Quarterly Report (10-q)

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36473

Trinseo PLC

(Exact name of registrant as specified in its charter)

Ireland

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

440 East Swedesford Road

Suite 301

Wayne, PA 19087

(Address of Principal Executive Offices)

(610) 240-3200

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	☒	Accelerated filer	◻

Non-accelerated filer	◻	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Ordinary Shares, par value $0.01 per share	TSE	New York Stock Exchange

As of October 28, 2022, there were 34,973,747 of the registrant’s ordinary shares outstanding.

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TABLE OF CONTENTS

`
		Page

Part I	Financial Information

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (Unaudited)	4

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	6

	Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	9

	Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48

Item 4.	Controls and Procedures	48

Part II	Other Information

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	51

Exhibit Index

Signatures

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Trinseo PLC

Quarterly Report on Form 10-Q

For the quarterly period ended September 30, 2022

Unless otherwise indicated or required by context, as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the term “Trinseo” refers to Trinseo PLC (NYSE: TSE), a public limited company existing under the laws of Ireland, and not its subsidiaries. The terms “Company,” “we,” “us” and “our” refer to Trinseo and its consolidated subsidiaries, taken as a consolidated entity. Trinseo PLC is the surviving entity of a cross-border merger with our predecessor company, Trinseo S.A., which merger was approved by shareholders in June 2021 and completed in October 2021. All financial data provided in this Quarterly Report is the financial data of Trinseo PLC, unless otherwise indicated. Prior to the formation of the Company, our business was wholly owned by The Dow Chemical Company (together with other affiliates, “Dow”). The Company may distribute cash to shareholders under Irish law via dividends or distributions made out of distributable profits.

Definitions of capitalized terms not defined herein appear within our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022.

Cautionary Note on Forward-Looking Statements

This Quarterly Report contains, without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. Forward-looking statements may be identified by the use of words like “expect,” “anticipate,” “believe,” “intend,” “forecast,” ”estimate,” “see,” “outlook,” “will,” “may,” “might,” “potential,” “likely,” “target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would,” or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.

Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements. Factors that might cause such a difference include, but are not limited to, our ability to successfully execute our transformation strategy and business strategy; our ability to integrate acquired businesses; global supply chain volatility, increased costs or disruption in the supply of raw materials; increased energy costs or costs for transportation of our products; the outcome of the European Commission request for information; the nature of investment opportunities presented to the Company from time to time; and those discussed in our Annual Report filed with the SEC on February 23, 2022 under Part I, Item IA— “Risk Factors,” within this Quarterly Report and in other filings and furnishings made by the Company with the SEC from time to time.

As a result of these or other factors, our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on these forward-looking statements. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge through the Investor Relations section of our website, www.trinseo.com, as soon as reasonably practicable after the reports are electronically filed or furnished with the SEC. We provide this website and information contained in or connected to it for informational purposes only. That information is not a part of this Quarterly Report.

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

TRINSEO PLC

Condensed Consolidated Balance Sheets

(In millions, except per share data)

(Unaudited)


	September 30,		December 31,
	2022		2021
Assets
Current assets
Cash and cash equivalents	$	242.8	$	573.0
Accounts receivable, net of allowance for doubtful accounts (September 30, 2022: $6.0; December 31, 2021: $4.1)		673.7		740.2
Inventories		614.0		621.0
Other current assets		40.5		44.3
Total current assets		1,571.0		1,978.5
Investments in unconsolidated affiliates		269.2		247.8
Property, plant and equipment, net of accumulated depreciation (September 30, 2022: $579.3; December 31, 2021: $556.5)		638.3		719.0
Other assets
Goodwill		691.9		710.1
Other intangible assets, net		764.7		823.8
Right-of-use assets - operating, net		74.8		85.3
Deferred income tax assets		62.6		77.6
Deferred charges and other assets		59.4		70.1
Total other assets		1,653.4		1,766.9
Total assets	$	4,131.9	$	4,712.2
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings and current portion of long-term debt	$	16.7	$	18.5
Accounts payable		442.2		590.3
Current lease liabilities - operating		17.9		18.4
Income taxes payable		25.4		52.1
Accrued expenses and other current liabilities		215.4		235.1
Total current liabilities		717.6		914.4
Noncurrent liabilities
Long-term debt, net of unamortized deferred financing fees		2,297.8		2,305.6
Noncurrent lease liabilities - operating		59.3		69.2
Deferred income tax liabilities		91.5		103.2
Other noncurrent obligations		267.6		306.7
Total noncurrent liabilities		2,716.2		2,784.7
Commitments and contingencies (Note 13)
Shareholders’ equity
Ordinary shares, $0.01 nominal value, 4,000.0 shares authorized (September 30, 2022: 39.2 shares issued and 35.1 shares outstanding; December 31, 2021: 38.9 shares issued and 37.9 shares outstanding)		0.4		0.4
Preferred shares, €0.01 nominal value, 1,000.0 shares authorized (no shares issued or outstanding)		—		—
Deferred ordinary shares, €1.00 nominal value, 0.025 shares authorized (September 30, 2022: 0.025 shares issued and outstanding; December 31, 2021: 0.025 shares issued and outstanding)		—		—
Additional paid-in-capital		483.7		468.1
Treasury shares, at cost (September 30, 2022: 4.1 shares; December 31, 2021: 1.0 shares)		(200.0)		(50.0)
Retained earnings		641.0		741.8
Accumulated other comprehensive loss		(227.0)		(147.2)
Total shareholders’ equity		698.1		1,013.1
Total liabilities and shareholders’ equity	$	4,131.9	$	4,712.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO PLC

Condensed Consolidated Statements of Operations

(In millions, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net sales	$	1,178.1	$	1,269.3	$	3,990.3	$	3,529.0
Cost of sales		1,217.6		1,101.0		3,714.8		2,951.7
Gross profit (loss)		(39.5)		168.3		275.5		577.3
Selling, general and administrative expenses		80.5		76.4		262.8		230.4
Equity in earnings of unconsolidated affiliates		22.8		17.1		83.8		70.2
Other charges		1.9		1.2		39.5		3.0
Operating income (loss)		(99.1)		107.8		57.0		414.1
Interest expense, net		30.4		23.0		77.7		56.6
Acquisition purchase price hedge loss		—		—		—		22.0
Other expense (income), net		0.5		(0.1)		1.6		8.4
Income (loss) from continuing operations before income taxes		(130.0)		84.9		(22.3)		327.1
Provision for (benefit from) income taxes		(12.1)		5.5		41.4		48.9
Net income (loss) from continuing operations		(117.9)		79.4		(63.7)		278.2
Net income (loss) from discontinued operations, net of income taxes		(1.9)		13.7		(1.9)		38.0
Net income (loss)	$	(119.8)	$	93.1	$	(65.6)	$	316.2
Weighted average shares- basic		35.2		38.8		36.3		38.7
Net income (loss) per share- basic:
Continuing operations	$	(3.35)	$	2.04	$	(1.76)	$	7.19
Discontinued operations		(0.06)		0.35		(0.05)		0.98
Net income (loss) per share- basic	$	(3.41)	$	2.39	$	(1.81)	$	8.17
Weighted average shares- diluted		35.2		39.5		36.3		39.6
Net income (loss) per share- diluted:
Continuing operations	$	(3.35)	$	2.01	$	(1.76)	$	7.03
Discontinued operations		(0.06)		0.35		(0.05)		0.96
Net income (loss) per share- diluted	$	(3.41)	$	2.36	$	(1.81)	$	7.99

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO PLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income (loss)	$	(119.8)	$	93.1	$	(65.6)	$	316.2
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments (net of tax of $0.0, $0.0, $3.9, $0.0)		(45.0)		(1.7)		(84.1)		(2.0)
Net gain (loss) on cash flow hedges (net of tax of $0.0, $0.0, $0.6, $0.0)		(5.6)		1.2		(3.8)		5.6
Pension and other postretirement benefit plans:
Net gain arising during period (net of tax of $0.8, $1.0, $1.6, $1.0)		2.4		9.3		10.0		9.3
Amounts reclassified from accumulated other comprehensive income		(0.9)		(1.2)		(1.9)		0.9
Total other comprehensive income (loss), net of tax		(49.1)		7.6		(79.8)		13.8
Comprehensive income (loss)	$	(168.9)	$	100.7	$	(145.4)	$	330.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO PLC

Condensed Consolidated Statements of Shareholders’ Equity

(In millions, except per share data)

(Unaudited)


	Shares			Shareholders' Equity
	Ordinary Shares Outstanding	Treasury Shares	Deferred Ordinary Shares	Ordinary Shares		Deferred Ordinary Shares		Additional Paid-In Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2021	37.9	1.0	—	$	0.4	$	—	$	468.1	$	(50.0)	$	(147.2)	$	741.8	$	1,013.1
Net income	—	—	—		—		—		—		—		—		16.7		16.7
Other comprehensive loss	—	—	—		—		—		—		—		(2.5)		—		(2.5)
Share-based compensation activity	0.2	—	—		—		—		7.6		—		—		—		7.6
Purchase of treasury shares	(0.9)	0.9			—				—		(50.0)		—		—		(50.0)
Dividends on ordinary shares ($0.32 per share)	—	—	—		—		—		—		—		—		(12.1)		(12.1)
Balance at March 31, 2022	37.2	1.9	—	$	0.4	$	—	$	475.7	$	(100.0)	$	(149.7)	$	746.4	$	972.8
Net income	—	—	—		—		—		—		—		—		37.4		37.4
Other comprehensive loss	—	—	—		—		—		—		—		(28.2)		—		(28.2)
Share-based compensation activity	0.1	—	—		—		—		4.4		—		—		—		4.4
Purchase of treasury shares	(1.0)	1.0			—				—		(50.0)		—		—		(50.0)
Dividends on ordinary shares ($0.32 per share)	—	—	—		—		—		—		—		—		(11.8)		(11.8)
Balance at June 30, 2022	36.3	2.9	—	$	0.4	$	—	$	480.1	$	(150.0)	$	(177.9)	$	772.0	$	924.6
Net loss	—	—	—		—		—		—		—		—		(119.8)		(119.8)
Other comprehensive loss	—	—	—		—		—		—		—		(49.1)		—		(49.1)
Share-based compensation activity	—	—	—		—		—		3.6		—		—		—		3.6
Purchase of treasury shares	(1.2)	1.2	—		—		—		—		(50.0)		—		—		(50.0)
Dividends on ordinary shares ($0.32 per share)	—	—			—		—		—		—		—		(11.2)		(11.2)
Balance at September 30, 2022	35.1	4.1	—	$	0.4	$	—	$	483.7	$	(200.0)	$	(227.0)	$	641.0	$	698.1

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	Shares			Shareholders' Equity
	Ordinary Shares Outstanding	Treasury Shares	Deferred Ordinary Shares	Ordinary Shares		Deferred Ordinary Shares		Additional Paid-In Capital		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2020	38.4	10.4	—	$	0.5		—	$	579.6	$	(542.9)	$	(186.1)	$	739.2	$	590.3
Net income	—	—	—		—		—		—		—		—		71.5		71.5
Other comprehensive income	—	—	—		—		—		—		—		6.1		—		6.1
Share-based compensation activity	0.3	(0.3)	—		—		—		(1.1)		12.9		—		—		11.8
Dividends on ordinary shares ($0.08 per share)	—	—	—		—		—		—		—		—		(3.4)		(3.4)
Balance at March 31, 2021	38.7	10.1	—	$	0.5		—	$	578.5	$	(530.0)	$	(180.0)	$	807.3	$	676.3
Net income	—	—	—		—		—		—		—		—		151.6		151.6
Other comprehensive income	—	—	—		—		—		—		—		0.1		—		0.1
Share-based compensation activity	0.1	(0.1)	—		—		—		0.2		4.7		—		—		4.9
Dividends on ordinary shares ($0.08 per share)	—	—	—		—		—		—		—		—		(3.1)		(3.1)
Balance at June 30, 2021	38.8	10.0	—	$	0.5		—	$	578.7	$	(525.3)	$	(179.9)	$	955.8	$	829.8
Net income	—	—	—		—		—		—		—		—		93.1		93.1
Other comprehensive income	—	—	—		—		—		—		—		7.6		—		7.6
Share-based compensation activity	—	—	—		—		—		3.5		0.5		—		—		4.0
Dividends on ordinary shares ($0.32 per share)	—	—	—		—		—		—		—		—		(12.5)		(12.5)
Balance at September 30, 2021	38.8	10.0	—	$	0.5		—	$	582.2	$	(524.8)	$	(172.3)	$	1,036.4	$	922.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO PLC

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Nine Months Ended
	September 30,
	2022		2021
Cash flows from operating activities
Net income (loss)	$	(65.6)	$	316.2
Less: Net income (loss) from discontinued operations		(1.9)		38.0
Net income (loss) from continuing operations		(63.7)		278.2
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities - continuing operations
Depreciation and amortization		147.1		111.0
Amortization of deferred financing fees and issuance discount		6.9		5.5
Deferred income tax		(8.0)		0.2
Share-based compensation expense		15.6		11.0
Earnings of unconsolidated affiliates, net of dividends		(21.3)		(10.2)
Unrealized net gain (loss) on foreign exchange forward contracts		1.6		(25.2)
Acquisition purchase price hedge loss		—		22.0
Pension curtailment and settlement gain		(3.0)		(2.1)
Asset impairment charges or write-offs		3.9		3.0
Changes in assets and liabilities
Accounts receivable		5.1		(280.8)
Inventories		(43.1)		(196.7)
Accounts payable and other current liabilities		(81.9)		248.7
Income taxes payable		(23.7)		22.3
Other assets, net		13.5		(9.2)
Other liabilities, net		61.8		41.0
Cash provided by operating activities - continuing operations		10.8		218.7
Cash provided by (used in) operating activities - discontinued operations		(1.4)		19.5
Cash provided by operating activities		9.4		238.2
Cash flows from investing activities
Capital expenditures		(94.0)		(64.7)
Cash paid for asset or business acquisitions, net of cash acquired ($1.0 and $12.1)		(22.2)		(1,806.6)
Proceeds from the sale of businesses and other assets		5.3		0.2
Proceeds from (payments for) the settlement of hedging instruments		1.9		(14.7)
Cash used in investing activities - continuing operations		(109.0)		(1,885.8)
Cash used in investing activities - discontinued operations		(0.8)		(3.3)
Cash used in investing activities		(109.8)		(1,889.1)
Cash flows from financing activities
Deferred financing fees		—		(35.0)
Short-term borrowings, net		(12.2)		(11.6)
Purchase of treasury shares		(151.9)		—
Dividends paid		(36.3)		(9.5)
Proceeds from exercise of option awards		2.9		10.5
Withholding taxes paid on restricted share units		(3.1)		(0.8)
Repurchases and repayments of long-term debt		(12.9)		(7.1)
Net proceeds from issuance of 2028 Term Loan B		—		746.3
Net proceeds from issuance of 2029 Senior Notes		—		450.0
Proceeds from draw on Accounts Receivable Securitization Facility		—		150.0
Repayments of Accounts Receivable Securitization Facility		—		(20.0)
Cash provided by (used in) financing activities		(213.5)		1,272.8
Effect of exchange rates on cash		(16.3)		(3.1)
Net change in cash, cash equivalents, and restricted cash		(330.2)		(381.2)
Cash, cash equivalents, and restricted cash—beginning of period		573.0		588.7
Cash, cash equivalents, and restricted cash—end of period	$	242.8	$	207.5
Less: Restricted cash		—		—
Cash and cash equivalents—end of period	$	242.8	$	207.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TRINSEO PLC

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, unless otherwise stated)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Trinseo PLC and its subsidiaries (the “Company”) as of and for the periods ended September 30, 2022 and 2021 were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are considered necessary for the fair statement of the results for the periods presented. Because they cover interim periods, the statements and related notes to the financial statements do not include all disclosures normally provided in annual financial statements, and therefore, these statements should be read in conjunction with the 2021 audited consolidated financial statements included within the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 23, 2022. The Company’s condensed consolidated financial statements presented herein reflect the latest estimates and assumptions made by management that affect the reported amounts and related disclosures as of and for the period ended September 30, 2022. However, actual results could differ from these estimates and assumptions.

The December 31, 2021 condensed consolidated balance sheet data presented herein was derived from the Company’s December 31, 2021 audited consolidated financial statements, but does not include all disclosures required by GAAP for annual periods.

Certain prior year amounts have been reclassified to conform to the current year presentation. Throughout this Quarterly Report, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

NOTE 2—RECENT ACCOUNTING GUIDANCE

As of September 30, 2022, there was no recently issued accounting standards which would have a material effect on the Company’s condensed consolidated financial statements.

NOTE 3—ACQUISITIONS

Acquisition of Heathland B.V.

On January 3, 2022, the Company completed the acquisition of Heathland B.V. (“Heathland”) from Heathland Holding B.V. (“Heathland Holding”), through the purchase of all issued and outstanding shares (the “Heathland Acquisition”). The Heathland Acquisition was completed pursuant to the Sale and Purchase Agreement dated December 3, 2021 (“Heathland Agreement”), by and between the Company and Heathland Holding. Heathland is a leading collector and recycler of post-consumer and post-industrial plastic wastes in Europe. The total purchase price consideration is estimated to be $29.3 million, including an initial cash purchase price of $22.9 million, as well as $6.4 million of contingent cash consideration, representing the fair value of certain earn-out payments. The maximum amount of potential earn-out payments is $6.8 million, which amounts will become payable to Heathland Holding as and when the related performance milestones or thresholds are achieved over the three-year period following the date of acquisition. The Heathland Acquisition was funded through existing cash on hand.

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Additionally, the Heathland Agreement includes a service fee of approximately $4.5 million, payable to Heathland Holdings contingent upon the continued employment of certain Heathland employees for three years following the acquisition date. The Company has not included this service fee as part of the estimated purchase price and instead will accrue for the service fee as compensation expense over the three-year period in which it is earned.

The Company accounted for the acquisition as a business combination pursuant to ASC 805. In accordance with ASC 805, fair values are assigned to tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that was available as of the acquisition date.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill. During the third quarter of 2022, there were no changes to the purchase price allocation for the Heathland Acquisition.

The table below summarizes the purchase price allocation for the assets acquired and liabilities assumed, based on their relative fair values, which have been assessed as of the January 3, 2022 acquisition date:


	January 3,
	2022
Cash and cash equivalents	$	1.0
Other current assets		1.2
Other intangible assets ⁽¹⁾
Customer relationships		5.1
Tradenames		0.9
Developed technology		0.2
Other assets		1.0
Total fair value of assets acquired		9.4

Current liabilities		(1.3)
Noncurrent liabilities		(1.6)
Total fair value of liabilities assumed		(2.9)
Net identifiable assets acquired		6.5
Purchase price consideration		29.3
Goodwill ⁽²⁾	$	22.8

(1)

The expected weighted average useful life of the acquired intangible assets are 7 years for customer relationships, tradenames and developed technology.

(2)

Goodwill largely consists of strategic and synergistic opportunities resulting from combining Heathland with the Company’s existing businesses and is allocated entirely to the Base Plastics segment. No goodwill related to this acquisition is expected to be deductible for income tax purposes.

Pro forma results of operations information have not been presented as the effect of the acquisition is not material. The operating results of the Heathland acquisition are included within the Company's condensed consolidated statements of operations since the acquisition date of January 3, 2022 and were not material for the three and nine months ended September 30, 2022. Pursuant to GAAP, costs incurred to complete the Heathland Acquisition as well as costs incurred to integrate into the Company’s operations are expensed as incurred. Transaction-related costs incurred, which are included within “Selling, general, and administrative expenses” in the condensed consolidated statements of operations, were not material for the three and nine months ended September 30, 2022.

Acquisition of Aristech Surfaces

On September 1, 2021, the Company completed its previously announced acquisition of Aristech Surfaces LLC (“Aristech Surfaces”) from SK AA Holdings LLC (“SK AA Holdings”), the sole member of Aristech Surfaces, through purchase of 100% membership interest and intellectual property (the “Aristech Surfaces Acquisition”). The purchase

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price consideration for the Aristech Surfaces Acquisition was $449.5 million, all of which was paid during the year ended December 31, 2021 (of which $448.0 million was paid during the nine months ended September 30, 2021). Aristech Surfaces is a leading North America manufacturer and global provider of PMMA continuous cast and solid surface sheets, serving the wellness, architectural, transportation and industrial markets, whose results are included within the Engineered Materials segment. Aristech Surfaces’ products are used for a variety of applications, including the construction of hot tubs, swim spas, counter tops, signage, bath products and recreational vehicles.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Refer to the Annual Report for further information. During the nine months ended September 30, 2022, there were no changes to the purchase price allocation for the acquisition of the Aristech Surfaces business. As of September 1, 2022, the acquisition measurement period for the Aristech Surfaces business has ended and the values assigned to the assets acquired and liabilities assumed are final.

Acquisition of the PMMA Business

On May 3, 2021, the Company completed its previously-announced acquisition of the polymethyl methacrylates (“PMMA”) and activated methyl methacrylates (“MMA”) business (together, the “PMMA business”) from Arkema S.A., (“Arkema”) through the purchase of 100% of the shares of certain subsidiaries of Arkema (the “PMMA Acquisition”). The purchase price consideration for the PMMA Acquisition was $1,364.9 million, all of which was paid during the year ended December 31, 2021 (of which $1,358.6 million was paid during the nine months ended September 30, 2021). PMMA is a transparent and rigid plastic with a wide range of end uses, and is an attractive adjacent chemistry which complements Trinseo’s offerings across several end markets including automotive, building & construction, medical and consumer electronics. PMMA results are included within the Engineered Materials segment.

The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Refer to the Annual Report for further information. As of May 3, 2022, the acquisition measurement period for the PMMA business has ended and the values assigned to the assets acquired and liabilities assumed are final.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the consolidated results of operations of the Company with the PMMA business and Aristech Surfaces for the three and nine months ended September 30, 2021 as if these acquisitions had occurred on January l, 2021. The pro forma results were calculated by combining the results of Trinseo with the PMMA business and Aristech Surfaces but do not include adjustments related to cost savings or other synergies that are anticipated as a result of these acquisitions. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions had occurred as of January 1, 2021, nor are they indicative of future results of operations.


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2021		2021
Net sales	$	1,300.2	$	3,863.8
Net income	$	94.1	$	355.1
Income from continuing operations	$	80.4	$	317.1

NOTE 4—DIVESTITURES AND DISCONTINUED OPERATIONS

On December 1, 2021, the Company completed the divestiture of its Synthetic Rubber business to Synthos S.A. and certain of its subsidiaries (together, “Synthos”) for a purchase price of $402.4 million, which reflected a reduction of approximately $41.6 million for the assumption of pension liabilities by Synthos and $47.0 million for net working capital (excluding inventory) retained by Trinseo. Refer to the Annual Report for further information. At closing, the Company and Synthos executed a long-term supply agreement, in which Trinseo will supply Synthos certain raw

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materials used in the Synthetic Rubber business subsequent to the sale. For the three and nine months ended September 30, 2022, the Company recorded $13.8 million and $55.6 million, respectively, in net sales, and $14.5 million and $46.3 million, respectively, in cost of sales related to the supply agreement, which is recorded in continuing operations.

The following table summarizes the results of the Synthetic Rubber business for the three and nine months ended September 30, 2022 and 2021, which are reflected as discontinued operations in the Company’s condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net sales	$	—	$	122.3	$	0.1	$	382.2
Cost of sales		2.2		101.9		3.6		321.2
Gross profit (loss)		(2.2)		20.4		(3.5)		61.0
Selling, general and administrative expenses		—		4.9		(0.3)		16.7
Operating income (loss)		(2.2)		15.5		(3.2)		44.3
Gain on sale of businesses and other assets		—		—		1.2		—
Other expense, net		—		0.2		—		1.2
Income (loss) from discontinued operations before income taxes		(2.2)		15.3		(2.0)		43.1
Provision for (benefit from) income taxes		(0.3)		1.6		(0.1)		5.1
Net income (loss) from discontinued operations	$	(1.9)	$	13.7	$	(1.9)	$	38.0

NOTE 5—NET SALES

Refer to the Annual Report for information on the Company's accounting policies and further background related to its net sales.

The following table provides disclosure of net sales to external customers by primary geographical market (based on the location where sales originated), by segment for the three and nine months ended September 30, 2022 and 2021.


	Engineered		Latex		Base
Three Months Ended	Materials		Binders		Plastics		Polystyrene		Feedstocks		Total
September 30, 2022
United States	$	128.9	$	105.4	$	73.7	$	—	$	4.5	$	312.5
Europe		72.5		160.1		157.1		174.0		48.9		612.6
Asia-Pacific		38.9

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