Third Quarter 2020 Highlights

  • Entered into a definitive agreement to sell our Phenolic Specialty Resin, Hexamine and European-based Forest Products Resins businesses for approximately $425 million
  • Net sales from continuing operations of $634 million
  • Loss from continuing operations, net of taxes of $26 million
  • Net loss of $102 million
  • Segment EBITDA from continuing operations of $91 million compared to $104 million in the third quarter 2019. Both periods reflect the treatment of the pending divestiture as discontinued operations. The prior year period also included $18 million of Segment EBITDA related to deferred revenue that was accelerated on July 1, 2019 as part of Fresh Start accounting.
November 09, 2020 07:00 AM Eastern Standard Time

COLUMBUS, Ohio--()--Hexion Inc. (“Hexion” or the “Company”) today announced results for the third quarter ended September 30, 2020.

"Third quarter 2020 results reflected steadily improving volume gains each month during the quarter as ongoing improvement in several key end markets drove Segment EBITDA that exceeded the prior year by 6 percent if excluding the prior year impact of fresh start accounting,” said Craig Rogerson, Chairman, President and Chief Executive Officer. “We were also pleased to post strong sequential Segment EBITDA from continuing operations gains of 60% in the third quarter of 2020 compared to second quarter Segment EBITDA from continuing operations of $56 million. Favorable residential construction trends drove strong sequential improvement in our third quarter volumes and EBITDA for our Adhesives segment. Our Coatings & Composites segment posted positive Segment EBITDA gains in the third quarter of 2020 versus the prior year due to our specialty epoxy resins business and continued positive demand in wind energy, as well as our Versatic Acids™ and Derivatives business due to strength in architectural coatings and recovering automotive demand.”

Mr. Rogerson added: "We were pleased to recently announce a divestiture and continue to explore other portfolio optimization opportunities. Upon closing, we plan to use the proceeds to invest in our business and reduce our debt. While our volumes continued to improve sequentially in October, visibility remains limited regarding the fourth quarter of 2020 because of the pandemic as well as normal year-end volatility. Our balance sheet, liquidity, and ability to generate cash remain strong, and we are encouraged by the recent trends in housing, wind energy, automotive and several other markets, although we continue to keep a close eye on key economic indicators to monitor the impact of COVID-19. In addition, we expect to be free cash flow1 positive in 2020. We remain focused on the things we can control, such as completing the pending divestiture, maintaining our streamlined cost structure and continuing to accelerate new product development, which we believe positions us favorably as demand recovers. We also plan to expand our investments in productivity and growth-oriented capital expenditures to drive future growth in 2021 and future years.”

Hexion Announces Strategic Divestiture

On September 27, 2020, the Company entered into a Purchase Agreement for the sale of its Phenolic Specialty Resin (PSR), Hexamine and European-based Forest Products Resins businesses (together with PSR, the “Held for Sale Business” or the “Business”) for approximately $425 million to Black Diamond and Investindustrial. The consideration consists of $335 in cash and certain assumed liabilities with the remainder in future proceeds based on the performance of the Held for Sale Business. The final purchase price is subject to customary post-closing adjustments.

The business includes approximately 900 associates and 11 manufacturing facilities globally where phenolic specialty resins and engineered thermoset molding compounds are produced for a wide range of end markets including building and construction, industrial, automotive, electronics, agriculture and consumer. The Company expects to use the net sale proceeds to reduce indebtedness as well as for general corporate purposes including investments in its business. The transaction is intended to close in the first quarter of 2021, subject to regulatory approvals and other customary closing conditions, including Works Council consultation.

Fresh Start Accounting

Upon emerging from Chapter 11 on July 1, 2019 ("Effective Date") and qualifying for the application of fresh-start accounting, Hexion's assets and liabilities were recorded at their estimated fair values which, in some cases, were significantly different than amounts included in the Company's financial statements prior to the Effective Date. Accordingly, Hexion's financial condition and results of operations on and after the Effective Date are not directly comparable to our financial condition and results of operations prior to the Effective Date. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to the Effective Date. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on or before the Effective Date.

Third Quarter 2020 Results

In January 2020, Hexion updated its reportable segments to align around two growth platforms: Adhesives; and Coatings and Composites. The Adhesives Segment is organized around Construction Adhesives, Industrial Adhesives, and Intermediates and Derivatives, while the Coatings and Composites Segment is organized around Composites, Performance Coatings, and Base Chemicals. Corporate and Other continues to be a reportable segment.

As of September 30, 2020, the Company reclassified the assets and liabilities of our Held for Sale Business as held for sale on the unaudited Condensed Consolidated Balance Sheets and reported the results of its operations for the three and nine months ended September 30, 2020 as “(Loss) income from discontinued operations, net of taxes” on the unaudited Condensed Consolidated Statements of Operations. Amounts for prior periods have similarly been retrospectively reclassified for all periods presented. See Schedules 9 and 10 for additional financial information for our Held for Sale Business.

Total net sales for the quarter ended September 30, 2020 were $634 million, a decrease of 9% compared with $693 million in the prior year period. Volumes positively impacted net sales by $13 million due to volume increases in Hexion's specialty epoxy and base epoxy resins businesses, offset by decreases in the Company's North American wood adhesives business due to overall weakness in the market, primarily in the non-residential construction industry. Pricing negatively impacted sales by $68 million due primarily to raw material price decreases contractually passed through to customers across many businesses, as well as unfavorable product mix and continued competitive market conditions in base epoxy resins. Foreign currency translation negatively impacted net sales by $4 million due to the weakening of various foreign currencies against the U.S. dollar in the third quarter of 2020 compared to the third quarter of 2019.

Net loss for the Successor three months ended September 30, 2020 was $102 million compared to a net income of $3,054 million for the Predecessor period July 1, 2019 and a net loss of $43 million in the Successor period of July 2, 2019 through September 30, 2019. Total Segment EBITDA from continuing operations for the quarter ended September 30, 2020 was $91 million, a decrease of $13 million compared with the prior year period reflecting improved results in our Versatic™ Acids and Derivatives and specialty epoxy resins businesses, offset by the absence of the $18 million of Segment EBITDA in the prior year related to deferred revenue that was accelerated on July 1, 2019 as part of Fresh Start Accounting.

Segment Results

Following are net sales and Segment EBITDA by reportable segment for the Successor three and nine months ended September 30, 2020 and Successor three and nine months ended September 30, 2019.

 

 

Successor

 

Non-GAAP Combined

 

Successor

 

Non-GAAP Combined

 

 

Three Months Ended
September 30, 2020

 

Three Months Ended
September 30, 2019

 

Nine Months Ended
September 30, 2020

 

Nine Months Ended
September 30, 2019

Net Sales (1):

 

 

 

 

 

 

 

 

Adhesives

 

$

293

 

 

$

361

 

 

$

874

 

 

$

1,122

 

Coatings and Composites

 

341

 

 

332

 

 

981

 

 

1,052

 

Total

 

$

634

 

 

$

693

 

 

$

1,855

 

 

$

2,174

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

Adhesives

 

$

58

 

 

$

77

 

 

$

156

 

 

$

194

 

Coatings and Composites

 

50

 

 

44

 

 

115

 

 

140

 

Corporate and Other

 

(17)

 

 

(17)

 

 

(51)

 

 

(47)

 

Total

 

$

91

 

 

$

104

 

 

$

220

 

 

$

287

 

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Efficiency and Cost Savings Initiatives

In the third quarter of 2020, Hexion continued to implement the creation of a business services group with Capgemini to provide certain administrative functions to further improve the Company's organizational efficiency and reduce its costs in future years. During the first nine months of 2020, the Company also achieved $19 million of cost savings related to its cost savings initiatives. At September 30, 2020, Hexion had approximately $8 million of total in-process savings that it expects to realize over the next 12 months.

Liquidity and Capital Resources

As of September 30, 2020, total debt was approximately $1.8 billion and consisted primarily of the Company’s approximately $1.2 billion Senior Secured Term Loans due 2026 and $450 million Senior Notes due 2027. At September 30, 2020, the Company had $452 million in liquidity, including $155 million of unrestricted cash and cash equivalents. In addition, Hexion has no upcoming maturities on its term loan or notes until 2026. Hexion expects to have adequate liquidity to fund its ongoing operations for the next twelve months from cash on its balance sheet, cash flows provided by operating activities and amounts available for borrowings under its credit facilities.

Earnings Call

Hexion will host a teleconference to discuss Third Quarter 2020 results on Monday, November 9, 2020 at 9:00 a.m. Eastern Time. Interested parties are asked to dial-in approximately 10 minutes before the call begins at the following numbers:

U.S. Participants: (844) 492-6045
International Participants: (574) 990-2716
Participant Passcode: 3589528

Live internet access to the call and presentation materials will be available through the Investor Relations section of the Company’s website: www.hexion.com. A replay of the call will be available for one week following the call and can be access by dialing (855) 859-2056 (U.S.) and (404) 537-3406 (International). The passcode is 3589528.

Non-U.S. GAAP Measures

Segment EBITDA is defined as EBITDA adjusted to exclude certain non-cash and non-recurring expenses. Segment EBITDA is an important measure used by the Company's senior management and board of directors to evaluate operating results and allocate capital resources among segments. Corporate and Other primarily represents certain corporate, general and administrative expenses that are not allocated to the other segments. Segment EBITDA should not be considered a substitute for net (loss) income or other results reported in accordance with U.S. GAAP. Segment EBITDA may not be comparable to similarly titled measures reported by other companies. See Schedules 4 and 5 to this release for reconciliation of net (loss) income to Segment EBITDA.

Pro Forma EBITDA is defined as EBITDA adjusted for certain non-cash and certain non-recurring items and other adjustments calculated on a pro forma basis, including the expected future cost savings from business optimization programs or other programs and the expected future impact of acquisitions, in each case as determined under the governing debt instrument. The Company believes that including the supplemental adjustments that are made to calculate Pro Forma EBITDA provides additional information to investors about the Company’s ability to comply with its financial covenants and to obtain additional debt in the future. Pro Forma EBITDA and Fixed Charges are not defined terms under U.S. GAAP. Pro Forma EBITDA is not a measure of financial condition, liquidity or profitability, and should not be considered as an alternative to net income determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. Additionally, Pro Forma EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not take into account certain items such as interest and principal payments on our indebtedness, depreciation and amortization expense (because the Company uses capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate revenue), working capital needs, tax payments (because the payment of taxes is part of our operations, it is a necessary element of our costs and ability to operate), non-recurring expenses and capital expenditures. Fixed Charges under the Indenture governing the Senior Notes due 2027 should not be considered an alternative to interest expense. See Schedule 6 to this release for reconciliation of net income to Pro Forma EBITDA and the Fixed Charges Ratio.

Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment. We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. See Schedule 7 to this release for the Company's free cash flow by quarter.

Net debt is defined by the Company as total debt less cash and cash equivalents. We believe that net debt provides useful information to management, investors, analysts and other parties in evaluating changes to the Company's capital structure and credit quality assessment. See Schedule 8 to this release for the Company's net debt by quarter.

Forward Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, our management may from time to time make oral forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “might,” “plan,” “estimate,” “may,” “will,” “could,” “should,” “seek” or “intend” and similar expressions. Forward-looking statements reflect our current expectations and assumptions regarding our business, the economy and other future events and conditions and are based on currently available financial, economic and competitive data and our current business plans. Actual results could vary materially depending on risks and uncertainties that may affect our operations, markets, services, prices and other factors as discussed in the Risk Factors section of our filings with the Securities and Exchange Commission (the “SEC”). While we believe our assumptions are reasonable, we caution you against relying on any forward-looking statements as it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, a weakening of global economic and financial conditions, interruptions in the supply of or increased cost of raw materials, the loss of, or difficulties with the further realization of, cost savings in connection with our strategic initiatives, the impact of our indebtedness, our failure to comply with financial covenants under our credit facilities or other debt, pricing actions by our competitors that could affect our operating margins, changes in governmental regulations and related compliance and litigation costs, uncertainties related to COVID-19 and the impact of our responses to it and the other factors listed in the Risk Factors section of our SEC filings. For a more detailed discussion of these and other risk factors, see the Risk Factors section of our most recent filings made with the SEC. All forward-looking statements are expressly qualified in their entirety by this cautionary notice. The forward-looking statements made by us speak only as of the date on which they are made. Factors or events that could cause our actual results to differ may emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

About the Company

Based in Columbus, Ohio, Hexion Inc. is a global leader in thermoset resins. Hexion Inc. serves the global adhesive, coatings, composites and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Additional information about Hexion Inc. and its products is available at www.hexion.com.

1 Free cash flow is a non-GAAP financial measure and is a liquidity measure used by the Company. Free cash flow is defined by the Company as net cash provided by (used in) operating activities less capital expenditures on property, plant and equipment. See Schedule 7 to this release for the Company's free cash flow by quarter.

See Attached Financial Statements

HEXION INC.
SCHEDULE 1: CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

                     

 

 

Successor

 

 

Predecessor

 

Successor

 

 

Predecessor

(In millions)

 

Three Months
Ended
September 30,
2020

 

July 2, 2019
through
September
30, 2019

 

 

July 1, 2019

 

Nine Months
Ended
September 30,
2020

 

July 2, 2019
through
September 30,
2019

 

 

January 1,
2019 through

July 1, 2019

Net sales

 

$

634

 

 

$

693

 

 

 

$

 

 

$

1,855

 

 

$

693

 

 

 

$

1,481

 

Cost of sales (exclusive of depreciation and amortization shown below)

 

500

 

 

586

 

 

 

 

 

1,514

 

 

586

 

 

 

1,211

 

Selling, general and administrative expense

 

56

 

 

61

 

 

 

 

 

164

 

 

61

 

 

 

128

 

Depreciation and amortization

 

47

 

 

48

 

 

 

 

 

143

 

 

48

 

 

 

43

 

Asset impairments

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

Business realignment costs

 

19

 

 

12

 

 

 

 

 

57

 

 

12

 

 

 

14

 

Other operating expense, net

 

4

 

 

4

 

 

 

 

 

15

 

 

4

 

 

 

17

 

Operating income (loss)

 

8

 

 

(18)

 

 

 

 

 

(54)

 

 

(18)

 

 

 

68

 

Interest expense, net

 

25

 

 

28

 

 

 

 

 

76

 

 

28

 

 

 

89

 

Other non-operating (income) expense, net

 

(8)

 

 

4

 

 

 

 

 

(12)

 

 

4

 

 

 

(11)

 

Reorganization items, net

 

 

 

 

 

 

(3,126)

 

 

 

 

 

 

 

(2,970)

 

(Loss) income from continuing operations before income tax and earnings from unconsolidated entities

 

(9)

 

 

(50)

 

 

 

3,126

 

 

(118)

 

 

(50)

 

 

 

2,960

 

Income tax expense (benefit)

 

17

 

 

(5)

 

 

 

191

 

 

8

 

 

(5)

 

 

 

201

 

(Loss) income from continuing operations before earnings from unconsolidated entities

 

(26)

 

 

(45)

 

 

 

2,935

 

 

(126)

 

 

(45)

 

 

 

2,759

 

Earnings from unconsolidated entities, net of taxes

 

 

 

1

 

 

 

 

 

2

 

 

1

 

 

 

1

 

(Loss) income from continuing operations, net of taxes

 

(26)

 

 

(44)

 

 

 

2,935

 

 

(124)

 

 

(44)

 

 

 

2,760

 

(Loss) income from discontinued operations, net of taxes

 

(76)

 

 

1

 

 

 

119

 

 

(79)

 

 

1

 

 

 

135

 

Net (loss) income

 

$

(102)

 

 

$

(43)

 

 

 

$

3,054

 

 

$

(203)

 

 

$

(43)

 

 

 

$

2,895

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Net (loss) income attributable to Hexion Inc.

 

$

(102)

 

 

$

(43)

 

 

 

$

3,054

 

 

$

(203)

 

 

$

(43)

 

 

 

$

2,894

 

HEXION INC.
SCHEDULE 2: CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

         

(In millions, except share data)

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents (including restricted cash of $3 and $4, respectively)

 

$

158

 

 

$

254

 

Accounts receivable (net of allowance for doubtful accounts of $3)

 

363

 

 

316

 

Inventories:

 

 

 

 

Finished and in-process goods

 

191

 

 

211

 

Raw materials and supplies

 

70

 

 

82

 

Current assets held for sale

 

103

 

 

99

 

Other current assets

 

51

 

 

40

 

Total current assets

 

936

 

 

1,002

 

Investment in unconsolidated entities

 

16

 

 

14

 

Deferred tax assets

 

6

 

 

6

 

Long-term assets held for sale

 

318

 

 

400

 

Other long-term assets

 

60

 

 

44

 

Property and equipment:

 

 

 

 

Land

 

78

 

 

82

 

Buildings

 

124

 

 

114

 

Machinery and equipment

 

1,207

 

 

1,148

 

 

 

1,409

 

 

1,344

 

Less accumulated depreciation

 

(187)

 

 

(63)

 

 

 

1,222

 

 

1,281

 

Operating lease assets

 

105

 

 

110

 

Goodwill

 

164

 

 

164

 

Other intangible assets, net

 

1,082

 

 

1,125

 

Total assets

 

$

3,909

 

 

$

4,146

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

265

 

 

$

289

 

Debt payable within one year

 

77

 

 

70

 

Interest payable

 

21

 

 

35

 

Income taxes payable

 

6

 

 

17

 

Accrued payroll and incentive compensation

 

40

 

 

43

 

Current liabilities associated with assets held for sale

 

67

 

 

69

 

Current portion of operating lease liabilities

 

19

 

 

20

 

Other current liabilities

 

112

 

 

95

 

Total current liabilities

 

607

 

 

638

 

Long-term liabilities:

 

 

 

 

Long-term debt

 

1,756

 

 

1,715

 

Long-term pension and post employment benefit obligations

 

223

 

 

223

 

Deferred income taxes

 

153

 

 

149

 

Operating lease liabilities

 

78

 

 

82

 

Long-term liabilities associated with assets held for sale

 

59

 

 

56

 

Other long-term liabilities

 

206

 

 

208

 

Total liabilities

 

3,082

 

 

3,071

 

Equity

 

 

 

 

Common stock —$0.01 par value; 100 shares authorized, issued and outstanding

 

 

 

 

Paid-in capital

 

1,168

 

 

1,165

 

Accumulated other comprehensive loss

 

(49)

 

 

(1)

 

Accumulated deficit

 

(292)

 

 

(89)

 

Total equity

 

827

 

 

1,075

 

Total liabilities and equity

 

$

3,909

 

 

$

4,146

 

HEXION INC.
SCHEDULE 3: CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

           

 

 

Successor

 

 

Predecessor

(In millions)

 

Nine Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

January 1, 2019
through July 1, 2019

Cash flows (used in) provided by operating activities

 

 

 

 

 

 

 

Net (loss) income

 

$

(203)

 

 

$

(43)

 

 

 

$

2,895

 

Less: (Loss) income from discontinued operations, net of tax

 

(79)

 

 

1

 

 

 

135

 

(Loss) income from continuing operations

 

(124)

 

 

(44)

 

 

 

2,760

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

143

 

 

48

 

 

 

43

 

Non-cash asset impairments

 

16

 

 

 

 

 

 

Non-cash reorganization items, net

 

 

 

 

 

 

(3,156)

 

Deferred tax expense (benefit)

 

5

 

 

(8)

 

 

 

140

 

Loss on sale of assets

 

7

 

 

 

 

3

 

Unrealized foreign currency (gains) losses

 

(1)

 

 

6

 

 

 

(7)

 

Non-cash stock based compensation expense

 

13

 

4

 

 

 

 

Financing fees included in net loss

 

 

 

 

 

 

136

 

Other non-cash adjustments

 

(1)

 

 

(2)

 

 

 

(1)

 

Net change in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(55)

 

 

12

 

 

 

(73)

 

Inventories

 

31

 

 

25

 

 

 

(20)

 

Accounts payable

 

(14)

 

 

(58)

 

 

 

(15)

 

Income taxes payable

 

(8)

 

 

2

 

 

 

15

 

Other assets, current and non-current

 

(1)

 

 

5

 

 

 

3

 

Other liabilities, current and non-current

 

(22)

 

 

17

 

 

 

9

 

Net cash (used in) provided by operating activities from continuing operations

 

(11)

 

 

7

 

 

 

(163)

 

Net cash (used in) provided by operating activities from discontinued operations

 

(1)

 

 

18

 

 

 

(10)

 

Net cash (used in) provided by operating activities

 

(12)

 

 

25

 

 

 

(173)

 

Cash flows used in investing activities

 

 

 

 

 

 

 

Capital expenditures

 

(78)

 

 

(18)

 

 

 

(41)

 

Proceeds from sale of assets, net

 

2

 

 

 

 

 

1

 

Net cash used in investing activities from continuing operations

 

(76)

 

 

(18)

 

 

 

(40)

 

Net cash used in investing activities from discontinued operations

 

(13)

 

 

(4)

 

 

 

(2)

 

Net cash used in investing activities

 

(89)

 

 

(22)

 

 

 

(42)

 

Cash flows provided by (used in) financing activities

 

 

 

 

 

 

 

Net short-term debt repayments

 

(25)

 

 

(6)

 

 

 

(4)

 

Borrowings of long-term debt

 

209

 

 

91

 

 

 

2,313

 

Repayments of long-term debt

 

(167)

 

 

(100)

 

 

 

(2,261)

 

Return of capital to parent

 

(10)

 

 

 

 

 

 

Proceeds from rights offering

 

 

 

 

 

 

300

 

Financing fees paid

 

 

 

(2)

 

 

 

(136)

 

Net cash provided by (used in) financing activities

 

7

 

 

(17)

 

 

 

212

 

Effect of exchange rates on cash and cash equivalents, including restricted cash

 

(2)

 

 

(3)

 

 

 

 

Change in cash and cash equivalents, including restricted cash

 

(96)

 

 

(17)

 

 

 

(3)

 

Cash, cash equivalents and restricted cash at beginning of period

 

254

 

 

125

 

 

 

128

 

Cash, cash equivalents and restricted cash at end of period

 

158

 

 

108

 

 

 

125

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

Interest, net

 

$

88

 

 

$

3

 

 

 

$

71

 

Income taxes, net

 

12

 

 

4

 

 

 

10

 

Reorganization items, net

 

 

 

 

 

 

188

 

Non-cash financing activities

 

13

 

 

 

 

 

 

HEXION INC.
SCHEDULE 4: RECONCILIATION OF NET (LOSS) INCOME TO SEGMENT EBITDA (Unaudited)

               

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Three Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

July 1, 2019

 

Three Months Ended
September 30, 2019

Reconciliation:

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Hexion Inc.

 

$

(102)

 

 

$

(43)

 

 

 

$

3,054

 

 

$

3,011

 

Less: Net (loss) income from discontinued operations

 

(76)

 

 

1

 

 

 

119

 

 

120

 

Net (loss) income from continuing operations

 

(26)

 

 

(44)

 

 

 

2,935

 

 

2,891

 

Income tax expense (benefit)

 

17

 

 

(5)

 

 

 

191

 

 

186

 

Interest expense, net

 

25

 

 

28

 

 

 

 

 

28

 

Depreciation and amortization

 

47

 

 

48

 

 

 

 

 

48

 

EBITDA

 

63

 

 

27

 

 

 

3,126

 

 

3,153

 

Adjustments to arrive at Segment EBITDA:

 

 

 

 

 

 

 

 

 

Business realignment costs (1)

 

19

 

 

12

 

 

 

 

 

12

 

Transaction costs (2)

 

1

 

 

5

 

 

 

 

 

5

 

Realized and unrealized foreign currency (gains) losses

 

(3)

 

 

9

 

 

 

 

 

9

 

Reorganization items, net (3)

 

 

 

 

 

 

(3,099)

 

 

(3,099)

 

Non-cash impact of inventory step-up (4)

 

 

 

27

 

 

 

(27)

 

 

 

Other non-cash items (5)

 

6

 

 

1

 

 

 

 

 

1

 

Other (6)

 

5

 

 

5

 

 

 

18

 

 

23

 

Total adjustments

 

28

 

 

59

 

 

 

(3,108)

 

 

(3,049)

 

Segment EBITDA

 

$

91

 

 

$

86

 

 

 

$

18

 

 

$

104

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

Adhesives

 

$

58

 

 

$

59

 

 

 

$

18

 

 

$

77

 

Coatings and Composites

 

50

 

 

44

 

 

 

 

 

44

 

Corporate and Other

 

(17)

 

 

(17)

 

 

 

 

 

(17)

 

Total

 

$

91

 

 

$

86

 

 

 

$

18

 

 

$

104

 

(1) Business realignment costs for the Successor and Predecessor periods below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Three Months
Ended September
30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

July 1, 2019

 

Three Months Ended
September 30, 2019

Severance costs

 

$

4

 

 

$

4

 

 

 

$

 

 

$

4

 

In-process facility rationalizations

 

5

 

 

3

 

 

 

 

 

3

 

Business services implementation

 

6

 

 

 

 

 

 

 

 

Legacy environmental reserves

 

4

 

 

4

 

 

 

 

 

4

 

Other

 

 

 

1

 

 

 

 

 

1

 

(2) For the Successor three months ended September 30, 2020, transaction costs included certain professional fees related to strategic projects.
(3) Represents incremental costs incurred directly as a result of the Company’s Chapter 11 proceedings after the date of filing, gains on the settlement of liabilities under the Plan and the net impact of fresh start accounting adjustments. Excludes the ”Non-cash impact of inventory step-up” discussed below.
(4) Represents $27 of non-cash expense related to the step up of finished goods inventory on July 1 as part of fresh start accounting that was expensed in the successor period upon the sale of the inventory.
(5) Other non-cash items for the Successor and Predecessor periods presented below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Three Months
Ended September
30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

July 1, 2019

 

Three Months Ended
September 30, 2019

Fixed asset write-offs

 

$

 

 

$

 

 

 

$

 

 

$

 

Stock-based compensation costs

 

4

 

 

5

 

 

 

 

 

5

 

Long-term retention programs

 

1

 

 

 

 

 

 

 

 

One-time capitalized variance impact of inventory fresh start step-up

 

 

 

(4)

 

 

 

 

 

(4)

 

Other

 

1

 

 

 

 

 

 

 

 

(6) Other for Successor and Predecessor periods presented below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Three Months
Ended September
30, 2020

 

July 2, 2019
through September
30, 2019

 

 

July 1, 2019

 

Three Months Ended
September 30, 2019

Legacy expenses

 

$

2

 

 

$

4

 

 

 

$

 

 

$

4

 

IT outage (recoveries) costs, net

 

 

 

(1)

 

 

 

 

 

(1)

 

Management fees and other

 

3

 

 

2

 

 

 

 

 

2

 

Accelerated deferred revenue

 

 

 

 

 

 

18

 

 

18

 

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Nine Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

January 1, 2019
through July 1, 2019

 

Nine Months Ended
September 30, 2019

Reconciliation:

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Hexion Inc.

 

$

(203)

 

 

$

(43)

 

 

 

$

2,894

 

 

$

2,851

 

Add: Net income attributable to noncontrolling interest

 

 

 

 

 

 

1

 

 

1

 

Less: Net (loss) income from discontinued operations

 

(79)

 

 

1

 

 

 

135

 

 

136

 

Net (loss) income from continuing operations

 

$

(124)

 

 

$

(44)

 

 

 

$

2,760

 

 

$

2,716

 

Income tax expense (benefit)

 

8

 

 

(5)

 

 

 

201

 

 

196

 

Interest expense, net

 

76

 

 

28

 

 

 

89

 

 

117

 

Depreciation and amortization (1)

 

143

 

 

48

 

 

 

43

 

 

91

 

EBITDA

 

103

 

 

27

 

 

 

3,093

 

 

3,120

 

Adjustments to arrive at Segment EBITDA:

 

 

 

 

 

 

 

 

 

Asset impairments

 

$

16

 

 

$

 

 

 

$

 

 

$

 

Business realignment costs (2)

 

57

 

 

12

 

 

 

14

 

 

26

 

Transaction costs (3)

 

4

 

 

5

 

 

 

26

 

 

31

 

Realized and unrealized foreign currency losses (gains)

 

2

 

 

9

 

 

 

(7)

 

 

2

 

Reorganization items, net (4)

 

 

 

 

 

 

(2,943)

 

 

(2,943)

 

Non-cash impact of inventory step-up (5)

 

 

 

27

 

 

 

(27)

 

 

 

Other non-cash items (6)

 

29

 

1

 

 

 

9

 

 

10

 

Other (7)

 

9

 

 

5

 

 

 

36

 

 

41

 

Total adjustments

 

117

 

 

59

 

 

 

(2,892)

 

 

(2,833)

 

Segment EBITDA

 

$

220

 

 

$

86

 

 

 

$

201

 

 

$

287

 

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

 

Adhesives

 

$

156

 

 

$

59

 

 

 

$

135

 

 

$

194

 

Coatings and Composites

 

115

 

 

44

 

 

 

96

 

 

140

 

Corporate and Other

 

(51)

 

 

(17)

 

 

 

(30)

 

 

(47)

 

Total

 

$

220

 

 

$

86

 

 

 

$

201

 

 

$

287

 

(1) For the nine months ended September 30, 2020, accelerated depreciation of $2 has been included in “Depreciation and amortization.”
(2) Business realignment costs for the Successor and Predecessor periods below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Nine Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

January 1, 2019
through July 1, 2019

 

Nine Months Ended
September 30, 2019

Severance costs

 

$

15

 

 

$

4

 

 

 

$

8

 

 

$

12

 

In-process facility rationalizations

 

13

 

 

3

 

 

 

3

 

 

6

 

Business services implementation

 

17

 

 

 

 

 

 

 

 

Legacy environmental reserves

 

8

 

 

4

 

 

 

1

 

 

5

 

Other

 

4

 

 

1

 

 

 

2

 

 

3

 

(3) For the Successor nine months ended September 30, 2020, transaction costs included certain professional fees related to strategic projects. For the Successor period from July 2, 2019 through September 30, 2019 and the Predecessor period from January 1, 2019 through July 1, 2019, transaction costs primarily included $4 and $23, respectively, of certain professional fees and other expenses related to the Company’s Chapter 11 proceedings.
(4) Represents incremental costs incurred directly as a result of the Company’s Chapter 11 proceedings after the date of filing, gains on the settlement of liabilities under the Plan and the net impact of fresh start accounting adjustments. Excludes the ”Non-cash impact of inventory step-up” discussed below.
(5) Represents $27 of non-cash expense related to the step up of finished goods inventory on July 1 as part of fresh start accounting that was expensed in the successor period upon the sale of the inventory.
(6) Other non-cash items for the Successor and Predecessor periods presented below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Nine Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

January 1, 2019 through
July 1, 2019

 

Nine Months Ended
September 30, 2019

Fixed asset write-offs

 

$

6

 

 

$

 

 

 

$

3

 

 

$

3

 

Stock-based compensation costs

 

13

 

 

5

 

 

 

 

 

5

 

Long-term retention programs

 

7

 

 

 

 

 

5

 

 

5

 

One-time capitalized variance impact of inventory fresh start step-up

 

 

 

(4)

 

 

 

 

 

(4)

 

Other

 

3

 

 

 

 

 

1

 

 

1

 

(7) Other for Successor and Predecessor periods presented below included:

 

 

Successor

 

 

Predecessor

 

Non-GAAP Combined

 

 

Nine Months Ended
September 30, 2020

 

July 2, 2019 through
September 30, 2019

 

 

January 1, 2019 through

July 1, 2019

 

Nine Months Ended
September 30, 2019

Legacy expenses

 

$

7

 

 

$

4

 

 

 

$

3

 

 

$

7

 

IT outage costs (recoveries), net

 

(4)

 

 

(1)

 

 

 

9

 

 

8

 

Management fees and other

 

6

 

 

2

 

 

 

6

 

 

8

 

Accelerated deferred revenue

 

 

 

 

 

 

18

 

 

 

HEXION INC.
SCHEDULE 5: RECONCILIATION OF NET LOSS TO SEGMENT EBITDA BY QUARTER (Unaudited):

                 

 

 

Three Months

Ended September
30, 2020

 

Three Months
Ended June 30,
2020

 

Three Months
Ended March 31,
2020

 

Three Months
Ended December
31, 2019

Reconciliation:

 

 

 

 

 

 

 

 

Net loss attributable to Hexion Inc.

 

$

(102)

 

 

$

(42)

 

 

$

(59)

 

 

$

(46)

 

Add: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

1

 

Less: Net (loss) income from discontinued operations

 

(76)

 

 

(6)

 

 

3

 

 

7

 

Net loss from continuing operations

 

$

(26)

 

 

$

(36)

 

 

$

(62)

 

 

$

(52)

 

Income tax expense (benefit)

 

17

 

 

(12)

 

 

3

 

 

 

Interest expense, net

 

25

 

 

25

 

 

26

 

 

27

 

Depreciation and amortization (1)

 

47

 

 

48

 

 

49

 

 

44

 

EBITDA

 

$

63

 

 

$

25

 

 

$

16

 

 

$

19

 

Adjustments to arrive at Segment EBITDA:

 

 

 

 

 

 

 

 

Asset impairments

 

$

 

 

$

 

 

$

16

 

 

$

 

Business realignment costs (2)

 

19

 

 

18

 

 

20

 

 

11

 

Transaction costs (3)

 

1

 

 

1

 

 

2

 

 

6

 

Realized and unrealized foreign currency (gains) losses

 

(3)

 

 

(1)

 

 

6

 

 

(5)

 

Unrealized losses on pension and OPEB plan liabilities (4)

 

 

 

 

 

 

 

5

 

Other non-cash items (5)

 

6

 

 

12

 

 

11

 

9

Other (6)

 

5

 

 

1

 

 

2

 

 

7

 

Total adjustments

 

28

 

 

31

 

 

57

 

 

33

 

Segment EBITDA

 

$

91

 

 

$

56

 

 

$

73

 

 

$

52

 

 

 

 

 

 

 

 

 

 

Segment EBITDA:

 

 

 

 

 

 

 

 

Adhesives

 

$

58

 

 

$

43

 

 

$

55

 

 

$

56

 

Coatings and Composites

 

50

 

 

26

 

 

39

 

 

15

 

Corporate and Other

 

(17)

 

 

(13)

 

 

(21)

 

 

(19)

 

Total

 

$

91

 

 

$

56

 

 

$

73

 

 

$

52

 

(1) For the three months ended June 30, 2020 and March 31, 2020, accelerated depreciation of less than $1 and $2, respectively, has been included in “Depreciation and amortization.”
(2) Business realignment costs for the periods presented below included:

 

 

Three Months
Ended September
30, 2020

 

Three Months
Ended June 30,
2020

 

Three Months
Ended March 31,
2020

 

Three Months
Ended December 31,
2019

Severance costs

 

$

4

 

 

$

2

 

 

$

8

 

 

$

5

 

In-process facility rationalizations

 

5

 

 

5

 

 

6

 

 

3

 

Business services implementation

 

6

 

 

8

 

 

4

 

 

 

Legacy environmental reserves

 

4

 

 

2

 

 

2

 

 

3

 

Other

 

 

 

1

 

 

 

 

 

(3) For the three months ended September 30, 2020, June 30, 2020 and March 31, 2020, transaction costs include certain professional fees related to strategic projects. For the three months ended December 31, 2019, transaction costs primarily included $3 of certain professional fees and other expenses related to the Company's Chapter 11 proceedings incurred post-emergence, as well as certain professional fees related to strategic projects.
(4) Represents non-cash losses resulting from pension and postretirement benefit plan liability remeasurements.
(5) Other non-cash items for the periods presented below included:

 

 

Three Months
Ended September
30, 2020

 

Three Months
Ended June 30,
2020

 

Three Months
Ended March 31,
2020

 

Three Months
Ended December 31,
2019

Fixed asset write-offs

 

$

 

 

$

5

 

 

$

2

 

 

$

5

 

Stock-based compensation costs

 

4

 

 

4

 

 

5

 

 

3

 

Long-term retention programs

 

1

 

 

3

 

 

3

 

 

(1)

 

Other

 

1

 

 

 

 

1

 

 

2

 

(6) Other items for the periods presented below included:

 

 

Three Months
Ended September 30,
2020

 

Three Months
Ended June 30,
2020

 

Three Months
Ended March 31,
2020

 

Three Months
Ended December 31,
2019

Legacy expenses

 

$

2

 

 

$

2

 

 

$

2

 

 

$

2

 

IT outage (recoveries) costs, net

 

 

 

(3)

 

 

(1)

 

 

1

 

Management fees and other

 

3

 

 

2

 

 

1

 

 

4

 

HEXION INC.
SCHEDULE 6: CALCULATION OF THE RATIO OF PROFORMA EBITDA TO FIXED CHARGES (Unaudited)

     

 

 

September 30, 2020
LTM Period

Net loss

 

$

(248)

 

Net loss from discontinued operations

 

(72)

 

Net loss from continuing operations

 

$

(176)

 

Income tax expense

 

8

 

Interest expense, net

 

103

 

Depreciation and amortization

 

187

 

EBITDA

 

122

 

Adjustments to arrive at Pro Forma EBITDA:

 

 

Asset impairments

 

16

 

Business realignment costs (1)

 

68

 

Realized and unrealized foreign currency gains

 

(3)

 

Unrealized losses on pension and postretirement benefits (2)

 

5

 

Transaction costs (3)

 

10

 

Other non-cash items (4)

 

38

 

Other (5)

 

21

 

Cost reduction programs savings (6)

 

8

 

Pro Forma EBITDA

 

$

285

 

Pro forma fixed charges (7)

 

$

100

 

Ratio of Pro Forma EBITDA to Fixed Charges (8)

 

2.85

 

(1) Primarily represents costs related to certain in-process cost reduction activities, including severance costs of $19, $19 related to certain in-process facility rationalizations, $11 for future environmental clean-up of closed facilities and one-time implementation and transition costs associated with the creation of a business services group within the Company of $18.
(2) Represents non-cash losses resulting from pension and postretirement benefit plan liability remeasurements.
(3) Represents certain professional fees related to strategic projects, including $3 of certain professional fees and other expenses related to our Chapter 11 proceedings incurred post-emergence.
(4) Primarily includes expenses for stock-based compensation costs of $16, non-cash fixed asset write-offs of $12 and long-term retention programs of $6.
(5) Primarily represents $8 of expenses related to legacy liabilities, $6 of business optimization expense, $10 related to management fees and other expenses, offset by $3 of IT outage recoveries.
(6) Represents pro forma impact of in-process cost reduction programs savings. Cost reduction program savings represent the unrealized headcount reduction savings and plant rationalization savings related to cost reduction programs and other unrealized savings associated with the Company’s business realignments activities, and represent our estimate of the unrealized savings from such initiatives that would have been realized had the related actions been completed at the beginning of the period presented. The savings are calculated based on actual costs of exiting headcount and elimination or reduction of site costs. We expect the savings to be realized within the next 18 months.
(7) Reflects pro forma interest expense based on interest rates at September 30, 2020.
(8) The Company’s ability to incur additional indebtedness, among other actions, is restricted under the Secured Indentures, unless the Company has a Pro Forma EBITDA to Fixed Charges ratio of at least 2.0 to 1.0.

HEXION INC.
SCHEDULE 7: FREE CASH FLOW BY QUARTER (Unaudited):

                 

 

 

Three Months
Ended

September 30, 2020

 

Three Months
Ended June 30, 2020

 

Three Months
Ended March 31,
2020

 

Three Months
Ended December 31,
2019

Net cash provided by (used in) operating activities

 

$

7

 

 

$

83

 

 

$

(102)

 

 

$

199

 

Capital expenditures

 

(30)

 

 

(29)

 

 

(32)

 

 

(36)

 

Free Cash Flow (1)

 

(23)

 

 

54

 

 

(134)

 

 

163

 

(1) Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment.

HEXION INC.
SCHEDULE 8: NET DEBT BY QUARTER (Unaudited):

                 

 

 

September 30, 2020

 

June 30, 2020

 

March 31, 2020

 

December 31, 2019

Debt payable within one year

 

$

77

 

 

$

76

 

 

$

80

 

 

$

70

 

Long term debt

 

1,756

 

 

1,839

 

 

1,834

 

 

1,715

 

Total Debt (1)

 

$

1,833

 

 

$

1,915

 

 

$

1,914

 

 

$

1,785

 

Less: Cash and cash equivalents

 

(158)

 

 

(295)

 

 

(250)

 

 

(254)

 

Net Debt (2)

 

$

1,675

 

 

$

1,620

 

 

$

1,664

 

 

$

1,531

 

(1) Total debt represents the sum of "Debt payable within one year" and "Long-term debt" on the Condensed Consolidated Balance Sheets. Certain components of total debt are denominated in foreign currencies.
(2) Net debt represents "Total Debt" as defined above less "Cash and cash equivalents" on the Condensed Consolidated Balance Sheets.

HEXION INC.
SCHEDULE 9: ASSETS AND LIABILITIES FROM DISCONTINUED OPERATIONS (Unaudited):

         

 

 

September 30, 2020

 

December 31, 2019

Carrying amounts of major classes of assets held for sale:

 

 

 

 

Accounts receivable

 

$

59

 

 

$

49

 

Finished and in-process goods

 

17

 

21

Raw materials and supplies

 

17

 

18

Other current assets

 

10

 

11

Total current assets

 

103

 

99

Investment in unconsolidated entities

 

5

 

 

3

 

Other long-term assets

 

7

 

 

11

 

Property, plant and equipment, net

 

293

 

 

297

 

Operating lease assets

 

13

 

 

12

 

Goodwill

 

14

 

 

14

 

Other intangible assets, net

 

61

 

 

63

 

Discontinued operations impairment

 

(75)

 

 

 

Total long-term assets

 

318

 

400

Total assets held for sale

 

$

421

 

 

$

499

 

 

 

 

 

 

Carrying amounts of major classes of liabilities held for sale:

 

 

 

 

Accounts payable

 

$

48

 

 

$

52

 

Income taxes payable

 

2

 

 

 

Accrued payroll

 

5

 

 

5

 

Current portion of operating lease liabilities

 

2

 

 

2

 

Other current liabilities

 

10

 

 

10

 

Total current liabilities

 

67

 

 

69

 

Long-term pension and post employment benefit obligations

 

30

 

 

29

 

Deferred income taxes

 

16

 

 

15

 

Operating lease liabilities

 

5

 

 

4

 

Other long-term liabilities

 

8

 

 

8

 

Total long-term liabilities

 

59

 

 

56

 

Total liabilities held for sale

 

$

126

 

 

$

125

 

HEXION INC.
SCHEDULE 10: FINANCIAL RESULTS FROM DISCONTINUED OPERATIONS (Unaudited):

                     

 

 

Successor

 

 

Predecessor

 

Successor

 

 

Predecessor

 

 

Three Months
Ended
September 30,
2020

 

July 2, 2019
through
September
30, 2019

 

 

July 1, 2019

 

Nine Months
Ended
September 30,
2020

 

July 2, 2019
through
September 30,
2019

 

 

January 1,
2019
through July 1,
2019

Major line items constituting pretax income of discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

120

 

 

$

149

 

 

 

$

 

 

$

360

 

 

$

149

 

 

 

$

309

 

Cost of sales (exclusive of depreciation and amortization)

 

100

 

 

130

 

 

 

 

 

301

 

130

 

 

 

263

 

Selling, general and administrative expense

 

11

 

 

8

 

 

 

 

 

33

 

8

 

 

 

17

 

Depreciation and amortization

 

8

 

 

7

 

 

 

 

 

26

 

 

7

 

 

 

9

 

Asset impairments

 

75

 

 

 

 

 

 

 

75

 

 

 

 

 

 

Business realignment costs

 

 

 

1

 

 

 

 

 

1

 

 

1

 

 

 

1

 

Other operating expense (income), net

 

 

 

1

 

 

 

 

 

 

 

1

 

 

 

(1)

 

Operating (loss) income

 

(74)

 

 

2

 

 

 

 

 

(76)

 

 

2

 

 

 

20

 

Reorganization items, net

 

 

 

 

 

 

(135)

 

 

 

 

 

 

 

(135)

 

Other non-operating expense, net

 

1

 

 

 

 

 

 

 

1

 

 

 

 

 

 

(Loss) income from discontinued operations before income tax, earnings from unconsolidated entities

 

(75)

 

 

2

 

 

 

135

 

 

(77)

 

 

2

 

 

 

155

 

Income tax expense

 

2

 

 

1

 

 

 

16

 

 

3

 

 

1

 

 

 

21

 

(Loss) income from discontinued operations, net of tax

 

$

(77)

 

 

$

1

 

 

 

$

119

 

 

$

(80)

 

 

$

1

 

 

 

$

134

 

Earnings from unconsolidated entities, net of tax

 

1

 

 

 

 

 

 

 

1

 

 

 

 

 

1

 

Net (loss) income attributable to discontinued operations

 

$

(76)

 

 

$

1

 

 

 

$

119

 

 

$

(79)

 

 

$

1

 

 

 

$

135

 

 

Contacts

Investors and Media Contact:
John Kompa
614-225-2223
john.kompa@hexion.com