Trinseo S.A. (TSE – Snapshot Report) reorganized their business into two new divisions as of January 1, 2015, and were quickly rewarded with strong earnings numbers in the first quarter of implementation. This reorg consisted of creating the Performance Materials segment, and the Basic Plastics & Feedstocks segment; which saw improved profitability, and accelerated growth for the company overall. This improved visibility and accelerate growth as made Trinseo the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company is a global materials company and manufacturer of plastics, latex, and rubber. The company’s technology is used by customers in industries such as home appliances, automotive, building and construction, carpet, consumer electronics, consumer goods, electrical lighting, medical, packaging, paper and paperboard, rubber goods and tires. Trinseo S.A. is based in Berwyn, Pennsylvania.
The reorg enabled Trinseo to see increased sales volume across all segments. Further, the company witnessed higher margins in polycarbonate, Performance Plastics, and “improved performance in styrene monomer, styrenic polymers, and at Americas Styrenics driven by first quarter industry restocking and overall stronger market conditions ahead of planned outages,” according to management.
Increasing Estimates
The graph below shows the historic and future EPS estimates for Trinseo.
Over the past 7 days, estimates for have increased for Q2 15, Q3 15, FY 15, and FY 16; Q2 15 jumped from $0.86 to $1.45, Q3 15 rose from $0.63 to $0.78, FY 15 leaped up from $2.79 to $3.88, and FY 16 increased from $3.01 to $3.44.
Looking Ahead
According to Chris Pappas, President and CEO, “We expect continued strong performance with higher Adjusted EBITDA and EPS in the second quarter versus the first quarter. The Basic Plastics & Feedsotcks division should see similar performance, quarter over quarter, while there will be some headwinds in the Performance Materials division from a second quarter planned outage in Synthetic Rubber as well as from increasing raw materials costs and price lag effects.”
Bottom Line
After management decided to reorganize their business they posted their first beat of the Zacks Consensus Earnings Estimate. Further, the new model enables investors to better view each segment and the overall impact on the business, which has improved investor confidence in the company.
