What happened?
Shares of Trinseo (TSE -0.35%), a global materials solutions provider of plastics, latex binders, and synthetic rubber, were down nearly 18% as of 11:20 a.m. EDT on Wednesday after management released preliminary third-quarter results that failed to impress investors.
So what
Management announced that third-quarter results will check in below previous guidance. Net income is now expected to range between $74 million and $80 million and adjusted EBITDA between $140 million and $146 million. Net income will check in roughly $15 million below prior guidance, with about $9 million of that due to operating performance and $6 million from one-time expenses. Adjusted EBITDA is roughly $12 million below prior guidance.
"We are actively evaluating and taking actions to address these challenges and are working to minimize impacts on our future results," CEO Chris Pappas wrote in a press release.
Image source: Getty Images.
Now what
Part of the issue is simply the plateauing North American automotive market. As sales peak and the tire market continues to be weak, it's pressuring Trinseo's plastics and synthetic-rubber business segments. Furthermore, the global trade uncertainty has put pressure on the company's latex binders and other business segments. Unfortunately, if trade uncertainty remains, these dynamics will continue to pressure the company's business, and management will need to find ways to offset a slowing automotive market.
