COLUMBUS, Ohio–(BUSINESS WIRE)–

Second Quarter 2019 Highlights

• On July 1, 2019, Hexion emerged from Chapter 11, successfully completed its balance sheet de-leveraging and reduced total consolidated debt by more than $2.0 billion
• Net sales of $892 million, a 10% decrease versus prior year
• Net loss of $107 million, which included $156 million of reorganization expenses
• Segment EBITDA of $112 million, a 13% decrease versus prior year

Hexion Inc. (“Hexion” or the “Company”) today announced results for the second quarter ended June 30, 2019.

“We are pleased to begin a new era for Hexion by successfully completing our balance sheet restructuring in an expedited pace,” said Craig A. Rogerson, Chairman, President and CEO. “Our new capital structure provides us with a strong financial foundation from which we can sustainably operate and grow our specialty chemical product portfolio. As an appropriately capitalized market leader with substantial free cash flow generation capabilities and a lower interest burden, we are well positioned to leverage our leading market positions, global manufacturing footprint, and specialty portfolio. We appreciate the support of our creditors throughout the process, as well as our valued customers, suppliers and associates.”

Mr. Rogerson added: “Second quarter 2019 reflected softer earnings primarily in our base epoxy, Versatic Acids™, and forest product businesses, partially offset by improved specialty epoxy results reflecting positive wind energy demand. Despite softer market conditions in certain end markets, we continue to position the company for a stronger sequential quarter and long-term success, as well as strategically investing in our business, such as our new Application Development Center in Shanghai that is expected to be open by year-end 2019. In addition, we are continuing to look for ways to streamline our business and we recently identified and are beginning to execute on $20 million of new cost savings that we expect to achieve over the next 18 months.”

Second Quarter 2019 Results

Net sales for the quarter ended June 30, 2019 were $892 million, a decrease of 10% compared with $995 million in the prior year period. Pricing negatively impacted sales by $36 million due primarily due to softer market conditions in our base epoxy resins business and methanol price decreases contractually passed through to customers across many of our businesses. Foreign currency translation negatively impacted sales by $34 million due to the strengthening of the U.S. dollar against the euro, Chinese yuan and Brazilian real in the second quarter of 2019 compared to the second quarter of 2018. Volume decreases negatively impacted net sales by $33 million, which was primarily related to volume decreases in our North American resins business due to weaker demand driven by high customer inventory levels and competitive pricing pressures, and in our phenolic resins business due to overall weakness in the automotive and construction industries. These decreases were partially offset by increased volumes in our specialty epoxy business due to strong demand in China wind energy. Segment EBITDA for the quarter ended June 30, 2019 was $112 million, a decrease of $16 million compared with the prior year period, driven primarily by the Company’s base epoxy resins and global forest products businesses, partially offset by cost reduction actions.

Segment Results

Following are net sales and Segment EBITDA by reportable segment for the second quarter ended June 30, 2019 and 2018. See “Non-U.S. GAAP Measures” for further information regarding Segment EBITDA and a reconciliation of net loss to Segment EBITDA.

Epoxy, Phenolic and Coating Resins reported net sales of $512 million in the second quarter of 2019, a decrease of 9% from second quarter 2018 net sales of $564 million. Pricing negatively impacting net sales by $24 million due primarily to margin compression in our base epoxy resins business due to softer market conditions as compared to the second quarter of 2018. Foreign currency translation negatively impacted sales by $21 million, while volume negatively impacted sales by $7 million primarily related to volume decreases in our phenolic specialty resins and versatic acids businesses. These decreases were partially offset by increased volumes in our epoxy specialty business due to strong demand in China wind energy. Segment EBITDA for Epoxy, Phenolic and Coating Resins was $59 million, a decrease of 18% from second quarter 2018 results of $72 million. The $13 million decrease in Segment EBITDA as compared to the prior year was primarily due to weaker base epoxy resins results.

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