AdvanSix (ASIX)

Adam Kressel Director of Investor Relations
Erin Kane President and Chief Executive Officer
Michael Preston Senior Vice President and Chief Financial Officer
Jeff Rossetti Cowen & Company
Chris Moore CJS
Chip Saye AWH Capital
Call transcript
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Good morning everyone, and welcome to the AdvanSix Third 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] Please note, today’s event is being recorded. At this time, I like to turn the conference call over to Mr. Investor of Director Kressel, Relations. Adam ahead. Sir, please go

Adam Kressel

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

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

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

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

Erin Kane

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

facility turnaround release, end Hopewell and a in quarter, was dynamic which our our markets, rising As third environment. input you plant characterized planned saw AdvanSix navigated a press the through energy on significant by at

planned to flow the programs a following. moment, in higher XX% we improve XX to up the cash strong quarter. Sales XX the turnaround. our advance a creation. the volume. with continues material quarter, detail X% by impact long-term And were roughly EBITDA offset increasing though, the XXXX we expectations, million largely value in from was our million lower pricing, and generation operate did like pre-tax quarter raw operations in I’d which highlight cash results will Mike While to pass-through from approximately about our full flow generate income included for didn’t cash with third to continued

nylon we performance performance. stable May, roughly dynamics saw favorable of XX industry reflecting addition, of In repurchased relatively domestic in in million the year-over-year the the in by through for allocation shares product confidence From October about as perspective, capital industry acetone. line strategy in maturing announced an caprolactam authorization generally be we our cash later strengthening and flow and ammonium fill in our challenging continued global and sulfate ongoing or our in industry conditions offset sales, expected one-third

performance. production stable and safe in to critical excellence operational our Our are discipline

rates Although lower programs in to we proactive were improvements our plant the quarter drive mechanical integrity than and output. utilization anticipated, sustained in remain confident reliability

continued across about capital in since has high-return project and public excited our and and AdvanSix. In growth is be and acceleration One you finalizing addition, to and we cost time When continue to sustainability are initiatives how report of hit operate. many It as In our compliance to here the an process the ongoing mark the continue our build forward to sharing exciting of commitment savings that core we spin-off performance our October, company. we our a area, momentum particular we at look safety been the two-year and inaugural pipeline. organization. with

our As chain. we’re to we’ve a $XXX pipeline multi-year against million enhance value advantaged previously million executing shared, $XXX project to integrated further

placed are year into half all benefits expect of XXXX start the back in two initiated and are once to projects we this first assets The progressing service. seeing

operational, expectation strong the to the DEQ higher come Virginia will outlook focused for strategy In aligns maintenance. and addition, on call, the functional our in capital investment disciplined help We’ll enable we remain This our we’re by recent as the performance against by continue and encouraged our look years strategies multi-year but our forward, approval we five-year rates for excellence, our executing the our robust of assets mechanical value color to provide supporting and pipeline. and smart mix product value to our company replacement growth We’ll strategies for long-term position facilitating continue our permit for utilization XXXX plant for more and permit most delivering and successfully later and the recently shareholders. committed improve to deployment. integrity on commercial, growth long-term received in from advance to current

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

Michael Preston

Okay. now by following Thanks was in Sales overall to pricing compared and results. favorable came and third year. raw compared flat, morning increases benzene Pricing Erin approximately everyone. passthrough material million Slide cost cover was on Where in Market-based up that’s I’ll good X%, roughly I’m financial quarter the prior pricing propylene. to X. XX%, the due year. XXX about to last at

XXXX, was the of decreased XX%, in lower Now, by softness industry planned intermediates, million versus year, primarily planned the third product XXXX chemical prior planting EBITDA due output. plant primarily driven million of acetone plant improved see pricing turnaround, sulphate supply by down XX XXXX, ammonium lengthening the output. of and turnaround lower production the line quarter as of Volume roughly impact entered due the and we to globally. XX of our we the and in about the production in season, supply benefit demand did dynamics to new offset

material from pass-through raw margin pricing. a turnaround higher further compares quarter discussed, million. this to EBITDA to of was as of roughly discuss about As a planned X.X% and the impact was turnaround the impact period. factors XX This year, the XXX of due points million in impact moment, prior declined year our the as primarily we’ll that basis X in just last of just plant well

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

margin So, our key sales being fluctuate our price with largely variable protected. materials the will with of raw

below we EBITDA at with $XXX,XXX than $XXX,XXX increase expense offset debt last interest was more by in As depreciation levels roughly year. items approximately lower compared decrease look in and to

that return. in tax rate was than the our quarter note anticipated our XXXX reflecting the effective of lower with tax filing You’ll at associated federal X%, income adjustments

on over million the expect be rate Given of the the that reduced quarter. tax amplified in XXXX a our in tax quarter, to XX% the We the adjustments do pretax income effective have full-year tax in the rate did impact an just now range.

versus EPS the reflecting by lower performance, year, XX% rates. line turnaround primarily terms and the In prior both of declined bottom income plant and utilization net plant

primarily driven year-over-year. an reached changes third diluted Our focus on cash the up by by operations working generation. for approximately from That’s net roughly count a from impact XX of the increase million. in compared authorized was benefit we capital, continued share XX of repurchases current And XX million to our reduced under flow of continue year-over-year to CapEx partially and XX%, from lastly, due million of Cash deferred XXXX shares, increase XX plan. was see our offset quarter to last results The favorable million, flat taxes. was year. lower income

to X.X roughly to roughly defined XX contributed total plan million pension also year-to-date third the million. in benefit quarter the the We bringing

make has year-to-date free we pension For additional we levels contributions. On flow as cash quarter, efficiently by million manage approximately don't to a basis, continue projects. the working plan and fund increased to capital capital fourth XX

quarter our last performance and that’s Now, dive let’s relative to deeper turn the into to Slide earnings X for a QX.

sequential performance we As in relative were our previewed headwinds to the to in third quarter earnings the quarter call, XXXX. second there last some of our known

facility inclusive as quarter. the This XXXX. fixed in million pre-tax XX turnaround ourselves, cost absorption, we plant In expense, of of to lower million approximately was income First, had planned of feedstocks, modestly the XX range the than compares sales. plant in third from the of impact a second our our of also total, larger million. that’s And XX incremental at purchases to normally approximately our manufacture million, turnarounds which the of impact the quarter expected higher turnarounds well as reminder, Hopewell we XX as maintenance the

throughout The other production, units including upgrades. unit our and oximes which plants, into feeds third caprolactam operations our plant, Kellogg utilities ammonia broader quarter turnaround hydrox and address the the multiple

also last of the installed four We our period. NOx systems during this control

plant, which turnaround one completed operations. but the a amount days a reduction drive of more Erin XXXX our techniques. the through and terms and expected, moving one historical more also returns a being continue quarter and historically And utilizing of big of is continues turnaround as this result of to the significant has the but safe of we overall, for element of in was ammonia point improve parts, proof higher lot than that in mechanical of our stable of effectiveness impacts the from versus our the setup touch on reflecting actions earlier turnaround of averages efforts. improvement that strategies will to been work company way, position the complex for to scope done assets moment, a three So, integrity upgrade our turnaround and by

the the the in pricing the performance mix ammonium considerations sulfate second business. to and sequential our the list from of key on is third seasonality of quarter Second typical impact quarter

application strongest begins. prices the As have then and season and the typically a quarter pricing highlighted into talked about fertilizer in in domestically the decline we sulfate second the new quarter during the quarter as past, third second ammonium seasonal are

million million North quarter In saw of to the total, with versus the particularly sales to standard that see end that of mix granular carries We tend typically toward $XX second domestically we America. a to higher the quarter. sequential product we second at the the also of have height about the greater we have call grade consideration talked Latin sales the in on the a third product export quarter grade to COGS in in seasonality third third in the season sales $XX earnings markets the products mix quarter, consideration This quarter. America mix we low in strong geographical as it our range in sold

to these an this on In turnaround. and factors, lower before start-up also of the earnings impact production saw from unfavorable after sales addition quarter and we the

severe Hurricane weather Florence, the year in and Coast was impacted amount And East due by of a the reminder, up Now, of events move chain on rail quarter, down trucking, did significant in the in and directly plant we this namely marine. not to the challenges quarter were XX% upper utilization modest as plants although supply the our through a as second we material see Hopewell results, the range. impact a also

nylon saw raw Lastly, in industry propylene conditions and oversupply acetone perspective, while costs, spreads. conditions an quarter of we from continued third industry our increasing price favorable the pressured

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

Erin Kane

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

the from similar see year. the can the page, chart on first you conditions saw side the reflect of As we to what spreads of right-hand half on industry the

interim we we have moving industry generally The in in Although economics. dynamic stable witnessed to market environment. prices the occasional we marginal producers China marginal constraints, levels that supply supply with pricing continue but a and a located face seen associated fluctuations would in associate environment, producer with end those around

most In sales tighter movements fundamentals negotiated formula-based continued to potential seen and demand capacity the considerations. and track additions to freely continuing a pricing are balanced raw environmental imposed market are, result ongoing North our both mitigate feedstock balanced America, to government downstream against lower we've working they're price tracking We're and and the through supply our material as controls of constraints where we’re and models. policy conditions. region, While of utilization in generally

higher base and the meet As conditions to on remainder regional to XXXX, the we industry advancing supply current the product applications. being expect and our value pipeline industry support domestic the forward start and stay continue while reliable needs, XXXX serve stable customers also the We'll supplier to expect look to spreads. we nylon of demand our focused conditions of most to

Slide X. Let's turn to

ammonium nearly sales new our quarter. the in We total to sulfate, improved of Moving dynamics as domestic saw which season XXXX-XXXX planting industry began. XX% the represented

price normal the the However, our see on mix and sequentially business product based or and quarters geographical impact third from as Mike considerations. did on mentioned earlier, we second seasonality

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

largest data, of of ammonium price is Our pricing. a tends pricing have compared other increase Urea the on sulfate we've sulfate dynamic Based and season will an nutrition both more their see fertilizer industry nitrogen products. movement to yields is third-party has recent nitrogen to on as with the to influence added-value seen year-over-year as by total more underlying typically consumption we been fill product and Urea all key again ammonium positioned nitrogen nutrient proposition sequentially crops. earlier. sulfur modest

it's ongoing in reductions demand costs have the in contribute globally. regions certain Several exports, recall costs China energy and year for we sulfate firmer same also So, balance global in factors producers type have helped and to firmer see remember to early important in continued ammonium pricing. continued to urea push contributing utilization has which Higher didn't pricing. supply further up to seen We've declines pricing. of to that to in the nitrogen the

costs. is helping offset rising sulfur ammonium industry and and pricing to For particularly, ammonia increasing been has sulfate,

For has third roughly XX% year-over-year basis and in a us, – key key and increased is the in input cost sulfur on sulfur consideration quarter.

increase like income been US to domestic farmer remain export in to achieve depressed futures While versus historical crop levels. monitor demand markets seasonally entering and we are ammonium continue as we've relatively and both able pricing they as well, some sulfate quarters, stronger fundamentals side and in

expecting However, we the indicators for on always, should customers We'll sulfur we on to on proposition an corn like year, and of in the value support stay based nutrition current our key as globally. continue environment. key are monitor delivering as industry crops we'll fertilizer acres wheat, the and nitrogen planted which focused exit for estimates, increase

turn Let's chemical for Slide intermediates. an to on update X

into or about Now, as levels XX% in quarter, XX% AdvanSix of represented and total oversupply portfolio our elevated line pricing continued approximately regional represents intermediates and of Overall, chemical spreads. on put the have reminder, half of acetone imports U.S. product chemical position remains and sales revenue. in a of our acetone an pressure the intermediates

side grade As we've shown the third-party and of shows based chart prices the the page in past, refinery the costs on on acetone right-hand data. propylene

pricing a small-medium This acetone large nearly to remainder of buyer. shown has is good been freely North proxy showing priced reflective the the price. small-medium quarter, the at a industry, addition in buyer marker to which negotiated of industry, biomarker, predominantly is we've historically the for of the also large and American the where is two-thirds premium This

to move acetone of on due for propylene but the XX% and Prices prices. in As industry third dynamics, in-line supply also nearly a influenced reference, increase in and move Input and prices conditions. rising year-over-year basis, generally break-down. own costs underlying of propylene its with by sales be tandem. can grade supply demand to that our in are propylene exposure acetone refinery a moves acetone will continue the tight quarter, Generally,

buyer the the However, small-medium have acetone and in conditions oversupply perspective, given increases large annual In throughout raws, during XXXX, increase, $X.XX put you been of the see pound, to robust acetone we've XXXX. biomarkers industry time, million that rate lagged we've and this To XXX large we can propylene the and seen compressed of roughly in over discussing. sell underlying per that relatively basis. remaining steady pounds after the in and spread on acetone $X.XX an produce the roughly

dynamics. the the effects buyer of with So, average this has in The to even $X.XX industry pound what modified XXXX, as our of a to has acetone average on raws illustrates range, in is commensurate propylene current seen been freely compression negotiated XXXX. oversupply the over from per chart financial where spread also clearly results. our $X.XX resulted the headwind more market small-medium Since we've price the in

the the name use and acetone we expected MMA plastics move significant a industry which quarter, in used year. exit support is MMA also industry the up and the space, The the various occurring or that globally. supply turnarounds end largest in methacrylate turnaround acetone there are as second U.S. the lengthening housing to we for methyl are for here acrylics end applications fourth As into for in is few. continued to automotive of

excess regional than pricing to levels supplier imports So, the continues persist. length as overall higher historical pressure inventory remain and levels

Given this compression be consideration, supply price that position XXXX. our anticipate of further can seen in we in raws

operating anticipated of market are remainder strength. chemical the globally demand given phenol to the rates favorable remain For end intermediates high portfolio,

and in growth regional from In to oximes our addition, on intermediate aligns our the focused course the trends. navigating with intermediates including differentiated network through terminal other continue in in applications, possible on growth by we're associated we here in We to acetone our portfolio see derivative. our prospects distribution the favorable and encouraged trends purity industry high best portfolio our good products models, of dynamic footprint this and high-value macro U.S. extended outcomes the And remain a drive also environment with niche focused

Let's X. turn Slide to

CapEx operational preview planned key are wanted we As an view. turnarounds everyone plant for to considerations, and XXXX early

Regarding capital XXXX, expenditures, two in we're initiated will drive cash we $XXX projects million approximately tracking flow. earnings including to and the future that high-return

have these on we've projects our and and in our similar quality mix discussed optimizing focused specific spend operations, carryover past, and of in As will are the position improving cost two XXXX areas overall. debottlenecking

a with in half projects see As from benefits we'll in begin back reminder, XXXX. these of benefits starting XXXX full-year to the

For growth and incremental continued what savings projects we're high this executing do against a of XXXX, acceleration we cost to return expect year.

in and consists to well pipeline also a We'll As compliance. and growth benefits. safe as our and stable safety projects as health, and improving plant cost and other risk profile among reminder, investments flexibility spend regulatory savings, focused reduce our of maintain project this operations, continue on buffers asset base environmental

in our Colonial the add Heights roughly This of addition, XXXX, current relocate Chesterfield, an leased site facility improved million to of our increase office excited resin and drive more in planning CapEx and collaboration a $XX R&D in enabling annual its will site. effective well into incremental within as labs Virginia Honeywell productivity, we're and as own include to location In project customers. to from This roughly rent with of space, with configuration our connectivity services. increase manufacturing our XX% will specialized XX% and savings cost lab

Chesterfield our Moving and allow us stream new customer as the value plant quickly our times cycle also will products we introduced teams. improve to support pilot to market to more and run strategic trials

essential, up-time to Moving our a than they disproportionately plant more turnarounds. and industry discussed at utilization the competitors success and criticality our run to Turnarounds linearity given performance. We've are plants represent, considerations low-cost previously the position plant ability planned our significant importantly throughout higher their our to quarterly our cycle. of particularly rates

this to take occur Our turnaround safe annual operations output. in and schedule It's returns successfully environment, on strive We for purchases inclusive at fall, focus that as product with not XXXX, specific toward $XX one weighted next our turnaround next a manufacture cost year; year input will quarter buffers targeted per complexity at million cost million turnarounds of the absorption Hopewell, aimed income to incremental In and turnaround of our only we will across may of and do continue of to two driving in are quarter we for turnaround with strategies excellence rates expect one the to of turnarounds, At quarters consistent fourth focus these same expense, stagger is XXXX the all factors operations, key split maintenance second mitigating be limit and feedstocks the will impact and scope differ. sites. to we in normally Frankfurt. rising but our higher is between the labor to from with roughly heavily million, remaining we'll remember output year. the of pre-tax of is impact these stable levels approximately the from business. a spring relatively unit we increased also business $XX timing may improving ourselves. to however, reminder across the we'll the million and an various impact our have focused $XX repair on turnarounds on improving and important the engage and turnarounds fixed third and to that seeing million the full-year reductions we and year-to-year, or in activities keen in of maintain and effectiveness. $XX $XX modest drive In That This and

cash So, back to let now to the call and flow me over outlook. turn our Mike discuss

Michael Preston

slide XX priorities flow our before. Erin. cash we've our use in terms cash. of Thanks, Okay. Slide where generation of now we've And on I'm the this highlighted and shown

On we've also to of and is powder reinvestment have that accelerate early higher but only quarter it operations you'll capital mix, not strong slide, the our Robust Free projects. earnings, a maintaining the CapEx have basis high reform. the company, an left-hand working a cash as cash a investments generation shows of capacity trailing through of in cash efficient the focus XXXX. in dry tax benefits of able significant cash can area flow such for free cash maintained And the improving through been trend the see, remained and and us trailing performance improving relatively as to you days continue portion XX-month third build third as has flow roughly see from product increased also on quarter our flow several drivers XX% while performance, XX-month capital steady. We're return generation, the we've performance on value to behind basis.

a healthy and As incremental investment cash in do structure savings our Reinvestment We've deployment strategies and business see consistently flexibility the the for We're reinvestment We in generation capital pipeline continue have flow of base our priority. organic high enables CapEx to opportunities. of form continues has in to our the of cost beyond capital return and ample prioritized optionality. growth CapEx. opportunities mature. that deployment capital financial a also business improve, our top maintaining been also

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

repurchase share addition, In share in we initiated $XX repurchases authorization. our under million June

outstanding reached we shares, our in shares October. Given repurchasing which have of through market conditions, total X% have roughly been

build core our and value-creating strengths evaluate in ensure Over our discipline the includes inorganic That that building all will and capabilities. and will capital priorities. advance pipeline our opportunities out we upon allocation long-term,

have broaden a acquisitions serve. we As stand-alone company, are ability There across potential and lines, product our the the our customer technology the enhance and with industries we of our margin assess would product portfolio could product while and landscape strong we opportunities stability. have base of our and technologies that to portfolio, free broader our coherence each our profile offering lines now improving flow where all improving cash

would So, growth a our characterize framework driving capacity. liquidity overall, strategy investments, adequate disciplined and allocation dry as for the I with higher business the organic building prioritization of maintaining while powder returns,

to Now XX. let's Slide turn

turning Now, well our like before year, to as remainder to Q&A, this the for we'd of XXXX. recap as outlook

some takes the would puts As are as from commercial a to environment we've current nylon industry favorable continue. discussed, characterize perspective. we overall conditions the stable space, there portfolio In across expect the and the and

expect the We heating peak to demand particularly that and are in China we to America, XXXX. monitoring remain balance season any driving the and in developments region. enter dynamics, through winter as In we price related supply supply policy environmental North generally

of of as the planting into season. an the mix to the environment fertilizer to the and in America We applications. prices characteristics look In and impacts higher fertilizer more the continue based continue key sulfate, rest in season. we on point focused feedstocks value Overall year on movements remain nylon XXXX-XXXX to differentiated increase through their pricing ammonium performance to we're indications heart our North and products improved value planting seasonally exiting from nitrogen expect mitigate

that in expect XXXX between fourth for the sales for differences cash in the quarter we for of cash We result where This planned in year. in and to planned see also some the level pre-buy next business. common advances sales as timing cash is receive quarter some in sales fourth does

for acetone continued in intermediates, As softness quarter and industry fourth we raws pressure into expect to XXXX. chemical the and persist price

schedule next for as expected earlier, our execution of quarter long remain towards weighted our flawless of which turnarounds completed remain as focused the XXXX, acetone third turnaround Erin the the globally. we've Operationally, quarter heavily highlighted As fourth XXXX and will supply indicated Erin of is on in planned be year. to

in XXXX rates programs. by utilization improved our expect maintenance reliability proactive and We supported

tracking XXXX of from the As projects savings and CapEx with in a $XXX acceleration for perspective, we high return of mentioned XXXX. million cost we're earlier, expectation growth to about continued

plan be pipeline to our ongoing very and healthy We're for of next to in you drive in process investment that to the projects of continue more organic we for benefits about as forward the look will We excited sharing year years with come. opportunities progress. these XXXX finalizing

year expect to we $XX versus approximately well perspective, contributions the and cash effective XXXX. in From of tailwind capital our the Lastly, both working continued efficient be expect XX% rate range of we as tax as XXXX, a quarter full-year performance cash we the next to pension expected year. anticipate this are $XX $X be to a in contributions as year-over-year million million million fourth

to markets, create So overall, while performance value. long-term operational redeploying capital in shareholder we'll strong and our monitoring developments continue driving

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

Adam Kressel

can questions. Jamie, the open Thanks, if And for Mike. line you


question Company. comes with from Our your Cowen [Operator & Instructions] first today question. go Please Charles ahead Neivert from

Jeff Rossetti

I what and products Jeff volume impact the the you This down were with like with Rossetti impact to your Mike. but Look is what acetone, looks break could other and due had? maybe in If Erin the quarter, Hi, the you your across your lower was questions breakout. some increase an have given maybe you that across the products. out, maintenance you a revenue of volumes might planned It had couple might could like Charlie. on the just start on XX%, was for have

Erin Kane

Jeff. morning, Good Sure.

we about is, that the that start Mike the maybe of One impact the can considerations. with we comments think things had pre-imposed shared on

we rate XXs. last the our in as early, operating catalog our in here this to perspective. you then challenges I you Hopewell sort We and utilization pointed if low-to-mid in we're success But look have some the with the expectations, really outage that you at I think, was again of start-up be XXs. from year we when pre-imposed, predominantly April were out mean, three going through look the but by July about did think quarter characterized associated ending days certainly if and running the high

vis-a-vis as but as So, just anticipated again, would we wasn't necessarily this where moderated high you industry participants, still would robust have see utilization, quarter.

Michael Preston

the percent necessarily I terms in just think, in the was keep did a are the wasn't mind, and at And impact, revenue Yes, produced. across volume we're maybe turnaround making of declines sales our at where the see Jeff, all of it reference intermediates our would product significant I Hopewell, the we of of line, obviously to add, turnaround. so lot Frankfurt lines product by given

Jeff Rossetti

guidance And XQ, gave run from NOx just do Thanks. of to some you you is or get rolling year? rate – for Okay. million next $XX on control systems going that benefit the CapEx noticed I a off quarterly you forward

Michael Preston

the million the and fourth the heaviest of past. in we've projects moved some these that appropriating forward in – with $XX is discussed of we've terms typically high-return No, the against is quarter CapEx quarter

higher our about. as is projects will year, that versus working of still we We're This in on highlighted normal but increase So, $XX that here, two it for $XX year we outlook those talked than CapEx. terms of million million was the of CapEx, year next in a rate. terms run the carryover we to have last

$XX to million those for another spend of expect We projects. next year million $XX

project R&D about be new the have that we for million, will year. $XX had next here highlighted something that addition, In Erin

to anticipate other to also We projects look well. at as accelerate

range, as from is the $XX about that's $XX to come are the maintenance, base of off a HS&E, roughly we typically going security that's of think replacement about at other that look are we've of and a estimated talked X% that to that is we coming before, we when expect repair On will in terms million and would again and into way get that, what right, around I our and In typically a we projects tailwind to million value, somewhat offset but CapEx, you're safety XXXX, bit the NOx and and that. systems see see. control be evaluating to in could as

but need it parts you next those of So, to still think for are think under year. the I evaluation, as to relates that moving about some CapEx

Jeff Rossetti

the are what in near-term like implemented on just up you you Thanks. year? nylon Okay. a capital into this season how the And regulations views wanted to if And environmental into any just positive more on winter last your could I then outlook. I new feel capacity that one going winter year? assume see your heading there starting regulation maybe Do China? was

Erin Kane

over three capacity additions years. certainly the are There next Sure. announced

continues market of timing forward, some adds However, firm the uncertain. in degree as those to remains the evolve

We JV]. are Fibrant facilities additions purchased the probably those closely and monitoring the DSM Europe most capacity Hisun, in [CVC addition, and from significant recently in of they've with

the So, demand important that to characteristics. fluctuating where that it's think more is discipline seeing has in I the the but again from note really we're supply – been utilization

at So, nearly offline that point rates. mean, are fourth there’s as operating and XXX,XXX I I turnarounds you the already, quarter tons Asia to more reduced certainly even think in for of capacity

and before, season burned. As these the where into head the as air-quality typically continued particularly nearly is focused we here, coal certainly of being on regulations capacities as focus understand it, in have we've the caprolactam and been we mentioned when a-third provinces sits scrutinized,

I continue to how perspective, is market see that to oriented have what have nylon again, I and And Taiwan house Korea as that to think on, is price, that in we'll think globally. so for now stated, see is more continue a we'll to more clearing the focused from carries over China we'll in which to just and we fluctuations the dynamic of we And which what watch.

Jeff Rossetti

you. Thank


additional We from Chris comes have Please This an question. Instructions] your do Moore from [Operator with ahead question. go CJS.

Chris Moore

could Hi. Good acetone. morning, we start guys. with Maybe

if continue So, or were could a improve while be the a you there tighten? – they market spreads the that it's sure sounds that further is saying like to wasn't dynamics likelihood to I be going the challenging. before

Erin Kane

can overall length Chris. Good regional we bit supply pressure certainly I continues glad here. a us. the mean, I'm expand you to pricing. Maybe morning. Great, joined

demand for the mean, key quarter quarter, the provide capacity about, talking and the there's market lot these of and here methacrylate fourth been we've persist, there. are consideration seeing we whole transparent say, noted this As data large small-medium here consumption, the as excess US of, XX% we is I certainly in would of introduced transparency for the buyer that right characterize, the impacts that levels as the I buyer XX% is inventory though to to now. a not more offline acetone America's methyl we

still but of focus that was would to going already then on has is consideration. say top quarter challenging here look a we're have intelligence going this I it. is The So, at has on when year vessel indicated consideration you consideration, here, length a to position then situation but exit in to fourth and is view what the continued you early, a that with continued also late-October, then import a significant that arrived add in which

And can know it talking for sort reality going time the this and quarter. we've now I taken hold the been like has in in spread drop it's looks persist. here to that you that So, fourth see is, some of now the about really

Chris Moore

it. Got

large, what small So, just inventory the little of, perspective, either differences can kind to I a the two, bit that terms understanding walk buyer of versus little a they further drives from through in you tend better? bit side hold do your between mean more or the dynamics – does kind of kind that the of

Erin Kane

explain. to happy Yes,

that's with period for start the time. Let's showing some one large buyer, been we've of the that

which those well large we've suppliers consumers their many the derivative as reflective head – and tied larger large a like the into epoxy demand again, marker type so, applications, I'm Bisphenol assuming like two-thirds A, typically methyl of roughly consuming corresponding to that And well. acetone showing the maybe methacrylate, as as bulk of under forward polycarbonate your would And is consumers of here contract. and view your as domestically. buyer some applications work for been

to about into participate in that tends do. marker we've settled, talked And that so not we in the others I – settlement, the past; But do marker perspective. tied think from that considerations be contractual it a that is if is

truck And be consumers dynamic markets, pricing typically, between considerations that of monthly Now, can actually barge And smaller or vessel and rail producers negotiated the of can farmer-oriented negotiated consumers. would on and your consumers, smaller that, distribution be consumers type even coatings applications, which on large because rail reflective and and type like nature versus has it the and what more how a be exacerbated to sort a this applications, a you've marker I some serve come that kind areas from perspective. space types consumed around buyer been the of compressed or of those nature, historical basis, what response truck of end really their applications, premium. the has market a basis oftentimes on freely and has the is really negotiated of norm operated. on that small-medium the negotiated at means operating that There a say will is freely your volumes paints smaller where and those is solvents and oversupply And that an has are the less of is market is happened the imports because disconnected of typically, have contractual seen targeting purchased. being has been is in, – got cost that and been what you've

Chris Moore

Got you.

either it anyone’s So, I way more volatility there, the mean, exacerbation is small on there more that of rebound is because again, quickly? likelihood it could of that guess, is it that, side

Erin Kane

that's the part actual quickly to because supply demand think going I pretty that, the again, move that's with dynamics.

Chris Moore

larger small-medium? to is one-third the split and two-thirds to your historically And

Erin Kane

market of characteristic just Yes, industry our I looks like. sort say applications, the another profiles what would like mirror would end

Chris Moore

And it. reason that's to Got to to that's levels, going those significantly? no change there's think at likely stay

Erin Kane


Chris Moore

Okay. Got it.

less to year, forward, the bit of $XX think? is about XXXX, above little terms turnaround, moving new than you the In $XX $XX of talking million to this million normal the million so million kind $XX bit a XXXX, little we are

Michael Preston

that's all cost normally are materials to raw a I turnarounds range. it's to Historically, incremental we said an we've we million, the get the to our come of done, of year, you're resources obviously, the when at we past. Yes. million mean, and evaluation what right, each – would we do bottoms-up, and to review what needs of that's into a come look planning needed, $XX that those that make, the in purchase been the $XX need

know of a a factor a that $XX are we costs to contributing what we year, gone purchase to seeing and raw but definitely that up, say range, would and though is that. just don't rising if is with I have $XX XXXX cost million, normally Next contributor a I that's energy a to the would what make I new that The seeing for commodities is plan at would overall. that and for. materials norm we're to that's million

Erin Kane

execution talked I are X%-ish And mean, in escalating, times. for the important other I've And our talked, maybe point to see I uncommon of peers, year. costs as not turnarounds us these contractors as to it's relative add one up we've would and these just side. to cost my really incredibly on cost census next are most during double – labor think, others labor and I the

executed. consideration is and a a reality these practical So that's get also here. This how turnarounds

Chris Moore

Got it. there milestones to timelines the related EPA Last question, are any discussions?

Erin Kane

is at we've No, we can mind back as inquiries the bring it's cooperative investigation shared, continue the it. available earliest quickly we as And time are to will active as conversations of that when share it our so. an we to news and have fully on and I are ongoing, but the answering progress ability we and more, a endeavor to do continuing characterize as to would consideration. top to certainly government's certainly be we

Chris Moore

appreciate it, I it. Got guys.

Erin Kane

Thanks, Chris.

Michael Preston

Thanks, Chris.


Chip from Instructions] question ahead [Operator Capital. your from next AWH comes go Please Saye Our with question.

Chip Saye

my questions. morning Good and thanks taking for

Erin Kane

morning. Of Chip. Good course,

Michael Preston

Good morning.

Chip Saye

morning. acetone Good what you for you roughly is business of XX% that revenues, I heard The is say? total

Michael Preston

That's right.

Chip Saye

would that buyer, large of And and one-third Okay. be typically? two-thirds would be buyer small

Michael Preston

that's Yes, correct, yes. roughly

Chip Saye


So, the MMA When going those on? are plants down. back come do

Erin Kane

in these I most are of one outages month duration. believe of sort

Chip Saye

the they from probably market? large Okay. buyers, buyer buying be those And would

Erin Kane

from balance suppliers also as length settlement domestically, to be quarter those, other outage does they acetone the here created have a note even offline, short one them turnaround well. this When as in you where I there is taken should the you anyhow being that think will Correct. is that handful it marker when quarter. purchase well. about, with contribute of actually But

Chip Saye


is the So, say? to that where back the fair the out figure was then in Is they're by buyer on that I plants to – early trying market, come demand QX, back back. that is on large

Erin Kane

take we theirs, be just happened just turnarounds mean, they the certainly and planned like are to same time. turnarounds, are our off I unfortunately at these taking Yes. coinciding

Chip Saye

supply but right? that is will Okay. still XXXX, in And then – concerns exist the

Erin Kane

situation we're through be been while, earlier had will there that ultimately, that's that here I our XXXX. start created think think we a to oversupply thought when global characterize way on for trying to reducing everyone And is I see higher into North access that levels persist. levels continuing America inventory off persistence higher are we region those than that continue historical XXXX. levels, and is and import of again in this challenge the value-added so come we to a

Chip Saye

Okay. Thanks for the that. on detail

a phenol that phenol most then you but shape produce, still selling, use be the right? market, seems On part that that's market. the you're You strong good of in to the there,

Erin Kane

end our phenol Yes, is going to we into healthy about and again, robust our derivative down Correct. XX% so through and demand. those to of be markets integrated continue production, caprolactam and see

ours. online phenol globally, polycarbonate had demand new is epoxy are resin some uses, production end phenol and come think, consuming that we've I into the like as healthy as plants again nylon-oriented well

technology, routes think, or I folks and our invested at looked our have those. have in

again, So that we see continuing.

production as, and certainly sell continued those that we've talked intermediates very we've nice off as here, again have other we a into show niche of about bit type demand come rates XXXX to chain through come We well as our oximes. XXXX. a As head little

Chip Saye

around again, Okay. you XX% your that in correct? that And caprolactam, lastly, sales North America, the mentioned and phenol business of

Erin Kane

market base, our be caprolactam say, nylon Americas-based. Yes. to since down, in When our late-XXXX with plants predominantly, sales are at would certainly restructuring look going you the I

Michael Preston


are So, XX% in confirm. year-to-date North When in the sales you the America, we're our just in the XX%-plus to range, in range U.S. total add

Chip Saye

and – that and favorable? looking and market is for balanced, right XXXX then And that Okay. XXXX lastly

Erin Kane


the growth and well. and new focus are to has our been us a with product our I think focus customer base we make to most as to to that keen for I opportunities structure, we're think reliable supplier balanced market with continuing snug the certainly lines the needs on and that sure

Chip Saye

Alright. Thanks for questions. my taking

Erin Kane

Thanks, Chip.

Michael Preston

Thanks, a one. Chip. good Have


and ladies the conference questions. closing at to Kane for additional turn And this back I'd Erin remarks. over no like call showing Instructions] [Operator to gentlemen, time any I'm

Erin Kane

thank time again Thanks, morning. all And your for this and Jamie. you interest

emphasis against, of operational that excellence, we're strategy We enhancement to on focused development investments. commitment longer executing have growth-oriented capabilities built research and a in and continuous an term our rigorous

building and to and continue forward speaking is strong a continue across While position executing foundation our come. our We're with control. you to that look operational in for will end-markets, we be focusing day. advantage there in are for We upon some what to puts Have ability on the great performance our our company next financial to takes confident years again quarter.


do We gentlemen, does that today's you call. presentation. thank and Ladies joining conference conclude for today's

You may lines. now your disconnect