ASIX - Earnings call transcript Q2 2020

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Operator

Good morning and welcome to the AdvanSix Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Investor of Director Kressel, Relations. Adam sir. Please go ahead,

Adam Kressel

the presentation Vice world to Thank investors.advansix.com. that can are XXXX quarter of our are and and and webcast, press our actual this forward-looking based that view of them welcome This non-GAAP that elements Michael it earnings me those elements and on on you, Good morning, President as our release you Senior statements Kane; that business Those Erin results are Brandon. from including AdvanSix's in the CEO, see and statements ask earnings light. change and call included we and materially Note forward-looking contain best presentation. our today the CFO, Preston. second we here and President reconciliations, We in projected, conference available consider any to could With refer today. call. differ at and you website of

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

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

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

Erin Kane

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

I our I calling. that up co-workers chemical all and acknowledge by families once safe. also be staying team wishes the on and AdvanSix. at X,XXX our has We and well deemed to listening start industry like offering again our the our essential hope the that who knew are entire will to lived and early today, to everyone been business teammates like to our I'd healthy would as have first, by that as affected off COVID-XX pandemic. So best call

sustainable our We continue for to deliver and customers driving safe, operations. stable by

quarter During screening, health continuity we safety, thermal actions plans equipment and facilities. medical and employees and business upgraded contractors, distancing the to telecommuting, on monitor other including measures, focus on-site with coverings actively among social continue personnel our and face execute at to personal mitigation second protective and a all

base earnings delivering. pleased very advantage. detail model, are our results improve encouraged Notably, strength quarter environment, business despite quarter We to terms a the sequentially we low-cost of saw quarter a we the reflect and resilience asset our where challenging practices market Michael sequential also results financials second operating from well are global our demand both we believe industry protocols our of and as and with COVID-XX. were moment of our the able the in as the face the the own integrated vertically by in improvement end first month-to-month rates. within of impacts second In will I'm

for For rates. target in approaching up April, the roughly XX% the third nearly followed our quarter seen in Hopewell quarter, May rates perspective improvement were utilization XX% utilization total. June, and are bringing in roughly XX% capacity by our normalized here to further Early in in we've nearly

the to conditions. industry hand sanitizer domestic diverse support as acrylic heart such through granular use nylon sold weak including the and continued navigated Our sulfate we portfolio us into acetone items as ammonium of season for and planting screens

is plant turnaround, ramping forward third which quarter half, Looking primarily are of to for our we second preparations ammonia start plants. around focused planned the the our up

in mix been employees a for have environment actively nylon as a business contractors continue, perspective, our and safety success. our In users, to ammonium challenging the across the a applications of demand position and We sulfate, From well ensure assets. and optimize geographies, expect while end to taken quarter, domestic number expect health demand steps third following line this the industry we've our product chemical to we working mixed within as intermediates to of acetone the seasonality ongoing to quarter. typical second and benefiting balance demand in applications high products we And the we while normal purity to do and in decline expect the strong portfolio. also from differentiated sequential supply investments favorable in drive pricing and continue, a other

position. remain also financial our in confident We

for year million anticipated supported despite to $XXX Act. the positive reduction challenging cost to between with free CARES million and operating targeted which where capacity with continue first flow under at tax cash XXXX, on and We cost of liquidity As hand by to cash expected boiler range the ended and associated million the very to our the similar benefits revolving we're we $XX capital for do environment taking at we had second full in. $XX capital the of compared addition working the in and our natural disciplined gas credit we a receipt the anticipated quarter, half end reduction to in to investment. approach expenditures, of in Overall, quarter a full year associated increased expect benefits management improvements cash also approximately position the our to We're additional have available facility. second

impacts cost navigating. and are to So we and volume help dynamic the price overall, markets the we're of savings driving mitigate productivity

During to it outcomes create nimble innovation of I'll inspired decision discuss teamwork, time, the our committed continue unique to our the be that to I this and to making in shareholder With quarter. driving is the across details control value. over Mike and that, by to turn optimizing we're possible happening levers organization. best

Michael Preston

morning. and Erin, good thanks, Okay,

well environments second This of perform to on business we're challenging results. we'll enables our very execution in quarter I'd financial of challenging market performance we've overall, Slide most the conditions. one a that end say ever now the and again strength that And of X, Now faced. review is the proud reflection of model our us of in

XX%. quarter. compared was lower to XX% pass lower pricing, about Now, turning was pricing X%, Pricing That's through last product particularly by in to overall down was in nylon by unfavorable the XXX unfavorable and material This year. offset and due primarily challenging improved XX% in industry acetone. sales down conditions ammonium about lines caprolactam the which raw about sulfate. million by financials our about sales in intermediates, partially was – prices market based lower reflecting end the chemical reached to dynamics to Market

year, also and quarter. decrease That's We phenol, per million COVID-XX. overall in primarily in prior sales compared in lower to approximately to the EBITDA the versus and XX% the was nylon, economic impact versus through demand, of X the related decreased in but also caprolactam of experienced $X.XX markets million And notably resulting the the year-over-year XX slide. the Earnings global walk XXXX. our key up quarter prior first year. volume next $X.XX share particularly on about the variances of down I'll

You'll the driven of XX.X% geographical the primarily effective state notice year. by compared sales That changes the mix tax research impact lower quarter on in was rate was of tax in tax credits. additional to last and

the be expect approximately full XX%. to continue tax rate year to We

was million million growth several last working. in and by management due roughly cost in impact of unfavorable about to well repair lastly, cash to X the million count as And year compared share the operations quarter following million changes as compared was year, our XX disciplined in second lower savings from returns to primarily reached million XX high period. year-over-year XX.X That's net favorable The XX.X quarter. CapEx of spend. million XX completion the and prior the down income of investments and maintenance of

Now, let's Slide X. turn to

benefit over was helpful highlight XX our a Tracking it This boiler lower result million margin As sulfate we roughly input and a Recognizing shared inputs, of key and variable investment, a costs, headwind million that propylene. This represented contributions materials a from SG&A price across $XX acetone a benefits tightening been resulting reflecting perspective. an noteworthy cost headwind and EBITDA to perspective. $X primarily in market-based net year, gas pressure drivers reached we've expense. and as really namely last roughly of spread caprolactam from in to year's Productivity be $X challenging caprolactam year-over-year. in this markets other actions was relative ongoing of reduction sulfur. last Lower rates versus savings the Pricing reflected cost nylon we volume. quarter, second productivity net saw quarter reflecting key industry and from benzene continued a raw phenol of compared year-over-year a a by natural gas few entire of overall we partially would business, economic lower by items our from and of our pricing and to which demand ammonium gas global offset the includes conditions. challenges, plant offset natural resilience And thought and impact the natural million year-over-year partially decline and drove across both utilization decrease raws approximately sales sulfur a drivers, and volume million performance year-over-year COVID-XX, the roughly XX of lower million XXXX. plant our belts in nylon, of of

return our compared benefits our realigned impact Erin $X chain approximately cost headwind The to reductions the cumene turnarounds million In million to of ensure a with supply XX supply, impact the the million $X as continuity in shutdown year-over-year. investment, full gas million high XXXX the was to are and to XX year natural the targeting and impact as we've associated PES of for boiler of quarter addition mentioned. planned plant we of represented following to

recognized pre-tax manufacturing with we of associated quarter the million XXXX, recall, approximately you facility. charge Pottsville, as second films closure our Pennsylvania Lastly, of in an $XX.X the restructuring

last the industry early first reflect end next over quarter, continued Slide our spreads quarter, here sharply quarter continue Similar included prices which the to spreads closely in The and together increased caprolactam across basis results, on product typical users, slide. globally. oversupplied a environment turn global an and X. lines of benzene recent experienced let's the been cost weak decline modestly caprolactam has across all Consistent declines seen pricing followed. lows more second the quarter. with We've to year-over-year our most second what on the our Freeze to So benzene demand major we've late

and with caprolactam As spreads. bending seen can in tend in to changes aligning downstream upstream over past, lag the prices in resin

important seen ton penal had last the over the beginning and urea And duties, we've in increased $XXX ammonium saw a the spreads, balance tracking the seen from quarter. decline in It's we've toward recall to you as improved impact year-over-year late data through earlier as supply which much we'll consumption. of ammonium the correct on modest has energy the final spring into applications acetone because As also pricing industry easier to price sulfate planting to demand improved more nitrogen typical total utilization nitrogen, in in latest an quarter, third – a season $XXX per range and lastly, global fertilizer back the prices contains in to of nitrogen. stabilization costs anti-dumping pricing end quarter top pre-plant, in and we've largest US compared sulfate Overall grade reflecting around normalize $XXX planting movement highlighted affirmative XXXX comparisons of sequentially, demand. some ton in in dress pricing, propylene downstream lower contains over caprolactam nitrogen lower refinery despite seen the wet on the following last XX% by we've which industry rates whereas we July. as March as global year. Relative and benzene see resin spreads the quarter, hovered prices. year's Asia party demand we to the declined the industry second consistent basis, per move the Based XX% through year-over-year capro and urea recent realized is industry weather, And second

buyer to We've pricing acetone anti-dumping has we prices marketplace. through seen costs of market is quarter disciplined second has continued over our declined. small to in and buyer the As fair return post the the large the stated premium the what focus good, and duties, medium expansion propylene the believe been we

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

call let turn me Erin. Now, the to back

Erin Kane

Mike. progress year. as to you, X the industry of now through on considerations the some Thank Slide discuss remainder we I'm

versus XXXX around sharing also context of North to demand breakdown we're you reference, our to estimated well a a industry provide North our As is exposure own American end and the end as the wake users. been where side in America see trends particularly building the mix with various and and sales as We we've Starting use starts. has remain market, to which from stronger with consumer across resulting monitor weak pace nylon the largest soft preference previously to of nylon, the impacted end continued structurally demand and in housing Carpet, nylon its markets. impact that much challenges of hard flooring consumer-oriented weak the commercial some foothold. pandemic, both a discussed on do has we in of recovery unfavorable sales residential on continue the construction existing but the home by

positive the stabilization On production and we rug carpet side in the in for have mills seen industrial US.

remained EP in resistance this electric on does plastics surface well has end and qualities. and chemical and electronics finish is and time approximately nylon three and in remain In output demand segments, declines toughness; Engineered at last production. global the its demand comprised However, year. of represents levels Auto sluggish industrial, below here for seen each, XX% is X automotive. consumer of nylon sector preferred

seen tracking US improvement. use However, centered on to globally for production been has economies robust. been has Europe. heavily has Asia which China's Nylon is consumer is packaging nylon is we increasing and mostly the Textiles, market largest on demand of the prior Conversely, nylon as manufacturing also the with impacted sequentially activity. confidence. overall We by of have out reopened overseas improvement economy China, food gradual in recovery demand end and China though retail and opening reliant remained and in see the

in of a our approaching second XX% down further and July, Asia, which and sales improve quarter Into nylon exited down to see did the was roughly compared start we now out overall, we're pre-COVID the year improvement at XX%. roughly particularly volumes. prior seeing So sequential demand demand, we of are sequentially,

performance, a new we're by users more demand mixed demand where a unfavorable the consideration product is on portfolio perspective focusing that outlook. end flexibility, products sustainable asset to pleased application While as same volume position having development the and that taking is At time, we are and forward place for temporal long-term returning, and product customer exists. there qualifications with align favorable we're

including shared, year in into depending there to XX% are across Let's this sulfate, we've now while a application prices ammonium last environment years every slide of line, change at we always fertilizer our second highlighting price We've XXXXX the the the quarter. industry for as industry the from July previously presentation are ammonium quarter. ammonium seasonal this the quarters, Corn time seen quarter a during Belt typically decline of average, shift from then year, in range described the we've the pricing And and sulfate strongest few results to each average prices in second decline Corn we've into in third a Belt America about in quarter a have sequential new on as XXXX we of On the which to appendix new by seasonality fertilizer declines the business third that season sulfate quarter this the the season, seen meaning any are since in runs third North morning, given XXXX. June. included begins, the through domestic

second height the seasonality to As sales geographical granular of a reminder, domestically compared standard mix markets this as the sales American quarter reflected of we into product the is at North both the will In quarter. a and in in normal total a product as sales quarter. have third ammonium nutrient consideration. or season sequential rate higher as result produce robust greater to export a the In typically third crops million average goods cost cost as on this net demand $XX sulfur of of to yields. consideration million seasonality, higher to caprolactam, for we a remains and are Overall sold in a COGS see sales that key supporting sulfate a back treated the $XX

is multi season XXXX However, for which still, we're acreage in crop The year. relatively and has potential monitoring flows. global key stocks also indicators XXXX corn new crop and USDA reduction the muted, into forecasting trade the ending prices, planted estimates higher including been

of Given to with nutrition focused crop remain value products as the sulfur yields. proposition our increase on positioning these added sulfate we always dynamics, ammonium

Moving imports to US duties. following to of into anti-dumping low remained time the have into expect chemical supply the acetone intermediates, half demand some favorable the for and industry continue Acetone now, the second the we balance affirmative year.

We second second year. the activity half saw Asia also the planned in quarter expected turnaround in the several phenol plant American acetone supply, in and and plant limiting Europe in turnarounds take North are of producers to

demand seen other acetone among disinfectants, other for construction demand as building in MMA, remains supply, for improved used and to as solvents equipment soft like screens overall demand IPA including Phenol In of has well used back methacrylate, demand hand stores several essential for alcohol sluggish protective coatings. the have as being factors which auto globally. used addition methyl tighter increased and isopropyl or in and sanitizer applications, trends

back Let call to our Mike the Q&A. moving to before to me turn recap outlook

Michael Preston

and Erin now I'm on X. Slide Thanks

change, optimistic while Erin and particularly output to As the to Operationally, the nylon monitor in and signals markets, to takes our portfolio. continuing across have operations, challenging. the closely the demand. support to We're seen continue we're and in with mix continue cautiously of to we've and be overall, which puts demand improvement any sequential changes end production most adjusting safe stable in been respect there discussed,

versus Kellogg time ammonia XXXX, a XX executed plant roughly be of plant. year. X which above approximately and So now global to last of absorption costs volume our result pre-tax cost industry versus about maintain term by impact was down our turnaround while output million expect we're to a million working planned continue million for we rates near We advantage. impacts as we to mitigate COVID-XX, leveraging fixed last the the That's income turnarounds XX of of the and utilization down year

planned So efficiencies buffer schedules continue to drive we work restart from the optimize of assets. the the to through required maintenance our and feedstock turnaround the

we perspective, to is to million, discussed year quarter year. terms roughly expect have first so of in previously, our cash of free third From we continue for cash flow six the the out As a expected anticipated. quarterly the the we cash positive we free XX as finish as negative linearity months the through our consideration flow despite largest XXXX impact in had

cash including improvements, to We buy have reductions tailwinds second half visibility advances in benefits. run year in tax sulfate We've for inventory to of anticipated by overall quarter, cash including last rate, fourth relative the roughly the midpoint the previous CapEx capital CapEx our and half, a ammonium for other working of favorable which the XXXX, and number significantly in highlighted approximately first lower XX the our versus expectations XX million range of a pre is year. million

the associated a benefits to And people our savings, the continue indirect full Through as logistics cash management also result actions. addition across Act, first drive approximately and result boilers. previous to cost benefits. of XX that we've half including CARES social expectation all planed We're XX it's XXXX, of and includes savings of as organization the also spending. million achieved gas now year million to reduction an lastly, to a We approximately XX our the security XXXX XX disciplined from natural the anticipate with tax cost in XX year of cost of prior XXXX managing versus targeting the in approximately savings other XX million That's and and And of deferral X of year. million cash our an taxes. up tax cost approximately for we from spin million benefit discretionary in

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

Adam Kressel

open line Brandon, Mike. Thanks Okay. the for questions? you please can

Operator

Absolutely.

Instructions] Chris Please now Our question-and-answer with question Securities. will first CJS the begin from Moore ahead. comes go [Operator We session.

Chris Moore

taking Thanks guys. a few morning, good Hey, questions. for

Michael Preston

morning. Good

Erin Kane

Good morning Chris.

Chris Moore

morning. Good

begin to nylon on Just with.

it think with when rationalization late 'XX meaningful EBITDA obviously or caprolactam, was I which there sometimes helped in So was 'XX. 'XX supply global results

might ago again you some see time five maybe and some and see and just reasonable expectations not softness and different make those now sense years kind why Given or might point in between at market now – you do what is same talk point? at continued of it and is to to that in the end

Erin Kane

Yeah, moved tracking to mentioned. some similar happy XXXX global the the people's nine since have was the actually the on Chris share question, to a half now At just XXXX or that's where right, position time really the of been number XXXX breakeven variable back shared more trends have market. sort minds loss environment, where right. that plus right, XXXX June about I would think at above back and then the There level sort of folks all in the types previously we much stabilized. now What of really what levels. of We're And of we in or here months, late a ultimate really one is we're July, Chinese had is as type into have depressed equated of – XX perhaps like from actually you spreads spreads breakeven same that. kind a uptick that you're on more cost looks for And progressed of months we saw pricing been very very at have so. least given perhaps probably of modest to we've and great back half half a we of the through

of the paper. it perhaps make the in I than the that again, sustain that, hard does what –seem ones situation. back are their be that around haven't differently, would world is considerations, several reasonable those longer away shied but and watch, there like have be market to approach. that sort capacity. for past assets from wrong out players significantly the signs did that might we call, made long. the disciplined So think the do we and on returned reduced see would those that of that would just we're But very down point through right, those that It's a XXXX are running for watching pointing structurally at multiple are number in is of industry the And we lines for not we Perhaps level we've much

announcements it. parts Asia watch the of we'll So number in population, levels. throughout other Europe very at sort than players are of where we low No can today, of see even a running rest of

Chris Moore

Got more about of the cost the bit you and just can and cost specifically kind it, decisions some that there about reductions the that targeted? helps. little talked for rest of talk specifically, Mike of the Maybe kind capital a where more year of

Michael Preston

Sure, Chris, I'll that one. take

managing As in you tightening I first we board belts or in this across imagine a the been indicated, reductions. from executed just services, and deferring maintenance. we've that's can just And – And cost, eliminating our like through year-over-year environment. time, over the perspective. non the spend XX cost half, reductions, as critical million that's T&E, half And such outside we about – people headcount discretionary as through

to about operations, the million line reduction do the when I about thirds perspective, another the at in across board, be SG&A clear can from XX the on again, two cost. we addition XX want that savings financials. you the coming the through SG&A expect see boiler investment. from million you really, to and third, year-over-year a of So really is the look functional is a And from to

So over this and is above.

will temporal. say of some are the that some be temporal, and structural are will I reductions some However,

our our business going down to the second drive going being From think from savings and R&D this the look a large spend about XX be cost to in as boilers, lifetime quarter, And continue the see forward. those support as to We first was operations as XX but ensure across in you'll half. we we projects. that's quality year. sort projects the we down was CapEx, So just We're quite to quarter as the to stable we're the permanent, the of second and our 'XX as well for while discipline and do quarter that did to the we've second of reduction of a million, project lapsed the much make to going continue prioritizing the well million perspective sure of we're CapEx forward. exercise really to half structural going spin the bit opportunities want so complete down but last cost in growth reduction of repair might safe about we maintenance board relocation, to

think that'll million full the about flow year by generation expect perspective. continue to free get also we'll that second importantly, half, first we CapEx you XX project our But a we to from when million, high the want be the go down first half versus cash XX pipeline. cost the spend half So to million, you second clear the half second XX in growth support savings half. And in healthy to and return I progress was

our there, how little Some hurdle going about the of we'll forward ones a smaller. those completed. that's probably have executed are rates, we've will bit against the ones it if the been IRRs But meet forward. so that highlighted returns be larger and we're and More of going again, thinking execute only the if

Chris Moore

right, appreciate jump all I'll guys. Thanks, it, that. I Got line. in back

Erin Kane

Thanks Chris.

Michael Preston

Thanks.

Operator

ahead. comes question next Please King. C.L. from Our Silver David go with

David Silver

you. Hi. Thank Yeah.

let's sulfate. just have a I start Maybe So couple of on questions. ammonium

have missed this, seasonality but thank for firstly, I pricing interesting. including may clarification. a just very So chart, you the

the XX% the to decline apples XX% on maybe apples. sulfate that mean, blended standard quarter ammonium the maybe I I and price pricing sequential a shift in is reflects same third So kind ammonium sulfate? that don't product. granular basis, Or that represent of between, grade know is a is that of

how sales So reflect reality has trends. adjusted is been that your to maybe the or mix that with benchmark

Erin Kane

you're – specific we great – appendix, if is David, talking that the in chart one, to I'll the about And sulfate. if granular ammonium

type it's same grade. So the all same

David Silver

Okay.

Erin Kane

the region. Corn Belt reference as a just And especially into

David Silver

production Got that in that you recently started who up effect I ammonium the supplier you the a North say new would been and has America. on know sulfate been How there's in mean, it relative would I overall has new product of or market? how you words, the kind has disorderly? that maybe? or been marketed distributed In maybe say other expectations been of orderly to

Erin Kane

Sure. referring of few a just here brought the maybe to you're clarify data plant Nutrien, that was Yeah. Redwater points right. And to online,

doubled roughly XX% and North to just their at capacity granular added metric as So about of we they ton, situation. XXX,XXX added approximately to XXX,XXX American talked had site more that which tons the total about metric as that roughly sort

We have continued see growth the in over long about AS with will, too right. a grow out had so looking ago. webcast, granular Vincent last several growing demand, more XX% like to is we the past alone I on in Sulfur for sulfur, that Brazil we've joined been in growth Now, years. if pointed tubing X%, you talked not

in growth these participants. So we good large do market see lines. are product very And Nutriens

used would expected their entered the and So expected. their current as that see they we would they've supply have that's how market as lines, we used have have base we would exactly customer they

of the we globally. we to things market. that obviously, to that US continue watch. North need have we are caprolactam rates would through one the to import declined markets need they're had would ultimately That's indicated still – balance But flow we'll had one we as that that impacting So what be the watch, or as expected would America in perhaps

David Silver

the large small is over to panel rightmost market Okay, and between catching, on eye very with buyer the I'd divergence X buyer. to acetone like chart the in switch the and great. Slide a

be up on A a acetone might maybe related if might supply. So drawing structural phenol anti-dumping. more of imports to by And for or one there's be little that markets also top I you boost the MMA, I imagine forward. demand then reduced several be so the has but reduced personally pie factors, couple could to production which driven a going pandemic, dried think up things, phenol were of chart, the related demand some

say would one factors, allocate factors of a factor. view is driver mean, third, you. of a the maybe you Is Thank third, I in buyer you since your principal three have a If what a kind is? XXX% predominant or started market third, were those strengthen? you it to or to the more small fourth those to

Erin Kane

give first think for No, two think the we your factors can I always, would to observations to that some a it's and and on Yeah. are fact you sort than heavily But thought in as give weighted great the probably waiting as and about directionally where more that color question it that of maybe a points later a sit, on perhaps perhaps. third. intriguing answer we the David I dialogue further

imports if North as the on the rightfully quarter you up 'XX. have versus construction meaning building the MMA. as the a you And American acetone a 'XX, noted, automotive are we coming contraction, resins And 'XX tons of versus XX demand with balance know, you that come where pointed side ultimately tightens of through to into driven way you been is that the in, of down. demand, When in in for out saw about and you users we if IPA the first back as tighter the X% has 'XX been you as of then first third certainly we has demand acetone sort through half on brought And will about think particularly you is the end the on 'XX half some will, as phenol lending QX. first sort But know, When there XX,XXX of second supply. think sorry well of So right, acetone. boost and utilization half only side. about being the and phenol – into pulled sort itself supply supply phenolic certainly IPA

is sort half The front a North the by Europe. we more and turnarounds helps supply we here. turnarounds. we least the by that And Asia side that really will a remains hopefully be supply characterized do characterized side it forward, as in snug at a because will So, strong have noted looking half of and with then America half directionally kind in series in back think you of second that sense turnarounds of was

David Silver

buyer small Could with it price just more remind Okay, where acetone. a on buyer great price for might you me renegotiate to that – the large the you. Thank other might renegotiated when is one effective buyer or In that market How customer-by-customer? maybe the market quarterly some large purely an annual move or is does price? date shake and we re-price? closer yearend out of see words,

Erin Kane

that Yeah. buyers sellers a the consider. large is and or the settled two to index the you marker, monthly really and there No settlement. factors and buyer the if the between gets there's will, published In market,

in factor and that Factor discount So a the sort does you predominantly contracts monthly, And large fourth annually quarter. monthly. to is buyer that typically there's that that one. point two, negotiated of get so supply that's is price negotiated settled as marker the is settled out, discount in typically

So that real discount Does more help? as will negotiation QX. the see market the in dynamics can but change that that monthly then settlement, happen time, we'll

David Silver

in back going very I'm you, get Thank got to good. queue. you. Yeah,

Erin Kane

Thanks David.

Michael Preston

David. Thanks

Operator

Our comes with Please ahead. Vincent go next Anderson Instructions] question [Operator Stifel. from

Vincent Anderson

a and Thanks quarter. nice

that that a sounds highlight like partnership that improving films of particular quarter able test well to of in So anything good your there I'm in was wanted business open is packaging in this it your you demand? were observe did and guessing demand you to

Erin Kane

say really both that I packaging So overall Vincent from comment packaging right. relate would my that to would resins

sell side films into resin extremely is as the As as you resin we did going films packaging well and well. multi-layer recall, packaging

food, I packaging for perhaps at home, just packaging more chain people very supply be saw think it's resin robust. we longer the shopping packaged stretches cheese of meat clear and that with considerations many notion and the eating in

consumer-oriented restaurants well, the balloons a film some that that single on sorry, see film up. track of back overall as sort to forward held But canned that. covers, come are metalized to robust let's say bags of typical bit again, one institutions we into, as actually like good and layer the And have industrial more applications quantities a use is over large versus well does segment, is a in but others up. it we up your book look that industrial Now, that picked perhaps where as the and – this other open even and purchases, that more Hopefully, things buying more in applications back demand, will of and QX. bulk we'll things packaging restaurants side be – and would continue so little

Vincent Anderson

Okay, curious that application just on nylon focus strategy mix, And the on optimizing then that's in or started ongoing to particular your anything reiteration was there if in distinction hone you of you recently? for referenced that helpful. there. Thanks if that's a just

Erin Kane

what portfolio. change us is We've a corporate We've re-articulation focused quite No, great the structural and on. past need transform flexibility. a talked been just in of we've bit question asset been to on and driver it's Vincent the application for end focusing the

in resins. and where engineering You'll resin well demand the QX meet our versus plastics-oriented market, allowing see right, as us sell caprolactam being plate going results more so as to exists, it to that able forward, carpet and into caprolactam molten that's really

the We've So have in assets customers focusing through qualified on resins. Chesterfield to has optimize perhaps been and been we've started trials predominantly at out One we new engineered working flexibility past Again, testing on now to carpet. and plastics, dedicated been resins. that the fully make getting on assets demand. that forward product meet wheel to of textile the how to just our some that

talk flexibility, So when little that asset gives bit in we you that color more about hopefully a regard.

our electronics. their auto seen some product automotive. demand, in running space list kind customers to we well right qualifications These in end and reminder we're that of earnings, and assets targeted certainly that period QX customers electric just We've And sort for getting from strong the not got accepting as through of sales just with again, space. are back But perhaps As talked perspective. slowed and a where a resilient in there are compounding growing consumer customer of the qualifications, a compounding time the all has pipeline industrial. this it's now that

know So re-articulation, we just I think strategy. key something a is a it's

have have towards. get to there we standpoint to considerations address and temporal considerations in that just from after the our prepared be structural that's navigating we're where are the We have challenges that we while to current, working

Vincent Anderson

the that the it. the operating the operating savings. earlier or at Michael, been one the operating components structural a of savings leverage plants improvement But were rates the the That's If call despite level enough I just between has on could demand ask very helpful. and more split specifically to it savings that, running back offset could lower achieved negative just would been with comes and these I be to are that leverage adding while any ask clarity, utilization temporary Thank cost about if you. here, I appreciated

Michael Preston

you perspective down, in of decline the million. Yeah. look Yeah. demand was the XX% from as was XX the second the I so And the that XX%. perspective, you And end I was quarter impact, year-over-year was big see, down volume, like can a the mean, EBITDA as volume number. at we a right, discussed from impact mean, an revenue

to that. bit little offset a fully time period that it's over So challenging, short-term

to about relates EBITDA a the that million portion cost to XX to talking investment, the of walk, a in we're in have XX and of see terms savings relates of portion You'll we boiler million the reduction. million which XX then

So there. cost value demand starting the from rates impact, it we improving on conservative markets as perspective. us quarter this nylon, don't drive to uncertainty. come anticipate not we're through managing But in to get sequentially costs we year-over-year volume are doing and the but sort decline in fully going and of our and we're different and as a as that offset utilization can. third to better the Erin the a And particularly given applications right, to But get we perspective, from here into enough continue penetration end to continue impact see we mentioned very we're be whatever the to quite overall to just the offset through

Vincent Anderson

targeted at XX%, XX% plant that. the of do for XXs? maybe could overheads Sure. I And covering with these trying less efficiency actual maybe operating so differentiation plant about of running make, I I the come one plant, the just but XX%, instead that rates, the the point that actually was How you appreciate rate think if at maybe clarify your to Erin. fees better at

Erin Kane

point, our then think your And seen the second well, And it's market robust, morning we're high sense improvements, I And context results while question. on to reflection operating – captured, we're think, do and our we ability on macro I the when very be execute we choices, of kind can in this that how operating we're to that certainly make no come quarter take maybe and outlook making of one that facing. his situation level. our it back what in to and we're trends through working have And a believe to our a our remains kind to note right. in of sequential back great David, agile. The prudent the just then yes, we from we focus control. the think But choices we rates far morning

have perhaps. weigh builds as the you We against operating the capital and leverage fixed absorption to working point costs

we shareholder to think recognize inventory time in do the But our value. is we're with I perhaps serving We right also there's us that always to advantage, can of approaching weekly that sales say, and drive we we've in best our you want moved make analysis, decisions. I measures the real how utilize this in where associated here have that to have others We weigh operations different with And think the more to again, planning across share rates. agile, tradeoffs challenges well, competitive leverage this. but more yields all we've reduced much right I balance. as we this for outcome been

Vincent Anderson

All you. right, thank

Michael Preston

mean, when able think, when thing rates as look it you and lower our that – impacted effect different question that you is our I'd as in could areas and have add on how look on is really We've really And your you and that the whole variability at I hasn't – from as coming plants. could you I us the yields, only lot. the utilization been a would overall, a yields have financials. say to I can you where The that the impact of negative at have optimize

to improve that planned less even impacts. areas And mitigate Hopewell and in in optimized had We been optimize how we this to those what running have getting in those some multiple on environment. able we're cases or and manage really more we've we at

Vincent Anderson

all for context. additional confusion, that's was to the appreciate exactly Michael, I the but Perfect, what to. Apologies get trying

Erin Kane

Thank required. apologies No you.

Operator

final up with is Our ahead. David follow go Please question Silver C.L. King. a from

David Silver

hi. Okay,

environment very this of been or So a And clear robust. Erin, first I for assume time. I you've, of the these next is and steps these parent loud about couple their is kind far a managing hand. long industrial kind the But my that the Erin independently part as parent I often your seasoned the current assets been also things, heard was in question that some finds some, like and low company have maybe from wasn't a of assets of willing to fruit back outs of company either know, offs mean, it or there's that independent interest. been tends be investment don't hanging there it's the experience but under carve then newly I your And invest spin unquote, and assets quote, to in,

attractive a sense in make of quick these opinion, payback I example. one based your your since So thing you've could fruit? of to mean, bit towards thought Could more that you're nylon? opportunities. there what captured you investment? incremental out. capability does additional efficiency think incremental But next the history coming guess, or issues kind your kind Are you. if I even of which program, that's cumene been supply, environment things some little lot become done opportunities? it more end the to there more? logistics investment return, opportunities. Thank Is those storage One Or and further on the have strengthen kind more incremental is of hanging low assets, remains a of normalized? changed just of with had in I have your of, attractive to there position to you low-cost Should wondering gross But be mitigate some with discretionary I high long And for make spun that done product? I'm be the type

Erin Kane

meet had of felt those we can savings internal through waterline So to our from million clarify still of of pipeline the yet – we here just strong perhaps $XXX ranging in to into returns. a last potential that $XXX we that an to level cost talk sort growth a year, what's projects larger the things to of had investment when One, indicated were on perhaps and we million store. had coming for ideas handful introduced pipeline,

range said scale of scope and rather larger As be we the a you that in execute lumpy. that those projects number know, and did we and ones could

that the stream first point not teams sort our is, thought of that with reshaped. It at to be through we're continues to think pipeline, continues pipeline and done looking really I So opportunities. value by be

will nick as you to with away actually and spend that side. to the and projects the that productivity side will things continues So cost this take see year nature continue the yield, our continue smaller opportunities on – include associated energy, to same of

to about got into here growth something the that our Meiko We a in smaller in show will again, be also X-PO. on is size. few And year We've that we've that talked a later drop-in portfolio replacement we for line the side, product oxime is with looking the trigger good growth. next that have to continues year

how working right. year, continue look shapes so you see sort and for for through count don't right. regards. us sessions to but in of up can focus you'll think And clarify I that to that And coming that out, opportunity those pipeline in our strategy next – the in quarters, We're lever

that is, question see we also on past Granular noted work things something we've continue on globally, you One that the to growth as in we talked that is a the ammonium of right. sulfate. about

we on field how in address continue be that optimization, go standard, we're the area. look will the And well, So continues and to the value trials potential we that granular to just an in get we soybean still and from because things standpoint we to research, as the from marketplace. growth so noted over so that It's growing right? of need address in list sulfate, to ammonium investing

a As still previously perspective. is we've that forward noted

the to associated stocks with of interactions potential kind of you and but efficient as work right kind supply these buffer how the do run opportunity talked noted, I So unit plants. out release first, between and through We we've chain, unlocking operations play sort your lean potentially as think of a you or all around storage.

taking business about our acetone make had again turn wouldn't an commented situation thought cumene supply that out of chain And and I underway. to make supply to that we we an slightly the on did then and out, right. continual view, in draw while and optimization, And that that investment you is security the sure right that is PES need forward about of can if I note are fashion make I think you it had right, as had sort kind of we we we pointed different we caprolactam you and opportunity in post phenol to ammonium one and and nylon realigning really and right. sulfate business make think we that this X, make a linear – the inside we share one

to We continue have We've have the we chemistries, the have phenol-based you chemistries, we side to was give us are push have to excellence, really to, that I is those but muscles. R&D mid that, allow the innovation on that growth be going to as those growth drive company. to noted And in application innovation ammonia-based chemistries but – muscles recognizing the us as invested we our within built. got that reframing operational long-term development, why sulfur-based that we think, that bolster we recognize that's we've team, build

the the So of avenues, umbrella facing medium about there bit and an to you for hopefully, there's driving to long a that right we're more little think for term.

David Silver

it. thank Very comprehensive, you, appreciate

Operator

question-and-answer our closing concludes would back Erin like conference Kane for This session. to over any the I turn remarks. to

Erin Kane

and quarter time again again our In such model. Thanks demonstrated a your strength morning. this our Brandon dynamic of business for time, all interest and thank results you this the

know the near-term executing of to and great control of on our in in a each foundation for challenges. have on delivering focused We member is what build face that is I these And customers. our organization our

and Our key long value all flexibility competitive us confidence for position stakeholders over gives the term. to of creation drive the our

and again to Do you speaking with So that, we'll next with look well. quarter. safe stay be forward

Operator

The conference is now concluded. Thank you presentation. for today's attending

may You disconnect. now

AdvanSix (ASIX) 31 Jul 202020 Q2 Earnings call transcript