Q2 2024 Trinseo PLC Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Trinseo second quarter 2024 financial results conference call.
Carter: Carter, 2024, financial results conference call.
Operator: 2020 for the financial results conference call. We welcome the Trinseo management team, Frank Bozich, President and CEO. David Stasse, Executive Vice President and CFO, and Andy Myers, Vice President of Investor Relations. Today's conference call will include brief remarks by the management team, followed by a question and answer session. These documents are posted on the company's investor relations website and furnished on a Form 8K filed with the Securities and Exchange Commission. If anyone should require operator assistance during the call, please press star then zero on your telephone. And I will now hand the call over to Andy Myers.
Abby: We welcome the Trinseo management team, Frank Bozich, president and CEO, David Stacey, executive vice president and CFO, and Andy Myers, vice president of investor relations. Today's conference call will include brief remarks by the management team, followed by a question and answer session. The company distributed its press release along with its presentation slides at close of market Tuesday, August 6th. These documents are posted on the company's Investor Relations website and furnished on a Form 8-K filed with the Securities and Exchange Commission.
Speaker Change: We welcome the Trinseo management team, Frank Bozich, President and CEO , David Stasse, Executive Vice President and CFO , and Andy Myers, Vice President of Investor Relations.
Speaker Change: Today's conference call will include brief remarks by the management team followed by a question-and-answer session. The company distributed its press release along with its presentation slides at close of market Tuesday August 6th.
Speaker Change: These documents are posted on the company's Investor Relations website and furnished on a Form 8K filed with the Securities and Exchange Commission.
Operator: If anyone should require operator assistance during the call, please press star then zero on your telephone.
Speaker Change: If anyone should require operator assistance during the call, please press star then zero on your telephone.
Andy Myers: And I will now hand from the call over to Andy Myers.
Speaker Change: And I will now hand the call over to Andy Myers.
Andy Myers: Thank you, Abby, and good morning, everyone. At this time, all participants are in a listen-only mode. After our brief remarks, instructions will follow to participate in the question-and-answer session.
Andy Myers: Thank you, Abby, and good morning, everyone. At this time, all participants are in a listen-only mode. After our brief remarks, instructions will follow to participate in the question and answer session. Our disclosure rules and cautionary note on forward-looking statements are noted on slide 2. During this presentation, we may make certain forward-looking statements, including issuing guidance and describing our future expectations. However, we must caution you that actual results could differ materially from what is discussed, described, or implied in these statements.
Andy Myers: Thank you, Abby, and good morning, everyone. At this time, all participants are in a listen-only mode. After our brief remarks, instructions will follow to participate in the question and answer session.
Andy Myers: Our disclosure rules and cautionary note on forward-looking statements are noted on slide two. During this presentation, we may make certain forward-looking statements, including issuing guidance and describing our future expectations. We must caution you that actual results could differ materially from what is discussed, described, or implied in these statements. Factors that could cause actual results to differ include, but are not limited to risk factors set forth in Item 1A of our annual report on Form 10-K or in our other filings made with the Securities and Exchange Commission.
Andy Myers: Our disclosure rules and cautionary note on forward-looking statements are noted on slide 2. During this presentation, we may make certain forward-looking statements, including issuing guidance and describing our future expectations.
Andy Myers: We must caution you that actual results could differ materially from what is discussed, described, or implied in these statements.
Andy Myers: Factors that could cause actual results to differ include, but are not limited to, risk factors set forth in Item 1A of our annual report on Form 10-K or in our other filings made with the Securities and Exchange Commission. The company undertakes no obligation to update or revise its forward-looking statement. Today's presentation includes certain non-GAAP financial measurements. A reconciliation of these measurements to corresponding gap measures is provided in our earnings release and in the appendix to our investor presentation.
Andy Myers: Factors that could cause actual results to differ include, but are not limited to, risk factors set forth in Item 1A of our annual report on Form 10-K , or in our other filings made with the Securities and Exchange Commission.
Andy Myers: The company undertakes no obligations to update or revise its forward-looking statements.
Andy Myers: The company undertakes no obligation to update or revise its forward-looking statements.
Andy Myers: Today's presentation includes certain non-GAAP financial measurements, a reconciliation of these measurements to corresponding GAAP measures; it is provided in our earnings release and in the appendix for our investor presentation.
Andy Myers: Today's presentation includes certain non-GAAP financial measurements. A reconciliation of these measurements to corresponding GAAP measures is provided in our earnings release and in the appendix to our investor presentation.
Andy Myers: A replay of the conference call and transcripts will be archived on the company's Investor Relations website shortly following the call. The replay will be available until August 7, 2025.
Andy Myers: A replay of the conference call and transcripts will be archived on the company's investor relations website shortly following the call, and the replay will be available until August 7, 2025. Now, I'd like to turn the call over to Frank Bozich.
Andy Myers: A replay of the conference call and transcripts will be archived on the company's investor relations website shortly following the call.
Andy Myers: The replay will be available until August 7, 2025. Now I'd like to turn the call over to Frank Bozich.
Frank Bozich: Now I'd like to turn the call over to Frank Bosich. Thanks, Sandy, and welcome to our second quarter 2024 earnings call. I'd like to start by discussing our Q2 results, which were in line with our expectations. The market conditions that we saw at the end of the first quarter continued through the second quarter, which resulted in our highest adjusted EBITDA since the second quarter of 2022, despite $10 million of unfavorable net timing. This was the second straight quarter of sequentially higher profitability. We continued to see positive momentum in our engineered material segments as moderating input costs, normalization of MMA market dynamics, and steady demand for our downstream applications led to the segment's highest sales volumes and adjusted EBITDA since the second quarter of 2022.
Frank Bozich: Thanks, Andy, and welcome to our second quarter 2024 earnings call. I'd like to start by discussing our Q2 results, which were in line with our expectations. The market conditions that we saw at the end of the first quarter continued through the second quarter, which resulted in our highest adjusted EBITDA since the second quarter of 2022, despite $10 million of unfavorable net timing. This was the second straight quarter of sequentially higher profitability.
Frank Bozich: Thanks Andy and welcome to our second quarter 2024 earnings call.
Frank Bozich: I'd like to start by discussing our Q2 results, which were in line with our expectations.
Speaker Change: The market conditions that we saw at the end of the first quarter continued through the second quarter, which resulted in our highest adjusted EBITDA since the second quarter of 2022, despite $10 million of unfavorable net timing.
Speaker Change: This was the second straight quarter of sequentially higher profitability.
Frank Bozich: We continue to see positive momentum in our engineered materials segment as moderating input costs, normalization of MMA market dynamics, and steady demand for our downstream applications led to the segment's highest sales volumes in adjusted EBITDA since the second quarter of 2022. We believe this higher level of profitability is sustainable in the current challenging macroeconomic environment due to the significant restructuring and footprint actions that we've taken over the past two years. And while free cash flow remained negative in the second quarter, we anticipate that it will turn positive in the second half.
Speaker Change: We continue to see positive momentum in our engineered materials segment as moderating input costs, normalization of MMA market dynamics, and steady demand for our downstream applications.
Speaker Change: led to the segment's highest sales volumes in adjusted EBITDA since the second quarter of 2022.
Frank Bozich: We believe this higher level of profitability is sustainable in the current challenging macroeconomic environment due to significant restructuring and footprint, and while free cash flow remain negative in the second quarter, we anticipate that it will turn positive in the second half.
Speaker Change: We believe this higher level of profitability is sustainable in the current challenging macroeconomic environment due to the significant restructuring and footprint actions that we've taken over the past two years.
Speaker Change: And while free cash flow remained negative in the second quarter, we anticipate that it will turn positive in the second half.
Frank Bozich: I'd like to shift gears to talk about sustainability. In July, we issued our 14th Annual Sustainability and Corporate Social Responsibility Report, which shows how our company and employees helped cultivate a circular transformation in 2023. In 2020, sustainability goals, especially the continued progress on our polycarbonate dissolution facility, breaking ground on our PMMA depolymerization facility, and achieving critical milestones in the implementation of our decarbonization strategy. We are committed to continued investment in recycling technologies and sustainable product offerings in order to support a circular economy while reducing our carbon footprint, creating a sustainable workforce, and operating responsibly. We had another record quarter in Q2 for sales of products containing recycled material, so our investments are already paying off, and we anticipate more growth in the future.
Frank Bozich: I'd like to shift gears to talk about sustainability. In July, we issued our 14th Annual Sustainability and Corporate Social Responsibility Report, which shows how our company and employees helped cultivate a circular transformation in 2023. I'm very proud of the exceptional progress we made toward our 2030 Sustainability Goals, especially the continued progress on our polycarbonate dissolution facility, breaking ground on our PMMA depolymerization facility, and achieving critical milestones in the implementation of our decarbonization strategy.
Speaker Change: I'd like to shift gears to talk about sustainability.
Speaker Change: In July , we issued our 14th Annual Sustainability and Corporate Social Responsibility Report, which shows how our company and employees helped cultivate a circular transformation in 2023.
Speaker Change: I'm very proud of the exceptional progress we made toward our 2030 goal.
Speaker Change: sustainability goals, especially the continued progress on our polycarbonate dissolution facility, breaking ground on our PMMA depolymerization facility, and achieving critical milestones in the implementation of our decarbonization strategy.
Speaker Change: We are committed to continued investment in recycling technologies and sustainable product offerings in order to support a circular economy while reducing our carbon footprint, creating a sustainable workforce, and operating responsibly.
Speaker Change: We had another record quarter in Q2 for sales of products containing recycled material, so our investments are already paying off, and we anticipate more growth in the future.
Frank Bozich: With that in mind, I'd like to provide a brief update on two of our major ongoing recycling projects. At the end of the second quarter, we announced the opening of our PMMA depolymerization facility in Roe, Italy. The facility utilizes a novel, continuous chemical recycling process that returns industrial and post-consumer acrylic waste to its constituent monomer, MMA, while emitting one fourth the amount of CO2 as version MMA production, with yields that exceed industry standards. Our technology also allows us to recycle several PMMA solutions that previously could not be recycled, creating a truly circular process with advanced economics.
Frank Bozich: We are committed to continued investment in recycling technologies and sustainable product offerings in order to support a circular economy while reducing our carbon footprint, creating a sustainable workforce, and operating response. We had another record quarter in Q2 for sales of products containing recycled material. So our investments are already paying off, and we anticipate more growth in the future. With that in mind, I'd like to provide a brief update on two of our major ongoing recycling projects. At the end of the second quarter, we announced the opening of our PM May.
Speaker Change: With that in mind, I'd like to provide a brief update on two of our major ongoing recycling projects.
Speaker Change: At the end of the second quarter, we announced the opening of our PMMA depolymerization facility in Roe, Italy.
Frank Bozich: Depolymerization Facility in Roe, Italy. The facility utilizes a novel continuous chemical recycling process that returns industrial and post-consumer acrylic waste to its constituent monomer, MMA, while emitting one-fourth the amount of CO2 as virgin MMA production, with yields that exceed industry standards. Our technology also allows us to recycle several PMMA solutions that could not be recycled, creating a truly circular process with advantaged economics. The result of our process is high-quality, recycled MMA monomer with purity levels comparable to virgin MMA.
Speaker Change: The facility utilizes a novel continuous chemical recycling process that returns industrial and post-consumer acrylic waste to its constituent monomer, MMA, while emitting one-fourth the amount of CO2 as virgin MMA production.
Speaker Change: with yields that exceed industry standards.
Frank Bozich: The result of our process is high-quality recycled MMA monomer, with purity levels comparable to virgin MMA. This enables the recycled MMA to be used in higher-end applications, such as vehicle tail lights and caravan windows that require exceptional optical properties. The high-purity levels also allow for higher concentrations of recycled content to be used in certain acrylic solutions, without sacrificing desired properties of the end product.
Frank Bozich: This enables recycled MMA to be used in higher-end applications, such as vehicle taillights and caravan windows that require exceptional optical properties. The high purity levels also allow higher concentrations of recycled content to be used in certain acrylic solutions without sacrificing the desired properties of the end product.
Frank Bozich: I'd also like to highlight some of the exciting technological advancements that we've made in our polycarbonate dissolution pilot facility. The newly developed technology at the pilot plant allows us to recycle polycarbonate waste, containing high levels of residual BPA, back into polycarbonate resins that contain levels of BPA that are orders of magnitude below than lower than virgin PC. Additionally, we are able to repair current end-of-life polycarbonate waste that is degraded over time due to the exposure to natural elements such as sunlight, humidity, and temperature by restoring its molecular weight, so that it can be recycled and reused even in most demanding applications.
Frank Bozich: I'd also like to highlight some of the exciting technological advancements that we've made in our polycarbonate dissolution pilot facility. The newly developed technology at the pilot plant allows us to recycle polycarbonate waste containing high levels of residual BPA back into polycarbonate resins that contain levels of BPA that are orders of magnitude lower than virgin PFA. Additionally, we are able to repair current end-of-life polycarbonate waste that is degraded over time due to exposure to natural elements such as sunlight, humidity, and temperature by restoring its molecular weight so that it can be recycled and reused even in the most demanding applications. These PC waste streams until now have not been suitable for mechanical recycling due to degradation and can be sourced at advantageous costs. The Technological Advancements in PC Dissolution
Frank Bozich: These PC waste streams until now have not been suitable for mechanical recycling due to degradation and can be sourced at advantage costs. The technological advancements in PC dissolution, along with the beginning of our PMMA depolimerization journey, are testament to the bright minds we have at Trinseo. On our examples of our investment in sustainable solutions, continues to spawn industry-leading innovations that will help build a more sustainable future and at the same time are economically advantaged.
Frank Bozich: Along with the beginning of our PMMA depolymerization journey, it is a testament to the bright minds we have at Trinseo and an example of how our investment in sustainable solutions continues to spawn industry-leading innovations that will help build a more sustainable future and, at the same time, are economically advanced. Before I turn the call over to David, I'd like to give a brief update on the planned sale of our America's Day Renex joint venture.
Speaker Change: along with the beginning of our PMMA depolymerization journey are testament to the bright minds we have at Trinseo.
Frank Bozich: Before I turn the call over to David, I'd like to give a brief update on the planned sale of our America's Stereonix joint venture. The procedural steps defined under the exit provision of the joint venture agreement have progressed. Therefore, we have agreed with our partner, Chevron Phillips Chemical, to pursue a joint sales process, which we expect to kick off this quarter and, in the ordinary course, should lead to a definitive agreement in the first half of 2025.
Frank Bozich: The procedural steps defined under the exit provision of the Joint Venture Agreement have progressed. Therefore, we have agreed with our partner Chevron Phillips Chemical to pursue a joint sales process, which we expect to kick off this quarter and, in the ordinary course, should lead to a definitive agreement in the first half of 2025. Now Dave will discuss our second quarter results.
Speaker Change: Therefore, we have agreed with our partner Chevron Phillips Chemical to pursue a joint sales process which we expect to kick off this quarter and in the ordinary course should lead to a definitive agreement in the first half of 2025.
David Stacey: Now, they will discuss our second quarter results. Thank you, Frank. Second quarter, adjusted EBITDA of $67 million was in line with our previous guidance and included $10 million of unfavorable net timing from falling, firing phrases.
David Stasse: Thank you, Frank. Second quarter adjusted EBITDA of $67 million was in line with our previous guidance and included $10 million of unfavorable net timing from falling selling prices. Mixed improvement led to a higher year-over-year adjusted EBITDA, despite a 5% decline in volume. This is driven by volume growth and all of our targeted growth areas, including case and battery applications and latex binders, formulated resins for building and construction and consumer electronics applications in engineered materials and automotive compounds in plastic solutions. Substantially, all the year-over-year volume decline was in polystyrene, where we shed uneconomic volumes in Asia and Europe to optimize plant operations and working capital.
David Stacey: Mixed improvement led to a higher year of year adjusted EBITDA display to 5% decline in volumes. This was driven by volume growth in all of our targeted growth areas, including case and battery applications, and latex binders, formulated resins for building and construction, and consumer electronics applications in engineer materials, and automotive compounds in plastic solutions. Substantially, all the year-to-year volume decline was in polystyrene, where we shed uneconomic volumes in Asian Europe to optimize plant operations and working capital.
Speaker Change: This was driven by volume growth in all of our targeted growth areas, including case and battery applications and latex binders.
Speaker Change: Formulated resins for building and construction and consumer electronics applications in engineered materials and automotive compounds in plastic solutions.
David Stacey: Cash used in operations during the quarter was $42 million, which resulted in free cash flow of negative $56 million. We expect free cash for the term positive in the second half from lower firing prices and from seasonal factors in the fourth quarter. We ended the quarter with $108 million cash and $352 million of total liquidity, including our two committed financing facilities. In July, we entered into a new accounts receivable securitization facility that extended the maturity date from 2025 to January 2028.
David Stasse: Cash used in operations during the quarter was $42 million, which resulted in a negative $56 million. We expect free cash flow to turn positive in the second half from lower selling prices and from seasonal factors in the fourth quarter. We ended the quarter with $108 million of cash and $352 million of total liquidity, including our two committed financings. In July, we entered into a new accounts receivable securitization facility that extends the maturity date from 2025 to January 2028. Liquidity preservation will continue to be our top priority for the foreseeable future as we navigate this prolonged industry downturn. Now, I'll turn the call back over to you.
Speaker Change: Cash used in operations during the quarter was 42 million dollars.
Speaker Change: which resulted in free cash flow of negative 56 million dollars. We expect free cash flow to turn positive in the second half from lower styrene prices and from seasonal factors in the fourth quarter.
Speaker Change: We ended the quarter with $108 million of cash and $352 million of total liquidity, including our two committed financing facilities.
Speaker Change: In July , we entered into a new accounts receivable securitization facility that extends the maturity date from 2025 to January 2028.
David Stacey: Liquidity preservation will continue to be our top priority for the foreseeable future as we navigate this prolonged industry downturn.
Speaker Change: Liquidity preservation will continue to be our top priority for the foreseeable future as we navigate this prolonged industry downturn.
Frank Bozich: Now I'll turn the call back over to Frank. Thanks, Dave. Looking ahead to the third quarter, we expect market conditions in adjusted EBITDA to be similar to the second quarter. While decreasing styrene margins and then unplanned outage are expected to negatively impact American sterrenics, unfavorable net timing is not expected to repeat at the same magnitude as Q. 2. Seasonal improvements in our higher margin building and construction and consumer electronics applications are expected to continue through the third quarter, and more normalized MMA market dynamics should continue to support improve margins and engineered materials. As a result, we expect Q3 adjusted EBITDA of $65 to $75 million.
Speaker Change: Now I'll turn the call back over to Frank.
David Stasse: Looking ahead to the third quarter, we expect market conditions in adjusted EBITDA to be similar to the second quarter. While decreasing styrene margins and an unplanned outage are expected to negatively impact America's styrenics, unfavorable net timing is not expected to repeat at the same magnitude as Q2.
David Stasse: Seasonal improvements in our higher-margin building and construction and consumer electronics applications are expected to continue through the third quarter, and more normalized MMA market dynamics should continue to support improved margins in engineered materials. As a result, we expect Q3 adjusted EBITDA of $65 to $75 million. While we are not providing a specific range for the fourth quarter, we do expect Q4 profitability to be sequentially lower than Q3 due to normal year-end seasonality.
Frank Bozich: Seasonal improvements in our higher margin building and construction and consumer electronics applications are expected to continue through the third quarter and more normalized MMA market dynamics should continue to support improved margins in engineering materials.
Frank Bozich: As a result, we expect Q3 adjusted EBITDA of $65 to $75 million.
Frank Bozich: While we are not providing a specific range for the fourth quarter, we do expect Q4 profitability to be sequentially lower than Q3 due to normal year-end seasonality. However, we anticipate free cash flow to increase sequentially from Q3 to Q4, as we typically have a substantial work in capital release at year-end. We are encouraged by the second consecutive quarter of sequentially higher profitability and expect to extend this similar level of profitability in the third quarter, despite persistently weak end market demand and challenging macroeconomic environment.
Frank Bozich: While we are not providing a specific range for the fourth quarter, we do expect Q4 profitability to be sequentially lower than Q3 due to normal year-end seasonality.
David Stasse: However, we anticipate free cash flow to increase sequentially from Q3 to Q4, as we typically have a substantial working capital release at year end. We are encouraged by the second consecutive quarter of sequentially higher profitability and expect to extend this similar level of profitability in the third quarter, despite persistently weak market demand and a challenging macroeconomic environment. We continue to see the benefit of the cost actions we have taken and are confident that we will emerge from this low-demand cycle stronger than we were before. And now, we're happy to take your questions.
Frank Bozich: However, we anticipate free cash flow to increase sequentially from Q3 to Q4, as we typically have a substantial working capital release at year end.
Frank Bozich: We are encouraged by the second consecutive quarter of sequentially higher profitability and expect to extend this similar level of profitability in the third quarter despite persistently weak and market demand and challenging macroeconomic environment.
Frank Bozich: We continue to see the benefit of the cost to actions we have taken and are confident that we will emerge from this low demand cycle stronger than we were before. And now we're happy to take your questions.
Frank Bozich: Thank you.
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And your first question comes from the line of Frank Mitsch with Firmium Research, LLC. Your line is open.
Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Speaker Change: If you would like to withdraw your question, simply press star 1 a second time.
Operator: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue.
Frank Mitsch: And your first question comes from the line of Frank Mitch with FermiM Research LLC. Your line is open. Thank you, and good morning, all.
Frank Mitsch: Thank you and good morning all. I want to drill down a little bit more into the free cash flow expectations for the balance of the year.
David Stacey: I want to drill down a little bit more into the free cash flow expectations for the balance of the year, given it's been a use of close to 140 million in the first half of the year. I understand that you're expecting styrene monomer prices down. You mentioned seasonal factors and working capital release by year end. And should investors expect that where can we get the free cash flow back to? I mean, are you looking forward to get to neutral? And if so, how does that play out? Again, given the fact that we're at a $140 million hole as we answer the second half of the year.
David Stasse: It's been a use of close to $140 million in the first half of the year. I understand that you're expecting styrene monomer prices to go down.
Speaker Change: It's been a use of close to $140 million in the first half of the year. I understand that you're expecting styrene monomer prices down. You mentioned seasonal factors and a working...
David Stasse: You mentioned seasonal factors and a working capital release by year-end. Should investors expect that? Where can we get the free cash flow back to? Are you looking forward to getting to neutral? And if so, how does that play out, again, given the fact that we're at $140 million as we enter the second half of the year? Uh, yeah. Good morning, Frank.
Speaker Change: Are you looking for it to get to neutral? And if so, how does that play out? Again, given the fact that we're at a $140 million hole as we enter the second half of the year.
David Stasse: Um, look, I think... As we said, we expect it to be positive. I think Q3 will be fairly neutral, kind of flattish free cash flow, and then Q4 will be positive. You know, for the year, clearly, because of how we started the year, because of the high starving prices, I think that puts us in a situation where for the full year, this year, our free cash flow will be negative. I mean, looking forward to next year, we have a slide in our presentation where we show our cash outflows for the year, and it totals about $350 million.
David Stacey: Yeah, good morning, Frank. Look, I think, as we said, we expected to be positive. I think Q3 will be fairly neutral, kind of flatish free cash flow. And then Q4 will be positive. You know, for the year, clearly, because of how we started the year, because of the high styrene prices, I think that puts us in a situation where, for the full year this year, free cash flow will be negative. I mean, looking forward to next year, if we have a slide in our presentation where we show all, you know, our kind of cash outflows for the year, and it told us about $350 million.
Speaker Change: You know for the year clearly because of how we started the year because of the high starving prices I think that puts us in a situation where for the full year this year our free cash flow will be negative I mean looking forward to next year if we have a slide in our in our presentation
Speaker Change: where we show all our cash outflows for the year and it totals about $350 million. So that's the sum of CapEx, interest, restructuring, etc.
David Stacey: You know, that's the sum of, that's the sum of capex interest, restructuring, et cetera. So, you know, and that includes $45 million of restructuring spend for this year. So, you know, I think to take away from that is, you know, at this level, you need $345 million of EBITDA to be cash flow neutral.
David Stasse: That's the sum of CapEx, interest, restructuring, etc. That includes $45 million of restructuring spend for this year. I think the takeaway from that is, at this level, you need $345 million to be cash flow neutral. So, look, we're clearly not in a position today to give guidance for 2025, but if I roll this page forward to next year, I think the restructuring costs will be lower. We still have a lot of spend this year for the two styrene plans that we closed.
Speaker Change: So, you know, and that includes $45 million of restructuring spend for this year. So you know, I think the takeaway from that is, you know, at this level, you know, you'd need $345 million of EBITDA to be cash flow neutral.
David Stacey: So we're clearly not in a position today to give guidance for 2025. But if I roll this page forward to next year, I think the restructuring costs will be lower. We still have a lot of spend this year for the two styrene plants that we closed. Cash interest; they also expect to be lower. We have a billion aid of floating rate debt. And I think, you know, everybody's followed what's gone on with rates recently. So the current trajectory of, you know, the forecast interest rate cuts would lead you to think that's going to be, you know, interest rates will be several.
Speaker Change: Hey.
Speaker Change: But so we're clearly not in a position today to give guidance for you know for 2025
Speaker Change: But if I roll this page forward to next year...
David Stasse: Cash interest, I also expect to be lower. We have a billion dollars of floating rate debt. And I think, you know, everybody's followed what's gone on with rates recently. So the current trajectory of, you know, forecasted interest rate cuts. Would it lead you to think that's going to be, you know, interest rates will be several, uh, several years? Thank you. Bye.
Speaker Change: You know, I think the restructuring costs will be lower, you know, we still have a lot of spend this year for the two styrene plants that we closed.
Speaker Change: Cash interest I also expect to be lower. We have a billion aid of We have a billion aid of floating rate debt
David Stacey: So, you know, it's not every hundred basis points is 18 million dollars a year of interest for us. So, you know, I mean, I think there's four cuts baked in the forward curve today that for this year alone. So I think those numbers will be, you know, that the interest number will be lower next year. And, you know, all of that, I think puts us in a position where, you know, this year's 345 or 350 of EBITDA, you know, cashflow neutral next year should be closer to 300. And, you know, 300 as a run rate of EBITDA, you know, is not far from where we are right now in Q2, Q3.
David Stasse: Every 100 basis points is $18 million a year of interest for us. So, you know, I mean, I think there's four cuts baked in the forward curve today for this year alone. So I think those numbers will be, you know, the interest number will clearly be lower next year. And, you know, all of that, I think, puts us in a position where, you know, this year's $345 or $350 of EBITDA, cash flow neutral next year should be closer to $300. And, you know, $300 as a run rate of EBITDA is not far from where we are right now in Q2, Q3.
Speaker Change: You know
Speaker Change: David Stasse, Frank Bozich
Speaker Change: And, you know, all of that, I think, puts us in a in a position where, you know, this year's 345 or 350 of EBITDA.
Speaker Change: You know, cash flow neutral next year should be closer to 300, and you know, 300 as a run rate of EBITDA, you know, is not far from where we are right now in Q2, Q3.
Frank Mitsch: That's very helpful. That's a very helpful day.
David Stasse: That's very helpful. That's very helpful, David. And if I could just stick with the restructuring spending.
Frank Mitsch: And in fact, we just stick with the restructuring spending that you mentioned. You know, there was an expectation that 24 would see between restructuring benefits and the, you know, the MACET edges, et cetera, that we'd see a hundred million dollar benefit in 24 versus 23. Can you give us a sense as to how that is trending and is that hundred million still trunce those expectations for 2024? It is. Yes. The hundred million is absolutely in the numbers for this year. We are very confident that we will fully recognize those cost savings again, which is the, just some of both, you know, the natural gas hedge is going away plus the benefits of no longer.
Speaker Change: That's very helpful. That's very helpful, David. And in fact, we just stick with the restructuring.
David Stasse: Spending that you mentioned, there was an expectation that 24 would see between restructuring benefits and the, you know, the NatGas hedges, et cetera, that we'd see a $100 million benefit in 24 versus 23. Can you give us a sense as to how that is trending?
David: Spending that you mentioned, you know, there was an expectation.
Speaker Change: That 24 would see between restructuring benefits and the, you know, the net gas hedges, et cetera.
Speaker Change: that we'd see a $100 million benefit.
Speaker Change: in 24 versus 23. Can you give us a sense of how that is trending and is that $100 million still...
David Stasse: And is that $100 million still Trinseo's expectations for 2024? It is, yeah, the $100 million is absolutely in the numbers for this year. We are very confident that we will fully recognize those cost savings again, which is the sum of both, you know, the natural gas hedges going away plus the benefits of no longer running the two styrene plants. We're very confident that we'll realize that full 100 million this year.
Trincio: Trinseo's expectations for 2024.
Speaker Change: Those cost savings, again, which is the sum of both the natural gas hedges going away plus the benefits of no longer running the two styrene plants. We're very confident that we'll realize that full 100 million this year.
David Stacey: Running the two styrene plants are very confident that we'll realize that 100 this year.
Matthew Blair: Thank you so much.
Frank Bozich: And your next question comes from the line of Matthew Blair with TPH. Your line is open. Thank you and good morning, Frank. I thought in your engineering material segment, the commentary on the PMA volume improvement was pretty encouraging. Can you talk about which end markets are, are maybe looking a little better for you, which end markets are still a little softer? Yeah. So thanks for the question. The, I would say automotive has been steady. And, and we saw building and construction applications where, you know, we're offering a sort of a unique solution into many building and construction applications to be, for example, cap stock, those to be actually very strong and steady demand.
Matthew Blair: and your next question comes from the line of Matthew Blair with TPH. Your line is open.
Speaker Change: And your next question comes from the line of Matthew Blair with TPH. Your line is open.
Frank Bozich: Thank you and good morning, Frank. I thought in your engineering materials segment, the commentary on the PMMA volume improvement was pretty encouraging. Can you talk about which end markets are maybe looking a little better for you, and which end markets are still a little softer?
Matthew Blair: Thank you and good morning, Frank. I thought in your engineering materials segment, the commentary on the PMMA volume improvement was pretty encouraging. Can you talk about which end markets are maybe looking a little better for you, which end markets are still a little softer?
Frank Bozich: Yeah, so thanks for the question. I would say automotive has been steady, and we saw building and construction applications where we're offering sort of a unique solution to many building and construction applications to be, for example, cap stock, those have actually been in very strong and steady demand. And so I would say in the markets, it's been steady in PMMA. The thing that has the growth in volume is really Europe recovering, volumes in Europe, it's sort of a geographical thing where European volumes have come back this year much stronger than they were last year.
Frank Bozich: And we saw building and construction applications where, you know, we're offering a sort of a unique solution into many building and construction applications to be, for example, cap stock.
Speaker Change: those to be actually very strong and steady demand.
Frank Bozich: And, and so I would say in end markets, it's been steady in PMA. The thing that has the growth in volume is really Europe recovering volumes in Europe. It's sort of geographical where European volumes have come back this year much stronger than they were last.
Speaker Change: So I would say in markets it's been steady in PMMA.
Speaker Change: The thing that has the growth in volume is really Europe recovering, volumes in Europe . It's sort of geographical where European volumes have come back this year much stronger than they were last year.
Matthew Blair: Stuart. Sounds good.
David Stasse: Sounds good. And then on the guidance, I guess I was a little surprised the Q3 number does not include, I guess, any sort of big assumptions on that timing. I think contract prices for styrene in the U.S. and Europe are down in the third quarter versus the second quarter. So is there an offsetting factor to those lower styrene prices once again this quarter?
Frank Bozich: And then on the guidance, I guess that was a little surprise. The Q3 number does not include, I guess, any sort of big assumptions on that timing. I think contract prices for styrene in the US and Europe are down in the third quarter versus the second quarter. So, is there an offsetting factor to those lower styrene prices once again this quarter? Well, in Q3, you know, you have, Amstie will be, you know, we expect Amstie to be, have some headwinds compared to Q2 due to lower styrene prices, as well as the unplanned outage they have at one of their plants.
Speaker Change: Sounds good and then on the the guidance
Speaker Change: I guess I was a little surprised the Q3 number does not include, I guess, any sort of big assumptions on that timing. I think contract prices for styrene in the U.S. and Europe .
Speaker Change: are down in the third quarter versus second quarter. So, is there an offsetting factor to those lower styrene prices once again this quarter?
David Stasse: Well, the... In Q3, you know, you have Amstey will be We expect AmSty to have some headwinds compared to Q2 due to lower styrene prices, as well as the unplanned outage they have at one of their plants. And then, as usual, you have a week or so of August in some of our end markets because of the vacation period in Europe. So that's, you know, how you look at Q, you know, that's how we're looking at Q3.
Amstey: So AmSci will be...
Frank Bozich: And then, as usual, you have, in some of our end markets, a week of August because of the vacation period in Europe. So that's, you know, how you look at Q3. You know, that's how we're looking at Q3. I think, Matthew, today, that's something just related to timing, specifically, you're right. We did see a big drop in prices at the end of Q2. In the Q3, which, you know, you would infer from that, we'd have negative timing, but we've seen an increase. There's an increase in contract prices in the month of August. There's a couple of outages; there's probably short term and duration that I think will probably largely offset that timing.
Speaker Change: In some of our end markets, a week or August because of the vacation period in Europe . So that's, you know, how you look at Q3, you know, that's how we're looking at Q3.
David Stasse: I think, Matt, this is Dave. I can add something just related to timing specifically. You're right. We did see a big drop in prices at the end of Q2 into Q3, which, you know, you would infer from that we'd have negative timing. But we've seen an increase. There was an increase in contract prices in the month of August. There are a couple of outages, probably short-term in duration, that I think will probably largely offset that timing.
Speaker Change: I think, Matt, this is Dave, I can add something, just related to timing specifically, you're right, we did see a big drop in prices at the end of Q2 into Q3, which
Matt: You know, you would infer from that we'd have negative timing, but we've seen an increase. There was an increase in contract prices in the month of August .
Speaker Change: There's a couple of outages, probably short-term and duration, that I think will probably largely offset that timing. Just one other point.
Frank Bozich: Just one of the point that you referenced North America's styrene prices, that doesn't have that doesn't influence any significance or net timing. It's really, by far, the European prices is the largest in an Asian price; this would be the second. So, you know, as I said earlier, we're sitting here today, Matt. I don't anticipate timing of any significance in a quarter. Great.
David Stasse: Just one other point that you referenced North America, styrene prices. That doesn't have an input, that doesn't influence, of any significance or net timing. It's really, by far, European prices are the largest, and then Asian prices would be the second. So, you know, as I said earlier, sitting here today, Matt, I don't anticipate timing of any significance in a quarter.
Speaker Change: You referenced North America styrene prices. That doesn't have an input. That doesn't influence.
Speaker Change: of any significance or net timing. It's really, by far, it's European prices is the largest, and then Asian prices would be the second.
Speaker Change: So, as I said earlier, sitting here today, Matt, I don't anticipate timing of any significance in a quarter.
Matthew Blair: Thanks for the color.
Matt: Great, thanks for the color.
Hassan Ahmed: And your next question comes from the line of Hassan Ahmed with Olympic Global Advisors. Your line is open. Morning, Frank and Dave. You know, you guys talked about how, you know, within the MMA business, conditions are normalizing. You know, certainly on the surface, it seems, you know, certain other businesses, you know, seem to be quite far away from more normalized levels. So, you know, if you wouldn't mind, just, you know, could you revisit what your assumption of the normal earnings power of the company is? I mean, you know, you guys obviously did around on an annualized basis, 270 million in EBITDA in Q2.
Hassan Ahmed: And your next question comes from the line of Hassan Ahmed with Alembic Global Advisors. Your line is open.
Speaker Change: And your next question comes from the line of Hassan Ahmed with Alembic Global Advisors. Your line is open.
Frank Bozich: You guys talked about how within the MMA business, conditions are normalizing; certainly, on the surface, it seems certain other businesses seem to be quite far away from more normalized levels. If you wouldn't mind, could you revisit what your assumption of the normal earnings power of the company is? You guys obviously did around $270 million in EBITDA on an annualized basis in Q2, and obviously the EM business popped nicely EBITDA margin-wise, close to 11%. So, if you wouldn't mind reminding us where we stand with the state of affairs the way they are in terms of the normal earnings power of the company.
Speaker Change: Morning Frank and Dave.
Speaker Change: You know, you guys talked about how...
Hassan Ahmed: You know, within the MMA business, conditions are normalizing, you know, certainly on the surface it seems, you know.
Hassan Ahmed: certain other businesses, you know, seem to be quite far away from more normalized levels. So, you know, if you wouldn't mind, just, you know, could you revisit...
Speaker Change: What your assumption of the normal earnings power of the company is? I mean, you know, you guys obviously did around on an annualized basis 270 million
Hassan Ahmed: And, you know, obviously, the EM business popped nicely; EBITDA marginalized, you know, close to 11%. So, you know, if you wouldn't mind reminding us where we stand, you know, with sort of the state of affairs, the way they are in terms of the normal earnings power of the company.
Speaker Change: in EBITDA in Q2.
Speaker Change: And, you know, obviously the EM business popped nicely EBITDA margin-wise, you know, close to 11%. So, you know, if you wouldn't mind reminding us where we stand, you know, with sort of the state of affairs the way they are in terms of the normal earnings power of the company.
Frank Bozich: Yeah, I mean, Hassan, it's really difficult to, in almost impossible to say what I'm, to predict what normal looks like right now. You know, so I think we can expect to see improvements going forward from the actions we've taken and, you know, we continue to have additional opportunities that we'll pursue. But, you know, to predict what a normal market looks like in many of our end segments, you know, against the backdrop of all the geopolitical uncertainty and market uncertainty, I think is really difficult. Understood, understood.
Frank Bozich: Yeah, I mean, Hassan, it's really difficult to, almost impossible to predict what normal looks like right now. You know, so I think we can expect to see improvements going forward from the actions we've taken. And, you know, we continue to have additional opportunities that we'll pursue. But, you know, to predict what a normal market looks like in many of our end segments, you know, against the backdrop of all the geopolitical uncertainty and market uncertainty, I think it's really difficult.
Speaker Change: Yeah, I mean, Hassan, it's really difficult to, almost impossible to say what, to predict what normal looks like right now.
Speaker Change: You know, so, I think we can expect to see improvements going forward from the actions we've taken and, you know,
Speaker Change: We continue to have additional opportunities that we'll pursue, but, you know, to predict what a normal market looks like in many of our end segments, you know, against the backdrop of all the geopolitical uncertainty and market uncertainty, I think is really difficult.
Frank Bozich: And on a separate note, you guys talked about how, you know, in China, the weakness in the polycarbonate market within epoxies and within nylon was impacting phenol and, in turn, acetone production, which obviously, you know, their own forward was limiting MMA production. So where do we stand with regard to that?
Frank Bozich: And on a separate note, you know, during the Q1 call, you guys talked about how, you know, in China, you know, weakness in the polycarbonate market within epoxies and within nylon, you know, that was impacting phenol and intern acetone production, which obviously, you know, they're on forward was limiting MMA production. So where do we stand with regards to that now? The, we see the MMA market is hype and basically all regions and the factors that we highlighted in in the Q1 call still exists, and I would say the other thing that, you know, you need to remember is MMA, the MMA market almost buried by region, but it also a significant portion of MMA almost.
Speaker Change: Understood, understood.
Speaker Change: And on a separate note, you know, during the Q1 call, you guys talked about how...
Speaker Change: In China, weakness in the polycarbonate market within epoxies and within nylon.
Speaker Change: You know, that was impacting phenol and in turn acetone production, which obviously, you know, their own forward was limiting MMA production. So where do we stand with regards to that now?
Frank Bozich: The MMA market is tight in basically all regions, and the factors that we highlighted in the Q1 calls still exist. And I would say the other thing that, you know, you need to remember is the MMA market is almost buried by region, but a significant portion of MMA, almost half of it goes into polymer additives, as well as architectural coatings. And you can see that in the architectural coatings market, volumes have improved and are coming back, so that's created a tightening effect at the same time feedstock availability in Asia is limited. So, you know, um, it's a tight market, and I don't see, you know, absent, something dramatically changing. We don't see the current conditions for MMA changing very much.
Speaker Change: We see the MMA market is tight in basically all regions.
Speaker Change: And the factors that we highlighted in the Q1 call still exist.
Speaker Change: And I would say the other thing that, you know, you need to remember is MMA...
Speaker Change: The MMA market almost...
Speaker Change: buried by region but it also a significant portion of MMA almost half of it goes into polymer additives
Frank Bozich: Half of it goes into polymer additives as well as architectural coatings, and you can see that in architectural coatings markets that has come, you know, volumes have improved and are coming back. So that's created a tightening effect; at the same time, the feedstocks availability in Asia are limited. So, you know, it's a tight market, and I don't see, you know, absent something dramatic changing. We don't see the current conditions for MMA changing.
Speaker Change: well as architectural coatings and you can see that in architectural coatings markets that has come you know volumes have improved and are coming back so that's created a tightening effect at the same time the feedstocks availability in Asia are limited
Speaker Change: So, you know, it's a tight market, and I don't see, you know, absence.
Speaker Change: something dramatic changing. We don't see the current conditions for MMA changing.
Hassan Ahmed: Very helpful. Thank you so much.
Frank Bozich: It's a very helpful site. Thank you so much.
Speaker Change: Very helpful site. Thank you so much.
Lawrence Alexander: And your next question comes from the line of Lawrence Alexander with Jefferies. Your line is open. Good morning. This is Dan on for Lawrence with the new PMMA facility in Italy that's now wrapping up.
Operator: And your next question comes from the line of Lawrence Alexander with Jeffreys. Your line is open.
Speaker Change: And your next question comes from the line of Laurence Alexander with Jeffries. Your line is open.
Dan: Good morning. This is Dan speaking on behalf of Lawrence. With the new PMMA facility in Italy that's now ramping up, do you have a timeline of when that's going to be positively contributing to EBITDA and kind of what the, I don't know, mid-cycle, what it could potentially mean to you guys in terms of EBITDA and earnings?
Speaker Change: Good morning, this is Dan for Lawrence. With the new PMMA facility in Italy that's now ramping up, do you have a timeline of when that's going to be positively contributing to EBITDA and kind of what the mid-cycle, what it could potentially mean to you guys in terms of EBITDA and earnings?
Frank Bozich: Do you have a timeline of when that second's going to be positively continuing to EBITDA and kind of what the, I don't know, and mid cycle what it could potentially mean to you guys in terms of EBITDA and earnings. Yeah, we don't have that a forecast for that right now because, you know, as a practical matter, this is a demonstration facility for a much bigger investment that will have to do in the future, and that's in, you know, front and load engineering analysis at the current time. So I can't really give you an expectation for what the EBITDA contribution or exact timing for when it will will occur, but I can say that we see that as favorable to virgin production from a cost standpoint.
Frank Bozich: Yeah, we don't have a forecast for that right now because, as a practical matter, this is a demonstration facility for a much bigger investment that we'll have to do in the future and that's in front-end load engineering analysis at the current time, so I can't really give you an expectation for the EBITDA contribution or exact timing for when it will occur. But I can say that we see that as favorable to virgin production from a cost standpoint and with similar quality. So it's a very exciting opportunity for us. OK.
Speaker Change: Yeah, we don't have that, a forecast for that right now because, you know, as a practical matter, this is a demonstration facility for a much bigger investment that we'll have to do in the future, and that's in...
Speaker Change: front-end load engineering analysis at the current time, so I can't really give you an expectation of
Speaker Change: for what the EBITDA contribution or exact timing for when it will will occur, but I can say that we see that as
Frank Bozich: So, and with similar quality, so it's a very exciting opportunity for us. Okay, and then you mentioned, I think you highlighted the battery market as being one that's doing fairly well. I was wondering if your outlook for that market has been altered at all. Just given, and a lot of headlines were reading with with Alexa vehicles or just just battery demand in general. Yeah, so our growth in battery continues into this year, and it's significant growth. Now, what's driving our growth is the technological advancement, and our technology or our solution goes into binding the anode in, you know, an energy battery, like a NCM, you know, nickel-cobalt manganese cathode battery that goes into EVs, and our technology allows the producer to have a higher energy density in the battery.
Speaker Change: favorable to virgin production from a cost standpoint so and with similar quality so it's a very exciting opportunity for us.
Frank Bozich: Okay. And then you mentioned the battery market as being one that's doing fairly well. I was wondering if your outlook for that market has been altered at all, just given the – I know a lot of the headlines we're reading with electric vehicles or just battery demand in general. Yeah, so.
Speaker Change: Okay. And then you mentioned, I think you highlighted the battery market as being one that's doing fairly well. I was wondering if your outlook for that market has been altered at all, just given, I know a lot of the headlines we're reading with electric vehicles or just battery demand in general.
Frank Bozich: Our growth in batteries continues into this year, and it's significant growth. Now, what's driving our growth is technological advances. And our technology or our solution goes into binding the anode in, you know, an energy battery like a NCM, you know, nickel cobalt manganese cathode battery that goes into EVs, and our technology allows the producer to have a higher energy density in the battery, which is a small percentage of the market.
Speaker Change: Yeah, so, um...
Speaker Change: Our growth in battery continues into this year, and it's significant growth. Now, what's driving our growth is the technological advancement.
Speaker Change: And our technology or our solution goes into binding the anode in, you know, an energy battery like a
Speaker Change: NCM, you know, nickel-cobalt-manganese cathode battery that goes into EVs.
Speaker Change: and our technology allows the producer to have a higher energy density in the battery. So, and we have
Frank Bozich: So, we have, you know, a small percentage of the market, but as our technology is qualified at other producers, we anticipate to see growth no matter, you know, even in, you know, sort of a flat EV market, because we're going to penetrate because of the innovation and the technical advantage of our solution.
Speaker Change: You know a small percentage of the market, but as our technology is qualified at other producers We anticipate to see growth no matter you know even in you know sort of a
Frank Bozich: But as our technology is qualified by other producers, we anticipate to see growth no matter, you know, even in, you know, sort of a flat EV market because we're going to penetrate because of the innovation and the technical advantage of our solution.
Speaker Change: a flat EV market because we're going to penetrate because of the innovation and the technical advantage of our solution.
Lawrence Alexander: Thank you very much.
Michael Leithead: And your final question comes from the line of Michael Leithead with Barclays. Your line is open.
Speaker Change: Thank you very much.
Michael Leithead: And your final question comes from the line of Michael Leithead with Barclays. Your line is open. Great, thank you. Good morning, guys. First, I just had two on cash interest. One, it looks like you decided to pick 15 million of cash interest in your updated forecast for this year.
Speaker Change: And your final question comes from the line of Michael Leithead with Barclays. Your line is open.
Michael Leithead: Great. Thank you. Good morning, guys.
Michael Leithead: I have two on cash interest. One, it looks like you decided to pick...
Michael Lighthead: Great. Thank you. Good morning, guys. First, I just had two on cash interest. One, it looks like you decided to pick $15 million of cash interest in your updated forecast for this year. I guess, Dave, can you just help us understand the change of thinking there versus last quarter, sort of how you arrived at that $15 million number versus
David Stasse: I guess, Dave, can you just help us understand the change of thinking there versus last quarter, sort of how you arrived at that $15 million number versus, say, a higher or lower amount, and then...
David Stacey: I guess, Dave, you just help us understand the change of thinking the adverse less quarter, sort of how you arrived at about 15 million dollar number versus stay a higher or lower amount. And then two related to that, what is the incremental cost for you guys on that 15 million interest by deferring it? Sure. Okay, so just for the benefit of it. So what Mike is referring to, we do have the pick option, pay-in-kind option on the term loan that we put in place in September of last year. That term loan carries interest of so far plus eight and a half.
David Stasse: And then two, related to that, what is the incremental cost for you guys on that $15 million interest by deferring? Sure.
Speaker Change: What is the incremental cost for you guys on that $15 million interest by deferring it?
David Stasse: Okay, so just for the benefit of everybody, so what Mike is referring to is that we do have the pick option, the paying kind option, on the term loan that we put in place in September of last year. That term loan carries an interest rate of SOFR plus eight and a half. And we have the ability to pick or pay in kind for 4.25% of that coupon. So today SOFR is about 5.25% plus the 8.5% spread.
Dave: Sure, okay, so just for the benefit of everybody, so...
Dave: What Mike is referring to is that we do have the pick option, paying kind option, on the term loan that we put in place in September of last year. That term loan carries interest of SOFR plus eight and a half.
David Stacey: And we have the ability to pick or pay-in-kind four and a quarter percent of that coupon. So today so far is about five and a quarter plus the eight and a half spread. That's about a 13.75 coupon right now. We have the ability to pick or not pay interest and instead capitalize four and a quarter percentage points of that, which is about a third of the coupon. And there's a 1% penalty for doing that. So it was about for the coupon that was payable in July. We elected that pick option again. It's kept it what I just described, Mike.
Speaker Change: And we have the ability to pick or pay in kind four and a quarter percent of that coupon. So today SOFR is about five and a quarter plus the eight and a half spread. That's about a 13.75 coupon right now.
David Stasse: That's about a 13.75% coupon right now. We have the ability to pick or, you know, not pay interest and instead capitalize 4.25 percentage points of that, which is about a third of the coupon. And there's a 1% penalty for doing that.
Speaker Change: We have the ability to pick or you know not pay interest and say capitalize
Speaker Change: four and a quarter percentage points of that, which is about a third of the coupon. And there's a 1% penalty for doing that. So it was about
David Stasse: So it was about for the coupon that was payable in July. We elected that pick option. Again, it's capped at what I just described, Mike, and it was about $11 million. The amount of pickings, you know, the amount of interest that was picked, if you will, or capitalized. I think the 15 that you're referring to is probably the change in interest from the last time we saw this. The other thing that influences that number is the forward curve, right?
Speaker Change: for the
Speaker Change: The coupon that was payable in July , we elected that pick option, again, it's capped at what I just described, Mike, and it was about $11 million.
David Stacey: And it was about $11 million, the amount of pick and the amount of interest that was picked, if you will, or capitalized.
Speaker Change: the amount of pickings, you know, the amount of...
David Stacey: I think the 15 that you're referring to is probably the change in interest from the last time we saw this. The other thing that the influence has, that number is the forward curve, right? So we're in obviously an environment today where it looks like there's going to be more cuts versus less this year. So, to get to your, the other question about what, why did we decide to do that? I mean, as I said in my, in my prepared remarks, Mike, I mean preserving liquidity in this environment is, you know, our absolute top priority. And, you know, I mean, what's changed from a year ago when we issued this debt is that we're, you know, we're a year further into this downturn.
Mike: interest that was picked, if you will, or capitalized. I think the 15 that you're referring to is probably the change in interest from the last time we saw this.
David Stasse: So we're obviously in an environment today where it looks like there's going to be more cuts versus fewer this year. So to get to the other question about, well, why did we decide to do that? I mean, as I said in my prepared remarks, Mike, preserving liquidity in this environment is our absolute top priority. And I mean, what's changed from a year ago when we issued this debt is that we're a year farther into this downturn, and there's been no recovery, no demand recovery to speak of.
Speaker Change: The other thing that influences that number is the forward curve.
Speaker Change: Right, so we're obviously in an environment today where it looks like there's going to be more cuts versus less.
Speaker Change: So, to get to the other question about, well, why did we decide to do that, I mean, as I said in my prepared remarks, Mike, I mean,
Speaker Change: Preserving liquidity in this environment is, you know, our absolute top priority.
Speaker Change: You know, I mean, what's changed from a year ago when we issued this debt is that we're, you know, we're a year farther into this.
David Stacey: And there's been no recovery, no demand recovery to speak of. So, you know, we just think it's prudent to take all possible actions to preserve liquidity.
Speaker Change: downturn and there's been no recovery, no demand recovery to speak of.
David Stasse: So we just think it's prudent to take all possible actions to preserve liquidity. We'll obviously revisit the election to pick or pay in cash, you know, in the future as we as we reach future coupon days.
Speaker Change: So, you know, we just think it's prudent to take all possible actions to preserve liquidity. You know, we'll obviously revisit...
David Stacey: You know, we'll obviously revisit. the election to pick or pay in cash in the future as we reach future coupon dates.
Speaker Change: The election to pick or pay in cash, you know in the future as we as we as we reach future coupon dates
Michael Leithead: Great, that's helpful. And then, for Frank, just with the joint Amstai sale, now you guys have obviously surveyed the market before.
Frank Bozich: Great, that's helpful. And then for Frank, just with the joint AmSty sale now, you guys have obviously surveyed the market before. By now going with, say, the whole asset for sale, going with CP Chem for AmSty, how do you think that changes the attractiveness of the sale and maybe how does that kind of influence your confidence about now getting this deal done, given the kind of your experience here before? Yeah, I mean, we've got very
Speaker Change: Great, that's helpful. And then, for Frank, just with the joint AmSci sale now, you guys have obviously surveyed the market before. By now going with, say, the whole asset for sale, going with CPChem for AmSci,
Frank Bozich: By now, going with, say, the whole asset per sale, going with CPKM for Amstai, how do you think that changes the attractiveness of the sale and maybe have us that kind of influence your confidence about now getting this deal done given kind of your experience here before. Yeah, I mean, we got very clear signals from the participants in our previous process that. But there was, you know, an overhang on their interest because, you know, to enter into a joint venture. So their strong preference was to own 100% of Amstai because it's a great asset. That it's performed very consistently and, you know, I think people want to buy control, not into a J.B.
Speaker Change: How do you think that changes the attractiveness of the sale and maybe how does that kind of influence your confidence about now getting this deal done given kind of your experience here before?
Frank Bozich: We got very clear signals from the participants in our previous process that there was, you know, an overhang on their interest because, you know, to enter into a joint venture. So their strong preference was to own 100% of Amstey because it's a great asset. It's performed very consistently. And, you know, I think people want to buy control, not into a JV. And so, you know, that experience and those market signals we got in the previous process make it clear to us that, you know, any concerns related to this that were expressed by some of the participants will be minimized.
Speaker Change: Yeah, I mean, we...
Speaker Change: We got very clear signals from the participants in our previous process that there was...
Speaker Change: you know, an overhang on their interest because
Speaker Change: You know to enter into a joint venture so their strong preference was to own a hundred percent
Speaker Change: of Amstey, because it's a great asset, it's performed very consistently, and I think people want to buy control, not into a JV.
Frank Bozich: And so that, you know, that experience and those market signals we got in the previous process make it clear to us that, you know, any concerns related to this that we were expressed by some of the participants will be minimized.
Speaker Change: So, that experience and those market signals we got in the previous process make it clear to us that the concerns related to this that were expressed by some of the participants will be minimized.
Frank Bozich: Great. Thank you.
Operator: And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.
Speaker Change: Great, thank you.
Frank Bozich: And ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.
Speaker Change: And ladies and gentlemen, this concludes today's conference call and we thank you for your participation. You may now disconnect.