Nouryon reports full-year 2023 results

Full-Year 2023 Highlights 

• Revenue of $5.19 billion, a decrease of 10 percent versus 2022 (-8% excluding foreign currency)  
• Adjusted EBITDA¹ of $1.05 billion, a decrease of 16 percent versus 2022 
• Net cash from operating activities of $996 million, an increase of 47 percent versus 2022 
• Adjusted free cash flow² of $655 million, a decrease of 26 percent versus 2022 
• Completed acquisition of ADOB, which broadens Nouryon’s crop nutrition portfolio 

Nouryon today reported full-year 2023 results with revenue of $5.19 billion, a decrease of 10 percent year over year, primarily due to lower volume, which was offset partially by positive contributions from price and acquisitions. Excluding impacts from foreign exchange, revenue declined 8 percent. Adjusted EBITDA decreased 16 percent year over year, driven by volume declines and foreign currency headwinds. These were offset partially by significant tailwinds from higher prices as well as from lower costs for raw materials, energy, and logistics. Net cash from operating activities was $996 million, versus $677 million in the prior-year period. The 47 percent year-over-year increase was driven by an improvement in working capital.   

“Nouryon’s 2023 full-year financial performance highlights the resiliency of our specialty portfolio in a very challenging macro environment,” said Charlie Shaver, Nouryon Chairman and CEO. “In 2023, we managed our costs and pricing to maintain a high level of profitability in the face of lower demand and channel destocking across the majority of our end-markets.”

In the Performance Formulations segment, revenue declined 14 percent to $3.6 billion, and adjusted EBITDA decreased 26 percent to $678 million. This decrease was primarily driven by a decline in volume in all business lines and a negative currency impact, partly offset by a contribution from the ADOB acquisition. Customer destocking was a significant headwind, particularly for the Agriculture and Food as well as the Paints and Coatings business lines. Demand was also lower across several end-markets. Segment adjusted EBITDA margin in Performance Formulations was 19.0 percent.  

Revenue in the Technology Solutions segment was flat year over year at $1.6 billion, primarily driven by higher pricing in both Polymer Specialties and Renewable Fibers business lines, offset by lower volume and negative currency impact. Segment adjusted EBITDA increased by 10 percent to $367 million, driven by higher selling prices and lower costs for raw materials and energy, which were partially offset by lower volume. The Technology Solutions segment adjusted EBITDA margin was 22.6 percent.

In 2023, Nouryon received an A- score for global climate leadership from CDP, a company that is considered the gold standard of environmental reporting that maintains the most comprehensive collection of corporate environmental data in the world. Additionally, the Company earned an EcoVadis Gold rating for its sustainability achievements, placing it in the top 5 percent of companies then rated by EcoVadis, the world’s largest provider of business sustainability ratings.  

Nouryon continued to invest in growth opportunities throughout 2023, including the closing of the acquisition of ADOB (completed in January 2023) which broadens Nouryon’s crop nutrition portfolio.  

^{This release contains financial measures presented on a non-IFRS basis, including adjusted EBITDA, free cash flow, and adjusted EBITDA margins. Management believes that, when considered together with reported amounts, these measures are useful to third parties and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These metrics should be considered in addition to, and not as replacements for, the most comparable IFRS measure. Refer to the reconciliations below of non-IFRS financial measures to the most directly comparable IFRS measures.} 

1. ^{Adjusted EBITDA consists of (loss)/profit for the period before finance costs-net, results from joint ventures and associates, income taxes, depreciation and amortization, non-operating income or expenses items, the impact of certain non-cash, or other items that are included in profit for the period that we do not consider indicative of our ongoing operating performance. A reconciliation of adjusted EBITDA to (loss)/profit for the period is presented below.}
2. ^{Adjusted free cash flow is calculated using Adjusted EBITDA less capital expenditures, in Property, Plant and Equipment and Intangible Assets for continuing operations, for the applicable period and is a measure we utilize to assess our operating performance and to assess the amount by which our operating cash flows exceed our working capital needs and capital expenditures. A reconciliation of free cash flow to (loss)/profit for the period is presented below.}
3. ^{Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue for the applicable period.} 

^{a) Transaction related costs: Eliminates (i) purchase accounting impacts and transaction fees incurred as part of the acquisition of Nouryon by Carlyle/GIC, (ii) certain third-party fees incurred in connection with the implementation of strategic initiatives, and (iii)  the costs associated with the energy hedge redesignation and (iv) gain or loss on divestment of (or part of) business, a site or property, plant and equipment.} 

^{b) Impairment: Eliminates impairments of property, plant and equipment, right-of-use assets, intangible assets and goodwill.}  

^{c) Stock based compensation: Eliminates costs associated with the management equity plan for the Company.} 

^{d) Transition, transformation and integration expenses: Eliminates costs related to the initial public offering. These costs also include transition consulting, technology infrastructure and other expenses related to achieving our standalone company infrastructure. Furthermore, these costs include expenses related to the restructuring and transformation of our business following the separation from AkzoNobel, mainly related to the strategic alignment of our business and functional organizations, including enhancements in our technology.} 

^{e) Restructuring: Eliminates charges resulting from restructuring activities principally from the Company’s cost reduction efforts.} 

^{f) Other adjustments: Eliminates other non-cash and non-recurring costs to the business including costs for environmental clean-up, gain on sales of land use rights, and management fees to the principal shareholders. Includes the release of a provision for U.S. retiree welfare benefits and net gain arising from hyperinflation in Argentina.}