Hexion Inc. Reports Volumes Increase in Coatings and Composites Segment

May 18 2020

First Quarter 2020 Highlights

• Net sales of $826 million
• Net loss of $59 million
• Segment EBITDA of $89 million
• Liquidity of $440 million as of March 31, 2020

Hexion Inc. released results for the first quarter ended March 31, 2020.

“In the first quarter of 2020, our diverse customer base and broad geographic footprint drove improved volumes in our Coatings and Composites segment, while our overall results were offset by weaker conditions that emerged late in the quarter due to the coronavirus pandemic,” said George Knight, Acting Chief Executive Officer and Chief Financial Officer. “We estimate that COVID-19 and the strengthening of the U.S. dollar compared to other foreign currencies negatively impacted our first quarter 2020 results by approximately $4 million and $2 million, respectively. We remain focused on the health and safety of our associates while taking the appropriate actions to continue to operate our sites, such as maintaining social distancing practices and enhanced hygiene at our manufacturing facilities, as well as working remotely at our corporate headquarters and global research and development centers. We are also following the guidelines of each country in which we operate as it relates to being deemed a business considered “critical infrastructure” enabling us to keep our sites running. For example, the U.S. Department of Homeland Security has identified the U.S. chemical industry and its workers as Essential Critical Infrastructure. During the first quarter and as of today, we maintained operations at the vast majority of our manufacturing sites. We were also pleased to support the communities in which we live and work through a variety of COVID-19 relief initiatives.”

Total net sales for the quarter ended March 31, 2020 were $826 million, a decrease of 7% compared with $886 million in the prior year period. Pricing negatively impacted sales by $57 million. Foreign currency translation negatively impacted net sales by $15 million due to the weakening of various foreign currencies against the U.S. dollar against in the first quarter of 2020 compared to the first quarter of 2019. Volume increases positively impacted net sales by $12 million related to improved volumes in Hexion Inc.’s base and specialty epoxy resins businesses.

Net loss for the Successor three months ended March 31, 2020 was $59 million compared to a net loss of $52 million in the Predecessor three months ended March 31, 2019. Total Segment EBITDA for the quarter ended March 31, 2020 was $89 million, a decrease of $14 million compared with the prior year period, driven primarily by margin reductions in Hexion Inc.’s base epoxy resins business.

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