WYNYARD, UK, Nov. 14,
2022 /PRNewswire/ --
Third Quarter 2022 Highlights
- Net loss attributable to Venator of $50
million compared to $47
million in the prior year period
- Adjusted EBITDA of $(8) million
compared to $48 million in the prior
year period
- Net cash used in operating activities of $74 million and free cash flow of $(90) million
- Diluted earnings per share of $(0.46) and adjusted diluted earnings per share
of $(0.33)
- Titanium Dioxide (TiO2) sales volumes declined 25%
compared to the prior quarter and 29% compared to the prior year
period
- Implements a $50 million cost
reduction program
- Closed a sale-leaseback transaction for Color Pigments
manufacturing facility in Los Angeles,
California for $51 million on
October 7, 2022
- On November 14, 2022 entered into
a definitive agreement to divest the iron oxide business from
within the Color Pigments business to Cathay Industries for an
enterprise value of $140 million
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
June
30
|
|
September
30,
|
|
(In millions, except per share amounts)
|
|
2022
|
|
2021
|
|
|
2022
|
|
2021
|
|
Revenues
|
|
$ 506
|
|
$ 557
|
|
$ 642
|
|
$ 1,807
|
|
$
1,677
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Venator
|
|
$ (50)
|
|
$ (47)
|
|
$
93
|
|
$
40
|
|
$ (91)
|
|
Adjusted net (loss)
income attributable to Venator(1)
|
|
$ (36)
|
|
$
3
|
|
$
14
|
|
$
(15)
|
|
$
4
|
|
Adjusted
EBITDA(1)
|
|
$
(8)
|
|
$
48
|
|
$
61
|
|
$ 110
|
|
$ 140
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings
per share (4)
|
|
$
(0.46)
|
|
$
(0.44)
|
|
$ 0.86
|
|
$ 0.37
|
|
$
(0.85)
|
|
Adjusted diluted (loss)
earnings per share(1)
|
|
$
(0.33)
|
|
$ 0.03
|
|
$ 0.13
|
|
$ (0.14)
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$ (74)
|
|
$
7
|
|
$
73
|
|
$
(87)
|
|
$
2
|
|
Free cash
flow(3)
|
|
$ (90)
|
|
$ (13)
|
|
$
58
|
|
$ (135)
|
|
$ (45)
|
|
|
See end of press
release for footnote explanations
|
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
third quarter 2022 results with revenues of $506 million, net loss attributable to Venator of
$50 million, adjusted net loss
attributable to Venator of $36
million and adjusted EBITDA of $(8)
million.
Simon Turner, President and
CEO of Venator, commented:
"Throughout the third quarter, macro-economic uncertainty
increased. While earnings from our Performance Additives segment
were more resilient, we experienced a 25% decline in sales volumes
for our Titanium Dioxide products compared to the second quarter.
The decline occurred primarily in Europe and APAC and accelerated throughout the
quarter, primarily as a result of low consumer confidence and
China's zero-COVID policy.
"Weak demand has continued into the fourth quarter, and we are
starting to see softening in North
America. As visibility into future periods remains limited,
we have implemented a range of actions, including moderation of
production at our manufacturing facilities. We are also
implementing cost reduction measures that we expect to deliver
$50 million in annualized savings by
the end of 2024. Our priorities are focused on cost reduction,
improvement of our liquidity profile and optimization of our
manufacturing network.
"In addition to the recently announced $51 million sale-leaseback transaction, we have
entered into a definitive agreement to sell our iron oxide business
from within our Color Pigments business to Cathay Industries for an
enterprise value of $140 million. The
average EBITDA of this business in 2020 and 2021 proforma adjusted
for the impact of the sale-leaseback was $16
million. We believe Cathay will be an excellent long-term
strategic owner of the business going forward. The transaction is
expected to close by the end of the first quarter in 2023."
Segment Analysis for 3Q22 Compared to 3Q21
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $361 million
for the three months ended September 30,
2022, a decrease of $69
million, or 16%, compared to the same period in 2021. The
decrease was primarily due to a 29% decrease in sales volumes
compared to the same period in the prior year which was driven by
decreased demand in Europe and
APAC, and a 7% unfavorable impact from foreign currency
translation, primarily as a result of the Euro weakening against
the U.S. Dollar. This decrease was partially offset by a 19%
increase in average local currency selling prices, which we
implemented to recover higher costs of energy, raw materials, and
shipping.
Adjusted EBITDA for the Titanium Dioxide segment was
$(5) million for the three months
ended September 30, 2022, a decrease
of $59 million compared to the same
period in 2021. The decrease was primarily attributable to a
decline in demand for our products in Europe and APAC as well as an increase in
costs of energy, raw materials, and shipping.
Performance Additives
The Performance Additives
segment generated revenues of $145
million for the three months ended September 30, 2022, an increase of $18 million, or 14%, compared to the same period
in 2021. The increase primarily resulted from a 31% increase in
average local currency selling price, which we implemented to
recover higher costs of energy, raw materials and shipping. These
increases were partially offset by an 8% decrease in sales volumes,
a 6% unfavorable impact from foreign currency translation,
primarily as a result of the Euro weakening against the U.S.
Dollar, and a 3% decrease due to mix and other.
Adjusted EBITDA for the Performance Additives segment was
$9 million for the three months ended
September 30, 2022, an increase of
$4 million compared to the same
period in 2021. The increase in adjusted EBITDA was primarily
related to the increase in average selling price outpacing the
increase in costs of energy, raw materials, and shipping.
Corporate and other
Corporate and other represents
expenses which are not allocated to our segments. Expenses from
Corporate and other were $12 million
in the three months ended September 30,
2022, which was an increase of $1
million compared to the same period in 2021.
Tax Items
We recorded income tax expense of
$4 million and $4 million for the three months ended September
30, 2022 and 2021, respectively. $9
million of tax expense was recognized in the third quarter
of 2022 in connection with recognizing a valuation allowance
against certain net deferred tax assets. Our adjusted effective tax
rate was 35% for both the three months ended September
30, 2022 and the same period in 2021.
Our income taxes are significantly affected by the mix of income
and losses in the tax jurisdictions and valuation allowances in
certain jurisdictions in which we operate. In 2022, we expect to
see an adjusted effective tax rate of approximately 35%. We
continue to expect our adjusted effective tax rate in the long-term
will be approximately 15% to 20%.
Liquidity and Capital Resources
As of September 30, 2022, we had $278 million of
total liquidity, including cash and cash equivalents of
$45 million and $233 million of
availability under our existing asset-based revolving credit
facility. At the end of the third quarter, net debt was
$926 million compared to $798 million as of December 31, 2021.
Primary working capital was a cash use of $30 million in the third quarter 2022. This was
attributable to higher inventory levels due to lower than expected
demand.
During the third quarter as a result of further weakening of the
Euro against the U.S. Dollar, we opportunistically monetized our
interest rate cross-currency swaps and received $16 million. On October
7, we received proceeds of $42
million, net of $9 million of
taxes and other expenses, as a result of the $51 million sale-leaseback transaction for our
Color Pigments facility located in Los
Angeles, California.
Year to date, capital expenditures totaled $48 million. We expect total capital expenditures
in 2022 to be approximately $70 million, which represents a
reduction of $20 million compared to
our prior estimate.
External Advisor Engagement
Citi are acting as
financial advisor and Latham & Watkins as legal advisor on the
sale of our iron oxide business. Separately, we have engaged
Alvarez & Marsal Europe LLP to advise us on a range of
operational and financial actions and objectives.
Earnings Conference Call Information
We will hold a
conference call to discuss our third quarter 2022 results on
Monday, November 14, 2022 at 8:00 a.m. ET.
|
Call-in numbers for the
conference call:
|
|
U.S.
participants
|
1-833-366-1118
|
|
International
participants
|
1-412-902-6770
|
|
(No passcode
required)
|
|
In order to facilitate the registration process, you may use the
following link to pre-register for the conference call. Callers who
pre-register will be given a unique PIN and separate call-in number
to gain immediate access to the call and bypass the live operator.
To pre-register, please go to:
https://dpregister.com/sreg/10171846/f4af61c878
Webcast Information
The conference call will be
available via webcast and can be accessed from the company's
website at venatorcorp.com/investor-relations.
Replay Information
The conference call will be
available for replay beginning November 14, 2022 and ending
November 21, 2022.
|
Call-in numbers for the
replay:
|
|
U.S.
participants
|
1-877-344-7529
|
|
International
participants
|
1-412-317-0088
|
|
Passcode
|
6008355
|
|
Table 1 — Results of
Operations
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
(In millions, except per share amounts)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Revenues
|
|
$
506
|
|
$
557
|
|
$
1,807
|
|
$
1,677
|
|
Cost of goods
sold
|
|
508
|
|
511
|
|
1,677
|
|
1,529
|
|
Operating
expenses
|
|
23
|
|
42
|
|
95
|
|
129
|
|
Restructuring,
impairment and plant closing and transition costs
|
|
5
|
|
35
|
|
21
|
|
60
|
|
Operating (loss)
income
|
|
(30)
|
|
(31)
|
|
14
|
|
(41)
|
|
Interest expense,
net
|
|
(16)
|
|
(15)
|
|
(44)
|
|
(44)
|
|
Other income,
net
|
|
2
|
|
3
|
|
93
|
|
10
|
|
(Loss) Income before
income taxes
|
|
(44)
|
|
(43)
|
|
63
|
|
(75)
|
|
Income tax
expense
|
|
(4)
|
|
(4)
|
|
(18)
|
|
(14)
|
|
Net (loss)
income
|
|
(48)
|
|
(47)
|
|
45
|
|
(89)
|
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
—
|
|
(5)
|
|
(2)
|
|
Net (loss) income
attributable to Venator
|
|
$ (50)
|
|
$ (47)
|
|
$ 40
|
|
$ (91)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$ (8)
|
|
$ 48
|
|
$
110
|
|
$
140
|
|
Adjusted net income
attributable to Venator(1)
|
|
$ (36)
|
|
$
3
|
|
$ (15)
|
|
$
4
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income
per share
|
|
$
(0.46)
|
|
$
(0.44)
|
|
$
0.37
|
|
$
(0.85)
|
|
Diluted (loss)
income per share(4)
|
|
$
(0.46)
|
|
$
(0.44)
|
|
$
0.37
|
|
$
(0.85)
|
|
Adjusted (loss)
earnings per share(1)
|
|
$
(0.33)
|
|
$
0.03
|
|
$
(0.14)
|
|
$
0.04
|
|
Adjusted diluted
(loss) earnings per share(1),(4)
|
|
$
(0.33)
|
|
$
0.03
|
|
$
(0.14)
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
108.0
|
|
107.3
|
|
107.8
|
|
107.2
|
|
Diluted
shares(4)
|
|
108.0
|
|
107.5
|
|
107.9
|
|
107.5
|
|
|
See end of press
release for footnote explanations
|
|
Table 2 — Results of
Operations by Segment
|
|
|
|
Three months
ended
|
|
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
Favorable
/
|
|
September
30,
|
|
Favorable
/
|
|
(In millions)
|
|
2022
|
|
2021
|
|
(Unfavorable)
|
|
2022
|
|
2021
|
|
(Unfavorable)
|
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
361
|
|
$
430
|
|
(16) %
|
|
$
1,357
|
|
$
1,259
|
|
8 %
|
|
Performance
Additives
|
|
145
|
|
127
|
|
14 %
|
|
450
|
|
418
|
|
8 %
|
|
Total
|
|
$
506
|
|
$
557
|
|
(9) %
|
|
$
1,807
|
|
$
1,677
|
|
8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$ (5)
|
|
$ 54
|
|
(109) %
|
|
$ 93
|
|
$
130
|
|
(28) %
|
|
Performance
Additives
|
|
9
|
|
5
|
|
80 %
|
|
48
|
|
46
|
|
4 %
|
|
Corporate and
other
|
|
(12)
|
|
(11)
|
|
(9) %
|
|
(31)
|
|
(36)
|
|
14 %
|
|
Total
|
|
$
(8)
|
|
$ 48
|
|
(117) %
|
|
$
110
|
|
$
140
|
|
(21) %
|
|
|
|
See end of press
release for footnote explanations
|
|
Table 3 — Factors
Impacting Sales Revenue
|
|
|
Three months
ended
|
|
September 30,
2022 vs. 2021
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Total
|
|
Titanium
Dioxide
|
19 %
|
|
(7) %
|
|
1 %
|
|
(29) %
|
|
(16) %
|
|
Performance
Additives
|
31 %
|
|
(6) %
|
|
(3) %
|
|
(8) %
|
|
14 %
|
|
Total
Company
|
22 %
|
|
(6) %
|
|
— %
|
|
(25) %
|
|
(10) %
|
|
Nine months
ended
|
|
September 30,
2022 vs. 2021
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
& Other
|
|
Sales
Volume(b)
|
|
Divestitures
(c)
|
|
Total
|
|
Titanium
Dioxide
|
26 %
|
|
(7) %
|
|
1 %
|
|
(12) %
|
|
— %
|
|
8 %
|
|
Performance
Additives
|
26 %
|
|
(5) %
|
|
(1) %
|
|
(10) %
|
|
(2) %
|
|
8 %
|
|
Total
Company
|
26 %
|
|
(7) %
|
|
— %
|
|
(12) %
|
|
(1) %
|
|
6 %
|
|
(a)
|
Excludes revenues from
tolling arrangements, by-products and raw materials
|
|
(b)
|
Excludes sales volumes
of by-products and raw materials
|
|
(c)
|
Our water treatment
business was disposed of in the second quarter of 2021
|
|
Table 4 —
Reconciliation of U.S. GAAP to Non-GAAP Measures
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted Earnings
(Loss) Per
Share(1),(4)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
(In millions, except per share amounts)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net
loss
|
|
$
(48)
|
|
$
(47)
|
|
$
(48)
|
|
$
(47)
|
|
$
(0.44)
|
|
$
(0.44)
|
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
—
|
|
(2)
|
|
—
|
|
(0.02)
|
|
—
|
|
Net loss
attributable to Venator
|
|
(50)
|
|
(47)
|
|
(50)
|
|
(47)
|
|
(0.46)
|
|
(0.44)
|
|
Interest expense,
net
|
|
16
|
|
15
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
27
|
|
29
|
|
|
|
|
|
|
|
|
|
Certain legal
expenses/settlements
|
|
—
|
|
3
|
|
—
|
|
3
|
|
—
|
|
0.03
|
|
Amortization of pension
and postretirement actuarial losses
|
|
1
|
|
3
|
|
1
|
|
3
|
|
0.01
|
|
0.03
|
|
Net plant incident
(credits) costs
|
|
(11)
|
|
6
|
|
(11)
|
|
6
|
|
(0.10)
|
|
0.06
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
5
|
|
35
|
|
5
|
|
35
|
|
0.05
|
|
0.33
|
|
Income tax
adjustments(2)
|
|
—
|
|
—
|
|
19
|
|
3
|
|
0.18
|
|
0.03
|
|
Adjusted(1)
|
|
$ (8)
|
|
$
48
|
|
$
(36)
|
|
$ 3
|
|
$
(0.33)
|
|
$
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
(benefit) expense(2)
|
|
|
|
|
|
$
(15)
|
|
$ 1
|
|
|
|
|
|
Net income attributable
to noncontrolling interests, net of tax
|
|
|
|
|
|
2
|
|
—
|
|
|
|
|
|
Adjusted pre-tax
(loss) income
|
|
|
|
|
|
$
(49)
|
|
$ 4
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35 %
|
|
35 %
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings (Loss)
Per Share(1),(4)
|
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
|
(In millions, except per share amounts)
|
|
2022
|
|
2022
|
|
2022
|
|
Net
income
|
|
$
95
|
|
$
95
|
|
$
0.88
|
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
(2)
|
|
(0.02)
|
|
Net income
attributable to Venator
|
|
93
|
|
93
|
|
0.86
|
|
Interest expense,
net
|
|
13
|
|
|
|
|
|
Income tax
expense
|
|
14
|
|
|
|
|
|
Depreciation and
amortization
|
|
26
|
|
|
|
|
|
Certain legal
expenses/settlements
|
|
(85)
|
|
(85)
|
|
(0.79)
|
|
Amortization of pension
and postretirement actuarial losses
|
|
1
|
|
1
|
|
0.01
|
|
Net plant incident
costs
|
|
(6)
|
|
(6)
|
|
(0.06)
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
5
|
|
5
|
|
0.05
|
|
Income tax
adjustments(2)
|
|
—
|
|
6
|
|
0.06
|
|
Adjusted(1)
|
|
$
61
|
|
$
14
|
|
$
0.13
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
$
8
|
|
|
|
Net income attributable
to noncontrolling interests, net of tax
|
|
|
|
2
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
$
24
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
35 %
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted Earnings
(Loss) Per
Share(1),(4)
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
(In millions, except per share amounts)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income
(loss)
|
|
$
45
|
|
$
(89)
|
|
$
45
|
|
$
(89)
|
|
$
0.42
|
|
$
(0.83)
|
|
Net income attributable
to noncontrolling interests
|
|
(5)
|
|
(2)
|
|
(5)
|
|
(2)
|
|
(0.05)
|
|
(0.02)
|
|
Net income (loss)
attributable to Venator
|
|
40
|
|
(91)
|
|
40
|
|
(91)
|
|
0.37
|
|
(0.85)
|
|
Interest expense,
net
|
|
44
|
|
44
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
18
|
|
14
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
84
|
|
89
|
|
|
|
|
|
|
|
|
|
(Gain) loss on disposal
of businesses/assets
|
|
(1)
|
|
2
|
|
(1)
|
|
2
|
|
(0.01)
|
|
0.02
|
|
Certain legal
expenses/settlements
|
|
(83)
|
|
4
|
|
(83)
|
|
4
|
|
(0.77)
|
|
0.04
|
|
Amortization of pension
and postretirement actuarial losses
|
|
2
|
|
9
|
|
2
|
|
9
|
|
0.02
|
|
0.08
|
|
Net plant incident
(credits) costs
|
|
(15)
|
|
9
|
|
(15)
|
|
9
|
|
(0.14)
|
|
0.08
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
21
|
|
60
|
|
21
|
|
60
|
|
0.20
|
|
0.57
|
|
Income tax
adjustments(2)
|
|
—
|
|
—
|
|
21
|
|
11
|
|
0.19
|
|
0.10
|
|
Adjusted(1)
|
|
$
110
|
|
$
140
|
|
$
(15)
|
|
$ 4
|
|
$
(0.14)
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
(benefit) expense(2)
|
|
|
|
|
|
$ (3)
|
|
$ 3
|
|
|
|
|
|
Net income attributable
to noncontrolling interests, net of tax
|
|
|
|
|
|
5
|
|
2
|
|
|
|
|
|
Adjusted pre-tax
income
|
|
|
|
|
|
$
(13)
|
|
$ 9
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35 %
|
|
35 %
|
|
|
|
|
|
See end of press
release for footnote explanations
|
|
Table 5 — Selected
Balance Sheet Items
|
|
|
|
September
30,
|
|
December
31,
|
|
(In millions)
|
|
2022
|
|
2021
|
|
Cash and cash
equivalents
|
|
$
45
|
|
$
156
|
|
Accounts and notes
receivable, net
|
|
340
|
|
371
|
|
Inventories
|
|
596
|
|
478
|
|
Prepaid expenses and
other current assets
|
|
101
|
|
84
|
|
Property, plant and
equipment, net
|
|
693
|
|
848
|
|
Other assets
|
|
369
|
|
427
|
|
Total
assets
|
|
$
2,144
|
|
$
2,364
|
|
|
|
|
|
|
Accounts
payable
|
|
$
352
|
|
$
377
|
|
Other current
liabilities
|
|
113
|
|
131
|
|
Current portion of
debt
|
|
24
|
|
5
|
|
Long-term
debt
|
|
947
|
|
949
|
|
Non-current payable to
affiliates
|
|
21
|
|
21
|
|
Other non-current
liabilities
|
|
262
|
|
313
|
|
Total equity
|
|
425
|
|
568
|
|
Total liabilities
and equity
|
|
$
2,144
|
|
$
2,364
|
|
Table 6 —
Outstanding Debt
|
|
|
|
September
30,
|
|
December
31,
|
|
(In millions)
|
|
2022
|
|
2021
|
|
Debt:
|
|
|
|
|
|
Term Loan
Facility
|
|
$
354
|
|
$
356
|
|
Senior Secured
Notes
|
|
219
|
|
217
|
|
Senior Unsecured
Notes
|
|
373
|
|
372
|
|
Other debt
|
|
25
|
|
9
|
|
Total debt -
excluding affiliates
|
|
971
|
|
954
|
|
Total cash
|
|
45
|
|
156
|
|
Net debt - excluding
affiliates (5)
|
|
$
926
|
|
$
798
|
|
|
|
|
|
|
Table 7 — Summarized
Statement of Cash Flows
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
(In millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Total cash at
beginning of period
|
|
$ 109
|
|
$ 182
|
|
$ 156
|
|
$ 220
|
|
Net cash (used in)
provided by operating activities
|
|
(74)
|
|
7
|
|
(87)
|
|
2
|
|
Net cash used in
investing activities
|
|
(19)
|
|
(26)
|
|
(55)
|
|
(47)
|
|
Net cash provided by
(used in) financing activities
|
|
32
|
|
(1)
|
|
37
|
|
(12)
|
|
Effect of exchange
rate changes on cash
|
|
(3)
|
|
(1)
|
|
(6)
|
|
(2)
|
|
Total cash at end of
period
|
|
$ 45
|
|
$ 161
|
|
$ 45
|
|
$ 161
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$ (27)
|
|
$ (27)
|
|
$ (57)
|
|
$ (58)
|
|
Cash paid for income
taxes
|
|
(1)
|
|
(1)
|
|
(5)
|
|
(5)
|
|
Capital
expenditures
|
|
(16)
|
|
(20)
|
|
(48)
|
|
(47)
|
|
Depreciation and
amortization
|
|
27
|
|
29
|
|
84
|
|
89
|
|
Restructuring
|
|
(2)
|
|
(2)
|
|
(16)
|
|
(7)
|
|
Net cash flows
associated with Pori
|
|
7
|
|
(3)
|
|
(9)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
112
|
|
2
|
|
(11)
|
|
(79)
|
|
Inventories
|
|
(94)
|
|
(5)
|
|
(198)
|
|
8
|
|
Accounts
payable
|
|
(48)
|
|
19
|
|
38
|
|
64
|
|
Total cash (used
in) provided by primary working capital
|
|
$ (30)
|
|
$ 16
|
|
$
(171)
|
|
$
(7)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
(In
millions)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Free cash
flow(3):
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$ (74)
|
|
$
7
|
|
$ (87)
|
|
$
2
|
|
Capital
expenditures
|
|
(16)
|
|
(20)
|
|
(48)
|
|
(47)
|
|
Free cash
flow(3)
|
|
$ (90)
|
|
$ (13)
|
|
$
(135)
|
|
$ (45)
|
|
|
|
See end of press
release for numbered footnote explanations
|
|
Footnotes
|
|
(1)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income/loss before interest income/expense, net,
income tax expense/benefit, depreciation and amortization, and net
income attributable to noncontrolling interests, as well as
eliminating the following adjustments: (a) loss/gain on disposition
of businesses/assets; (b) certain legal expenses/settlements; (c)
amortization of pension and postretirement actuarial losses/gains;
(d) net plant incident costs/credits; and (e) restructuring,
impairment, and plant closing and transition costs/credits. We
believe that net income is the performance measure calculated and
presented in accordance with U.S. GAAP that is most directly
comparable to adjusted EBITDA.
|
|
|
|
We believe adjusted
EBITDA is useful to investors in assessing our ongoing financial
performance and provides improved comparability between periods
through the exclusion of certain items that management believes are
not indicative of our operational profitability and that may
obscure underlying business results and trends. However, this
measure should not be considered in isolation or viewed as a
substitute for net income or other measures of performance
determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA
as used herein is not necessarily comparable to other similarly
titled measures of other companies due to potential inconsistencies
in the methods of calculation. Our management believes this measure
is useful to compare general operating performance from period to
period and to make certain related management decisions. Adjusted
EBITDA is also used by securities analysts, lenders and others in
their evaluation of different companies because it excludes certain
items that can vary widely across different industries or among
companies within the same industry. For example, interest expense
can be highly dependent on a company's capital structure, debt
levels and credit ratings. Therefore, the impact of interest
expense on earnings can vary significantly among companies. In
addition, the tax positions of companies can vary because of their
differing abilities to take advantage of tax benefits and because
of the tax policies of the various jurisdictions in which they
operate. As a result, effective tax rates and tax expense can vary
considerably among companies. Finally, companies employ productive
assets of different ages and utilize different methods of acquiring
and depreciating such assets. This can result in considerable
variability in the relative costs of productive assets and the
depreciation and amortization expense among companies.
|
|
|
|
Nevertheless, our
management recognizes that there are limitations associated with
the use of adjusted EBITDA in the evaluation of us as compared to
net income. Our management compensates for the limitations of using
adjusted EBITDA by using this measure to supplement U.S. GAAP
results to provide a more complete understanding of the factors and
trends affecting the business rather than U.S. GAAP results
alone.
|
|
|
|
In addition to the
limitations noted above, adjusted EBITDA excludes items that may be
recurring in nature and should not be disregarded in the evaluation
of performance. However, we believe it is useful to exclude such
items to provide a supplemental analysis of current results and
trends compared to other periods because certain excluded items can
vary significantly depending on specific underlying transactions or
events, and the variability of such items may not relate
specifically to ongoing operating results or trends and certain
excluded items, while potentially recurring in future periods, may
not be indicative of future results.
|
|
|
|
Adjusted net income
(loss) attributable to Venator Materials PLC ordinary shareholders
is computed by eliminating the after-tax amounts related to the
following from net income/loss attributable to Venator Materials
PLC ordinary shareholders: (a) loss/gain on disposition of
businesses/assets; (b) certain legal expenses/settlements; (c)
amortization of pension and postretirement actuarial losses/gains;
(d) net plant incident costs/credits; (e) restructuring,
impairment, and plant closing and transition costs/credits and (f)
income tax adjustments. Basic adjusted net income per share
excludes dilution and is computed by dividing adjusted net income
by the weighted average number of shares outstanding during the
period. Adjusted diluted net income per share reflects all
potential dilutive ordinary shares outstanding during the period
increased by the number of additional shares that would have been
outstanding as dilutive securities.
|
|
|
|
Adjusted net income
(loss) and adjusted net income (loss) per share amounts are
presented solely as supplemental information. These measures
exclude similar noncash items as adjusted EBITDA in order to assist
our investors in comparing our performance from period to period
and as such, bear similar risks as adjusted EBITDA as documented
above. For that reason, adjusted net income (loss) and the related
per share amounts, should not be considered in isolation and should
be considered only to supplement analysis of U.S. GAAP
results.
|
|
|
|
(2)
|
Income tax expense is
adjusted by the amount of additional tax expense or benefit that we
would accrue if we used non-GAAP results instead of GAAP results in
the calculation of our tax liability, taking into consideration our
tax structure. We use a normalized effective tax rate of 35%, which
reflects the weighted average tax rate applicable under the various
jurisdictions in which we operate. This non-GAAP tax rate
eliminates the effects of non-recurring and period specific items
which are often attributable to restructuring and acquisition
decisions and can vary in size and frequency. This rate is subject
to change over time for various reasons, including changes in the
geographic business mix, valuation allowances, and changes in
statutory tax rates.
|
|
|
|
We eliminate the effect
of significant changes to income tax valuation allowances from our
presentation of adjusted net income to allow investors to better
compare our ongoing financial performance from period to period. We
do not adjust for insignificant changes in tax valuation allowances
because we do not believe it provides more meaningful information
than is provided under GAAP. We believe that our revised approach
enables a clearer understanding of the long-term impact of our tax
structure on post tax earnings.
|
|
|
|
(3)
|
Management internally
uses a free cash flow measure: (a) to evaluate the Company's
liquidity, (b) to evaluate strategic investments, (c) to evaluate
the Company's ability to incur and service debt. Free cash flow is
not a defined term under U.S. GAAP, and it should not be inferred
that the entire free cash flow amount is available for
discretionary expenditures. Free cash flow is defined as cash flows
provided by (used in) operating activities from continuing
operations less capital expenditures. The Company updated its
definition of free cash flow during the third quarter of 2021 to
conform to the definition more commonly used by publicly traded
companies. Prior to the third quarter of 2021, free cash flow was
defined as cash flows provided by (used in) operating activities
from continuing operations and used in investing activities. Prior
period comparatives within this release have been restated for the
updated definition. Free cash flow is typically derived directly
from the Company's consolidated statement of cash flows; however,
it may be adjusted for items that affect comparability between
periods. Free cash flow is presented as supplemental
information.
|
|
|
|
(4)
|
The potentially
dilutive impact of share-based awards was excluded from the
calculation of earnings per share for the three months ended
September 30, 2022 and the three and nine months ended September
30, 2021 and adjusted diluted earnings per share for the three and
nine months ended September 30, 2022 because there was an
anti-dilutive effect as we were in a net loss and adjusted net loss
position.
|
|
|
|
(5)
|
Net debt" is not a
defined term under U.S. GAAP. We define net debt as debt (the most
comparable GAAP measure, calculated as long-term obligations plus
short-term borrowings) minus cash and cash equivalents. Management
believes that net debt is an important measure to monitor leverage
and evaluate the balance sheet.
|
About Venator
Venator is a global manufacturer and
marketer of chemical products that comprise a broad range of
pigments and additives that bring color and vibrancy to buildings,
protect and extend product life, and reduce energy consumption. We
market our products globally to a diversified group of industrial
customers through two segments: Titanium Dioxide, which consists of
our TiO2 business, and Performance Additives, which
consists of our functional additives, color pigments and timber
treatment businesses. Based in Wynyard, U.K., Venator employs approximately
3,500 associates and sells its products in more than 110
countries.
Social
Media:
Twitter:
www.twitter.com/VenatorCorp
Facebook: www.facebook.com/venatorcorp
LinkedIn: www.linkedin.com/company/venator-corp
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press
release constitute "forward-looking statements" within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995. These
forward- looking statements represent Venator's expectations or
beliefs concerning future events, and it is possible that the
expected results described in this press release will not be
achieved. These forward looking statements are subject to risks,
uncertainties and other factors, many of which are outside of
Venator's control, that could cause actual results to differ
materially from the results discussed in the forward looking
statements, including volatile global economic conditions and a
downturn in the worldwide economy due to inflation, geopolitics, or
other factors, changes in raw material and energy prices,
interruptions in raw materials and energy, economic and other
impacts from the military conflict in Ukraine and the economic sanctions imposed due
to the conflict, the impacts and duration of the COVID-19 pandemic
and the measures put in place by governments in response, our
ability to maintain sufficient working capital, our ability to
access capital markets on favorable terms, the costs associated
with site closures, including our Pori facility, and execution of
our cost reduction programs and initiatives, our ability to realize
financial and operational benefits from our operational improvement
plans and initiatives, industry production capacity and operating
rates, the supply demand balance for our products and that of
competing products, pricing pressures, technological developments,
legal claims by or against us, changes in government regulations,
including increased manufacturing, labeling and waste disposal
regulations and the classification of TiO2 as a
carcinogen in the EU, management of materials resulting from our
manufacturing process, including the ability to develop
commercial markets in the regions that we manufacture and our
ability to dispose of these materials if necessary, the impacts of
increasing climate change regulations, geopolitical events,
cyberattacks and public health crises.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, Venator does not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for Venator to predict all such factors. When considering
these forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in Venator's filings with
the US Securities and Exchange Commission, including Venator's
Annual Reports on Form 20-F for the year ended December 31, 2021 and its Quarterly Report on
Forms 6-K for the quarter ended March 31,
2022, June 30, 2022, and
September 30, 2022. The risk factors
and other factors noted therein could cause its actual results to
differ materially from those contained in any forward-looking
statement.
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SOURCE Venator Materials PLC