Hexion Inc. Announces First Quarter 2018 Results
First Quarter 2018 Highlights
- Net sales of $946 million, a 9% increase versus prior year
- Net loss of $13 million
- Segment EBITDA of $118 million, a 24% increase versus prior year
- Completed the sale of the Additives Technology Group (ATG) business in January 2018 generating $49 million in proceeds or approximately twelve times Segment EBITDA over the last twelve months
COLUMBUS, Ohio–(EON: Enhanced Online News)–Hexion Inc. (“Hexion” or the “Company”) today announced results for the first quarter ended March 31, 2018.
“First quarter 2018 Segment EBITDA reflected significant improvement in our base epoxy resins and phenolic specialty resins businesses, as well as the positive impact of our recent structural cost reduction initiatives. We also drove higher Segment EBITDA in all regions of our formaldehyde and forest products resins business.”
“Hexion reported strong Segment EBITDA gains of 24% and sales growth of 9%, respectively, in the first quarter of 2018,” said Craig A. Rogerson, Chairman, President and CEO. “First quarter 2018 Segment EBITDA reflected significant improvement in our base epoxy resins and phenolic specialty resins businesses, as well as the positive impact of our recent structural cost reduction initiatives. We also drove higher Segment EBITDA in all regions of our formaldehyde and forest products resins business.”
Mr. Rogerson added: “We continue to experience strong Segment EBITDA growth in 2018 reflecting tailwinds across the portfolio including improved demand in our forest products business, and continued strength in market fundamentals in base epoxy resins, which are expected to persist for the foreseeable future. We also expect our specialty epoxy business to benefit from growing market demand for waterborne coatings over the next few years and long-term secular growth in renewable energy to support our wind energy business.”
First Quarter 2018 Results
Net Sales. Net sales for the quarter ended March 31, 2018 were $946 million, an increase of 9% compared with $870 million in the prior year period. The increase in reported net sales was driven by pricing actions primarily in the base epoxy resins business and the pass-through of higher raw material costs in the global forest products resins and phenolic specialty resins businesses.
Segment EBITDA. Segment EBITDA for the quarter ended March 31, 2018 was $118 million, an increase of 24% compared with the prior year period. Segment EBITDA in the first quarter of 2018 increased by $24 million, or 26%, when adjusted for divestitures. First quarter 2018 results reflected the ongoing cost reductions and improved margins in the Company’s base epoxy resins, phenolic specialty resins, and global forest product resins and formaldehyde businesses.
Global Restructuring Programs
In the first quarter of 2018, the Company achieved $13 million of cost savings, including reductions in selling, general and administrative (SG&A) expenses and targeted site rationalizations. Hexion recently identified approximately $40 million in additional structural cost savings with approximately 90% of the savings related to headcount reductions. At March 31, 2018, Hexion had $39 million of total in-process cost savings. The Company has taken the majority of the actions and the impact is expected to be realized by year-end 2018.
Following are net sales and Segment EBITDA by reportable segment for the first quarter ended March 31, 2018 and 2017. See “Non-U.S. GAAP Measures” for further information regarding Segment EBITDA and a reconciliation of net loss to Segment EBITDA.
|Three Months Ended March 31,|
|Net Sales (1):|
|Epoxy, Phenolic and Coating Resins||$||540||$||492|
|Forest Products Resins||406||378|
|Total Net Sales||946||870|
|Adjustment for disposition (2)||—||(4)|
|Adjusted Net Sales||$||946||$||866|
|Epoxy, Phenolic and Coating Resins||$||70||$||52|
|Forest Products Resins||67||61|
|Corporate and Other||(19||)||(18||)|
|Total Segment EBITDA||118||95|
|Adjustment for disposition (2)||—||(1)|
|Adjusted Segment EBITDA||$||118||$||94|
|(1)||Intersegment sales are not significant and, as such, are eliminated within the selling segment.|
|(2)||Adjustment for disposition impacts the Forest Products Resins segment.|
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