The Urethane Blog

Hexion Results

Hexion Inc. Announces Second Quarter 2018 Results

Second Quarter 2018 Highlights

  • Net sales of $995 million, a 9% increase versus prior year
  • Net loss of $21 million
  • Segment EBITDA of $128 million, a 28% increase versus prior year
  • Liquidity of $322 million

COLUMBUS, Ohio–(BUSINESS WIRE)–Hexion Inc. (“Hexion” or the “Company”) today announced results for the
second quarter ended June 30, 2018.

“Strong results in our base epoxy resins and forest products businesses
drove year over year Segment EBITDA gains of 28% and sales growth of 9%
in the second quarter of 2018,” said Craig A. Rogerson, Chairman,
President and CEO. “Our results also reflected improved performance in
our specialty epoxy resins business, primarily due to ongoing growth in
our waterborne coatings business, as well as the positive impact of our
recent structural cost reduction initiatives.”

Mr. Rogerson added: “We continue to expect strong year-over-year Segment
EBITDA growth in the second half of 2018 reflecting solid demand in our
global forest products business and continued strength in market
fundamentals in base epoxy resins, which are expected to persist for the
foreseeable future. We also anticipate that continued environmental
regulation and long-term secular growth in renewable energy will support
gains in our waterborne coatings and wind energy business over the next
few years. Finally, we generated $41 million of operating cash flow in
the second quarter and we remain focused on generating improved cash
flow in 2018.”

Second Quarter 2018 Results

Net Sales. Net sales for the quarter ended June 30, 2018 were
$995 million, an increase of 9% compared with $912 million in the prior
year period. The increase in reported net sales was driven by the
pass-through of higher raw material costs and pricing actions primarily
in the base epoxy resins business.

Segment EBITDA. Segment EBITDA for the quarter ended June 30,
2018 was $128 million, an increase of 28% compared with the prior year
period. Segment EBITDA in the second quarter of 2018 increased by $29
million, or 29%, when adjusted for divestitures. Second quarter 2018
results reflected cost reduction actions and improved margins primarily
in the Company’s base epoxy resins, phenolic specialty resins, and
global formaldehyde businesses.

Global Restructuring Programs

Hexion recently identified $53 million of structural cost savings that
it expects to realize during 2018. In the first six months of 2018, the
Company achieved $25 million of cost savings, including reductions in
selling, general and administrative expenses and targeted site
rationalizations. At June 30, 2018, Hexion had approximately $28 million
of total in-process savings that it expects to be substantially realized
by year-end 2018.