amount of our asset based
revolving credit facility from $300
million to $350 million. At
the end of the second quarter of 2019, we had in place an asset
based revolving credit facility with an available borrowing
capacity of $257 million. Net debt
was $720 million as of June
30, 2019, compared to $583
million as of December 31,
2018.
In the second quarter of 2019, we spent $31 million of total capital expenditures, of
which $11 million was related to
project wind-down and closure costs at our Pori, Finland
TiO2 manufacturing facility. We continue to expect
capital expenditures, including capital expenditures related to the
specialty TiO2 transfer program, to be approximately
$130 million in 2019.
Earnings Conference Call Information
We will hold a
conference call to discuss our second quarter 2019 results on
Tuesday, August 6, 2019 at 8:00 a.m. ET.
Call-in numbers for
the conference call:
|
U.S.
participants
|
1-833-366-1118
|
International
participants
|
1-412-902-6770
|
(No passcode
required)
|
|
|
|
|
In order to facilitate the registration process, you may use the
following link to pre-register for the conference call. Callers who
pre-register will be given a unique PIN and separate call-in number
to gain immediate access to the call and bypass the live operator.
To pre-register, please go to:
http://dpregister.com/10133097
Webcast Information
The conference call will be
available via webcast and can be accessed from the company's
website at venatorcorp.com/investor-relations.
Replay Information
The conference call will be
available for replay beginning August 6,
2019 and ending August 13,
2019.
Call-in numbers for
the replay:
|
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10133097
|
|
|
|
Upcoming Conferences
During the third quarter of
2019, a member of management is expected to present at the
Jefferies Industrials Conference on August
7, 2019, the Goldman Sachs EMEA Leveraged Finance Conference
on September 3, 2019 and the UBS
Chemicals Conference on September 4,
2019. A webcast of the presentations, if applicable, along
with accompanying materials will be available at
venatorcorp.com/investor-relations.
Table 1 — Results
of Operations
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
578
|
|
|
$
|
626
|
|
|
$
|
1,140
|
|
|
$
|
1,248
|
|
Cost of goods
sold(1)
|
|
511
|
|
|
193
|
|
|
997
|
|
|
647
|
|
Operating
expenses
|
|
45
|
|
|
46
|
|
|
100
|
|
|
97
|
|
Restructuring,
impairment and plant closing and transition costs
|
|
—
|
|
|
136
|
|
|
12
|
|
|
145
|
|
Operating
income
|
|
22
|
|
|
251
|
|
|
31
|
|
|
359
|
|
Interest expense,
net
|
|
(10)
|
|
|
(10)
|
|
|
(21)
|
|
|
(20)
|
|
Other
income
|
|
1
|
|
|
2
|
|
|
2
|
|
|
4
|
|
Income before
income taxes
|
|
13
|
|
|
243
|
|
|
12
|
|
|
343
|
|
Income tax benefit
(expense)
|
|
9
|
|
|
(45)
|
|
|
8
|
|
|
(65)
|
|
Net
income
|
|
22
|
|
|
198
|
|
|
20
|
|
|
278
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(2)
|
|
|
(2)
|
|
|
(4)
|
|
Net income
attributable to Venator
|
|
$
|
21
|
|
|
$
|
196
|
|
|
$
|
18
|
|
|
$
|
274
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$
|
61
|
|
|
$
|
157
|
|
|
$
|
121
|
|
|
$
|
314
|
|
Adjusted net
income(2)
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
28
|
|
|
$
|
183
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.20
|
|
|
$
|
1.84
|
|
|
$
|
0.17
|
|
|
$
|
2.58
|
|
Diluted earnings
per share
|
|
$
|
0.20
|
|
|
$
|
1.84
|
|
|
$
|
0.17
|
|
|
$
|
2.57
|
|
Adjusted earnings
per share(2)
|
|
$
|
0.13
|
|
|
$
|
0.86
|
|
|
$
|
0.26
|
|
|
$
|
1.72
|
|
Adjusted diluted
earnings per share(2)
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
$
|
0.26
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
106.6
|
|
|
106.4
|
|
|
106.5
|
|
|
106.4
|
|
Diluted
shares
|
|
106.6
|
|
|
106.7
|
|
|
106.5
|
|
|
106.8
|
|
See end of press release for footnote explanations
Table 2 — Results
of Operations by Segment
|
|
|
|
Three months
ended
|
|
|
|
Six months
ended
|
|
|
|
|
June
30,
|
|
Favorable
/
|
|
June
30,
|
|
Favorable
/
|
(In millions)
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
439
|
|
|
$
|
455
|
|
|
(4)%
|
|
$
|
864
|
|
|
$
|
911
|
|
|
(5)%
|
Performance
Additives
|
|
139
|
|
|
171
|
|
|
(19)%
|
|
276
|
|
|
337
|
|
|
(18)%
|
Total
|
|
$
|
578
|
|
|
$
|
626
|
|
|
(8)%
|
|
$
|
1,140
|
|
|
$
|
1,248
|
|
|
(9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
55
|
|
|
$
|
147
|
|
|
(63)%
|
|
$
|
116
|
|
|
$
|
290
|
|
|
(60)%
|
Performance
Additives
|
|
16
|
|
|
23
|
|
|
(30)%
|
|
31
|
|
|
47
|
|
|
(34)%
|
Corporate and
other
|
|
(10)
|
|
|
(13)
|
|
|
23%
|
|
(26)
|
|
|
(23)
|
|
|
(13)%
|
Total
|
|
$
|
61
|
|
|
$
|
157
|
|
|
(61)%
|
|
$
|
121
|
|
|
$
|
314
|
|
|
(61)%
|
See end of press release for footnote explanations
Table 3 — Factors
Impacting Sales Revenue
|
|
|
Three months
ended
|
|
June 30, 2019 vs.
2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(9)%
|
|
(4)%
|
|
—%
|
|
9%
|
|
(4)%
|
Performance
Additives
|
(1)%
|
|
(3)%
|
|
1%
|
|
(16)%
|
|
(19)%
|
Total
Company
|
(6)%
|
|
(4)%
|
|
—%
|
|
2%
|
|
(8)%
|
|
|
|
Six months
ended
|
|
June 30, 2019 vs.
2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(7)%
|
|
(4)%
|
|
—%
|
|
6%
|
|
(5)%
|
Performance
Additives
|
(1)%
|
|
(3)%
|
|
1%
|
|
(15)%
|
|
(18)%
|
Total
Company
|
(6)%
|
|
(3)%
|
|
—%
|
|
—%
|
|
(9)%
|
|
|
(a)
|
Excludes revenues
from tolling arrangements, by-products and raw materials
|
(b)
|
Excludes sales
volumes of by-products and raw materials
|
Table 4 —
Reconciliation of U.S. GAAP to Non-GAAP Measures
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(2)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
income
|
|
$
|
22
|
|
|
$
|
198
|
|
|
$
|
22
|
|
|
$
|
198
|
|
|
$
|
0.21
|
|
|
$
|
1.86
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(2)
|
|
|
(1)
|
|
|
(2)
|
|
|
(0.01)
|
|
|
(0.02)
|
|
Net income
attributable to Venator
|
|
21
|
|
|
196
|
|
|
21
|
|
|
196
|
|
|
0.20
|
|
|
1.84
|
|
Interest expense,
net
|
|
10
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(9)
|
|
|
45
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
29
|
|
|
35
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration (adjustments) expenses
|
|
(1)
|
|
|
2
|
|
|
(1)
|
|
|
2
|
|
|
(0.01)
|
|
|
0.02
|
|
Loss on disposal of
businesses/assets
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
Certain legal
settlements and related expenses
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
0.03
|
|
|
0.04
|
|
Net plant incident
costs (credits)
|
|
6
|
|
|
(273)
|
|
|
6
|
|
|
(273)
|
|
|
0.06
|
|
|
(2.56)
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
—
|
|
|
136
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
1.27
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
—
|
|
|
(17)
|
|
|
24
|
|
|
(0.16)
|
|
|
0.22
|
|
Adjusted(2)
|
|
$
|
61
|
|
|
$
|
157
|
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
0.13
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
|
|
$
|
8
|
|
|
$
|
21
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
1
|
|
|
2
|
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
23
|
|
|
$
|
114
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
18
|
%
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(2)
|
|
|
Three months
ended March 31,
|
|
Three months
ended March 31,
|
|
Three months ended
March 31,
|
(In millions, except per share amounts)
|
|
2019
|
|
2019
|
|
2019
|
Net
loss
|
|
$
|
(2)
|
|
|
$
|
(2)
|
|
|
(0.02)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
(1)
|
|
|
(0.01)
|
|
Net loss
attributable to Venator
|
|
(3)
|
|
|
(3)
|
|
|
(0.03)
|
|
Interest expense,
net
|
|
11
|
|
|
|
|
|
Income tax
benefit
|
|
1
|
|
|
|
|
|
Depreciation and
amortization
|
|
26
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
2
|
|
|
2
|
|
|
0.02
|
|
Amortization of
pension and postretirement actuarial losses
|
|
4
|
|
|
4
|
|
|
0.04
|
|
Net plant incident
costs
|
|
7
|
|
|
7
|
|
|
0.07
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
12
|
|
|
12
|
|
|
0.11
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
(8)
|
|
|
(0.08)
|
|
Adjusted(2)
|
|
$
|
60
|
|
|
$
|
14
|
|
|
0.13
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
$
|
9
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
1
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
$
|
24
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
38
|
%
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(2)
|
|
|
Six months
ended
|
|
Six months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
income
|
|
$
|
20
|
|
|
$
|
278
|
|
|
$
|
20
|
|
|
$
|
278
|
|
|
$
|
0.19
|
|
|
$
|
2.60
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
(4)
|
|
|
(2)
|
|
|
(4)
|
|
|
(0.02)
|
|
|
(0.03)
|
|
Net income
attributable to Venator
|
|
18
|
|
|
274
|
|
|
18
|
|
|
274
|
|
|
0.17
|
|
|
2.57
|
|
Interest expense,
net
|
|
21
|
|
|
20
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(8)
|
|
|
65
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
55
|
|
|
69
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
1
|
|
|
4
|
|
|
1
|
|
|
4
|
|
|
0.01
|
|
|
0.04
|
|
Separation expense,
net
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
Loss on disposal of
businesses/assets
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
Certain legal
settlements and related expenses
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Amortization of
pension and postretirement actuarial losses
|
|
8
|
|
|
7
|
|
|
8
|
|
|
7
|
|
|
0.07
|
|
|
0.06
|
|
Net plant incident
costs (credits)
|
|
13
|
|
|
(273)
|
|
|
13
|
|
|
(273)
|
|
|
0.12
|
|
|
(2.56)
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
12
|
|
|
145
|
|
|
12
|
|
|
145
|
|
|
0.11
|
|
|
1.36
|
|
Income tax
adjustments(3)
|
|
—
|
|
|
—
|
|
|
(25)
|
|
|
23
|
|
|
(0.23)
|
|
|
0.21
|
|
Adjusted(2)
|
|
$
|
121
|
|
|
$
|
314
|
|
|
$
|
28
|
|
|
$
|
183
|
|
|
$
|
0.26
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
|
|
$
|
17
|
|
|
$
|
42
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
2
|
|
|
4
|
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
47
|
|
|
$
|
229
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
36
|
%
|
|
18
|
%
|
|
|
|
|
See end of press release for footnote explanations
Table 5 — Selected
Balance Sheet Items
|
|
|
|
June
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
50
|
|
|
$
|
165
|
|
Accounts and notes
receivable, net
|
|
423
|
|
|
351
|
|
Inventories
|
|
508
|
|
|
538
|
|
Prepaid expenses and
other current assets
|
|
75
|
|
|
71
|
|
Property, plant and
equipment, net
|
|
965
|
|
|
994
|
|
Other
assets
|
|
433
|
|
|
366
|
|
Total
assets
|
|
$
|
2,454
|
|
|
$
|
2,485
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
313
|
|
|
$
|
400
|
|
Other current
liabilities
|
|
125
|
|
|
135
|
|
Current portion of
debt
|
|
32
|
|
|
8
|
|
Long-term
debt
|
|
738
|
|
|
740
|
|
Non-current payable
to affiliates
|
|
34
|
|
|
34
|
|
Other non-current
liabilities
|
|
326
|
|
|
313
|
|
Total
equity
|
|
886
|
|
|
855
|
|
Total liabilities
and equity
|
|
$
|
2,454
|
|
|
$
|
2,485
|
|
Table 6 —
Outstanding Debt
|
|
|
June
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Debt:
|
|
|
|
|
Senior
Notes
|
|
$
|
371
|
|
|
$
|
370
|
|
Term Loan
Facility
|
|
363
|
|
|
365
|
|
Other debt
|
|
36
|
|
|
13
|
|
Total debt -
excluding affiliates
|
|
770
|
|
|
748
|
|
Total cash
|
|
50
|
|
|
165
|
|
Net debt -
excluding affiliates
|
|
$
|
720
|
|
|
$
|
583
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
(In millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Total cash at
beginning of period
|
|
$
|
80
|
|
|
$
|
223
|
|
|
$
|
165
|
|
|
$
|
238
|
|
Net cash (used in)
provided by operating activities
|
|
(21)
|
|
|
254
|
|
|
(50)
|
|
|
305
|
|
Net cash used in
investing activities
|
|
(29)
|
|
|
(95)
|
|
|
(82)
|
|
|
(162)
|
|
Net cash provided by
(used in) financing activities
|
|
20
|
|
|
(6)
|
|
|
17
|
|
|
(14)
|
|
Effect of exchange
rate changes on cash
|
|
—
|
|
|
(22)
|
|
|
—
|
|
|
(13)
|
|
Total cash at end
of period
|
|
$
|
50
|
|
|
$
|
354
|
|
|
$
|
50
|
|
|
$
|
354
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(5)
|
|
|
$
|
(6)
|
|
|
$
|
(23)
|
|
|
$
|
(25)
|
|
Cash paid for income
taxes
|
|
(2)
|
|
|
(5)
|
|
|
(3)
|
|
|
(20)
|
|
Capital
expenditures
|
|
(31)
|
|
|
(94)
|
|
|
(83)
|
|
|
(167)
|
|
Depreciation and
amortization
|
|
29
|
|
|
35
|
|
|
55
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(16)
|
|
|
(6)
|
|
|
(77)
|
|
|
(56)
|
|
Inventories
|
|
(5)
|
|
|
(34)
|
|
|
30
|
|
|
(46)
|
|
Accounts
payable
|
|
(22)
|
|
|
(24)
|
|
|
(44)
|
|
|
(17)
|
|
Total cash used in
primary working capital
|
|
$
|
(43)
|
|
|
$
|
(64)
|
|
|
$
|
(91)
|
|
|
$
|
(119)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Free cash
flow(4):
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(21)
|
|
|
$
|
254
|
|
|
$
|
(50)
|
|
|
$
|
305
|
|
Capital
expenditures
|
|
(31)
|
|
|
(94)
|
|
|
(83)
|
|
|
(167)
|
|
Other investing
activities
|
|
2
|
|
|
(1)
|
|
|
1
|
|
|
5
|
|
Non-recurring
separation costs(a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Total free cash
flow
|
|
$
|
(50)
|
|
|
$
|
159
|
|
|
$
|
(132)
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
61
|
|
|
$
|
157
|
|
|
$
|
121
|
|
|
$
|
314
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(20)
|
|
|
(22)
|
|
|
(48)
|
|
|
(42)
|
|
Cash paid for
interest
|
|
(5)
|
|
|
(6)
|
|
|
(23)
|
|
|
(25)
|
|
Cash paid for income
taxes
|
|
(2)
|
|
|
(5)
|
|
|
(3)
|
|
|
(20)
|
|
Primary working
capital change
|
|
(43)
|
|
|
(64)
|
|
|
(91)
|
|
|
(119)
|
|
Restructuring
|
|
(10)
|
|
|
(8)
|
|
|
(17)
|
|
|
(19)
|
|
Maintenance & other
|
|
(14)
|
|
|
(7)
|
|
|
(18)
|
|
|
(21)
|
|
Net cash flows
associated with Pori
|
|
(17)
|
|
|
114
|
|
|
(53)
|
|
|
76
|
|
Total free cash
flow(4)
|
|
$
|
(50)
|
|
|
$
|
159
|
|
|
$
|
(132)
|
|
|
$
|
144
|
|
|
See end of press
release for numbered footnote explanations
|
|
|
(a)
|
Represents payments
associated with our separation from Huntsman
|
Footnotes
(1)
|
Cost of goods sold
for the three month period ended June 30, 2019 increased by $318
million from the same period in the prior year primarily as a
result of the recognition of $325 million of insurance proceeds
which was an offset to cost of goods sold in 2018.
|
|
|
(2)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income/loss before interest income/expense, net,
income tax expense/benefit, depreciation and amortization, and net
income attributable to noncontrolling interests, as well as
eliminating the following adjustments: (a) business
acquisition and integration expenses/adjustments; (b) separation
expense/gain, net; (c) loss/gain on disposition of
business/assets; (d) certain legal settlements and related
expenses/gains; (e) amortization of pension and postretirement
actuarial losses/gains; (f) net plant incident costs/credits;
and (g) restructuring, impairment, and plant closing and
transition costs/credits. We believe that net income is the
performance measure calculated and presented in accordance with
U.S. GAAP that is most directly comparable to adjusted
EBITDA.
We believe adjusted
EBITDA is useful to investors in assessing our ongoing financial
performance and provides improved comparability between periods
through the exclusion of certain items that management believes are
not indicative of our operational profitability and that may
obscure underlying business results and trends. However, this
measure should not be considered in isolation or viewed as a
substitute for net income or other measures of performance
determined in accordance with U.S. GAAP. Moreover, adjusted
EBITDA as used herein is not necessarily comparable to other
similarly titled measures of other companies due to potential
inconsistencies in the methods of calculation. Our management
believes this measure is useful to compare general operating
performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities
analysts, lenders and others in their evaluation of different
companies because it excludes certain items that can vary widely
across different industries or among companies within the same
industry. For example, interest expense can be highly dependent on
a company's capital structure, debt levels and credit ratings.
Therefore, the impact of interest expense on earnings can vary
significantly among companies. In addition, the tax positions of
companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
various jurisdictions in which they operate. As a result, effective
tax rates and tax expense can vary considerably among companies.
Finally, companies employ productive assets of different ages and
utilize different methods of acquiring and depreciating such
assets. This can result in considerable variability in the relative
costs of productive assets and the depreciation and amortization
expense among companies.
Nevertheless, our
management recognizes that there are limitations associated with
the use of adjusted EBITDA in the evaluation of us as compared to
net income. Our management compensates for the limitations of using
adjusted EBITDA by using this measure to supplement U.S. GAAP
results to provide a more complete understanding of the factors and
trends affecting the business rather than U.S. GAAP results
alone.
In addition to the
limitations noted above, adjusted EBITDA excludes items that may be
recurring in nature and should not be disregarded in the evaluation
of performance. However, we believe it is useful to exclude such
items to provide a supplemental analysis of current results and
trends compared to other periods because certain excluded items can
vary significantly depending on specific underlying transactions or
events, and the variability of such items may not relate
specifically to ongoing operating results or trends and certain
excluded items, while potentially recurring in future periods, may
not be indicative of future results.
Adjusted net income
is computed by eliminating the after-tax amounts related to the
following from net income attributable to Venator Materials PLC
ordinary shareholders: (a) business acquisition and integration
expenses/adjustments; (b) separation expense/gain, net; (c)
loss/gain on disposition of business/assets; (d) certain legal
settlements and related expenses/gains; (e) amortization of pension
and postretirement actuarial losses/gains; (f) net plant incident
costs/credits; and (g) restructuring, impairment, and plant closing
and transition costs/credits. Basic adjusted net earnings per share
excludes dilution and is computed by dividing adjusted net income
by the weighted average number of shares outstanding during the
period. Adjusted diluted net earnings per share reflects all
potential dilutive ordinary shares outstanding during the period
increased by the number of additional shares that would have been
outstanding as dilutive securities.
Adjusted net income
(loss) and adjusted net earnings (loss) per share amounts are
presented solely as supplemental information. These measures
exclude similar noncash items as Adjusted EBITDA in order to assist
our investors in comparing our performance from period to period
and as such, bear similar risks as Adjusted EBITDA as documented
above. For that reason, adjusted net income and the related per
share amounts, should not be considered in isolation and should be
considered only to supplement analysis of U.S. GAAP
results.
|
|
|
(3)
|
Prior to the second
quarter of 2019, the income tax impacts, if any, of each adjusting
item represented a ratable allocation of the total difference
between the unadjusted tax expense and the total adjusted tax
expense, computed without consideration of any adjusting items
using a with and without approach.
Beginning in the
three- and six-month periods ended June 30, 2019, income tax
expense is adjusted by the amount of additional tax expense or
benefit that we would accrue if we used non-GAAP results instead of
GAAP results in the calculation of our tax liability, taking into
consideration our tax structure. We use a normalized effective tax
rate of 35%, which reflects the weighted average tax rate
applicable under the various jurisdictions in which we operate.
This non-GAAP tax rate eliminates the effects of non-recurring and
period specific items which are often attributable to restructuring
and acquisition decisions and can vary in size and frequency. This
rate is subject to change over time for various reasons, including
changes in the geographic business mix, valuation allowances, and
changes in statutory tax rates.
We eliminate the
effect of significant changes to income tax valuation allowances
from our presentation of adjusted net income to allow investors to
better compare our ongoing financial performance from period to
period. We do not adjust for insignificant changes in tax valuation
allowances because we do not believe it provides more meaningful
information than is provided under GAAP. We believe that our
revised approach enables a clearer understanding of the long term
impact of our tax structure on post tax earnings.
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(4)
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Management internally
uses a free cash flow measure: (a) to evaluate the Company's
liquidity, (b) to evaluate strategic investments, (c) to
evaluate the Company's ability to incur and service debt. Free cash
flow is not a defined term under U.S. GAAP, and it should not be
inferred that the entire free cash flow amount is available for
discretionary expenditures. The Company defines free cash flow as
cash flows provided by (used in) operating activities from
continuing operations and used in investing activities. Free cash
flow is typically derived directly from the Company's consolidated
and combined statement of cash flows; however, it may be adjusted
for items that affect comparability between periods. Free cash flow
is presented as supplemental information.
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About Venator
Venator is a global manufacturer and
marketer of chemical products that comprise a broad range of
pigments and additives that bring color and vibrancy to buildings,
protect and extend product life, and reduce energy consumption. We
market our products globally to a diversified group of industrial
customers through two segments: Titanium Dioxide, which consists of
our TiO2 business, and Performance Additives, which
consists of our functional additives, color pigments, timber
treatment and water treatment businesses. We operate 24 facilities,
employ approximately 4,300 associates worldwide and sell our
products in more than 110 countries.
Social Media:
Twitter:
www.twitter.com/VenatorCorp
Facebook: www.facebook.com/venatorcorp
LinkedIn: www.linkedin.com/company/venator-corp
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press release constitute
"forward looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These forward looking
statements represent Venator's expectations or beliefs concerning
future events, and it is possible that the expected results
described in this press release will not be achieved. These forward
looking statements are subject to risks, uncertainties and other
factors, many of which are outside of Venator's control, that could
cause actual results to differ materially from the results
discussed in the forward looking statements, including global
economic conditions, our ability to transfer technology and
manufacturing capacity from our Pori, Finland manufacturing facility to other sites
in our manufacturing network, the costs associated with such
transfer and the closure of our Pori facility, our ability to
realize financial and operational benefits from our business
improvement plans and initiatives, impacts on TiO2
markets and the broader global economy from the imposition of
tariffs by the U.S. and other countries, changes in raw material
and energy prices, access to capital markets, industry production
capacity and operating rates, the supply demand balance for our
products and that of competing products, pricing pressures,
technological developments, legal claims against us, changes in
government regulations, geopolitical events and cyberattacks.
Any forward looking statement speaks only as of the date on
which it is made, and, except as required by law, Venator does not
undertake any obligation to update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for Venator to predict all such factors. When considering
these forward looking statements, you should keep in mind the risk
factors and other cautionary statements in Venator's Annual Report
on Form 10-K for the year ended December 31,
2018 filed with the SEC, and in its Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. The risk factors and
other factors noted therein could cause its actual results to
differ materially from those contained in any forward looking
statement.
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SOURCE Venator Materials PLC