Hot Stock under Review: Venator Materials PLC (NYSE: VNTR)

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On Thursday, Shares of Venator Materials PLC (NYSE: VNTR) fell -4.27% to $6.28. The stock traded total volume of 172,121 shares lower than the average volume of 782.45K shares.

Venator Materials PLC (VNTR) recently stated fourth quarter 2018 results with revenues of $484.0M, net loss attributable to Venator of $69.0M, counting a restructuring charge of $55.0M, adjusted net income of $19.0M and adjusted EBITDA of $45.0M.

Segment Analysis for 4Q18 Contrast to 4Q17

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Titanium Dioxide:

The Titanium Dioxide segment generated revenue of $366.0M in the three months ended December 31, 2018, a decrease of $21.0M, or 5%, contrast to the same period in 2017. The decrease was mainly because of a 6% decrease in sales volumes and a 1% unfavorable impact of foreign currency translation, partially offset by a 1% increase in average selling prices and a 1% improvement because of mix and other. Sales volumes reduced mainly because of lower demand for functional product grades regarding customer destocking and lower availability of certain specialty grade products. Average selling prices for specialty product grades increased in the quarter.

Adjusted EBITDA for the Titanium Dioxide segment was $52.0M, a decrease of $67.0M for the three months ended December 31, 2018 contrast to the same period in 2017, or a decrease of $34.0M after excluding $33.0M of lost earnings attributable to our Pori, Finland facility, which were reimbursed through insurance proceeds in the 2017 period. A decline in volumes and higher raw material and energy costs contributed to the decline in earnings, partially offset by a $4.0M benefit from our Business Improvement Program.

ABS REPORT

In the fourth quarter of 2018, the Titanium Dioxide segment incurred a $52.0M pre-tax restructuring expense, of which about $50.0M is non-cash regarding Pori accelerated depreciation and other.

Performance Additives:

The Performance Additives segment generated $118.0M of revenue in the three months ended December 31, 2018, which is $23.0M, or 16%, lower contrast to the same period in 2017. The decrease was the result of a 13% decrease in volumes, a 1% decline in average selling prices, a 1% unfavorable impact from foreign currency translation and a 1% decrease because of mix and other. The decline in volumes was mainly the result of customer destocking in Functional Additives, the restructuring of our North American business and the discontinuation of sales of a product to a Timber Treatment customer.

Adjusted EBITDA for the Performance Additives segment was $3.0M, a decrease of $12.0M for the three months ended December 31, 2018 contrast to the same period in 2017, mainly as a result of destocking and higher raw material and energy costs, partially offset by a $1.0M benefit from our 2017 Business Improvement Program.

Corporate and Other:

Corporate and other represent expenses which are not allocated to our segments. Losses from Corporate and other were $10.0M, or $6.0M lower for the three months ended December 31, 2018 than the same period in 2017 as a result of non-recurring operational expenses incurred during the fourth quarter of 2017. We expect Corporate and Other to be about $50.0M for the full year 2019.

Tax Items:

We recorded an income tax benefit of $18.0M and $8.0M for the three and twelve months ended December 31, 2018, respectively, contrast to an income tax expense of $24.0M and $50.0M for the three and twelve months ended December 31, 2017, respectively. Our adjusted effective tax rate was 11% for the twelve months ended December 31, 2018 contrast to 18% for the same period in 2017.

Liquidity and Capital Resources:

As of December 31, 2018, we had cash and cash equivalents of $165.0M contrast with $251.0M as of September 30, 2018 and $238.0M as of December 31, 2017. In addition, we have in place an undrawn asset based revolving credit facility available for our working capital needs and general corporate purposes with an available borrowing base of $259.0M as of December 31, 2018.

As of December 31, 2018, net debt was $583.0M contrast to $497.0M as of September 30, 2018 and $519.0M as of December 31, 2017. In the fourth quarter of 2018, capital expenditures, excluding Pori, were $42.0M or $114.0M for the twelve months ended December 31, 2018. We expect total capital expenditures, counting spending related to the transfer of production from Pori to other sites in our network, to be about $130.0M in 2019. We are taking steps to increase our liquidity to assist fund the capital requirements for the Pori transfer and shutdown and other general corporate purposes.

VNTR has the market capitalization of $674.11M. The return on assets ratio of the Company was -5.90% while its return on investment ratio stands at -7.70%. Price to sales ratio was 0.30 while 48.40% of the stock was owned by institutional investors.

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