# Trinseo PLC (TSEOQ) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Trinseo PLC's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1519061/000155837022001688/tse-20211231x10k.htm
Accession: 0001558370-22-001688
Filing date: 2022-02-23
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/TSEOQ/
All MD&A years: /company/TSEOQ/mda/
Next year: /company/TSEOQ/mda/fy2022/ (FY 2022)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto, included elsewhere within this Annual Report. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and all other non-historical statements in this discussion are forward-looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management and are made as of the date of this Annual Report. See “Cautionary Note Regarding Forward-Looking Statements.” Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere within this Annual Report, particularly in Item 1A—“Risk Factors.” Definitions of capitalized terms not defined herein appear in the notes to our consolidated financial statements.

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2021 Highlights

For the year ended December 31, 2021, we had net income from continuing operations of $279.6 million and Adjusted EBITDA of $729.4 million. The Company’s legacy businesses performed very well throughout 2021, and were further supplemented by our acquisitions in the Engineered Materials segment. These very strong results were achieved, despite challenging industry operating conditions that arose during the second half of the year, including high utility costs and constraints in material, labor and energy. Additionally, the Company delivered strong cash generation during 2021 and returned significant cash to our shareholders, purchasing approximately 1.0 million ordinary shares for total value of $50.0 million and declaring quarterly dividends for an aggregate value of $0.80 per ordinary share, or $31.4 million. Refer to the discussion below for further information and refer to “Non-GAAP Performance Measures” for discussion of our use of non-GAAP measures in evaluating our performance and a reconciliation of these measures. Highlights for the year are described below.

Portfolio Transformation: In 2021, we made significant strides in the Company’s strategy to transform into a higher growth, higher margin and less cyclical specialty and sustainable materials provider. Key achievements in this transformation during the year include the following (refer to Note 4 and 5 in the consolidated financial statements for further information):

[[GREPCENT_TABLE]]
[["","1.","Acquisition of the PMMA Business - On May 3, 2021, the Company closed on the PMMA Acquisition for a purchase price of $1,364.9 million, funded primarily using proceeds from new debt financing arrangements, as described below. PMMA is a transparent and rigid plastic with a wide range of end uses, and complements Trinseo\u2019s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics. The results of this business are included within the Company\u2019s Engineered Materials segment."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2.","Acquisition of Aristech Surfaces - On September 1, 2021, the Company closed on the Aristech Surfaces Acquisition for a purchase price of $449.5 million, funded with cash on hand and existing credit facilities. 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. Its 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 results of this business are included within the Company\u2019s Engineered Materials segment."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3.","Divestiture of Synthetic Rubber Business - On December 1, 2021, the Company completed the divestiture of our Synthetic Rubber business to Synthos S.A. and certain of its subsidiaries (together, \u201cSynthos\u201d) for a purchase price of $402.4 million, which reflected reductions 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. The sale resulted in the recognition of an after-tax gain of $117.8 million, which was recorded during the fourth quarter of 2021. At closing, Trinseo and Synthos executed a long-term supply agreement, under which we will supply Synthos with certain raw materials used in the Synthetic Rubber business subsequent to the sale."]]
[[/GREPCENT_TABLE]]

The assets and liabilities of our Synthetic Rubber business are classified as held-for-sale in our prior period balance sheet and the associated operating results of the Synthetic Rubber business are classified as discontinued operations for all periods presented.

[[GREPCENT_TABLE]]
[["","4.","Exploration of Divestiture of Styrenics Businesses - In the fourth quarter of 2021, Trinseo announced that we have begun work to explore the divesture of the Company\u2019s styrenics businesses, for which we launched a formal sales process in January 2022. The scope of this potential divestiture is expected to include the Feedstocks and Polystyrene reporting segments as well as our 50% ownership of Americas Styrenics."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","5.","Acquisition of Heathland - On December 3, 2021, the Company entered into a definitive agreement to acquire Heathland, a leading collector and recycler of post-consumer and post-industrial plastic wastes in Europe. The acquisition closed on January 3, 2022 for a preliminary cash purchase price of \u20ac20.0 million, subject to customary working capital and other closing adjustments, and up to \u20ac10.0 million contingent payments to be"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","","paid based on criteria as defined in the agreement. Heathland is based in Utrecht, the Netherlands, and is focused on converting post-consumer and post-industrial PMMA, PC, ABS, polystyrene, and other thermoplastic waste for use in a wide range of high-end applications. The acquisition of Heathland aligns with Trinseo\u2019s strategy to transform into specialty materials and sustainable solutions provider."]]
[[/GREPCENT_TABLE]]

​

Capital Structure and Shareholder Return: In 2021, we executed transactions and took steps to improve and streamline the Company’s infrastructure, adjust our capital structure to support strategic initiatives, and return value to our shareholders. The key specific actions we took during the year in this pursuit include:

[[GREPCENT_TABLE]]
[["","1.","Redomiciliation to Ireland - On October 8, 2021, we completed the cross-border merger transaction, as approved by our shareholders at our annual meeting, pursuant to which our former publicly-traded parent company, Trinseo S.A., a Luxembourg limited liability company, was merged with and into Trinseo PLC, an Irish public limited company, as successor issuer to Trinseo S.A. (the \u201cRedomiciliation\u201d). The Redomiciliation is expected to provide Trinseo with a favorable legal and regulatory infrastructure, simplify regulatory requirements, provide dividend withholding tax benefits to shareholders and provide operational efficiencies and reductions in its operating and administrative costs. Refer to Item 1 \u2014 Business and Note 1 in the consolidated financial statements for more information on the Redomiciliation."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2.","Entry into New Financing Arrangements - On March 24, 2021, the Company issued $450.0 million aggregate principal amount of 5.125% senior notes due 2029 (the \u201c2029 Senior Notes\u201d). Further, on May 3, 2021, in conjunction with the closing of the PMMA Acquisition, the Company entered into $750.0 million in incremental term loan borrowings (the \u201c2028 Term Loan B\u201d) under our existing senior secured credit facility. The net proceeds from the 2029 Senior Notes and the 2028 Term Loan B, as well as available cash, were used to fund the PMMA Acquisition. Refer to Note 12 in the consolidated financial statements for further information."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3.","Share Repurchases - In December 2021, the Company\u2019s board of directors authorized the repurchase of up to $200.0 million of the Company\u2019s ordinary shares. Under this authority, the Company purchased approximately 1.0 million ordinary shares from our shareholders through open market transactions for an aggregate purchase price of $50.0 million (of which $1.9 million of repurchases were not yet settled but were accrued on the consolidated balance sheet as of December 31, 2021)."]]
[[/GREPCENT_TABLE]]

​

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Results of Operations

Results of Operations for the Years Ended December 31, 2021, 2020, and 2019

The table below sets forth our historical results of operations, and these results as a percentage of net sales for the periods indicated. Prior period amounts herein have been recast in conjunction with adjustments made for the Company’s classification of the Synthetic Rubber business as discontinued operations.

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[[/GREPCENT_TABLE]]

2021 vs. 2020

Net Sales

Of the 76% increase in net sales, 53% was due to higher selling prices resulting mainly from the pass through of higher raw material costs. An additional 17% increase was due to the contribution from our acquisitions in 2021, including the PMMA Acquisition, which closed on May 3, 2021 and the Aristech Surfaces Acquisition, which closed on September 1, 2021. Higher sales volume increased net sales by 4%.

Cost of Sales

The 70% increase in cost of sales was primarily attributable to a 48% increase in raw material costs, an 18% increase related to our acquisitions, and a 5% increase from higher utility costs.

Gross Profit

The increase in gross profit of 118% was primarily attributable to higher margins from strong demand and tight supply mainly in polystyrene, ABS, and PC, higher volume in Latex Binders, Base Plastics and Engineered Materials, as well as contributions from our acquisitions. See the segment discussion below for further information.

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Selling, General and Administrative Expenses

The $95.9 million, or 42%, increase in SG&A was primarily due to an increase in personnel costs of $42.5 million due to the Company’s improved performance during 2021 and the addition of personnel from acquisitions, as well as an increase of $44.4 million in acquisition transaction and integration costs, primarily related to the PMMA Acquisition and the Aristech Surfaces Acquisition. There were additional increases of $13.8 million from costs associated with the Company’s strategic initiatives and $6.4 million attributable to foreign exchange rate impacts. These increases were partially offset by a decrease of $18.1 million from lower advisory and professional fees, mainly related to the Company’s transition of business and technical services from Dow in 2020.

Equity in Earnings of Unconsolidated Affiliates

The increase in equity earnings of $25.7 million was due to higher equity earnings from Americas Styrenics, mainly attributable to higher polystyrene sales volume and higher polystyrene and styrene margins in North America.

Impairment Charges

During the years ended December 31, 2021 and 2020, the Company recorded impairment charges of $6.8 million and $11.0 million, respectively, primarily related to our Boehlen styrene monomer assets. Refer to Note 14 in the consolidated financial statements for further information.

Interest Expense, Net

The increase in interest expense, net of $35.8 million, or 82%, was primarily attributable to the Company’s issuance of the 2029 Senior Notes in the first quarter of 2021 and the 2028 Term Loan B during the second quarter of 2021. Refer to Note 12 in the consolidated financial statements for further information.

Acquisition purchase price hedge loss (gain)

During the years ended December 31, 2021 and 2020, the Company recorded an acquisition purchase price hedge loss (gain) of $22.0 million and $(7.3) million, respectively, due to the change in fair value of the Company’s forward currency hedge arrangement on the euro-denominated purchase price of the PMMA business.

Other Expense, Net

Other expense, net for the year ended December 31, 2021 was $9.5 million, which included $5.2 million of expense related to the non-service cost components of net periodic benefit cost and $4.5 million of transfer taxes associated with the PMMA Acquisition. These expense amounts were partially offset by foreign exchange transaction gains of $1.3 million, which included $61.9 million of foreign exchange transaction losses primarily from the remeasurement of our euro denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, more than offset by $63.2 million of gains from our foreign exchange forward contracts, excluding the acquisition purchase price hedge. Also included in Other expense, net was $0.5 million of loss on extinguishment of debt related to the Company's new financing arrangements entered into during the year.

Other expense, net for the year ended December 31, 2020 was $7.9 million, which included $5.5 million of expense related to the non-service cost components of net periodic benefit cost and foreign exchange transaction losses of $1.9 million. Net foreign transaction losses included $24.4 million of foreign exchange transaction gains primarily from the remeasurement of our euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, which were more than offset by $26.3 million of losses from our foreign exchange forward contracts, excluding the acquisition purchase price hedge.

Provision for Income Taxes

Provision for income taxes was $70.9 million and $42.7 million for the years ended December 31, 2021 and 2020, which resulted in an effective tax rate of 20% and 40%, respectively. The increase in provision for income taxes was primarily driven by the $245.1 million increase in income from continuing operations before income taxes, partially offset by a release of a valuation allowance of $16.3 million in 2021, as a result of improvements in business operations and projected future results of the Company’s subsidiaries in China.

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Net Income (Loss) from Discontinued Operations, Net of Income Taxes

Net income (loss) from discontinued operations, net of income taxes during the years ended December 31, 2021 and 2020 was $160.4 million and $(54.8) million, respectively, and was related to the results of our Synthetic Rubber business, including the divestiture of the business on December 1, 2021. This sale resulted in the recognition of an after-tax gain of $117.8 million, which is reflected in the results for the year ended December 31, 2021. Refer to Note 5 in the consolidated financial statements for further information.

2020 vs. 2019

Net Sales

Of the 19% decrease in net sales, 13% was due to lower selling prices resulting mainly from the pass through of lower raw material costs. An additional 6% decrease was due to lower sales volume, primarily within the Base Plastics and Feedstocks segments, mainly due to the impacts related to the COVID-19 pandemic.

Cost of Sales

Of the 21% decrease in cost of sales, 16% was due to lower raw material costs, primarily from styrene and butadiene, as well as a 5% decrease due to lower sales volume primarily from the Base Plastics and Feedstocks segments.

Gross Profit

The decrease in gross profit of 7% was primarily to lower sales volumes related to COVID-19 as well as an unfavorable net raw material timing impact in comparison to the prior year. See the segment discussion below for further information.

Selling, General and Administrative Expenses

The $49.4 million, or 18%, decrease in selling, general, and administrative expenses was due to several factors. Lower advisory and professional fees, mainly related to the Company’s transition of business and technical services from Dow, which was largely completed in the first quarter of 2020, resulted in a $28.2 million decrease. Also contributing to the decrease were various management actions taken to control operating costs in response to COVID-19, including a $9.7 million decrease in travel-related expenses, as well as a decrease in restructuring costs of $12.5 million, primarily related to the Company's corporate restructuring program, which was initiated in the fourth quarter of 2019. Partially offsetting these decreases was an increase in acquisition costs of $7.5 million, which was principally attributable to the costs incurred in 2020 related to the proposed acquisition of the Arkema business.

Equity in Earnings of Unconsolidated Affiliates

The decrease in equity earnings of $52.0 million was due to lower equity earnings from Americas Styrenics, mainly attributable to lower styrene margins and volume-related impacts from COVID-19 in 2020.

Impairment Charges

During the year ended December 31, 2020, the Company recorded impairment charges of $11.0 million related to our Boehlen styrene monomer assets. There were no impairment charges recorded during the year ended December 31, 2019. Refer to Note 14 in the consolidated financial statements for further information.

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Interest Expense, Net

The $4.3 million, or 11%, increase in interest expense, net was primarily attributable to a $7.4 million reduction in interest benefit recorded as a result of the Company’s entry into a new CCS arrangement in February 2020. This was partially offset by the net decrease in interest expense of $2.6 million attributable to lower interest rates during 2020 as compared to 2019.

Acquisition purchase price hedge loss (gain)

During the year ended December 31, 2020, the Company recorded an acquisition purchase price hedge gain of $7.3 million due to the change in fair value of the Company’s forward currency hedge arrangement on the euro-denominated purchase price of the PMMA business. No such gains or losses were recognized in 2019.

Other Expense, Net

Other expense, net for the year ended December 31, 2020 was $7.9 million, which included $5.5 million of expense related to the non-service cost components of net periodic benefit cost and foreign exchange transaction losses of $1.9 million. Net foreign transaction losses included $24.4 million of foreign exchange transaction gains primarily from the remeasurement of our euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, which were more than offset by $26.3 million of losses from our foreign exchange forward contracts, excluding the acquisition purchase price hedge.

Other expense, net for the year ended December 31, 2019 was $3.4 million, which included $5.3 million of expense related to the non-service cost components of net periodic benefit cost and foreign exchange transaction gains of $1.6 million. Net foreign transaction losses included $6.4 million of foreign exchange transaction losses primarily from the remeasurement of our euro-denominated payables due to the relative changes in rates between the U.S. dollar and the euro during the period, which were more than offset by $8.0 million of gains from our foreign exchange forward contracts.

Provision for Income Taxes

Provision for income taxes was $42.7 million and $12.7 million for the years ended December 31, 2020 and 2019, which resulted in an effective tax rate of 40% and 13%, respectively. The increase in the provision for income taxes was primarily driven by the one-time deferred tax benefit of $65.0 million recorded in 2019 as a result of changes in the Swiss federal and cantonal tax rules. This one-time benefit was partially offset by a $25.3 million valuation allowance for the portion of the cantonal deferred tax asset that more likely than not will expire before utilization. Refer to Note 15 in the consolidated financial statements for further information. Excluding this one-time net benefit of $39.7 million in 2019, the provision for income taxes decreased $9.7 million, due primarily to the decrease in income from continuing operations before income taxes.

Net Income (Loss) from Discontinued Operations, Net of Income Taxes

Net income (loss) from discontinued operations, net of income taxes during the years ended December 31, 2020 and 2019 was $(54.8) million and $4.9 million, respectively, and was related to the results of our Synthetic Rubber business. The results for the year ended December 31, 2020 were adversely impacted by significant headwinds to the Synthetic Rubber business from COVID-19 impacts, as well as impairment charges of $28.1 million recorded during the period. Refer to Note 5 in the consolidated financial statements for further information.

Selected Segment Information

The Company’s reportable segments are as follows: Engineered Materials, Latex Binders, Base Plastics, Polystyrene, Feedstocks, and Americas Styrenics. Refer to Item 1—Business for a description of our segments, including a detailed overview, products and end uses, and competition and customers.

The following sections present net sales, Adjusted EBITDA, and Adjusted EBITDA margin by segment for the years ended December 31, 2021, 2020, and 2019. Inter-segment sales have been eliminated. Refer to Note 20 in the consolidated financial statements for a detailed definition of Adjusted EBITDA and a reconciliation of income from

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continuing operations before income taxes to segment Adjusted EBITDA. Beginning in the second quarter of 2021, the Company reported the results of the Synthetic Rubber business, as discontinued operations in the consolidated statement of operations for all periods presented, and therefore, it is no longer presented as a separate reportable segment. Refer to Note 5 in the consolidated financial statements for further information.

Engineered Materials Segment

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[[/GREPCENT_TABLE]]

2021 vs. 2020

Of the $560.1 million, or 287%, increase in net sales, $468.4 million, or 240%, was attributable to the contribution from the acquisitions of the PMMA business and Aristech Surfaces. An additional 26% was attributable to increased sales volumes, mostly due to higher sales to consumer electronics customers in Asia, and an additional 19% was due to increased prices primarily from the pass through of higher raw materials.

Adjusted EBITDA increased $60.2 million, or 174%, of which $71.0 million, or 206%, was attributable to the contribution from the acquisitions of the PMMA business and Aristech Surfaces. Also contributing to the change was an increase of 61% from increased sales volumes, mainly to consumer electronics customers in Asia, offset by a decrease of 78% from lower margins due to higher raw materials costs and a decrease of 12% due to higher fixed costs. During the fourth quarter of 2021, including the acquired businesses, segment results were lower than anticipated due to approximately $25.0 million of higher natural gas, freight, and raw material costs, primarily due to an unprecedented, short-term spike in natural gas prices in Europe.

2020 vs. 2019

The 7% decrease in net sales was attributable to a 4% decrease in sales volume, due to COVID-19 impacts, as well as a 3% decrease in pricing from the pass through of lower raw material costs.

Adjusted EBITDA increased by $3.2 million, or 10%, compared to the prior year. This increase was primarily due to a $4.2 million, or 13%, increase in margins, primarily due to commercial excellence pricing actions. Also contributing to the increase was a $0.8 million, or 2%, increase due to lower fixed costs. These effects were partially offset by a decrease of $3.0 million, or 10%, from lower sales volume.

​

Latex Binders Segment

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[[/GREPCENT_TABLE]]

2021 vs. 2020

The 54% increase in net sales was primarily due to a 46% increase in pricing from the pass through of raw material costs, mainly styrene and butadiene. Additionally, there was an increase of 6% due to increased sales volume for the

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period, which was driven by higher sales to CASE and paper applications, noting that sales volume to CASE applications alone increased 21% in comparison to prior year.

The $29.9 million, or 39%, increase in Adjusted EBITDA was primarily due to an increase of $22.4 million, or 29%, in sales volume as discussed above. The increase was also due to higher margins of $15.4 million, or 20%, including impacts from commercial excellence initiatives. These effects were partially offset by a decrease of $11.4 million, or 15%, due to higher fixed costs.

2020 vs. 2019

Of the 15% decrease in net sales, 15%, or nearly all of the decrease, was due to lower pricing from the pass through of lower raw material costs.

Adjusted EBITDA remained consistent year over year, with a minor decrease of $0.1 million driven by several offsetting factors. There was a decrease of $6.4 million, or 8%, from a negative net timing variance as well as a decrease of $2.0 million, or 3%, from lower volume and a decrease of $1.6 million, or 2%, due to higher fixed costs. These decreases were partially offset by an increase of $6.4 million, or 8%, mainly due to improved portfolio and product mix, as well as commercial excellence actions, and an increase of $4.2 million, or 5%, attributable to lower freight and utility costs.

Base Plastics Segment

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","Percentage Change","\u200b","\u200b"],["($ in millions)","","2021","\u200b","","2020","\u200b","","2019","\u200b","","2021 vs. 2020","\u200b","2020 vs. 2019","\u200b","\u200b"],["Net sales","\u200b","$","1,497.9","\u200b","","$","918.2","\u200b","","$","1,156.3","\u200b","","63","%","(21)","%","\u200b"],["Adjusted EBITDA","\u200b","$","314.2","\u200b","\u200b","$","106.0","\u200b","\u200b","$","98.7","\u200b","\u200b","196","%","7","%","\u200b"],["Adjusted EBITDA margin","\u200b","","21","%","\u200b","","12","%","\u200b","","9","%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

2021 vs. 2020

Of the 63% increase in net sales, 53% was due to higher pricing from the pass through of raw material costs, primarily styrene. Additionally, there was a 7% increase due to higher sales volumes, mainly to building and construction applications, and a 3% increase due to favorable foreign exchange rate impacts.

The $208.2 million, or 196%, increase in Adjusted EBITDA was primarily due to higher margins, which contributed $167.3 million, or 158%, particularly in ABS and PC products attributable to commercial excellence initiatives as well as tight supply and strong demand. There was an additional increase of $26.0 million, or 25%, due to increased volumes as discussed above as well as an increase of $12.5 million, or 12%, due to foreign exchange rate impacts.

2020 vs. 2019

Of the 21% decrease in net sales, 12% was due to lower sales volume, primarily related to lower sales to automotive applications from COVID-19 impacts, and 10% was due to lower pricing from the pass through of lower raw material costs.

Adjusted EBITDA increased by $7.3 million, or 7%, compared to the prior year. This increase was due to a $32.0 million, or 32%, increase in margins as a result of favorable pricing actions and tighter market conditions in the second

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half of the year. An additional $10.4 million, or 11%, increase was due to lower fixed costs. These effects were partially offset by lower sales volume of $34.3 million, or 35%.

Polystyrene Segment

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","Percentage Change","\u200b","\u200b"],["($ in millions)","","2021","\u200b","","2020","\u200b","","2019","\u200b","","2021 vs. 2020","\u200b","2020 vs. 2019","\u200b","\u200b"],["Net sales","\u200b","$","1,118.8","\u200b","","$","698.9","\u200b","","$","809.4","\u200b","","60","%","(14)","%","\u200b"],["Adjusted EBITDA","\u200b","$","183.1","\u200b","\u200b","$","79.4","\u200b","\u200b","$","54.4","\u200b","\u200b","131","%","46","%","\u200b"],["Adjusted EBITDA margin","\u200b","","16","%","\u200b","","11","%","\u200b","","7","%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

2021 vs. 2020

Of the 60% increase in net sales, 65% was due to higher pricing primarily from the pass through of higher styrene costs to our customers. This increase was slightly offset by decreased sales volume of 5% caused by raw material constraints and a planned production outage as well as higher demand in the prior year for COVID-19 essential applications such as packaging.

The $103.7 million, or 131%, increase was due to higher margins resulting from commercial excellence initiatives and tight market conditions, which resulted in an increase of $119.5 million, or 150%. These effects were partially offset by a decrease of $8.1 million, or 10%, from lower sales volume as noted above as well as higher fixed costs resulting in a decrease of $5.9 million, or 7%.

2020 vs. 2019

Of the 14% decrease in net sales, 19% was due to lower pricing from the pass through of lower styrene costs to our customers. This was partially offset by an increase of 4% due to increased sales volume.

Adjusted EBITDA increased by $25.0 million, or 46%, compared to the prior year. Higher margins, primarily from pricing initiatives and tighter market conditions, resulted in a $22.4 million, or 41%, increase. Also contributing to the increase was a $6.3 million, or 12%, increase in sales volume.

Feedstocks Segment

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","Percentage Change","\u200b","\u200b"],["($ in millions)","","2021","\u200b","","2020","\u200b","","2019","\u200b","","2021 vs. 2020","\u200b","2020 vs. 2019","\u200b","\u200b"],["Net sales","\u200b","$","272.4","\u200b","","$","165.5","\u200b","","$","295.5","\u200b","","65","%","(44)","%","\u200b"],["Adjusted EBITDA","\u200b","$","33.7","\u200b","\u200b","$","3.2","\u200b","\u200b","$","6.5","\u200b","\u200b","953","%","(51)","%","\u200b"],["Adjusted EBITDA margin","\u200b","","12","%","\u200b","","2","%","\u200b","","2","%","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

2021 vs. 2020

Of the 65% increase in net sales, 74% was due to higher pricing from the pass through of higher styrene prices. This effect was partially offset by a 10% decrease due to lower styrene-related sales volume.

The increase of $30.5 million in Adjusted EBITDA was primarily due to higher styrene margins in Europe, despite significantly higher utility costs from high natural gas prices, resulting in an increase of $41.3 million. This effect was

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partially offset by negative impacts of $7.8 million due to foreign exchange rates as well as $2.2 million due to higher fixed costs.

2020 vs. 2019

Of the 44% decrease in net sales, 25% was due to lower styrene-related sales volume and 19% was due to lower pricing from the pass through of lower styrene prices.

Adjusted EBITDA decreased by $3.3 million, or 51%, compared to the prior year. Lower margins resulted in a $4.8 million, or 74%, decrease due to unfavorable net timing and portfolio mix. An additional 52% decrease was attributable to currency impacts. These decreases were partially offset by lower fixed costs driven by the Company’s overall cost reduction initiatives, which resulted in a 61% increase.

Americas Styrenics Segment

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,","\u200b","\u200b","Percentage Change","\u200b","\u200b"],["($ in millions)","","2021","\u200b","","2020","\u200b","","2019","\u200b","","2021 vs. 2020","\u200b","2020 vs. 2019","\u200b","\u200b"],["Adjusted EBITDA*","\u200b","$","92.7","\u200b","\u200b","$","67.0","\u200b","\u200b","$","119.0","\u200b","\u200b","38","%","(44)","%","\u200b"]]
[[/GREPCENT_TABLE]]

*The results of this segment are comprised entirely of earnings from Americas Styrenics, our equity method investment. As such, Adjusted EBITDA related to this segment is included within “Equity in earnings of unconsolidated affiliates” in the consolidated statements of operations.

2021 vs. 2020

The increase in Adjusted EBITDA was mainly due to increased polystyrene sales volume and higher styrene and polystyrene margins in North America, primarily attributable to COVID-19 related impacts in the prior year as well as tight supply conditions caused by weather related and other events.

2020 vs. 2019

The 44% decrease in Adjusted EBITDA was mainly due to lower styrene margins in North America, volume-related impacts from COVID-19, and the impact from the planned turnaround at its St. James, Louisiana styrene facility in the first quarter of 2020.

Outlook

Based on the strong demand in many of our end markets, as well as our commercial excellence programs and the synergies from our acquired businesses, we expect that 2022 will be another year of solid earnings and strong cash generation. As discussed above in “2021 Highlights,” there were challenges in late 2021 due to high energy prices and adverse supply chain and production conditions, however, we have navigated through these situations and have successfully continued providing unique product solutions to our customers. We will continue to move forward with our transformation strategy, including progressing on our process to divest the styrenics businesses, and achieving our sustainability goals.

Non-GAAP Performance Measures

We present Adjusted EBITDA as a non-GAAP financial performance measure, which we define as income from continuing operations before interest expense, net; provision for income taxes; depreciation and amortization expense; loss on extinguishment of long-term debt; asset impairment charges; gains or losses on the dispositions of businesses and assets; restructuring charges; acquisition related costs and other items. In doing so, we are providing management,

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investors, and credit rating agencies with an indicator of our ongoing performance and business trends, removing the impact of transactions and events that we would not consider a part of our core operations.

There are limitations to using the financial performance measures such as Adjusted EBITDA. This performance measure is not intended to represent net income or other measures of financial performance. As such, it should not be used as an alternative to net income as an indicator of operating performance. Other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use this or similarly-named financial measures that other companies may use, to compare the performance of those companies to our performance. We compensate for these limitations by providing a reconciliation of this performance measure to our net income, which is determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Adjusted EBITDA is calculated as follows for the years ended December 31, 2021, 2020, and 2019. Prior period amounts herein have been recast in conjunction with adjustments made for the Company’s classification of the Synthetic Rubber business as discontinued operations.

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b"],["\u200b","\u200b","December 31,"],["(in millions)","\u200b","2021","","2020","\u200b","2019"],["Net income","\u200b","$","440.0","","$","7.9","\u200b","$","92.0","\u200b"],["Net income (loss) from discontinued operations","\u200b","\u200b","160.4","\u200b","\u200b","(54.8)","\u200b","\u200b","4.9","\u200b"],["Net income from continuing operations","\u200b","\u200b","279.6","\u200b","\u200b","62.7","\u200b","\u200b","87.1","\u200b"],["Interest expense, net","\u200b","","79.4","\u200b","","43.6","\u200b","","39.3","\u200b"],["Provision for income taxes","\u200b","","70.9","\u200b","","42.7","\u200b","","12.7","\u200b"],["Depreciation and amortization","\u200b","","167.5","\u200b","","92.6","\u200b","","91.5","\u200b"],["EBITDA(a)","\u200b","$","597.4","\u200b","$","241.6","\u200b","$","230.6","\u200b"],["Net gain on disposition of businesses and assets","\u200b","\u200b","(0.6)","\u200b","\u200b","(0.4)","\u200b","","(0.7)","\u200b"],["Restructuring and other charges(b)","\u200b","\u200b","9.0","\u200b","\u200b","5.6","\u200b","","16.8","\u200b"],["Acquisition transaction and integration net costs (benefit)(c)","\u200b","\u200b","75.3","\u200b","\u200b","9.1","\u200b","\u200b","(0.9)","\u200b"],["Acquisition purchase price hedge loss (gain)(d)","\u200b","\u200b","22.0","\u200b","\u200b","(7.3)","\u200b","\u200b","\u2014","\u200b"],["Asset impairment charges or write-offs(e)","\u200b","\u200b","6.8","\u200b","\u200b","11.0","\u200b","\u200b","\u2014","\u200b"],["Other items(f)","\u200b","\u200b","19.5","\u200b","\u200b","25.5","\u200b","","55.4","\u200b"],["Adjusted EBITDA","\u200b","$","729.4","\u200b","$","285.1","\u200b","$","301.2","\u200b"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(a)","EBITDA is a non-GAAP financial performance measure that we refer to in making operating decisions because we believe it provides our management as well as our investors and credit agencies with meaningful information regarding the Company\u2019s operational performance. We believe the use of EBITDA as a metric assists our board of directors, management and investors in comparing our operating performance on a consistent basis. Other companies in our industry may define EBITDA differently than we do. As a result, it may be difficult to use EBITDA, or similarly-named financial measures that other companies may use, to compare the performance of those companies to our performance. We compensate for these limitations by providing reconciliations of our EBITDA results to our net income, which is determined in accordance with GAAP."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(b)","Restructuring and other charges for the years ended December 31, 2021, 2020, and 2019 primarily relate to employee termination benefit charges as well as contract termination charges incurred in connection with the Company\u2019s transformational and corporate restructuring programs. Additionally, a portion of the restructuring and other charges for the years ended December 31, 2019 relate to decommissioning and employee termination benefit charges incurred in connection with the upgrade and replacement of our compounding facility in Terneuzen, The Netherlands as well as our decision to cease manufacturing activities at our latex binders manufacturing facility in Livorno, Italy. Refer to Note 21 in the consolidated financial statements for further information regarding restructuring activities."]]
[[/GREPCENT_TABLE]]

Note that the accelerated depreciation charges incurred as part of both the Company’s corporate restructuring program and the upgrade and replacement of the Company’s compounding facility in Terneuzen, The Netherlands are included within the “Depreciation and amortization” caption above, and therefore are not included as a separate adjustment within this caption.

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[[GREPCENT_TABLE]]
[["(c)","Acquisition transaction and integration net costs (benefit) for the years ended December 31, 2021 and 2020 relate to expenses incurred for the PMMA Acquisition and the Aristech Surfaces Acquisition. Acquisition transaction and integration net benefit amounts for the year ended December 31, 2019 are primarily comprised of the bargain purchase gain recorded in conjunction with the Company\u2019s acquisition of latex binders production assets and related site infrastructure in Rheinm\u00fcnster, Germany, partially offset by certain jurisdictional asset transfer taxes and advisory and professional fees incurred related to this acquisition."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(d)","The acquisition purchase price hedge loss (gain) for the years ended December 31, 2021 and 2020 relates to the change in fair value of the Company\u2019s forward currency hedge arrangement that economically hedged the euro-denominated purchase price of the PMMA business. Refer to Note 13 in the consolidated financial statements for further information."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(e)","Asset impairment charges or write-offs for the years ended December 31, 2020 relate to the impairment of the Company\u2019s styrene monomer assets in Boehlen, Germany. Refer to Note 14 in the consolidated financial statements for further information."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(f)","Other items for the year ended December 31, 2021 primarily relate to fees incurred in conjunction with certain of the Company\u2019s strategic initiatives, including our ERP upgrade project. Other items for the years ended December 31, 2020 and 2019 primarily relate to advisory and professional fees incurred in conjunction with our initiative to transition business services from Dow, including certain administrative services such as accounts payable, logistics, and IT services, which was substantially completed in 2020, as well as fees incurred in conjunction with certain of the Company\u2019s strategic initiatives."]]
[[/GREPCENT_TABLE]]

Liquidity and Capital Resources

Cash Flows

The table below summarizes our primary sources and uses of cash for the years ended December 31, 2021, 2020, and 2019. We have derived the summarized cash flow information from our audited financial statements. Prior period amounts herein have been recast in conjunction with adjustments made for the Company’s classification of the Synthetic Rubber business as discontinued operations, as described in Note 5 of the consolidated financial statements and in Item 1—Business.

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended"],["\u200b","\u200b","December 31,"],["(in millions)","","2021","","2020","","2019"],["Net cash provided by (used in):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Operating activities - continuing operations","\u200b","$","456.0","\u200b","$","216.8","\u200b","$","241.9","\u200b"],["Operating activities - discontinued operations","\u200b","\u200b","(3.3)","\u200b","\u200b","38.6","\u200b","\u200b","80.6","\u200b"],["Operating activities","\u200b","\u200b","452.7","\u200b","\u200b","255.4","\u200b","\u200b","322.5","\u200b"],["Investing activities - continuing operations","\u200b","","(1,936.2)","\u200b","","(3.0)","\u200b","","(83.2)","\u200b"],["Investing activities - discontinued operations","\u200b","\u200b","396.5","\u200b","\u200b","(21.2)","\u200b","\u200b","(26.1)","\u200b"],["Investing activities","\u200b","\u200b","(1,539.7)","\u200b","\u200b","(24.2)","\u200b","\u200b","(109.3)","\u200b"],["Financing activities","\u200b","","1,075.7","\u200b","","(104.3)","\u200b","","(206.7)","\u200b"],["Effect of exchange rates on cash","\u200b","","(4.4)","\u200b","","4.4","\u200b","","(1.4)","\u200b"],["Net change in cash, cash equivalents, and restricted cash","\u200b","$","(15.7)","\u200b","$","131.3","\u200b","$","5.1","\u200b"]]
[[/GREPCENT_TABLE]]

Operating Activities

Net cash provided by operating activities from continuing operations during the year ended December 31, 2021 totaled $456.0 million, driven by strong earnings, and inclusive of dividends received from Americas Styrenics of $85.0 million. Partially offsetting these factors was a $23.0 million reduction in operating cash from a net working capital use during the period, primarily attributable to increases in raw material costs. Net cash used in operating activities from discontinued operations during the year ended December 31, 2021 totaled $3.3 million, and was related to the operations of our Synthetic Rubber business, which was sold during the period. As discussed in Note 5 to the consolidated financial statements, the sale of our Synthetic Rubber business excluded the transfer of net working capital (excluding inventory).

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As a result, the release of this working capital, the majority of which will occur in the first quarter of 2022, is or will be included in our continuing operating cash flows.

Net cash provided by operating activities from continuing operations during the year ended December 31, 2020 totaled $216.8 million. This increase in cash was driven by a $83.6 million increase in operating cash generated from a net working capital release during the period, which was primarily attributable to the Company’s liquidity-focused actions during the height of the COVID-19 pandemic, including reduced capital spending, operating expenses, and working capital, as well as the impact of lower raw material prices and sales volumes. Net cash provided by operating activities from discontinued operations during the year ended December 31, 2020 totaled $38.6 million, and was also driven by the aforementioned liquidity-focused actions.

Net cash provided by operating activities from continuing operations during the year ended December 31, 2019 totaled $241.9 million, inclusive of $110.0 million of dividends received from Americas Styrenics. This increase in cash was driven by a $98.6 million increase in operating cash generated from a net working capital release during the period, which was primarily attributable to decreases of $66.6 million in accounts receivable and $43.1 million in inventories, due to lower raw material prices and lower sales volumes, as well as lower days sales in inventory. Net cash provided by operating activities from discontinued operations during the year ended December 31, 2019 totaled $80.6 million, and was also driven by lower raw material prices and lower sales volumes during the period.

Investing Activities

Net cash used in investing activities from continuing operations during the year ended December 31, 2021 totaled $1,936.2 million, which was primarily attributable to net cash paid for asset or business acquisitions of $1,804.0 million (see Note 4), capital expenditures of $117.7 million, and payments for the settlement of hedging instruments of $14.7 million (related to the acquisition purchase price hedge – see Note 13). Net cash provided by investing activities from discontinued operations during the year ended December 31, 2021 totaled $396.5 million, which was primarily attributable to cash received from the sale of the Synthetic Rubber business.

Capital expenditures for 2022 are expected to be approximately $180.0 million, inclusive of spending for both growth initiatives as well as compliance and maintenance costs.

Net cash used in investing activities from continuing operations during the year ended December 31, 2020 totaled $3.0 million. This activity included capital expenditures of $66.6 million, partially offset by proceeds from the settlement of hedging instruments of $51.6 million as well as proceeds of $11.9 million from the sale of our former latex binders manufacturing facility in Livorno, Italy. Net cash used in investing activities from discontinued operations during the year ended December 31, 2020 totaled $21.2 million, which was attributable to capital expenditures of $15.7 million as well as cash paid for a cost method investment of $5.5 million.

Net cash used in investing activities from continuing operations during the year ended December 31, 2019 totaled $83.2 million, primarily resulting from capital expenditures of $84.0 million. Net cash used in investing activities from discontinued operations during the year ended December 31, 2019 totaled $26.1 million, which was entirely attributable to capital expenditures.

Financing Activities

Net cash provided by financing activities during the year ended December 31, 2021 totaled $1,075.7 million. This activity was primarily due to $746.3 million in proceeds from the issuance of the 2028 Term Loan B, $450.0 million in proceeds from the issuance of the 2029 Senior Notes, and $11.0 million in proceeds from exercise of option awards. This activity was partially offset by $48.1 million of ordinary share repurchases, $35.4 million of deferred financing fees paid, $14.6 million of net repayments of short-term borrowings, $21.9 million of dividend payments, and $10.7 million of net principal payments related to our 2024 Term Loan B and 2028 Term Loan B during the period.

Net cash used in financing activities during the year ended December 31, 2020 totaled $104.3 million. This activity was primarily due to $61.8 million of dividends paid, $25.0 million of payments related to the repurchase of ordinary shares, $12.6 million net repayments of short-term borrowings, and $6.9 million of net principal payments related to our 2024 Term Loan B during the period. Additionally, net cash used in financing activities included $0.6 million of withholding taxes paid related to the vesting of certain Restricted Share Units (“RSUs”) during the period, which was more than offset by $2.6 million of proceeds received from the exercise of option awards.

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Net cash used in financing activities during the year ended December 31, 2019 totaled $206.7 million. This activity was primarily due to $119.7 million of ordinary shares repurchases, $65.7 million of dividends paid, $7.0 million of net principal payments related to our 2024 Term Loan B during the period, and $10.6 million net repayments of short-term borrowings. Additionally, net cash used in financing activities included $4.6 million of withholding taxes paid related to the vesting of certain RSUs during the period, partially offset by $0.9 million of proceeds received from the exercise of option awards.

​

Free Cash Flow

We use Free Cash Flow as a non-GAAP measure to evaluate and discuss the Company’s liquidity position and results. Free Cash Flow is defined as cash from operating activities, less capital expenditures. We believe that Free Cash Flow provides an indicator of the Company’s ongoing ability to generate cash through core operations, as it excludes the cash impacts of various financing transactions as well as cash flows from business combinations that are not considered organic in nature. We also believe that Free Cash Flow provides management and investors with useful analytical indicator of our ability to service our indebtedness, pay dividends (when declared), and meet our ongoing cash obligations.

Free Cash Flow is not intended to represent cash flows from operations as defined by GAAP, and therefore, should not be used as an alternative for that measure. Other companies in our industry may define Free Cash Flow differently than we do. As a result, it may be difficult to use this or similarly-named financial measures that other companies may use, to compare the liquidity and cash generation of those companies to our own. We compensate for these limitations by providing a reconciliation to cash provided by operating activities, which is determined in accordance with GAAP.

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended","\u200b"],["\u200b","\u200b","December 31,","\u200b"],["(in millions)","","2021","","2020","","2019","\u200b"],["Cash provided by operating activities","\u200b","$","452.7","\u200b","$","255.4","\u200b","$","322.5","\u200b"],["Capital expenditures","\u200b","\u200b","(123.5)","\u200b","\u200b","(82.3)","\u200b","\u200b","(110.1)","\u200b"],["Free Cash Flow","\u200b","$","329.2","\u200b","$","173.1","\u200b","$","212.4","\u200b"]]
[[/GREPCENT_TABLE]]

Refer to the discussion above for significant impacts to cash provided by operating activities for the years ended December 31, 2021, 2020, and 2019.

​

Capital Resources, Indebtedness and Liquidity

We require cash principally for day-to-day operations, to finance capital investments and other initiatives, to purchase materials, to service our outstanding indebtedness, and to fund the return of capital to shareholders via dividend payments and ordinary share repurchases, when deemed appropriate. Our sources of liquidity include cash on hand, cash flow from continuing operations, and amounts available under the Senior Credit Facility and the Accounts Receivable Securitization Facility (discussed further below).

As of December 31, 2021 and 2020, we had $2,368.8 million and $1,187.3 million, respectively, in outstanding indebtedness and $1,064.1 million and $983.3 million, respectively, in working capital (calculated as current assets from continuing operations less current liabilities from continuing operations). In addition, as of December 31, 2021 and 2020, we had $560.6 million and $172.8 million, respectively, of foreign cash and cash equivalents on our consolidated balance sheets, outside of our country of domicile, which was Ireland as of December 31, 2021 and Luxembourg as of December 31, 2020, all of which is readily convertible into other foreign currencies, including the U.S. dollar. Our intention is not to permanently reinvest our foreign cash and cash equivalents. Accordingly, we record deferred income tax liabilities related to the unremitted earnings of our subsidiaries. For a detailed description of the Company’s debt structure, borrowing rates, and expected future payment obligations, refer to Note 12 in the consolidated financial statements.

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The following table outlines our outstanding indebtedness as of December 31, 2021 and 2020 and the associated interest expense, including amortization of deferred financing fees and issuance discounts. Effective interest rates for the borrowings included in the table below exclude the impact of deferred financing fee amortization, certain other fees charged to interest expense (such as fees for unused commitment fees during the period), and the impacts of derivatives designated as hedging instruments.

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","As of and for the Year Ended","\u200b","As of and for the Year Ended"],["\u200b","\u200b","December 31, 2021","\u200b","December 31, 2020"],["\u200b","\u200b","\u200b","\u200b","Effective","\u200b","\u200b","\u200b","\u200b","\u200b","Effective","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","Interest","\u200b","Interest","\u200b","\u200b","\u200b","Interest","\u200b","Interest"],["($ in millions)","","Balance","","Rate","","Expense","","Balance","\u200b","Rate","","Expense"],["Senior Credit Facility","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["2024 Term Loan B","\u200b","$","670.4","\u200b","2.1","%","$","20.6","\u200b","$","677.3","\u200b","2.6","%","$","23.3","\u200b"],["2028 Term Loan B","\u200b","\u200b","742.8","\u200b","2.6","%","\u200b","15.2","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["2026 Revolving Facility","\u200b","\u200b","\u2014","\u200b","\u2014","%","\u200b","2.1","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","3.7","\u200b"],["2029 Senior Notes","\u200b","\u200b","450.0","\u200b","5.1","%","\u200b","19.0","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["2025 Senior Notes","\u200b","\u200b","500.0","\u200b","5.4","%","\u200b","20.7","\u200b","\u200b","500.0","\u200b","5.4","%","\u200b","19.5","\u200b"],["Accounts Receivable Securitization Facility","\u200b","","\u2014","\u200b","2.0","%","","1.8","\u200b","","\u2014","\u200b","\u2014","\u200b","","1.5","\u200b"],["Other indebtedness*","\u200b","","5.6","\u200b","2.2","%","","\u2014","\u200b","","10.0","\u200b","2.4","%","","0.1","\u200b"],["Total","\u200b","$","2,368.8","\u200b","\u200b","\u200b","$","79.4","\u200b","$","1,187.3","\u200b","\u200b","\u200b","$","48.1","\u200b"]]
[[/GREPCENT_TABLE]]

*For the year ended December 31, 2021, interest expense on “Other indebtedness” totaled less than $0.1 million.

Our Senior Credit Facility includes the 2026 Revolving Facility, which matures in May 2026 and has a borrowing capacity of $375.0 million. As of December 31, 2021, the Company had $368.6 million of funds available for borrowing (net of $6.4 million outstanding letters of credit) under the 2026 Revolving Facility. Further, as of December 31, 2021, the Company is required to pay a quarterly commitment fee in respect of any unused commitments under the 2026 Revolving Facility equal to 0.375% per annum.

Also included in our Senior Credit Facility is our 2024 Term Loan B (with original principal of $700.0 million, maturing in September 2024), and our 2028 Term Loan B (with original principal of $750.0 million, maturing in May 2028), each of which requires scheduled quarterly payments in amounts equal to 0.25% of the original principal. The stated interest rate on our 2024 Term Loan B is London Interbank Offered Rate (“LIBOR”) plus 2.00% (subject to a 0.00% LIBOR floor). The stated interest rate on our 2028 Term Loan B is LIBOR plus 2.50% (subject to a 0.00% LIBOR floor). The Company made net principal payments of $7.0 million on the 2024 Term Loan B and net principal payments of $3.7 million on the 2028 Term Loan B during the year ended December 31, 2021, with an additional $14.5 million of scheduled future payments classified within current debt on the Company’s consolidated balance sheet as of December 31, 2021 related to both the 2024 Term Loan B and 2028 Term Loan B.

Our 2025 Senior Notes issued under the indenture executed in 2017 include $500.0 million aggregate principal amount of 5.375% senior notes that mature on September 1, 2025. Interest on the 2025 Senior Notes is payable semi-annually on May 3 and November 3 of each year. These Notes may be redeemed prior to their maturity at the option of the Company under certain circumstances at specific redemption prices. Refer to Note 12 in the consolidated financial statements for further information.

Our 2029 Senior Notes, as issued under the indenture executed in 2021, include $450.0 million aggregate principal amount of 5.125% senior notes that mature on April 1, 2029. Interest on the 2029 Senior Notes is payable semi-annually on February 15 and August 15 of each year, which commenced on August 15, 2021. These Notes may be redeemed prior to their maturity at the option of the Company under certain circumstances at specific redemption prices. Refer to Note 12 in the consolidated financial statements for further information.

We also continue to maintain our Accounts Receivable Securitization Facility, which has an outstanding borrowing capacity of $150.0 million. The Accounts Receivable Securitization Facility was amended during 2021, and pursuant to the amended terms, it matures in November 2024 and incurs fixed interest charges of 1.65% on outstanding borrowings plus variable commercial paper rates, as well as fixed charges of 0.80% on available, but undrawn commitments. In August 2021, in conjunction with the Aristech Surfaces Acquisition, we drew $150.0 million on our

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Accounts Receivable Securitization Facility, which was fully repaid as of December 31, 2021. As such, as of December 31, 2021, there were no amounts outstanding under this facility and the Company had approximately $150.0 million of accounts receivable available to support this facility, based on the pool of eligible accounts receivable. Refer to Note 12 in the consolidated financial statements for further information on the facility.

Our ability to raise additional financing and our borrowing costs may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios.

We and our subsidiaries, affiliates, or significant shareholders may from time to time seek to retire or purchase our outstanding debt through cash purchases in the open market, privately negotiated transactions, exchange transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Trinseo Materials Operating S.C.A. and Trinseo Materials Finance, Inc. (the “Issuers” of our 2029 Senior Notes and 2025 Senior Notes and “Borrowers” under our Senior Credit Facility) are dependent upon the cash generation and receipt of distributions and dividends or other payments from our subsidiaries and joint venture in order to satisfy their debt obligations. There are no known significant restrictions by third parties on the ability of subsidiaries of the Company to disburse or dividend funds to the Issuers and the Borrowers in order to satisfy these obligations. However, as the Company’s subsidiaries are located in a variety of jurisdictions, the Company can give no assurances that our subsidiaries will not face transfer restrictions in the future due to regulatory or other reasons beyond our control.

The Senior Credit Facility and Indentures also limit the ability of the Borrowers and Issuers, respectively, to pay dividends or make other distributions to Trinseo PLC, which could then be used to make distributions to shareholders. During the year ended December 31, 2021, the Company declared total dividends of $0.80 per ordinary share, or $31.4 million, of which $13.6 million, inclusive of dividend equivalents, remains accrued as of December 31, 2021 and the majority of which was paid in January 2022. These dividends are well within the available capacity under the terms of the restrictive covenants contained in the Senior Credit Facility and Indentures. Further, significant additional capacity continues to be available under the terms of these covenants to support expected future dividends to shareholders, should the Company continue to declare them.

The Company’s cash flow generation in recent years has been strong, and the Company generated positive cash flows during the year ended December 31, 2021. We believe that funds provided by operations, our existing cash, cash equivalent, and restricted cash balances, borrowings available under our 2026 Revolving Facility and our Accounts Receivable Securitization Facility will be adequate to meet planned operating and capital expenditures for at least the next 12 months under current operating conditions.

Our ability to generate cash from operations to pay our indebtedness and meet other liquidity needs is subject to certain risks described herein and under Item 1A—Risk Factors. As of December 31, 2021, we were in compliance with all the covenants and default provisions under our debt agreements. Refer to Note 12 in the consolidated financial statements for further information on the details of the covenant requirements.

We do not have any off-balance sheet financing arrangements that we believe are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations and Commercial Commitments

The Company’s primary contractual obligations and commercial commitments consist of the payments for principal and interest on our outstanding long-term debt, raw material purchases, funding requirements under our pension and other postretirement benefits, lease commitments, and obligations under our SAR SSAs.

The Company has both fixed and variable-rate long-term debt arrangements, which have varying principal and interest payment requirements over their contractual terms. Refer to the table and section above as well as to Note 12 in the consolidated financial statements for more information on our debt arrangements. Additionally, refer to Item 7A—

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