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AdvanSix (ASIX)

Participants
Adam Kressel Director of Investor Relations
Erin Kane President & Chief Executive Officer
Michael Preston Senior Vice President & Chief Financial Officer
Charles Neivert Cowen
Vincent Anderson Stifel
Chris Moore CJS Securities
Bill Dezellem Tieton Capital
Call transcript
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Operator

Good day and welcome to the AdvanSix Second Quarter 2019 Earnings Conference Call. Today's conference is being recorded. And after today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Adam Kressel, Director of Investor Relations. ahead. go Please

Adam Kressel

and Good XXXX Casey. are welcome AdvanSix' Vice to and Thank conference morning call. quarter President Senior and earnings Erin today Michael With second Preston. CEO, you, Kane; and CFO, me President here

any and of world available can elements on reconciliations, call our the see contain presentation as of forward-looking at This our are non-GAAP Note best based of website on investors.advansix.com. are and business including webcast, that this our statements that the and we view elements could results and from included ask materially and press Those you in consider in differ today. it refer release statements earnings change we actual projected the We that those forward-looking presentation. light. our to that them you

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

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

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

Erin Kane

and in first Adam, It's continued us your and a good interest your Thank morning, for for Thanks, you dynamic XXXX. half joining of been AdvanSix. everyone.

priorities. weather-delayed uncertainty, season. the acetone nylon moment. quarter AdvanSix will challenging saw in a results a strategic our domestic executing of end the second by a detail to macro As in plant in you our dynamics rates But supported solved and the results planting press industry face overall high continues utilization Mike trade and were in low-cost markets, while from our against advantage release, full global benefit challenging environment, macro

operations million associated the July. of Second in previously the included ceased manufacturing Pennsylvania announced also closure quarter facility, repositioning which pretax charge $XX.X our Pottsville with income

last with a a into Group. of strategic approximately we as alliance a As quarter, Oben year and result cash action we expect in one payback this entering shared

for us films gain strength continues alliance success positioning industry. nylon in Our to the

immediate lastly, while cost boilers high-growth investment maintained share of shares. return the in and are quarter, approximately through continuing our we million our coal for of gas July also buy new to stream total, our on delivering shares track, $XX is back We second quarter. and in repurchased benefits in decommissioning business. And XX. productivity shares a have natural our of $XX nearly on excited in year this the operation to And that savings million CapEx We're repurchased

execute highly more to what on continuing in performance. a to investments operating support and driving operations long-term overall. improved focused continues end-market our We're uncertainty underlying environment the challenging will high-return we're be Despite that

$XXX We XXXX CapEx at full approximately be previous end year expect of million high to our our the range.

expect in of continue plant million safe, from We're in on quarter full to $XX and range continue plant. operations. Hopewell, turnaround which the we million. up ramping of to to We to the year primarily income stable our also impact our sulfuric benefit planned be Overall, focused for around focus turnarounds acid pretax preparations sustainable $XX fourth is our

refinery again, call. following the we've time further will release one is, successfully this ability organization event. seen impact XXXX demonstrating environment Over narrowed navigate this later on our the half past its financial of on topic a Mike our as spend the fire cumene several our dynamic the of Philadelphia. in weeks, the second in you've to suppliers of at But range

to There's of still as at work chain ensure Our key be into XXXX. realign we economics focus we optionality. is remain confident our our and done to supply in supply long-term security optimized

the have facility criminal that our air us with required. had further United that the in notified government Lastly, likely no Hopewell concluded emissions saw action as announced you regarding May, investigation we States at

culture of driven strong this with pleased safety, by integrity very respect. values of our are We operating and accountability, to compliance a outcome committed and remain

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

Michael Preston

I due was in am chemical to prior Volume came overall Sales lengthening assets-owned compared raw overall following ammonium to morning, improved in compared reflecting the million slide offset last impact unfavorable pricing, down Market-based by that's year the results. to at good in $XXX four where disclosed offset by was cost in year. about continued by by Pricing X%, X% quarter quarter of previously X% a approximately and to supply and propylene. phenol Erin, now down intermediates challenging dynamics, decreases Thanks, I'll primarily flat force on benzene everyone. pass-through sulfate XX% second material improved acetone and sulfate the and industry lower was globally. performance to due unfavorable cover that declines from that and for the financial volume volume. ammonium primarily majeure the nylon was due partially about pricing was

EBITDA was prior $XX $XX million down year. the the in quarter, million about versus

$XX.X an associated repositioning charge quarter our two-thirds non-cash. approximately recognized in the of the second Erin manufacturing. closure Pennsylvania with films the Pottsville we pre-tax is As charge million Approximately mentioned, of

challenging more unfavorable the benefit the than of plant planned impact impact a roughly dynamics from saw of acetone year-over-year turnarounds. we industry million offset Overall, $X

the carryover majeure. In quarter events force benefit $X.X the offset approximately addition, impact an an included unfavorable million from approximately million phenol this related year's from XXXX business results insurance to by interruption first proceeds $X.X weather

has business year. been in recalls, year's million weather The quarter everyone we balance recognized with as with of of million. now to $XX recorded related And event the fourth first of the claim the last $X.X a recorded benefit in interruption XXXX this approximately closed total half

share by decreased just offset partially factors last Earnings lower discussed, per share count. the versus a by $X.XX year, by approximately XX% driven of

to XXXX year-over-year. Our continued XX.X for share note was driven approximately And contributed noteworthy of shares, diluted count share the $X.XX by EPS the to million quarter count share accretion second of repurchases. lower it's that

the working roughly of savings $X primarily million year-over-year, capital impact projects. $XX And compared lastly, CapEx quarter. against the unfavorable continue to was flow to and pipeline million changes our and last million as up about high-return of due in operations That's million from year, cost cash $XX $X in now we reached growth execute of to that's capital.

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

Erin Kane

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

as the as As in The were the see overall. second second quarter. globally well seen trade spreads, spreads chart around of softer caprolactam from the environment exited reflected we've In declines China growth side end-market spreads resin weigh the we and the you can the slowing on pressured uncertainty pricing of and right-hand quarter. to particularly as industry to Asia, caprolactam demand benzene rest and Asia page, on

North end-use tracking benzene globally nylon markets a America continued as year-over-year in cost a prices weakness sequentially the auto end second on underlying basis, uncertainty quarter carpet From and oil in seen we've in From prices. in well declined but the particularly input Europe increased perspective, and as application perspective, first an China. from

a spreads. We input factored into months, in in have and seen fluctuations costs the regional recent regions among some pricing which in interim divergence however of is also

around growth spreads. operating in year. in year-over-year With So, not the uncertainty global and the of industry demand rates expect of half continued recovery expect we to muted much pricing overall, decelerate and factoring back we're

our serve However, the being remain we'll to focused and requirements. with advantage, of most low-cost customers' our on domestic nylon high-utilization assets always continue partner our as global reliable to drive rates

stability start the as Let's in overall. season to represented ammonium here turn XX% total seen sulfate despite the sales relative wet planting to industry and In late saw third-party U.S. on result the slide our ammonium a weather. Corn in compared pricing pricing nitrogen which as sulfate, in Based Belt data, the to we've improved of pricing spring of about we X. through quarter, volume

and moved We can domestic corn for higher, pricing reminder, yield dynamic key the planted wet consumption acres total and past in income quarters, the in has influence planted disruptions role. well nutrient have acres largest by products. which for adverse all and lower planting playing for the logistics nitrogen season. and a bode to regions Nitrogen is weather As urea continued on higher be saw to weather few crop resulting industry Recently tends expectations cold other have prices potentially key and over an the with fertilizer underlying corn. projections nitrogen farmer reduced next fertilizer

look from second we sequentially pricing XXXX, of third rest to the toward expect As we decline normal seasonal to the quarter. see

As in this is a both sales reminder, consideration. mix reflected seasonality a and product geographical

sales we're the third we to quarter. into the In height We're quarter season supply of the for remaining and prices, the third acre planted of ahead product estimates, season fill, quarter well fill. key ammonium higher at export still grade domestically as in early and standard sales the indicators American it's on markets season and flows. crop granular new through as increased move North trade greater second monitoring And delivering global will sulfate compared have the new including agile expectations as

the and product overall yields increase remains on key market value ammonium to the So stay environment sulfate focused nutrition with to continue our of we'll proposition of positioning sulfur dynamic added crops.

the as of update The anticipated, slide and refinery On challenged our side industry supply grade global aroused portion intermediates. again significant U.S. represented on product had propylene be was price chemical the lengthened the the the acetone segment compressed buyer the a turn chart in total in of to right-hand third-party prices and acetone acetone data. Let's an on weaker X of quarter on large second back demand on based have line, intermediates roughly The further quarter. realized to And continue for overall. we as shows of disrupted. chemical sales XX% costs page

the Texas This the Deer at the in included downtime Coast and MMA from terminal a in Gulf Park, downstream earlier the planned predominantly ITC markets facility the and fire year. customers, unplanned in this several impacts

also imports pressure result, discounts have buyer large there spreads, we've to seen the quarter. into acetone But we have U.S. some second the which as developments on We've begun in been of a market. however. deeper driven moderate market exited see spot a As positive

that half consumers North we've here some America of Europe particularly come we move phenol Although the by also as remains reduced addition Asia to back in in online. And of year, demand. second the driven inventory operating through in expect larger as we historically particularly seen rates through stabilize and slowing high, reduced industry the chain do -- the

antidumping determinations the U.S. to petition. the vote of five investigation a antidumping acetone Lastly, duty Department on I proceeded for International Filed the favorable the would remaining provide April on preliminary by Xth, update opportunity U.S. the Trade to to Commerce ongoing against Commission like an the take countries.

On two the the XXX%. of five Spain. provisional duties of countries announced excess Commerce in duty rates preliminary Department Singapore The of XXth, were and for antidumping July

the receive by expect of duty the We determinations end third remaining to preliminary quarter. notice on any

nine to time this months. Given seven line, expect completed process entire to the the over also we be next

turn me call let Mike. over to So the back

Michael Preston

Thanks, means Solutions Erin. spend everyone our X. And a moment Philadelphia on to now we refinery And slide the to bringing what business. fire up latest wanted regarding to Energy on speed the

and described material fire As is has used that way chemical on it in since and our phenol one kept Friday of other at to acetone suppliers in as PES to operation down in press significant XXst background AdvanSix Refinery the that PES their everyone multiple a shut of date. cumene, late release feedstock June Philadelphia knows was intermediates. produce of June, a

diligently who plans want along we'd weeks organization employees rest following event. leadership like of certainly from the have of the mitigation our be our the been PES team for to to First, -- disruption. thankful implement Erin And thank to all we across working past we're the several safety this teams the over with this

integrated information we're supply slide long-term maintain order ensuring The this that key on here our have on security only is weeks we we're in and away takeaway the base. based to the across utilization from rates our today. fire, both While out near-term laid available of considerations high still best long-term we've asset

secured we've supply from maintain additional phenol near-term cumene of multiple production and suppliers the In to output.

plant, local operations the working that Frankford to inherently supply Given benefits we of proximity PES' derived our capital from relative relationship. and phenol logistics

and inventory additional vessels risk more are buffer working a to optimize toward storage our reliance Coast buffer capacity logistics mitigate of shift incremental -- adding and we including to we supply, Gulf As actively

Over we the cumene supply long-term, dynamics medium of supportive sufficient and to see availability. demand

to a our confident and while our both optionality. is result So supplier as domestically our there more financial supply in base and diversifying optimize further event, our evaluating of working we are chain a and partnerships actively acute this This long-term alternatives. internationally are enhance impact includes with to potential near-term

impact million As $X midst in pretax broad third the optionality continue in impact our range of refine to you end now and disruption assessing our quarter. and qualified million to quarter of would million income and $X across spot in or as a approximately result to the the $X expect, of a we base $X the for expect we're fourth a position suppliers. an initial of optimize this We contract lower as the our million supplier

expect We cash half second flow $XX we the onetime in a inventory. year unfavorable do to as million of build cumene million buffer impact of $XX to the

the As realign supply we feedstock our look base as supply given the cost local XXXX. increases, lack we're optimizing we forward, chain and expected logistics into of

we'll always, apprised As material to continue of developments. keep you any

let's the to remainder our X slide of Now turn a for recap of for XXXX. expectations

impacting acetone through nylon challenging there conditions. America be the while rates plant utilization in across focused and takes portfolio. industry markets uncertainty; and to our continues North carpet; and on and auto soft As driving continued puts we've discussed business; navigating Europe We're end high China trade macro

announcement anticipate the end third remaining preliminary of As Erin earlier, duty by mentioned of any quarter. acetone we antidumping the an determinations

sulfate ammonium export for seasonality progress the particular, typical to sequential in third on drive expect into as mix decline As pricing we we quarter. a higher

We its in common some also expect that to business. for of in level the quarter fourth cash XXXX sales advances in planned prebuy as see

in scheduled Operationally, the impact, this no change terms quarter which bulk planned occur plant to million in $XX the fourth which in our of range year. of income for $XX will remains pretax million the to XXXX, of a of turnaround

savings continued cash As high-end million growth anticipate This full high-return expectations $XXX for around of execution we the and of our cost our approximately projects. previous CapEx, range. our year includes of or outflow

immediate of project, new sizable our half and boilers natural benefits is gas the fully second are providing up running now which year. productivity first in The this

for the first and of starting We us and previously benefits our expect discussed quality capital-light projects debottlenecking quarter year. in position next to

And quarter in expected indicated we've fourth lastly, the as the third PES impact pretax and a I income result of just our fire. as discussed,

expect chain. year the back lengthening half unfavorable a impact build we a of the to to million to inventory flow onetime In buffer addition, of supply $XX cash due we up cumene our million in $XX of as

to our continue for into assess while logistics we optimizing and we feedstock optionality based as supply Overall, and expected cost chain logistics long-term XXXX. increases cumene supply realign

wrap-up back the before Q&A. me let to over for call Now Erin moving turn to brief a

Erin Kane

Great, I'd Mike. Thanks. areas close on core by highlighting slide focus to our like XX.

for near-term will creation. within levers factors, perform do While through end-market we and will which on outcomes possible remain we dynamics value achieve drive focused and best we driving transient long-term our control

It's and safe producer lowest stable and the a a sustainable we essential through First, evidenced greater rates An by run way foundation excellence consistent cycle. of operations. as average the than cost of utilization on important safe caprolactam in globally. XX%

and of how Our to the a critical how plant. operational identify facilities. run excellence deploy how we we're our discipline, for and this and years operate prioritize is After our CapEx we framework deploying programs in improvement our maintenance significant seeing we

business. to more drives remain there less the yield While for returns production, in accomplish, quality higher variability and

product growth. differentiated Second,

of these our of over spanned driver large nylon. and be a gross lines are years. margin. products been we from average, business high-purity to applications, X.X across our product next hasn't improved these times representing high-value expecting intermediates On products to differentiated sales, five X an three our It's this contribution can historically, can the total include times margin average Although of the about base business all and XX%

forward. for moving an clearly, important focus So us

Since flow, $XXX generated repurchases. the debt towards which deployment. and over generation cash reinvestment, share finally, deployed of paydown capital operating million and cash And spin, been we has

the we business We consistent capital delivering previously value have allocation long-term as the growth are committed drive in priorities we to with discussed.

returning building shareholders. excess capabilities reinvestment, our to cash and and high-return inorganic our Executing out pipeline

advantage, the our drive value global our now. cost to improve with focused to shareholder navigating in through underlying So remain year while confident ability over performance long-term potential strategies we and our the and

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

Adam Kressel

for And Erin. the Thanks, line Kathy, please open questions.

Operator

We'll Charles Instructions] [Operator question the from our session. now with We'll first begin question-and-answer Neivert take Cowen.

Charles Neivert

in. Bunch guys. morning, we see what can of get Good questions let's

in assuming some? from to it Have the been the there any should – tell? to it going seen that? get has been mean expect duties generally far time And would is from have comes be that still of guys you'll prices Or any raise that that benefit beginning too over help So do you early I any you that antidumping levied? is it case?

Erin Kane

say reflected, and investigation. week. duties duties that are So right? would with into reminder from defend, Singapore Singapore did the air to the press Price in this ultimately reiterate. not perspective. out consistent was I announced were as were off the just And announced notice put against Spain Spain we the – the just fresh and the come They had what a forward So there and

there. reflected would South the we on we process countries they're Africa So more to Korea have in and and are Belgium, hear three progress that, are remaining expect through third the again, the quarter. still against We that as And certainly, defending petition.

where So about certainly that seeing just continued Again, the propylene but you not has better pressure pricing sit on near and to at think lows. the put acetones on currently large chart as those in we we're look for when spot you discounts. deepening historical the length industry Charlie, market spreads market excess buyer,

per spread So well we've buyer the below compared nine in we're to level the at where peak that seen $X.XX to range large pound and $X.XX average historical range, prior today. in

given the into and industry allow into seen we've inventory certainly the we So more to ultimately, and And monitor. the is we the percolate coming in the that seven should have again reduced a fair nine as large that of process of news half as react. industry and – head to back would dynamics we months. stabilize can from share can't come back normalized continue quarter the And rework speculate, still resolution still bit completely, as And online. the But I us of to imports a state will exited we we'll exactly how what we've perspective. reach say so we to about those have amount consumers back inventory throughout

Charles Neivert

Okay.

market were now at thoughts you that the you've to decreases of renewed raw that away a else the remaining case, that for lot you That this that of least the the increases And for in Are that going get to these though guess part we contracts will part you've market fire. the most terms that being be can because assume material outlined on of the with back cost the I expect somebody year at a you'll year? disappear cost which way that? of be you are that of in you we little spotter in it, fire? the and got to have Second for were some might logistics to have went involved Although, to purchase phenol. a prior the cumene with cost lose to attached more based used most next bit I there but or going

Michael Preston

Yeah.

it's So question a good Charlie.

are I to think let's views back our of on go all, first initial today. where we

initially, impact coming be So anticipated would that. the had million. million, $X quarter We're between for better than in third $XX we the

X% to impact to to all X% and as continue look we the far can to X% optimize tell So quarter that now fourth we as in X%.

the PES So with to benefits associated the to that. some quarter. fourth optimization And local working capital was result, supplier as in is in was there inherent a note important us Philadelphia. further a logistical and that thing But

on to need has an the you're spot impact out as going supply get up. from you to particularly logistics bring vessels material Gulf, and elsewhere getting costs, So in

a uncertainty here, But as anticipate So, and increase. what as the we there we're overall hearing future PES now PES there's of in a the out well news, of long-term supply. of just lot right we're seeing of cost will terms with be

lot options. will say a have What is of I we

and work suppliers, We go evaluating impact those, we to But, across and be we'll incremental have logistics are considerations capital we're forward. many all optionality optimize the going there to working as in and XXXX. different of inherently

Charles Neivert

the beat of terms back pretty this. sulphate, it course the decent do how you're it have the a -- ammonium of good. couldn't some now, quarter? fields. whether last there companies of I you -- maybe the certainly Okay. second of But have couldn't in thought to weren't after They are export simply come Or But that great. noticed down. to They managed you more that weather were know decent is areas go during they question okay? do all the in be mean were because I expectation guess People out -- issues? didn't perfect, because I of we've volume where laid they actually going get but for to lot the weather from actually spring? than into Or given volumes. fertilizer to you would move these for, the this hoped does weren't numbers slightly I'll just

Erin Kane

just called Yeah. were that timing mentioned feel and in as positive XXXX-XXXX No, sort maybe there recap to on that XXXX-XXXX, experience great you a of cycle. out our question. about And season maybe acres. because challenges of the the season delays on pleased in are And can the in relates we are XXXX-XXXX overall, as reduction I certainly our and performance lot

previous we the a say out. were or So less XX% we effectively saw equivalent, improvement. about year, Over material pricing was right? volumes roughly the more season-to-season, moved And would

team ultimately late was how as the quarter. into of positive cycle that and -- the and the certainly hard work they the think here how at I reflected ended

forward, time to normal into and about growing We we head to we take know don't kind As of look It's talked that account. of as third fit have I our there's be we two year right? a into consideration experience. necessarily more seasonality just of And the volumetric together, going sequential we as yes, that this the this last kind seasons consideration quarter.

Charles Neivert

other some Thanks. people let’s come in. I’ll Thanks. back and

Erin Kane

Thanks, Okay. Charles.

Operator

question Our Stifel. comes with Vincent Anderson from next

Vincent Anderson

Thank morning. Good you. Yeah.

Adam Kressel

morning. Good

Vincent Anderson

and shortages -- that about in constraints now? talk carpet -- construction labor patterns hearing morning talk is keep right We spring demand. growth Can could weather you general than good you from buying about the more even seeing so

implied inventories your or maybe So, by you're year. managing the I'm they're line this in wondering getting how with that's customers conversations if

Erin Kane

then, a me -- And view sort every had to -- the when region, of at if reported sure there applications party, growth slowing can you you come understood. kind largest under give I broader contraction. dynamics it's look make third of or and start you'll, I there are Yeah. right of maybe a think, at that set nylon, full data, maybe demand give to in on allow really And the

has That here. global an overall of sort implication

textiles XXXX significant So, growth and XXXX it's low China, single-digit at they in now projected. now saw in in least here while double-digit growth, right, seeing

Engineering a now projected Europe, in carpet, plastics which be projected now last And you is certainly our on to largest also year. as application, is mentioned, growth to versus be decline here decline.

think does the it you're up macro of I that match indicators with some watching.

number a certainly a muted there's of for building think residential factors. I environment

carpet, to In as And several folks X% aspects broader in of this to down space cost regard. factor lower of across in an you increasing have becoming that your has noted XX%. reporting also also seen polyester kind we're be seeing segment that reported, flooring all

not its of builds largest of there out overall America think considerations And number factors choices slowing North are builds, well, and in just in carpet as a sort but of about demand. just XX% XX%, of the application. to playing again, pressuring I the representing or So, addition sort as muted

Vincent Anderson

up at the question. XX% year-to-date. statistics you the down you. Chinese just Where what being to output helpful. Thank my is in going of according national it mentioned would is year-over-year on Asia demand stay they're textile be to worth. Synthetic topic That's And to fiber least nylon,

Erin Kane

the uptick, -- a synthetic bit nylon into that per across of the inventory we seeing the quite se so of to Right fibers view and fiber certainly of it's now an build. last in fiber is a It think like there's Nylon I hats of quite kind We're was It different think things number board. year yarn see gloves. had I in went also So use. inventory it's build. demand. lots

are So the depending I is consideration where think chain, and there what's ebbing in of flowing. you on

the So the decelerated the feels seeing inventory perhaps that and resin and back certainly chain. into is and build the here side the that intermediates impact of the through chip it growth upstream

Vincent Anderson

it. on And can to just on the one of comment trade cases the Got it. the Thanks. a last extent you topic

cases between South have Korea's a two cost point be parties claim they to accounting for accounting impression with Korean compliance sticking to value will the technically standards. that be the Do an as commerce accounting involved to these acetone fair to on from you in the versus and an if GAAP basis with carry any of weight seem whether standpoint? whatever economic is generally allowed the Or department seeks evaluate department?

Erin Kane

from countries of complex to It's and question are There great can a What perspective. these one is bit technical a that in share there, cases point. highly depends analysis a WTO I constructed is into what home what in regulations that happens goes that it. on to versus and ultimately are duties oriented how are their cost sales They are here their vis-à-vis there. quite

So it's hard to say.

the of of additional questionnaires. part is it back the on forth set and think I

-- of separated case here is that they And acetone we this from have part is in the -- case phenol.

the separate objection of You -- incoming at as And them the And on other. is we to material being raw the I between output have different separate drivers. markets, that considerations. see the of is heart shifted fundamentally material kind cost where one think

we'll there. again, so And continue drive to

Singapore the point in think were and And was those what allegations high consistent calculations number. that reflected Spain, that was with of were at ultimately, And preliminary were how just in. determinations. the and They the the I

fair the And so indication step a in material a restore to I kind competition. injury the right? And to is reasonable feel think industry positive they occurring, of process that a

next using over of accounting commerce the the one now that's only couple weeks is part that particular Korea process be and department. in done cost So right and here that of months by will the work

Vincent Anderson

in trade sneak can I if actually And case. Thanks. more the one on

it to as for Just know its Spain Or procedurally its unable X its to grounds? battle continue if on comply treated chose -- that Singapore data and would other it with be additional Africa defend? cost dropping South like do you to not defense August is deadline to able would be

Erin Kane

run is answer I firm Again, and know expectations. I there pretty Vincent. other a you question have highly that process the the for dates technical by than

our of been the so laid expectation And with Commerce out comply. by that expectation would be consistent process that's it and Department the the -- you

Vincent Anderson

Thank you.

Erin Kane

Yeah.

Michael Preston

Thank you.

Operator

Chris question from next with Our comes CJS Moore Securities.

Chris Moore

morning Hey, just… Maybe guys. good

Michael Preston

morning. Good

Chris Moore

Good On CapEx. morning.

$XXX level just of more a And the get one-time of the million expected is a of fiscal year? And expenditures sort So I this know trying you just remind us of moving might Can kind kind maybe to be year a level normalized in level? normal what sense forward. XXXX.

Michael Preston

Yeah.

the is, plant turnaround. of seeing So, And question. an $XX CapEx Chris million about what good incremental we're associated planned timing year the of this with

large in our sulfuric spring. have in a will the of year. plant the fourth acid And turnaround have quarter we year So turnaround, next this

of the two we'll because the some being proximity of this CapEx have for year. next for spend turnaround close, that those year So turnarounds

did Okay? by that … So itself. it that

Chris Moore

Okay.

Michael Preston

scope turnaround. a purchasing the as turnaround the but the acid equipment really is is for well of also the bigger year million, And impact plant, that consideration sulfuric this of we're the the proximity in $XX

$XX So million. that's

That million The year is with a in relocation, is Chesterfield. Honeywell range. which that Heights other itself facility is project we're to the executing the by facility this the $XX Colonial from shared R&D

year. be so That or less much more will there next be impact done year, of won't an this

$XXX our So anticipate two that we In factoring things XXXX were those that XXXX, be to closer in what level. around levels. we XXXX right CapEx in, will million

that's we of what today. So anticipate as

Chris Moore

boilers natural XXXX. will and on it's begin Hopewell QX of helpful. online it -- in Got over is de-bottlenecking And CapEx the the the the like now. the on CapEx switch staying so sounds for gas it, And just -- to

relative of specifics a is that little further Can any just give? can a these -- looking And you're there in to bit the terms you of, quantify from basis? any benefits you each way on

Michael Preston

Sure. Yeah. Yeah.

Chris. as in about business the with returns consistent And projects with look at anticipate that. them, we these And the And the anticipate these internal is, with cases be projects, associated XX% we these consistent we'll rate past, a be talked we projects. CapEx threshold. we've what as evaluate different will returns So, return, for the a and of we

Chris Moore

opportunities time? just Group, Anything talked can question Got you it mean Oben this point the in and share development new about had product last on at there. I you

Erin Kane

alliances. the focused on we're So up, highly right now ramping

down shut at uneventfully and we successfully in shared, July. Pottsville I the, that here As facility

supply that So through customers. aligning with the now we're our qualifications transitioning chain,

ramping through well stabilization get and excited we be forward. we which to up, as continue is this, new about, on prospects extremely chain supply the the going the And period going

continue the, those. the to on grow. to type would about the that. alliance We'll come And I think to expansions as well what R&D-oriented as are more so, to then turn say efforts, opportunities there to is

Chris Moore

right, all it, guys. I Got appreciate it

Erin Kane

Sure.

Operator

question Capital. from next Tieton with Dezellem Your Bill comes

Bill Dezellem

relative Thank the come relative back remaining about size acetone Group I may the their and you imports if, countries? duties, Spain, questions you. the to Singapore of to of talk would

countries, And your which be calculations and duties, degree of Singapore were given? the the Spain your indicate should view higher lower would remaining to what or to similar

Erin Kane

Sure.

of roughly represent So, three countries the import. the XX% remaining

on have quite we reiterate So, exceed just -- Maybe Singapore the XXX%. and to of still a Spain here. bit to did go ways duties

not in as were respond, line was they what in used with made the as the took -- in would through inherently and since And calculations. those against did And resulted alleged petition, the high countries again -- inferences duties. expected, suppliers them. department in provisional the the And they be

ultimately still determination provisional. are And again There's final come. to a these

So while to and specific bit were just defense a those earlier on specific Vincent to their goes are producer because country, ultimately necessarily dialoguing we again we duty their can't little will determinations speculate here. to with how what and happen again dialogue as

third based would remaining the expect the three. case of the timing on the by we'll we on more that quarter end of learn So the

particular least in of time no its assurance they're to non-defense. say result the really And indication sign competition. And did industry. those the ultimately, injury of find that there's to they the represent at restore the step duty again, as a against were their range just is feels that we higher I would department fact positive determination that And while two maybe that material outcome the other reiterate this the at reasonable taking think this we fair a process in to a a

Bill Dezellem

when to it start boiler relative the then And did up? actually

Michael Preston

decommissioning little good. time. will in costs so we anticipate to They're bit this far not we over assets third getting so rate full as And in with associated again accrue -- we're of a the running benefits the those expect. start of And but get There's quarter we'll the midyear. so our be benefit the there coal around and quarter third may we benefits quarter. right Yes, run

Bill Dezellem

Okay.

amount? quarter So the dollar impact by decommissioning will of what the coal this

Michael Preston

net going dollar in the decommissioning quarter have clean but in benefit the And of you full operations. still not quarter the and we're do again third won't we then exact a an amount full but fully the until forward. there'll We we be fourth the coal quarter the see benefit in complete the are

Bill Dezellem

to when there July is it's said approximately June somewhere or that And in the... that XX mid-year X you assume

Michael Preston

Yes sure.

Bill Dezellem

be run then Great. Okay. And steady-state rate? the QX will

Michael Preston

correct. That's

Bill Dezellem

My But reference more were PES bit I be. talk to you some the that to we that case understand It what down. you shutting shift you it perceived than impression be is a reports. Let's what had conflicting to that plant to the is there was fluid fact little if could. Would Erin there? made through

Erin Kane

when there early you think public moving they comments then earlier down are CEO shutting certainly retail a Mike's there that and on start-up. for I of the parts hence were a look indication number And at to. down happy shutting their was Sure, here. statements you the were intent indicated that -- with And they a when

for is bankruptcy. last as petition they indicating exploration. have I are And It liquidation. to timing restructure and the recently restart there believe Most not recent sale that for week view within statements filed consider

not our think right? start here back is base that I up again do So case they

and benefits. the East our place. we and to supply certainly to Coast that business in Mike economic putting a have run working mitigation does itself point lend made We plans But capital to are

have working domain than more to dialogue. in continue is it what wouldn't But we in closely anything today. the we public watch So

we data have. And so points that those -- the are

Bill Dezellem

Thank Erin. you,

as sake assume online next again upside Let's come does yours some argument. of that that that -- could for a the there understand and to never question this PES -- I be back not supplier which of

your facility? impact Or you Would that you that now. as million move to see and normal ongoing assume remainder coming see down increase in of costs cost that by highlighted release two you million. into the fourth for not XXXX even $X to that QX those today would have of the $X is The further? quarter you having the Let's in sake be

Michael Preston

say a we're our have we question. number the I'll for to priority to confident get utilization we're What ensuring position and a one is us that sustain It's supply good is high security plants. in supply Yes. of at our

we're So two, optimize that's really here into number And forward going one. looking number XXXX. to that

You've the to seen third an fourth in the quarter. impact from quarter the improvement

say to as of evaluating. we're I options going options XXXX costs be we of have lot have, think with will and alternative a supply incremental will But lot a with associated contend region, about we that what into the There's we'll outside there forward. that's logistics

best and we're to supply. have our best while the impact security of ourselves ensuring also that do to put mitigate However going we position in

the earnings So that's with as for have learn And the have as we'll next updates here really update our goal. we better investment community. further more at provide we'll that we'll a call everyone In visibility point.

Bill Dezellem

to to XXXX, make to at dollar reduce are discuss. this looking what you just correctly have sure that you going to as But a I'm amount ways that said into point find don't further. there you cost heard move you I

Michael Preston

right. That's

Bill Dezellem

folks you, Thank great. That's

Michael Preston

early. bit you. little a Thank It's

Operator

with Cowen. from take follow-up Neivert a We’ll Charles

Charles Neivert

Yes, Couple things. of

strictly to coal to lower that you've the run the gains it terms -- On from What what's in the in cost cost that they're level what they're Is else of increase going the coming or boiler? going to environmental be Or that throughput efficiency talked does on process fact the of of the driving? bring some the effect boilers reliability? that from about to is operation? more bring. might they're on actual and Or greater

Michael Preston

the is really efficiency. Yes high. coal it's really I mean cost. the to cost itself operation; cost efficiency inherently it's lower Well run and Charlie the of coal

the out as technology And new well. are boilers the gas prices see of could natural there. You

So very efficient.

s-- it's really So throughput going to impact to -- going impact cost per it's efficiency. strictly and it's not se

Charles Neivert

Okay.

sort do set pricing are I gas same with it I'm set? up will on things? And contracted deal the just -- how How note but natural hedged? you of for is how you assuming Is it volume buy on mean Is you spot? guys is that? those

Michael Preston

Yes.

cases, ultimately the natural we'll we look -- NYMEX. to on we do will of we some longer-term a forward purchase fluctuate natural at What we lowest deploy a make possible do of other cost sure is plant agreements procure cases, running strategy gas. whatever we to gas In we our to going can consistent In a -- on natural to the have variety So purchases costs look with basis. we're ways at to gas.

and are we that basis. what else there hedges may perspective, anything at And and and demand. supply depending From but is times case-by-case is like point. where this evaluate on we where on evaluate outlook in the NYMEX it's more a price evaluating going hedge here the there, We'll opportunistic hedging and a

Charles Neivert

now mean the of premium is clearly last if be little is same of. $X.XX the delivery to off whatever different going trading I what's a or have the about -- what's gas a NYMEX question I we're tend then NYMEX hub number on the mean, numbers, that $X.XX. -- So range mean delivered guys again because And to than plant seen? just over typically around working you NYMEX you're round price your X.XX%, be a to you bit I

Michael Preston

don't we going disclosure. going And optimize We Charlie, it the a lowest around and supply question. say, focused level that. have would fluctuate dedicated say, What good -- it'll it's the I to of and that cost best I'll NYMEX we forward get of yes, we source for people to on go forward. look

Charles Neivert

the in that Okay. businesses? mix taken have And mean, nylon? Has question. things there other As carpets of some on benefit I volume higher-margin last shift off, been bigger any on eased

Erin Kane

Yes.

those areas North efforts enabling in America expect, as Charlie, opportunities focused would in, you you are share and engineering sales-type plastics growth providing going And So growth and what around would can might in expect. and the space. -- are right, we offsets globally. there are the here as to be And and our and packaging

-- So

Charles Neivert

Okay. Thanks much. very

Erin Kane

you. Thank

Michael Preston

Thanks, Charlie.

Operator

question next from our take Capital. from Dezellem Tieton We'll Bill

Bill Dezellem

not? in to on just project last a or good Hello. boiler. to Actually question What to Thank relative was you wanted gas that calculation the price was follow-up your determine and this whether the were you. NYMEX natural assuming

Michael Preston

has our this at that relative model making number to a look in of in that develop in us. scenarios project say I different is the scenarios coal -- evaluate we determine lock investments, that those would and specific scenarios project right, we We a operation, number a a a price. to value with provides return As different so a it, around that that, adds through of that wouldn't

we've I previously this -- that So a said return, to return. project the all price. specific consistent feel necessarily rate But with around good internal is wouldn't a of what we in specific going very disclose all XX% provide that

And we're the far, it. benefits from seeing so

Bill Dezellem

benefit what that given at been natural they've lowest that you the and return prices greater your years, presumably, are that is And be than originally levels one would of gas for gas -- anticipated?

Michael Preston

project we'll where as you I we se the get gas predict going per feel way. low It's bad term going forward. hard necessarily are natural return from thing indicated, that's But, cost on go to again, a they're that to that a mean, prices very and comfortable over long not the perspective. that

Bill Dezellem

Thank you.

Michael Preston

you. Thank

Operator

would to Kane session. question-and-answer like our remarks. for over concludes the turn This I back Erin to closing any conference

Erin Kane

great your this all and Thank questions for morning. again interest time, Great. you

the And demonstrated our model. puts macro there across our and end our are focused strength business while broader of are uncertainty, is takes on markets what control. results and Our executing we this again, quarter, in

the I'm we and look commercial you for mix and focus We beyond. operational, disciplined for can stakeholders speaking smart next capital continue strategies, our accomplish forward to excited all functional key over of product on and maintain deployment. to quarter. higher-value remainder with XXXX excellent We our what of again

Operator

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