AdvanSix (ASIX) 1 May 202020 Q1 Earnings call transcript

Good day and welcome to the AdvanSix First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

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

Vice to Thank investors.advansix.com. XXXX Quarter are and and and webcast, welcome This non-GAAP Michael me on you, Good morning, President our Senior Kane; Erin are Chantel. including AdvanSix's CEO, and Earnings call today CFO, Preston. First here and President reconciliations, Conference available any With Call. at website

business world on this we our Note forward-looking based view contain today. of it the elements as are presentation change our that and of Those the elements that statements best and of see can actual we press the our results that forward-looking consider could light. differ that in in included release materially from and those projected, them to statements ask earnings and We presentation. you refer you

risks in quarter the our principal morning, annual product SEC. the key COVID-XX that In we'll updated pandemic, including as our the our identify and our for our markets. lines on filings subsequent financial addition, outlook performance end first our Form XX-K thoughts for in This and and on and review report share further the affect SEC with uncertainties filings we results

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

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

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

start and pandemic. safe. families hope their I that First, healthy offering our today call the COVID-XX well been are to the as I'd condolences like have and by everyone off by to all affected who coworkers as staying listening

at crisis impacted professional lives also and to my in thanks our clearly We appreciation This and want and unprecedented has teammates to X,XXX many. in are send of personal I an times, all our heartfelt AdvanSix.

work. work adapted how even our have and schedules We routines, we

the efficient will come along creative forced opportunities. on and even the with agile, more our collective challenge, our has processes strengths our organization way. innovating to be while With It there many

as essential our press designated specific highlighted we in and COVID-XX for the chemistry community of well as in during industry to As release, the both health business well-being was our response as public March XX safety

We stay risks population, began day. to relentless seriously feedback part ensure our key communication maintain great opportunities onset by on loop continuous accountability At Daily produce as meet crisis, we the as take organization's identify team done leadership that daily materials throughout communications focus Company. the a safety. health maintaining the as meeting the and broader on organization aligned the our of my priorities focus to to of broader potential obligation support work a to structure tiered the areas being each employees and of well our highlight and while

Significant into quarter. shareholders surrounding taken efforts including our the of scheduled actions and work communities, majority as nimble have the plant and I are by the that navigate be we and collaboration and Above across inspired and core to health priority environment. shifting and derisking been to continue protect the employees, decision-making who second safety a turnaround the remains happening teamwork, board. customers, top previously planned our to quarter third suppliers, is through all, we our

We results are delivering. are the very practices pleased with protocols and our

we're highlighting an and and seeing to our the challenges results, operations call is COVID-XX health, quarter and restructured taking from a first focus review key information the to as our in our to from With the what we'll world significant important call we our is pandemic, today also position. financial response as support we most have well on safety to spend then most actions briefly Mike facing industry We'll believe COVID-XX dive perspective market of perspective. will end from shareholders. we're the a

acetone planting for various heart the ammonium nylon continue we across do for domestic other tied applications including sulfate and plastics the sanitizer granular screens, consumer to in expect do particularly see of hand weakness our to into acrylic season. engineered and resilience we While food demand, demand product nylon carbon packaging lines,

base, the asset global in integrated served and low-cost Our position us diverse co-product quarter. first portfolio well

second cost plans trusted through these The that on is partner a good dynamics. starting assets to it we business to and have is this will foundation. executing base we're model, the the resilience global have, remain as the of impact strong supply a The customers. business great pace organization, across build a considerable regarding we continuity the quarter, ensure from our and give navigate is for global thing through our the AdvanSix to advantage progress our crisis, and duration we the us uncertainty economy. upon of potentially And There reliable recovery

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

Erin, Thanks, and good Okay. everyone. morning,

I'll Now keep quarter the X, COVID-XX. $XXX And the first quarter where largely Slide compared financial quarter I'm on the year. mind first about to down unaffected results last in X% that's in were review Sales results. were million, by

ammonium up intermediates, about X%. oximes. was primarily overall in dynamics impact about unfavorable in sulfate product as Raw market-based mix standard to pricing, Volume acetone challenging down material pass-through X%, industry due sales in caprolactam was well due to primarily conditions export and from improved particularly market sulfate. ammonium pricing nylon chemical an favorable was overall about and as sales our Pricing XX%, export XX.X% higher end lines higher by standard reflecting and

the the million the unfavorable but year. the year. quarter, low share $X.XX versus $XX primarily decrease of $XX on per Earnings $X.XX, prior market-based next about variances million down to key in slide, impact of was last walk reflects EBITDA decreased I'll the pricing. And the compared through

expected being the expect approximately rate year XX%. tax by the improve rate year a You'll expectations, expectations, benefits carryback driven net last compared by and was in taxes full as that few rate allowed loss quarter reduced above approximately XX.X% to of plan federal higher to including equity deduction loss continue from through million factors, result of Despite expected vesting notice effective to and be first which Act, and the to quarter CARES pursue to year. is tax operating tax this claim a the $X we the cash of in was our the

to million first in now about of last share primarily cash $XX and million in the working million lower $XX.X down capital. prior million lastly, million from $X million impact year-over-year. down And terms to count, in quarter that's quarter to in due at compared the operations changes $XX roughly And unfavorable in year, compared net CapEx income of $XX.X flow reached year the was of period. came $XX

Now key EBITDA our drivers let's Slide would of it the to a performance thought few We turn of X. highlight helpful to be year-over-year.

unfavorable a headwind, impact conditions challenging million well due prices pricing the as ammonium represented nylon continued grade of roughly mix sulfate $XX year-over-year result significant of export of sales As I mentioned to market-based products. earlier, in as higher part standard lower a in the as

second impact shutdown an million $X input quarter decline. XXXX, Lower in approximately no last of pricing the Planned Energy quarter XXXX. represented seen were million of costs, we $X Solutions the The cumene natural overall turnarounds namely impact gas Philadelphia sulfur, approximately only in of quarter partially runway had of the following the year. half plant that's the versus in this an and year well the impact offset first in impact

a supply. million. now aligned as and our supplier We result $XX the impact the shutdown have to are cumene of full further disruption expect PES our optimizing we of We supply income million $X XXXX to year chain XXXX as pretax

Now estimate XXXX. $X that's approximately favorable million is about and flat favorable versus to million $X our previous compared to

and represented approximately In across progress addition, we organization. costs, disciplined IT have an as and SG&A decrease appropriate. insurance compensation submitted the management updates $X on claim, expense year-over-year, interruption a benefit that business a reflecting continued we'll cost stock-based and provide in million

$XX and factors. net from tailwind Lastly, volume, we saw operational an approximately performance million other higher

benefits Hopewell, continued which our return our at boilers natural This gas have to from includes exceed expectations. productivity

you roughly of largely proceeds we quarter quarter recall, impact event million in As to approximately which the majeure. and the XXXX $X.X insurance first of considerations, phenol other one-time force of offset related the two first million a of weather $X each the had XXXX,

slide. Now to next let's turn the

Slide year-over-year quarter. our results, declines a Consistent major altogether users our As continued across an in what in a global to X. first is spreads reference, a weak globally. basis decline benzene spreads environment our most The and with industry caprolactam we've already on reflect end included oversupplied product lines here over demand pricing across the sharply on typical

already are the raws levels show very to did which We was the March, transaction resin we've back Downstream and also correct price to caprolactam in tracking seen per industry low, falling the entered volume the the $XXX in more drop benzene costs over is followed. to however, in second see we begun the in ton caprolactam, quarter. the closely significant an as spreads roughly expansion $XXX it at range industry these in

curve urea declined is industry fertilizer also costs as averaged the sulfate global that by modest per to basis, spreads movement seen at quarter, third-party total lower on as by approximates year-over-year remains has half more for capro which, saw prices. of Based levels XXXX. Overall, than roughly recall, consumption. below levels more and Asia, ammonium benzene nitrogen energy tracking you trough pricing, a data, caprolactam we've nitrogen compared pricing the on the the and in cash recent industry largest ton cost in and $XXX we gold

of final demand realized grade affirmative in supply month quarter U.S. and duties a to saw over medium the in to tracking March prices costs stabilized premium biomarker. expansion a increased industry and balance refinery lastly, significant The the first drop back and And propylene buyer costs input small downstream in acetone large acetone following and improved demand. antidumping prices to in medium propylene the

medium the industry, negotiated. of small is reflective the where buyer pricing price is of predominantly roughly reminder, a As freely one-third domestic

to me turn back Now let Erin. call the

Thanks Mike.

wake turn of some taken X the to actions we've discuss pandemic. of COVID-XX Slide in to Let's the the

For demand. dedicated continuing the operate our while all measures impact, executing meet safety and proactively health continuity of remains last of throughout with priority implementing employees teams been facilities all to or so, The this. business to plans our mitigate we've our to top customer manufacturing COVID-XX two months

medical actively in personnel and place, and monitor employs to contractors. We on-site have protocols including

of consistent equipment, government guidelines, employees number including and XXX% and practices on with policies the in manufacturing have processes distancing adapted we're visitors. nonessential all labs at personal limiting work meetings. CDC rooms, We've facilities. at while with and maintaining And including mitigate thermal all We established the risk, we also face screening restrictions way covering facilities upgraded control social manufacturing to implementing protective

We travel. mean where and in contingent a all proactively moved sites as prohibited we've plants continuity the operate part to all our trained possible, business nonessential workforce addition, international domestic planning. to telecommuting across I business of

previously scheduled number of the second earlier, contractors third the current of in derisked plan As quarter operational majority to turnaround shifted and to quarter XXXX on-site work highlighted environment. limit continuity the the I was with order the plant in ensure

end the hand of had the At We position. facility. million with of $XX revolving first approximately quarter, $XX of under cash we our in available also capacity on remain confident our financial approximately credit million additional

revolving million source to a matures cash addition $XXX the credit in for in base liquidity of business flows Our facility XXXX. our and provides operating

cash measure precautionary million. $XX currently in are a As current maintaining balances of approximately environment, the we higher

leverage the our reminder, to for net up a of million cash. ratio to with $XX As covenants allow debt of facility us

with facility in in amendment previously Our to the flexibility XXXX. executed covenant ratio leverage quarter, announced first us the also of provides

In incremental under borrowing uncommitted assessing addition, we're actively accordion facility's potential the capacity feature.

a $XX and from driving of disciplined year XXXX. for a CapEx a expenditures. XXXX are million capital represents the which management, to cost in million spending expect previously and including of discretionary full we're $XX $XX also estimates million reduction of million of to range now be planning further versus approach a to We the reduction million, all our Now decrease to $XX announced $XX

Act funding to programs evaluate a and Mike We're will other potential for including government flow, employment-related obligations continuing on the and for provisions optimize stimulus in liquidity, to deferral elaborate pension taxes, options CARES impact the costs, cash which moment. of

Slide to turn let's X. So

are from from an visibility the say side impact to of must total XX% page, a remains exposure provided moderate On in this left-hand percentage concentrated many sales, we market. of by The to impacts. COVID-XX XX% But across I high sales On low-to-moderate chart end our exposure. markets. the key ranging end potential of average, estimated framework represents mixed our of

intermediate auto demand lines. durables demand Asia production highest Global in are nylon and demand markets. chemical near-term and is also demand consumer risk the linked impacting impact in weakness nylon in our industry's more declines Our to expected supply shutdowns to are product Textile conditions. and consumer-oriented end

significant trends construction We're activity. also declines on well a directly, which which as are weak eye nylon and and do not economic as end-use close they textiles result the to the Although greater significant AdvanSix COVID-XX. all impacted sales largest keeping a in are lockdowns a globally of are expected as are and building end-use consuming for by Europe represent demand, carpet facing U.S. markets, remain

Conversely, stores been for spring we this the packaging preferred the the turnover. inventories ag we've has demand with is seeing fertilizer of ammonium from strength of season. which food robust side as strong rapid Through see toughness continued for to its heart nylon, and our period, sulfate demand sell at grocery into the business, signals planting

historically sulfate for sales. value quarter quarter is ammonium domestically second strongest our The higher granular

We've following increased seen the hand for March. which Demand in supply/demand equipment at screens weather which, was as seen improved sanitizer affirmative to other the several also alcohol for year to U.S. as applications, this our among duties an balances protective methyl earlier other isopropyl recall, compared and across acetone of industry season year, MMA, other regions seen start stores planting imposed well or wet We've disinfectants, delayed antidumping using improved you'll by used final IPA, solvents central coatings. have has for demand as acrylic things, uses methacrylate including or last

across too than different a how only out, our weeks portfolio Visibility few which come in typically is is in. cases many not orders the

stuck checks long-tenured customer weeks. our to customer even and several operations increased through in very pulse and of points lock relationships, been quickly frequency planning and last the decision we've signals. top respond steady base to them Our our with We've inventory these teams sales, demand greater is with

across in proceeding XX% our we April, reopen a There in demand to in sales planned pickup average. which XX% core Despite for industry nylon has been turnaround to seen this in with the portfolio in mix which plant reduction by We've XX% and a Asia our proactively Chesterfield. reduction addressed is utilization in demand our we're higher, strengths disproportionately at leveraging some April, environment. region, position running at global as still optimize low-cost to roughly XX% economies industry in minimum the above we're the some

also and Now ever, mix our more into ability soybeans demand coupon to with We're to commercial underlying agile product improvement our wins and we our ammonium through ongoing packaging continue driving flexing for are sulfate trials investments space, growing across and on to our high-purity portfolio than offerings utilization. field products improve remain differentiated recent in intermediates yields. in the quality applications plant

are for as has refine for with to result a to U.S. Slide utilization in vast a of additional in turn or fuels. So watch not An let's the X. majority been the the point our business demand COVID-XX driving of transportation implications population there flying, contraction

in are Some build. storage of back managing constraints the output by XX% are significant refineries U.S. on inventory and the dropping to a XX%,

as of streams raw this sulphur, key on propylene We may any and potential monitoring are and benzene materials, have of notably most refinery impact closely operations. our its input supply product are well cumene which as of

our continue chain. sulfur to maintain work at diversified and through suppliers has supply cumene year to two as been ensure supply our hard supply. optionality team of new Our We've this added security we

drop seen in weeks. a oil prices in significant We've recent also

the past on have general prices and price a proxy their use demand indicator in for is material movements, we our supply raw fundamentals. inputs, as propylene While driven and and based benzene do which business own oil

For all grade average approximately WTI propylene instance, while XX%, moved in well crude refinery $XX benzene quarter-to-quarter. sequentially, fell rose QX down on X%, roughly

volume. our raw customer briefly to business, modestly agreements nylon to formulary index-based in roughly helpful across resin review anticipate input span our We through and of We spot the and demand the caprolactam parts in primarily risk it sales this in thought be price our would and our base. index-based see material our some mechanisms We higher We of revenue typically agreements, context. business. formulary in given exposure total decline mitigate in a sales place in XX% which pricing chemical particular, contract of price environment near term, intermediates price

or in materials, Our selling propylene. benzene prices indexed raw of price are to these instances the

with our consider fluctuate key margin roughly protected. of being largely our materials our the is So raw pricing. revenue would will XX% what remaining price sales market-based The of we variable with

serve including and of influenced in ammonia demand line various the our our of Pricing for all of the part sulfate intermediates, the dynamics up nylon will raw product line we where -- ammonium underlying industries this well lag is commodity The impact producer rest and supply XX product prices to inputs. economics. XX negotiated with portfolio, by materials marginal days pricing as as can also selling to those in movement

industry monitoring impact in sharp also a we're on drop curves. Lastly, the with oil cost prices,

discussed we've this may second before, will the in some lower pricing resilience In us pressure. well nitrogen fertilizer. environment that have impacts in energy particular, any cost We continue for year curves, to As can flatten lower energy into pricing inputs environment. us watching energy perform the our and to we're in operating strengths result on potential half the core enables of believe the our model serve and

me back to Let call Q&A. Mike wrap turn up before we into the move to

a global product Nylon perspective, rest businesses are XX COVID-XX. some outlook Okay. weakness line Erin operating move We've highlighted expected our key I'm we to impact reduced as on rates of our now the continue. on From outlook can highlighted the Thanks, to summarize we're from our many for that here. Slide forward year. the of seeing industry also Erin. demand and considerations impacts

signals textile growth around We'll also production both out be closely auto watching for nonresidential Asia. residential of construction, any demand and and

on navigating do and acetone. optimistic in we're intermediates, cautiously sulfate remain particularly we while ammonium nylon, So our view challenges about chemical

of closely second half. lower pricing be nitrogen the energy monitoring in impact will the We on prices

support we're while operationally, output demand. in safe changes production and adjusting to continuing and to our operations, stable Now mix

absorption COVID-XX, output result by global to volume impacts utilization rates we're our of working as advantage. mitigate leveraging maintaining are industry So cost we near-term and while above to a

expected be about a assess for XXXX, year. now in to be cash reduction current light of is $XX prior turnaround to spend conditions. schedule and the impact free we is anticipated changes or third in expected a and quarter pretax down flow From as million maximize for our continue in The to $XX of estimate. CapEx our this opportunities heaviest of Erin expectations $X highlighted from further million to our perspective, we've which of highlighted income economic impact to XXXX, to cash plan million the

expect compared the progress to other lower This year a considerations. particularly number in a run the We half. to first the timing the perspective, as half generation have primarily tailwinds cash reflects and second of continue cash from through and flow flow we rate CapEx stronger working significantly capital

Our sulfate This typically advances spring for annual is occurs in ammonium cash program cash sales the following consideration flow quarter the prebuy in another fourth year. for linearity.

We're driving including management cost all disciplined organization, across spending. discretionary the

of plant of actions, an million versus to approximately and people As managing $XX other an And our taxes. and year year, cash full savings, deferral reduction the benefit logistics CARES of costs a result of $X prior tax we indirect savings the evaluate social million spend we're -- to $XX million cost XXXX approximately we continue while security benefits in in benefits. tax approximately Act, XXXX anticipate do cash from the cash including and cost $X targeting million

the Given the portfolio, the negative remain across cash expect to through half puts free of the we flow and takes year. first

committed the this is agile be more positive continuing in outcomes, us to of early term to best However, expected through navigate part which second possible will than capital the offsetting are our cash the half strengths year. headwinds We're remain impacts as and CapEx with driving lower free near leverage and environment. we spend to require working to timing flow

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

can the Thanks, for if up and you Great. Q&A. open line Mike, Chantelle,

question very Anderson, come Vincent first you Stifel. will Our Thank from [Operator much. Instructions]

months? acetone move in capro. into when the time plan your wanted levels we to drop you to we're in win. you capacity the I kind for high more at see of the like for much rates it cost in these incremental demand, potentially for like nylon With and couple of commercial can, trade Belated placing is but channels down physical through congratulations position, capro a comes quarter than the third the to utilization second to move XX% if go something the maintaining a capro on global to that were you'd every if

Great, us glad you're Vincent. question, morning. and joining this Thanks here for well, and the

we that So mentioned, as be April, saw we certainly, continues to in extended. if that

continue base. we indicated, do around see opportunity, As our integrated well globe demand we asset run across to provided there the right, our the to signals

So you that that as if is way certainly, across reopens imagine, globe us of the here end into demand saw at continuing important, the the signal can construct, is same export in of April, the pandemic the the markets, came May, given Asian and early kind expectation here. that for we the obviously, it

that is as that markets optimization, post our mix happen where to continue recognizing right, world. reopen, in then will of And a placed recovery

making got sure in we've right is, So product we've demand right this signal meet been focused to where mix environment. the quality, on right, the basically the

look our again, mitigate see say, we capacity strength roughly And some of be strength. So that believe we'll near in that do believe is will in competitive X% and about serve with fashion. us world's that that chesterfield have, did turn disciplined And to us the we're term. again, and that, And in well we proactively that the the you took we like the that helped plan. We down then outage that leverage, the April. in here

And you right led X. into my next

you timing Chesterfield. Just labor for this external risk and outage your availability turnarounds? there quickly, you on to perspective? much How depend contractors the And is from any mentioned do a year

that to our something into QX It's heavily played certainly a question. our outage. great And derisk decision

reflected allows to was If QX, here, We're you When contractors in stay-at-home outage. as was nearly previous across Emergency conduct into us our outages. place. the as going That efficiencies. allows integrated be going a Chesterfield. across to site. outage X,XXX National recall, And QX have as Frankfurt, orders our would our is To required get declared maintain we on in well outage were to as as Hopewell multi you rates, know, us it that flight

our teammates health to and the as safety work. prudent contractors it looked we availability, was safety at very we of out So the and well derisk the of shift health majority just felt the and and our of as when

outage chesterfield the So was successfully done.

how was We covering. I to think the improved distancing as social PPE well out feet facial get great with figured done work as it and two protocols.

is a environmental of was successful that as and outage safety, as that from time. plants the adventitious we're coming health, work -- and done And an perspective ramping up out well back the getting back in

to So QX again, those a believe to execute lot. we'll making we last in decisions the the considerations QX very if look on contractors pandemic long site. and and obviously learn to how we we'll prepared have Obviously, even be spread come as well and on transmission,

screening the operations. Yes. the our that be our add And Vincent, protocols only place well there as employees to same as protect thing in that have contract we same will to I'll subject the is the and

that talked around as as screening site, anyone personnel contractors. who's to well well, employees visiting well about monitor as thermal would include actively as we and on-site So of contractors our as protocols medical

and good actions put employee, to we of very from also operations the all the protect only feel mitigations place we not an contractors. about in through but our So infection

we to forward. that good feel a very position going we're So manage in

capro its Asian base. just impact your from want like and the is to That's opportunity, you your textile seeing of Erin, of earlier great. for quickly pivotal two, near-term perspective, touched for any then manufacturing anything as Or to But you on of the And note have comments. manufacturers result watch that? impression? One, the on in to just Chinese than been kind in trade of that Asia rest there. to textile you looks market. you'd to else are much slower back it And recover an a being outsider the go kind weakness mentioned export

largest the and it's tied consumer being demand. globally, in confidence, being it So, consumer certainly right, to for nylon application

right it -- to general, But But there see I best here, across I we rates start-up of your board. the this with a the that, unique, so shape see probably think in a right? China consistent start will around in XX% again, think seen. I as a slower kind observations the still is now. that the consideration. what a pace of region. recovery again, Operating In the or be think positive the been have are we've --

seen we're make make. very And product meet exists, where too, potentially able in reopening. again, think, just And than it's we'll little play states, we're opening we're bit flexible domestic we of in through that markets. prove considerations, on things some I the agile, we've and We've And one here a nimble, focused being retail can staying June, watch the sure other out then here differently, well. it's that going navigate right, these of to on going it stores but mix need and with cycles, be where demand May we to proven be previous to here, it to as

question Our CJS next will come from Moore, Chris Securities.

little plot. a expectation that? behind what's the you Just 'XX little you bit had like previously than Maybe incremental talk referenced looks for a lower the fiscal kind bit of It is cumene sourcing. cost can

Sure. Yes.

if we XXXX, million last $XX So about $XX million million year. to to of of we previously, that's for compared you a talked $XX impact had this recall, a when impact range an and

would was we a or thinking see million initial impact. unfavorable $X the possibly So flat

discussions supplier had If where outside region supply PES in by we've the inherently to you a your the just recall, very was Philly. expanding outside our of local plant

compared point charter logistics which And favorable Inherently, the million source more world. to significantly the require could to material at to that get the more will as vessel logistics will Gulf, or spot vessels thinking the which look currently We've able spend you we're $X we of be more that at from from regions per costs I'll this as have flat reduce we say, and really more, or you been lot vessel. and optimize up this Gulf, the last even a down material perhaps year. cost, other

logistics and it but we spend, to see going get it really -- we're here. lower optimize any continue if to down we can So to the came to as go forward

maybe, you second into heading sulfate Just the talk outlook more can thoughts half? bit a further about Erin, little the there. And just ammonium

joining in us today. Great. Thanks. well Glad you're well here as

seeing because briskly plantings they're crop in week the average, about So of Chris, XXXX. to bit saw let ahead week. of out in than almost demand season is week X-year now moving me is earlier field. last things corn our XX% on the we're from top of robust with what fast X% the planted was, maybe about corn X/X states, last the ahead start heading what heart we're we a last certainly we of is rather hear, season And actually reiterating, was by The right fertilizer rather year with with and and

So prices lows. approach and seeing falling. demand, contracting spring we that which typically is see prices summer we This those in QX. we the do will the prices curves, of sort as I heart But flattening energy for and of below the fertilizer and likely of planting, mentioned, typical, years, fertilizer could end as likely is robust cost nitrogen as we to begin and see fall and great projections have anticipate with nitrogen global mid-summer demand last two seen that it,

that's to XXXX even approach those right? levels, They watch for. we're going what So maybe

well which seen in the that impact also value everyone to However, will cutbacks, nitrogen. could We right? focused offset, have that ammonium on of the does we've which right, capital that believe stay I'll I just utilization, remind as on production sulfate continue that you considerations, mean, weaker some that ammonium sulphur curtail sulfate I action nutrition. provide and related its of right, own

more for bit color you. provides So hopefully, a that little

any me. little of competitive on opportunities there? last of landscapes thoughts And the Absolutely. bit? back pandemic? end any specific -- there the just kind Any shift a potential that might you Or are Do question for

when the we And operating of cost, operating industry now more here. XXXX. at Yes. levels No, already we been so right? oversupply. the cost watch, testing it's isn't we're It's is came a of We believe for in space, saw sort we're you caprolactam, right? curve that that need look think completely below related we here, necessarily caprolactam that reflection the but COVID XX% right, I And it into with the nylon cash to position, one than trough great this with in back an

for into XX downturn on thing to see think the when call the time that simply that's of a months. as last about considerations here, probably in the you Europe. I but an create does extension think COVID nylon signs And right, But one in additional the here, plant the that is, at U.S. could let's no play capacity And well it it, for cycle that, would of rationalization XX about, space. of the end right, some rationalization. to round we the extension sat opportunity of and XX, have we that's one we and restructure the yet, another the will there as the here And that, watch did

David next Our CLK. question will come from Silver,

I have a number of questions.

a think of don't would -- get clarified points you from if mind, like to I couple I prepared just maybe your remarks.

percentage of from I you points the Was that that I $XX just that repeating just just be on Was nylon fast a products? boost year-over-year we additional two end -- you $XX then apologize and drawdown? also the -- you clarify million I in of writing would thing. -- that of recovery I'll follow-up. mentioned QX? what guess, during enough decline of could these. demand, And context wasn't the I million sales that was I think So would Or wouldn't quarter? But was in and with could that mind second cited from, the cash my of then at missed like and balance working those Erin, decline the capital you I just and if April, first other that. month to due to If if the

sure. Yes,

engineering Let's number applications sort certainly, in coming from to saw what would of certainly, on up had have of decline did automotive customers plastics And on April, XX% some saw the the COVID take XX%. And a side. shutdown of was sort impacts back their for in we the that's then we their we own right? shutdowns safety the and of health -- operations. some those order, So

in impact but in did XX% XX% to April. -- it So culminate that

then cash balance on build the Okay. up? And

Yes.

credit Yes. source liquidity. as part Sure. base know, so facility use the as a our of of I'll take you revolver we -- our as

will million we flexibility. ended quarter On kind we $XX of and as having benefit with And the the revolver of you the and ebb have the as balances indicate, flow, cash. really that's that of

the out a are revolver, of measure, draw As precautionary cash higher additional did down funds holding we balances.

environment balance, Again, through how and balance cash down as that more and up cash on measure, this will flows fluctuate. we here, our navigate that a challenging go will as It that. precautionary manage depending we

view and that period. better XXXX now XXXX whole were they the the capitalization is perspective to Our shape than from banking in industry is much relative a a

cash at manage through strictly navigate than we'll as little demand those we would. visibility as this go normally strictly just the is, this precautionary we here. point. we get just impacts balances forward a higher it's And holding we bit as it here here, as really, understand But we precautionary again, operations better and and So go on

Okay. into prepared or did I and in demand in IPA you ask emerging remarks. that about to you newer for the highlight particular, your acetone outlook wanted this acetone outlet

amount where incremental but or think an could is shorter wondering do had also So industrial in spiking, source chemistry that fundamental interesting for longer that book open the market to use. end a I incremental my incremental perspective be that acetone you internally, here. was demand sustainable crack going or term, alternative you what route route it's of But a term? think used maybe demand is from a whether to I

may David, the to certainly, book, propylene, in I acetone, And your since propylene. long the trade-off perhaps And depends you of build it offer that, stretches, U.S. So and are are as from on route here One as chemistry two seen question. there that Great I'll opened routes really say that try you of globally, isopropyl make that would from in you well second to over I up chemistry off block, right? where wins, alcohol. over sits employed. right, routes, both which acetone think, directly have the

a certainly like it. think seeing now can we're make anybody making But the certainly demand, is who it I time and in

are acetone the that route. U.S. we here who servicing So use producers large in two

right, for future, think, the foreseeable certainly, so I And the important. demand strength here is

certainly passes, made are further There markets when always call back the But the can't over future it we're side creating that is in it's interim, IPA protective over methacrylate will we've seen But and would between clear the the the trade-off for seeing into from route at addition to that I some barriers. fall propylene tightness normal would point, normal sheeting cycles. acetone imagine, acetone. I in I pandemic the and balance. the route anticipate on some sometime plastic restored and the for what In stretches methyl

think, question this for it right. of of context I do to oil kind Okay. then All and with a and current And price Mike, levels has is within the inventory the outlook.

production talk your are is have the certain in from inventory than or different a ago, and at inventory wondering that risk levels XX? to wherever produced year-end we're price lower just me, now scratching a about scratch I'm it XX. was in on you overall? about level. to oil or my But pass-through of March declined I head So and even that it's inventory costs might from it much think potential noted today, kind amount, the but petrochemical a kind March decline sequentially, a makes type and certain months I'm -- and of effects, oil oil that's that that, to just and the your full product with losses you at on of kind head ability for of wonder based inputs represented my me do few price always What Could your maybe

Yes. Sure.

really and areas. I earnings drove really aggregate. and sort that reduction. $X that believe, acetone at inventory, quarter And in quarter, had in the we maybe product driven sulfate, did did down see look had was you about inventory. of drivers of sell well. last two and of roughly the about also inventory million of a we as noticed, reduction the inventory was you that width asked really the by two much primary the ammonium we finished did in the at the end call, first the When on You We first And that standard goods year, a reduction,

around every that, evaluate we'll like sounded an sort From referencing to of quarter. market. price that perspective, lower an evaluate oil single And we you're it consideration cost accounting

values standard our costs. on set inventory, that based of the you we go they that's the the when the into look at As inventory, are and volumes amount of inventory And and standard does have we cost value level, in the our the inventory.

of terms quarter that market We to pricing. relative will every evaluate values those in the

appropriate. adjustments make at When the as you look finished and goods, we'll

the how impact prices I it, to in around need through. cost you will product prices, the see the go If the you sales product still and Economically, say, when accounting XX% an prices relative below if considerations look consider cost, sales the we actual that the fell oil consideration. would is is to again, do of values. that inventory decline But passed below at our of economically, fact business terms that

We passed through down. those raw materials go as they

a relatively variable tell can we increase in is is lower in the on now, as prices low. -- economic protected. largely as also right terms is up. raw That margin place. the considerations consideration We from still far go as risk And accounting our And materials cost of of market,

including domestic kind markets, -- but it's reordering had about think to I pandemic back region Erin, into certain that be, have be Just I'm the any very have a might strategically into extent, in Q&A. see redirected would for things company know a America. in just answer or you high-level back wondering, of post to North contacts China, have follow-up a I your of level several And any variety there maybe is reduced And you America. North currently earlier perspective, other including markets for a thought to kind you manufactured, predicting, or one sense let's to say, So on I is -- I regarding we'll question currently I've or And that on steps demand be supply high words, my be industrial the inquiries? global out, it's been might pandemic chain other early opportunity? you post but chains your any believe will in focus the that have people play final that China This domestic that ask how of products did read pandemic. of mean, there there that wide potential and manufactured be relocated Okay. the I that just or conversations. was in might and you it's handled post question. But a a supply. potential product going are days, from be

So, great David. it's thesis, a

on yet. haven't seeing certain I date, that PPE goods we're been chains impacted that would and of of durable for. just all medication's to, say, I think more it's it's whether certainly, and received where -- collectively indication to any we we're And things relative a watching basis that one supply to that, certainly, that. humanitarian have

employees I work, rapidly there the I well. last and has to been X domestically quickly adjust a really signals of amount quite think, keep X to to and their think in healthy changing to safe as for people demand weeks also

I would say focused. that we remain

conversations would nylon transformation portfolio I Our engineering steady a of conversations in us which points. talked that And opportunity about, continues, touch think when And out in year-over-year, just grow will packaging sort with I sort daily have about the in and right? work right, think I and carpet customers a continue that quarter-over-quarter are and on we we say plastics, we to of say, need basis. a those in for decline, to that

it's into sales industrial space EP And to an up a XX% space, XX%. to Our the application is XX%.

focused very into on getting applications. customer trials products and relationships, building those we're again, So

slowed, bear so recognizing trusted So I the reliable right? here, for for to play products and are that we can that thesis should connections who will A come. think, is that supplier been that those out seeing has the needed, work building out. that as But that, lot of again, us bring new products applications are that important those

be from decisions just hopefully it the there But it we strategically well standpoint to to. we're us should one positioning those made. doing need So is be

pretty days. it's early I very know Okay.

Appreciate for you thank I So on comments your that. it.

Thank you very much.

question last from Our Neivert. Charles come will

about question. in the Brazilian obviously, but quick America value relative doing is change to inquiries well. like South like or to -- been are look like lot acreage into America we've gotten sulfate, very looks And One real this there's could well. their going the be guys a typically the dollar. and that. market, lull, It I've is some you strong it farmers summer obviously a of you the early year Have are doing things given that got potentially ideas of sell anything rather sort ammonium expense because what South farmers and be terms understanding might its my

you So front? have indications yet on gotten any early that

focus we of rightly probably that as And to would it's say early, here QX on noticed, as you to the export here a I QX. consideration. in Yes, out sort right, moving the little we fields certainly do granular typically switch

I America but think say, America. our inquiries Peru, Brazil, right just we would what America, and now, not through again, normal that would have Central be certainly, bookings South pace, seen, I of Latin for into

that, that we'll total a of over season appreciate are think going crops, the weeks watching Charles. be I into good proceed So getting right, of get one things But plantings And observations. key, and on and about months, sort of that fall. as think I sense next say, of you think into like to the couple better the where the obviously, we we sits. that and second I certainly what as

that the demand be supply but seeing just or that better, guys that also see the in is the may you or anyone helps Again, seeing a acetone? facing can are be that acetone obviously, hit. Is else you So facing? side. bit might on side, guys being terms means that of in phenol little you're Also, therefore, helped are side some phenol which getting to is who tightness production Great. the some all adding of feel ratcheting you people at things, the like weaker and acetone do back you industry you something snugness is it the you're fact a in by the

the certainly Yes, sort pricing ability there's were certainly playing restoration, and post where a -- and that are after the recovery number of really into determination. that for we acetone of factors, the antidumping dynamic right,

XX,XXX you to side, supply of last year. about tons imports QX compared the X,XXX came year-over-year, in certainly, So on only look if time tons this

has the antidumping. moderated So certainly that post

polycarbonate, from know, construction, weakening you are certainly epoxy BPA certainly, and auto perspective. resin globally, into phenol that As rates operating for

supply -- continued So be phenol comes down, with coupled utilization to down, demand comes acetone's acetone has again, what then with robust demand. you're down, fairly

plus for You've that U.S., be far, seems held have in at sort believe, MMA well. XX into PMMA to Again, of percent. doing pull-through thus market continues coatings got been sheeting the we clear too. the to operating here up Architectural

automotive of DIY, where that restoration to painting to homes industrial supply-demand wanted I and which end playing may houses but up the are their But dynamic of think, over to, value I think has is these their with all get architectural and certainly and see that enabling application. was the that create held to be of out, people we market or really price sort coatings. fair

So kind things point those that of of combination out. all you a

I for to Erin like concluding over remarks. conference Kane would turn now to this back

and their levers remain here. is we unique focused on great. to control in everyone It we Well, a time as value. to That this and morning. our again was best terrific create the but I optimizing driving and spend hour a approach everyone with just possible interest wanted time, for thank outcomes

in unprecedented this to way dynamic time. happening And highlights website come can our the has press of third a to of love of many together read-through we report, and proud take out that, and which our initiatives entire around our the you release you our encourage organization. very I forward to published it. on I'm recently all annual found business morning, sustainability ongoing our this saw be And keep during the I'd call as moving lastly, team really

speaking safe with quarter. stay Please again with we you So well. next be you. Thank that, look forward please to and

conference. very now you gentlemen, and today's Thank concludes this much. Ladies

and disconnect you. rest your lines, of phone may a Thank You great the week. have