TREC - Earnings call transcript Q3 2020

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Operator

Good day and welcome to Trecora Resources Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. And at this time, I would like to turn the call over to Jason Finkelstein from The Piacente Group, Inc. Please go ahead Jason.

Jason Finkelstein

Thank you, operator, and good morning, everyone. Resources XXXX Trecora Conference the to Third Earnings Quarter Call. Welcome the release markets after was earnings wire yesterday distributed financial The the over services of the afternoon. close Chief be on Financial Chief Quarles, Presenting today and will call President Ahmad, our Officer. and Executive our Office Sami Pat Corporate also Groves, later, for session be the our Christopher follows the available question-and-answer which management’s Controller, will prepared remarks.

as this facts get the Securities Act safe Statements statements in review are Private I'd historical harbor not to presentation in like started, are Litigation Before of we that the XXXX. defined forward-looking statement. Reform

Forward-looking expectations this statements the are teleconference, based as of upon management's beliefs date only and November XXXX. XX, of

others and reports from annual greater detail are Forward-looking risks uncertainties quarterly statements the materially could in Trecora's to those filings cause involve on including XX-Q. recent risks actual most Form and with the These company's XX-K subsequent differ as discussed results projected. SEC, report in that well Form on as

also certain financial During today's discuss non-GAAP comparison call, measures purposes only. will management for

presentation of www.trecora.com. to slide available a CEO, Investors Quarles. over a reconciliation afternoon. and website financial of measures the of GAAP and Pat webcast the time turn the At yesterday to I’d is call accompanied definition section This by the the the on this a that financial earnings at close is company's non-GAAP please see like markets results, financial Trecora’s to of For issued release after non-GAAP President

Pat Quarles

our and historical in Good the resilience that of well. safe, nine challenges. Jason. managing accomplishments morning, thank healthy for hope are results year spite of you recent the first you, Thank families We and through operating reflect months Trecora's us your fundamental you joining everyone and today. and

our AMAK have our advance significant the specialty we growth. landmark enhancing quarter and which financial chemicals to by our we by company. our During successfully a shareholders the deliver value commitment With company simplified to narrowing flexibility the focus divestiture for this our was closed dramatically event for sale to

level million. sale the proceeds midst in Net by our million from increase quarter sale, of have the our million. QX paid also million to in debt operations we balance preserve QX our versus of increasing XX% level down in levels has includes $X.X challenging maintain workforce for nearly $XX.X This loss higher cash brought the than compares $X.X Adjusted position last QX which caused from COVID-XX to and the $XX including million the to and EBITDA at plants safe and $XX a income environment of in while QX QX, business a compensation since slightly strong of net has was its With million was liquidity our to the end operations enabled continuing the gain XXXX. A of debt This lowest us year. pandemic. AMAK. of from $X.X benefits

value review, discussed the expected the higher the rising saw as the prime As of Inventory prices to recovery and Sami quarter will we earnings of effects byproducts. significant recovery last demand quarter. feedstock contributed in did costing as and also product we

weak linked for better Our the in implemented improvement advancing from accountability pre-COVID that saw XX.X%, in quarter second than we reliable prioritizes all this below This levels. Trecora. I transformational year a be was third and of demand been the spread and significantly improved it to year year. reinforced operations management byproduct while company gross the system across Earlier the has sustainability our this quarter third while we significant note energy safety, margin a remained assets. well X.X% quarter last while the refining will X.X% improvement demand and continued the to

resulted significant in requiring and in expectations thereafter. this growth portfolio of projects further annualized organic while deliver of has to million with million creation of little growth diversified developed a XXXX value sustainable already $X $X growth year, XXXX have we During incremental capital. also in further EBITDA This

We the delivering continue new in to work portfolio. towards of projects the unidentified current our increasing projects, projects adding and impact

slide are in As phase, in XX can since in projects, of the ideation. in end the XX on at and our had the XX Of deck eight see managing six an quarter, the actively end of quarter. definition the first XX, you we increase projects of projects, we execution XX

we and commercial three for in We two negotiations our projects. have two more equipment commercial conducted with trials are on scheduled engaged

markets. will distillation assets units projects these such manufacturers SHR. of gulf specialty revenues at Some entering projects a the of that equipment improving and and abroad, our The of launch the be of driving those of applications. our on the focused quarter coast drivers short of year. projects these delivering capital us the value to as grow early chemical as on focused don't the other focused as could on The hydrogenation X require XX are the a our total term projects new portfolio current in first utilization give of In processing TC productivity products needs drivers are of revenues at significant meeting leverage costs. new are key reducing projects and custom existing assets opportunity our asset on array the ability or XX by idle to with capabilities wide next

agreement Next from our new further outsourced spoke this and savings earlier which year year. feedstock we from logistics we expect about our project

capabilities together market as we're new although can the the of to assets our hydrocarbons term come to medium allow the the in see our development story exciting today. indicates will offerings. broad development encouraged of growth of the it's do especially It’s and how growth and waxes The product see forward. assets pipeline in we both Trecora early our the go from products the a our to level engagement fill of that need grow extend unique Over market

results. of QX turn let it our to Sami the me discuss Now over to specifics

Sami Ahmad

to everyone. morning good and Pat Thanks

our cash performance fulfillment in the The third AMAK company and equity year-to-date marked of an and non-core detail. shareholders. as of with more of discuss of million. closing proceeds start our some million our a significant flow the approximately and me net company our for proceeds transaction $X.X then of expenses Gross deliver date. closing the Let important $XX for commitment liquidity, The transaction sale after the from quarter milestone taxes the $XX the value consideration debt million I'll share extension discussion and to include approximately and to

XXXX. our our Some accrued are while sheet. on to The of proceeds our these building third down bank $XX million the September reduce noted of XXth included at our lowest significant from facility million debt you liquidity level leverage pay for enabled will debt to future in expenses reduced we ratio deployment. dramatically sale approximately liabilities since debt June In $XX credit at Oat and balance the us note quarter as September XXth

at this Our $XX.X Total X.X March compares as times to XXth stood including leverage million XXth. ratio debt XX. and at declined under X.X recently the our times September to at September credit agreement as loan PPP

balance CARES was of that we $XX.X is includes $X.X the proceeds program XXth the part September Our million received of million as PPP act. which cash under from loans

PPP criteria. We forgiveness and earnings debt. process out debt positions the million loan. forgiveness we on quick the based X believe, for our of $X.X Our on qualify A and update laid the net status SBA full of slide are cash on

and funds employment specifically and funds for PPP our and used segregated loan payroll our operating our thus our sites. from other of benefits for were at only All employees preserving

We the the application in begin process expect forgiveness to for future. near

year. we of on end the expect this a However, don't determination forgiveness the before

changes these expect we proceeds receive In in refund tax also law when IRS should AMAK funds. totaling by expect are to the approximately We from receipt been We result the of sale that IRS claims $XX.X significant to tax with income act. backlogs to million. addition time not quarter we share to regards filed as the the a claims. under At this understand third CARES refunds as of we've at the there our advised federal the processing these

less million. cash XXXX million period CapEx was cash the from operations $XX stood $XX.X debt operations which flow CapEx from year-to-date was less at and $XX.X last as XXXX, capital Our $X.X we spending compared in for Gulf part the free million defined which pipeline $XX.X and flow part spending same the flow fourth amortization million Year-to-date a States anticipate with project cash required Southampton million year-to-date approximately quarter, of year. year-to-date we plan is to continuing spending to pipeline. CapEx of multi-year expenditures In and this rehabilitate $X major A includes of maintenance at feedstock capital million. the upgrade nine-month approximately

be CapEx total uncertain current year million working capital. for million and $XX costs to environment, to our we should in the continue control range. the the In So $XX

our managing assessing to addition the discretionary monitor customer credit trade all of of closely expenses and exposures. In we aging receivables our

million quarter gain the which of third our of quarter in at a diluted quarter per We the $X.XX net year. or take net share $XX.X per million to share diluted third compares from third of year-to-date let's $X.X in closer approximately $XX.X income net the or the income reported Now of million. look This and AMAK performance. $X.XX of sale includes last

per AMAK income $X.X share of or continuing or year. quarter compared diluted diluted $X.XX from the third Excluding the to per net $X.XX gain from quarter in last sale in third million was of million operations share the $X.X

diluted of share share income Looking net was the which or X.X a at AMAK gain including net $XX.X million results, or last year-to-date sale to diluted year. $X.XX of per million the income per from year-to-date $X.XX compares

same Excluding XXXX. of with second the for profit to XX.X% and or and resulting quarter diluted gross $X.X year-to-date compares or gross compared of in the the share $X.X profit to EBITDA was XXXX XXXX. period level quarter the higher this million $X.X this and in gain per adjusted from continuing in which from operations drivers profit from and second operations period gross was to represents high was or year. continuing was in of the margin million second same in Year-to-date the in million for prime last quarter quarter, year. a Gross continuing $X.XX partially quarter year. for gross third diluted the gross product AMAK this in same and XXXX. was XX.X% EBITDA the million the last $X.XX weaker compared EBITDA XX.X% the million million in administrative margin net of and the in At Year-to-date income to basis in third Adjusted third X.X the million from million specialty the period with waxes General last offset profit by million $X.X the quarter share $XX.X $X.X a million million adjusted sales operations and million third continuing million sale results On $X.X in for key volume quarter the margin the operations to the $XX.X $XX.X $XX.X were third a approximately compared the third same profit margin was period $XX.X in compares profit G&A compared quarter comparing from with period a year. million XX.X% the in the $X.X $XX.X expenses per quarter quarter XX.X% compares last margins improvement second segment. $X.X same in were million results expenses year-to-date

period with corporate plant the is third $X.X general interest that should third You rates. million G&A and $X.X million the compared million debt expense combined million quarter level, in for last million year. Interest expense lower expenses. approximately $X of compared to the expenses interest in The note with Year-to-date due reduction year-to-date administrative almost same as to was includes in $X.X was as approximately interest $X.X expense reduction year. quarter last well

primarily Our there on result the quarter benefit year-to-date changes discussed to tax stood that to due $X tax third basis. a at a is CARES Note that effective as act. laws a million rate for is interest the we of previously the This the X.XX%.

We tax be quarter effective to expect rate XX%. our approximately fourth

year the same specialty pandemic. because period markets a for with quarter same million negative throughout quarter our natural volume on improved segment gasoline gallons down our Gross XXXX. expansion decline markets sales the sales the products posted were The in gallons was for to product website. prices sales million gallons in quarter XXXX. that in third Benchmark throughout third compared slide million sales our margins. on EBITDA for as year. profitability the a the million ago. increased in compared use third of quarter year due increased in XX.X% to million We from through the demand other the per in compared XX.X the key last Canadian feedstock end-use which both end EBITDA to second starting third third XX.X% pandemic. the deck non-formula from plants, specialty XXXX of petrochemicals to petrochemicals. XX.X the in generally million in a third portfolio quarter feedstock million of Adjusted was leading Sales in in and XX.X a the recovery from packaging also due down compared last well same or to petrochemical to volume the who benefited customer period end-use saw you the XX% million was million sales quarter million quarter quarter of Recall positive natural segment of due XX.X a of XX.X a margin Late petrochemical to XXXX. walk margin gallons XXXX. for is that the third was petrochemical the specialty Butyl quarter Prime XXXX prices million to to in margin prime in of customer shut primarily are as last trend as significantly number products as polyethylene consumption quarter sands was lower million quarter second COVID-XX compares second The decline second market inventory higher Prime and our markets customers. average prime third me compared quarter including third in the for single-use let specialty the by the compared to and costs. in increased in million product costing cost approximately XX% weaker percentage XX to driven and last and the natural QX polyethylene lower customer to is This from in per of was quarter as year-to-date had period gasoline in impact quarter demand product third due in quarter Now segment sales business down of and restarts in the the expandable improved approximately margins the gallons to Specialty volumes the gasoline this feedstock to year driver QX a third in XX.X% year COVID product of increase costing. to of well natural inventory October's the $X.XX X and the was quarter rates XX.X second per was $X.X quarter in quarter inventory $X had approximately our quarter. sharp the second product XX.X% reduced million $X to dollars the X.X the Adjusted rubber. an products to prices $X.X impact. second prime quarter, Year-to-date $X.XX the well as of or polystyrene, due price the in shown quarter. to third gallons third XX.X gallon effect of $X.XX gallons pricing as gallons feedstock gasoline volume in gallon. gallons in gallon compared to is volume earnings in business oil

due Byproduct prices. moving third to was was last $X.XX prices sharp costs. sales year. million from feedstock to third was gallon X.X quarter This gallons product the in spread a higher generally versus Byproduct quarter byproducts. Now Byproduct improved of primarily gallons volume declined million in quarter of per to X.X an by driven on in sales prime to spread as improvement year by the gallon. in and the higher gallons of production. compared last second million quarter the in X.X $X.XX improvement negative higher partially $X.XX volumes result benzene byproduct per offset gallon about The second or per nearly byproduct lower

feed million Now negative third COVID-XX customers in from impacted revenues due last quarter the to last was like waxes compared quarter and and segment $X.X moving modest million the quarter, the Despite to were EBITDA on summary specialty quarter a in second to third to third Pat by million from of $X.X up third in had quarter decrease disruptions. quarter was year. X.X% the waxes back approximately the but in of increase $X to from wax in the included That the second of year. from X.X% pounds in volumes Specialty nearly be supply then the your or $XXX,XXX wax the and questions. million wax of million quarter of I'd second the from or our revenues waxes. a the financial million $X.X about and will in Specialty a the of turn that quarter recorded the quarter a increase third a year. X.X% increase demand increased from pandemic. $X.X sales million sales. over second approximately about adjusted open sales, which line concludes million last last the impact in $X.X the depressed about the from product million on for generated of quarter quarter and of million Revenue $X.X wax third X% continues third increase Processing half third call $X.X $X.X year, quarter approximately we the to

Pat Quarles

fourth the being markets and range the demand take international see will in from the the is events, late strong questions, by times. delivery sands in in increase relieved. frankly demand make and reflected will next year. This other solvents long government QX to sands limitations how fourth very pipelines X. chain surprising. in demand Likely into December into to Yes. shipping end demand tied began significantly. We're and our seeing supply end bit some related a recovery market we volume our let seen for seen quarter in that strong in broad October We're the region revenue has few which revenue on due monthly polyethylene again led oil to due increase producers. also a oil comments production began the the be aware removed significantly on be of Thanks September and these At quarter. production QX limitations Sami. in their we looking to oil also And to The of fourth seen Alberta affected have before me a long we quarter of We've

quarter. our as Feedstock note recover to levels volumes We solvent important $X.XX sales pre-COVID It's relatively cost means quarter, per to Also saw result. benefits to as inventory This implemented expect we in the all November. $X.XX exited with prices were in see we QX non-formula didn't a consistent in effective not quarter the flat solvents feedstock through the the to that also a increase the you'll may repeat. rise successfully for increases third price chart. prices gallon byproduct that the we

and lower recover So is approaching what average than business pre-COVID we wax now third specialty byproduct This slower spread is to the in levels. although demand is domestic quarter today was an the see today.

aspect need growth current driving our despite tremendous challenges to brings for value also customers. toward environment. business shareholders We our every of goals remains our the and of the We're in working acknowledge business that our and there to our COVID business in uncertainty diligently

the may like to have. we you questions phone to open up Now any would

Operator

the first Riley of question from Our from line Sherbetchyan Securities. Instructions] Sarkis [Operator comes B.

open. Your line is now

Unidentified Analyst

is question. Aman, my I'm in for actually taking This jumping for thanks Sarkis. guys, Hi

So which key expect you markets in my the softer recover? are of markets ones those growth? to when of are and is, softer ones Which driving first Trec's question

Pat Quarles

Yes.

the for thanks So question.

the about very think talked we are what last I quarter. listen So trends consistent

the which that's particularly and home all has recovery packaging all polyethylene to COVID to as have we're supply at so the the from what So and been again tied about is forth and non-durables reading of consumer end-users these throughout forefront chains moved towards delivery. chains

mentioned mentioned and third Then a was early in ramped the up saw was and nice as Sami that XQ the the demand. in and that that first as they we resurgence So EPS quarter we foremost in driver. the return XQ producers. of earlier late

counter big up bit, another relatively of the is third which use I for increasing mentioned and us necessarily that second It demand came just low in to was COVID to we attribute expectations our quarter. I quarter. what in quarter. low shipping is significantly sands, late little a that that as today a in mentioned oil se. course third per don't were the the that I bit is in started and On product It was the

I still to there government with it's frankly, cost I their we though Alberta of production the rates crude and probably now there run they're seeing benefit relieving fixed pretty margin the said of out atrocious even economics given production the of curtailments up is motivated higher on think that. as the are setting the

encouraging. that's So

in at the polyethylene component what I to have effectively year and talked real over not as missed essential saw expect kind into their QX. there, least to we think above commercial Appreciate principally was any optimistic XQ exposure we that season probably of building for a When into but XXXX spring it to to the level fairly historically of demand. customers on We back actual a and a getting next get of to seasonal course construction was remain summer. to they continue rate construction XQ. they XXXX this year I it our their recover the course, guess, that we that's generally so week the recover level

get refining through a of Yes, values. to up for product on into demand think and continue refining we watch So the the the that corresponding with have has kind course of next market dislocations aviation these we that of the plague the the imbalances be loss it the assets and would imbalances results in we fuel us driven see I out are as biggest frankly and step year. that

been earlier some continues. and maximize that see optimize saw it help into it turned back we we and significantly and So to them and sell this has we that and some of year refineries processing their

the it us natural or year. real there in toluene to these for And relative benzene see imbalances. continued I values and for absence it that's unusual dislocation you then next is co-product, our is the and a reflects price our think gasoline So of out byproduct response watch increasing

it's So input. a volatile very

it. see that it. demand that is We through improve. quarter. that return fact, It And the The drives price talk should that numbers did every You consumption begin we to up anticipation November. benzene Styrene see bounces about with markedly go our benzene of it in in

the So spreads right of is we're still encouraging well it cost directionality natural depressed your gasoline of relationships kind typical below but byproduct and therefore are our now.

we So get be the that's we watching again year the of year. year something and rest next as as ends, will unfolds the into

Unidentified Analyst

volume Understood. next prime levels product pre-COVID the say are the rebound phase? match gives to My you from go confidence question and that and volumes will sustainable you what that you can would sales

Pat Quarles

Well of November. Sure. and through going book us going is that's bit course, got is to, November into an one busy of pretty keep its order we've confidence to know we That's populated.

either we international demand These the we've So into well. lead and this October of the from. that September where Asia fourth think that's middle rail loading then are sales that southeast started of volume and our part into mentioned comes results that east into and markets as we confidence shipments return and month consistently really sell markets be long again I loading quarter as in which of also for Alberta cars since will and that been the

comes and these or The a have months confidence course watch month the out you still is where two from. number half a out that's and So there. of that's

from encouraging. what So we we're see watching that it, part today but is

Unidentified Analyst

you as would growing specialty you demand? is the demand a Do waxes? improved a for service What Understood. feed have say supply driving stable

Pat Quarles

Yes.

side. clear the to So we on need wax be

so the talk produce and wax will up. we about wax So it's we more where about, typically sell if we ends that the

our is we us customers and domestic they customers we value durables furniture when about type and that we're today. product and all our talking our entered what talk seen which hard So did some we for instance wax what as really those are and COVID like use off bring demand came through, seeing production the applications we've that durable greater about the recovery of for good

and value we're stay volumes expect to for So able we it. more better our domestic for

So the kind trends of that see general it's consistent with it. it's access demand to our recovery of of really, and durable we

Unidentified Analyst

question sales from you for the growth and me release out specifically in significant the out EBITDA projects expectation contribution the you. you of thereafter. us understand earnings outlined you the expecting next year called Thank help for Last you're in Could level call? and the

Pat Quarles

Sure. Yes.

So listen, our and I'm doing we've has mature to with how year year pleased beginning growth were introduced of the our throughout at the the consistently the give you tried progression it deck. you XX first the into some to of provide that kind slide and of of we development of and of projects number we our the projects see visibility continued when to can on what portfolio

expect see very and busy of them we've business support count not grow this as to in trials through execution the running year continue in soon and that we'd in that processing year. advancing been this projects second half the busy can of you in next and of towards have early as total year, of be lay commercial the remainder throughout new year we'll to to then our only can custom So continue this fact year start

generally getting without these highly So chemical installed specifics available streams to specialty understand the the with into because opportunities confidential to you again have them are so because it's that of lot but companies this us our bringing are customers, custom processing a should is we of capabilities interesting to market. and the have and particularly that they that it's assets of we're certain specifically, upgrade

Southampton market that contract there and that was the loss installed valuable a went distillation us you available to the at that we the the started and about at unit think recall column unique I about the that hydrogenation XX. has may capabilities processing that you end So to where the time TC talked away about even custom some of of at was

So as a that's few to an market that conversations actively asset and to unit that bringing engaged we're the well. back about service is available in

see the to we about. growth why we'll really continue that's have that So we're talking confidence that

million predicated structural outlined I of growth we've natural kind next supply that and of to saving on that have XXXX this in cost year. us have really gasoline that basis savings then over benefits talked and $X it's contract cost renewed $X benefits about. we've We So drivers the million incremental a those outsourced are year year about about we talked those we our further this We've and we earlier logistics. will added all got on on

Unidentified Analyst

on. it. you. it Got I'll Thank pass

Pat Quarles

you. Thank

Operator

you. Thank

M next is question from the Henning, now Our line comes your Inc. from open. Tom Carl line Harenburg of

Tom Harenburg

course wax Yes, Pat way you Folly Simon and performed think certainly was to the really has the or to never specialty good of I had hoped business of hope Simon's morning fellas. and kind as to the he's possibly loss that and using thought any there gain the possibility any to gone sale there be the versus business an of AMAK or on now. Would giving offset?

Pat Quarles

TC. or I and It's question. thanks and the efforts by it. been we TC the Tom for Hi, pretty that talking is improve what we've think foundational that on generally year I few the and for the we that at so to plainly growth mean last talking our able Listen, and it projects of that over its challenges to have reliability improve about of profitability asset have be needed the consistency We at actually based improve quite grow. are a to we're in to the order

our So the course growth. absolutely of today on we're earnings is overall and focused driving there potential

portfolio else's now get but we more a can if to in with said, have gotten about what foundation asset we're someone listen operations. the certain belief out that always that open of conversation, it that Now we has we've we think of value improved that

we'll that's consider use always that stick So to options. the different measuring

Tom Harenburg

Pat. Good Okay. Thanks luck.

Pat Quarles

Thank you.

Operator

Bill the Dezellem Instructions] line from from question Our comes next of Tieton [Operator you. Capital. Thank

Your now line open. is

Bill Dezellem

you. Thank

For $X million year $X be next million year, of X? clarification, of the incremental X and that that XX million incremental $X EBITDA the to would is is the this reach of or of X top therefore that on million

Pat Quarles

that's the It's X incremental to XX. so

Bill Dezellem

then customers could started see Great. comment last re-engaging Thank in business. quarter made you that you and that to lead to you projects the new

saw you to talk QX? line answer seeing that into to XX. to to may QX phase the QX kind and how and XX final and in of that question would thought a of of process then the this what Now continuation has that jumped page you the in yes But of X lie execution trended

Pat Quarles

Sure.

as So more trials my that that trials we scheduled. we've two things made the I are earlier commercial such commercial comments have said executed

those completed year. end expect by get the this of We to

Some that we're commercial service trials negotiating the of in are of customers. of also process process to providing of those for it in the contract the side these

So year. started continuation earlier it that what a engagement It's said. this of is you the exactly

again getting we trial through commercial visibility now contract Some trials this of have into hopefully them commercial progressed piece again thereafter. completed contract negotiations. and year and successful to the Others getting then into have negotiations

a running both So successful what I think of completion see never don't all work Southampton our at would revenues I happens and to expect and it January associated and stuff be and we're but certain with that'll of and we'll off proportion TC X then then this is it. driving begin projects the the

Bill Dezellem

it projects call etcetera or of like earlier the in versus time how that these you hesitancy, year experienced had and sensing COVID the moving call? with and you customers that that the are dissipated you the you'd that gauge evaluations, just the QX would largely are level last today hesitancy I'll your now forward hesitancy has Pat And

Pat Quarles

Yes is going to guess to all what really. I of dealing is this pandemic mean us. mean think I the not the anxiety still answer I we're Sure. short with

I and projects have Now, they're ones we've of that think by reality value that is running, in we I I portfolio things helping say is them opportunities there say have better business. and fact less But our and been is moving that, assets COVID and have have kind we out characterize the the us I'd this pulling are near what say the were COVID projects to conversation impacted or consuming There of certainly the our have so is way People of in customer if and in things kind needed applied some then because optimism to there. are properly. for I about forward. creation we think dynamics past with feel to particularly uses year I influenced in on is on the people demand our on would those little for more I'd paused across have been are the stopped There COVID. there that's last economy structural by and bit customers a would are and these other had look active are them are, that simple they're these and mean a term in that on unique kind more might of now back the say those growth these sensitivity if what

Bill Dezellem

balance? you so Great. no all Thanks down large pay once feel the with you AMAK you out the final Pat didn't forward cash Sami with don't proceeds and debt here the left that go thinking

Sami Ahmad

we Yes. for on like basis. that we've right time a of structure standpoint quite Bill said place I capital to X a I feel times be mean, X.X to is bit think, the from leverage a

million So we of that debt $XX the reduction. was $XX million,

that's board say point. terms in the remaining decision cash of that that use of all at that's can Beyond and this a really I

Pat Quarles

on board weigh Obviously, everything and board. of mind mind, we're options our our that's with continuing the on of it's on keep externally to various dialogue it's something just that the active going our kind with

Bill Dezellem

both the you for Thank time.

Pat Quarles

Thanks Bill.

Operator

you. Thank

Our line the Slam from Grand next Asset. in Mitchell of comes Sacks question

open. now is line Your

Mitchell Sacks

Hi guys.

Pat Quarles

Mitch. Hi

Mitchell Sacks

First question, thanks.

Can the remind had First percentage done question the do you market. of spot? to price us again increase volume with what your is on spot through

Pat Quarles

the am started costs on March in and being that of if and chart all we really past me, through year volumes about the really with a $X.XX bounce $X.XX that the rather you at the course earlier gallon margin in to of with come quarter talked costs. that I pleased went we volume, but November. we fall talked course I gasoline the it's as the natural look to that about in on gasoline of you So call natural see what third XX% effective in spread per improved through excuse off and spot back

engage did we price good that. capturing us increase and a was to market for on the that environment So frankly

Mitchell Sacks

to respect byproduct normalized with start more levels. demand And would would I margins that historical assumption? Okay. come expect prime margins products and That's fair time recovers to again your recovers back to assume you to as the for the over byproduct economy

Pat Quarles

to it's refining now not you the all if know right look the I so yes, they price aromatics to we leveraged concern price styrene assumption pressure. said mean, as have in at, a it's that we're under benzene “re-equilibrated” with I that and and much an we're this environment

I be the U.S. a a consumes because benzene in for styrene big think us a that lot driver of recovery demand better of will

should, are had basically we go and it November but bit day and drivers go and back and to relationships we've benzene the now But of XXXX. globally to demand the short that benzene the we get in price little seeing up Europe balance end the benzene arbs that mechanisms and are we We kind recover long the those seeing the in ways of a is got mean before traded ratios place. are Asia in I U.S. still at regions benzene gets are and between of

out it back us. for watch but it normalcy be a get should to So continues to

Mitchell Sacks

with back respect to I to XX your when slide funnel. go then, And the

If projects number that the definition, assumed getting front. XX the could about QX, ones that XX QX, execution and funnel I've in as XX you happens some I You've fitting just that through move had got other you as the the think if walk that shifts are projects me so up the QX. how killed you there's ideas, are

of sort could what's what if you how pushing also if stages? you falling it ones helps or are versus the out stages different could flow of me it walk kind those of through in through push different you Just coming that are and the the defining or

Pat Quarles

Sure.

classic have a and think great, of you you idea, or it this sketch money. you can it's to is business kind make development intended you new what listen, an project a management So kind of out process do is

little it to move it more usually put as you definition getting You resources on and it and requires certainty to forward you value. more forward deliver start moving a you're then and the

you business spend resources case as those the fails. sometimes So

the pricing customer you either can tart engage be is moved there nothing start having You discussions that and there forward. just with you and

So that comes out.

customer's good look may advance continue you part our it. levels you part. have it or to more If the kill You then things of commitment on and

the kind of high So wasting is some capital from more, and how involved that's maybe the of legs it and too to kills business resources of you I that's out that's generic try did kind early it later progression if progresses. it I never in this as had it comes and and then your the bring case. you knock kind keeps really stuff you and when so value there it of capital on estimate how mean is

in and are all they're I they So individual time that are snapshots these we ones the you're the project moving stages as within progression numbers the right these these we followed mean process. around time numbers through and reviews. that advancing go and The

about these trials. So some examples talked I've commercial

have and we trial a that then We'll we a through looks sit long how looks So commercial some down the lab really plants early price progressed. some hope of year can quote our lot time. and toward technology. and these to deal If idea. qualification we have you take good have and move that's conversations they through that visibility some started on an A if the we'll maybe good if that to pilot that that negotiate good and then a looks the validate go stuff this ones

uncertainty drive still be thing So yes some not we'll we're confidence the that year. have trials able they're that's still what on to certain some we but us negotiating next and gives this that

Mitchell Sacks

my That's question. Okay. Thanks.

Operator

Thank you.

Our the of from comes on question Kurt next line Carl Henning. Caramanidis M.

line now Your open. is

Kurt Caramanidis

call. Thanks taking guys. Hi for the

return undervalued. shareholders now always stock we few sale they positive I in when cap, you've you Sounds year that you like forward you've the what you in on challenges kind I next been XXX talking to significantly is but projects announced working return think the where of what got it's was of obviously based AMAK actively saying a as What the said Are to we're about around Do on go decision. kind things it a the lot process? are money a appears there board that? at the know on far you're and of as of and timeline

Pat Quarles

Yes.

And with actively we're engagement options in what is going those the return one and and been team the the broadly we're engaged on we with both I So those very allocation board shareholders of our management should certainly considering through on would make of the to active capital say topics. think I capital. choices board

Kurt Caramanidis

engaged? it's any So we're actively or just is there timeline

Pat Quarles

and think going to we're and impacts and wave” put things. Yes. you us if around considering what's careful that's very us a second are I going very, how to The we on with things what's timeline on dynamic about mean that think have I hate pandemic just that on very those what because forward us now. right “the poor and visibility is monitoring could around about

Kurt Caramanidis

certainly of day. Okay. things like a I that -- good you. sounds a you've reflecting going. just lot got That good but have Thank

Pat Quarles

Thank you, yes.

Operator

for Thank you. would showing Quarles remarks. to At turn to this further I like time over call closing Pat questions. no the back I'm

Pat Quarles

results to on reporting Thank you. next appreciate progress in and your for your you and questions interest and today. quarter Thank our We Trecora call forward look plans. our year-end growth all the participating and on support on

each them challenges as their of work and again Finally for unprecedented every on commitment they people. one want to our taken these to you how I'm and proud for thank your close today. always, hard participation I of thank and have and by want thanking

Sami Ahmad

Thank you.

Operator

and this today's Ladies call. gentlemen, for concludes participating. conference Thank you

may You now disconnect.

Trecora Resources (TREC) 4 Nov 202020 Q3 Earnings call transcript