Trinseo S.A (TSE) CEO Chris Pappas on Q2 2018 Results - Earnings Call Transcript

Trinseo S.A. (NYSE:TSE) Q2 2018 Results Earnings Conference Call August 3, 2018 10:00 AM ET

Executives

Barry Niziolek - Executive VP & CFO

Christopher Pappas - CEO, President & Director

David Stasse Trinseo - VP of Treasury & Corporate Finance

Analysts

David Begleiter - Deutsche Bank

Hassan Ahmed - Alembic Global

Laurence Alexander - Jefferies

Vincent Andrews - Morgan Stanley

Dylan Campbell - Goldman Sachs

Matthew Blair - Tudor, Pickering, Holt

Eric Petrie - Citi

Operator

Good morning, ladies and gentlemen, and welcome to the Trinseo's Second Quarter 2018 Financial Results Conference Call. We welcome the Trinseo management team, Chris Pappas, President and CEO; Barry Niziolek, Executive Vice President and CFO; and David Stasse, Vice President of Treasury and Corporate Finance.

Today's conference call will include brief remarks by the management team followed by a question-and-answer session. The company distributed more detailed remarks on its financial results, along with a press release and presentation slides at the close of market yesterday. These documents are posted on the company's Investor Relations website, and by means of a Form 8-K filing with the Securities and Exchange Commission. [Operator Instructions]

I will now hand the call over to David Stasse.

David Stasse Trinseo

Thank you, Virgil, and good morning, everyone. [Operator Instructions]

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. 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, factors set forth in our annual report on Form 10-K under the Item 1A risk factors.

Today's presentation includes certain non-GAAP measurements. A reconciliation of these measurements is provided in our earnings release and in the appendix of our investor presentation. A replay of the conference call and transcript will be archived on the company's Investor Relations website shortly following the conference call. The replay will be available until August 3, 2019.

Now I would like to turn the call over to Chris Pappas.

Christopher Pappas

Thanks, and welcome to Trinseo's Second Quarter 2018 Financial Results Conference Call. I would like to highlight a few key points on our financial results and strategic initiatives. We recently published our Eighth Annual Sustainability and Corporate Social Responsibility Report, which showcases how Trinseo is meeting or exceeding the highest standards of safety and environmental performance and developing innovative solutions that benefit our world. This report is significant because we began the adoption of the Global Reporting Initiative framework. GRI is a leading independent organization that provides a common language and framework for public sustainability reporting.

Every year, since our first report in 2011, we have achieved reductions in waste, water consumption, electricity use as well as total chemical, volatile organic chemical, greenhouse gas and nitrogen oxide emissions, just to name a few. We continue our work to reduce Trinseo's environmental footprint, while developing new innovative solutions that enable our customers to create more sustainable products by reducing energy use, preserving health, enhancing safety, improving durability and conserving natural resources. We are very proud of these accomplishments as they demonstrate the company's commitment to sustainability.

Now turning to business results. We started the year with record profitability in the first quarter, and we finished the first half with strong second quarter results that were in line with guidance. Net income of $98 million and adjusted EBITDA of $170 million. These results included a pretax $10 million favorable net timing impact. Higher-than-expected styrene margins during the quarter were offset by production issues at Americas Styrenics, which has since been resolved as well as higher-than-expected impacts from our planned maintenance event in Performance Plastics. In total, this maintenance impact in the second quarter of about $10 million was a little more than we expected.

In addition, we had EPS of $2.24 and adjusted EPS of $2.40 as overall business fundamentals continued to be positive. Cash generation was very strong during the quarter with cash from operations of $142 million and free cash flow of $113 million, and we utilized $37 million of cash to repurchase nearly 500,000 shares.

We continue to make progress toward our growth target in Latex Binders, Synthetic Rubber and Performance Plastics, which includes growth in polycarbonate. Recall, that at our Investor Day in November 2016, we outlined a $100 million growth target from 2016 to 2019 for these businesses. This target was made up of $75 million from organic projects and $25 million from other projects, primarily M&A. We currently expect to achieve approximately $90 million of adjusted EBITDA growth across these segments. The $75 million target from organic projects and approximately half of the $25 million target from executed M&A.

Now I'd like to discuss third quarter and full year 2018 guidance. For the third quarter, we expect net income of between $88 million and $96 million, adjusted EBITDA of between $150 million and $160 million, and diluted and adjusted EPS of $2 to $2.19. This outlook assumes minimal net timing impacts and includes no potential favorability from unplanned styrene outages. This third quarter outlook is sequentially lower than the second quarter due to seasonality, softer-than-expected tire demand as well as lower styrene margins as more supply comes back online after a period of planned and unplanned outages. However, we do expect sequentially higher adjusted EBITDA in Performance Plastics after the second quarter planned maintenance activity.

Moving to full year 2018, we are affirming our full year guidance and expected net income of between $393 million and $410 million, adjusted EBITDA of between $665 million and $685 million, diluted EPS of $8.95 to $9.32 and adjusted EPS of $9.15 to $9.52. This outlook assumes a minimal impact from net timing and no impact from unplanned styrene outages beyond the approximate $20 million impact from the first half of the year.

For full year 2018 cash generation, we are currently forecasting $450 million of cash from operations and $300 million of free cash flow. This assumes $150 million for capital expenditures, $95 million for cash taxes and $50 million for cash interest for the year. It also includes some working capital increase for our growth projects as well as about $25 million of cash expense related to the business services transition that we discussed on the first quarter call.

Now I'd like to make a few comments to give you an indication of how we see the key drivers for our 2019 expectations. Overall, we see continued healthy business conditions around the world, driven by good economic growth. In addition, our team continues to focus on solving our key customer needs with innovative polymer solutions. This is true across our product lines, including SSBR for high-performance tires; Latex Binders for adhesives, construction and flooring application; as well as various engineer plastics for automotive light-weighting appliances, consumer electronics and medical solutions. We see limited new capacity over the next year, leading to similar or slightly higher operating rates across our businesses.

This outlook results in the following expectations for 2019. One, as previously mentioned, we expect to achieve approximately $90 million of growth across the Latex Binders, Synthetic Rubber and Performance Plastics segments from 2016 to 2019, with $30 million of this included in our 2018 guidance. From this full year 2018 outlook, we expect that the additional $60 million of growth from 2018 to 2019 will be comprised of approximately $10 million in Latex Binders, at least $20 million in Synthetic Rubber and about $30 million in Performance Plastics. Two, for Feedstocks, we see a slightly higher operating rate environment that should yield another strong year, slightly above 2018, excluding the approximate $20 million of unplanned outages that we have experienced so far this year. Recall, while we don't include the impact of unplanned outages in our guidance, we have had EBITDA lift from unplanned outages in each of the last 4 years. Three, in polystyrene and Americas Styrenics, we expect another steady year with results similar to 2018 in both of these businesses. So in aggregate, we see 2019 as a continuation of the EBITDA and EPS growth and strong cash flow performance that Trinseo has delivered from 2015 through 2018.

Before turning to Q&A, I want to say a word on the current trade environment. First, this arena is clearly in a state of flux and it's difficult to predict where these trade dynamics will finally end. But for Trinseo, we see no material impact on our business from the tariff activity that is currently being implemented or proposed by the United States and China.

As Q2 ended and Q3 started, we have noticed some reluctance by customers to purchase normal volumes, as they weigh the outcome on the trade situation. This means we have seen some inventory destocking, which, we believe, will be a temporary and short-lived issue.

In closing, I want to reiterate a few key points. First, we had an excellent first half of 2018, and we are affirming our full year guidance including net income at a midpoint of $402 million and adjusted EBITDA in the midpoint of $675 million, which assumes minimal timing impact for the year. Second, we are increasing our full year 2018 diluted EPS and adjusted EPS, each with a new midpoint of $9.14 and $9.34, respectively. Third, we are on track to deliver $90 million of adjusted EBITDA growth from 2016 to 2019 across Latex Binders, Synthetic Rubber and Performance Plastics segments, a significant lift in these differentiated product-based businesses. Fourth, in 2019, we are expecting another year of growth and profitability as well as continued strong cash flow, driven by our growth initiatives as well as continued healthy operating rates. And finally, we continue to focus our capital deployment on our differentiated products growth and returning cash to shareholders via dividends and share repurchases. Since we went public in June of 2014, we have returned $365 million to shareholders.

And now, Virgil, you may open the phone line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from David Begleiter from Deutsche Bank.

David Begleiter

Chris, just on Rubber. Can you give us a little more color on the weakness you're seeing in the tire market as well as the slower-than-expected ramp in that new SSBR capacity?

Christopher Pappas

Sure. First of all, we are still doing very nicely in SSBR. We're up about 6% year-over-year in volume. We were expecting a little bit higher growth than that through this midyear and through the end of the year, but it's becoming a little bit clear to us that both in the OEM and replacement tire market, there is some amount of slowdown in the tire market. That's been communicated by the tire producers. And while the growth rates are still positive, they're a little bit lower than they have been historically. And that's true across both, what we call, high-performance tires and standard tires. Now, as you know, David, we participate in high-performance tires with our SSBR, but we also participate in standard tires with our E-SBR. So as the tire market slows down, we would see and do see some effect on our Rubber business on both SSBR and E-SBR. It's not dramatic, it is a subtle change, but we do want to indicate that we see that slowing down slightly, as the tire companies have generally mentioned in their commentary recently as well.

David Begleiter

And Chris, just on the Performance Plastics outlook for next year, nice growth, even ex the $10 million of maintenance outages this year. Maybe little more color on that organic growth you're seeing in '19 from Performance Plastics.

Christopher Pappas

Well, as you know, David, we have the ABS facility in China that has started up towards the end of last year. That's great source of growth for us in Performance Plastics. But we're seeing general growth in the market that we're in. We had a very nice year-over-year lift or a sequential lift in volume in that business. Generally, we see a strong growth conditions in plastic substitution and automotive still for light-weighting, medical. All of the segments we're in, consumer electronics, appliances, et cetera, are still looking for good solutions out of engineered materials, engineered plastics. So across the board, we see good market dynamics. We also have an ABS facility that's ramping up, and we have additional compounding capacity to address the general growth in the market.

Operator

Your next question comes from the line of Hassan Ahmed from Alembic Global.

Hassan Ahmed

Chris, just wanted to revisit some of the trade comments you made. You said that, you're sort of seeing, maybe potentially some customers sort of holding back currently from buying certain products to figure out how sort of things shape up. But through the course of this quarter, leading up to the implementation of these sanctions, did you guys notice any sort of prebuying activity at all?

Christopher Pappas

We noticed prebuying, I think, Hassan, more from whatever the normal feedstock dynamics were driven by, not by trade. We are noticing, at the end of the quarter, the beginning of the quarter, the comment I made about customers being a little bit reluctant. Remember, for us on trade, for Trinseo, we are regional producer of polymers. And we really don't move our polymers outside of region at all with the exception of rubber, where we do make in Europe, and we sell it around the world with our rubber products. So as a general rule for our polymers, we may can sell locally. So those dynamics for us are not impactful, the trade dynamics. And even as you look to the downstream nature of our business, downstream being the products that we sell to, for example, refrigerators, it's that level of the business where people are trying to kind of figure out where things are going to land as they think about how much product to produce in a given region. Now for us, as that gets sorted out -- in other words, the trade dynamics, for example, refrigerators, again, remember, we operate regionally. So if there are less refrigerators produced in China and slightly more in the United States, our polystyrene that goes into that refrigerator will be supplied by Americas Styrenics as compared to ourselves in China. I bring that example up, Hassan, because we started to look at a number of segments like that and started to look at the economics, the math of how that could impact us. It turns out in refrigerators, just to stick on that, we see only small, very low-value refrigerators coming out of China anyway, and so the effect on us, that I just outlined, would be de minimis. And we started to look at many of our segments that way, and that's why we continue to make the statement that we just don't see a material impact on us. It has to do with the regional nature what we do, both on Polymer and our ability to supply Polymer regionally to the production of finished goods, whether they move from China to the U.S., U.S. to China or wherever. And that's why we believe it will have minimal impact on us.

Hassan Ahmed

Very helpful, Chris. Now as a follow-up, along the product lines. One of your competitors within the sort of European polycarbonate domain reported some very good sort of Q2 volume growth numbers, 5%, 5.5% volume growth in Q2 year-on-year. So just trying to get a sense of whether you guys are seeing similar sort of demand/volume growth within polycarbonates as well? And going forward, what you think a more sustainable demand growth number could be for that business?

Christopher Pappas

Well, first of all, we're constructive on polycarbonate. So we do see that business as having a growth -- healthy growth going forward. We've pegged it in the 4% range. Remember, we're a very small player in polycarbonate. We have 1 asset, that's it, in Europe in polycarbonate about 150 kt. We're 13% of the European market, and we really aren't in the North America or Asia markets. We're a very small player in polycarbonate. So we're constructive on polycarbonate. We see the operating rates continuing to move in the right direction, which should be supportive of margin. And we do see higher demand for our polycarbonate. But our objective in polycarbonate is to move our product from selling neat polycarbonate to selling compounded polycarbonate products. And so our volume growth in polycarbonate will come from 2 directions. One is whatever we can sell that's neat and whatever we can sell that's compounded. But at the end of the day, we're generally sold out today with our 1 asset. So the shift for us will be on driving into compounded products where we can make more margin, not so much volume, but that shift.

Operator

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

Laurence Alexander

Just had a couple of questions. First, just to clarify your comments. So you're basically pointing towards an organic tailwind of about $60 million in 2019, is that correct?

Christopher Pappas

That's correct.

Laurence Alexander

Okay. And then can you sort of give little bit of a longer-term perspective on 2 things. One is, as the -- just to stick on the refrigerator example. As the Chinese move up the quality scale and as they're doing more high-end fridges there, will a high-end fridge there have the same economic benefit to Trinseo? Or does flowing it through the -- capturing the value in the JV structure somehow change the amount that you capture? Can you just sort of give us a sense for sensitivity? But also how are you thinking about the longer-term deployment of cash between organic growth projects and capital returns after the end of this investment, what cycle?

Christopher Pappas

Okay. I'll take the first part, and Barry will take the capital allocation question, Laurence. So I used refrigerators just as one example. Let me assure you that our EBITDA exposure to the refrigerator business is really de minimis. It was just an example of how that dynamic can work. It's hard for me to tell whether China will become -- and they make some very good high-end refrigerators today, don't get me wrong. The -- I brought it up because it turns out that their export market for refrigerators today is contained to -- there's very small undercounter kind of refrigerators, $150 units. It doesn't mean they aren't making high-quality higher end, those just aren't exported to the U.S. They might be going to Europe, they may be used in country, et cetera. So they're already in that business. So it's hard for me to tell how that will impact specifically over time. The point for us on trade continues to be, we operate regionally, we have regional Polymer production, very little export of Polymer, and we have the ability to shift our focus from selling customers in China to the U.S., to Europe and vice versa, as the trade dynamics dictate. My personal view is the trade dynamics are going to sell out a lot less severe than the current rhetoric, but we'll have to wait and see. But that's my personal view on the trade dynamics. But then having said that, the regional dynamic, I outlined, is really the important point for now. And on capital allocation deployment, Barry?

Barry Niziolek

Yes, regarding the capital allocation, we continue to be balanced between investing for growth and returning cash to shareholders. As you heard Chris say, in the second quarter, we repurchased about 500,000 shares for $37 million. That brings the year -- return to shareholders through share repurchase and dividends, year-to-date up to $93 million. So we continue to invest organically for growth in Synthetic Rubber, Binders and Performance Plastics. And we're going to continue to look for M&A, right deal at the right price. Now we said that we would be disciplined and thoughtful in the M&A area and continue to do so. So in particular, this is why we give an indication of 2008 -- of 2019 as these deals do take time.

Christopher Pappas

And on the next cycle, Laurence, of organic growth. As we said on the last call, we did challenge our businesses to assess and come up with a next phase of organic growth beyond what we've committed to through '19. And I suspect we'll have more to say about that perhaps in November and thereafter, as those plants become more reality versus ideas. We have some very good ideas that they have come up with them. We'll have more to say about that as I said in November and beyond, which would address, I think, your question of beyond '19 organic growth. But it clearly is on our mind and it's part of our capital allocation program.

Operator

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

Vincent Andrews

You mentioned in the release or in the slides that there were some elevated logistics cost in the quarter. Is that something that sort of onetime in nature? Is it related to fuel costs or what have you? How should we be thinking about that going forward?

Christopher Pappas

Yes, well, that's really contained to a short term. So the answer is onetime short term. Look, we have the ability to react to logistics, especially in a relatively strong operating condition in the market and good technology for good product offerings to our customers. But when there are rapid changes in those things, it can create a short-term dislocation. That's the way we describe that.

Vincent Andrews

Okay. And then maybe just a follow-up on the capital allocation. Can you remind us, one, sort of what that minimum level of cash that you're going to have on hand, as you're still building cash, and obviously, you got growth next year and so there will be more cash coming? And how are you -- sort of a year later, how are you thinking about the trade-off between your own shares and filling out the portfolio, and then even more broadly speaking, how are you thinking about the portfolio itself, keeping it together with the commodity pieces and the specialty pieces in the same house?

Barry Niziolek

Yes, I guess that goes back to the capital allocation question, again, and I'll just repeat this. A minimum level that we would like to keep from a cash standpoint is probably about -- around a $200 million range. As we've said in the past, we still see that being consistent. I think as Chris mentioned, as we just spoke, as we look at that next cycle of growth to grow organically, we've challenged the businesses to come forth with additional organic projects. We're going to continue to push in that area. More to come as we go later in the year, more work in that area. But then again, I just want to come back is we also said that we'll continue to look at M&A. We said we'd be disciplined, we'd be thoughtful and -- but it takes more time for that to come forward to fruition.

Vincent Andrews

I guess, my question is just sort of is there a limit on your patience to some point? Or you just decide, hell with that, we can't find anything that's more attractive than our own stock? And if your stock is still sideways in November or next year, do you look to get more aggressive or is that not something being thought about, you're very focused on organic M&A?

Barry Niziolek

Again, I think, it's staying balanced. If you look at what we've done in the first half of this year, combined share repurchase and dividend is about $93 million. And also, if there's a dip in the stock price, we'll look to -- there'll be some opportunistic additional repurchases.

Christopher Pappas

As there was in the second quarter, Vincent. So we really don't look at, is there a line in the sand, where we have immediate reaction one way or the other. That's not the way the management team thinks about the business. We think about a continuum, and we don't care for the valuation of the company. We think it's very low. If you look at the numbers we've described for '19, you can conclude a pretty low multiple of the company, whether it's EBITDA at 5.3 or EPS at $7. But I think, performance will take care of that, and we'll continue to assess. It is all I can say about that.

Operator

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

Dylan Campbell

This is Dylan Campbell on for Bob. Clarification question on Performance Plastics with the planned maintenance unfavorable $10 million impact on the quarter. Was that factored into your prior guidance? And I guess, the reason I'm -- it seemed you labeled it as planned and not unplanned is kind of why I'm asking.

Christopher Pappas

We did factor in a planned large maintenance outage in that business. The actual amount of maintenance cost that we incurred was higher than what was planned by about $3 million. In addition to that, we had some challenges in that business in Q2 on raw material, logistics and other costs, that we were unable to pass through in a short period of time. And it was that combination, Dylan, that led to the aggregate of the shortfall in that business. And we have said that in the third quarter, we expect that business to come back to its prior level, both as a function of no maintenance outage and an improved environment for capturing price.

Dylan Campbell

Got it. And on the timing impacts for the quarter for entire business. Can you provide a little bit more color whether this was a reversal of the negative impact in the first quarter or kind of should we kind of look to the second half of the year reversing the positive impact we saw in the second quarter?

Barry Niziolek

I think we said overall for the total year, the impact is expected to be 0.

Christopher Pappas

Through 6 months, it's 0, and we said 0 for the year, minimal for the year. Let me just say one other thing, Dylan. I think, I would encourage you and others too, while timing, as I've said many times, can be an important factor in our company. I would sure hope that the way you guys would think about the company at a guide of $675 million midpoint for EBITDA for this year with the words minimal timing, I would certainly expect not a lot of effort to try and understand whether there's $5 million or $7 million of timing either way that's going to happen to this company. It's not a predictable amount, it's not a material amount, it's not at all instructive or important to the valuation of the company. And we're trying to move the agenda away from that and more towards, hey, we're growing by $60 million of EBITDA in performance-related products next year, we see strong operating rates next year, we see rising EBITDA, rising EPS, strong cash flow, we're returning cash to shareholders, we're looking for an additional avenues to grow. And I think that's where the action for the company is around real valuation and real trend line growth in both profitability and equity.

Operator

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

Matthew Blair

So with the M&A contribution coming in lower than expected, would you say the issue has been more around a lack of deal flow or more around valuation levels? And overall, would you say the M&A landscape is better or worse than, say, 6 months ago?

Christopher Pappas

I think, valuation is probably the answer in short terms, Matthew. It's -- valuations are kind of high. We would -- we look for very good fit. We have been extremely disciplined in this arena, we're going to continue to be. We have to have good strategic fit. It has to have good synergies, good value. And in today's environment, that has not been easy to come across. And that's why we've also redoubled our look at organic growth, as mentioned earlier. So tough environment for value is the short answer. And less great fit, high synergy. So that would change the equation if we could find that.

Matthew Blair

Got it. And then since the start of the year, we've seen this disconnect between benzene and crude prices. Benzene down in the Europe and U.S., crude up. Normally, there's a pretty decent correlation here. Do you expect benzene to catch up eventually? And does that present a risk to your styrene margins? Or is there may be a structural disconnect that's going on here?

Christopher Pappas

I don't think it's structural. But I also don't always agree that there's a good correlation. We have studied this a lot. And benzene can move away from oil, either way, quite frequently, usually for maybe a short period of time, but it is its own commodity and its own market. So I'm not surprised at all to see dislocations either way in benzene. We've seen it many times relative to oil. Can we push through benzene if it moves the other way? Yes. If operating rates for styrene are high, which they are, and 2019 looks to be incrementally the highest -- higher than this year, and therefore, the highest operating rate around that we've seen for styrene around the world, in that environment, we can move benzene through and capture margin or maintain margin. Just take a look at the August settlement as an example. Benzene went down, styrene went up. That happens when operating rates are high on styrene. That allows that dynamic to occur, right? So it comes right back to operating rate, is the fundamental answer on what happens to styrene in relationship to benzene.

Operator

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

Eric Petrie

So there's a new Chinese SM/EL plant starting up next week, roughly 3% of the country's capacity, 1% of global. I'm just wondering your thoughts on the impact there? And if you've seen any smaller plant shutdowns in China to date?

Christopher Pappas

Our data and knowledge suggests that there is a Chinese plant starting up in short order, but it's about 260 kt of unintegrated capacity. I think, the plant you're referencing is in a later time frame. Yes, in Q3, I think, it's next year or later this year, sorry, in Q3. So what effect those combinations will have on closure shutdowns is unclear. There's a lot of pressure in China across a lot of industries, as you know, on, not only just economics, but environmental concerns, et cetera. We'll have to wait till we see how it plays out. We've laid out our styrene supply-demand dynamic pretty clearly and it does not call for a change in the operating rate for styrene monomer globally through the course of next year, and we have seen strong derivative demand in China on top of that. So our story is the same as it's been. Relatively strong styrene monomer operating rates, in fact, rising slightly in '19 and then coming down in '20 and '21, but not dramatically if, in fact, the new capacities get built and started up on time, et cetera.

Eric Petrie

Okay. In Performance Materials, how confident are you in achieving that remaining bridge of the $10 million to $100 million growth over '16 levels? Whether it'd be from organic projects or M&A?

Christopher Pappas

Well, we're pressing hard on it, but I'll kind of repeat what I maybe said a little bit earlier on timing. I don't think it matters materially to the company. The company is committed to growing its performance-related products, Rubber, Latex, Performance Plastics. We outlined how we're going to get to the $90 million. It's consistent with what we said during our Investor Day. We had proffered at Investor Day that we might have additional M&A to get all the way to $100 million. We don't see that today M&A, because of what I commented earlier. So we're changing the number to $90 million, reflective of the precision we see today as compared to what we hypothesized in November '16. In my calculations, on a $700 million -- low $700 million EBITDA business, that number is not material, and I wouldn't be focused on it. I'd be focused on what I said earlier, the company's continued growth in EBITDA, EPS, strong cash, excellent growth prospects, good operating rates and extraordinarily low multiple. I think those are the issues at hand.

Operator

Thank you. There are no further questions at this time. This concludes today's call, and you may now disconnect.+