Eastman Chemical (EMN) 31 Jan 202019 Q4 Earnings call transcript

Good day everyone and welcome to the Eastman Chemical Fourth Quarter Full Year 2019 Conference Call. This conference is being recorded. This call is being broadcast live on the Eastman’s website www.eastman.com.

We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company, Investor Relations. sir. ahead, go Please

And everyone Deanna. joining thanks us. good you. and morning for Thank

with Mark CFO; today and the LaRoe me On call Relations. are President, and Espeland, Vice Manager, Investor Vice CEO; Executive Costa, President McLain, and Willie Finance; Jake Curt Chair Board

I‘ll items. we begin, Before cover two

year to in or for statements Commission, future filed change. XXXX financial or be during filed our events full be results including will First, filings forward-looking news plans presentation, in expectations Certain Exchange and release, year company’s plans and XX-Q XX-K during Form and third this for will full you our this quarter the call could factors concerning to slides, related expectations. are with certain expectations and the the quarter in and XXXX hear accompanying the concerning and Actual detailed XXXX. Securities our Form results and the fourth

www.eastman.com in to items including and of this associated any non-core disclosures, excluded presentation a certain directly fourth Second, measures available other the financial of items. adjusted year and quarter and website most earnings results GAAP the section. financial release, Investors could non-core exclude unusual the be or on future our the XXXX referenced and earnings excludes which Reconciliations are description Projections found items. in unusual news comparable full in non-recurring

turn will I the call over that, With Mark. to

Advanced innovation and closes EBIT growth incredibly deliver, full plate Eastman in with $XXX through a around Thanks of tougher that XXXX new And I to has XXXX. business decade by world significant a challenges, Greg. almost how challenges from stepped macroeconomic to the on year. year of up the continue page the of morning, to begin Materials, achieved I’ll XXXX am to employees the year everyone. in highlights responded X. million revenue was good led which proud get these

progress record at management the year. on I’m targets, how $X.X to engine flow for while almost proud our of of cash our we make our a programs. also level continue consecutive cash on delivered cost third We billion innovation free generated

satisfied performance, earnings a are earnings XXXX we in growth and Although, what difficult our forward. going in environment, for positioned aren’t was well we with

few first, centennial year. we’re XXXX, highlights are Here from Eastman this celebrating

history XXX-year successes Our challenging that and innovations material way. life with segment macro a the is have quality which meaningful filled considering best spirit enhanced innovative many demonstrates delivered the in that environment. results, Advanced impressive its Materials, The is of

to on Advanced discretionary Materials we greatly exposure transportation outperformed any environment. consumer free flow several cash markets. deliver this And other as can its despite our demonstrate, underlying markets, consistently in results

and XX to two in Marlotherm our combination a technologies. you And for We this a push M&A, way, saw which work share XXXX. with have repurchases including up remain which returns markets dividends, a great continue significant capital of priority our and to cash businesses opening delevering, like for consecutive increased years. disciplined Bolt-on through us in year, new will INACSA for

century years, a has has an Curt’s the note, to had extraordinary in to talented CFO XX nearly elected after Espeland, a I personal on and career. highlight professional our of Finally hugely retire of financial quarter want XXXX, a Curt service.

to a company. role he his specialty in transformation, foundational very become the been personally I’m leading leadership grateful pragmatic and which of materials portfolio a element for vital has the has strategy played our

has years, have as planning successor, confidence Willie like that every Eastman for process. part in of key worked long-term Willie to XX been I and a also player our Curt closely share to succession McLain. has I’d Curt’s

markets, organization, company’s which continue and integral transformation. deep capital of knowledge financial businesses, with a the as He has proven be experienced will leader Eastman’s we

he financial and closes some With to review, as opens Curt, over another. results, final call this I’ll hand review chapter to the quarterly that, his

good Mark. Thanks And everyone. morning,

all, and It thank to since for the at you, of Board the real a allowing the Eastman kind and has men I been all CFO want as First women XXXX. the honor. and Mark me words. appreciate to serve

to to is take CFO in Willie I’d Eastman. that forward is very absolutely team reiterate by talented the like supported motivated also right and and talented Eastman

We are in good hands.

me slide let said, that With X. start on

reduced For level, the disputes alongside for a primary growth EBIT declined most strong lower dollar, contributed a and destocking as earnings. and the revenue volumes At to full and the global year, due trade customers. decline corporate decelerated Eastman uncertainty all our to EPS created and year-over-year in demand,

were at in lower Advanced rates, we the across margin for utilization strong innovative Materials. year. level corporate delivered difficult The variable Despite our particularly the environment, growth flat many lower in a products, resulted of spreads volume economic

year, lower Similar slowdown were quarter with decreased result material of a trends results the normal for impacted prices. lower full prices, a due to selling top the global economy, the seasonality. in on raw fourth mostly by as of Revenue

we costs like generating environment in we and closing mix. focused product control, material revenue, and business what raw can lower costs In to reducing free cash due flow. remain slightly improved increased are we on new strong now, EBIT an

with Moving considering over to year EBIT in Advanced full with now was performance segment business X%. environment XXXX, growing results Materials; the solid, and starting

chain XXXX, normal supply had a in volumes China, Materials out once the Advanced segment’s had in the drove more innovation and early While the largely challenges destocking and the between U.S. programs to growth. of level return part played

great trade are the business innovation. immune premium core results The to products not a provided in due of and transportation, global The example with was Advanced the but resilience. challenges uncertainty of importance Materials

flowed lower the disciplined on We second pricing. also as cost spread remain expansion are able to we in raws through and realize half,

to this fourth continued revenue year business in Ahead innovation another and headwind product the dollar we progress, on to volume expect in rates. both due revenue benefit new deliver as a quarter; and currency mix. XXXX, strong from EBIT growing EBIT increased more of growth at foreign we Looking from favorable segment, exchange

mid up EBIT be single result, a digits XXXX. we As to in Materials expect Advanced

AFP Products XXXX. Advanced destocking with through Now X; up gradually more & was moving Functional to Additives on impacted Materials, picking unlike slide

While primary of and was many we in demand serve Europe. China decelerating, the geographies in particularly

environment, in strong as care specialty expansion AFP this I’m water solid encouraged spread well in that portfolio. and including two-thirds as across treatment, fluids, the of results growth delivered chemicals,

had in also of and challenges China in for ag autos businesses are market the in how AFPs the bulk specialty disruptions including in this part some All demand the in of segment, this a perform slow We China. environment. performing business should in,

we the one-third year. majority previously tires remaining acids, of of quarter at the for The and contributed called the the business, call, formic third our earnings decline that adhesives significant

work this for to actively solutions segment. part are continuing We on of the

in we in challenges down, two-thirds, impacting the to Putting we offset by and growth it flat volumes. EBIT the slightly compared together, both XXXX, AFPs Looking to ahead to to continued be expect one-third, expect spreads XXXX. solid all

fourth to the reasons due Intermediates; for the in slide. now In year costs. summarized slide revenue to EBIT planned Turning the decreased, and for full the quarter, mostly on X increased the Chemical fourth decreased quarter, sales shutdown

As spreads slowed, our declined, seeing XXXX lines think progressed many product activity but at we’re now in and industry signs we derivative this stabilization of point. of

Intermediates we at half to higher be in first carry of XXXX, the the back headwind normal XXXX our All other cost as in, ag, be which of gets in Chemical a stabilizing the America we’re see management into a XXXX. of lower planting to year, We volumes XXXX actions. half more also benefits to season, programs lower in think we but EBIT of the and will level than back the and spreads to North will expecting expect expect see

chunkiness full declined EBIT year in to tow on patterns. related segment with slide and Finishing X, XXXX acetate quarter Fibers up general to up EBIT revenue views, for and was the buying some market China. increased in due Fourth to customer decline volumes tow, due

market key including was make growth up year. in applications. we the with offset for more textile XX% traditional by This progress softness continue progress In approximately women’s which initiatives, textiles the our in was this market, to wear, global

we tow expect be to down acetate slightly, the XXXX, market. consistent with In

Textiles. For

Fibers expect in be our overall We be by EBIT traditional consistent women’s strong than a market, lower to growth market. together, with offset we expect end as Putting textile segment markets continued softer applications. to key XXXX wear textile XXXX, the impacting it more in slightly such

highlights sustaining almost achieved financial at some on X; slide strong cash billion, was with record XXXX. in we flow finish level $X.X the I’ll free

great Another of teams Eastman. BA across variety by a delivered result

record stockholders. returning our also value cash our owners of to track We and both for created continued reducing which debt,

remain upcoming will a de-lever to XXXX, top debt priority further year, of and our Reducing this strength we expect million in than the $XXX balance sheet. improving greater

tax year to I XX% XXXX. and XX.X% Our XXXX XXXX the to to $XXX expenditures was expect are XX% $XXX to expected in tax in to the be year that the be for range. similar rate rate Capital for million million full approximately

projects, tenant main associated increase a periods. in flow The reimbursed number the of behind which other be over is site planned lines across capital cash with will spending, statement of the driver

our well that and for the Finally, a as life. don’t the we mark-to-market part modeling as One appendix; final advantage amortization certain manufacturing as project acquisition, miss assets other the of shutdown and methanol Taminco year slide scheduled decline this Eastman XXXX, will in and on $XX depreciation million, in five the comment approximately with year. appendix contract

this market the offset amortization at of million of end purchases $XX Taminco methanol based the in of XXXX, advantage contract contract. substantially With XXXX the the will expiration reduced methanol

it to turn back Mark. I’ll that, With

Thanks, Kurt.

to XX. outlook turning our XXXX Now on slide

make macro a environment. dynamic Despite we of series assumptions are outlook. know, for we to this and uncertainty, all As a needed currently our we certain in

modest First, three volume we growth and improvement from factors. expect mix

industrial We similar to are ‘XX. assuming be growth to production global

behind be American where that North more destocking expecting are we Second, is is may there there some such although pockets to as go, ag. us, predominantly

create market expect through to own and Third, we innovation. our growth development

number In tailwinds. we certain and item additional a XXXX, of have

on We inflation for be offsetting reflecting the million is and million expect by between annually. productivity, which lower $XX above year, $XX our and will normal million to this $XXX continued costs $XX million progress operating is

Curt $XX a total We million expect about expect million, tailwinds expense to benefit All as be be million. $XX remarks. net his we and pension depreciation to in, by about lower lower mentioned will in approximately these EBIT, $XX costs also

as have the target a U.S. million. with for an of year. a other somewhat levels, benefit as small year, assumption we rate stronger higher such Together expect variable and headwind And return few a euro, to for compared headwinds the we with increased to dollar few at $XX and a comp the $X.XX comps, of averages items, we exchange

and declined spreads This of lower, relative as to expecting the especially level Chemical enter war through to that be year these at AFP. lower third first half escalated, a spreads we in In the reflects we the Intermediates primarily one fact are a in therefore trade the ‘XX. addition, year, and of this XXXX

disciplined, they make where and acquisitions, that capital, delevering, including continue bolt-on should you repurchases, we sense. as allocate be Lastly, expect to we share

first the quarter expect Putting coming to this - will be ago altogether, year we in our EPS flat between EPS the will from with quarter. slightly and $X.XX down XXXX be slightly $X.XX,

free our also We between expect full $X.X $X.X year to be billion cash billion. to flow

factors above there that us range. course, this macroeconomic or below Of move are could

this short-term April, As we that more uncertainty, we time. get and necessary will expect in through as we’ll adjust view have we at informed a

actions performance the taking are Next, to years. discuss three I’m we going increase and next XXXX for to in

XX, revenue First new on business innovation. slide from

development be our new to Key those been this $XXX For won’t million. approach increased business growth ‘XX, progress. $XXX innovation-driven in had revenue we follow concept, a made that million as the new we in approximately million. to and our it investment application our success in Eastman, we’ve particular, has model, new made great XXXX, ‘XX, $XXX revenue capability. was expect In we and business By

The Advanced up revenues. paint copolyester, numerous They protection has driving segment-leading films. include innovative acoustic which business products interlayers Saflex new way, Tritan heads of display is and interlayers, examples the Materials,

have for plastics, two enhanced our our we ophthalmics, as offering, such and with Chemical cosmetics, several especially new toys And recycling commercial more. applications technologies,

the And years. Functional poised significant most coming Materials contribution make while Additives Products in has Advanced made to progress, the is and

number We’re have will Tetrashield of we innovation tires non-intent large several throughout auto with year. including getting you sustainable commercial next platforms, discuss and generation coating for solutions, PPA and orders food platforms, new we in ketone packaging for coatings, specialty the a for Crystex

at forests progress consumer in growth textiles managed Naia women’s in yarn, we’re I’d about that our yarn market, that cellulosics markets, uses of a in biobase where have the sustainably is The particularly behavior. excited a driving a we offering cellulosic Lastly, great compelling is add wear. sustainability from made where certified

Economy technology, commercialize will even makes buy Naia more and recycled to which product. the consumer with our our excited Circular compelled more content, with Now we

new us driving in in has Overall, we’ve This the resilient outstanding our made economy difficult made progress more business current for growth, and environment, as it revenue. strong the results rebounds. positions

more it’s building about slide an I’ll year and capable and XX, even is our strategy. next The execute investments our cover efficient in to on organization

an is commercial great implemented growth business making enhancing deliver are our model manage and decision-making We progress operating to We costs. our dramatically that improved in capability.

We’re helping investments. and of seeing investments, commercialization development innovation digital significant application CRM accelerate other our also And our rate making programs. improvement are with several our investments are

time, At the we’re investment inflation costs. driving offset efficiency these also and in same how we

As with are in we efforts our you portfolio. this the a can innovation especially see disciplined graph, relative in manage with our how bar we peers, to of our costs level operator

are And these in productivity going on I the significantly, times, uncertain quarter call. step mentioned we to third as up

$XX We have million inflation, reduce by said, XXXX. $XXX our and than developed to we to of of get $XX million, I a cost net program greater will in as structure, it, million

Singapore these our new areas; plant three makes site conditions. optimization in us olefins. adjust will example to our that One to allow first, results is footprint market these achieve will We

difficult not of raw giving to realize decision renew our options the made supply end We XXXX, material $XX million have to of by us the contract benefits.

under have few of other We in also AFP. a one-third sites the consideration

have other and we Second, productivity digital investments.

We wide of have energy productivity process a improving yield business initiatives and efficiency, improvements. across range maintenance,

we opportunities the and time, Third, to to at at across performance, capability, must we look today’s In and our world, optimization, improve improve safety changes our geographic mix. our we chain adjust customer to in structure build to cost same the are continue win. supply driving as globe,

an organization, and we are to On slide even additional there improve performance. our more addition XX, are to taking in capable actions building efficient

by sites the three of million recurring our could years. end $XX First, in $XX better EBIT to million leveraging yield

additional example, recently Enlist our are development. we we At two support Gabriel, integration site their in Coast City, Ammonia And in we site leveraging and a Texas asset alkylamines, Gulf system. Air strategic innovative St. new several our For new growth to tenants to in Products. welcomed have in of Corteva’s Louisiana, opportunities building

to an step the significant see opportunity and in years. and level in to of technologies, that as portfolio Eastman $XX history innovative our three next rich such also have licensing. that licensing, up our to to could million -- another we strong EBIT million Second, a contribute develop olefins of $XX a has acetyls, results of value,

We which step developed have up technology that of benefit this raw ethylene majority technologies, biomass, is the which had could JM value a we of partnership materials, This to glycol with natural made XXXX. first use a coal, from expected to a gas We meaningful the in creation with MEG, mono is currently agreements a expect create Davy variety number or of the ethylene. the including is unlike in the world of works. new

restructuring, volatility discussed we we committed to actions we fully this potential challenging third demonstrated These October, as AFP, could divestment. more one-third remain that Lastly, the in of in taking environment. on our than actions or has expected in be partnerships quarter call,

value sensitive years. and are leveraging important XXXX to next contributors We are success for create these options better actively to continue and Eastman, to for looking portfolio at recognizing be optimization our the actions, that These in market all our few stepping they’d up licensing conditions. sites, will current and

Finally together. improve XX, bring with we I me on will win. performance years and everything the multi-year take slide coming shared just plan our of you in let to actions

and day Yet, bring quality of commitment done none and rise a the every material to without Eastman, and our the happens it of prove to the the dedication persistence team this who enhancing are occasion get they of in way. to continue that the life, people of life of

be even we in and challenges our us poised will the through more to driven specialty model growth, know innovative own When allow of they will, macroeconomic reverse it’s markets. leadership create innovation growth that our and to

control creation what growth, sustainable we long-term can earnings will In we the and for to all continue big remain our and committed attractive value to forerunners, focus meantime, and on picture, of stakeholders.

I’ll Greg. it back that, turn to With

right, thanks Mark. All

people usual, as possible. morning on get As line to and we’d of we’ve questions like got lot a to this many the as

that, ready With and So are I yourself one ask for we questions. limit one question to you that please follow-up. Deanna,

now from Morgan Vincent Please Thank first line will our open. you. go Instructions] is question from ahead, take We Andrews [Operator your Stanley.

talk you impressive hearing relative the versus just absolute maybe Good volume elsewhere. which to an in about growth Advanced basis, morning and could we’re Materials, be you. on everyone. continues Thank Mark, what

just a talk have moat around of in that you how competitive behavior maybe volume? sort of about insulated you a pricing still pickup We’re hearing Can well. how or in decreases is much generically, pricing and holding up and

So how are you in there staying so an difficult environment? obviously differentiated

company in growth heart the as great defend having innovation-driven margins. Yeah, create the Thanks, really a and own as whole your Vincent. around question growth well way your tough as of Good morning. model, a environments, strategy you it’s

and entire from products is important comes our growth differentiated the sort are innovation through segment, we’ve the earnings to of really XXXX Across of differentiation continuous in and - decade The is been sustainable that marketplace. investing this it. innovating

our patented is the medical deliver success, free in to BPA being that’s a story polycarbonate just continues growing and in continues housewares for to only is Triton and success now placement, and So tremendous which durables, have the proprietary product solution performance. that that

It’s continue up even we where in not we interlayers, acoustic can better speak, lightweighting now where that of this significantly to space. enhance acoustic and generation heads and launching generation, the experience and driver HUD the with drive growth and next as just a the but in display are same and this differentiation have car, in interlayers year thing to you enable

rolled films, support best Same the software the dealers. thing the where we’ve software new year, best have with product we out to protection launched paint cutting last where marketplace the for

these developing enhancing new market. and growing businesses features at rates higher it’s underlying than the much So about always and

or are in and our appliances or or core that whether why model innovation felt But that so discretionary it’s that interlayers electronics a markets segment allows our continue well has of core we and you copolyesters. autos underlying to - This some grow, to down lot works our consumer of some exposure, its the

believe you you Okay. a planned amount follow-up, this on versus paying flow. just free cash down year with last debt that I ask year said similar And as a of - you could I more

curious what’s I’m repurchases, So congrats to just and share that versus decision driving Curt.

Thanks, the the Vince For and question as well. comment

you know, we all buckets down are capital debt. very disciplined as them as to consider bolt-on with of of for and our acquisitions value across repurchases, always stockholders. allocation of And three we you share pay create our So ways viable those

cap we mentioned, a our further XXXX, finish that’s towards allocation Mark and as priority, de-levering that cash up to shifting we as more in So going ended excess as of continue XXXX.

was of used million for the result original the So $XXX we promised. $XXX that, we down flow pay free our cash million versus that

XXXX, So at of at be - maintained. going now for looking what discipline is you look that we’re if kind to

So we’re $X.XXX midpoint $X.X you let’s the kind $X and just billion. of take -- that, looking about think billion if of at billion to

million than used $XXX that which of million. will towards of at we’re million So to very shares will reduce Greater a And minimum. roughly - proud $XXX it is increasing go repurchase and we $XX offset debt minimum, that will a I’m then at of. dividend kind dilution, be to sorry

million till second of out, remaining it pay half plays macro kind time additional of out. free to be hold So and see to plays flow probably we how will cash for that that’s $XXX more just million have of down, to or really environment so that the debt extra further this the year, $XXX acquisitions, is that we choices depend and how applied going repurchases going share to

next our take question… now will we And

the... have we can Operator,

question comes your David Deutsche from Begleiter from is next ahead, open. Bank. Please Our go line

you than on Good even likely how morning. here. and - these potential on ago, you did for AFP some do clarity Thank of have months Thank the sales today that or three for identified you are potential outright possible more action option you’ve much Have a you. businesses? you. of one-third Mark,

Thanks, morning. David. Good

options, in thoughtful well everything how and structure the the be consider. So as innovation we it environment on are looking then as divestment at do things both as the all cost optimizes this at options. and requires driving restructuring about options sense. can we looking what This makes we’re environment, us we’re to at front, partnering and looking Certainly, we

to set, understanding how the consideration understand the but got the make don’t businesses, we Divestment we’ve to activities is for as the certainly in in well restructuring to overreact both, qualities, we as short-term owner. sure challenges sure potential a position we them impact make new marketplace, the of

going we you, driving when to have we’re and more So update keep forward clarity. it we’ll

in Mark Thank chains where to supply saw that three - the the we all inventory Any destocking just on businesses with and cetera, across you. levels stand five businesses? your is over you XXXX do into last quarters, heading that done, and And et customers? think do

say, across places. entire in the I’d Yeah, most company

seen we’ve think in Materials. channels I destock Advanced

it’s bit looking even destocked and I and In has goes a of destocking mostly course, we’re think the a point. demand AFP, and of in inventory management, those stabilization at more in primary where maybe I’d run little at its this few the businesses. channels say

normal and believe one place but As I work may dramatic business, here be growth mentioned do first America, for bit as off. have still a is ag inventory we in where means the & additional destocking quarter. as assuming CI We not Functional a it North of some see pattern in in to here net you could weather that volume

there European more inventory people America, But on Asian and I bit a economy where in would has say sitting customers stronger, than the where is North probably been are.

if a destocking So there. could always economy risk, down, the U.S. there is you see slows better a

lack just is we’ll it it growth that growth between see two year, do net-net, have year last economic us, the volume think will vast similar provide years. So the of behind to But and plays I out. some destocking versus assuming how the this majority

you. Thank

Juvekar our take your is question will from We ahead, next Citi. PJ from open. line Please go now

you. thank Yes,

of retirement. First on Curt, congratulations your all,

Thank you, PJ,

your well all and centennial and years, that. depressions survive the as for it’s all year. XXX Eastman not I to through to know And easy congrats for wars

congratulations. So

you. Thank

it. of proud We’re

on a chemicals. assets; of some care question So, Taminco

flu. the of think last they Asian swine and feed pass-through about additives, lot have in a quarter you pricing, mentioned I had

So those products? on just intermediate can you. update Thank of you some

with the acid Taminco in formic exception the acquisition out was are quarter, third a that businesses small Taminco we ahead the Taminco. business of had doing portfolio, just great us the which of done, across called buying the Overall,

centering we with treatment the what with in contracts. environment, which is you as acquiring environmental this trends at and margins. look and stable cost pass-through very doing really great chemicals, the delivered are is quite out highlighted, care well, has when But just we strong core growth platform, there growth having alklyamine again, really margins Water stable

And contracts functional you and the into market the again margins, look those we given the very in goes with structures place. then that as means at seasons. have and up ag, going the - stable Obviously, there demand is down

But portfolio great. great. had structure has whole been retention management and We’ve of has been really the The the overall, well the team has managed. cost been been phenomenal talent

my I from bolt follow Thank for the a picture big Solutia over you. any you’ve M&A major deal. And on question. some but since acquisitions years, done then of I have away know stayed sort up,

So not in get this slow to use growth? environment, why some rates low

I transportation, some One this is in but in have especially for deal, that large deal looking appetite a size? would sale, Wilmington a businesses has company know risk at in you of

PJ, think billion attractive really of of did of So bolt-ons and $X.X we’ve add billion great been we businesses, doing what acquisitions industry in now, great ahead Taminco of underperforming I Solutia are with businesses. way of $X.X revenue transformation, and and people the portfolio divested proud where to some the

the nine and with paid very returns a delivered for the impressive not of good attractive we just where So I bought, we that times synergies have things that we at doing think EBITDA track good have record we delivered. prices, acquisitions very

open to So portfolio management, out we’re the of in very both and much portfolio.

right especially when don’t that But that there financially the we look so be we market out are seem now, large is see they attractive. very opportunities conditions at expensive, there, to and ones

portfolio we’ve we sure that think acquisitions we up we have, our deliver that done and on like through and deliver well. spent ‘XX, shareholders making these we for return been importantly, growth quite that the we’ve money the on and focused More to I

‘XX EBITDA ‘XX, that look you came before two but $XXX trade acquisition, well these core the businesses, over from was growth growth we’ve businesses. war thirds the one million to that two If of acquisitions, the organic Eastman specialty third it of started, as had as from was at

So we integrate acquisitions. we how can good feel about

do saying financially not seem or we’ll I’m never So right now prudent. ones necessary but anything, don’t large

we add, PJ to when since it whether will I’m I look at organic at things and the And same MBA And school, Willie basis. that we traditionalist I it’s and a If an or continue. acquisitions could both still growth, investments, I look went unlevered think on is,

So that value sure considering we the way, it. great then we’re and/or make find opportunities good ways And without leverage. we good we programs, finance to find growth once driving

unlevered continue a to look we’ll in So at things disciplined, basis.

Thank you.

Our next Please from open. comes ahead, is Bank question Matthew line with go your DeYoe of America.

morning. Good

with get to my sticky but a of Triton, by were with second XXXX. you numbers, a So, tailwind I and million fairly that absorb the think raw something ‘XX, in did mentioned Materials prices, half Advanced like back materials and lower inflation things maybe $XX of and you lot giving of some

XXXX, can on So Is Should think half there should be tailwinds? the when there it back? comes where second you yeah, that. about more we opportunity, if annualization expand to give of more

Yeah.

the what Advanced growth, some did tailwind is they Materials, growth of vary, at to really main to in input If innovation have be then and some continues performance. XXXX. is look do costs we’d and There pricing keep volume opportunity and that product an their you call driver off there the of

I there. be but think will some it of that will still moderate,

on relative provides. And it I they’ve the think good shown products, to performance their of pricing discipline

in business digits this at EBIT mid-single grow think we why that’s so will XXXX. And

we conversations prices had investors a topic, it. this thorough onto mean do as I of with on expect you the a come expect - little material previous but do value. portion down We we bit, We’ve to share to calls hold on raw good some of

fixed and More the importantly, strategy across of management activities going company, leverage that well sort is heart the cost growth, our into that the to flow we’re the cost as other of mix have segment. and as volume

pressure Okay. the Malaysia to then been come, capacity little And since. Crystex, but more divulging I know under you plan at of a on market and doubled opportunities in bit you this has

there, there? footprint I are cats got for you these So facilities, and out think imagine to dogs opportunities can older rationalization some that like

that’s which we well competitors. the call a added capacity the better where far one we we with we’ve as that So as of product, make, product Cure added, areas, that to advantaged current our relative the produces technology Pro,

can we tire to mixing XX% their So XX% by customers plants. efficiency on tire help their improve

new are is and also this differentiated at the we looking overall footprint business. capacity and So the in advantaged, now

decisions as Just what’s appropriate in where assets to we sense we of where look that, go is, sort forward. at what expect makes demand really on make and we’ll some demand grow, then

you. Thank

Next Kevin Please from is McCarthy ahead, question from your line Research Partners. comes Vertical open. go

your morning. by over program next good you sites, are the I’m play? three talk Yes, Mark. sites little your indicated of leverage to the on about, million a line million $XX bit EBIT you years. $XX to which Can benefit think I in intrigued

Are for there project and any How flow at which segments over and through affected? Texas years, beyond be will the the that GCA City? Products three next Air might

project can opportunity could sort that Products site Ammonia and what that and look great scale, of So this phenomenal is rail you we everything. Gulf and site, other a the look several the to great great It’s Texas Coast think at will is at leverage, I one ports, a how when a example Air like. a opportunities Texas just - which opportunity at of the of infrastructure, City, did an acquisition City site, just the we provide have and set example Sterling, several

is are see reliably Corteva, multiple can alkylamine unique do supporting at there. I be platform. we’re world our predictable and looking offer things very earnings. I’d But we’ll we’re what more other and it to I’d So there Gabriel St. doing the at. substantial sites around But think say

if Willie, that see products that Kevin, CI integration today. & projects, Additives a beyond is fact as also I I think primarily may we highlight the other Yes, Functional basis we But well. two would that segment would it add, as further benefiting assets about those benefit could the and on this businesses

long-term notwithstanding of perhaps, XX or the decision? recognizing Then a for Willie Okay. growth current that you there, to in financial production raised for is to level continue, question expect you’ve would a it’s environment? years What Board that Curt streak row, the industrial a choppy commitment dividend ultimately your

with it the Kevin, definitely to point, that decision. -- is on Board collaborate we your

you and think it to acquisition. have dividend - we also growth, ratio payout based back would the post think grow on in where dividend continue as our as gotten with I future it, about in expectation, long-term that see it to we be, it, Taminco line we call will moderated how and consistent but Solutia we is the we will will I’ll expect our past. be the with

And has look to Willie, pleasure. been you. Thank you. it a with forward working Curt, we

Kevin. Thanks

from Sheehan Jim go your from comes Robinson Humphrey. question SunTrust is open. ahead, next Please line Our

and an Yes, thank volatility, which on Curious to about price would you. exposed more lot to contract segments a are expect advantaged you that methanol your how and going in comments it? with that’s methanol you deal be to occur expiring, would

methanol market-based well Yes, as we this benchmark. exposure is we’re Willie. is, about would What our well we tell here Kingsport I as we - other you produce purchase as across as diversified methanol site at as think methanol our

Additives So as going our think and Product I in and is Functional forward, segments. diversified exposure, our exposure & think that Chemical Intermediates primarily we we’ve about

Year Thanks. you post-Chinese give the thoughts And us in your New virus can your in demand? for impacts Corona embedded guidance what’s on China,

said our the I of our does statement, the as So Corona statement not in include impact outlook virus. outlook

we’re early making right travel China, -- sure and employees, the But our those around well China possible. in as all actions and what safe of were implemented world, including safety making which out around impacts we’ve it’s set the little within travel people to as the importantly, are most China and taking sure as and controlling health of of call going people agree on can a think to focused too I we’re in we as be. it’s

We offices. have plants in nine two China and do

So we’re the where New going on to the focused obviously you weeks, two a those Year delay, and by is out there be depending one Chinese extending look on the location. at on based to

have factor to of So we’ll thinking. sort into that our

the at it’s going though, which simple look what’s happen you to China, will I of just occur. obviously impact in to demand don’t a think conclusion where

but as be shut are it’s both in going important how China, So will keep down world. mind our around compete customers well they the in as down, our that as to shut to competitors well, be

of when for see some some want some become on have is a those volume more us of probably to reliable customers to China, them improvement and supplier of, help to as and them, outside lot make a we there sources, So our there reliable that not help and dependent sources global may available, we’re sure proud footprint. be we’re be opportunities diverse Chinese and

you. Thank

go comes ahead, Duffy line question open. next Barclays. your Our from Please is from Fischer

morning. good Yeah,

had like, Curt it we ag ag some most sounds I of China. here North us issues, issues America. think mentioned in in know

saw ag So your level? that year, all the do can you you in you size think kind and of get a that back last business normalization this to you year of just headwind

nutrition. ag actually animal the Yeah, is

So about it’s mostly China. in

consumer about in which was flu. exact by others mostly is pig the a that swine hit XX% but huge it’s we and population, African that of that these some numbers, It’s somewhere organic population around reduction to sell. acids, hard XX% give So the to

a pricing hit also to Acid, Formic some challenges saw and products. volume of a we the So in associated contributed that, couple that’s with other

that it’s really dynamic. So

they’ve Obviously, rebuilding the under of flu, the flu swine population. that with and control, that got

to So snap recover like ag and American year. it could market back North this we’ll but start doesn’t see this next, the it year

lumpy to big for side, inquiries, the of on coming licensing effort, that reverse that and is you will of be on where one we’ll Okay. of two see big lot signed? kind of or one proactive a contracts or or your technology projects, And a little effort your guys are is that two some then kind

here which around Well, our we’re more out substantial is a identifying inbound historical where some get proactive value acetyls program more But always do. of we inquiries what former, approach. is and and olefins is this we the calling

we than a So make ethylene, effort had focused a through that we years number as MEG technology sort an of process on down we ago, internally, specialty coal more alternate breakthrough to turned growth. of and gasification developed leverage to

technology a with and off it JM their strength leveraging to work market with Davy as that take finish and partner we So us to and licensing organization.

is So better than These been quite will them, some a they’re and this to product and and license. we’ve the scale significant of is been success the technology licenses problems. has in trying the in MEG a the background lot first quality obsolete are use, built. large what to working critical technology which in with close they’ve be plants that

go opportunity it’s sort think Important licenses a show as chunky great up ways. for of forward. in we I to So multiple remember, these licenses

going So it’s real predict hit, you register the and they’re to hard when value. to exactly

All guys. right, thank you

next take is will question go Fermium from from ahead, your Please Mitsch Frank now Research. line open. We our

wishes. best and paths Espeland. hope much I continue to cross. so our you Mr. Thank

- A Curt Espeland

Thank you.

Can of Mark, quite I I respect in to order didn’t what there? detail were there. raw Singapore talking the apologize you contract little you catch the and give a more magnitude about with material

a years, The are. coming and contract start was options of the let place finally in it we and let Willie terminate us will options, I’ll long-term and those for contract I’ll there then had allows year, cover Sure, consider expiration that number up end for off. supply it’s finish it to I at Willie a this other of and what

existing curve of obviously use we million Texas we cost the in would improvement as run footprint, compete, an other integrated look the our to and business. facilities and think the where business. gives in that at can of rate. Intermediates to XXXX, ability you current our are this to probably about, options, footprint have versus that sort of the leveraged consider we market Obviously, best the that based the on we But regions As $XX us Chemical support our

what thought All well. in you doing discussed business, was heard, right, some to I clarify that I that wanted but also AFP the terrific. part of And the the I That’s --

I what mentioned Is in been You XQ? in the have that time there saw that going And benefit time. XQ, recur can Fluids. be opinion? is to know -- upon that And business might can that from Specialty in to we chunky you your expand

the been developed the, end robust Fluids great business Yeah, much applications. a has of portfolio and more market

LNG it some was other diversified very on fluids, dependent we’ve things. applications, on historically, heat So the into transfer example now PET and for facilities

in exposure, helpful. So to continue we’ve couple of business have a is this strong position to diversified competitive And small relative our we market very other which players. a

Aviation cycles, construction always the pointed portion on, that moderate you down, solar As where very is is a there mention, up and we and Fluids continuing this good see that sometimes capital as business chunky It’s how that show up. the they of business important business also is Frank, be fairly this that out, can to field steady. actually will business

well fluids go been oil well. revenue just stream, much aircraft, and we’ve stable that margin hydraulic that great improvement, continuous fluids a growth as acquisition as have in more as and that’s done our turbine into revenue, great and had a This where is we’ve

for best your Very and years. wishes helpful XXX next

Thank you.

Koort Goldman next your our comes Please line ahead, question go from is And Bob from Sachs. open.

questions, around would can profitability than the peers? those of to standpoint, slide I’m like very help for you do metrics metrics companies mean, revenue favorable that business commodity sort guess, more it what struck be from benchmarking a specialties. you to at that relative look Thank you admin and Mark much. XX, I on are would dimensionalize us seem of some your Couple first, showed R&D to interesting sort I of base.

Yeah.

to a delivers trying dollar spend stewards think to the organization and I’m make way. trying technology And we shareholders’ dramatic I budget, that Officer Bob, make our of Technology a a our in are point has, the lean we’re So proud of every we’re very Chief good there, money is our incredibly within organization return. transformed how sure

our the a So those more new spend. reorient much that around stop, organization of the success, lot we’re are the built we we’ve that had we really But product is capability within to key amount business capability and mix to development. had since doubled have now, this where development we a going that and on of resources going XXXX application put very and to technologies process we’ve payback AD towards to projects time, in long and of for development, a you

a we how make just Innovation can and customers, accelerate we we our products, in do. value we what can coating, our tire, accelerate showing can final can to the customers our understand to in we AD and we a how Day the in market, by ‘XX do can go but we our specification formulations can is direct with accelerate through those downstream drive can explained so we not market, what innovation, do, we as make windshield, make make thermoplastic a we That can

So side gear real test of support efficiency we of that commercial that the and is the resources, find as functions. adding and in up the really we’re, it course,

the we’re revenue one one. think I getting the is metrics, The innovation It’s metric from shared that new year every year, revenue -- the is, that’s test. with the you, the real the business we

next the about helping that’s about really year, when it’s $XXX So million that year, this year. you see last

track $XXX year. for portfolio. help next getting results of sort million to careful and metric important aiming will keep very we’re that’s say the you we are most that But of year, The this this from

disciplined a to see bunch everything have very and good gate milestones optimizing we on and discipline, stage We value. of have metrics portfolio focusing and the we’re constantly manage and way, a internal else project to shifting where our best resources and

you quantify that fixed as release, go cost you on of have can you’re you end us little seems that have year? And you. through your brakes absorption Thank call, capital advantage ‘XX? the levels might Got or the then trying third help might an been, and at you bit Is your lean year. go the it. the production into as of That’s pain of it that, sense out through helpful. to recovery quarter when and what a any to putting the working that Do

seeing the right margin. I’d in you of it, kind characterize are way Yeah, where that now is the

had to we to is COGS plans. cost down reduction were while and are reduction to harder the able our we see cost slow those So actions, our because implement margins, actions

but utilization X%. etc, in products our XX-K, declined in finished intermediate inventory We specific see you’ll our that get our rates don’t you give goods when

--- Some some production its is in slowdown our some of that did of of the but we also value, rates.

run go half first the into And add as careful plants to that Bob, how our we going we this I’d year. just of we’re about be

lot that to So release forward. opportunity go inventory way for that. a and we us move great to of is sort cash volume growth progress on a of down as a It’s making -- continue

Thanks, guys.

line is Alexander question ahead, And from go our Laurence next open. your from comes Pleas Jefferies.

to spreads not the in missed you you of what commodity Can tied I morning. of would competitor give middle back end Good may perspective a have for in prospect to market sense the demand? this, the technologies, helping recycling And stabilizing the be it terms are competitive? secondly, environments on the or the shutdowns your purely seeing improve is spreads year, half for

Okay. Good questions.

The with Economy, or not or the the station, the single feedstocks. So about train banning the oil first the on one right, of jurisdictions you’ve point got is other has fossil use fuel against on this marketplace, Circular it’s in what of at in trends the left much putting price as basically Responsibility, and Producer legislation plastics which Europe taxes use they coming in plastic. call multiple single EPRs, Enhanced competing

preference on not creating is Even for around for world. So a cost the of year consumer brands the like plastic real value China now just drive banning for cities putting recycling that that. this groceries choice, things the end is it’s by it, a and all major bags and the in choice

part, us. So what differentiator content about doing, critical is we’re the for excited we’re recycled really a

the rid out of PET single got trying plastic got to it, Fortunately, the in we XXXX. of defend business, we’re business so when we use not

of not durables, specialty in only have around on of solutions is provide more in have We’re demand. to customers of these focused so whole new how as we as lot recycled vector growth products, textiles in as finished the plastics, another recycled and recycled we questions fibers, Vince’s well actual we very a well is a products the differentiation put by which to now our product a content as and significant content in back content, earlier, differentiation do whole putting over the product, in performance

will marketplace. fuel-based the products, think we that And these relative do premium to solutions providing a we to get for fossil

in year premium You Europe, can marketplace. XX% roughly look at rPET through a at in to last PET they the traded

high. bit a that’s think I

compete that’s a basis can provide going mechanical feedstock solutions, But think landfill we our we recycled do on do technologies real to and against not some think streams. access because we long-term

doing. our that’s be structure because alternative important value, cost what advantaged us will for feedstock, the and we’re So more for no an differentiator for it has

good good to programs position like, we’re of really feel fibers. we move differentiated in So and both we a in and AM sort about those forward feel that

The in second the question back year. spreads half on was of last

CI said, competitive not first the more we the particular, led war, elongated behavior, As so people half know, to of relative of back economy was with AFP. as that of settlement the declined stress improve through trade to that realize in ‘XX, that one-third you going to and the a and half spreads economic the

who much do to stabilizing competitors, prices cash their see relative Asia. hitting very CI, In are cost in we out

have shut shut not these plants seen and start we are permanently. rates temporarily. are down of or will think people I’m we going potentially plants run So moderating sure down to that, seeing I any

the So marketplace, is we assuming when about these we’ve year. the people spreads why on this spreads back market cautious how and in think we’re do not been recovers, which year will of this some improve come

think good so a And I place we’re in there.

Thank you.

And our your next Roberts question Please UBS. ahead, is line comes from John from open. go

how little Yes, overall best segment company for I talk the Willie. and does most Advanced Did Curt, materials play And lower prices? are and paraxylene C&I Materials assume a bit from acetyls purchased, lower and of benefit propylene? about the propylene the in fiber glycols, out AFP? lower wishes between could you the acetyls welcome raw but and

formulated from PX to propane. that’s supply lower well prices, propane olefins prices. and ethane a polyester as correct lower contract you’re benefited propylene So The from benefited as

the So olefin we saw a raw in benefits chain. material

our asset have coal tailwind asset there make the we gasifier, on wasn’t there. chain, any our yield prices been yields On coal-based are we stable, so with relatively how

Thank you.

Pickering go next is from Tudor Blair question Please Holt. line comes Matthew ahead, our open. from And your

quantify currency Good you on could impact morning. XXXX? Willie, the in EPS

a were is basically Yes, we which $X.XX what share. with about it’s consistent QX, in saying

up. So in slightly in that remind it it and you our was businesses. that’s Materials, XX% I’d Functional is Products Advanced also of about

could Great. overall provide And during color trajectory any you QX. business on the then of the

up are above guidance that Does in little provided little come in do You imply the a picking midpoint a October. December? bit bit that things in

They did.

than in October, came than we both in material the on bit side. quite in volume expected had came raw a December. weak some that a better good concern better expected cost about us a then And November and what might So we happen had gave

you. thank Great,

Let’s one, make the next question please. last our

So question from open. the Sison last comes Michael ahead, Wells your Fargo. line is from Please go

great and congrats guys. you. with Hey, Curt working was it

I down us In just and terms each AFP, make Can grow The one-third for of -- to is for EBIT. pretty maybe to give flat that’s something. digits of on two-thirds a digits year, sure there I challenged, down you next of more specialty or outlook want understood bit double side, your pieces? mid-single the a the grow the color just little

as well all the will ‘XX, outside flat Yeah, and so prices we where out we pass-through these and material first saw we of last as Curt contracts, two-thirds did benefits expect we raw stable headwind, this laid that be additives of continue the automotive a net high-value this year. were to being for saw especially and China down growth for in volume result, have in modestly prices year, through cost relatively quite out, a

year, well this deliver as see stable cost we we some we at look some volume, well see as as pricing, going growth to So raws as reduction. so as that’s

potential we in is of do some for from you for portfolio. the of the back lower see the the So spreads one-third the in last AFP you’re side down net And segment, earnings earnings correct, segment two-third the in as take growth year. half those

good some had so fourth pricing volume XXXX, through the some with in first we and in on pricing regaining We the half quarter. do tires, that of as volume, discipline regain we some lost adhesives

have down where in So volume as this challenges going one-third, will are but net improvement, have the there, point. at earnings given to pricing a spreads you’re some well some as just

So I think you’re correct. directionally

one you to then a you of several years. How capacity are you growth Great or you’re sort growth China, seeing? add for and need on been the it’s capacity? enough on Do have support do one business quick good that to

doubled volume across We This was capacity because had one great, been capacity. several our been really we’ve We’re XXXX, until growth growth so plants AM, had hit. war well with where we and capacity, XXXX, AFP was having, we online that volume in trade run the the of the brought the in strong. had because positioned

positioned well growth support we’re to So there.

cost an upgrade, I this business, volume mix now add, growth, that’s not and as only well. if you for could get leverage fixed example And Mike, get you you get

Great, thank you.

Thank you, everyone.

of our everyone again. morning. for on morning. a great your later website Thanks us this time. available this again be joining Have Thanks There’ll replay Appreciate a day. this

call. conference and this Ladies your gentlemen, Thank you today’s participation. for concludes

now may You disconnect.