TSE - Earnings call transcript Q2 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the Trinseo Second Quarter 2019 Financial Results Conference Call. We welcome the Trinseo management team, Frank Bozich, President and CEO; and David Stasse, Executive Vice President and CFO.

Today's conference call will include brief remarks by the management team followed by a question-and-answer session.

The Company distributed its press release along with its presentation slides at close of market yesterday. These documents are posted on the Company's Investor Relations website and by means of a Form 8-K filing with the Securities and Exchange Commission. instructions] [Operator

hand to now Stasse. call the will David over I

David Stasse

Slide [Operator good disclosure forward-looking Thank on and everyone. statements instructions] noted on you, Kenzie, note morning, Our cautionary rules are X. and

make described certain this and our or materially in actual implied expectations. future differ our from we that statements. During must in you could forward-looking report Risk describing factors could caution include, presentation, We results including to issuing statements, what but guidance may that differ is results to, XA are Factors XX-K these set Form actual forth annual on Item under discussed, limited not cause the Factors.

our certain The X, call Company's is measurements. earnings the Investor in be our transcript investor presentation reconciliation of following conference replay call. of replay will be XXXX. the until and non-GAAP of will the presentation. provided includes and archived A conference in Relations these measurements August on release available shortly Today's appendix website A the

would Now Bozich. like to Frank call over I hand the to

Frank Bozich

and Thanks, financial conference XXXX results Trinseo's quarter second to call. welcome Dave,

results, GRI of the a environmental Trinseo Before the the and proud. framework of marks responsibility report. for the sustainability sustainability few two particularly This week, released our of and public Last efforts I'd some financial release like our in area to we of one health including safety, minutes Xth which its discuss I'm on examples spend corporate adoption social year reporting. anniversary of

comparability, of about information more a quality global Trinseo provides enhance transparency, framework better and This sustainability.

record. and reductions, can most highlights product programs, volunteer environmental you our some footprint X, Slide see On importantly, our safety innovations, from

everyone average safety companies for and decile contractors at council a believe level a for are the that chemical We're at its the includes one significantly injury the safety and responsible we industry. few is and the rate Trinseo American of attain, member is than accountable at because and employees and count, our chemistry that top of sites. lower only Trinseo both companies. injury record the we can manufacturers performing

underscores the process reduction led the basis. efficiency equipment. baseline for XX% Our health make. of significant to the level, tenants and achieved greenhouse of employee through are safety This paramount through improve and on decision report environmental emissions improvement every care at in optimization our most energy gas and report XXXX partly to a that projects volume organization This and to respect our responsible sustainability versus is and environmental in was commitment every we in

highlight This take to Polystyrene is recycling proven Solutions Trinseo's The earlier industry partner that example President advantage inherent I'd SCS recently this of of the of Business Joly, Styrenics joint to is through Global Nicolas circularity Director a and driven driving initiative Circular like second was solutions. year. technologies elected or Styrenics force

and is monomer. identical Therefore, production the monomer be into is applications, identical with a utilizing state its technologies. the with can purification polymers enables is and most recycled the potential yield, virgin contact. easily of emerging recycling polymer its food quality, monomer high into all circularity, processed and proven it including from The monitor Polystyrene characteristics at unique as changing easy original liquid Styrenic to for to reversed game enabling the achieve

chemical building their Styrenics Europe, joint plans and first recycled and both polystyrene INEOS recycling from Trinseo in plant on to Also, technologies established already America North America In XX, the be of venture there partners. continuously develop can July between announced members in indefinitely. our SCS

associations, converters, forward. engaging propel from recyclers, these circular value supply litter chain in trade of milestones the partners as urgency reducing as the Given universities the economy ambitious is SCS the the chain and and research environmental has meet well centers. goals of impacts and plastic to waste, set SCS waste, and brand to owners entire

was Trinseo environment. initiative this one improve the leading be of manufacturers to the proud to

a from and like well some key through initiatives. few of I'd points our quarter update outlook to our our second on walk results, an year Now as full provide as

Europe which as growth in plastics ABS quarter, macroeconomic performing weakness a are and the experienced be those from from in impacted impacting and uncertainty and trade challenged to continuation slower Production China. weak demand particularly the adversely in causing China, In economic the investment. geopolitical slowdown Margins second industry, were and and polycarbonate for in remain products. of automotive continues we uncertainty stresses a

and Europe, in then region As prior Asia, is to ABS well. impacts sold we've as discussed margins these which quarters, polycarbonate, lower that into supply leading being in of excess creating are in

In to China. market, continue Europe particularly weakness addition, and the tire in see we in

first would lead the to an see quarter have of we in call, begun On the that the course year. second anticipating mentioned which to the markets improvements half year, comparison we in many improvement we last to were of over ongoing

from to in styrene, ABS resulted those in weekend and sequential in polycarbonate, which QX margins lower products. However, a QX conditions market

We'd to see expected higher period. quarter styrene to due seasonal outage margins second the

total The second demand to level extended July adjusted issue. margin outage breakeven outage. the well general versus derivatives, an beyond $XX unplanned had first We in feedstocks the from week. led to upstream of about adjusted on and was second quarter, QX EBITDA in margins general the last at This outage plant quarter an back resumed pretax our quarter. the this through lower EBITDA for and outage planed roughly supply second operations half of of declined $XX the the first for impact The styrene However, quarter, million million. Boehlen, in to quarter supplier lower to weakness due facility our economic styrene which Germany QX, due

polystyrene seen were this due note, and by another strong ABS excellence Overall, On to in in to we quarter a encouraged compared more market polycarbonate. stability positive we've business initiatives. better

last the as approach, end a and flow. focused impact of in Cash generation of year. free as the half was results raw of and inventory the materials year, and operating of strong $XXX of management the This million discipline, operations, the cash of first million more delivering quarter was falling very continued in from $XXX cash first well the

a have healthy We share cash relatively to low of with net the even after leverage. buybacks continue continued position, benefit

working key especially us, always, area As challenging is more management focus market and conditions. in critical for capital is a these

year on let's XXXX our to move Now full outlook.

are range our million. updating $XXX full to year We to $XXX $XXX XXXX a $XXX to range guidance of EBITDA income million and million adjusted net million of

began economic any from some improvement our year and us leading styrene, to in polycarbonate stabilization markets, momentum combination While ABS quarter in in dynamics, with we've full not see the continue. and forecast. seen did sequential is our positive first the weaker we end meaningful to remove This

assuming half improvement, are half at or we that the seen expected we've Given the first overall levels volume are no in year. of what economic second and margin near

economic and upside course, this as forecast. cost And focused any improvement Of cash to generation remain containment. always, we is will on highly

and that just sitting back to for our we're note to market important not improve It's waiting results. the

earnings better During call, Trinseo I to the strategically. last outline and designed future to some position initiatives improve

of quarter. latex is approval, and production acquisition Rheinmunster, progressing. fourth Germany, this Chemical's to in Dow our assets we the We've transaction finalize in First, expect received regulatory

from first We million this EBITDA contribution year expect of acquisition. $X

plant polycarbonate in we to of for Second, Stade, strategic our progress evaluation in Germany. a make alternatives continue

we recently. business. market in still While, our we margin the consume material pricing XX% is margin The compounding polycarbonate There challenged been produce our what to merchant about in polycarbonate higher have segments options integral performance and merchant conditions of are for as exposure to are of our a facility, maintain feed downstream pursuing market. reducing number of the a with while supply that the for to objective startup we business, our the secure being quality plastic compounding

variable as excellence both we're Finally, to well with programs, costs, of on proactively profitability. and greater increasing taking steps emphasis the placing as fixed reduce objective all business

fixed in least offset For spending. to example, we costs aim at inflation our

year, constant this of spending the half accomplished been we've first on has than X% basis. as year lower the currency a than more Over about prior this,

levels to inventory at In down greater forward critical to addition, and are business quantity implement QX the in our shareholder end to XXXX. and as of the importance will even in inventory programs was the These we confident area we've X% more initial comparison closely momentum these economic been I'm in of value. carry current success end challenging this us that our have environment. managing deliver

lines you questions. may And the for that, with open

Operator

Thank you. line of the comes first Our Deutsche David Bank. with from Begleiter question [Operator Instructions]

open. is line Your

David Begleiter

Thank revised the is? for Good your the guidance some way end the and XX about morning, you. and Thank parameters just range the Frank, risk of really really EBITDA that just of and bottom on do discuss just to you. bottom end you ranges, XXX, top can those how

Frank Bozich

half million in range half and degree did morning. we negative you Good we this in margins. a working million of we have optimize of the in drawdowns also David. And know, capital. keep say from the, range. we $XX end our first low $X in impact we high operate of contemplates impact confidence a the inventory that – in one, I in from styrene we And that during that, half, demand, to first approximately mind basically, had were like Hi, second this The at doing outages. saw in that the terms would

And have the us at So believe the degree that we we the half a basically, in continuing contemplates first lower high level. end of confidence range. of

reoccur, Boehlen programs margins of operational or we in in we You no excellence had than business half. issues styrene of and some that that range the the from second know, in higher already that higher the contemplates in get have end we the our the saw greater half we issues we've Stade first traction in benefit see don't and that are

David Begleiter

some Very helpful? there year, your good. and for you. styrene be styrene. that Frank, XXXX, is and at What's coming assume looking early just I early, it's capacity would margins expectation Thank in next

David Stasse

that. Dave, hi. Dave, I'll It's answer

way I dependent But see in think capacity see the think I now the demand coming situation. do later it's XXXX. we on it obviously, heavily we

capacities announced new from as it and delayed in its been expect, of originally this of has All most you'd China, date.

XXXX XXXX. annual over which data actually capacity a see a bit of coming relative little probably period, which approach we bit magnitude online rates, high, tell pressure to would being styrene come over to margins the demand I we'd a order But I bit it's little annualized, think is growth as little it's bit the an know, in to put hard now it. mean of you higher is online, probably than in going being even a So little XXXX, capacity in

things the the Dave of producers But one non-integrated know which cost always at the having of that's you make Chinese right end know, we've curve, have you to on that, going guys talked impact in is a, production. China, the said the XX% up about of

outlined, don't situation in economic contemplate I China could happen. well we from So even very in producers, that, now. by any shutdowns right And numbers the may fact, the which think exacerbated just those be

David Begleiter

Thank you very much.

Operator

Our from the Frank Mitsch next of line Fermium Research. question from comes

Your open. line is

Frank Mitsch

could step business this through any the July, you auto if Yes. so particularly guys you Good wondering through pace the morning. quarter into have I tire was in been the far second of What markets. quarter? seeing

Frank Bozich

segments segment question. QX, we And remained and in saw while for deteriorate lower Thanks, July during we broadly relatively Yeah, it and through look Frank. segments. that so August. great across the most continue into stable quarter, performance is than When book what far that of steady QX. didn’t the order It our was the we by in saw or so

So steady QX. during continuing the quarter, see we into it and

Frank Mitsch

QX, into correct, the right? than quarter Steady first

Frank Bozich

Yes.

Frank Mitsch

Yes.

a All XXX million how was cash factor the the about I on free could are million. flow share buyback if you wondering Okay. of then, XXX you in? and right. cash uses And prior talk guiding to

David Stasse

I think is Frank, to as strong the we of in million have first quarter the half. Yeah, year free outline Dave, half – flow the $XXX for Frank a the first did it’s cash

also that second implies can a neutral. year. the guide of obviously, stock kind So And In staying fee working see prices it lower through second the implies of other you capital flat words half half.

us, on was less in we million continue that may the bit In had prior I than bought we’ve what little noticed, $X for we’ll statement. last as quarter, have our several And don’t shares quarters. bought our a the that approach back in a with a stock, that the little shareholder what for which several for authorization have think back bit We exhausted limit. has second of you balanced been terms XXX,XXX $XX basis, changed less the buyback implemented we’ve we because allocation, flow’s been quarters. lot We would – repurchase the is cash capital think I for did reason

our we Annual through So the that refresh on got end June. process at proxy our Meeting General of

have a fresh So forward. authorization going we

Frank Mitsch

So the we should the level up anticipate was that correct? prior it pace pick second quarter, from to to that

David Stasse

quarters. individual in allocation on of shareholders, how want don’t being reinvesting terms and buy would overall, I I capital to I to outlined allocation going change balanced think to business. what in much approaches we’ve comment purchases the the past we we’re from don’t just think the between return in that, dividends say our between the

Frank Mitsch

right. All Dave. Thank you,

Operator

question of from Koort line next Our from Goldman the Bob comes Sachs.

is Your open. line

Dylan Campbell

Good morning. Campbell for Dylan is This on Bob.

assessment stay now guess assuming your that as So assumptions kind the actually for this of when earlier seems low the economic you Does including range, in the of recovery absence And the like incrementally? tire then, things gotten have low China, of new kind the ranges range Western those year, things no guidance end markets, of I end continuation out with guidance the first laid you a cetera. same. of in included Europe, recovery limited et of an follow-up weak relatively worse

environment the get won’t half to the of what economic gives continue second year? that you the in So worse comfort

Frank Bozich

Compared So German in QX. want particular of in declined X%, from QX China, into did to the exports And QX. see performance in deterioration I out declined QX. QX, there’s Europe, number QX, and to a point QX some questions key a auto X%, production, compared to that And of we in the to sectors there. auto to

QX. QX stimulus some some into seeing volumes And level And was a from in immediately in raised were than uptick So the lower those quarter. Chinese QX, in if early remember, QX. and saw end you we we the of were toward also, increased

the direct anticipated, won’t we and reflects are continue be going confidence reflected that’s markets QX, degree it of year high we that change, in I level our Relative to the I to the levels our again, in have our say we’re in a solidly have have So we guidance. with that would if QX at we started in they range. and confidence our where than in lower

Dylan Campbell

And quick benzene guys you That’s on impact you lower of picked as AmSty, for kind of that but margins likely QX JV, have about talked segment scale question hoping that a quite prices I business? like and bit, August seems guess, helpful. to well. July A QX I it kind up in that for margin think at can

Frank Bozich

to what they there business, in and spread probably had, how that right, million that has AmSty’s bit would go it, look, out generally, a I say a the we have the QX terms I much of is little polystyrene in dollars. you’re we been QX, styrene in dropped is margins, recover there move inside couple that and might

Dylan Campbell

Okay. Thank you.

Operator

Your Stanley. from next of question line comes the Vincent Morgan Andrews with

Your open. line is

Angel Castillo

is Vincent. Angel this Hi, Castillo for on

I wanted Just clarify the question, cash a free quick to flow.

good, if conversion cash that EBITDA. the terms about just, prior bridge trying to I please? kind think prices year, guess of But you for also half. and and half. think had about, in talked flow, least so you that in pretty, But from that that I free But mentioned, an about You that flat. you’re versus deceleration of EBITDA understand you the second feedstock could a generating us, it’s million first I just staying at I $XXX deceleration pretty strong And low as compared to I’m pretty perspective think as just

Frank Bozich

a maybe significant to remember one and the look first inventory then if we it the hand year, Well, in at flow the Dave, sort of just half, generation cash of that second I reduction had comment, half in the in free reduction. you

last volume, inventory we by year. end reduced X% the versus of So

a at liberated are current given that in And outlook frankly, business So cash. performance. demand significant our their we’re that sustainable, levels of amount

full the walk over I’d Dave. to year, doing it the then hand Now, to

David Stasse

we guidance this – with has from loaded is $XXX year of CapEx the million think, forecast project spent for transition do you the now, for have $XX a the by And was we to so the really last our we’ve take to that’s but spending a really, somewhat capital do two the project This for been we’re have year-to-date. – away for want I I gave for Dow. capital on Angel, going years into other The highlight that about and forecast consideration administrative driven million. so CapEx, move backend to other thing services

So there’s the half the load end a the CapEx in back year. of in second

capital transition in Dow Now, to moving we’re that away. the project going for forward substantially XXXX, see go that

year couple that’s So that pretty full for about a million to zero million we’re dollars close project, $XX that be year XXXX spending or for going to next particular project.

Angel Castillo

in talk helpful. help just Very regions, you. the then various in here about how levels quarter? I at if And just Thank wondering the for are internationally. Could inventory was you probably, China first the could just and whether those trending us couple it’s in months you the

Frank Bozich

– for but it are that. X% general came in was precise I world. basis, you levels follow-up where biggest would couldn’t that What probably think our because out asset I on I largely could based European we where around that’s give the reduction anticipate

David Stasse

Yeah, metric weekly the normal basis And you held inventory Kts. over that’s if comment a on And look ports the at the styrene cycle only that level at – XXX inventory really. the and there’s one China periodically. about would is published is that

On specifically around in been talked well we’ve think because the it and if higher, it’s about it’s the quarter calls, over XXX I couple I it of XXX call, Kts correctly. remember last was last much been

out going overhang the outage below Kt, now a of and levels that down So of Those season overhang inventory season inventory styrene from level. so their XX bit the into there was QX. normal to the are spring in

of happen lift when fall. So in historically, some going you margins the sometimes, we've styrene outage into because that planned season in the know, seen fall outages

metric kind only inventory don't now into season, timeframe. that is You typically inventory fall the That's we which talk you know, about. an we October of have would industry going the that that, know, overhang reported generally September

Angel Castillo

you. Thank helpful. Very

Operator

with Eric Citi. from next question comes the line Your Petrie of

Your open. line is

Eric Petrie

morning. good Hi,

Frank Bozich

Eric. morning, Good

Eric Petrie

focusing downstream. that We've on companies other announced seen they're

the exposure Germany what could wondering PC, I'm downstream XX%, likely capacity derivative absorb is to that? how that increase an you Stade, share So to take merchant compounding

Frank Bozich

objective it would our relates not be to Well, as necessarily that State.

around customers So we we're to would options, want commercial when in compounding able term secure But be discrete our we initiatives. that. think clearly, while efforts be with the have developing projects business, market that that downstream in that we the that running we have our through about growth to based able to volumes market and absorb short would be won't type we

on possibly a State assets. the our to So focused those from some of divesting our efforts even or opportunities as it range of options site restructuring really ranging

Eric Petrie

Okay.

Secondly, is change some neither how or to pass the raw material Or your those latex specialized potential in deflationary what in environment? plastics through say businesses the your of to lines a are? terms, contract asked and way, performance lower would you product minimalize another costs in

Frank Bozich

less one the if we've and our you we've performance, Well, our portfolio, impact. had seen of erosion that and seen of rubber, in than plastics, I think latex, sub at margin things look segments volume a we've in in that

very held margins opportunities And because and to highly specified So they're fact, the enable have up in customer value have products, price well. solutions. those we

would because and you those and carbon, value to it's sub they're pass-through. it's a probably based example market ability really is great parts know, based the price price So of others segments, raw material market I we other where, on a portfolio have in price say solution, the based were our a and

David Stasse

think – Dave. I it's Eric,

latex. various speaking, of you and have – regionally, basis agreements. And bag mixed without think Asia, more to the XX a America, plastic you'd set on It's up a for I latex pricing through markets side be generally terms opener lengths, surprises pass different months, and negotiation. Just on of that Europe to from to that. spot contracted a couple bit it's on kind is Generally mean explicit monthly a And know, it's a those that. it right, are are on to Frank's a an a I could business. in North on contracted year, on have wait months, add performance renegotiate spot to

Eric Petrie

you. Helpful. Thank

Operator

question Our next Mike is from from comes Barclays. the line Leithead

open. is line Your

Mike Leithead

believe you guys. market how derivatives morning, question maybe naphtha have of the of start, A for outlook? in term many good the number styrene and will to cracker, Thanks of seek China longer means I a right being into Do a built and sense now. bit styrene a what there's that

Frank Bozich

outlook don't based wouldn't our I would we I And, styrene have announced think on would know, Yeah, on sort outlook – have that. we you production on capacity. rely for of an styrene

David Stasse

it Yeah, what's on styrene China, know, you a mean, takes to been pretty over three my I generally, in based have obviously. the announced implant a years of, years, idea three build and next good know, coming Mike, we you what's

as several But, cost handle, or Beyond for very now on you end that the three predict. of integrated us date. what's have years said online the curve these to know, things know, years, the plants after the next for new, China think earlier, on over going the that have what's least you to know, quarters China, at impossible be it's I of you it's us styrene polycarbonate, you to know, to difficult particularly tend good announcement predict a And, is I lower of whether that, is in impact non-integrated to we come producers. the beyond pretty up as announced, styrene been operate these

Frank Bozich

that stream value go to wouldn't ultimately having chain. Yeah, more come question, on guess to be naphtha conclusion just styrene original would necessarily draw the and a to but the raffinate I would crackers I back destined that

be there's lot draw chains. So difficult value for that and I can the you cracker know, think, styrene outputs to frankly, would it'll of directions of that the a derivatives naphtha And different conclusion go. be

Mike Leithead

this year, conserving CapEx year. held this given Okay, confident fairly the some a managing back lower and the outlook. your just earnings then looks for and inventory tighter I original is if But like to I just guidance working bit go capital appreciate

that, this look capital you on of year? composition your can to you've deterioration? talk just the maybe the if spending And rerun about the given just So what some of market is numbers

Frank Bozich

that about strategic capital have built approximately $XX then is our conversion you control up, $XX the $XXX if look million. then to at between the million budget our divided plants maintenance our Chemical independent for how are at million. that our of that's and is projects spending. capital two also serve from And Sure, ABB services. its that Dow And million total project systems And $XX of in plant, systems become distributed you spend

about So million. what's of is capital left $XX growth in productivity

I those, it's heavily say of toward each good Now, And would weighted productivity. paybacks. have and those

So as given the emphasis as we in that outlook, current that and this on cut the that maintenance, capital it's well spending much to we're strategic heavy going from year, have unlikely spending budget.

that. But as Dave that and I and to strategic would after pointed or year. are freed strategic coming forward flow, we free we a have this completion, make a spending lower out, portion we forward, up as we initiatives initiatives have absorb to see would initiatives capital anticipate whether go significant to and being level off productivity would decision those rolling But of going cash for

Mike Leithead

Okay, thank you.

Operator

Your line next Jefferies. question comes with of from the Alexander Laurence

Your open. line is

Unidentified Analyst

Laurence. is this Aaron [ph] for Hi,

ton a underneath that past styrene somewhere need I current to levels. of basis, the the range on Greenfield the $XXX be in is environment I per in in mentioned new margin a to economics was consistent margins And work. those of So believe think the or

there capacity gets mentioned you some is the shell? new that So of chance completely

Frank Bozich

and anticipate and are possum have will plants oxide into demand is driver different have that market. really that you built POSM or and the styrene for being that's consumer spending capacity the really we which population oxide propylene demand growth. is propylene kinds two that One would of drive plants that and there's, Well, you comes the

style are given this So putting levels. that plants under would plants anticipate very us this not current they'll likely outlook announced we margin will the stream. non-integrated come it on seem the in would begin that to construction in current and non-integrated that they monitor environments, The and be two and new green would

Unidentified Analyst

Thank you very much.

Operator

[Operator Hassan line next Global. Instructions] with Alembic of from Ahmed question comes Our the

Your line is open,

Hassan Ahmed

and Dave. Frank morning, Good

Frank Bozich

Good morning.

Hassan Ahmed

nowadays we how I polystyrene in various demand remarks, balances, we about talking noise the fair of initial like? light mean, coming surrounding questions know, about happening, sort medium on know, sort of have spent whole recycling you internal guys would sort you you demand a growth hear kicking you do own into states, out time impact you bit I know the term, run you counties, as the the these your with, mean, what are countries you obviously You of these impact to term know, sort and more about, of moving your in bans bans. of recycling growth? supply place feel should think know, near of sort demand and some it longer all you of parts, know, of of the

Frank Bozich

Well, you we're we materials from characteristics that our advantage but could non-recycled and getting happen, consumers that options formed materials. de-selection recycle even already to feedback from downstream could very if regulated, selection those stabilize demand, could Styrenics for And proven, a is other you over plastics solution, destruction increase recycled that they it of polystyrene the JV the market, offer only know, and positive America those believe clearly that not demand take and polystyrene. it And but are the our JV we from would then know, some very of we the offer of. real positive were to seeing good traction customers of

tell, think solution in it's I I industry. So difficult some but it's to and that the polystyrene early, potential why offer recycling inherent still think there's for advantages its we're about to excited a

Hassan Ahmed

Understood. Understood.

around CapEx to in, that side obviously, your there a questions, how, projects of is XXX the things, to you you are you million. are you the this million. going maintenance year know, CapEx guys know, involved know, one couple of is and you back XX of And response Now, talked around for about in guidance

period sort are you take mean, know, let's there's deep draconian you know, view, some have assume you that, cuts. know, a how, CapEx So some I companies some let's get that a we into, and announced of recessionary there

know, draconian I environment? like a be, number I'm mean, maintenance free what, I I Maybe a to that mean, to short look how you duration down we do in just mean, environment, know, below CapEx fall for of that sort could in trying sense levels? sort would levels? So of recessionary flow generation a get you low of, cash the maintenance even,

Frank Bozich

me $XX make stronger a sustainable of to this that, is, couple and comments going million. in there's that, XXX So, that million add to us to maybe and let on makes strategic do remember that. in we The Dave, more to forward have that thing ask spending

So a business on investment will cost the programs, that frankly, hurler our spending reduce opportunities know, or become is and at identify of would know, is, I that, But spending to you is in term, off those will short to as that. come rates size our CapEx not in you assets future. practical will we million, maintenance tell for our asset the for appropriate more sites, will short and What safety of term. you through the stability put take $XX sacrifice efficient, base out at matter, we And appropriate. in the and excellence prioritize for the our

So the the is subject this productivity area growth million. XX is to and flexibility that probably which capital, is year

strategic that we identity, initiatives. level hurdle and have very in again, fast future flexibility I have after get through the very focused Now, be the rates. on But of deliver good we returns projects appropriate we'll the that's believe

David Stasse

said, again, on combined. spend, capital, going I we're environment, $XX mean, of back it's on rate other know, year., million Hassan, in Dave, EBITDA this Frank can know, tax probably as it high about whatever cash million the I a a to using. pretty fixed, projects those much Hi in you recessionary you you're you $XX I'm XXs a numbers, taxes two interest terms to is But think use year

maintenance would know, You again, or we like maintenance. spend to would next for be XX% number think more XX%. And don't we year should the cut, continue that I

probably be $XX top know, you $XX made in decision then productive million run of productivity would be clearly context no that rate. the the be And in So would would what's there for million environment. the on the economic to

Frank Bozich

XXXX. Yeah, that $X that just point million goes strategic one to last other spend in

So gone it's almost by entirely XXXX.

Hassan Ahmed

so Thanks guys. helpful, much. very Understood,

Operator

Tudor, Your Holt. line next from comes Blair Pickering, of question Matthew the with

Your open. line is

Matthew Blair

Good morning, Frank and Dave.

Frank Bozich

Good morning.

Matthew Blair

little could market. more you the provide on was I hoping rubber bit a commentary

talk you market? share trends quarter-over-quarter, this to year-over-year. I Is seeing? think any were OEM can that you're XX%, volumes about roughly versus down your it you're losing rubber that say XX% replacement in in fair And

Frank Bozich

demand tire markets producers more relatively has seeing in significantly, for been ESPR and it's tire auto is relatively technology Replacement stable you because tire tire the tires. that OEM with that volume it's commodity branded destined So have with branded go. typically that's global non-performance been consistent hit the are for markets. down companies, fields. because up performance more tires decrease what know, or has the hurt tires they're SSBR been the And flat, the where held our would OEM our broadly, we're the

of we market and know, the you say level broader color. see high tire and much that performance faster in growing that's growing the that we tires, the would would and utilize I So, technology related continue I than to sort backdrop SSPR And that's for being why variable that to to place future. broaden think tires. us would sort invest you. a our the that's But that's give offering important performance broad of

Matthew Blair

regarding integrated interesting and global just styrene curve pretty your does on and how versus I the tire Dave, thought in cost Great, were does these and non-integrated producers? producers helpful. Trinseo's And I that's comments the cost you battle China. overall curve China this that between was the American about fare integrated how talk upcoming could hoping in capacity, really then European

David Stasse

you've North showed clearly in on of step America yesterday the would is cost Middle then chart America XXXX. so up. a styrene background of that. on in couple be left styrene, this far you've Sure, a And the this back East side curve, got We got actually to and

reasons. in One because, and but hard in second, in operating a they've So is where ethylene. you've economic dollars European smaller, XX% the these China, the independent two when I a producers. know, you operate they're those Middle to put economic been ethylene, generally, lot would a hundred because styrene the you've you of you after and at they integrated getting rates I the put, And up operate separation pretty put far amongst economic. know, Chinese there's par North ton that got European And really know, it’s you time then know, got the non-integrated, several you higher, on close, only for right, East, healthy, And at healthy America obviously and producers benzene producers sites. normal step environments large with feedstock,

And in environment So ethylene. they today. are where these are trucking guys literally we

cheap. ethylene in know, and You a economic more in is plentiful environment China, difficult

up I that out are in China you plays is. the the what producers market these question have coming and But sets running. think will, you're wait right, So how it and to styrene years for know, it we'll see

years, know, happens non-integrated comes that's, of that all You to what know, Chinese, you over China comes you next out XX% producers. online of production capacity these of this know, after couple the

Matthew Blair

you. thank Great,

Operator

you There call. this today's are no Thank at your conclude time. further does for This questions participation. conference

You may now disconnect.

Trinseo (TSE) 9 Aug 192019 Q2 Earnings call transcript