Hexion Inc. Releases Financials for First Quarter
COLUMBUS, OH — Hexion Inc. announced results for the first quarter ended March 31, 2018, reporting an increase in sales of 9%.
“Hexion reported strong Segment EBITDA gains of 24% and sales growth of 9%, respectively, in the first quarter of 2018,” said Craig A. Rogerson, Chairman, President and CEO. “First quarter 2018 Segment EBITDA reflected significant improvement in our base epoxy resins and phenolic specialty resins businesses, as well as the positive impact of our recent structural cost reduction initiatives. We also drove higher Segment EBITDA in all regions of our formaldehyde and forest products resins business.”
Rogerson added, “We continue to experience strong Segment EBITDA growth in 2018 reflecting tailwinds across the portfolio including improved demand in our forest products business and continued strength in market fundamentals in base epoxy resins, which are expected to persist for the foreseeable future. We also expect our specialty epoxy business to benefit from growing market demand for waterborne coatings over the next few years and long-term secular growth in renewable energy to support our wind energy business.”
Net sales for the quarter ended March 31, 2018 were $946 million, an increase of 9% compared with $870 million in the prior year period. The increase in reported net sales was driven by pricing actions primarily in the base epoxy resins business and the pass-through of higher raw material costs in the global forest products resins and phenolic specialty resins businesses.
Segment EBITDA for the quarter ended March 31, 2018 was $118 million, an increase of 24% compared with the prior year period. Segment EBITDA in the first quarter of 2018 increased by $24 million, or 26%, when adjusted for divestitures. First quarter 2018 results reflected the ongoing cost reductions and improved margins in the company’s base epoxy resins, phenolic specialty resins, and global forest product resins and formaldehyde businesses.
In the first quarter of 2018, the company achieved $13 million of cost savings, including reductions in selling, general and administrative (SG&A) expenses and targeted site rationalizations. Hexion recently identified approximately $40 million in additional structural cost savings with approximately 90% of the savings related to headcount reductions. At March 31, 2018, Hexion had $39 million of total in-process cost savings. The company has taken the majority of the actions, and the impact is expected to be realized by year-end 2018.