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AdvanSix (ASIX)

Participants
Adam Kressel Director of Investor Relations
Erin Kane President and Chief Executive Officer
Michael Preston Senior Vice President and Chief Financial Officer
Charles Neivert Cowen and Company
Chris Moore CJS Securities
Jed Nussdorf Soapstone Capital
Call transcript
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Operator

Good day, and welcome to the AdvanSix second quarter 2018 earnings conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Adam Kressel, would like to to over conference the Director turn I of Relations. Investor ahead. go Please

Adam Kressel

consider elements Thank investors.advansix.com. Michael that press With are reconciliations, actual our And best this XXXX morning. refer We forward-looking Kane, Those any view and of release President see world you, ask materially non-GAAP our AdvanSix's the the President them elements to Erin business Note call Steven. included of you in you quarter projected, could and Web statements and today. results Vice second and our including CFO, and welcome CEO, as statements in on based on those that it the earnings This contain presentation. here site our and are we from of me light. to call. that available and Senior earnings forward-looking at today Preston. are differ can presentation change conference Good and webcast, we that

second our share identify product results addition, for lines XX-K. uncertainties performance our This affect markets. on filings, risks we'll key annual our principal with SEC morning, you review In our that in including the Form and and for our the quarter our we XXXX report financial outlook and end

end. at leave we'll the your for Finally, questions time

the I'll that, turn over Erin call to and Kane. with So President AdvanSix's CEO,

Erin Kane

us in you Thank joining AdvanSix. everyone. once continued and morning, good for and Adam, for again Thanks, your interest

As strong XXXX. dynamic delivered half quarter, another you capping release, a on first AdvanSix saw off of press our

Mike has environment. generation year-over-year. a sales million, detail of pass-through were saw the results, Earnings increasing the contributing ability to highlight strength to I'd and the Sales raw strong results input improvement material flow. cash XX% and the up and including following. full will of energy with model was demonstrated flow the We our XX%, Our rising to to $X.XX metrics, pricing, volume income in cash higher of our and what improve perform in an quarter, a operations business $XXX continued per cash but operating increase been volume, share like across number with results our XX%. and

we've June, capital strategy $X.X approximately and in reflecting flow initiated purchased for share cash addition, shares in Through In continued purchases maturing July, allocation our confidence generation. XXX,XXX we've million.

markets demand America supported is Global this end environment. pricing continued quarter, to and did North favorable nylon caprolactam balanced constraints In remain dynamic. as dynamics we by in continue well, side Europe favorably see and supply China. and supply tight with generally Our to demand in supply

we We industry conditions into market expect to continue as start year. domestic in the half expected ammonium be demand improved phosphate, a quarter, XX% late strong general favorable we nylon The of season. saw we the up second executed move following pricing to the fertilizer is the new on current and has in year-over-year. environment the to planting the season about In fill

seasonality However, normal in quarter. to third decline expect pricing we driving the do typical sequential the

end of phenyl rates strong, the and of in global resulting additional market have chemical As production to demand acetone. intermediates, our the operating coproduct remained

for we've imports the a acetone half elevated XXXX in America industry. in As a the pricing call. detailed We'll to the result, continued pressure more North share of framework see later second

other no to our Award. based Safety to was Facility incidents. our sites injuries Council and lost AdvanSix quarter, days operate. core part Earlier compliance and were with honor excellence performance. excellence given to we Safety the production by Several the performance how certificates is and discipline and safe operational or Our American Responsible of in performance, for stable critical having their are of recognized Chemistry this Care safety in work

proactive planned mechanical our the upcoming turnaround and and for quarter. annual do the our robust the quarter at and output making the paying We by We to improvements efficiently see we're quarter of feedstock reliability cost for also base expense, As incremental normally in million. evidenced integrity structure beyond been saw preparing planned the that pretax range second flexibility deployment repair to optionality. of turnaround are turnaround Hopewell we've income, completed third $XX to the ourselves and financial expect million manufacture We're impact this this maintenance program quarter, our plant incremental the planning we enables safely capital a CapEx. Hopewell off. at inclusive of maintaining ample purchases and opportunities and in and absorption, We of capital $XX fixed we be actively

million Importantly, a asset developed as other buffers, savings, with the projects million of spend we shared range, $XXX flexibility $XXX focused to plant cost we've among improving pipeline and last on benefits. potential in call,

not execution value drive the further of that will While these all to for fruition, come disciplined will pipeline of company.

total As are to of $XX cost quality areas debottleneck discussed, million investments our a and two further and will that $XX improve organic of operations, we optimize savings overall. progressing position million and for specific mix cost high-return our growth

against with year to starting benefit in and $XX into million million the second carry-over outflows be $XX these of next cash expect We half to projects in XXXX. XXXX,

company mix and higher to two-year projects, With be excited this total, the utilization about maturing what value evolution continue of driving a long So, I'm what range term. We're million. are to standalone $XXX mark well-positioned we've $XXX operational the continue we the make. value our on of million approaching full-year public in continues and even rates running I'm proud offer. future to made being very plants expect accomplished XXXX, product the of and in shareholder commercial strategies focused the we high over for at reinvestment and has to organization to and has to do of the more pipeline and excellence, CapEx

I'll turn Mike the over that, discuss to details of quarter. with to the So, it

Michael Preston

XX% material financial favorable year. Volume and propylene, X% results. the due Sales inputs ammonium increased shared. across and dynamics previously Okay. flat we've elevated compared derivatives demand compared supply impact by are driven our quarter product Market-based the normally intermediates million feedstocks plant everyone. imports about was volume. to $XX costs, key our increases EBITDA of on the line. following now and the came the I'm X%, which second and primarily lines, where million oil purchases Thanks, and Pricing sulfate unfavorable $X.X million, rates acetone Erin. last up industry And $XXX we of good manufacturing four continued to I'll lines. in high to slide North at saw was ourselves, increases morning, that's nylon including up approximately favorable nylon We with impact of on sulfate, partially feedstock pass-through product of by benzene raw was decreased our as offset cost utilization chemical pricing, in pricing pricing manufacture of chemical America cumene, offset ammonium versus which product intermediates and prior-year. by improved benefit the in and sales cover prior our to year, higher by

pass-through maintenance we was programs. our in our quarter were last declined a proactive Hopewell plant line rates XXX planned partially from just expectations from reliability XX.X% pricing impact million. will continue increased discuss in in offset the volume. investments and with by to this plant margin As roughly moment, discussed, of of cost very we utilization impact primarily and of due year, quarter further sales raw benefit strong higher turnaround points $XX of manufacturing and to The in EBITDA material higher the

As and pricing formula a agreements. reminder, total index-based roughly is revenue of base our XX% protected by

the price raw the our of will protected. largely margin is materials, fluctuate sale with So, our variable but

last generally as interest As you look in versus at by expense expected. with million, came debt they approximately lower Depreciation items $X.X roughly levels by increased below EBITDA, $XXX,XXX decreased year. while

EPS increased year, performance, reflecting by XX% bottom income benefit net of terms the tax prior versus reform. both and In line of the

And million XX.X% in income was increased reached of deferred the XX% And rate amount quarter capital, sort Our continue was as flow in generation. in the nearly to in continue in million, the a $XX last by to levels $XX The On a line of free up our the and and $X plan by our we or roughly a the $XX to million second impact contributed tax do million our additional year-over-year $XX favorable also CapEx operations that's million in $X Cash versus partially results on efficiently. cash the roughly pension year-to-date cash increase total quarter, million XXXX pension due we year. that's from to capital $XX changes quarter benefit we million reduced to basis, planning to by from we higher bringing of plan XX.X% compared primarily from a net year-to-date effective tax was But range. $X.X to taxes. expectations. year. with offset increased working make the and total cash manage see in last in flow from focus million to perspective, million. lastly, again, working $X.X contributions for

the Now, let seeing me our to what discuss each lines. Erin to over product in call we're of turn

Erin Kane

the five includes products, Mike. second XX% and our in nylon which slide now films of caprolactam, I'm Great. quarter. sales line, on Thanks, our discuss to our resin and product over represented

chart can on page, you reflect conditions year-over-year. improved side industry of spreads from the the see As right-hand the globally

supported has plant there industry snug half previously, kept discussed the we've unplanned which in planned and XXXX, a supply outages of number first As and were spreads. of global

conditions supply North feedstock supply-side to government-imposed America constraints continue across We tighter driving heavy are and constraints, to environmental Europe. schedule, a China, generally see turnaround and continued In downwards dynamics.

includes been of we plants parks. this new of announced areas are to has In now of populated that just impacted inspections beyond fresh and plan part sectors chain as industry relocation round chemical designated monitoring a by potential existing focus. recently government value our Numerous a anti-pollution from three-year addition,

So, to associated while these in impacts environmental continued other additions balanced region, we seems against be capacity to track the lower this controls. utilization potential with and do continue

So, despite year. overall, spreads have shown the held global long, structurally industry and up the and nylon being throughout stability market

to As look the are the favorable we current second conditions industry of expected continue. toward XXXX, nylon half

we've market across constrained feedstock are supplies associated serve. Nylon downstream is demand with nylon various XX showing seen remaining healthy other severely Our the we production and applications indicators end shortages. And also

the So, result X increased several this areas end create such movements growth, We'll engineering modest But pricing know, and through for as and substitution Nylon projects. way of can formula-based fundamentals models. in through work take to opportunity mitigate constraints, associated to can the market with raw material customer both its end supply a a work as and continue market plastics. we pricing chain value as fully-negotiated this track pricing to the our months price

to turn six. slide Let's

saw XX% planting the to wet demand, season domestic to ammonium we weather. Moving which and of sulfate, in to sales slower following due represented our the cold start somewhat total strong very over quarter, a the

and ammonium basis. in urea industry As always XX%. we've shown on pricing belt plots whereas retail corn on important a the pricing sulfate sulfate Again, nitrogen nutrient contains and contains the previously, as graph urea it's ammonium normalize side right-hand the XX% to

urea utilization, the helps Our monitoring total a have also the product value thus particularly pricing impact discussing. quarter firmer upward supply the the additions, curve. of on pricing. producers consumption, pricing ammonium urea sulfate We've of may relatively nitrogen tend for recent second nitrogen reductions prices of basis. environmental has It X% year-over-year an and result the in the A increase industry of pushed and XXXX significantly movement, is the an yields to ammonium up stable, factors costs with to And influence other to have in is in certain as other out in Based from have in capacity belt we've Urea, of a as seen on and sulfate belt though underlying back an China crops. pricing cost decisions. number are influencing contributed in various we've compared increase been added nitrogen dynamics. the data, sulfur on again they corn more but Corn third-party positioned industry on key supply/demand on largest again, roughly to nitrogen corn products, of dynamic Urea belt seen by proposition wrong industry nutrient pricing. tariffs granular urea next do to have nutrition impacted prices ammonium increased showed quarter all fertilizer for of XX% ongoing markets, which energy when considerations the over on cost been have regions planting policy US. global additions dropped export crops exports globally has balance the in season's Higher we regions. largely sulfate

moment. I'll remainder second, towards work in which see we quarter the XXXX, pricing further do in seasonal to the we of the sequentially expect as the compared As into to dive a normal third declines

fertilizer the where operating time we is last we're market However, were in this year. stronger than

the supply/demand year. proposition crop always, season expect but sales, monitoring value and including of new on be prices, pricing the delivering approximately focused trade We stay fill new for flows, And the nutrition globally. to fundamentals season global XX% as last ahead of our are sulfur key above indicators customers we'll

since We slide time, what We've seven. season to the spend to the the larger a third nitrogen to two as they always ammonium as over spin. turn explained appear really And ensure is to sulfate we our not but it thought turn here considerations be Let's entering now fertilizer would moment be were the discussing seasonality cycle. we been through understood discussing wanted going sequential in particularly are seasonality. or that so are intuitive, and helpful

Green during second ammonium last which time average the to and into new XXXX had then left-hand the season, the quarter North sequential fertilizer the as this the sulfate corn from the for a quarter As side ammonium depicts change new seasonal America, prices from considerations June. published the third by as North begins, we price on the in And illustrate we are XXXX. by better seasonality, season meaning chart belt of typically pricing are July that strongest the the over XXXX/XXXX the fertilizer it quarter through sulfate to runs in decline period now described here application year, page through America Market

over of the quarter in strengthen there of quarter we third third reflects new planting and on to XXXX. are seen the year prices results season every As On typically into while environment the can season ahead corn sales. any see, industry given second that seen And depending you timeframe. the sequential XX% in the we've ranges year, decline prices decline since the from across spring in belt the have quarters declines then average, the trend that

decreases ranged The XX%. third low from declines to of declines quarter sequential single-digit over period that have over

to are So, perspective, talked as mitigate America sales regions. South seasonality volume to sell both America we into efficiently we ability from our the able a North about our and given

actually relatively volumes a our basis. on remain steady quarterly So,

expect export of geographical sold markets particularly North product However, half the of our it amount domestically the to higher have we America products sales we as Brazil. year, sales the quarter to This to in into a the also and do Latin second mix height have product the strong a to the America has tend higher consideration mix sales standard at season. as in relates granular of

a we $XX discussed earn past product over the As around a in reminder, that granular ton. of sales a standard premium

– to total, So, cost we sold our caprolactam, treated sales sequential in $XX of in consideration a seasonality, third goods when netback consideration $XX on at million the of impacts the to and ammonium in to are see that you quarter. sulfate the the produce typically as – of COGS million a to higher look average cost

a continued it we was a place in market is monitoring I we signposts improvement XXXX. environment to better into mentioned are head ago. are And just there year fertilizer initial for the Importantly, as as earlier, where

that, eight slide intermediates. with chemical an update turn So, let's for to on

intermediates about business, one-third of provides total from variety chemical of the represented our co-products diversification sales Our in quarter, we a revenue sell. which

influenced quarter, conditions. own due continued in tight of the underlying also Prices propylene year-over-year data. done on rising and the for but in we've prices supply/demand a move prices. intermediates side to on propylene of increase moves chemical over supply represented mostly acetone based on can the our its which will grade for third-party past, shown page propylene Input in of to with As second refinery half basis we've the right-hand dynamics, portfolio, the be acetone, XX% by prices

can in globally elevated pressuring factored time, large we've into which Operating to in continued remain to underlying lagged as rates levels nylon trade imports demand high this production resin further acetone resulting has dynamics. the original pricing. this and global has epoxy US, coproduct. flows, of During acetone with been And acetone of phenomenon Coupled supply the you demand regional increases biomarker see, has phenyl and across applications polycarbonate, into given strengthen the [indiscernible]. and continued global see acetone

we have closely do about to off, but capacity basis. we while which rationalization, year, domestic monitor remain do a see leveling occurred continue talked historical import we levels, So, this high which earlier they on

expect market We which continue we term. to to end demand remain overall favorable, in don't rates means now see near right utilization that down the coming

and back call our me for discuss to let framework operational to second of over half turn So, performance the the year. Mike

Michael Preston

we've on side production an Okay. shows annualized chart nine. plant page rates the Thanks, the Erin. left-hand on shown I'm our basis. slide the as And of now on previously

our robust average. year, levels set base in the as asset the our over historical did last the production increase as total across wasn't X% utilization second Although quarter, roughly near-record

at that modestly the performance the second the XXXX. improved upper we this Hopewell Importantly, in our quarter on utilization site XX% quarter saw of

that maintenance for and programs the So, that's integrity further and are benefits providing long-term. near-term over proof the mechanical also our both

across control risk monitor matrices in We and our reliability to improved These asset assets place through critical operations output. are drive uptime and are our and mitigating risk programs plans.

Our that culture plays improvement in integral success. of role continuous an also

through our dedicated an the Our element detailed start performance. plant of We've the from also the our implemented teams of turnaround continue assigned improving turnaround programs the efforts of asset. are effectiveness the important to restart planting operational of process

in our mentioned concluding Erin plant the turnaround quarter. As third are schedule XXXX earlier, we

produce event quarter of $XX in include shift the year, given running purchases our the We normally pretax relatively In we we're even Most of allow the a $XX us to timing turnaround efforts. at expect ourselves. the unplanned the would higher million income rates portion turnaround, the utilization plants that seeing in during that that million particular a continue of high ammonia throughout total related from first impact weather to purchases and activities to quarter. feedstocks impact this to the notably,

smart rates improve Our advantage performance position and debottleneck high our and making utilization to leading cost we're investments supports these operations.

robust year overall, So, sustain beyond. performance expect to operational of for our and this the we remainder

slide Let's turn to XX.

our time to the half. to we'd turning to a more Q&A, second of recapping expectations like half first before little relative Now, year the spend this for

As the the space and We're puts we developments China industry the in to favorable policy takes current to continue. conditions supply portfolio. and are any monitoring environmental In price related we've across dynamics. expect particular, there discussed, driving some the nylon

past, the shifts in seen we've quickly As pricing supply. to react in market can

are do value bit. value be But In raw nylon performance moving up $XX price applications. in impact differentiated reminder, a of expect that our in nylon agreements Some expected on and in their pricing by pass-through to the will the quarter Erin remain quarter, seasonality sequential characteristics to material higher and quarter sales formal chunk although million highlighted as volumes third we steady inputs XXXX. around second of million a the on more pricing the based our good also of key caprolactam products the are a representing market, focused $XX of key to those third feedstocks on ammonium compared in and driven normal sulfate, XX% year-over-year be to on

to expect also business. advances cash in We in pre-buy for the plan quarter XXXX as is the of in common sales some level see fourth that

expected intermediates, phenyl second chemical robust market demand remain for half of As the year. to the end in is

third into focused [indiscernible] America. remain turnaround. ample execution the quarter in Operationally, of plant supply of associated imports pricing We to headwinds acetone we on North expect with this continued our result flawless

and XXXX utilization returns proactive output foundation sound expect We we higher supported beyond. manufacturing sites and sustainable maintenance upgrades remainder for provide of into a our and the and in rates enter investments by for XXXX, as programs. high The reliability our

our that and specific also growth in of $XXX see overall. and position The of $XX high-return begin will higher-return savings million us which quality the project total, flow. earnings million million optimize will further half mix areas executing for to towards In operations, of and on that will cash includes of $XX cost full our $XXX CapEx expecting second and the improve CapEx we're our range to drive debottleneck this pipeline year, cost million CapEx year

focus key the nearly cash generation a cash Lastly, has us. seen We've flow XX-month basis. second steady a as trailing improvement to area continues for be a through quarter operating XX% increased on

second ongoing income a XXXX, capital the cash and of into tax strong move and we expect favorable benefits performance we half have net impact flow. reform As to on working

in for performance remainder pricing the in driving year. So, of overall, our we'll continue strong while operational markets, monitoring the developments

So, to with Q&A. that, move let's Adam,

Adam Kressel

Thanks, right. you And, All Q&A. Mike. can open line the for Stephen, if

Operator

from Thank Please Charles you. [Operator Cowen. go Neivert ahead. Instructions]. And our first comes with question

Charles Neivert

out nylon, about they is and and In XX the that's using you at little regard, and gap who you a you least guys inquiries couple Nylon today. how over or some that expanded some X the Can Nylon between the might get X situation of gotten. XX typical about about talk in looking next And how at instead it gotten of be talked customers bit significantly? to have the Have of picture beginnings Nylon XX things more pricing where tight about might switching progress quarters?

Erin Kane

Great question, Charles.

tried to in to about start, marketplace, PA so first experts a upwards XX bit it areas polyamide of space, here. estimates want X, We've kind So, of just X kind XX% is help maybe XX adjusted when applications. look application substitute X third-party across everybody are our what to of could the you the we've and understand part, XX XX% with where smaller, look the market. PA is, type at is XX%, of for those than triangulate we right, the total you maybe When application about frame

higher a This pertained of to X, Europe marketplace the that the for been to and see maybe you think And is kind as focus nearly has gone, some of engineering plus XX% force in you XX% for arena, as it pricing frames yarn. where When that in year XX plastics and maybe look again, with considerations. we local can the So, high at some constraints. US tough pricing now – in majeures probably XX% it's as in. industrial where has the about

So, folks looking. think I certainly, are

one – it But take. had that would next the given already be increase, time down we think had substitution, quarters. hypothesis arena We've folks project. can several OEMs, that imagine, about, have as these working We But say. to spec to a constraints, at in customer you a typically the having think convert you as one compounding would in fair actively the long-term some is I least particularly it's perhaps just there may over through what I

Charles Neivert

others contracts And smaller, coming certain preclude some – you opportunity think have know is are there might movement given something I that has it, available. raise being is even between the the definitely you that's then, much might opened for be there all? to Do might XX at price that's or Yeah. barring no seen already always – normally something if but that that substitution, that two, been guys gap allow up premium, certain any in just is prices there at at otherwise might not

Erin Kane

always exists when world. X at ahead oriented X Certainly, think differential that ensure are associated this higher stay into there. staying we're We'll year moves on that Nylon in to to the X in there well. increased in XX logistics, fighting and the imports of applications prices have everyone value-added versus Nylon in We're looking [ph] seeing the on markets I the pricing are that focused certainly pricing. side moves. costs the with US. moves the of general, raw There length you probably with price the I just is more do regional Well, dynamics look again, at, think is material

can versus as when regional considerations, been as discussing at there's always we've here think regions as I threads look a time actually the well, perform. over to how you So, factor

Charles Neivert

Okay. And then, a subject. last one on different

year going to Can $XX currently from on and is Based forward? to might be – You're then will on. pipeline. number million be company much? to project that year go how beginning $XX the what is – flow ultimately to assume work start there $XX I worth on total – next to going to projects is the some over projects to this bring million at million worth $XX going into that is on million is or whatever might spend you and all the the to bracket to those be going you're

Michael Preston

Yeah.

and think way about growth as of the talked forward projects, as internal rate we and we the look a moving hurdle past, XX% in rates So, of evaluate funding at these cost return. sort about we savings we things of

those returns And so, of through. those see Those investments with are going we investments. expect carry to the will associated kind forward

to of, million $XX call $XX $XX We'll carryover million year. probably million to XXXX. in another this have We have it, million $XX

As we the the first you'll year, then get in of benefits seeing conclude of projects as full-year into benefits the seeing half the year start you half those you'll and second in start XXXX.

Charles Neivert

it. Got

So, are are – these months basically – take these not quite to obviously, typically complete, going to

Michael Preston

of they them Along take we execute. months and with XX turnarounds X our of business tying need to also typically these to to to and capital-intensive and years and the work as type nature sort investments of upfront do, the them, well, the engineering a of lot

Charles Neivert

Got it.

physical So, you're the into getting work.

you've paperwork. meaning done – all that's the it, the already So, front-end of

Okay.

Michael Preston

That's correct. Yes.

Charles Neivert

Okay, thanks very much.

Michael Preston

Okay.

Erin Kane

No, thank you.

Operator

ahead. from with And Chris Moore CJS question Instructions]. go next our comes [Operator Please Securities.

Chris Moore

Hey, good morning, guys.

Erin Kane

Good morning.

Chris Moore

the turnaround. morning. Good Start plant on

talked So, kind the QX million impact impact about million. is numbers, had the total million for It's you I to $XX of want make sure to understand Frankfurt to being $XX year million. so from the $XX in just million QX. $XX $XX

Michael Preston

right. That's

Chris Moore

that little bit more million, $XX million it is that So, expanding $XX – to is or a

Michael Preston

the recall, you forward as Chris, execute quarter our there, and the that used in first if we in impact And operations then too to talked some plant quarter. correct. spend turnaround is in opportunity the pull to the we when the some an That quarter first and impact Yeah. sort first the of weather of

a of there's impact there. couple million So,

also full-year of terms when the at throughput we've which it So, it, well estimate to the primarily really, of feedstocks of when is support our look well. high seen ammonia only down particularly you $XX on original which to capital that are pricing increase numbers, basis, make, the really range. plan $XX purchases that about above comes to million the of not And you sort look it as year full comes some in but going at a of those guidance sort of range, increasing to our we of forward, ammonia, now normally million that

sort So, that the impact, range. of with increased that has

Chris Moore

That will of maybe, American that Erin, is why North that, helps. you On that behind a think Kind do happen. it. Thanks. you Got the off. of talk about the begin level assumption acetone, Kind belief little just imports talked will the to bit.

Erin Kane

activity, about So, certainly, we what on candidly, seen this is a that has had based maybe moved trading last as multiple America going through talked the over quite last right, market months, imports over net market comment in what the So, needs, the a be we've into several American we've were coming So, right? position. North that right? to import seen at North of sort call,

what moved being influencing the tight environment And as product here with need. propylene propylene this, in lengthy a do I into got but aggressive, would coming need what moves to of Asia trying US, favorable expected get up move so have say, has say, seen that's is is I leveled inflows, well in some the we've inflows we've more consideration the right, propylene variable as on environment. regional would also normal line to more a with material That to what margin as down structurally seen Coupled the we we in, that there well. or from in was So, that's last, off With over was as there. months, three cost. a coming

So, that. some relative interim to considerations that's created well as

also flush over I again, of to as getting of are imbalances, last the propylene – takes is of global several the it sort that that what pressuring this trade that through And, that And have – length we're there to I the any flows. case, the – where signs there. time think well. now, compounding least consideration seeing we months at we're think in consideration

Chris Moore

it. Got

in right? chemical remind terms indexed of your Just about the and the kind me sales intermediates, roughly of nylon thirds on the about side, understanding my formula-based – that half on of formula was two half of pricing, is

Erin Kane

when an So, goes, it's depending the – through pricing not to the benzene the It's which propylene, propylene have up a to implication but And a a a right? phenyl necessarily indices, side, you indices, on have you buyer half on put two-thirds but through we large may indicated Certainly the it's go influence. mix. one-to-one. acetone how side, has then, that, also on

Chris Moore

Got right. it. I appreciate All it.

Erin Kane

Thank you.

Operator

Soapstone our [Operator with Please go ahead. comes question Jed Nussdorf from Instructions]. And next Capital.

Jed Nussdorf

would've question the was just Quick thought Deer Hi, I Park some follow-up for would this Erin. it given tighten have What result. the there? I imports guess, in to have Shell there. know you a relates mix Gulf you the from there the idling And market that Coast business, facility? to year, acetone earlier with the on of particularly the as you changed idling what that expected, as the pricing facility, seen

Erin Kane

the from net in as bit kind so demand. shutdown, one to again, range year, say, position, Deer statistics, import match When maybe the of needed through to a if Park would you coming around a demand because monthly look that in shutdown perspective. we you the to XX kind prior meant the from more, last maybe at to to of has right, in more inherently, come line, I US robust be of that market a continued go and XX import So, you elaborate you to back were import [ph]

maybe to had on things increase XX-ish, closer have know, are to, moving would maybe that I depending XX, how don't out. So,

flow late more. I even that where you January, March, that through to needed happened December then say, market. would situation need. It would to into traders create look of when what we brought multiple really So, a a the But had in, at

but re-exported, certainly here position in it price first a here the has been have half. that in Some came pressured

And Phenyl are that that onstream, side. come onstream to notion phenyl demand, lining as this nylon should epoxy said, on have – and extremely has coming There's that that and again, think the new global are polycarbonate I we've plants structurally, out. rebalance. even been that robust so, the

time, and not do those propylene kept crystal right? both as seen I just and, bit large So, more reach a point as up, structural of more of again, goes in of a into have a the to the to result It's dynamics. it's think ball say hard to have pressure length a we this – chart. it's have stability. when on Certainly, where buyer the matter But rebalancing acetone the we settlements indicated just set the the

Operator

any like turn Instructions]. [Operator session. further back remarks. concludes showing I'm Kane for to over the I'd questions. our closing question-and-answer no This conference Erin to

Erin Kane

good quarter, Again, and and this again everyone's time believe, Q&A. this business the here again, morning interest Thanks for we the Well, our of results in great. dialogue for strength our demonstrates the model.

the We capabilities smart commitment making higher investments have excellence, executing and growth against, business in a continuous to built returns. enhancement on long-term to drive focused of operational strategy rigorous that we're our our

and best we on While there in puts end and across our some focusing what executing is control our markets, outcomes. driving possible are takes are

Our global to next and again give And we the continue cost to you. to over us Thank position to long-term. forward look and the drive integration vertical advantage quarter. speaking value you confidence creation flexibility

Operator

is now Thank today's presentation. conference attending concluded. you for The

now disconnect. may You