KRA - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to Kraton Corporation Second Quarter 2020 Earnings Conference Call. My name is Kath, and I will be your conference facilitator. At this time, all participants are in a listen-only mode.

Following the Company’s prepared remarks, there will be a question-and-answer period. [Operator Instructions] And today's conference is being recorded.

objections, disconnect any this have you you at may time. If over now turn will to the I call Mr. Director Shiels, Gene of Investor Relations.

You may begin.

Gene Shiels

Good XXXX me and Atanas in Kath. Corporation Kraton's presentation Executive the President morning morning you, morning, Kraton's Executive to Fogarty, welcome Thank Officer; news release quarter Chief the Vice our are second Kevin quarter the of second earnings on With this Atanasov, and of call. call this section and and President Relations review the Investor Chief material related our copy is will Financial available Officer. A we and website. Kraton

of review our our presentation measures morning we to of your included and second quarter this attention release. earnings in XXXX, use I'd the disclaimers Before information non-GAAP for to forward-looking draw results in like on yesterday's the the and

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

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

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

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

we'll and in this a comparable release in financial measure use most we financial earnings Regarding GAAP the appendix the of morning. financial use provided was to of reconciliation presentation the of non-GAAP measures, review each non-GAAP measure its yesterday's

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

Kevin Fogarty

overall in strong Kraton second EBITDA results with in demand financial Gene, pleased conditions, the and second a light of we $XX.X on impact adjusted XXXX. market delivered quarter, COVID-XX, quarter everyone. our million. for market particular the associated greater global with of the are morning In Thanks, with results of

environment, has in of certainly be and employees safety the our the our always, to As current highest priority. continued

steps in any We thus responsible resulted diversification to be COVID-XX have been have concerns no have actions portfolio that and, taken impairment the broad significant our operate geographic of we in our to employees and of or far safely. and effectively material efficiently, course, continues a strength. ability Kraton's fortunate the

our markets quarter. demand Polymer adhesives we diversification in Our the for raw business such second sourcing, end resilience particularly strong And particularly where and the model with in to the to butadiene, contributed in medical, XXXX many segment, personal profitability as of material stable favorable see to our results, infrastructure. our care, contributed quarter continue and

down of However, sales segment, was activity to Americas, America. in quarter in current decline including and the conditions the a significant due more our Chemical volume market to challenging second market impact in where overall on XXXX oilfield end-market the the of for COVID-XX North do demand environment present compared especially adverse fundamentals,

manufacturing control on and drive second management efficiency, with made fixed solid focus operating during ongoing of quarter, on cost terms In locations, we in particularly the costs. our actions, the progress improvement to

X. Turning to now Slide

our the environment, or as global we had not on global broader disruption experience chain, While capability. mentioned, a operational did COVID impact chain in supply safety

and raw these an costs. available quarter prices. targeted we low plan as a historically specifically, operate to to at And Our rates, build materials in at in segment our continued attractive material Polymer leverage raw the plants were readily inventory second result,

the our to of enhanced to of of planning implemented measures our With manufacturing and work cases had employees, employees, of continue manufacturing locations significant our we again, the our year. diligence earlier precautions, stakeholders number company. rates once local safety protocols our and not and customers, innovation remotely. top a centers, have distancing reported continue and of the normal of COVID-XX in Because we operate of under Outside the communities employees the ongoing social our majority health safety our our priority, remaining at locations within

on did COVID-XX quarter COVID-XX not the Although XXXX impact demand particularly a quarter, America. did second a have North see material we associated our impact first broader with results, in in

an other adhesives However, market and geographic quarter, and personal mitigate in care, infrastructure end as in solid the served our was medical markets. diversity advantage trends demand to in weakness

of XXXX, Given have remains our balance healthy. Since million. business, reduced we our resilience net by sheet $XXX the year-end consolidated overall debt

very availability liquidity under inventory to annual seasonal and $XXX the number the the cash scheduled the generate end we season, and $XXX our at no until XXXX our strong including We of million quarter of cash position, a million of roofing with maturities ABL of Due a significant in have and paving in half majority build advance of factors, the second year. historically facility.

year working the this releasing inventory we half, to process. in and as the this in expect generating capital We liquidate second the case cash be

As further through the debt cash balance over the year. such, of free we anticipate reduction generation

our priorities reduction financial primary a focus. remains the unchanged. operating flexibility, remain balance sheet current and Debt health our of our Given and strategic

providing Through continue innovation innovation CirKular The therefore, hydrocarbon-based our expansion industrial have virgin ability grades, and recently sustainability. tackifiers, of are compatibilize the Ester and well our Rosin bioplastics REvolution economy our We our programs recent alternative post-consumer the their a theme to in streams. successes family polymer is of recycling position plastic, to we, enabling many which long-term innovation innovation plastic low-color the compelling overarching as to for continue are through ongoing circular commitment, to in company pipeline. introduced invest our biobased which and our formulations, and of we as

of our million development run $XX year-end. overall progress on track in by metrics. an sustainability, objectives, past have Consistent great in with in only the sustainability tangible made key rate also of year, we the the progress advancing deliver establishing Over but product we terms of theme not savings cost on to front, estimated remain

call turn will With these who Financial going financial Officer, now the our results second quarter. Chief Atanas? to Atanasov, the on Atanas more details for opening comments, our I'm provide over to

Atanas Atanasov

everyone. Thanks, Kevin, good and morning

consulted will I more detail for provide X, Slide second to quarter. financial the on our Turning results

Kevin in of quarter posted adjusted million context conditions, XXXX, adjusted margin associated second XX.X%. of of results we and As with an of market indicated, $XX.X EBITDA overall the in EBITDA the strong

adjusted business. While million Cariflex EBITDA the significant second quarter was down $XX.X is of a decrease our sale compared XXXX, of by of the the to former portion explained

the consolidated Excluding adjusted quarter down would largely $XX.X Cariflex, with have operating to including of of in COVID-XX. attributable a the XXXX, results conditions, million, EBITDA current impact market been decrease second

year-ago this decrease segments, the resulting lower was compared the lower million the by balance was million raw with and sales of of Polymer The Cariflex of decrease lower both quarter. costs volume $XX revenue in the and our second-quarter prices from $XXX.X driven consolidated in Chemical sales XXXX the $XXX.X million of while associated the was sale down to business, material segment. Chemical

CST of the second XXXX. was terms the posted decrease lower second conditions, Chemical compared down principally to volumes these in was the our for quarter, Market COVID-XX and shifted to this the costs the of key in an EBITDA on remains remained quarter second the material quarter, and significant for sale to delivered timing to historical demand. were million to results, extent, of quarter. the sales In our the the down the to with effective second a segment margins the due more The market Kraton. we prices conditions a market quarter of of Debt third segment to of customer prices raw high million average Chemical chain our XX.X% in quarter of lesser year. the with compared business. upgrades quarter impact revenue, reduction and on adjusted selling to adjusted due by segment strong Cariflex of million. $XX.X XXXX for second in XXXX, compared quarter, in second lower EBITDA relatively sales This driven of in lower the segment The average the segment margin which results light of was million second priority in EBITDA $XX.X stable to associated quarter in a $X.X challenging Polymer $XX.X Polymer of the adjusted the

capital of second first cash half the effects modest quarter, million, to and year-end the the second second basis consolidated timing adjusted compared Although quarter by in the have foreign consolidated build built a release a and relates of XXXX. in to of inventory associated Historically, we net use XXXX, the million cash year. debt of targeted seasonal year, of a inventory for reduced was due the business, the largely half the with second this and $XX.X to $XXX our impact working year-to-date half the by this of increased the our we inventory debt adjusted FX the currency. paving On of net and in in generate the in liquidation majority of for

second in As such, we the half debt expect of further reduction in XXXX.

position second remains We availability million outstanding liquidity quarter million cash the $XXX with under the $XXX million Our strong. and only quarter. million second $XX of our base facility, borrowing $XXX at of of with ABL end ended the

Polymer X, Slide to Turning segment to discuss results. the

quarter revenue $XX And noted, quarter business. down sale the the to relates as of second $XX of Cariflex The previously the for million million the XXXX. decrease was compared of the to Polymer second segment

volume to with down lower the due quarter million associated Excluding prices was segment XXXX, costs. material sales Cariflex, second primarily was down the X.X%. Compared to of $XX.X selling revenue Polymer average raw lower

in excluding which Polymer quarter to COVID-XX Products demand additives, applications. well principally the sales second Sales However, adhesives the Specialty sales hygiene and lower higher The into the European volume automotive second up with as down have of applications. XXXX, in volume on lower in on as and reflects sales global personal volume X.X% roofing for the sales segment would been quarter X.X% of strong XX.X%, applications up of and quarter sales XXXX. impact care into durables, compared Polymer consumer lubricant Performance overall into America, Cariflex sales associated was the to XXXX, into was of business for second compared North

for this segment of to quarter of EBITDA the an associated million compared adjusted margin second was $X.X down And was Polymer $XX.X the XXXX. million with XXXX quarter Second XX.X%.

year, per from quarter gross XXXX, included note $X lower per second the basis, also second year-to-date this Cariflex XXXX. prices average ton On compared quarter material a selling that the $XXX.X $X,XXX would quarter of Polymer Excluding have business. adjusted profit I'll lower down of associated XXXX, with despite was the revenue costs. million been segment to the and XX.X% a ton sale in sale Polymer Cariflex quarter up EBITDA the adjusted Cariflex was second our quarter raw strong $X,XXX which second second of or in the of XXXX to reflecting of business compared segment Cariflex the million

the to selling due been Cariflex, revenue have million lower costs. from material or down resulting approximately largely of raw would lower $XX effect average Excluding approximately XX%, prices

medical Excluding Products sales million was Cariflex, first the was volume with Sales The offset first weaker Polymer for unchanged from the sales resulting the lubricant adjusted Specialty $XXX of impact in six largely America Polymer XXXX. half by million reflecting into half weakness of COVID-XX of applications. high for Performance demand $XXX.X XXXX. lower first North volume Asia, sales compared XXXX. was first COVID-XX the demand unchanged was additives. to compared EBITDA volume to and for demand was months XXXX in X.X%, the versus segment half In of associated of down

Excluding to the EBITDA of half would have been up XX.X% XXXX compared Cariflex, XXXX. first half adjusted first

first profit gross $X,XXX half the In per strong on adjusted slightly addition, the XXXX. basis of per of ahead $X,XXX the of XXXX ton, be ton at first continues for ton year-to-date half per for to a

significant for including the pressure the and degree, Chemical decrease from the XXXX gum prices lower lower X. and of continued and Slide COVID-XX. in was prices rosin in $XX.X selling segment chain and demand impact on market revenue TOR second TOFA to rosin million Chemical XXXX. of segment the Turning the quarter to quarter decrease products and esters, which turpentine is some in reflects oilfield for conditions, related of compared CST sales second on to volume down The by lower to resulting the average results upgrades

CST in in rosin the into turpentine stabilization products chain, Relative quarter our pricing we seen gum the margins CST in translated decline products. has CST a was XXXX refinery rosin for and XXXX, turpentine and base prices, for the second have In for stabilization of year-end this of and essentially peak and gum our to terms pricing of the esters. therefore,

down applications America. volume in Chemical down of sales North COVID-XX of systemic Second primarily quarter and a volume for Adhesives XX.X% second reflecting customer, with into XX.X%, oilfield market sales quarter, compared the quarter fuel due mostly sales was Sales demand which disruption to primarily for in a volume decline oilfield reflection sales the the reflecting was on market was COVID-XX. while volume Performance tire weaker significant XX.X% down road additive Chemicals and the in impact into lower and timing of segment shifted the applications. related sales of demand marking X.X% to lower tires to XXXX, in third was and sales into associated down production automotive

quarter quarter absolute to sales EBITDA of However, million Tires from the segment CST in Chemical overall peak conditions less business extent, lower of upgrades second XXXX. million, compared due Chemical was volume than XXXX the quarter decrease of for impact volumetric second reflects and pricing our X% second $XX.X lesser decrease the pricing of in segment lower for compared to standpoint, volumes. The a to the the market accounts of pricing COVID-XX compared volumes second the and XXXX to to for of adjusted a sales lower XXXX. and $XX.X chain TOR quarter sales

adjusted to to North of the decrease, in was was of to America. due $XX.X primarily Having the presents consolidated turning XXXX, and consolidated basis. revenue the down volume lower on covered for upgrades. I'll of adjusted compared oilfield million, of Drivers into TOR of sales segment first sales the Slide to reflecting company the the impact due first million to the XXXX market was of of million to fuel the for the results the additive from Chemical Chemical the by compared CST XX.X%. adhesives automotive down XXXX which decrease applications, factor $XXX.X rosin was sales was X first $XX.X for Volume lower volume for sales XX, for Chemicals XX.X%, was business with ended market for six XXXX, for principally similar to whole the TOFA in and conditions adverse applications. second that segment overall upgrades Chemical $XXX.X year-to-date million the was marking road in first quarter into volume decrease was of lower oilfield that related Tires down for is EBITDA here XXXX chain trends largest in into XXXX. COVID-XX. for segment first EBITDA disruption conditions first and of demand. The was second volumes COVID-XX months and in associated drivers sales volume year-to-date review, for half and of X.X% note $XX.X XXXX. half COVID-XX the significant pricing Now on the results results this six reflecting upgrades six X.X%, market half production down first months market in our for adjusted million, the first of and for half esters pricing and volume the segment. the including the Chemical to TOR chain months the compared a lower largely current June down factors, half of the margin driven XXXX. down the with to CST The for XXXX quarter, resulting overall impact the half EBITDA and Performance while compares and X.X%, lower lower COVID-XX, and was segment

reported adjusted this for earnings $X.XX of For diluted XXXX. the quarter second quarter per share of share, second XXXX, we to a compares and the $X.XX of

earnings we For of of compares first for per reported $X.XX share $X.XX this and half of adjusted share, the XXXX, the first XXXX. six per diluted to months

XXXX, largely currency, Since excluding of net Kraton. the business. to Slide XX. our high Cariflex debt, from proceeds we a effect million, Now the remains $XXX year-end reduction Debt foreign consolidated by have reduced priority turning for sale through

$XXX quarter and generation want base end our $XXX.X in ABL available at As XXXX. previously mentioned, an which of facility. I borrowing totaled of consisting million, the second and approximately debt of we cash again half cash reduction under million strong further our position, of expect liquidity $XXX million to therefore, highlight

maturity earlier facility extended of previously this January our to of ABL was XXXX. mentioned, the year, As

turning on to a expectations the year. the comments for half second few XX, Now our of Slide

guidance an While factors have we and the first for with expect COVID-XX do we demand other XXXX. this second on at are that not results associated XXXX providing weaker the adverse any time, financial half of to formal overall will half of impact compared

turnarounds XXXX fixed in Specifically, absorption inventory number build XXXX less will million one, first include than in with of lower half that half million. the maintenance first of with associated million of half result Number $XX rates plant to XXXX. our favorable second two, in plants cost be million an with $XX to expected impact associated is and higher expected the costs to would $X operating $X

of back in our expected of impact I'll million one And included of Thirdly, first we lastly, approximately in EBITDA year, is of XXXX. adjusted XXXX adverse in COVID-XX. year. the versus of closing to Chemical continued the his this half second March primarily the year include half COVID-XX half segment results weakness half two the due was Cariflex which sold the Kevin business of turn second of quarters expect impact comments. in impact in quarter our to market associated of for Number four, now to $XX with financial the the first

Kevin Fogarty

Thank you, Atanas.

market an turn for let's on outlook. our Now XX near-term update to Slide

automotive the see sales As America demand particularly the with pronounced and production road for COVID-XX, and experience additives associated Chemical tires Sales in fuel quarter impact North noted, reflecting globally in lower into more oilfield, second were marking tire volumes for during our a weaker in applications. we did COVID-XX. previously down, segment, demand disruption we where

lower North applications. sales of similarly a segment, the COVID-XX durable resulted into in consumer primarily, volume America, Polymer in impact Our

stability that to improving. certain end relative in markets mitigate North in mixed. for stability weaknesses overall contrast, is Europe relative see currently in we expect will the demand that in and others. is China evidence And in we broader America see as Asia, result, We and conditions, continue outlook In market

changed In significant has terms to of end end nothing view the compared markets, specific April. our of at

expected, been we automotive and and seen applications, in demand disruption automotive production in tire in tire weaker COVID-XX business, have have our factor. where oilfield As a applications in demand

view, where trends overall less continue our in Polymer demand of will significant segment associated diversification associated relative end such in packaging are our cautious end levels as trends our XX% saw but In quarter moderation in market we quarter Polymer markets. as which continue and our availability, to and our relative stable, we about labels, markets with while revenue is half for may demand demand to second a to demand quarter, particularly demand. which demand. revenue contribute medical than and such segment in adhesives relatively approximately see that many is of have where in actual positive the are we segment, robust applications markets markets particularly to demand Chemical in noted strong financial applications adhesive tapes managing masks, seen and overall conservative during market which now the adhesive However, we concerns have first In Nearly expect markets we inventory weakness remains we in revenue construction in with but have our results. stable, end in in XX% summary, lessened, maintaining outlook. adhesive believe many customers with demand more approach first is In for stability associated a to we have supply contributed some

a expect in year. And balance the we the moderation to demand we the seen However, of XXXX. first of a quarter will compared adhesive factor for for COVID-XX continue the be to overall, segment have

leverage we expect to to offerings, While on uncertainty, focus the portfolio believe our will impact our continue market we ongoing position COVID-XX of favorable nature which the innovation drive of continue longer through because our term sustainability. remains and we of the our outlook and intend for that to near-term business

broad a and XX interpretation. sustainability for Now term on often is is Slide open

actions First that on create is long-term premised value to a on we in embracing believe resource-constrained and world. foremost, focus sustainability a

is role we Simply desire of for the our at world. in through to well tagline practices, for summed products portfolio innovation. up world on Sustainable business a focus through us is best our defined resource-constrained that increasingly specifically, need deliver Kraton And and Kraton Endless our Solutions a positions play growing drives stated, which For and a a sustainable sustainable by his in Innovation. reality actions

compelling alternatives Our is portfolio XXX% Chemical that's to and biobased a hydrocarbon-based products. with broad segment provides effective

of enhancement Polymer drive growth sacrificing introduced medical automotive packaging. facilitate the offering future. Kraton products business, polymer CirKular our continued our performance. believe through the are recycling of to and formulations our improve to Chemical current and hydrocarbon-based XXXX provide stability, relative had XXXX to in applied innovation key the enhance alternatives. now continues was we tread recently as introduced product the providing which More tread and include innovation We fuel well significant without sales agents. manufacturing to biobased the into introducing for Ester commercial plastic we positive. formulations the to quarter significantly as the REvolution and low-color last quite enhanced to in and underway performance such have specific projects industrial to capabilities have SYLVATRAXX products them R&D to efficiency feedback cable, We products functional economy we is the the and color bioplastics While we wire that safety not Other business believe circular our will business, efficiency differentiated our acquired SYLVATRAXX segment, third business is continue when are we in of that In will family recyclability, examples recently, for streams. compatibilizers have to innovations Eosin applications technologies used we have performance by drive a This first and market. customer or A our have positioning the are auto as example two a for CX enhancement industry And and Kraton. our Tires year reminder, advancement be focus years, differential growth

products However, and well our our programs. beyond extends sustainability innovation focus on

Our economic our made focus the impact, impact practices on consider significant year, past more sustainability society It and as sustainability terms in on overall. engagement. in guides objectives. environmental In we this is business of stakeholder impact our we around our and over tangible holistic regard, governance, compliance and our have progress

aligned on We to Nations is with SDGs, United development Goals, Global Compact Development a Sustainable for by the have world's issues address or which most intended framework sustainable XXXX. global challenging

have program a we the introduced places procurement We Kraton a by XXXXX. the and recently were companies sustainability awarded rating are assessed and in adopted principles percentile with EcoVadis in and that American recognition Gold care EcoVadis. management we responsible of systems. by XX acknowledgment ISO have of Council, This of progress responsible our all those of in alignment industry Chemistry the implementing In

for on joined of sustainable a supply recently Together also Sustainability, companies initiative focused have chains. joint We chemical

sharing encourage sustainability, in comments, we're Sustainability more questions. products. Lastly, lifecycle We now we we with forward Report call to learn for and and XXXX conduct measure your look to specific those up that assessments With have you recently evaluate progress end available to to environmental XX on our is open happy committed published the by you of year for to impact website. our the more on this this in our

Operator

Thank you.

of session. from now UBS. begin Our question will We Matthew is first [Operator Skowronski the question-and-answer Instructions]

Your now line open. is

Matthew Skowronski

it. And about have guide secondly, morning. should of might in an sequential in odd volumes terms about Thank this you and missed in I is But the is of $XX we unit seasonality? given then good still million? year think your CapEx full-year How polymers, margins

Kevin Fogarty

ask then to I'm ahead going take the I'll Atanas with polymer the CapEx, and question. to go

Atanas Atanasov

Yes. And what $XX at is full-year, this Well, more million. million. be don't earlier have that know. is spending we're we the anything that we're indicated we we as What we were $XX looking that not to had providing than year guidance now you going around indicated believe for

it at million this to various rest with unfolds. So less and CapEx the for or of year the we're year. opportunities $XX be respect looking will retain as flexibility And

Kevin Fogarty

that been I I paving the our into by the polymer paving question, interesting to expectations I market yes, most say going when the But an from is think of inconsistent has volume's with the for is And season. to Products mean the so particularly sequentially, QX, for QX part, heading evolution the about the year, least. this our roofing driven Performance demand business summer in and and terms mean,

results. same, drivers. then COVID return and openly while that I the couple different that volumes think and In of lot about the talked there's occur, business, QX obviously you then pick to in the of to scenarios call QX, specialty the in we thinking starting to we China that first up a the quarter markets. would from a other volume going through China had look recovery had Our when QX and in But demand Kraton impacting the market were

business. same kind type in So specialty different you of the of approximately volume trend have kind two our of demand drivers to equating

our strategy, that on fairly into overall the noted. the to relative think it million. impact, you look $X through raw that to and margins you obviously, expansion able between raw if very And first right the a manage consistent period. And effectively course, mean opportunity, of an with I million use somewhere if I in second time margin dramatic yes, we that to that what's achieve, the have were results our to decline at price top we from kind will, that happened second material as did raw quarter, of $X the obviously, also said, as is quarter in probably going we of quarter, we on material, the see Now, being materials. That you costs for

Matthew Skowronski

Thank you.

Operator

Thank you.

Stifel. of from Vincent is question next Our Anderson

open. is Your line now

Vincent Anderson

if you this your is an and I was what price I But curious because in pressure from this versus don't adhesives how much wondering anticipated? an maybe demand than and comments it of lower you talk inventory quarter you'd XQ into know to your the you. chemicals, Thank structural in made, was pine of I'm particularly maybe had Yes. at versus and quarter reset typically looking detail. I'm and you actual that going disclose about correction be the level July, volume willing demand first

Kevin Fogarty

No.

As a of didn't see I demand we in characterize would my as we terms shift what said in comments, consumption.

into As trends, us our that would wanted it's back we on and supply first evident that that of of the supply. that formulations the them, quarter pretty to very lot customers, make sure be the positive to COVID-XX, now look chains surge a packaging associate available knowing critical had go some fully downstream volume how the adhesive not demand to ample they with for

But overall then an and So in they inventory changes. seeing any built probably consumption that some second standpoint, released we're from the inventory. not quarter they

Vincent Anderson

Okay. Thanks. your of I wanted turnarounds to kind turnarounds. second outlook I that appreciate to back move able into have go any this to clarification. been year? demand you half With of be kind how then your XXXX, and to coupled turnaround that, into year, and kind you'd they've then maybe of costs going And total XXXX quantify next if willing moved? with

Atanas Atanasov

Yes.

When have $X sense for on looking indicated slipped five that When the million to look our to required into that. it had a year, plants, the our other you or years, accurate. of And turnarounds, in $X turnaround, we revolving, incremental we turnaround reflects have six at some the that have COVID. recall second and that every every plants say, expense have On attributable maintenance while prepared activity of shall I occurs from impact largely that's every second to your so we schedule. year is have half remarks, we're we regulatory that million was year. on it's some at you basically others to turnaround as P&L you think quarter quarter our that realize that comes of we dozen third that to they

on turnaround nothing what million. at. look to point to activity year, part of have $X you in the as $X of you at may it, the time, from depending unexpected. is the ordinary simply world this of million any half you're at looking or the But a half the that specifically second first which year, So to shift out it's It's

Kevin Fogarty

season. season, that because we over carefully course thing business on Paving only I of would to produce cadence, as the our our manage summer products, of demands market the performance to the Roofing depending our part summer just can't the And for inventories the what relative and note turnaround we have is specifically

So across line it turnaround at just Atanas with schedule that we look that then inventories have mentioned. the to the year calendar and up our

Vincent Anderson

Okay. very spoke a monomer your also hear your That's you looking incorporating side, portfolio. Thank I in, potential to that compatibilizers, if just that you're styrene if helpful. and looking large interesting. pyrolysis If and when sneak suppliers that's partner the of few a in started was you. increasing content. styrene quite with We've could more curious about recycled opportunities one some wondered are I you at sustainable technologies seeing start source to on had interesting as been at

Kevin Fogarty

our No. technology. say polystyrene of I styrene wouldn't is the plastic in that a CirKular driver chain the

being works but CirKular other think very I so. technology, as polyolefins the for also of plastics, as our number of of course, polyester, the though, largest well the even polyamides driver, a some well

Vincent Anderson

virgin understanding plants the the styrene I specifications that polystyrene could the like then. to into sounds output, go If meet styrenic you back copolymer, chain]? for would from monomer it Is so to the my clarify, pyrolysis it [value Okay. given thought expect needed not block have this these you some

Kevin Fogarty

our Again, that quite of that the as focused I'm what the for streams CirKular chain polyester sources question. for polyolefin main on certainly solution, chain. will need recycle it's those technology, well very large driving see opportunity at look as a at as and solution. But We the sure not you're as we provide CirKular this

Vincent Anderson

Okay. you. Fair enough. Thank

Operator

Thank you.

question Jim is next from Our of SunTrust. Sheehan

open. now is line Your

James Sheehan

you. Thank morning. Good

parse COVID-XX segment could in you impacts by the half. first If out the

two said Are continued second market levels one to half in had know what clarify, as you chemical of do expecting the more versus what quarters going You have similar you half. quarter? see half just from just second first the you're in And second EBITDA that weakness? also, in the realized to you you – to the

Atanas Atanasov

Yes. question. for Thank is your This Atanas. you

at not look ranges. our the I'll our So you of we we will at look – half when second on precise But science. some specific give a impact, impact if again and Company. at COVID-XX look quarter, I first we the give view When you it's our

anywhere of to segment, HSBC probably the million the side On the million, And Polymer our specialty on $X to $X the primarily $XX around Chemical $XX the segment, results. on that's in portfolio. between on million million

in a of to you're quarter. second the impact at million, occurred be obviously So second a looking majority this of basis, of $XX the impact that's $XX little maybe the year-to-date more, the going million quarter around On but year. in

million. around polymers, at Chemical, looking on $XX million I $X And it's the on HSBC think primarily maybe for So to million. again And that's of $XX portfolio. side we're the

CST, COVID year-end, and in the to Chemical you're at plus you at if degree, weakness basis a $XX at, the large When have the weakness, million year-to-date Kraton. is a on impact because you on TOR So versus and of on continued stabilized, it the looking particularly for chain. primarily largely chain look call look volumes, in segment the margins total,

You a little movement, bit but may much. have not of

on the side. impact why impact, primarily that's about when it's the So we half North the year, in talk of for COVID chemical demand-driven America second

So question. I impact. your it's that volume sales a volume, hope answers

James Sheehan

you And and Thank in in you excluding Yes. ton second year XXXX Could per this referenced very was ton, much. you your your the polymer. of profit per profit year state, gross what quarter Cariflex? last gross

Atanas Atanasov

would It very around been $XXX, $X,XXX, not still and so have $XXX $X,XXX, it been robust. Cariflex, right have excluding still would between Yes. –

James Sheehan

U.S. your up, If some with the would for election are tax And rate raise effective Thank mean XX%. political rate? tax proposals to implemented, the were you. coming that to what corporate there that

Atanas Atanasov

I would I tax that say be, on overall operate or our rate But across at is an say estimate. likely I is impact that say All to of that's at immediate the of XX% just below Well, just availability tax jurisdictions. not and future as high-level again, will for overall And tax level, a XX%. foreseeable the have such. would on would you an various effective we favorable simply a basis high our because immediate credits know, us well positions,

James Sheehan

very much. you Thank

Atanas Atanasov

You're welcome.

Operator

Speakers, in questions this there [Operator time. at are you. queue no Instructions] Thank

Kraton (KRA) 1 Aug 202020 Q2 Earnings call transcript