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Trinseo (TSE) Closes Aristech Buyout, Boosts Portfolio Offerings

Trinseo's (TSE) Aristech buyout is another step toward its transformation efforts, which are focused on becoming a global specialty materials and sust...

This story originally appeared on Zacks

Trinseo S.A. TSE recently completed the previously announced transaction to acquire Aristech Surfaces LLC. The latter is a leading North American manufacturer and global provider of polymethyl methacrylates (“PMMA”) continuous cast, solid surface and architectural resin sheets serving the wellness, architectural, transportation and industrial markets.

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The buyout is in sync with Trinseo’s transformation efforts. Noatbly, the company's efforts are focused on becoming a global specialty materials and sustainable solutions provider. The Aristech buyout will strengthen Trinseo's position in acrylic solutions and expand its product portfolio offerings in important markets such as building & construction and consumer goods.

Aristech is expected to accelerate Trinseo’s growth in Asia. Greater exposure to new markets, and improved ability to generate cash and stable margins are likely to lead to further growth opportunities.

Trinseo’s reach in North America, Europe and Asia is expected to lead to the transaction generating annual pretax cost synergies to the tune of roughly $10 million by 2024 and additional revenue synergies. It aims to accelerate growth and deliver meaningful value to shareholders.

The buyout includes the addition of roughly 300 employees across two manufacturing and R&D locations in Florence, KY and Belen, NM. Aristech will continue to operate as a stand-alone entity within the Engineered Materials segment, while Trinseo continues the integration of the PMMA business it acquired earlier this year.

Shares of Trinseo have appreciated 92.7% in the past year compared with 8% rise of the industry.

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Trinseo, in its last earnings call, stated that for 2021 it sees net income from continuing operations in the range of $344 million to $380 million. Adjusted EBITDA is forecast in the band of $750-$800 million.

The company also expects cash from operations of $425-$475 million and free cash flow of $275-$325 million for full-year 2021.

Trinseo envisions strong earnings performance from continued commercial excellence actions and high demand for most of its products in the second half of the year. However, it expects earnings to decline from the first half of 2021 primarily due to no expected contribution from the Feedstocks segment.

Zacks Rank & Key Picks

Trinseo currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Nucor Corporation NUE, Dow Inc. DOW and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 478.7% for the current year. The company’s shares have soared 145.8% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has an expected earnings growth rate of around 403% for the current year. The company’s shares have gained 28.9% in the past year. It currently carries a Zacks Rank #2 (Buy).

Cabot has an expected earnings growth rate of around 138.5% for the current fiscal. The company’s shares have rallied 39.4% in the past year. It currently carries a Zacks Rank #2.

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