Correspondence 0001558370-24-009102 from Trinseo PLC (TSE) (CIK 0001519061) (TSE)
Trinseo PLC (TSE) (CIK 0001519061)
Date: June 12, 2024 · CIK: 0001519061 · Accession: 0001558370-24-009102
AI Filing Summary & Sentiment
File numbers found in text: 001-36473
Referenced dates: June 7, 2024
Letter
Trinseo PLC 400 E. Swedesford Rd.
Suite 301
Wayne, PA 19087
June 12, 2024
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Attention:
Jeanne Baker
Nudrat Salik
RE:
Trinseo PLC
Comment Letter Dated June 7, 2024
Form 10-K for the Year Ended December 31, 2023
File No. 001-36473
To the Staff of the Division of Corporate Finance:
Below please find the responses (the “Responses”) of Trinseo PLC (“Trinseo” or together with its subsidiaries, the “Company”) to the comment (the “Comment”) set forth in the letter dated June 7, 2024 from the staff of the Division of Corporate Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) to Trinseo.
For the convenience of the Staff, we have restated the Comment in bold in this letter, and the corresponding responses of the Company are shown below such Comment. References to page numbers are to the page numbers in the corresponding filings.
Form 10-K for the Year Ended December 31, 2023
Financial Statements, page F-1
1.
We note your response to comment 1. Please provide us with the calculations and corresponding explanations which led to your determination that Americas Styrenics LLC was not significant in any period presented pursuant to Rule 3-09 and Rule 1-02(w) of Regulation S-X.
Response:
The Company acknowledges the Staff’s Comment and respectfully submits the following calculations for all periods presented in the Company’s financial statements for the year ended December 31, 2023, along with the calculation for the year ended December 31, 2020 (the last year Americas Styrenics LLC met the definition of “significant subsidiary” under the investment test or income test according to Rule 1-02(w) of Regulation S-X required under Rule 3-09 of Regulation S-X).
On an annual basis, the Company performs the significant subsidiary tests required by Rule 3-09 of Regulation S-X for its 50 percent or less owned subsidiary accounted for under the equity method to determine whether separate financial statements of the subsidiary will need to be filed.
Investment Test
For the investment test, according to Rule 1-02(w)(1)(i)(A) of Regulation S-X, the test is only met when the investment in and any advances to Americas Styrenics LLC exceed 20% of the Company’s consolidated assets in the Company’s consolidated financial statements for any period presented.
Fiscal Year 2020
Fiscal Year 2021
Fiscal Year 2022
Fiscal Year 2023
Numerator – carrying value of investment
240.1
247.8
255.1
252.2
Denominator – Company’s total assets
2,845.2
4,712.2
3,760.2
3,029.2
Investment Test Calculation
8.44%
5.26%
6.78%
8.33%
Significant Subsidiary Conclusion
No
No
No
No
Income Test
For the income test, according to Rule 1-02(w)(1)(iii)(A) of Regulation S-X, the test is only met when both (1) earnings before taxes attributable to the Company and (2) proportionate share of the total revenue of Americas Styrenics LLC exceed 20% of such amounts in the Company’s consolidated financial statements for any period presented.
Income Test 1 – income
Fiscal Year 2020
Fiscal Year 2021
Fiscal Year 2022
Fiscal Year 2023
Numerator –
Proportionate share of Americas Styrenics earnings before taxes
42.7
102.3
106.1
67.8
Adjustments to Numerator 1
26.6
(6.6)
0.2
(3.9)
Adjusted Numerator
69.3
95.7
106.3
63.9
Denominator –
Income (loss) from continuing operations before income taxes of the Company
105.4
350.5
(469.6)
(632.9)
less Equity in earnings of unconsolidated affiliate
N/A2
N/A2
102.2
62.1
Absolute value
105.4
350.5
571.8
695.0
Income Test 1 Calculation
65.75%
27.30%
18.59%
9.19%
1. Items impacting net income of the registrant that should be excluded from the numerator of the income test include (but are not necessarily limited to) impairment charges recorded at the investor level, gains or losses from stock sales by the investor, dilution gains/losses from stock sales by the investee, the investor's share of accounting changes reported in the financial statements of the investee and preferred dividends.
a. Therefore, in the Income Test above, all numerator balances are the Company’s proportionate share of the “Pre-Tax Income” of Americas Styrenics, adjusted for the Company’s accounting policy specific to treatment of costs related to planned major maintenance activities (Americas Styrenics accounts for these costs in the P&L whereas the Company capitalizes these costs & depreciates them over the respective period (i.e. until the next major maintenance project)).
2. Equity earnings are not subtracted from the Company’s income from continuing operations during periods where both entities had income.
Income Test 2 – revenue
Fiscal Year 2020
Fiscal Year 2021
Fiscal Year 2022
Fiscal Year 2023
Numerator – proportionate share of Americas Styrenics Total Revenue
557.8
911.1
1,030.0
861.2
Denominator – Continuing Operations Sales of the Company
2,744.6
4,827.5
4,965.5
3,675.4
Income Test 2 Calculation
20.32%
18.87%
20.74%
23.43%
Meet Significance (>20%) under both the income and the revenue test?
Yes
No
No
No
In performing both the investment and the income test, detailed above, the Company noted in its Form 10-K for the year ended December 31, 2023, that both criteria were not met for each of the years presented. Therefore, inclusion of the financial statements of Americas Styrenics LLC is not required pursuant to Rule 3-09 of Regulation S-X, and the Company provided summarized financial information in the footnotes to its Form 10-K (Footnote 13 – Investments in Unconsolidated Affiliates, pages F-30 and F-31).
Fiscal Year 2020
Fiscal Year 2021
Fiscal Year 2022
Fiscal Year 2023
Investment Test Conclusion
No
No
No
No
Income Test Conclusion
Yes
No
No
No
Significant Subsidiary Conclusion
Yes
No
No
No
I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please contact the undersigned at (610) 240-3200. Thank you for your assistance.
Very truly yours,
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CORRESP 1 filename1.htm Trinseo PLC 400 E. Swedesford Rd. Suite 301 Wayne, PA 19087 June 12, 2024 U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, NE Washington, DC 20549 Attention: Jeanne Baker Nudrat Salik RE: Trinseo PLC Comment Letter Dated June 7, 2024 Form 10-K for the Year Ended December 31, 2023 File No. 001-36473 To the Staff of the Division of Corporate Finance: Below please find the responses (the “Responses”) of Trinseo PLC (“Trinseo” or together with its subsidiaries, the “Company”) to the comment (the “Comment”) set forth in the letter dated June 7, 2024 from the staff of the Division of Corporate Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) to Trinseo. For the convenience of the Staff, we have restated the Comment in bold in this letter, and the corresponding responses of the Company are shown below such Comment. References to page numbers are to the page numbers in the corresponding filings. Form 10-K for the Year Ended December 31, 2023 Financial Statements, page F-1 1. We note your response to comment 1. Please provide us with the calculations and corresponding explanations which led to your determination that Americas Styrenics LLC was not significant in any period presented pursuant to Rule 3-09 and Rule 1-02(w) of Regulation S-X. Response: The Company acknowledges the Staff’s Comment and respectfully submits the following calculations for all periods presented in the Company’s financial statements for the year ended December 31, 2023, along with the calculation for the year ended December 31, 2020 (the last year Americas Styrenics LLC met the definition of “significant subsidiary” under the investment test or income test according to Rule 1-02(w) of Regulation S-X required under Rule 3-09 of Regulation S-X). On an annual basis, the Company performs the significant subsidiary tests required by Rule 3-09 of Regulation S-X for its 50 percent or less owned subsidiary accounted for under the equity method to determine whether separate financial statements of the subsidiary will need to be filed. Investment Test For the investment test, according to Rule 1-02(w)(1)(i)(A) of Regulation S-X, the test is only met when the investment in and any advances to Americas Styrenics LLC exceed 20% of the Company’s consolidated assets in the Company’s consolidated financial statements for any period presented. Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2022 Fiscal Year 2023 Numerator – carrying value of investment 240.1 247.8 255.1 252.2 Denominator – Company’s total assets 2,845.2 4,712.2 3,760.2 3,029.2 Investment Test Calculation 8.44% 5.26% 6.78% 8.33% Significant Subsidiary Conclusion No No No No Income Test For the income test, according to Rule 1-02(w)(1)(iii)(A) of Regulation S-X, the test is only met when both (1) earnings before taxes attributable to the Company and (2) proportionate share of the total revenue of Americas Styrenics LLC exceed 20% of such amounts in the Company’s consolidated financial statements for any period presented. Income Test 1 – income Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2022 Fiscal Year 2023 Numerator – Proportionate share of Americas Styrenics earnings before taxes 42.7 102.3 106.1 67.8 Adjustments to Numerator 1 26.6 (6.6) 0.2 (3.9) Adjusted Numerator 69.3 95.7 106.3 63.9 Denominator – Income (loss) from continuing operations before income taxes of the Company 105.4 350.5 (469.6) (632.9) less Equity in earnings of unconsolidated affiliate N/A2 N/A2 102.2 62.1 Absolute value 105.4 350.5 571.8 695.0 Income Test 1 Calculation 65.75% 27.30% 18.59% 9.19% 1. Items impacting net income of the registrant that should be excluded from the numerator of the income test include (but are not necessarily limited to) impairment charges recorded at the investor level, gains or losses from stock sales by the investor, dilution gains/losses from stock sales by the investee, the investor's share of accounting changes reported in the financial statements of the investee and preferred dividends. a. Therefore, in the Income Test above, all numerator balances are the Company’s proportionate share of the “Pre-Tax Income” of Americas Styrenics, adjusted for the Company’s accounting policy specific to treatment of costs related to planned major maintenance activities (Americas Styrenics accounts for these costs in the P&L whereas the Company capitalizes these costs & depreciates them over the respective period (i.e. until the next major maintenance project)). 2. Equity earnings are not subtracted from the Company’s income from continuing operations during periods where both entities had income. Income Test 2 – revenue Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2022 Fiscal Year 2023 Numerator – proportionate share of Americas Styrenics Total Revenue 557.8 911.1 1,030.0 861.2 Denominator – Continuing Operations Sales of the Company 2,744.6 4,827.5 4,965.5 3,675.4 Income Test 2 Calculation 20.32% 18.87% 20.74% 23.43% Meet Significance (>20%) under both the income and the revenue test? Yes No No No In performing both the investment and the income test, detailed above, the Company noted in its Form 10-K for the year ended December 31, 2023, that both criteria were not met for each of the years presented. Therefore, inclusion of the financial statements of Americas Styrenics LLC is not required pursuant to Rule 3-09 of Regulation S-X, and the Company provided summarized financial information in the footnotes to its Form 10-K (Footnote 13 – Investments in Unconsolidated Affiliates, pages F-30 and F-31). Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2022 Fiscal Year 2023 Investment Test Conclusion No No No No Income Test Conclusion Yes No No No Significant Subsidiary Conclusion Yes No No No I hope that the foregoing has been responsive to your comments. If you should have any questions about this letter or require any further information, please contact the undersigned at (610) 240-3200. Thank you for your assistance. Very truly yours, /s/ David Stasse David Stasse Executive Vice President and Chief Financial Officer 400 E. Swedesford Rd. Suite 301 Wayne, PA 19087 cc:Frank Bozich, Chief Executive Officer and President Angelo N. Chaclas, Chief Legal Officer, Senior Vice President and Corporate Secretary