WYNYARD, UK, Nov. 6, 2019 /PRNewswire/ --
Third Quarter 2019 Highlights
- Net loss attributable to Venator of $19
million and adjusted net income attributable to Venator of
$8 million
- Adjusted EBITDA of $50 million
which includes an $8 million
nonrecurring benefit; diluted loss per share of $0.18 and adjusted diluted earnings per share of
$0.08
- Average TiO2 pricing was stable compared to the
second quarter of 2019; volumes declined in-line with normal
seasonality
- Our Business Improvement Program provided an incremental
adjusted EBITDA benefit of $8 million
in the third quarter or $15 million
year-to-date
- Net cash provided by operating activities was $14 million and free cash flow was a use of
$5 million and does not include a
$15 million benefit from monetizing
cross-currency interest rate swaps
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
June
30,
2019
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
526
|
|
$
|
533
|
|
$
|
578
|
|
$
|
1,666
|
|
$
|
1,781
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Venator(a)
|
|
$
|
(19)
|
|
$
|
(368)
|
|
$
|
21
|
|
$
|
(1)
|
|
$
|
(94)
|
Adjusted net income
attributable to Venator(2)(a)
|
|
$
|
8
|
|
$
|
34
|
|
$
|
14
|
|
$
|
36
|
|
$
|
216
|
Adjusted
EBITDA(2)(a)
|
|
$
|
50
|
|
$
|
77
|
|
$
|
61
|
|
$
|
171
|
|
$
|
391
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share(a)
|
|
$
|
(0.18)
|
|
$
|
(3.46)
|
|
$
|
0.20
|
|
$
|
(0.01)
|
|
$
|
(0.88)
|
Adjusted diluted
earnings per share(2)(a)
|
|
$
|
0.08
|
|
$
|
0.32
|
|
$
|
0.13
|
|
$
|
0.34
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
14
|
|
$
|
1
|
|
$
|
(21)
|
|
$
|
(36)
|
|
$
|
306
|
Free cash
flow(4)(b)
|
|
$
|
(5)
|
|
$
|
(103)
|
|
$
|
(50)
|
|
$
|
(137)
|
|
$
|
41
|
|
|
(a)
|
Includes an $8
million nonrecurring benefit in the three and nine months ended
September 30, 2019, due to a change in plant utilization rates,
which increased our overhead absorption and corresponding inventory
valuation at certain facilities
|
(b)
|
Does not include a
$15 million benefit from monetizing cross-currency interest rate
swaps in the three and nine months ended September 30,
2019
|
See end of press release for numbered footnote
explanations
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
third quarter 2019 results with revenues of $526 million, net loss attributable to Venator of
$19 million, adjusted net income
attributable to Venator of $8 million
and adjusted EBITDA of $50
million.
Simon Turner, President and
CEO of Venator, commented:
"Notwithstanding macroeconomic challenges, we generated
$50 million of adjusted EBITDA in the
third quarter of 2019. Our Titanium Dioxide business delivered
stable sequential TiO2 pricing, consistent with our
tailored approach to individual customer requirements, which
reduces overall price volatility.
"We remain on track with our strategic initiatives. We have
accelerated savings from our Business Improvement Program and
generated $15 million of adjusted
EBITDA benefit year-to-date. We have also made substantial progress
on the phased transfer of our specialty TiO2 products,
which will enhance our leading position in these high value
applications.
"Following a comprehensive review of our color pigments
business, we identified meaningful self-help measures that should
improve the annual EBITDA of the business by approximately
$10 million, for a similar amount of
investment. We also have received inquiries from third parties
expressing interest in purchasing this business. In order to
maximize value for our shareholders, we have retained Citi as a
financial advisor to assist us in exploring a potential sale."
Segment Analysis for 3Q19 Compared to 3Q18
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $396 million in
the three months ended September 30,
2019, an increase of $7
million, or 2%, compared to the same period in 2018. The
increase was primarily due to a 12% increase in sales volumes,
partially offset by a 7% decline in the average TiO2
selling price, a 2% unfavorable impact from foreign currency
translation and a 1% unfavorable impact due to mix and other. Sales
volumes increased compared to the prior year quarter as a result of
higher sales of new products, increased product availability at
certain manufacturing sites and increased demand. The decline in
the average TiO2 selling price was primarily
attributable to lower global average functional TiO2
prices with regional variations.
Adjusted EBITDA for the Titanium Dioxide segment was
$51 million for the three months
ended September 30, 2019, a decrease
of $24 million compared to the same
period in 2018. The decline was primarily as a result of lower
TiO2 margins driven by a lower average TiO2
selling price, higher raw material costs and unfavorable fixed cost
absorption related to planned maintenance. This was partially
offset by higher TiO2 sales volumes and a $5 million benefit from our 2019 Business
Improvement Program. In the third quarter of 2019, we had a
$6 million nonrecurring benefit due
to a change in plant utilization rates, which increased our
overhead absorption and corresponding inventory valuation at
certain facilities.
Performance Additives
The Performance Additives
segment generated $130 million of
revenues in the three months ended September
30, 2019, a decline of $14
million, or 10%, compared to the same period in 2018. The
decline was primarily due to an 8% decrease in sales volumes, a 2%
unfavorable impact of foreign currency translation and a 2%
unfavorable impact of mix and other, partially offset by a 2%
increase in the average selling price. The decline in volumes was
primarily attributable to lower sales into construction-related
applications, softer demand in coatings and plastics, principally
related to automotive and electronics end-use applications and a
discontinuation of sales of a product to a timber treatment
customer. The average selling price increased due to the mix of
sales within our functional additives, timber treatment and color
pigments businesses.
Adjusted EBITDA in the Performance Additives segment was
$13 million, an increase of
$1 million for the three months ended
September 30, 2019 compared to the
same period in 2018. A higher average selling price, lower overhead
costs and a $2 million benefit from
our 2019 Business Improvement Program was offset by lower sales
volumes. In the third quarter of 2019, we had a $2 million nonrecurring benefit due to a change
in plant utilization rates, which increased our overhead absorption
and corresponding inventory valuation at certain facilities.
Corporate and Other
Corporate and Other represents
expenses which are not allocated to our segments. Losses from
Corporate and Other were $14 million,
or $4 million higher in the three
months ended September 30, 2019
compared to the same period in 2018. This was primarily as a result
of the unfavorable impact of foreign currency translation,
partially offset by a $1 million
benefit from our 2019 Business Improvement Program.
Tax Items
We recorded an income tax expense of
$8 million for the three months ended
September 30, 2019, compared to an income tax benefit of
$55 million for the three months
ended September 30, 2018. Our adjusted effective tax rate was
35% for the three months ended September 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 an adjusted effective tax rate of approximately 35%.
We continue to expect our adjusted effective tax rate in the
long-term will be approximately 15% to 20% with a cash tax rate of
10% to 15%.
Liquidity and Capital Resources
As of September
30, 2019, we had cash and cash equivalents of $40 million compared with $165 million as of December 31, 2018. In August 2019, we monetized three cross-currency
interest rate swaps entered into in 2017, resulting in cash
proceeds of approximately $15
million. We concurrently entered into three new
cross-currency interest rate swaps which are expected to provide
annual interest savings of approximately $4
million, or approximately $20
million by maturity in July
2024 compared to an unhedged position on our fixed rate U.S.
Dollar intercompany loan. As of September 30, 2019, we had in
place an asset-based revolving credit facility with an available
borrowing capacity of $285 million. Net debt was $713 million as of September 30, 2019,
compared to $583 million as of
December 31, 2018.
In the three months ended September 30,
2019, we spent $27 million of
total capital expenditures, of which $2 million was related to
project wind-down and closure costs at our Pori, Finland
TiO2 manufacturing facility ("Pori site capital
expenditures"). In the nine months ended September 30, 2019, we have spent $110 million of total capital expenditures, of
which $37 million was related to Pori site capital
expenditures. In 2019, we expect to spend approximately
$155 million in total capital
expenditures including approximately $40
million related to Pori site capital expenditures. Thus, we
have reduced our 2019 total expected capital expenditures,
excluding Pori site capital expenditures, to $115 million.
Earnings Conference Call Information
We will hold a
conference call to discuss our third quarter 2019 results on
Wednesday, November 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/10135620
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 November 6,
2019 and ending November 13,
2019.
Call-in numbers for
the replay:
|
U.S.
participants
|
1-877-344-7529
|
International
participants
|
1-412-317-0088
|
Passcode
|
10135620
|
Upcoming Conferences
During the fourth quarter of
2019, a member of management is expected to present at the 2019
Bank of America Merrill Lynch Leveraged Finance Conference on
December 3, 2019 and Citi's 2019
Basic Materials Conference on December 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
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
526
|
|
$
|
533
|
|
$
|
1,666
|
|
$
|
1,781
|
Cost of goods
sold(1)
|
|
464
|
|
463
|
|
1,461
|
|
1,110
|
Operating
expenses
|
|
50
|
|
57
|
|
150
|
|
154
|
Restructuring,
impairment and plant closing and transition costs
|
|
12
|
|
428
|
|
24
|
|
573
|
Operating
income
|
|
—
|
|
(415)
|
|
31
|
|
(56)
|
Interest expense,
net
|
|
(10)
|
|
(10)
|
|
(31)
|
|
(30)
|
Other
income
|
|
1
|
|
4
|
|
3
|
|
8
|
Income before
income taxes
|
|
(9)
|
|
(421)
|
|
3
|
|
(78)
|
Income tax (expense)
benefit
|
|
(8)
|
|
55
|
|
—
|
|
(10)
|
Net (loss)
income
|
|
(17)
|
|
(366)
|
|
3
|
|
(88)
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
(2)
|
|
(4)
|
|
(6)
|
Net loss
attributable to Venator
|
|
$
|
(19)
|
|
$
|
(368)
|
|
$
|
(1)
|
|
$
|
(94)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$
|
50
|
|
$
|
77
|
|
$
|
171
|
|
$
|
391
|
Adjusted net
income(2)
|
|
$
|
8
|
|
$
|
34
|
|
$
|
36
|
|
$
|
216
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
|
$
|
(0.18)
|
|
$
|
(3.46)
|
|
$
|
(0.01)
|
|
$
|
(0.88)
|
Diluted loss per
share
|
|
$
|
(0.18)
|
|
$
|
(3.46)
|
|
$
|
(0.01)
|
|
$
|
(0.88)
|
Adjusted earnings
per share(2)
|
|
$
|
0.08
|
|
$
|
0.32
|
|
$
|
0.34
|
|
$
|
2.03
|
Adjusted diluted
earnings per share(2)
|
|
$
|
0.08
|
|
$
|
0.32
|
|
$
|
0.34
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
Favorable
/
|
|
September
30,
|
|
Favorable
/
|
(In millions)
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
396
|
|
$
|
389
|
|
2%
|
|
$
|
1,260
|
|
$
|
1,300
|
|
(3)%
|
Performance
Additives
|
|
130
|
|
144
|
|
(10)%
|
|
406
|
|
481
|
|
(16)%
|
Total
|
|
$
|
526
|
|
$
|
533
|
|
(1)%
|
|
$
|
1,666
|
|
$
|
1,781
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
51
|
|
$
|
75
|
|
(32)%
|
|
$
|
167
|
|
$
|
365
|
|
(54)%
|
Performance
Additives
|
|
13
|
|
12
|
|
8%
|
|
44
|
|
59
|
|
(25)%
|
Corporate and
other
|
|
(14)
|
|
(10)
|
|
(40)%
|
|
(40)
|
|
(33)
|
|
(21)%
|
Total
|
|
$
|
50
|
|
$
|
77
|
|
(35)%
|
|
$
|
171
|
|
$
|
391
|
|
(56)%
|
See end of press release for footnote explanations
Table 3 — Factors
Impacting Sales Revenue
|
|
|
|
Three months
ended
|
|
September 30, 2019
vs. 2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(7)%
|
|
(2)%
|
|
(1)%
|
|
12%
|
|
2%
|
Performance
Additives
|
2%
|
|
(2)%
|
|
(2)%
|
|
(8)%
|
|
(10)%
|
Total
Company
|
(4)%
|
|
(2)%
|
|
(1)%
|
|
6%
|
|
(1)%
|
|
|
|
Nine months
ended
|
|
September 30, 2019
vs. 2018
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(7)%
|
|
(4)%
|
|
—%
|
|
8%
|
|
(3)%
|
Performance
Additives
|
—%
|
|
(2)%
|
|
—%
|
|
(14)%
|
|
(16)%
|
Total
Company
|
(5)%
|
|
(3)%
|
|
—%
|
|
2%
|
|
(6)%
|
|
|
(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
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
loss
|
|
$
|
(17)
|
|
$
|
(366)
|
|
$
|
(17)
|
|
$
|
(366)
|
|
$
|
(0.16)
|
|
$
|
(3.43)
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(0.02)
|
|
(0.02)
|
Net loss
attributable to Venator
|
|
(19)
|
|
(368)
|
|
(19)
|
|
(368)
|
|
(0.18)
|
|
(3.45)
|
Interest expense,
net
|
|
10
|
|
10
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
8
|
|
(55)
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
27
|
|
33
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
2
|
|
5
|
|
2
|
|
5
|
|
0.02
|
|
0.05
|
Loss on disposal of
businesses/assets
|
|
1
|
|
—
|
|
1
|
|
—
|
|
0.01
|
|
—
|
Certain legal
settlements and related expenses
|
|
2
|
|
—
|
|
2
|
|
—
|
|
0.02
|
|
—
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
3
|
|
3
|
|
3
|
|
0.03
|
|
0.03
|
Net plant incident
costs
|
|
4
|
|
21
|
|
4
|
|
21
|
|
0.04
|
|
0.20
|
Restructuring,
impairment, plant closing and transition costs
|
|
12
|
|
428
|
|
12
|
|
428
|
|
0.11
|
|
4.01
|
Income tax
adjustments(3)
|
|
—
|
|
—
|
|
3
|
|
(55)
|
|
0.03
|
|
(0.52)
|
Adjusted(2)
|
|
$
|
50
|
|
$
|
77
|
|
$
|
8
|
|
$
|
34
|
|
$
|
0.08
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
|
|
$
|
5
|
|
$
|
—
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
2
|
|
2
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
15
|
|
$
|
36
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(2)
|
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2019
|
|
2019
|
Net
income
|
|
$
|
22
|
|
$
|
22
|
|
|
$
|
0.21
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
(1)
|
|
|
(0.01)
|
Net income
attributable to Venator
|
|
21
|
|
21
|
|
|
0.20
|
Interest expense,
net
|
|
10
|
|
|
|
|
|
Income tax
benefit
|
|
(9)
|
|
|
|
|
|
Depreciation and
amortization
|
|
29
|
|
|
|
|
|
Business acquisition
and integration adjustments
|
|
(1)
|
|
(1)
|
|
|
(0.01)
|
Certain legal
settlements and related expenses
|
|
1
|
|
1
|
|
|
0.01
|
Amortization of
pension and postretirement actuarial losses
|
|
4
|
|
4
|
|
|
0.03
|
Net plant incident
costs
|
|
6
|
|
6
|
|
|
0.06
|
Income tax
adjustments(3)
|
|
—
|
|
(17)
|
|
|
(0.16)
|
Adjusted(2)
|
|
$
|
61
|
|
$
|
14
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
$
|
8
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
1
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
$
|
23
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(2)
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
(loss)
|
|
$
|
3
|
|
$
|
(88)
|
|
$
|
3
|
|
$
|
(88)
|
|
$
|
0.03
|
|
$
|
(0.82)
|
Net income
attributable to noncontrolling interests
|
|
(4)
|
|
(6)
|
|
(4)
|
|
(6)
|
|
(0.04)
|
|
(0.06)
|
Net loss
attributable to Venator
|
|
(1)
|
|
(94)
|
|
(1)
|
|
(94)
|
|
(0.01)
|
|
(0.88)
|
Interest expense,
net
|
|
31
|
|
30
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
—
|
|
10
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
82
|
|
102
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
3
|
|
9
|
|
3
|
|
9
|
|
0.03
|
|
0.08
|
Separation expense,
net
|
|
—
|
|
1
|
|
—
|
|
1
|
|
—
|
|
0.01
|
Loss on disposal of
businesses/assets
|
|
1
|
|
2
|
|
1
|
|
2
|
|
0.01
|
|
0.02
|
Certain legal
settlements and related expenses
|
|
3
|
|
—
|
|
3
|
|
—
|
|
0.03
|
|
—
|
Amortization of
pension and postretirement actuarial losses
|
|
11
|
|
10
|
|
11
|
|
10
|
|
0.10
|
|
0.09
|
Net plant incident
costs (credits)
|
|
17
|
|
(252)
|
|
17
|
|
(252)
|
|
0.16
|
|
(2.36)
|
Restructuring,
impairment, plant closing and transition costs
|
|
24
|
|
573
|
|
24
|
|
573
|
|
0.23
|
|
5.37
|
Income tax
adjustments(3)
|
|
—
|
|
—
|
|
(22)
|
|
(33)
|
|
(0.21)
|
|
(0.31)
|
Adjusted(2)
|
|
$
|
171
|
|
$
|
391
|
|
$
|
36
|
|
$
|
216
|
|
$
|
0.34
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(3)
|
|
|
|
|
|
$
|
22
|
|
$
|
43
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
4
|
|
6
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
|
62
|
|
$
|
265
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See end of press release for footnote explanations
Table 5 — Selected
Balance Sheet Items
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
40
|
|
$
|
165
|
Accounts and notes
receivable, net
|
|
366
|
|
351
|
Inventories
|
|
496
|
|
538
|
Prepaid expenses and
other current assets
|
|
88
|
|
71
|
Property, plant and
equipment, net
|
|
936
|
|
994
|
Other
assets
|
|
404
|
|
366
|
Total
assets
|
|
$
|
2,330
|
|
$
|
2,485
|
|
|
|
|
|
Accounts
payable
|
|
$
|
287
|
|
$
|
400
|
Other current
liabilities
|
|
116
|
|
135
|
Current portion of
debt
|
|
16
|
|
8
|
Long-term
debt
|
|
737
|
|
740
|
Non-current payable
to affiliates
|
|
34
|
|
34
|
Other non-current
liabilities
|
|
295
|
|
313
|
Total
equity
|
|
845
|
|
855
|
Total liabilities
and equity
|
|
$
|
2,330
|
|
$
|
2,485
|
Table 6 —
Outstanding Debt
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2019
|
|
2018
|
Debt:
|
|
|
|
|
Senior
Notes
|
|
$
|
371
|
|
$
|
370
|
Term Loan
Facility
|
|
362
|
|
365
|
Other debt
|
|
20
|
|
13
|
Total debt -
excluding affiliates
|
|
753
|
|
748
|
Total cash
|
|
40
|
|
165
|
Net debt -
excluding affiliates
|
|
$
|
713
|
|
$
|
583
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Total cash at
beginning of period
|
|
$
|
50
|
|
$
|
354
|
|
$
|
165
|
|
$
|
238
|
Net cash provided by
(used in) operating activities
|
|
14
|
|
1
|
|
(36)
|
|
306
|
Net cash used in
investing activities
|
|
(19)
|
|
(104)
|
|
(101)
|
|
(266)
|
Net cash (used in)
provided by financing activities
|
|
(4)
|
|
(3)
|
|
13
|
|
(17)
|
Effect of exchange
rate changes on cash
|
|
(1)
|
|
3
|
|
(1)
|
|
(10)
|
Total cash at end
of period
|
|
$
|
40
|
|
$
|
251
|
|
$
|
40
|
|
$
|
251
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(18)
|
|
$
|
(16)
|
|
$
|
(41)
|
|
$
|
(41)
|
Cash paid for income
taxes
|
|
(1)
|
|
(8)
|
|
(4)
|
|
(28)
|
Capital
expenditures
|
|
(27)
|
|
(105)
|
|
(110)
|
|
(272)
|
Depreciation and
amortization
|
|
27
|
|
33
|
|
82
|
|
102
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
49
|
|
42
|
|
(28)
|
|
(14)
|
Inventories
|
|
(3)
|
|
(21)
|
|
27
|
|
(67)
|
Accounts
payable
|
|
(28)
|
|
(1)
|
|
(72)
|
|
(18)
|
Total cash provided
by (used in) primary working capital
|
|
$
|
18
|
|
$
|
20
|
|
$
|
(73)
|
|
$
|
(99)
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Free cash
flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
14
|
|
$
|
1
|
|
$
|
(36)
|
|
$
|
306
|
Capital
expenditures
|
|
(27)
|
|
(105)
|
|
(110)
|
|
(272)
|
Other investing
activities
|
|
8
|
|
1
|
|
9
|
|
6
|
Non-recurring
separation costs(a)
|
|
—
|
|
—
|
|
—
|
|
1
|
Total free cash
flow(4)(b)
|
|
$
|
(5)
|
|
$
|
(103)
|
|
$
|
(137)
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
$
|
50
|
|
$
|
77
|
|
$
|
171
|
|
$
|
391
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(25)
|
|
(30)
|
|
(73)
|
|
(72)
|
Cash paid for
interest
|
|
(18)
|
|
(16)
|
|
(41)
|
|
(41)
|
Cash paid for income
taxes
|
|
(1)
|
|
(8)
|
|
(4)
|
|
(28)
|
Primary working
capital change
|
|
18
|
|
20
|
|
(73)
|
|
(99)
|
Restructuring
|
|
(5)
|
|
(11)
|
|
(22)
|
|
(29)
|
Maintenance & other
|
|
(22)
|
|
(38)
|
|
(40)
|
|
(60)
|
Net cash flows
associated with Pori
|
|
(2)
|
|
(97)
|
|
(55)
|
|
(21)
|
Total free cash
flow(4)(b)
|
|
$
|
(5)
|
|
$
|
(103)
|
|
$
|
(137)
|
|
$
|
41
|
|
See end of press
release for numbered footnote explanations
|
|
(a)
|
Represents payments
associated with our separation from Huntsman
|
(b)
|
Does not include a
$15 million benefit from monetizing cross-currency interest rate
swaps in the three and nine months ended September 30,
2019
|
Footnotes
(1)
|
Cost of goods sold
for the nine month period ended September 30, 2019 increased by
$351 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.
|
|
|
(4)
|
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.
|
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.
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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 by or against us, changes
in government regulations, including in connection with the
classification of TiO2 as a carcinogen, 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