Kraton (KRA) 27 Feb 212021 Q1 Earnings call transcript

Good morning, and welcome to the Kraton Corporation Fourth Quarter 2020 Earnings Conference Call. My name is Dale, and I will be your conference facilitator. [Operator Instructions] Today's conference is being recorded. [Operator Instructions] I will now turn the meeting over to Mr. Gene Shiels, Director of Investor Relations. begin. now may you Sir,

and of Thank to in presentation related Officer. website. material the you, Corporation this on to earnings review we the Kraton Investor quarter non-GAAP release included President release. the Kraton's and call And Atanasov, news and disclaimers our we Kraton's XXXX attention Executive use copy Good section quarter XXXX review of morning is morning, Vice President before yesterday's measures and Fogarty, press the in fourth the Kevin me Chief fourth Relations available morning welcome Executive earnings forward-looking Officer; this Atanas quarter, Financial the draw and will are Dale. results presentation the to our Chief information A call. in of on for the fourth I'd with your like and With the

statements the cause we call, any from fact and stated performance may comments expectations constitute make factors and risks, certain During be significantly statements are to by we actual the or statements. make may are that forward-looking are today. cautioned of other implied thus uncertainties there historical Kraton's forward-looking Investors different not that

speak Our to we have update date as no only forward-looking they're statements obligation future. the such the of made, and statements in

of factors. a risk Our number business to is outlook subject

of these in of other please section of morning's and the permit factors, this full presentation risk format website. Relations the discussion to not our Investor As available XX-K, our does refer filings regulatory XX-Q forms a

financial was press financial measure measures, a most provided financial in well of we comparable the release use material as as non-GAAP its earnings of presentation this each the non-GAAP Regarding yesterday's used to measure morning. GAAP reconciliation

questions. turn I'll our comments, call your to Kevin line Kevin? we'll open the Fogarty. over now prepared for Following the

you're I good and Gene, everyone. and morning, healthy. safe all hope being Thanks, staying

and by posed other, in like well on challenges the especially the adverse geographies. pandemic, As impact given a unprecedented the was know, end global year XXXX demand markets no COVID-XX you many

pleased, We but for not terms entire quarter responded environment. results are with overall, operating our of year organization and altered how only to financial in our an fourth extremely the the

work of in operate, employees suppliers a of priority efficiency was to quickly our successfully customers, business the business early operating safety which portfolio XXXX, almost our to supply the around to seamlessly and the enhanced in number our broad the a continue we we diversification. so environment communities This also year in locations, customers. our the continued for of has prove our end safety we the proud good our market and serve With a past work the we remote year continuity of our in resiliency organization and top to needs the year with way and benefits able I'm our chains transitioned preserve to the our that of to model protocols of employees, of significant globe. are responded our and

XXXX of adhesive impact markets. and into translated evidenced applications trends had as demand in end such and particular, demand in in in by areas growth saw consumer we markets roofing such other and half in care COVID-XX paving that oilfield the an adverse in global first weakness durables, While personal medical as favorable on as automotive, businesses, and

As and volume sales growth XXXX, Polymer Kraton a with our for and COVID-XX, delivered despite in demand Chemical both segments. associated result, our disruption

challenges of are challenging market environment we for focused Of the compared continue the XXXX excluding for critical approximately which position we second business, in particularly a down performance of our quarter XXXX of would adjusted measure of XXXX, X% business, the importance, first XXXX. results Cariflex near-term been of to the we As while term. XXXX, associated the despite in a resilient the COVID-XX, for further on sold core quarter Kraton the to have with long EBITDA navigating

plastic cost Over now such excuse me, structure enhanced have the I'll capital well esters few And into efficiency, sustainable strategy and and successfully the objectives, responsible past year, supply the R&D, technology and technology year launch the bio-based speak that further we technology color we Buick On REvolution And in more CirKular+ GLX IMSS initiatives in key our our world's forward as ongoing sustainability expansion our of just to of of we can more growing automotive products need address family as other for our polymer we circular forward with examples and advanced a diversity via with this minutes. improvements, alternatives. operational look applications. and of automotive with chain and how processing low advancements management or procurement in that of more broad-based these The are facilitate achieved commercialization automobile strengthening framing and were our our translation waste XXXX, of – inclusion our in about products commercialization post-consumer which streams. vision on sustainability our commitment tactical of rosin blue are as economy front, a are like certification paramount. in a China, include and

year efficiencies quarter our position contributed refinance to reducing approximately XXXX healthy and we Kraton we pricing. delevering additional throughout first our maintained to facility $XX value to while rate balance savings, year the the for a sheet, of cost ABL significant through leverage able million the the accretion December The business overall year. expect During of our Cariflex and it deliver last improving took were our a significant of sale unlocked in action year, this We and shareholders, liquidity profile. cost deliver to run of

notes, In refinanced reducing addition, X% unsecured the to we coupon senior successfully our X.XX%.

Atanasov, on and results the Financial the year will will provide interest the financial and meaningful Atanas Atanas? who fourth our this more I'll President savings. in happily quarter Officer, turn specifics to full call forward, cash Vice for now Going for XXXX. over provide Executive Chief our

Kevin, Thanks, morning, good and everyone.

XXXX. turn Slide X, financial to highlights quarter we fourth of review of As the I'll the

results out, quarter pleased very for and, with this our specifically to we're pointed our more results. Kevin As fourth discussion, XXXX

the associated we of demand sequential in in continued fourth closed to out providing As the in COVID-XX. half in levels financial quarter, year. with solid XXXX quarter continue as the demand recovery first the results the from see fundamentals adverse third of XXXX, improved low we impact The of the for

year, our fourth $X.X million of XXXX. to This our revenue. highlights, $XX the in had Polymer of approximately nearly XX% contributed The to In in of approximately disposition XXXX Chemical terms over revenue to a versus excluding the higher in business compared million early sales margins largely of XXXX stability Therefore, grew financial up the of the XXXX. flat, XQ quarter million function Cariflex specific same was $X.X XXXX. fourth adjusted quarter volume close contributed down was of or segments fourth sales and relative quarter Cariflex, $XX.X was which in XX% EBITDA which period and million, both

quarter compared fourth have ago versus segment for year the EBITDA of EBITDA up Chemical XXXX. Polymer the the and also up excluding Chemical the quarter $XX $XX fourth XXXX segment XXXX, would million up ago of $XX.X of Cariflex, EBITDA quarter adjusted been to compared to while fourth of million the X.X% for quarter and, was the was XX.X% quarter was perspective, in adjusted Excluding up we solid fourth adjusted Polymer fourth From EBITDA a Chemical Polymer our segments. the contribution versus the Cariflex the approximately results associated year quarter. and segment quarter million XXXX, with delivered businesses both in of

debt As and indicated, sheet reduction structure. on Kevin just during improving focus balance fourth capital our we quarter, through continued the to strengthening our

debt, the we During of the reduced quarter, by excluding million. foreign consolidated $XX.X effect net currency,

to financial of We ABL quarter, XXXX facility, extending our maturity the to cost borrowing. refinanced During and enhance also the proactive we took December the reducing flexibility. of our steps

to former senior million. In effectively year completed due over XXXX. on booked bond results. X.XX% of X% segment cash fourth financial savings $XX unsecured we in quarter. unsecured solid therefore, with notes liquidity $XX in notes our $XXX successful We, financial senior of result the a and ended unsecured our evidenced of ABL now Polymer significant approximately million of review move approximately of X a segment strong and senior hand facility million. results flexibility Slide of This I'll addition, under annual availability with interest as position refinancing December offering, will The highly our the Polymer by replacing for

for While Cariflex, been Cariflex last revenue revenues the versus of million Adjusted down have mostly decrease QX the versus $XX.X was QX XXXX, period is of would sale result $XX the XXXX. same year. of in million approximately up business the of the

Cariflex quarter of to As fourth segment XXXX EBITDA XXXX I adjusted noted, just contribution without was the the for fourth our of quarter results. up X.X% even Polymer

are The X% to volumes, of XXXX, quarter up contribution Excluding higher EBITDA driven primarily the have sales which by million. from XXXX Cariflex end compared of segment the key fourth results been up were $XX would applications. Cariflex included compared in was such in Polymer XXXX, quarter adjusted improved QX consumer sales demand the Specialty durables business. and volume of recovery up with in Polymer fourth regions to automotive markets all XX.X% and results recovery as which

quarter principally XXXX driven was quarter per gross per of paving in and in profit applications. included growth fourth of a Products segment sales which adhesive the and saw X.X% compares $XXX quarter, roofing for and also $XXX XXXX, Performance Cariflex. business by fourth results volume the sales ton stronger ton Polymers Our the fourth Adjusted this to quarter for into

at point adjusted We Polymer segment year improvement XX.X% the margin a to XX.X% also EBITDA in saw in ago XXX-basis quarter. compared

the full results Polymer Looking for at segment. year

prices million, For business. revenue the our XXXX. volume the business material $XXX.X partially was selling $XXX.X offset costs, a with as million decrease, by average well sales however, associated higher Polymer revenue lower of in and business of – core by to driven largely the as Cariflex core lower full raw was decrease sale year XXXX, average compared The

the Although versus was prior year, disposition this of reflects the reported Cariflex. sales down volume X.X%

X.X%. Asia as we improving volume of in progressed. Cariflex, weakened significantly Polymer X.X% sales demand – compared Specialty trends volume have half broader in demand Whereas and would up XXXX. up the XXXX was sales X.X China to Excluding been XXXX, saw second

in result, Asia. recovery volume Specialty Polymer largely demand a associated the in is As increase with

XXXX sales compared adhesive applications. paving Performance Polymer driven adjusted and for year $XXX.X higher into and full the million. XXXX Products, X.X% volume For roofing was sales to by up EBITDA was segment XXXX

XXXX, year has full million Although impact sale versus $XX net the a on period-to-period down million decrease. of approximately a of $XX.X Cariflex

our $XX.X compared to adjusted evidence including the Cariflex, XX% EBITDA would up cost have million of XXXX, benefits Excluding of of strong been or discipline. in performance core business XXXX, the

XXXX, we have discussed Polymer margin As in seen notable have we our segment. throughout stability

XX.X%, which the XXXX, included the in segment XXX a basis points business. EBITDA XXXX, year XX.X% Cariflex For an contribution to increase of was full full year from the margin adjusted of compared

and ton, ton. of the ton compares per adjusted $XXX is approximately which Cariflex. included impact gross to The $XXX XXXX, this on the per adjusted Lastly, Cariflex per in of $XXX contribution profit gross XXXX was in profit of sale

including volume on higher pricing. rosin – adhesives for recent Now to albeit up XXXX of the Chemical for the up adhesive versus XXXX was compared look reflecting the XXXX. demand at esters, results. the of QX of fourth segment was year market $XX.X Sales different X, reflective sales to needs. was Sales Chemical volume ago strong Slide opportunistic of quarter, segment relative up $XXX raw of to million, materials, quarter a with higher sales compared revenue quarter fourth million X% turning to for XX.X%

segment a the was materials, growth was sales XX.X%, opportunistic Chemicals XXXX, raw in XX.X% XXXX was quarter to of in up Performance Chemical quarter. versus with The XX.X%. in raw the offset the lower of associated sales sales Performance was in million, segment innovation million and pricing hydrocarbon the revenue second demand increased The up ester volume offset X.X% lower upgrades flat impact margin derivatives including essentially up robust reflects X.X%. QX of volume the was rosin million The and opportunistic On TOFA driven esters $XXX.X X.X%, Chemical in $XX.X to healthy fourth compared pricing sales the solid contribution $XX.X decrease sales to TOFA for Tires Chemical materials partially sales of of full While Tires due demand. for to as up $X.X an with XX.X%, of EBITDA in particularly XXXX. by increased reflecting prices volume volume was selling the was and a lower in was XXXX, tackifiers growth that sales year volume TOFA this for the year oversupply adhesives the to this the contraction partially Sales function Asia. lower decrease higher Fourth of pandemic, primarily which of CST million quarters COVID-XX, low-cost XXXX in COVID-XX XXXX, average was raw applications. high volume for also with margin related fourth in of impact volume demand second sales and opportunistic our for to down as chain due for Compared associated the associated by materials. was compared $XX.X on offset of was third, therefore, for Sales of market in largely basis, had rosin segment adjusted demand first, by a was sales the driven products. quarter tire for production with million revenue Chemicals COVID-XX a the quarter by widespread severe and, by and fundamentals, adverse

Chemical $XX.X decline EBITDA record as segment $XXX.X Factors was materials. partially the in consolidated summary in the half selling year lower from resulting average to XXXX for derivatives ester conditions, lower impact levels include our of COVID-XX, adjusted by higher whole, provides compared of CST raw million products TOFA the this fourth and For chain the market relative reported well TOFA million, XXXX a the XXXX, pricing million quarter the offset as sales $XX.X a and prices of in sales full and of and for lower the down to rosin results of of XXXX. as including XXXX. of Slide X first the

million, whole, EBITDA consolidated of a and was million decrease as compares this $XXX.X to $XXX.X adjusted million. XXXX, a in XXXX $XX.X For

of the raw volume lower CST the was to the CST XX.X% business, EBITDA sales the partially lower than Cariflex which or costs TOR The the to more of and in sale and offset for this TOR the pricing material balance and XX% Cariflex million in decrease for chains However, in average XXXX XX.X%, higher associated Chemical adjusted XXXX, $XX and relates by the chains high consolidated included with segments. with in segment. and both the compares margin pricing largely

For the diluted to of this compares in the quarter per earnings per earnings diluted loss of fourth share, share quarter of adjusted adjusted $X.XX $X.XX were fourth and XXXX, XXXX.

XXXX. XXXX, months the we sale the the share, earnings The $X.XX XX EPS ended December XX, Cariflex For months ended decline CST diluted in principally and reported associated adjusted the per of to the per and adjusted this decline and XX December compares of $X.XX for the rosin share XX, business prices. is with

quarter the the currency, turning we excluding Now to XXXX, reduced debt, of year reduced Slide X, debt On net of foreign foreign by we currency. million, during XXXX, net effect during million. by consolidated the full basis, excluding $XXX.X effect fourth $XX.X consolidated a of

to will – debt reduction ratio back further this to expect we call target his approximately Kevin three for leverage of our in Kevin? we leverage XXXX. XXXX, turns year, I As expect comments. turn achieve closing the now

Thank you, Atanas.

Chemical thus second disruptive half XXXX. improved we our noted, segments of demand encouraging, XXXX, the far are in in XXXX. continue use. our our us our to diverse by core benefit X% an grow XX, provide business this to to end of year. Therefore, X% outlook On end for currently update we market have trends Polymer mindful market while potential we of remain and And and of we expect COVID-XX, Slide key both we As in to trends near-term exposure the in expect

major demand of geographic fundamentals in we the with applications. in strong and exposures, Americas, terms recovery In industrial continued consumer anticipate

we demand to trends improve. in currently While European markets, continuing see

Asia also activity China economic very Thus have course the improve. trends and in we encouraging. saw continuing in far been levels XXXX, Over demand of to broader XXXX,

XXXX broader markets. to growth Polymers in well opportunities business, important positioned markets Specialty are and these our for China address key As enter we Asia

demand we critical In markets prove terms needs. anticipate in XXXX, in a applications continuation addressing XXXX of of end for solid key market for that unique

applications well prior in trends favorable and by year highlighted e-commerce care demand markets. markets the masks in in as and have as As seen past health as over in other growth we driven quarters, gowns packaging adhesive such

plant masks used HSBC being new we to relative is at addition, wearer facility COVID-XX, needs face also have in Mailiao, satisfied grade comfort. in an Taiwan In our improve market to manufactured innovative

COVID-XX, addition, being are vaccines. to of are the address critical of In that product insulation hydrogenated gels development our with vaccines in in temperature-controlled grades used distribution

businesses, product our early we trends a with season further of Chemical seeing roofing paving still three favorable durable currently markets adoption favorable major our and we of CST in further traditional are Now consumer chain. the look in our of market in more growth innovation year, grades. to TOR In TOFA, and while our segment, categories all in associated forward and automotive and

has in expand Kraton for our and and participant addition, our biofuels see for renewable global XXXX remaining opportunities growing quite customers. we some while to time, existing applications committed market active a these in role been In in and the diesel, to

grows, biofuel the in expertise Europe footprint refineries place. with Kraton all in us requirements necessary positioned have Moreover, is proven in a for well two demand as with as we global As enables two refineries supplier. certification participate to this U.S. already and

strong a supply pitch the as we and and into have with ability the European supply derivatives CTO CTO market. We capabilities proven have U.S. position, and well well-established and from to CTO chain as the ship diverse

and that needs business Slide Kraton has now but market practices society's need sustainable the bio-based the one our dependent Kraton participation example and of is for working products. biofuel for and Turning future success is how renewable in growing long growing to sustainable is our to address sustainable global XX, believed demand alternatives. meeting upon

meeting into for the alike We our our compliant, believe are stakeholders today and and for a practices through shareholders sustainable and positive prerequisite all fundamentally future. we committed socially stakeholders environmentally because the operations that safe, expectations sound of difference to making all are a business

but business sustainable in our and ES the Industry driving management Council of is commitment Chemical enterprise. Care, in sustainability and American membership and participation for our evidence Council, excellence. in performance in is the entire not progress practices the through This chemical commitment Our Responsible world-class just tangible to across standard our words HS industry's our demonstrated founded European Chemistry in

that opportunity sustainability not the to an do is had proud made website, you to review advancing If report, encourage so. have in have to I sustainability our our progress our I'm of you objectives. which on date available we

as and Turning from The to global are perspective, evolving, our XXXX. intensified world's challenge. on XX, society the the now sustainability to whole needs Slide and must focus Kraton in rise a

to solutions, whether a supplier segment Our an We value it sustainable our Polymer shapes value of be through believe it embrace forward. as and driver, customers segment. sustainability We is move our practices admired our we sustainable innovation-based goal our create for Chemical strategy stakeholders. and all or is our business that as

our to but commitment Of destination final not journey. course, a a sustainability is

And continue objectives long-term define safeguard future. our expect so, to we to to

every As are level part short-term initiatives and we our will critical of this continue of identify at our to also longer-term vision. organization to delivering process, tactics that

already Slide groundwork Turning now the business we our sustainable to way are practices organization. through driving throughout XX, in well we on our established, have

of responsible systems to Ecovadis recognition As committed ensure practices procurement. of in in in and responsible progress In to are remain improvement continual Gold a Together a awarded member procurement. implementing by we Sustainability, for we rating our XXXX,

labor core to we in continually value, include our first which of management addition, the it as work that all employees, the our relates policies we to enhanced work communities performance In and specifically, HS&E. to ensure have we practices safety and as procedures With safety and compliance, stakeholders. adopted systems our relative

around our gas the will specific inclusion, reduce opportunities broader our long of of XXXX, the all On our manufacturing embraced and and Directors, we way evidenced topic XX% an target meet XXXX, to ensuring of diversity have employees. of organization. we as energy emissions by to Board on work level, in policies we our and reduction We for adopted greenhouse continue carbon throughout equal diversity operational and intensity our are intensity by our composition well

regard, of commercialize established continue and we platforms. segment Chemical and key REvolution our progress in made and believe customers develop solutions. our that platforms look to the this in our we we that sustainable On garnered commercialization As rosin XX, terms nature customers' we one of needs leverage capability In XXXX, industry from address our will during bio-based R&D these of which significant has standard products stability. color for we has interest Slide solid our downstream, the ester is adhesive of technology, as

expectations, product REvolution needs think offering As and our and for its a global REvolution positive alternative inputs, is our and evolving a for share positioned adhesive hydrocarbon-based customers' demand response continued bio-based is sustainable for to given our customers. Customer tackifiers exceeded has performance and compelling initial adhesive for expectations we growth. given attributes, our

our solutions. respect versatility is we the segment the materials, chemistry, Turning CirKular+ know, our in it example to plastics as continues to providing XX, SBC Polymer growing more well needs through to recyclability Slide One waste sentiment technology market our is materials address evolve. post-consumer utilizes and the to single-use facilitate And hydrocarbon-based of sustainable the growth plastics CirKular of recyclability societal able are economy true for you with efficient and streams. all to hydrocarbon-derived enabling while raw with industry by which is technology, that

and effective innovation, of technology. providing end as of an our use an in IMSS, streams, Injected increased the functionality is a broader Soft CirKular productivity. is additive waste multiresin XX, on most Molding Slide well And – commercialized or as recently allowing compatibilizer, As waste Skin, as use our effective streams, processing now

VOC technology reduced in This are has look such in and significant provides and door excited automotive large, translation for cost future. and time at feel performance features in some panels this platforms for GLX to vehicle the in parts commercialize been technology as recyclability, of Chinese Other been this compared We slush processes. that lighter notable forward other allow development savings odor. We extremely Buick to the fast-growing haptics commercialized weight, improved market. as look into aging we've and emissions the with IMSS to technology system-level molding working and injection-molded improved dash

in would potential approval applications, for fight COVID-XX regulatory in remain that acknowledging in its other the enthusiasm remiss and not continued process the BIAXAM. be I we for our given Lastly, against

In focused don't providing to exemption, that both specific time, this the approval. and updates I While we soon as often they have I conditions. the said, closing, any X% can to by we update XXXX early we become challenging Section specific as closed to we remained enter X this as as into momentum available. solid And the broader on XXXX year under opportunities energized referred provide the at performance in base has Section XX, as I market business grow emergency have look EPA's The year the We continued X%. XXXX. positive despite assure delivered we you currently expect our to forward to

and those further it. positioned to upside the up your benefit With questions. comments, to various growth you know further if will call the are We we're pursue markets, end for exists, in our we for happy opportunity from open

move Dale, can to we the Q&A please? session,

open. Sir Kapsch now you Speakers, Capital Loop line Markets. comes first Thank Chris so Sure. much. question from is our of your [Operator Instructions]

You may proceed

this table. the And morning. this was morning, business, on TOFA But came in calls Yes, most thing curious is, price hi if one I'm so the XXXX good has I some you an price increases apologize. targeted earnings then at into introduced about recently, pine chemicals multiple initiative. with you juggling conference I across-the-board addressed, been

a some raw higher is of visibility the Is costs? the traction. here Or these material extra to – end if margins seems some about offset regarding traction be price the market magnitude really of some curious and of demand to the I'm the just scenario increases sort supported that by there also healthier vis-à-vis given materials? So, to effort be what helpful. alternative opportunity would the So around just probably color capture

inter-material price all, would that as Well, to combination that space that that pine my business, said, the in have our may we're any as competitive often And that But our all real three initiatives. need very businesses, factors our We're reflects we as well is initiative. of Thank – the the the about within case feel. pricing the of product grades addressing seeing, cost of well, commentary, used Sure, a of have indeed, inflationary I price make through that both said chemical in positivity, factors a inflation we've the as fact pressure I initiatives certainly as certainly the as backdrop we well. price in say you. the and space. regard competitive we're I those certainly, a inter-materials, encapsulate lot of mechanisms in announced in both Chris. setting And two first covering Chemical sure

So, our backdrop. certainly price benefit initiatives that increase from

Yes, I there's you're referring to think also rosin, maybe gum clearly Kevin, in and hydrocarbon. updraft an

So, – products and with those compete that TOR. that are the fact

while, first in we've of the – for introduce least time, So, in at TOR. a visible evidence to trying pricing

So, would of helpful refiners for be there's TOR I'm of to demand in it. to underscores for terms competitive the able the wondering your obviously, more really overall the strengthening it for economics produce that be in just also just the market it if demand I'm pricing, set, Is TOR. pricing dynamic? if because, just curious

reflects In ester. for derivative demand rosin including our view, absolutely, increased the the trends TOR it molecule,

vegetable at competes chain the – mechanisms also relevant in, oil the TOFA to that comes oil markets remind yes, so same also that's backdrop provides provided But And that for underlying pricing our it positive the certainly you markets of. when spoke that are that vegetable time, impetus. and that I positive I'll

reminder. a Just

Okay. have on focused then really. Well, BIAXAM. it's also did I twofold, one And

you're obviously Section suggesting on your X, that XX one, focused approvals. So, the appreciate Section

period their night. in open knowledge was comment Salt authorization. Lake think for Delta last there's for Air Lines like use And emergency concluded, by I the it's City hubs the in that the use application looks there that Federal there It for Minneapolis an of public and an Register, I this product. think,

comment emergency – here if out open and period gets curious you time any on that that line in how traction. terms with fact, from that of process just I'm use So request, you're concluded that might play if have color having in if, for

that state the is states. – Section that state Sure, ingredient, Chris. Delta helpful, for in which authorization also I desire think the say to And with emergency we filer referenced obviously, the all-important partner I've active to states X because to being the application. all you think the ultimate filed two states. the Atlanta add urgency that don't just for ingredient. that, COVID-XX, XX case But with is come news had X were to fact hub by our forward BIAXAM. I I applications a And of is, the I have a Section in of the correct obviously, the have said discussions is subsequent of step that Georgia, full the very where new the new applications actually we that process, XX, now positive good blanket the of the one actually I would the those exemption would to also the But states, relevant receive say ingredient. bad active the active resides, marketplace from Any And EPA is stories along we approval where our themselves. the with might but mean you, respect fight Section Section for of objective, it's that a which the the towards clearly, of but

priorities. a to fact this it not the our the obviously, XX in noting. because because perspective, future beyond active We we're same and, reference is So, they us, one-time building construction about in unique we in in going world's take now technology, and thinking and form, beyond new has it certainly time, applications to worth pandemic-led the performance just in field the is think transportation Section the need in that But is it also advantage of makes that's it allow to COVID-XX filing. think, to health too, a fight well ingredient from EPA just the on novel an understand this as what truly superb public this but also care obviously polymer

very to new they undergoing, grateful to a received their in to we're their it's for obviously we compelling they So, robust all own regards process we're see they've that processes. through EPA the of from done can level coming are – market, work cooperation and certainly the desire quite certainly because technologies

The on one that. follow-up

the like on the is go the intended of I – urging those of this authorization, COVID application. it non-COVID in safe a that through, from product the to But even for or X in this from testimony were some Delta like, strong say So, catalyze and states – seems it understand helps emergency greater if, probably And reality, with in this a use it's for Thank being that under you And testimonial this opportunities addressing this other from that the serve as in do case. an maybe of if likelihood the it becomes to a you you. but adoption relevance particular think a of likelihood this if approval? would this the a addressed? yes, is – product a there relevant fact, Section request

beneficial beyond think, Well, without where sight Section Chris, goes well application. that. be wouldn't I can is very pursuing towards XX a mean to specific it we goes X. very we XX, saying line we specific a be that BIAXAM, our for Because Section of without society vision to Section as And said,

– Now a a do XX indicator would Well, Section not good reverse sure. negative believe be that also presumably, the a of yes. a It's X? indicator, Section I I'm is

EPA. COVID-XX. perspective, of EPA. make it's I a priority the a in validation technology a find I'm to it's priority been like just new to yes, this to of the been step say of So here my they the from the has them way a That through. BIAXAM, have reality towards their they need to work to ingredient, active process feel But eyes certainly of that, And again, a good fight

you. Thank

question from Sir, Stifel. next comes Vincent may Anderson you line is from proceed. now line Our your open of the

the it's under in know the I been on pine HSBC on I Yes, coming. a you preferred long on start II. been as application a to wanted of chemicals. historically new thanks. automotive. RED time lukewarm CTO had congratulations memory prospect morning. And pretty my Good If feedstock serves,

right it's curious, now, your the I whether selling TOFA, So, view or other just excess you're was CTO changed that there what in participating market has to and maybe biorefiners? has shifted how selling

time, simple to to a just certain base. qualification need There's not Well, as and quite it's a volumes go process obviously, for of through. as also we new following we've been some this, diverting just customer TOFA

already about, and diversification. nice TOFA in the an serve, of we it adds And I thing as that of market set just so, mean alternatives that we of very platform our we the a got extension word. it's TOFA talked sense to the every diversified view about platform, as this

it's which So, of we diversification think just that's And singular, been molecule been in TOR we've in that's said TOR is up. is most a where business. very one ultimately challenges for the which our positive direction time very for the ends opposite, a part, the the chain, for some of clearly, terms that,

positive guess just if And And is we're a an see market. the thing all – that that's despite point going well is renewability obviously, at industry, that we've we this you serve we I it's And in in the EU agree and to we this think here this the believe alternatives. growing to but in have for world situated want don't is all. the got to this Kraton the this I I make directive biofuel So, trend sustainability given and the fact stay. desire growth. mean will, marketplace is, to backwards I driving

clearly, ability to our we serve market. adapt need growing to So this

you. Thank Understood.

worst and similar case, contracts? CTO biofuel were become your contracts for context So, willing you Or in of are those European Europe some discuss to your that direct commitments respect supply CTO biorefiners I but your they your the arrangements, U.S. if to of in CTO completely these firm not production. do of excess to for feedstock you're Europe specifics under processing how supplier U.S. in offtake have over tight assets? there? Are assets

We've our ourselves vision on day, in so CTO we've CTO on the relationships. in of CTO a new is Kraton process advantage an in outlet have position This broad-based for to, best Vincent, if our of way. always to pine strong the that, need in it's biodiesel. in market always real business, of level the we our we're relationships all when had on, or, depending from you One long-standing, end with a It's engaged our at more if prided an business certainly time a this we will, part thing form and to relationship strategic given nature chemical that, very, the is advantage kind to suppliers, of time makeup. circumstances, we a a opportunistic CTO can of be our sell interest

I minute. one Okay. wanted dig raws a to I ask polymers into appreciate in Perfect. No, more. If for could try to price I versus that.

we pretty implied down be price I price/mix So, and some drastic in was year. like quarter, typically HSBCs start looked increase the the feedstock increases to off are through. quarter, know a you year-over-year. fourth the price late of in the announced had lows around it the passed those then in And

So, in dynamic? are that adequate just over that increase that us HSBC those can material on you to maybe was linked? price cost cover non-raw raws price contracts refresh And feedstock inflation

this Well, Polymer long I we've business. can time our in been say unequivocally a doing because this

move lift time, anticipating raw perhaps least to could see. Our raw of price price raw to that it clear at result real rate in We're material when business. our know we From the moves. some that prices going that strategy and price is our margin increase going in to up get front we're in this. to material even comes to in that reflect of material time pressure we We're

ways. our itself Of goes strategy of it that's because – typically Right part all course, in Price goes both

the luck the year. rest All on Good right of thank you.

John question Thank comes from your you UBS. is line so Roberts from Sir next now much. line The open. the of

proceed. may You

is you. is other that China, well? Taiwan? Since think in that be Sinochem and that materials? made competition IMSS Yes, can launched something you to LCY Do the in And do primarily is going was thank as

compound Kraton founded not the the a make not location, tell it part was to this work Taiwan. on case compound. say ultimately, one compound, that of to is made material, our going or polymer. I'm we at is made only a it's I So partners in you, specifically the whether the and yes, polymer with but will is But obviously, in

the guys competitors to for in Okay. continues opportunity industry biodiesel the yourselves And you on grow, eventually the for CTO against then become just rather opportunity, do than if materials? these

some CTO employ, kind two of Well, to which then There's the there's of channel. to channel, direct acid get and a a there's hydrogenation the channels biofuel. fatty

at at end think those the view market the whether look guess, day, satisfy evolve of the chain. in to a optimal you're acid of for attractive do, being to, need. a and people you chemical, everything of same knowing way biorefiner value time, hydrogenation requirements So, depends. the the RED the biodiesel it's that chain to without, most very where efficient And the satisfy like of truly for the or supply always the this is looks while, And fatty one I to is I be our questions way to II industry going the

you. Thank

Capital is next The you Sir of open. from Thank now so the line much. line Loop Kapsch your comes question Chris from Markets.

You may proceed.

Yes, so guidance the – XXXX. guidance my follow-up question for about initial was

it half looks for the sales. on your business, almost Page like a – that on of chart own of XX, demand stoplight sectors table stronger the price outlook You the comprise the environment. you've number have Chemical market maybe of increases in In in improved a sort

given into COVID, and some to momentum comparisons wondering given I'm with this commercial X%. if new the of up base seems could business some could on there of X% So, associated that's be traction some just that maybe like the translating – of the what's of easy innovations upside. these we It

So wondering how you guidance. that just thought providing about

was, you go back million, up for pre-COVID you ended think, and $XXX year guys' If you'd million. doing a guidance ago, $XXX initial XXXX I

process be helpful. you So, Any take are presumably? you a posture just to similar year on that – color trying to would ago, a did Thanks. you are what

our the business know. as around of of the difficult here, Well, do there's a of Chris, part things next one model, lot to forecasting is you well things XX do, months but we as most

variables, decide the going of process we're So, requisite to with risks, we the come opportunities that a we at guidance provide. number where how to very the robust try the look we have to up

there's unique, a is we thing approach things the what's period, the this in of pretty course, year's in. and second of XXXX removed years from full couple extraordinary we the was, every which so, way be of And course, Cariflex and factored at year year's be looking stub about And that bear. which One six this do need need to is performance. to performance last turnaround

I that, to the business so, that. understand mean, out very deliver able we're to X% growth. to we at feeling beyond ought for be X% to want And like we call investors that yes, But least, to

Now But of think I all I'll It's improve yet remain on business positive over still we're that more. in feeling February. there's an ready we're the now, if year, opportunity trends the intact the it, will of that our not say just say yet. that course, course right to to

Okay. you're of to you're – in wondering sort which could to your investors. But in kind most asked meetings the excited the the starting if what get and evolving is a want view. I we've this terms the I’m that and so the of seemingly opportunities there's traction other on. question in ones innovation get you – rank But I with world then you current was And had – just of order, of platforms, needle-moving about. what

it's is REvolution the in I way And to what in platform closed a the look the addressing it. innovations we're viewing closed past, In a you're team for one itself. the because to technology, staffing has plastics then thing businesses good proud where couldn't it way very business, business had we at exceed quality bringing adoption. our now developing are sustainability then and plastics a of and the the But BIAXAM in industry, them of potentially trees And stability we're mean, challenges it. market, a world hear their here, to That's sense. I so the only in objectives. people mean, And very we about, we the plastics gap, reuse unlike technology people not of is trying and they for fundamentally it to that the one is Well, we've are becoming And our critical plastics a that the caused can shortfalls and the terms customer loop to I'm kind I the that's we're BIAXAM of thing color That's our Clearly, continues of don't And there's when And have of that have of potential growth if with very this from way otherwise recycling, the excited that's in productivity having I in in the the from gap driving the participating each about closed that's begin to own I single-use but be and CirKular+ use for polymers. more us. to separate advance with expectations mean, understand the it that the all if problem of story. address people's the case models. absolutely which in look, that – business our standpoint we increases the the implications each societal for polymer. CirKular+. the you

are if we very to us assurance They're settled innovations. that able process. of typically for can't I the potential heard then the help a ways. approval time, that a been but some this IMSS. automobile from these tried that sense. be time. excited you've grow on will, innovate to going both further. Once I'm to sure in a technology, There's people very goes other yes, We've at same it quite long in some we're build But be risk-averse, working about you it on the And community. referenced you to So gives

right. used I polymer that's – have telecom in and That's a product And in wire believe All innovation. then you cable. well, not helpful. this

this XG in so, industry as burgeoning years. and driver the And couple you of if that if this super And wondering – just sales my from benefiting similarly Thanks. companies product the benefiting wire wondering into follow cycle. see your XG I'm over of are you're next here a I and cable if some

because of many business for put space need established subsea quite Yes. cable I good big kind bucket particularly kind mean for of our XG frankly, conversions leading in and business us. in years. We installation, been a in cables, the that's gels that, for we've very that in

Thank you.

in any speakers, questions time, queue. don't have this we At

You may proceed.

their our question-and-answer be morning, There our Thank replay questions. and morning available for everybody your concludes and you, the Kraton. by thanks Dale. you this XXX-XXXX. access call this in may morning. their a will later this for Well, thoughtful And this we want this (XXX) for you. prepared And to comments interest Thank thank time dialing of session, replay

This Quarter concludes Call. the Fourth Kraton XXXX Earnings Corporation's Conference

may You disconnect. now