Epoxy

June 23, 2023

Olin Epoxy Moves

Olin Updates Second Quarter 2023 Outlook and Announces Additional Epoxy Restructuring Actions

Jun. 20, 2023 8:30 AM ETOlin Corporation (OLN)

CLAYTON, Mo., June 20, 2023 /PRNewswire/ — Olin Corporation (NYSE: OLN) announced today an updated outlook for the second quarter 2023. Olin’s second quarter 2023 adjusted EBITDA is expected to be in the $350 to $360 million range, which is lower than previously expected mainly due to an approximately $50 million impact from an extended vinyl chloride monomer plant turnaround and additionally due to a lower market participation rate by Olin in the face of deteriorating market conditions. The planned vinyl chloride monomer plant maintenance turnaround at the Freeport, Texas facility required an extension of approximately seven weeks and resulted in higher unabsorbed fixed manufacturing costs, reduced profit from lost sales, and higher turnaround expense. The vinyl chloride monomer plant has returned to operations at a reduced rate.

https://mma.prnewswire.com/media/717484/OlinLogo.jpg

Olin also announced the decision to cease all operations at its Gumi, South Korea facility, reduce epoxy resin and upstream capacity at its Freeport, Texas facility, and reduce our sales and support staffing across Asia. Olin’s second quarter 2023 results are forecast to include approximately $12 million of restructuring charges associated with these plans of which approximately $6 million represents non-cash asset impairment charges. The cash component of these charges is expected to be paid over the next year.

“The restructuring actions announced on March 21, 2023, and in this announcement will complete the rightsizing of the Epoxy business and are expected to deliver $50 million of improved annual EBITDA beginning in fourth quarter 2023 continuing our commitment to elevate our Epoxy business earnings to a more sustainable level. Through these actions, we will have configured our global Epoxy asset capability to improve profitability through future recessions,” remarked Scott Sutton, Chairman, President, and Chief Executive Officer. “Both of our chemical businesses continue to experience a challenging demand environment. Our team remains focused on demonstrating our winning model’s resilience and ability to deliver significantly higher trough level adjusted EBITDA compared to Olin’s historical approach.”

https://seekingalpha.com/pr/19372864-olin-updates-second-quarter-2023-outlook-and-announces-additional-epoxy-restructuring-actions?mailingid=31842346&messageid=2900&serial=31842346.1962

June 13, 2023

Lanxess Increases Benzyl Alcohol Capacity

LANXESS doubles capacity for high-purity benzyl alcohol in North America

LANXESS doubles capacity for high-purity benzyl alcohol in North America

MOSCOW (MRC) — LANXESS has doubled its production capacity for benzyl alcohol at its site in Kalama, WA, US, to support the growth of its established customer base in the Americas, said the company.

The capacity expansion is the result of various technical upgrades. LANXESS also produces benzyl alcohol at its sites in Krefeld-Uerdingen (Germany), Botlek (Netherlands), and Nagda (India).

The LANXESS business unit Flavors & Fragrances develops and produces one of the world’s broadest portfolio of fragrances and flavours, preservatives, and animal nutrition products. Its substances are found in various everyday consumables, such as cosmetics and personal care products, detergents and cleaning agents, beverages, baked goods, candles, oils, and animal feed.

The portfolio also includes speciality chemicals for industrial applications, including pharmaceuticals, agrochemicals or the construction industry. The business unit operates production sites in five locations on three continents. The sites are “ISCC Plus” certified. Through the use of green electricity and sustainable raw materials, these sites will produce mass balance certified renewable alternatives for the entire product portfolio by end-2023, reflecting the business unit’s strong commitment to sustainability. The business unit has around 750 employees and is part of LANXESS’ Consumer Protection segment which generated sales of about EUR 2.4 bn in 2022.

We remind, LANXESS will be at the Battery Show Europe showcasing its portfolio for batteries for electric and hybrid vehicles, said the company. The event in Stuttgart is Europe’s largest trade fair for cutting-edge technologies and production processes in this fast-growing segment.

https://www.mrchub.com/news/407986-lanxess-doubles-capacity-for-high-purity-benzyl-alcohol-in-north-america

May 15, 2023

Westlake Epoxy Highlights from Earnings Call

Westlake Corporation (WLK) Q1 2023 Earnings Call Transcript

May 04, 2023 10:56 PM ETWestlake Corporation (WLK)

SA Transcripts

137.3K Followers

Q1: 2023-05-04 Earnings Summary

EPS of $3.09 beats by $0.94 | Revenue of $3.36B (-17.26% Y/Y) misses by $51.05M

Westlake Corporation (NYSE:WLK) Q1 2023 Earnings Conference Call May 4, 2023 11:00 AM ET

Company Participants

Jeff Holy – Vice President & Treasurer

Albert Chao – President and Chief Executive Officer

Steven Bender – Executive Vice President and Chief Financial Officer

Albert Chao

Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our first quarter 2023 results. For the first quarter of 2023, we achieved sales of $3.4 billion, net income of $394 million and EBITDA of $825 million. These solid results reflect significant improvement in volumes, margins and earnings from the fourth quarter of 2022 as customer destocking activity moderated, end market demand improved, and we benefited from lower feedstock fuel and power costs.

As demand improved in the first quarter, we shifted sales volumes from exports to domestic markets, contributing to better sales mix and higher integrated margins. We also benefited from lower feedstock and energy costs compared to the levels of 2022 as our globally advantaged low-cost feedstock and energy position in the U.S. Gulf Coast improved further, but we also saw lower energy costs in Europe as well. Our results for the first quarter also reflected the achievement of approximately $25 million of cost savings in this quarter towards our previously communicated $55 million to $105 million of targeted 2023 cost savings. Each of these factors supported solid improvement in our integrated margins on the fourth quarter of 2022.

Looking at our first quarter financial results, I’m particularly proud of our HIP segment performance, which maintained EBITDA margin of 20%, similar to the first quarter of 2022. These margins were achieved despite a 21% decline in volume when compared to the prior year period, which was driven by the decline in home building activity due to lower affordability from higher mortgage rates.

This demonstrates the benefit of our product mix and strength of our brands. The margin stability of these businesses along with the long-term growth opportunity in the U.S. housing market were key reasons why we invested in the HIP segment in 2021 through the acquisitions of Boral Building Products, LASCO Fittings and Dimex. We continue to have a positive long-term view of the U.S. housing market, driven by the deficit in new housing construction since the Great Recession in 2020 — 2008 and increasing demographic demand.

Turning to our PEM segment. We continue to operate with agility as we navigated the current market dynamics by shifting PVC and polyethylene sales volume back from export markets to rebounding domestic markets, while solid chlor-alkali markets drove higher average selling prices for both chlorine and caustic soda in North America. Lower feedstock energy prices, combined with our cost reduction actions, drove significant improvement in integrated margins from the fourth quarter of 2022. Overall, I’m very pleased with our first quarter performance and the team’s ability to successfully adjust to rapidly changing end market trends.

Steven Bender

Essential Materials sales in the first quarter of 2023 decreased $164 million over the first quarter of 2022, primarily driven by higher average selling prices for caustic soda. As compared to the first quarter of 2022, our earnings were impacted by lower integrated margins for all of our Performance Material products, including PVC, epoxy, polyethylene and lower production and sales volumes across most product lines. These headwinds were particularly — were partially offset by higher average selling prices and Essential Materials along with lower fuel and energy prices.

PEM’s segment EBITDA of $615 million in the first quarter increased $172 million from the fourth quarter of 2022 as a result of 6 key elements. Higher production and sales volumes, particularly in PVC and epoxy resins,

Essential Materials sales in the first quarter of 2023 decreased $164 million over the first quarter of 2022, primarily driven by higher average selling prices for caustic soda. As compared to the first quarter of 2022, our earnings were impacted by lower integrated margins for all of our Performance Material products, including PVC, epoxy, polyethylene and lower production and sales volumes across most product lines. These headwinds were particularly — were partially offset by higher average selling prices and Essential Materials along with lower fuel and energy prices.

PEM’s segment EBITDA of $615 million in the first quarter increased $172 million from the fourth quarter of 2022 as a result of 6 key elements. Higher production and sales volumes, particularly in PVC and epoxy resins,

Michael Sison

Nice start to the year. Albert, I think you mentioned that 2Q tends to be seasonally better than 1Q. As you said — as you look at demand and where integrated margins are for all your businesses, how do you think that plays out this year given things are weakening across the board?

Albert Chao

Yes. We’ve seen inventories destocking run its course and pretty much finished that destocking process. And we believe that customers are reordering as they see the demand. And we believe that the economy has stabilized through the changes in interest rate increase, and it should improve from the bottoms we’ve seen in the fourth quarter of 2022.

But having said that, the Fed just raised interest rates, and they could have repercussions in the economy going forward. But we believe that the U.S. economy is still quite long, domestic demand is quite strong. We’ve seen that in our — both in the PEM segment, polyethylene, PVC as well as in our HIP Building Materials business. So we are cautiously optimistic that we will see some improvements. It doesn’t mean that we’ll go back to 2022 or 2021 high levels before the interest rates start increasing.

Kevin McCarthy

Albert, in your press release, there is a comment that you saw increasing demand for epoxy resins which surprised me a little bit. Can you elaborate on what you’re seeing in the epoxy market with regard to demand and operating rates? And looking ahead, are you seeing any increased stability in the pricing function there?

Albert Chao

Sure, Kevin. Yes, we see epoxy demand improving, primarily in North America, still quite weak in Europe with a high cost position in Europe and also in Asia, it’s relatively weak. But we are seeing signs of improvement and the U.S. economy is still growing. We need more windmill blades and coatings as well as structural products. So we believe that the epoxy business should have a good position going forward, but not as, of course, robust as in 2021, 2022. But we believe the demand is there. And I think when the economy recovers, the increased demand in epoxy, especially in the U.S. with a lower cost position as well.

John Roberts

You noted the increased exports of polyethylene and vinyls. Could you talk about some of the geographic shift that’s going on in epoxy. So we’ve got China epoxies moving into Europe. Are you shifting any of your geographic footprint in our epoxy sales as well?

Albert Chao

Yes. We are reacting to all the dynamics in the very competitive global marketplace. And as I said earlier, the China with its economy has been slowing in the past years or quarters, they exported the epoxy and as well as PVC to places like India and Europe. But we’re seeing that being slowing down the Chinese economy is improving, but things could change. So — but we are very cautious and colleagues and all the activities going on.

Duffy Fischer

Fair enough. And then one of your large competitors in epoxy has talked about doing some pretty significant restructuring of their assets, you’ve had years for about a year. As you look at it, do you have the right footprint, do you think an epoxy — or do you think you need to do some significant restructuring of your asset base as well?

Albert Chao

Yes, certainly, we are new to the epoxy business and have had ownership for a year. We find a lot opportunity to improve. And as we go forward, we’ll try to improve our positions.

Hassan Ahmed

Fair enough. So now on the epoxy side of it Albert, you obviously — the commentary sounded incrementally positive. So is it fair to assume that potentially Q4 and Q1 were the trough and sort of things start cycling up from there. And if that is the case, this inflection, will this be primarily sort of demand driven with sort of China picking up and the like? Or will it be partly demand driven and partly supply driven as well, where sort of — in that sort of positive commentary you’re being in maybe some capacity rationalization in the marketplace. Maybe less disruptive pricing. You talked obviously about China exporting less now. So I’m just trying to figure out supply and demand wise, what you guys have seen there.

Albert Chao

Yes, that’s a very good question. I think for PVC, we think you are right that Chinese demand increasing, especially real estate, which is a big component of the economy and the government tried to stimulate that part as well, that dimension increase of less export and pricing should improve and so as caustic. On the epoxy side, little bit different. It’s not that a big business and the Chinese are building.

Looking for the windmills and windmills are just getting back in China of new construction. Certainly, everybody needs a renewable energy and lower cost. So it takes time for that to come into this place. Meanwhile, as one of the earlier questions that they have been exporting the amount overseas. But as the year progresses in next year, I think next few years, definitely, the demand for epoxy globally will increase improve. But this year is still a — maybe it’s a bottom of the cycle year.

Turner Hinrichs

This is Turner Hinrichs on for Angel. I was wondering if you could give us a little more color on your epoxy business results, specifically how they compare to 1Q ’22 of last year and 4Q ’22 of last year as well. And as part of that, would you say your epoxy business is gaining share in the market? Or how is Westlake’s position evolving in light of the ongoing imports from Asia and strategic moves by one of your peers?

Steven Bender

So good question. So the market was meaningfully stronger in the first quarter of 2022. And so you certainly have seen a change in market dynamic in terms of demand first quarter of 2022. So I’d say that with the energy power circumstance that we have, let’s say, in Europe, European epoxy is in a much better position to be able to compete. But you’re right, there is still imports of Asian epoxy into the European market, though as the Asian markets begin to rebound, less so in terms of the volume of epoxy resins into that market.

When you think of the domestic market for our epoxy resin, as Albert noted earlier, it’s a stronger position that we see there in terms of overall market demand. And so I would say that the troughs that we saw in fourth quarter as everybody was destocking across all product chains, we certainly saw that really come to an end at the end of the fourth quarter.

And so I would say that we see some recovery as we get into ’23 with ’24 and beyond being stronger markets as we see greater demand for wind energy and windmill contracts being led in ’22, ’23 and ’24 and beyond. And those will take time before those windmills are constructed and the demand really gets much stronger. So I’d say ’23 is one of those years we see a strengthening of the market but not fully backed by any means back to the levels that we saw in ’21 and first quarter of ’22.

https://seekingalpha.com/article/4600294-westlake-corporation-wlk-q1-2023-earnings-call-transcript

May 5, 2023

Huntsman Epoxy Comments from Investors Call

Huntsman Corporation (HUN) Q1 2023 Earnings Call Transcript

May 05, 2023 2:30 PM ETHuntsman Corporation (HUN)

SA Transcripts

136.83K Followers

Q1: 2023-05-05 Earnings Summary

EPS of $0.20 beats by $0.06 | Revenue of $1.61B (-32.78% Y/Y) misses by $65.15M

Huntsman Corporation (NYSE:HUN) Q1 2023 Results Conference Call May 5, 2023 10:00 AM ET

Company Participants

Ivan Marcuse – Vice President of Investor Relations

Peter Huntsman – Chairman, President, and Chief Executive Officer

Phil Lister – Executive Vice President and Chief Financial Officer

Peter Huntsman

With that, let’s turn to Slide number 7. Advanced Materials reported adjusted EBITDA of $48 million in the quarter, an increase of $7 million versus fourth quarter and down versus the prior year due primarily to lower sales volumes. Destocking appears largely behind us, though we continue to see pressure on our infrastructure coatings market. Total volumes increased quarter-on-quarter and drove the adjusted EBITDA improvement.

The sales volume decline of 21% was due in part to our ongoing reduction of bulk liquid resin commodity sales. Our core specialty business was down but less than the segment average. The Americas was the weakest region due to depressed demand, primarily from our coatings, adhesives, and general industrial markets. Our aerospace business continues to demonstrate improving trends. Sales were stable compared to quarter 1 of 2022, primarily due to some supply chain constraints and timing impacting sales in the quarter.

Our order backlog is solid, and we expect growth as we move through the rest of 2023 and into 2024. The increase in demand for our products is heavily relied to widebody production rates, which have positive tailwinds with increased travel and new airplane orders from airlines. Our expectations remain that this important and profitable sector will return to pre-pandemic levels during 2024.

We continue to seek out bolt-on acquisitions for Advanced Materials to grow and expand the overall portfolio as well as improve the overall returns of the business. We are also continuing to move forward with organic investments, such as our MIRALON business, which provides an innovative technology to capture methane, turn it into hydrogen and a carbon material that can be utilized across many different markets. While still in development, we expect to aggressively scale this business over the coming years.

With lower destocking and seasonal improvements, we expect Advanced Materials to deliver improved results in the second quarter versus the first quarter. We expect second quarter adjusted EBITDA for this division to be in the range of $50 million to $56 million, with improved EBITDA margins.

https://seekingalpha.com/article/4600641-huntsman-corporation-hun-q1-2023-earnings-call-transcript?mailingid=31392984&messageid=2800&serial=31392984.1039

May 1, 2023

Olin Discussion

Olin Corporation (OLN) Q1 2023 Earnings Call Transcript

Apr. 28, 2023 12:42 PM ETOlin Corporation (OLN)2 Comments

SA Transcripts

136.48K Followers

Q1: 2023-04-27 Earnings Summary

EPS of $1.52 beats by $0.22 | Revenue of $1.84B (-25.07% Y/Y) misses by $204.49M

Olin Corporation (NYSE:OLN) Q1 2023 Results Conference Call April 28, 2023 9:00 AM ET

Company Participants

Steve Keenan – Director, IR

Scott Sutton – CEO

Todd Slater – CFO

Scott Sutton

All right. Thank you, Steve, and good morning, everybody. The Olin team is deeply engaged in doing what we said we would do, which is to establish a new 12-month trough EBITDA level that is significantly higher than previous peaks and additionally supports a higher equity valuation. We are halfway through that demonstration after back-to-back quarters where our EBITDA delivery was $442 million in the fourth quarter and $434 million in the first quarter.

Market conditions are quite poor, and the forward outlook of those conditions is for more of the same. But Olin is busy adjusting our market participation across the ECU to support product values fixing our prior shortfall of not recession-proofing the Epoxy business while simultaneously growing Epoxy systems and correcting commercial ammunition channel loads and landing new military business in Winchester.

Referring to Slide number 5 in our earnings presentation. The initial evolution of Olin to a higher level value state is also about halfway along. Leadership behavior in all three of our businesses through this recessionary environment will lead to more value growth opportunities that, in turn, deliver more firepower for share repurchases. We are currently on a run rate to repurchase 10% of the Company’s outstanding equity this year after repurchasing 16% in 2022.

Kevin McCarthy

Scott, you’ve taken a number of actions toward restructuring your Epoxy business. Can you talk through what you’ve done already and what lies ahead? I think there was a reference in your materials to some additional restructuring actions. It wasn’t clear as to whether that was in addition to what you communicated several weeks ago or just additional implementations against that existing communication?

Scott Sutton

Yes. Sure. Thanks a lot. So we have taken some recent actions to really recession-proof the Epoxy business. And so in March, we announced that the Terneuzen and Cumene plant and our solid epoxy resins facilities in Korea and Brazil are to be closed. And you see that we took a restructuring charge of almost $60 million in the first quarter to do that. We had additionally also closed one BPA facility in our Stade, Germany plant. And there’s more to come. We’re going to have additional asset decisions to make. And then we’re going to also change the way that we go to market in the Epoxy business as well. So, that’s going to happen through the course of this year.

Kevin McCarthy

Okay. And then secondly, perhaps for Todd. Can you speak to the inventory levels on your balance sheet? Optically, it looks like they’re up 20% year-over-year. How much of that is underlying escalation of inventory versus other factors. I’m not sure if your Blue Water joint venture establish an affects any of those numbers?

Todd Slater

Kevin thanks for the question on inventory. We normally build inventory and working capital during the first part of the year and liquidate that late in the third and fourth quarter. The inventory levels are higher than that normal seasonal activity this year because of a major turnaround as planned that we built some inventory in advance of that turnaround. You should expect those levels to decline as the year unfolds with a step down you’ll see in June.

Unidentified Analyst

So, I wanted to follow up on Kevin’s question earlier, Scott. Have you settled on maybe a more permanent vision for what the optimal footprint looks like for the Epoxy business, particularly with regards to an appropriate level of vertical integration?

Scott Sutton

Yes. Yes, I mean, thanks for the question. And look, I mean, as we go through this restructuring, right, we’re going to get to a footprint and a business presence that removes some element of the duplication that we have two of every single kind of assets all across that vertically integrated change. And we may or may not need all of those to have full capability. But what I’ll say, when we get through this Epoxy is still going to be the absolute global leader in that world. And it’s still going to be the absolute most vertically integrated business in that world as well.

Epoxy has certainly been challenge. If you go a little bit backwards in time, whenever Asia volumes became available, customers bought away. And then when those Asian volumes weren’t available because of instability or demand in Asia, they came back to Olin for security of supply. More recently, we probably overpriced a bit for a bit too long. So, now we’re just moving to a point where we’re going to partner with Epoxy customers for a bit longer run, and there’s going to be a lot more cooperation in that forward world with Epoxy customers, especially as our business pivots more to value from systems, so you need to have a longer-term profile mix with customers.

Mike Leithead

First on Epoxy. Scott, can you just maybe talk about where the Chinese export pressure currently stands today versus maybe a quarter ago? And just where you think that trends over, say, the next quarter or so?

Scott Sutton

Yes, sure. I mean, look, that export pressure, I’ll say, in the second quarter is probably even more than in the first quarter. There’s record Epoxy exports coming out of Asia. And those exports out of Asia are being driven by the fact that China has added a lot of capacity. They’ve got their supply apparatus running hard, yet their demand apparatus has not turned back on.

So that sort of reversal in trade flows out of China has caused the rest of the volume in Asia to come towards Europe and North America. So that’s the impact we’re seeing, and we see extreme pressure continuing there.

John Roberts

On Slide 9, the ECU PCI declined sequentially from 287 down to 262. But almost all the chlorine caustic products went up sequentially. So, epoxy was big enough and declined enough that it offset all the gains in the other products sequentially.

Scott Sutton

Yes. I mean, John, Epoxy was a big driver of that because per ECU, there was less delivery of contribution profit. So in epoxy, not only do you have price declines, but you have volume declines as well. So you get the impact of volume and price coming through there.

https://seekingalpha.com/article/4597818-olin-corporation-oln-q1-2023-earnings-call-transcript?mailingid=31316745&messageid=2800&serial=31316745.825