PQG - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the PQ Group Holdings Fourth Quarter 2019 Earnings Conference Call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nahla Azmy, Vice President, Investor Relations. Please go ahead.

Nahla Azmy

Thank you, Kerry. us results fourth call. joining year and everyone earnings XXXX to for quarter our full Welcome

and Vice We from Then President, Officer; Belgacem start we Chariag, Crews, will today a Chairman, and with will follow Chief Q&A Financial And Chief President formal with remarks Mike Officer. Executive session. Executive

SEC. actual company’s implementation uncertainties some are subject plans discussed the today’s of that of that that website at note in to Investors the These GAAP in company’s and filings their presentation with cause forward-looking statements www.pqcorp.com. release financial vary with the we risks measures risks results and results on the the make company’s materials plans mentioned earnings Please of be are on the found Reconciliations today of could our section measures the our corresponding can about and non-GAAP the call, materially. and to posted

that, Belgacem. turn I’m the Now to to call pleased with

Belgacem Chariag

Thank morning. flow. through thank you, would in believe Nahla, and performance value like joining we a of team’s and fronts, capital focus delivered shareholder cover am and on XXXX. efficiency with of I briefly us driving on execution We financial achievements. solid growth, and cash our for some you commercial proud strategic, profitable good free morning, everyone, to this I these key

environmental area, the team a and the and a XX HSE in three performance performer. quartile from in XXXX to with The training top safety, of last incident with the becoming to focus the continue in rate, improvement years. Starting leadership advance we intensified level XX% increased lowest resulted combined safety

on pricing our delivered structure had catalysts cost excellent the Materials The both industrial also safety and initiatives. On materials and improved highway team executed but businesses. not products, front, results from significant Performance we both only in commercial

surge and and increased the share catalysts of MMA in activity hydrocracking level from increases continued capacity technology volume polyolefin addition refills. in benefited The growth to

optimization to we the simpler efforts, pathways portfolio our for continued we on identified portfolio our stronger. make strategic As progressing and

enabled improved lower efficiency focus and and spend capital program. capital Our on

realized we monetization. more asset of successfully million Additionally, than $XX

have margins higher Finally, on financial, expanded basis record grew key we on by points, X%, all adjusted pleased flow. and cash We by adjusted XXX EBITDA are flow over and drove measures commitments. cash operating successfully free generated delivered to

As growth. we have leverage reduced our by optimize half accelerate million ratio a our improved further to debt and committed, turn. enhances by over we our improves back paying our our This position portfolio value enhancing and and flexibility future financial $XXX

diverse each will some in end the affecting Next, businesses use of I drivers of cover our XXXX.

First, slightly in refinery schedule. largely rates and year, down utilization unplanned refining due US to services, outages numerous were heavy turnaround this

and regeneration supply continue to dynamics and However, benefit services demand terms. favorable contract improving from

in the high weakness volume new sales mitigated sulfuric automotive on industrial destocking to demand partially helped customer virgin with also to demand of has This There needs demand turbocharged refining most widening between is The and complex. alkylation the the for in gasoline regulations one premium process produce to gasoline. to market profitable vehicle customers related favorable sulfuric by increases. users. regular be have growing product offset trends gasoline some tightened sulfur has acid evidenced for enabled higher by spreads weakness This as to and These octane share acid. for alkylate been for the line end of continues as purity

whom favorable shift silica drove we specified to sole catalyst to catalyst positive we several our we the catalyst, In customers record and performance. expansions Timing our of a polyethylene are in in silica from to benefit performance business refill Next, based the additional supplier industry due drivers. had MMA technology. our demand continued capacity by for

catalyst. of demand refining second strongest and In specialty year of drove outs our change the timing terms customer Zeolyst JV, in the hydrocracking the for

change reminder, will depending peak a on three a outs four to refinery every hit utilization. years As

higher year-over-year growth result to this the of number base driving increase, thereby refineries continue While variability, potential. in future underlying can the

and for In related as winter both early helped our increases offset and to North automotive demand construction, And we finishing. higher Performance Further, in coating has slightly offset glass and America such engineered lines Materials, despite experienced able Europe. some there a rainfall capture we were price which volumes. by the level striping softness, been season highway an softness lower applications shortened in metal still product on for products of

update exchange we a US-based and Let with leading operating their glass, This core segment. producer focus a Materials capabilities month, on we market line. recent reinforce business. me thermoplastic are facilities safety highway transaction acquiring in in global our to long-term into you agreement now us entered supply enables Performance production This through in on the our product beads for ThermoDrop our growth a

Chemicals. Finally, on Performance

global The Our demand. weaker sodium has review customers. I will this silicate in of product industrial to this improved some destocking by position impacted line our general financial large business resulted by in been Later plan our has for call, a slowdown performance.

trends to largely businesses we Looking expect to positive be our underlying similar the XXXX. for XXXX, demand to

extended services, early production refining we the strong But into balance, anticipated In year. benefit will unplanned of for XXXX. on alkylate customer the part from outages have

due MMA. the demand lower the XXXX and following for business expect change record We reduced catalyst in hydrocracking near to number to outs, refinery level refill lower be of

sodium are product for Performance We as customers restock. silicate half to our second Chemicals, a improvement some largest forecasting seek line, of

the extent effect low some direct of as Finally, exposure That still to continue the be that an limited is closely. customers exposure the of can Coronavirus remains uncertainty full we participation unknown, classified the monitor of market. to our our in China our due secondary the through while said,

of to the call for a over Let and XXXX review XXXX turn me detailed more Mike now the outlook. results the

Mike Crews

to business results good fourth had better catalyst by the and our Belgacem, you, finish Thank the year, morning, We driven a outstanding than from in expected quarter. everyone.

the in posted and growth For full we adjusted margins. EBITDA year, both

asset enabled successful with generation, Our us our to our ratio. reduce combined meaningfully monetizations strong free again cash leverage flow

on I comments results our my highlights, quarter outlook. and the reviewed the focus will XXXX just fourth Belgacem As XXXX

So higher than $XXX related our quarter Adjusted margin on sales million currency decreased or and X% EBITDA X, of offset were across volumes. by a insurance results more turning to Hurricane Slide focus $X sales constant lower year to gain $X million, to $XXX products as on pricing fourth X% improved included a a The basis. was recovery million million down prior proceeds portfolio Harvey. for

services business Performance line outages year. prior XX%, performance quarter with the weakness unplanned our lower Chemicals. in Catalyst offset margin was customer the Further, stronger refining and additional was in continued volumes the from of demand EBITDA by Adjusted from in

points. For the year, margins expanded XXX basis

review were X down Slide business of sales on lines of to a million customer approximately the largely pricing Services segment. our through $XXX were services sulfur in million Regeneration outages. $X Refining by lower lower turnaround Volumes unplanned product detailed from Moving higher costs million. of $XX for and pass

virgin EBITDA prior due gain demand. insurance margin million strong nylon Adjusted to sales Adjusted year. the remained $X lower acid $X on sulfuric addition, at declined in million to weaker million volumes declined $XX the EBITDA recovery In volume and XX%.

X This to of sales for to primarily demand Turning increased for due silica was increased XXXX. methacrylate million was joint X%. from methyl with doubled joint volume fourth $XX XXX increased favorable $XX the XX% This which margins basis venture outperformance. $XX EBITDA more Slide sales to points Higher the prior mix more million. accelerated to catalyst combined by venture Zeolyst than XX%. XX% versus sales driven hydrocracking than sales expanding the Catalyst, Adjusted drove year quarter. catalyst Zeolyst million with increased to

constant on Performance Sales $XX a on currency basis. X% million declined of Slide Next X. Materials for

This performance pricing, with was coupled partially and Continued soft points demand the Asia our to in within XXX by we product This lower executed XX%. freight our highway X% pricing million lines. costs $XX improved constant with currency higher result impacted to a was rising Adjusted on and reduction basis sales cost for Europe our as mitigated materials. operating glass EBITDA basis margins safety grew of higher initiative. engineered

XX% lower million silicate volume resulting a This maintain in constant Turning Performance silicate X% $XX $XXX XX%. of of currency inventories. America. into North a a EBITDA Slide Sales basis basis. on XXX customers Lower on continue to reduction constant on quarter sodium Adjusted currency lower to was sales to declined by for Chemicals driven fourth demand point were margin million the in sodium as extended X. basis down primarily

foreign pricing the XXXX, PQ silica year effects of been primarily through volumes full higher across of all unfavorable by declined volume pass million items the sodium For sales Absent economic flat offset sulfur Chemicals, America currency would $XX sales and of reflects prices. higher and sales due were businesses Europe. $XX lower the or silicate have X.X% these million North which slowdown in Performance million to $XX and in catalysts the lower as in

along XXXX million. built declined strong Catalyst $XXX with and year pricing. to currency coupled Performance sales as lower with maintenance hydrocracking the we largely costs on And on basis sales catalyst commitment. volumes Adjusted specialty X% X%, lower XX% EBITDA X% Performance meet to a prior Chemicals higher rose due increased to demand Materials increased constant from versus inventory higher costs.

a for of our adjusted X cash leverage. and Slide flow discussion on Next free

free generated During monetized debt. us pay million adjusted a XXXX cash swap $XXX of XXXX. to along This assets. and cash of currency reduced flow, million with XX% flow monetization product cash and We sale a free line we delivered over $XXX flow increase capital higher expenditures operating enabled down

more times our half As refinance opportunity extending end turn this year lowering two on the than to Building month financial below ratio additional term an by points X.X earlier a we interest loan was facility stronger our and maturity a result, years. by rate position basis XX XXXX. took the our leverage our

our XX the growth to businesses. $X.XXX billion. are in billion and Catalyst reflects Sales our of Materials Turning Performance This single-digit to $X.XXX mid expected to outlook. Slide XXXX in address range be to

of refining We expect pass single-digit year. sulfur in of in growth first lower and Chemicals to weaker to the through Performance services low demand due pricing the through half flat continued on

expectation million Chemicals, We Performance below decline as to sales low largely outs on the projected EBITDA given is be catalyst a in following adjusted the are $XXX range, services, the XXXX higher range $XXX XXXX hydrocracking to Performance inventories strong improved costs demand. fewer refining change in meet from and to for driven and mid double-digit to of volume. low by growth Materials million single-digit targeting Catalyst

expected per we our with EPS expect Adjusted are in line $X.XX lower be with XXXX. interest offset higher to EBITDA be outlook along with to forecasted Adjusted margins largely levels. to to range with costs more of by catalyst XXXX are margins line $X.XX the anticipated of reflects be is which be to share. Overall in XXXX guidance EBITDA the by This consolidated in diluted to income taxes. exception similar adjusted segment

weakness million $XXX in $XXX free to flow capital interest targeting reflects This expenditures working offset We And million. largely low lower cash range needs cash in by to adjusted first below with by in quarter to single-digit $XXX Performance lower $XXX the be of of first we our are driven respect and continued range, to million demand capital XXXX. in million EBITDA quarter, expect the adjusted Chemicals. XXXX

differentiated completed pleased and leverage performance. position reduced solid that, to of and with even free strengthened I In we is results demonstrated our summary, and generation Belgacem. macro improved flow another With quarter be will we a stronger. environment to year through with and of changing financial the are fourth our that financial cash turn We potential have diversified portfolio call the back resilient our to largely businesses

Belgacem Chariag

Mike. you, Thank

strong of this we in silicates plan XXX history of strength address Slide on The have of business of chemical customer history nearly base performance on zeolites. relationships. of silicas, and long transformation I’ll collaboration, our XX, Now a Built years successes competitive includes a innovation please.

us consumers supply included strengths allow our to network production reliably. and global locally competitive mobile other key knowhow Our and which

the part in of we improvement review and this last had efficiency, significant business growth year, portfolio margins. capital potential our for As that determined

with performance combined strengthened environments We change flex to ability to or an saw the for potential conditions. in also this macroeconomic could be

to and centralized a global Accordingly, Performance improve under a and we four-pronged plan the program enhanced the accountability focusing through business, leadership now our infrastructure that under productivity manufacturing Beginning one best of off is we realigned and team. practices to with plants Chemicals network, across transformation efficiency kicked restructure excellence, way. manufacturing growth for on

drive to per We this should order also reduce network. and growth. cost to and in the It expect improve reliability throughput optimize plant across incremental

are our will customers with and undertaking discipline, efficiently. target Through global focus requirements. engagements combinations. a reduce strategy are integrated to markets we and winning our we customers and a differential accounts. focus organization planning, approach customer on our existing the on growth commercial ongoing optimization, we with network more serving also maintenance footprint growth product key On deliberate key This will capital On adjusting

with Our approach is and growing lines result additional and improve product assets. pricing and focused differentiated smaller users. lines or value key shedding to could a monetizing our growth objective product of also in This through non-core accelerate end margins combination

Finally, a This on and working will improved change integrated business customer experience. capital accuracy, business forecasting management, demand we planning supply for to step result efficiency. the are while improved in process drive implementing enhancing

We program targeting $XX to successfully assets being Chemicals next several our rate XX transformation portfolio. months, run a already comprehensive monetized we the in million With EBITDA adjusted in XX this have non-core $XX are executed over improvement to of million. Performance

cash benefit period. the over We project also expect to same deliver a

would we cover of Slide beyond, to got discuss our objectives for accomplishments, XX. And like and I here. to and Turning how before I XXXX some our

to while achieved a four across XXXX XXXX X% a was adjusted leverage reduction our the in despite Chemicals, businesses, has decline a our growth as and Since improved one achieved by free Performance two services. of our Materials in slowing growth little capital commercial macroeconomic ratio a and That The maintaining the ago, execution a Catalysts, Performance asset Refining monetization, mitigating margins years cash period turn. has from over team three well of over X% EBITDA solid PQ as team IPO our also efficiency, a environment. flow

and efficiency, to deliver XXXX, successfully businesses. benefits, and Building flow optimization Return by the and free win asset to plan on including on cash our team Chemicals strong the continue performing additional returns. execute the in our to the capital portfolio, commercial projects record, implementing realizing transformation business diligently this track improved continue which will initial generate growth intensity and Performance in

to Beyond to XXXX mid executed, Refining across range and we well in Material single-digit drive with Catalysts, these ongoing actions services and high expect the our sustainable growth businesses.

to flexibility Chemicals last, sustained expect business. financial like to also and expect GDP enable And pursue inorganic to for our a our not growth least, growth. we We achieve enhance but Performance investments further

remarks. prepared our concludes This

ready your take questions. to now We’re

Operator

question of first will instructions] [Operator Suisse. Christopher The Credit Parkinson come from

Christopher Parkinson

Thank you. Great.

So now strides took times. XXXX you’re solid some you leverage reducing and in X below

your you’re Has changed view inorganically? deployment to then Thank portfolio, primary on all? at your reduction changed do are or your also, that any there all you’d at priorities is priority? reviewing Going units capital core? what’s any And the you. grow And changed forward, has degree that to where still when consider truly

Mike Crews

target systematically allocation, turn is respect a Mike. set year leverage and I’ll three we’ve times we’ve a first to is leverage since in Chris, XXXX. part. reducing we the this goal take with a half three With to capital went been stated that our public doing on of a half which

As you toward cash end top adjusted an by for will I be with primary to the of repayment end free focus XXXX, getting eye that our think, look debt the that of again XXXX. range at flow

distance, striking So that’s within good about we and feel that.

bolt-on allocation return or items solidly opportunity inorganic growth looking our for for acquisitions also into can to supplement then shareholders growth of capital having looking we at there we’ll priorities greater as think whether organic be Once and to get get and at that cash change, with such we’ll dividends. be I we’re range, some

continue the So, something are that that getting It’s range. we close table. on will to to our at look all targeted be we given

Belgacem Chariag

me answer Let the complement Chris. the portfolio, on

our performance. to we We have we portfolio contribution strong the overall consider four their been that and the value components components saying of

always shareholders. and create to open we’re value that We said value for unlock our also options to

to of on deliver the years couple continue back going with we’re the get We business it that on of to exception in last chemicals single every track.

growth our and desired where and portfolios triggers that performance these margin attention. in threshold lower have areas for below slowing returns or we look our in We

on have means noticed. looking executing even been multiple things consider. our you of it components reallocation would move a or smaller Whether adjacencies logical portfolio, We disposal and options of be we resources, we the consolidation a at or some sale been have or that into

options considering and results. still of each the making we’re to all these actively So, on business of of business the units our and that we’re right operating sure is we’re subcomponents drive acting component

Christopher Parkinson

great color. That’s

depth? just you Thank in specifically, Just it you further how opportunity when think expected as initiatives? refer of optimization you. Can about the there, those Performance we opportunities, the more transformation color bit add a could more follow-up. your you network be growth benefits if And little Chemicals would But greatly the discuss to should appreciated.

Belgacem Chariag

are Chris. place. components where four-pronged complementary, over very we operate, we the Well, been create. relates network The all we to optimization operate, the how what we value Historically, have

that we’re maybe operations places producing where return or make - we’re have products sense where looking need the anymore, We in maybe in at places growth consolidations. operating we future don’t and

deciding network. where can our how Network what is is resources produce produce we optimization optimize the we and assets. really we So, and that and

earlier, much productivity how without said having value critical a in we we invest how capital turn facilities spend this to in maintenance. I As and in create new maintenance consolidate on will and

Christopher Parkinson

you. Thank

Operator

next question Capital The BMO will McNulty of John come Markets. from

John McNulty

With regard thinking we there the cash flow put that restructuring Chemicals’ XXXX? to part is any you’ve transformation for Performance incremental be and cash flow be that as this included free about of would And should there? number the out adjusted that in hit transformation

Mike Crews

John, the provided. we’re are yes cost a that that the undertaking there they will initiatives be incorporated for we in guidance cash and

John McNulty

taking about Okay. swapping dropping in business profile place? is off, give the looks out. clarity on in you’ve margin glass that like it. change should the ThermoDrop guess the And change some swap assets thinking and I in long-term the guess, the and around the then, how I or assets the Got beads signed it Thermo us for be sales contract and on we that now you that up can with then

Belgacem Chariag

a things adoptions. the and Thermodrop commercial made It bringing perspective up of kind and technology. was was progress with success a let technical customers’ John, good in start in me step good by ThermoDrop.

them of line, outcome where enable to an core wanted be that believe horizon had contract would our trade highway together industry. to facility were earnings deliver the with and in we to be our safety great opportunity time beads product we and secure that that ThermoDrop opportunity produce with had. to capabilities we contract, the in operating When on we outcome to to great XX-year actually returns However, capacity this the to and glass us this focus contract, against that that was will a the not and

the will when want deliver this time with it because from assets anything try Now add to in improvement these you actually the customers complications our and place, most And the of all will and our network to line of on capabilities. definitely bottom we’re to - be an contract is see with ThermoDrop. with going earnings had Mike, improve that? we’ve in

Mike Crews

Performance Yes. And that all the mid in little to part going over here, we And time of the Materials, both as it’s a XXXX to take we sales overall as growth range. but sort single-digit for through see we EBITDA have tried think estimate to and change us our guidance.

probably So, with XXXX would that toward has we margin seen in been for as profile incorporated forward. an going have similar a margin XXXX expansion potential eye and

Belgacem Chariag

be not actions I portfolio on this John, ThermoDrop from we a to I a and you quarters watch going either horizon want And in to it’s only is Absolutely. took did I say that take take time actions. ago product it’s growth numbers because the that we’re to the of perspective, the or going or great part mean, three

technology, right aligns want. our time everything ThermoDrop a growth we’re for we what horizon of and that our didn’t I really And think I how make but trajectory with great And If helps. scrutinize work. portfolio still this the was the is growth. is that confirmation sure we doing that believe

John McNulty

Thanks the much perfect. No, call appreciate that’s for very it.

Operator

will Bank. come from Deutsche Begleiter of question next David The

David Begleiter

be year? equity just it the Zeolyst earnings this this Thank down JV I the but basis, know you. and for at I’m and looking much year. you how down Belgacem, be in both will year-over-year, will sales think,

Mike Crews

to low compared XXXX with EBITDA in be David, its with similar for XXXX double-digit as XXXX is catalyst Mike. business, the will margins What we’ve said that down be levels. the will

quarter how that’s and of So, many we have sales that step methyl hydrocracking came catalyst methacrylate down into outs benefited the the XXXX. of XXXX. just The change in as fourth a ‘XX function out

Belgacem Chariag

add a me this. on Let color

David Begleiter

Yes. I’m sorry.

Belgacem Chariag

Yes.

Sorry.

activity me XXXX. how on Let very I a strong hydrocrack. color mean, was the add great in in was hydrocracking XXXX

really XXXX the capability that Our it, was next hydrocracking responding, the it second, when the delivered and were that of pushing and that. to probably and had This capacity surprised We that because we last capability. were QX two, we very were reasons successful. toward team positively is also I sustain that’s part think I deliver why highest we on remember, was the

this a very year, obviously, be lower still to But higher. So, we’re next when you activity exceptional because compare will was year next plans year. XXXX,

the altogether. ongoing. POs little the it, we directionally, very they We it’s This a the great It’s with So, price but enjoy trend just is we’re still the lumpiness is bit actually business. struggle this a of and comparison, that. a and happen then and positive when with happy

David Begleiter

just $XX And $XX in do the Chemicals’ transformation. to to on of How million XXXX? expect this Understood. million you much Performance realize benefit

Mike Crews

projecting also EBITDA estimate from that Chemicals, about a transformation of we’re in half mid versus the XXXX and single-digit come project. for we growth will So

David Begleiter

Thank you much. very

Mike Crews

You’re welcome.

Operator

next The Citigroup. P.J. from will Juvekar question of come

Unidentified Participant

this Hi, P.J. Amada Karen for on [ph] is

was the weakness expand seeing which just wondering at in? So almost just end were for could markets, Chemicals a I most little if And X% given Volumes quarter. segment. XQ, you the the down outlook bit this on looking you’re Performance

Mike Crews

Yes.

accelerated chemicals, was gotten quarter For as third also it some silicate. of across was applications. It’s It industrial the really we’ve variety quarter has pretty And destocking. really fourth into XXXX sodium macro. wide about the a with and

As chemicals be it the below first at QX fourth expect had quarter, still for we to from sequentially of look up for what we quarter, but we the XXXX.

one a say bit a We’ve got doesn’t around shoot green little of would I silicates. year. sodium there. down step month a be will there So make

first second Performance an here better Chemicals. to and rebound So of first year the we in rebounding the few opportunity for be that months will is the we’re half expect the the cautiously optimistic that’s than why half there have be that we

Belgacem Chariag

a because color here silicate product. again just not on a add sodium it’s regular me Let

this into the variety what a figured probably, sales largely wide industries industrial of on products, US the goes is serves we think Performance to know is more. the lower Europe. Chemicals I variety silicate as that in were and a wanted for parts world and that still ongoing products it’s the because in the we in is a first whole second because year product of end lot the quarter of industrial a goes consumer this then many impact impact industries. in of markets you It the consistently this consumer And see. And of Sodium of and and destocking as

We that built we’re to start the in going projection restocking. recovery our in seeing some

forever in cannot You a so, second the of the first half And chemicals. in versus half recovery of destocking the trend explains destock year. second bit that and half’s our

the You but have the will to the HX recovery you in differentiated direction, half the positive in the part longer kicking a start that recovery. of right HX to project very with the add that term second chemicals, project in will year, of

Unidentified Participant

Thank helpful. you much super that’s very

Operator

of America. Spitz will Roger of Bank from The next come question

Roger Spitz

good Yes, morning.

and walk cash [ph] I free there items for these EBITDA two. million, of EBITDA another that’s to could beyond some presumably, and to some $XX XXXX and $XX other capital the between working leaves flow, On your interest, if CapEx assumptions things. between provide the wonder other maybe cash you taxes million

Mike Crews

Sure, Roger. This is Mike.

but our look expense the that. start interest you if midpoint runs can guidance, a guidance than little of at and lower interest at So, our cash you

about we million a $XX the to be year, usage range. capital going would typically million somewhere that’s expect to be normally a lower are which million. little So, Cash Working than be $XX $XXX that. in around taxes

rest the the you the transformation that that’s the I there’s the going believe. and just get of $XXX a of range rest prepaid we’ll million Net-net for $XX in relates about And expenditures. big have would the you to project. fairly then, cash cash outlay really of the midpoint for is have, And the still then, it of our right other. to million at also guidance, flow what pension include all of capital the accruals It’s midpoint other,

Roger Spitz

very you thank much. Perfect

Mike Crews

welcome. You’re

Operator

of Vincent will next from Stanley. Andrews be The question Morgan

Angel Castillo

Angel This question. is our on taking for for Vincent. you Castillo Thank

quick Just services. a question refining around

XQ. about talked of of You unplanned the kind outages continuing seeing the kind into

give just So, in for curious us could you and versus sense half expectations first EBITDA then half. XQ if for your second a

Mike Crews

and is sales flat compared relatively for EBITDA year. and last think refining service to to We both going be

about a have some here. unplanned couple quarters We customer outages of over talked

demand that in multiple has underlying January, a a into something it has that’s here, the not mechanical These quarter not of through. Some turnaround. of so plants, mechanical that Really not at reflective on typically outages issue those issue extended managing but are very long. first been there here we’re the full are

though EBITDA which growth in even likely digits. we expect quarter, be in some certainly see flat So, to be would lower. the relatively Revenue first do will in growth, we in again be the mid-single

XXXX through had sulfur a lower We on in $XX pricing. million hit passing

have that before watch impact that no decline. but you top If has EBITDA, net And prices sulfur continued limit to on it does line growth.

years at the about this I point. they’re XX lowest think in

year. that of and in impact on the services no that line, refining get bit a again So, that’s on we expect has watching, top we growing EBITDA EBITDA but we’re for impact the something little the throughout

Angel Castillo

side? at how fits give catalyst bit curious more catalyst I’d just seeing into what are it. side? And that? specialty color. a in Around be I of comments XXXX you’re little year And Got just then just you in I silica polyolefin then, if terms guess, catalyst the the wondering What was hydrocracking, on The could side. of IMO us on And the of the XXXX? orders your moment? seeing so this kind you’re of more in kind of Or right typical historically experience kind would referencing terms a be your now just whether what also catalyst?

Belgacem Chariag

Great.

early to companies into oil will petrochemicals. is piece the Many innings silica on stage. continue the at probably take I’ll in So, is this of downstream catalyst invest

US, transition. in PE While XXXX substantial are all they capacity energy of and business we’re Nearest expansion gaining and with And come we XXXX three term, significant continues going in to Russia through China. online in new possibly volumes the this these countries.

We market see catalyst what demand we slowdown is to no dropping particularly go our sign HDPE near really with. for or the of which term

about the concern that use LDPE plastics, hear that lot and is probably of you there catalyst As for single is deteriorating. a

growing. we What in our XXXX We’re another in margin grew actually, products a are double-digit That of not because products. question? single-use on is high XXXX. brings from double-digit we are plastic lot of was second the expect catalyst much, growth half margin and polyolefin perspective the HDPE which year in these sales playing And improved value a year

Angel Castillo

of IMO whether were that also in to both one seeing historical experience I Just curious industry? more kind guess, based it’s about reference of orders XXXX. in for peaks on XXXX the your hydrocracking. into just, see how the these the that I of of you terms weakness already then that and and for year? as That’s on of And refining just highlighted you areas kind what But of the that? in think whether comments you’re Or for plays

Belgacem Chariag

Yes.

increase it’s is We XXXX. On the is we capacity demand seen the lot demand troughs. is have a transition actually creating still The It’s the growing, IMO, The is peaks in continue than and of the to in happening really what’s of but anticipated. demand see definite lumpiness results strong. production and reflected there. a our demand smoother these

exceptional to be an to dramatic a relative I we XXXX see a XXXX was year. said drop. performance As earlier, just It’s don’t which

IMO If you refiners still. only positive we the continue and a yet to is demand. average, debottlenecking time demand slope with implementation the is happen are going to and and see the draw continuing to XXXX cycles

on change assets, everything. get outs into and interesting So, more this activity could

positive So, we’re about very hydrocracking.

in that four are are and the got easily and cycle at peak years, everything. you’ve But speed three of - or running three amount a closer years because closer and today, very to the cycles of refineries cycle timeframe. peaks which getting outs change The on

going to to is then, we’re But see going still the another XXXX now be maybe and between So, peak. bigger. growth

Angel Castillo

Thank helpful. you. Very

Operator

come of will question next The from Alexander Laurence Jefferies.

Laurence Alexander

Good morning.

to of sulfuric market. the nylon really be of wanted are play Or recovers demand follow-up To Just the hostage if out? would on virgin at market sort And acid slowly, point? there secondary more the sources that that would are extent how you demand this incentivized? to

Belgacem Chariag

the with impacted one destocking to a think of the forever, The going basically It me just some supply be demand. of going temporary. there’s the the market make does which six a be sure market And to because the does aligned. It happening a impact impact major the Let only two from to result that players. few words and stronger providers. of Asia market say not is the we is nylon market nylon destocking as by we’re on couple Africa it’s

reduction for virgin quality What compensated acid. we also demand good by nylon are because see people mining for that that, is sulfuric market see we sulfuric demand increase that fresh looking acid an in virgin, on

That’s nylon. on it’s So, it’s some compensating out, not balancing for the that. of but

additional of for gasoline on rest require to whether primarily the it implementation it supply going acid and is is refinery X gasoline demand demand. alkylation treatment the the side the sulfuric is acid, is Tier the right additional and On alkylation on of which processes or whether now, for standard sulfuric

now challenge this about in So, we’re demand the optimistic and much market, drop Refineries variety we’re we’ve market unplanned the for right to seeing customers that the diversity. not only the have our run growth think very I outages. with. acid is The that hard some the outages, the there’s really the sulfuric do unplanned of outages with offsetting started and nylon of diversity

the that acid the is demand simply right And tightening of actually now. supply is because on going sulfuric

will we that. year done tightness remain by a probably we half be of believe, happening is on be recovery outages to are the of going should start toward And inventory optimistic, which the QX, recovery the on we that second in the great. the seeing So, Laurence, the

Laurence Alexander

you. Thank

Operator

come The Jeff from will next question Morgan. of JP Zekauskas

Silke Kueck

shutting Silke much of And is that accelerated my there from there on, came end might XXXX. like maybe that were Will memory D&A down Good D&A any be? at capacity the the like that is Like some plants? morning. XXXX? expansions behind Or the how that ThermoDrop for It’s Kueck. guidance be higher what’s

Mike Crews

depreciation. that’s bring Since Silke, won’t its question. that did are there not a time down accelerated good but assets in them, we be on are those shutting swapping assets frame. an these Mike We Crews, actually

work to accounting an there won’t call. and D&A an quarter through to that this answer for a transaction. to accelerated be provide next able have we’ll result question, the exchange update as your But of will on We the be

Silke Kueck

you to means the actually giving swapping partner? So assets the

Mike Crews

product for beads two for Correct. production our facilities exchange glass in We take line.

Silke Kueck

understand. I

Okay.

- expand will your you tech sell guess, that business. so, And with I

that? upon just You’re building

Mike Crews

have think you improves customers. us as for network. think mean, about rather our I network our which already and large that’s Correct. This beads, our we for glass is a capability. core We operating good good

Silke Kueck

planning in your helpful. are $XX What the on? million. or $XX And CapEx? capital $XXX for maintenance to - CapEx secondly, memory million spend what And That’s Okay. million expenditure that you like guidance, gross my sort for like is are of

Mike Crews

Yes.

at last taken hard Over look very the years, of capital. couple a we’ve maintenance

really range. perhaps it think correct, it’s range rest, more. million growth. little in about you’re the a the in $XXX or as it’s year, more traditionally $XX So, This geared toward been that million has And you

transformation costs million then, cost have as as we the capacity. expansion have Those know, project have we’re in on $XX silica where additional Performance our part we reduction of of trying inflation. And that keep unlock the would some Chemicals, some a we in below to catalyst. we opportunities items. So, primary debottlenecking initiatives spend you opportunities And some year fixed that probably be the rate other

Silke Kueck

very appreciated. Thanks much,

Mike Crews

welcome. You’re

Operator

our And today. great session all joining and this for We concludes question-and-answer conference also day. thank to want a today’s you concludes Have call.

You may disconnect. now

Ecovyst (ECVT) 22 Feb 202019 Q4 Earnings call transcript