Good morning and welcome to the to the AdvanSix Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Adam Kressel, Director of Investor Relations. Please go ahead..

Thank you, Danielle. Good morning and welcome to AdvanSix's Third Quarter 2020 Earnings Conference Call. With me here today, our president and CEO Erin Kane; and Senior Vice President and CFO Michael Preston. This call and webcast including any non-GAAP reconciliations are available on our website at investors.advansix.com.

Note that elements of this presentation contain forward looking-statements that are based on our best view of the world and of our business as we see it today. Those elements can change and the actual results could differ materially from those projected and we ask that you consider them in that light.

We refer you to the forward-looking statements included in our press release and earnings presentation. In addition, we identify the principal risks and uncertainties that affect our performance in our SEC filings, including our annual report on form 10-K as further updated in subsequent filings with the SEC.

This morning, we'll review our financial results for the third quarter of 2020 and share our outlook for our key product lines and end markets. Finally, we'll leave time for your questions at the end. So with that, I'll turn the call over to AdvanSix is president and CEO Aaron Kane..

Thanks, Adam, and good morning, everyone. Thank you for joining us and for your continued interest in AdvanSix. I hope that everyone listening today as well as their families and coworkers are remaining healthy and staying safe.

As you saw on our press release, our diverse product portfolio and low cost caprolactam competitive advantage continue to serve as well as we navigate through the current environment. We remain focused on delivering for our customers while executing our business continuity plans with a vigilant focus on health and safety.

In the third quarter, we successfully completed our planned plant turnaround, which was originally scheduled for the second quarter. We continue to be very pleased with the results that our practices and protocols are delivering, while also managing the hundreds of contractors that came onto our site to support those turnaround activities.

Mike will detail our third quarter financials in a moment, where we believe our results reflect the resilience and strength of our business model. Notably, we've seen nylon sales volume returning to pre-COVID levels, which is an encouraging sign as we monitor the pace of global and regional recovery.

In addition, we generated higher cash flow in the quarter through working capital improvement, cost management and reduction of capital expenditures. We continue to take a disciplined approach to cost management and expect $20 million to $25 million of cost savings for the full year compared to 2019.

And this is an addition to the benefits associated with our natural gas boiler investments. As we look ahead from a product line perspective, we are targeting strong caprolactam plant utilization at Hopewell while optimizing our nylon mix across end uses, applications and geographies to position the business for success.

In ammonium sulfate, we expect a stable environment through the 2020-2021 planting season. And in chemical intermediates, we expect the favorable acetone industry supply and demand balance to continue while also benefiting from ongoing investments for differentiated product growth within this portfolio.

We also remain confident in our financial position. At the end of the third quarter we had approximately $128 million in available liquidity between cash on hand and the additional capacity under a revolving credit facility.

We continue to expect robust cash flow generation in the fourth quarter supported by a lower run rate of capital expenditures, further anticipated working capital improvements and receipt of cash tax benefits associated with the CARES Act, resulting in a reduction of leverage levels and positive free cash flow for the full year.

On October we hit our four-year mark as a public company and while I'm very proud of all the accomplishments this organization has made since our spin off, I'm even more excited about the opportunities that lie ahead.

As we work to complete our planning for 2021 some aspects of which we'll share this morning, we are continuing to take a prudent approach of planning conservatively from a macro perspective.

Our priorities will focus on continued operational excellence and improving through cycle profitability, enhancing our portfolio resiliency through differentiated product growth and mix optimization, and being strong and disciplined stewards of capital. With that, I'll turn it over to Mike to discuss the details of the quarter..

Okay, great. Thanks, Erin, and good morning, everyone. I'm now on Slide 4 where I'll review the third quarter financial results. And overall, we once again executed very well in a dynamic environment highlighted by volume growth and strong cash generation. Sales totaled $282 million in the quarter that's down about 9% compared to last year.

Pricing overall was down about 14%, primarily due to lower raw material [indiscernible] pricing, which was unfavorable by about 13%. Market-based pricing was unfavorable by about 1%, reflecting challenging and market conditions in our nylon and caprolactam product lines, and lower sales prices in ammonium sulfate.

This was partially offset by improved industry dynamics in chemical intermediates, particularly acetone. Sales volume in the quarter increased 5% versus the prior year driven by end-of-season domestic granular ammonium sulfate sales and increases in nylon.

EBITDA was $16 million in the quarter, down about $9 million versus the prior year, primarily reflecting the impact of our planned plant turnarounds. I'll walk through the key year-over-year variances on the next slide. Earnings per share decreased $0.30 versus the prior year to a loss of two sets in the quarter.

And lastly, cash flow from operations reached $36 million in the quarter. That's up about $2 million compared to last year primarily due to the favorable impact of changes in working capital, partially offset by lower net income.

CapEx of $60 million was favorable by roughly $90 million year-over-year, following the completion of several high return growth and cost savings investments as well as disciplined management over our repair and maintenance spend. Now let's turn to Slide 5.

As we've shared in the last few quarters, we thought it would be helpful once again to highlight a few of the key drivers of our EBITDA performance from a year-over-year perspective. Pricing overall was roughly a $1 million tailwind year-over-year.

This reflected in approximately $5 million benefit from lower input cost, namely natural gas and sulfur, partially offset by a $4 million market-based pricing even decline.

Tracking our key variable margin drivers, we saw continued net price over raws pressure across caprolactam and nylon relative to benzene inputs, reflecting challenging year-over-year industry conditions and lower ammonium sulfate prices, net of natural gas and sulfur in sulfur input costs.

This was partially offset by higher acetone spreads over propylene, and improvements in other key intermediate products.

Despite an increase in sales volume driving higher revenue in the quarter, volume and other items represented roughly an $8 million headwind on an EBITDA basis versus last year, primarily reflecting an unfavorable mix in our caprolactam and nylon business driven by a large increase in exports.

As a reminder, nylon is a space where we've seen the most impact from COVID, which is not surprising given the material ends up primarily in consumer-oriented products, such as auto, to textiles, to packaging and to carpet.

While we're pleased that volume and demand is returning, there is a temporal unfavorable mix consideration, which we discussed last quarter as we place product where demand exists.

The impact of planned plant turnarounds to pretax income was $20 million in the third quarter of 2020 as expected, versus $5 million in the third quarter of 2019, representing an approximately $15 million headwind year-over-year, as we successfully completed our larger Hopewell turnaround this quarter, including our Kellogg ammonia plant.

Productivity and cost savings reached $11 million compared to the third quarter of 2019, including plant cost actions, lower SG&A expense as well. In addition to benefits associated with a higher return natural gas boiler investment, we are targeting $20 million to $25 million of cost reductions for the full year compared to 2019 as Erin indicated.

We estimate roughly half of the full year cost savings are more temporary in nature, with the remainder being more structural and permanent. We're keeping our focus on disciplined cost management moving forward while assessing our dynamic and markets.

Lastly, our realign cumene supply chain and logistics productivity represented an approximately $2 million favorable impact in the quarter as we continue to drive efficiencies while ensuring continuity of supply following the shutdown of cumene supplier Philadelphia Energy Solutions. Now let me turn to the next slide.

We've included our typical pricing and spreads across our product lines altogether here on Slide 6. Consistent with our results, global caprolactam spreads over benzene continued to decline on a year-over-year basis in the third quarter. However, we have seen stabilization on a sequential break basis from the second quarter of 2020.

Although the industry remains in an oversupplied position globally and we're monitoring inventory levels through the value chain, we are encouraged by the recent improvement in demand. The Asia capro to benzene spreads average just above $600 per ton in the third quarter.

This spread has stabilized for about nine months now and continues to approximate the trough levels we saw in 2016. Lastly, the Asia resin over caprolactam spreads average roughly in the middle of the typical $200 to $300 per ton range through the quarter.

Overall, nitrogen industry pricing continued to decline on a year-over-year basis in the third quarter, reflecting the impact of lower global energy prices and also declined seasonality from the second quarter as we exited the heart of the domestic planting season.

It's important to normalize pricing as urea contains 46% nitrogen, whereas ammonium sulfate contains 21% nitrogen. So while urea has an underlying influence on other nitrogen products, ammonium sulfate does have its own supply and demand dynamics influencing the premium earned for the sulfur nutrient.

With that, we continue to monitor competitive dynamics in light of North America supply additions, which came online at the end of last year, as well as European imports. And lastly, industry relies acetone pricing over refinery-grade propylene costs further improved in the third quarter tracking and improve supply and demand balance in the U.S.

following final affirmative anti-dumping duties, global phenol industry utilization rates and robust downstream demand. We've seen the continued expansion of the premium in the small/medium buyer asked home prices over the large biomarker on a year-over-year basis through the third quarter, as propylene costs declined from last year.

On a sequential basis, pricing in both segments further expanded while propylene increased from trough levels after a significant drop in the second quarter. As a reminder, the small/medium buyer price is reflective of roughly one-third of the domestic industry where pricing is predominantly freely negotiated. Now let's turn to Slide 7.

On the left side of the page, we've highlighted the drivers of the robust-free cash flow generation in the third quarter. As anticipated, working capital was a source of cash in the quarter, contributing $20 million to the overall cash flow generation with inventory representing a $10 million favorable impact.

Specifically, the organization executed well to drive a reduction of finished goods and with inventory, particularly in our nylon resin product line. We also remain disciplined around our cost and capital management, including all discretionary spending.

Recognizing this year's challenges from a macro perspective, we've continued to tighten our belts across the business, resulting in noteworthy productivity and cost savings contributions.

As we previewed, our CapEx run rate has come down quite significantly following the completion of several high return growth in cost savings investments as we closely manage our repair maintenance CapEx spend.

We continue to expect positive free cash flow in 2020, supported by further robust cash generation in the fourth quarter, resulting in a reduction of leverage levels, which I'll discuss in a moment.

We expect working capital performance to continue to support cash flow generation as we exit the year with an anticipated continued reduction in overall inventory, and the benefits of ammonium sulfate pre-buy cash advances.

From a CapEx perspective, we anticipate roughly $85 million for the full year, or similar run rate for the fourth quarter as we saw on the third. And lastly, as a result of the CARES Act, we do anticipate approximately $12 million of the cash tax refund in the fourth quarter as we've discussed previously.

So overall, a strong quarter from a cash generation perspective and an improving outlook as we head into 2021. Now let's turn to Slide 8 to discuss our debt and leverage. We wanted to spend a moment to address the confidence we have in our financial position as well as clarify potential investor perceptions regarding our leverage levels.

On the left side of the page, we showed our leverage ratios, our net debt over trailing 12 months adjusted EBITDA, going back to the end of 2018. Both net debt and adjusted EBITDA are calculated in accordance with the terms of our revolving credit facility.

For example, our adjusted EBITDA adds back non-cash stock-based compensation and other nonrecurring items such as the possible restructuring charges recorded in 2019. Net debt includes our line of credit from the revolving credit facility less cash balances of up to $75 million and other minor items.

However, it does not include operating leases and unfunded pension liabilities by definition. Yet various external reporting sources include these amounts of debt following the new leasing standard, which creates the impression of increased leverage.

Our operating leases as a percentage of debt tends to be larger than peers and has impacted the perceived leverage levels despite not being considered a debt buyer lending partner.

You'll notice our leverage did increase over the last year as we've ramped up strategic investments in the business, namely our conversion to natural gas boilers at Hopewell, caprolactam quality and debottlenecking project and our R&D lab relocation.

In the third quarter, we do have a timing consideration tied to the impact of two large planned plant turnarounds within a trailing 12-month period. You recall we had roughly $25 million planned plant turnaround in the fourth quarter of 2019 and just completed a $20 million plant turnaround in the third quarter of 2020.

We are well within our maximum leverage covenants and expect net debt to be reduced into yearend toward our target range of 1x to 2.5x trailing 12 months adjusted EBITDA.

And that's supported by the continued robust cash generation I discussed earlier, the normalization of the planned plant turnaround impact and our trailing 12 months EBITDA, as well as anticipated debt pay down. Now, let me turn the call back to Erin..

high purity applications, high value intermediate, and differentiated nylon. Individually, many of these products are still growing off a small base, but we've seen successes across the portfolio, including our oximes, cyclohexanone and wiring cable offerings.

We'll be well-positioned to capitalize on further improvement in the macro environment and continue to expect and improve contributions from these product lines over the long term. Finally, strong capital stewardship.

We expect CapEx to be $80 million to $90 million in 2021, which does and will include a modest amount of spend towards continued high return growth and cost savings projects. We are focused on improving our return on invested capital and will remain disciplined in our approach as we look to drive long term shareholder value.

We expect leverage to be reduced within our target range of 1x to 2.5x and have approximately $60 million remaining under our share repurchase authorizations and we'll continue to evaluate options to return cash to shareholders.

We've also continued to build out our inorganic pipeline and internal capabilities as we assess potential acquisitions that would have strong portfolio coherence with our product lines and technologies.

During this dynamic time, we are strengthening our ability to deliver long term growth and believe we have the foundational elements in place for sustainable shareholder return. With that, Adam, let's move to Q&A. Great, thanks, Erin. Danielle, if you please open the line for questions..

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Chris Moore of CJS Securities. Please go ahead..

Good morning. This is Stefanos calling in for Chris, thank you for taking my questions..

Sure. Great to hear you, Stefanos, good morning..

Good morning.

First, could you provide us a little more color and update on the differentiated product growth and high value intermediate and also the high purity applications?.

Yes, I'll be pleased to, and recognize this as an area of continued interest and we're going to offer here some proof points perhaps over the last couple of years and how we've continued to progress this strategic area for us.

So as you pointed out, we do continue to view this portfolio and its effort in those buckets - high purity applications, high value intermediate, and places to drive differentiated nylons to high-value applications as well. And just as a quick reminder, these are all products lines that have 1.5% to 2% extra growth margins.

So we look at where we were in 2017, about 8% of our total AdvanSix sales fell into this bucket. That has increased to 11% this year, projected for 2020. So overall about a 4% CAGR growth for the product lines in this bucket.

I would note though, that that doesn't include our granular ammonium sulfate, which represents about 18% of our total AdvanSix sales - and again, we view that as high value for the premium earned as well. So we kind of dive into where we're seeing some real tangible growth and I noted in my comments around meto and cyclohexanone.

Since 2017, that product line has grown 10% on a three-year CAGR. Our oximes product line, we've talked quite a bit about our lines of our EZ-Blox product line. Again, a drop-in replacement for [indiscernible]. That's more than doubled in sales this year, and has a 76% three-year CAGR. Kind of growing on that introduction of that product.

On nylon, our wire and cable offerings as well, they're up 10% this year and nearly 38% on a three-year CAGR and also copolymer which we introduced - and again, growing off the small base, remember, these are going into oftentimes specific niche applications. They have to be qualified. That has actually seen a 60% growth this year.

So I think even in a year where we've noted that our efforts with customer qualifications have been delayed and perhaps slowed, still seeing again a positive push here and again, just a continued area of emphasis that we think will serve us longer term..

Got it? Thank you very much. And just one more and I could come back in the queue. So you talked about $20 million to $25 million of the full year 2020 cost reductions.

Is some of that just one-time savings for COVID? Or does all of that flow into 2021?.

Yes, so as we indicated on the call - by the way that range has increased. So initially when we discussed this on the last quarterly earnings call, we said in the range of $15 million to 20 million, we now expect that to be $20 million to 25 million. But we're estimating that roughly half of that is more temporal and half of that is structural.

So you want to think about that as half so the costs will be coming back next year. What I'll say is year-to-date, we're pretty close to being within that range. In the fourth quarter, if you look at our cost, so for example if you look at SG&A in the fourth quarter of 2019, our spend was relatively low.

We had low IT cost, lower incentive comp cost as well. So we don't expect a significant year-over-year cost reduction in the fourth quarter - this upcoming fourth quarter from a year-over-year perspective just so you get a sense of how we're seeing things going forward here.

And we're going to look to optimize really as much as we can and continue to be very diligent on our cost structure as we head into 2021 in this challenging environment..

Got it. Thanks..

The next question comes from David Silver of C.L. King. Thank you..

Yes, hi. Good morning..

Good morning..

Good morning.

Hey, I had a couple of questions. So the first would be on the revenue side.

So when I just take the percentages of your revenues that you allocate to your different product lines and then relate it to your total revenues, it seems like there was a very substantial sequential pick up on your chemical intermediate line towards the an incremental $30 million of revenue this quarter by my estimates.

So I guess some of that is acetone but I'm just wondering how would you characterize what was going on on the chemical intermediates line during the third quarter? Maybe just give us some sense of where that substantial pickup in revenues were coming from? Thank you..

Yes. Well first of all, when you're compare the second quarter to the third quarter, you need to consider the fact that utilization and demand was very soft in the second quarter as a result of the economic impact of COVID overall. So when you look at the third relative to the second, generally volume was stronger really across the board.

And when you look at the intermediates business, specifically, we saw a strong revenue growth from the second to the third quarter in really virtually all of the intermediate products and you point out acetone were not only getting improved volume from the third to the second quarter, but also pricing has moved up.

We shared with everyone the trends and pricing, particularly in the small and medium buyer, which improves sequentially. But we also saw improvements in phenol, Nadon and AMS as well when you look at the top line revenue.

So it's really driven both by volume coming off of a lower quarter in the second quarter because of COVID, as well as pricing particularly driven by acetone..

Okay, very good. Thanks for that color. Appreciate it. I had a question I guess about the - sorry. So I had a question about your comments to both last quarter and this one about expecting to generate I guess free cash flow for full year 2020. And I wanted to maybe just harp on the working capital element.

So per the slides in the third quarter, there was a net working capital benefit of around, I don't know, $18 million to $20 million. I think $20 million the way you laid it out. And I was certainly expecting a working capital benefit, but maybe not, not in the third quarter.

Could you may be comment on maybe what incremental working capital benefit you're looking for in the fourth quarter? So not so much earnings, but how much more maybe inventory or receivables might be effectively released? There was a pickup in your accounts payable in the third quarter and I guess that has to be run down as well..

Yes. And what you'll see is sometimes there is some variability on a quarter-by-quarter basis when you look at the working capital overall. But they're a few things, and you are correct in indicating that in the third quarter. We did get a $20 million benefit from working capital, of which $10 million was inventory.

But when you break down the inventory, we saw a $26 million reduction in finished goods and whip [ph]. And about two-thirds of that was really the nylon business.

So we talked about the fact to have the expected inventory levels to come down as they were elevated during the first half of the year and that was partially offset by raws, which were up $16 million in the quarter and there is some timing considerations as we purchased cumene.

We also tend to hold higher balance this year to mitigate potential weather impacts is associated with hurricanes potentially down in the Gulf. What I'll say is as we go into the fourth quarter, still a very big focus on inventory reduction and we anticipate inventory to continue to go down.

We also anticipate the typical seasonal ammonium sulfate pre-buy advances in the fourth quarter. That is also going to help.

We may have some movement in some other areas, so I wouldn't anticipate working capital in the fourth quarter to be as large of a contribution from a free cash flow perspective, but I would call it probably in the low to mid millions contribution in the fourth quarter. But we're going to continue to focus on it and drive cash to close out the year..

So just to clarify, low to mid-single digit millions? Is that what you were referencing right towards the end your comment?.

Yes, that's correct..

Okay, I'm going to just spiel one more here, fit in one more. But I was hoping that Erin might be able to comment on just a little bit more color on the global kind of nylon demand outlook. So I guess in the third quarter, we finally saw some rebound in global auto production and certain regions, their industrial activity levels are picking up.

I'm just wondering from your perspective, are things progressing as you would normally have expected? In other words, is the uptake of nylon into the typical end markets progressing as you might have anticipated? Or is there something different this time either regionally or by end market where that's may be leading to your commentary earlier on about maybe marketing your nylon a little bit differently, or placing your pounds a little bit differently than then you traditionally might? Maybe just the big picture on where you see nylon demand? Maybe stronger than you anticipated, maybe weaker, maybe, maybe some new outlook that you hadn't counted on maybe when the year started? Thank you..

Yes. Of course, David. I think it's at this point, we've been communicating and certainly, you well-noted, and nylon is a space where we have seen the most impact from COVID this year. And no, it really conditions on the front ends of the pandemic. Weren't necessarily all that great to begin with, given the long, long market in which we're operating.

As we noted, volume has been returning to pre-COVID levels, but it's returning in Asia at a faster clip than we've seen sort of regionally first there, which is what we expected, I believe when we chatted last time from the standpoint that they had the pandemic a bit more in control.

And certainly when you look of note like in auto for instance, China, car sales are only down 7% year-to-date with a lot I think momentum being built in the last several months, which is being lagged. The U.S.

is still down 18% to 19% even though certainly, again, you're starting to see demand pick up here and Europe is further lagging that at about 29%. So we are seeing this regional recovery very differently as sort of the global pandemic progresses.

So I think on one hand what that's allowing or sort of necessitating us to do is we've been driving the higher utilization rates. It's certainly heading into our turnaround and post the turnaround is as we say, kind of meeting demand where it exists. That is one consideration why our exports are higher as the U.S. has been lagging.

Now, as we've come through the third quarter and headed into the fourth, we continue to see a pick up right in North America.

Certainly in in carpet even though commercials down again, that residential pool is coming through, we're seeing the engineering plastics, in sort of the non-auto spaces returning to pre-COVID levels and auto is kind of on the tails of that. So I think clearly, we've been operating and stabilized at trough levels.

It's hard to say, 'Okay, where do we see a turn?' And our focus will have to continue to be on driving the asset flexibility and the agility to ensure that we're meeting recovery as it exists. And I think even as you noted this morning in your note, it's still going to be uncertain.

If we were here talking a couple weeks ago, Europe looked a little bit different, we have a resurgence ongoing, we're watching that very carefully. But there are signs, the textile market seems to be perking up certainly for demand in Asia, you see signs at least that engineering plastics is moving forward, packaging will continue to remain robust.

But I think we just have to watch that macro view here, which really could impact the regional recovery which is what we really need to see both in Europe and in the U.S. to really push the full global recovery up as it joins Asia. I think what we're seeing again, the signs of it, there are there are still some puts and takes.

We had talked about for instance that the U.S. [indiscernible] had come off the bottom. They wavered here a little bit in the last month. So we might see some seesaw recovery potentially in nylon just with the broader macro..

Okay, thank you for all that. I appreciate it..

Of course..

[Operator Instructions] The next question comes from Vincent Anderson of Stifel, please go ahead..

Thanks. Good morning, guys..

Good morning..

I was hoping you could just talk really quick about the turnaround guidance for 2021.

Was there some timing differences on maybe the smaller maintenance projects that has it lower year-on-year? Or is that just the more results from your execution improvements?.

I'm happy to address that. I think it's a combination, Vincent, as you may call it. So we will remind you that we alternate sort of our large asset turnarounds every other year. So we did Kellogg this year, the sulfuric acid plant will be up next year.

When you look at sort of the scope that we've nearly locked, it will be more of a maintenance scope versus a large capital expense scope, which has influence on sort of our, I would say wrench [ph] time considerations which would have impact on our sort of absorption and rates that we could run.

But it also does reflect, I think if you look just at our continued execution, over the years we've talked about the fact that we look at global strategies, integrated scheduling, using our lean tools to take out ways, strong partnership with our turnaround partners and I would note we've actually elevated inside our organization.

So we actually have a turnaround leader on the leadership team of the integrated supply chain group now, we've elevated turnaround leaders at every site onto their leadership team against with this consistent focus that we have to drive efficiency, drive productivity, drive as well the safety and startups of these turnarounds.

So it definitely is the combination, but we're pleased with where we continue to head..

Excellent, thanks.

And then if I missed it, I apologize, but specifically volumes of ammonium sulfate into Brazil this quarter, how did they do? And then in the event that you sell through distributors that exchange basically crop inputs for pledged crop output from farmers, which is common in some parts of Brazil, in the event that you distribute through them, we've seen this massive pre-selling of next year's crop by Brazilian farmers and I'm wondering if you have seen that in any kind of early conversations? I know you mentioned pre-buying for I assume the U.S.

season, but any comments there?.

one, we saw the season kind of extending to July on the domestic side. So that was a positive for us in the quarter and certainly we did see again, buying was up on the standard side into export sequentially as we expected as well.

So I would say that the quarter more or less progressed as we would have had anticipated in our remarks coming into this call. And as it pertains to sort of pre-buys - maybe just a clarification - the pre-buys we do are for the domestic granular season. So we really aren't participating that relative to the export side of the house..

Okay. All right. So we'll maybe hear more about that early next year. All right. And then so last one, so the balance sheet is absolutely moving in the right direction. You still have this big discount between your shares and the replacement value of your assets.

If I'm thinking about acetone and what has changed structurally with domestic supply sources, obviously as a positive for you, maybe some incremental headwinds on phenol from MDI taking share and OSB over the long term, does this open up any opportunities or any thoughts around monetizing maybe a minority interest in your cumene oxidation unit? Or through a long-term product off-take agreement that maybe unlocks the assets value bit and derisk [ph] a portion of your cash flows?.

I think the way I would best answer that for you here today, Vincent, when we think about our forward opportunity, again, thanks for the notice that we're moving in the right direction.

We wanted to make sure that that was clear and that we have confidence in our ability to drive free cash flow whether it's in in growth amounts from a conversion perspective and also from a yield perspective.

When we look at sort of our ability and opportunities to optimize the system, I think the best way to say is that we will continue to look up and down the value chain. We're not opposed to the appropriate partnerships that allow us to succeed for the long haul.

I think it's those particular projects and/or opportunities on inorganic basis firm up, then that would be the right time for us to bring those to life..

All right, thank you..

This concludes our question and answer session, I would like to turn the conference back over to Erin Kane for closing remarks..

Great. Thank you all again for your time and interest this morning. Our results this quarter again demonstrated the strength of our business model and the commitment of our roughly 1,500 employees to delivering best possible outcomes as we execute for the remainder of 2020 and head into 2021.

We have a focused strategy that we're executing against, built on rigorous commitments operational excellence, enhancing our portfolio resiliency and being strong and disciplined stewards of capital - all of which are underpinned by our global low-cost position. So with that, we'll look forward to speaking with you again next quarter.

Stay safe and be well..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..