David Stasse - VP, Treasury & IR Chris Pappas - President & CEO John Feenan - EVP & CFO.

Dave Begleiter - Deutsche Bank Frank Mitsch - Wells Fargo Securities Ryan Berney - Goldman Sachs Dan Rizzo - Jefferies & Co. PJ Juvekar - Citigroup Matt Andrew Kovacs - Morgan Stanley.

Welcome to the Trinseo Fourth Quarter And Full Year 2014 Financial Results Conference Call. Turning to Slide 2, we welcome the Trinseo management team; Chris Pappas, President and CEO; John Feenan, Executive Vice President and CFO and David Stasse, Vice President of Treasury and Investor Relations will be conducting the call.

I will now hand the call over to David Stasse..

Thank you, Shannon and good morning, everyone. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time.

The Slide presentation for today's call has been posted on the company's Investor Relations website, in the webcast viewer and with the financial results press release by means of a Form 8-K filing with the Securities and Exchange Commission.

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 March 4, 2016. Before beginning, I call your attention to the disclosure rules on Slide 2, regarding forward-looking statements and the use of non-GAAP measures.

The agenda is on Slide 3. I will now hand the call over to Chris Pappas..

Thank you, Dave. Good morning and thank you for joining us to discuss our fourth quarter and full year 2014 financial results. Our agenda today, as shown on Slide 3, will be as follows. First, I will give a business overview, covering key highlights from quarter and the year.

John will then review the details of our latest results from both a consolidated and business segment perspective. After that, I will comment about the current business conditions and our focus for 2015 and we will then open the call up for your questions. Before reviewing the results for the quarter, I would like to highlight a few other items.

First, in February we completed a nine-month process to change our company name and legal entities from Styron to Trinseo. The new company name reflects our breath as a growing company with broad global reach and a diverse portfolio of materials and technologies.

We believe Trinseo captures our commitment to deliver innovative and sustainable materials that provide intrinsic value to our customers and products. Second, as part of our continued steps towards being a fully independent company, in February, we elected Donald T. Misheff to our Board of Directors.

Don will join at the audit committee and the environmental health, safety and public policy committee of the Board. Don brings substantial financial, corporate governance, business and Board experience to Trinseo. With these changes, Trinseo now has a fully independent three-person audit committee. Now let's turn to Slide 4.

This is a snapshot of Trinseo and our performance for 2014 at the total company, division and segment levels. This represents the reporting segments that we used through 2014. And later, I will discuss the new segmentation, which we covered on last quarter's call and we will begin using in the first quarter of 2015.

For your reference, we've included historical quarterly financials using both the old and new segmentation, in the appendix to the Slide presentation. Before getting into the financial results, I want to take a minute to address the unfavorable inventory revaluation we saw in the fourth quarter.

On the third quarter call, we talked about an unfavorable inventory revaluation for the fourth quarter of approximately $30 million. Prices subsequently declined further than anticipated through the fourth quarter and the resulting inventory revaluation for this quarter was $72 million.

John will talk more about how this works in a few minutes, but please note that we now present adjusted EBITDA at the consolidated and divisional levels with and without this inventory revaluation impact.

We believe that EBITDA, excluding inventory revaluation, is a better indicator of the underlying trends in the business because it strips out the positive and negative swings of volatile raw material prices. We also believe providing this transparency at the division level is appropriate as well.

Now looking at the financial results, our total company adjusted EBITDA for the year was $326 million, excluding inventory revaluation. This includes $48 million in equity affiliate income and this compares to $318 million on the same basis in 2013.

This increase was driven by better performance in synthetic rubber and engineered polymers and lower corporate expenses. Our 2014 $326 million of adjusted EBITDA, excluding inventory revaluation, is with about $40 million less styrene margin than in 2013.

Free cash flow for the year was $25 million, including $56 million of payments related to the termination of Dow's emerging markets Latex JV Option Agreement, as well as the Bain Advisory Agreement, excluding these one-time outflows, free cash flow was a solid $81 million. Now let's look at the full year results at the division and segment levels.

First, our emulsion polymers division continued its strong performance, with $234 million of adjusted EBITDA or $246 million, excluding inventory revaluation. The result, excluding inventory revaluation, was about $5 million higher in 2013 on the same basis and well in line with our $60 million per quarter run rate.

Latex had another year of consistent performance, delivering $97 million of adjusted EBITDA on 1.2 billion pounds of volume. We continued to execute our strategy of growing volumes in Asia in carpet and in performance latex to offset the secular declines in the North American and European coated paper market.

In fact, we had a record year in sales volume to the carpet market, where we saw double-digit year-over-year growth and our volumes in Asia and performance latex both increased by high single digit year-over-year.

We continue to focus on lower cost starch emulsion technologies, which provide our customers with similar performance as SB technologies but at a cost advantage. We sold a record high volume of this technology in 2014, a 20% increase over 2013 and we continue to grow this technology going forward.

Finally, our strategy to meet the growing demand for latex in China's paper and board industry continues to be on time and on budget, with our new reactor expected to come on-stream midyear and then sell out quickly at current margins. Moving to synthetic rubber, adjusted EBITDA for the year was $137 million, compared to $113 million in 2013.

The year-over-year improvement was driven by higher SSBR sales volume, as well as unfavorable inventory revaluation in the prior year. We also continued to shift the product mix of our rubber business towards higher-end differentiated products. SSBR sales volumes increased 28% in 2014 and this now represents 45% of total synthetic rubber volume.

Sales volume of our enhanced SSBR increased nearly 40% in 2014 and was over 50% of our total SSBR sales volume. These results are consistent with our strategy of selling a differentiated line of products to serve the high-performance tire market, which continues to grow at 3 to 4 times the overall tire market.

In support of this, we continue to make progress on new products such as generation-four SSBR, which further raises the performance bar on rolling resistance and wet grip. We're trialing this technology with key customers and will have it commercially available by the end of 2015.

In addition, during the year, we commenced work on the conversion of our nickel PBR line to neodymium PBR, which is on time and on budget. This is expected to come on-stream early in 2016. We remain committed to being a technology leader in providing solutions to the rapidly growing, high performance tire market.

We're recognized as a world leader in the space and we plan to continue to invest in this area. Now moving to our plastics division, adjusted EBITDA for 2014 was $100 million or $153 million excluding inventory revaluation, which includes $50 million of equity affiliate income.

This result was $31 million lower than 2013, excluding inventory revaluation due mostly to lower styrene monomer margins, which were at elevated levels for about four to five months in 2013. The styrenics segment adjusted EBITDA for the year was $87 million, including $50 million in equity affiliate income from Americas Styrenics.

Most of the plastics division inventory revaluation during the year impacted this segment. We continue to operate in a balanced styrene environment in 2014, as operating rates held steady the mid-80s.

This leaves the market susceptible to outage-driven margin spikes as we experienced in the fourth quarter of 2014 and for much of the second half of 2013. This benefited Trinseo and our joint venture, Americas Styrenics, in the fourth quarter and that has continued so far into the first quarter of 2015.

Styrenic polymers demand, excluding the impact of the EPS divestiture declined 6% in 2014, versus 2013, driven by lower polystyrene sales in Europe and Asia.

This decline was more in the latter half of the year to the destocking activities that we previously discussed, with the declining price of raw materials and the wait-and-see approach of our customers.

The engineered polymer segment adjusted EBITDA for the year was $13 million, including a $3-million loss in equity affiliate income from SSPC, Sumika Styron Polycarbonate Limited.

This result was $13 million higher than 2013, driven by higher sales volume to the automotive and consumer electronics markets, higher margins in our compounds and blends business, as well as a $5-million benefit from the fourth quarter exit of the polycarbonate manufacturing agreement in Freeport.

In automotive, our sales volume was roughly flat year-over-year, a combined 5% increase in Asia, Europe and North America, was offset by a decline in Latin America due to low consumer confidence and high interest rates in that region.

We continue to focus on our strategic plans to grow this business with our current offerings, as well as expanding our offerings for car exteriors and semi-structural applications. We have already seen some success in these areas and look forward to the future growth as well in these higher margins that these offerings can produce.

We're seeing some good signs in our consumer essential markets, which includes medical, electronics, electrical and lighting. Sales volume for the year was up 7% over prior year, driven largely by the electronics market in Asia, as we participated in some new product introductions.

In addition, we made significant progress during the year with our lighting customers, including materials for LED housings and lenses. We look to continue this momentum into 2015 as we add resources in this area. In polycarbonate, industry operating rates rose above 80% in the fourth quarter to their highest level since 2010.

We're seeing positive trends in this business, driven by continued growth in end markets, as well as recent capacity closures. The combination of our plant exit in Freeport, as well as the partial closure of [indiscernible] facility in Singapore reduced global capacity by approximately 3%.

Polycarbonate margin expansion will likely result in EBITDA above the $35 million we previously talked about from our polycarbonate restructuring actions. Turning to Slide 5, I'll focus my comments more on fourth quarter performance.

Adjusted EBITDA for the quarter was $104 million, excluding the $72 million in inventory revaluation impact mentioned earlier. This is a very strong result and one of our best quarters ever on an adjusted-EBITDA, excluding inventory revaluation, basis.

Let's start with emulsion polymers, which had adjusted EBITDA, excluding inventory revaluation, of $62 million. The majority of emulsion polymers inventory revaluation was in latex and excluding this, latex results were in line with our two-year trend and consistent with our expectations on the third quarter 2014 conference call.

Synthetic rubber adjusted EBITDA was $30 million. Excluding inventory revaluation, performance was in the mid-$30 million, consistent with our expectations on the third quarter call. Now moving to plastics, this division had adjusted EBITDA, excluding inventory revaluation, of $63 million for the quarter.

The styrenics segment adjusted EBITDA of $4 million included nearly all of the division inventory revaluation. Excluding this impact, the quarterly improvement in the segment was higher than we expected on our last earnings call, due to higher styrene monomer margins, as well as better performance at Americas Styrenics.

Engineered polymers adjusted EBITDA of $8 million was the highest for this segment since the third quarter of 2012. This performance was driven by polycarbonate restructuring and improving market dynamics that I discussed earlier.

Polycarbonate margins increased about $100 per ton from the third quarter through the end of the fourth quarter and we expect polycarbonate margins to widen through the first quarter of 2015. Turning to Slide 6, let's discuss some recent trends in our major raw material markets.

As a reminder, last quarter, we modified the styrene monomer feedstock charts to show a proxy for the styrene monomer margin, which is the styrene price less the cost of benzene and ethylene.

This proxy margin is shown in the gray bars on the charts, on the approximately 600 to 700 kilotons of styrene we produced in Europe and the approximately 300 kilotons of styrene we purchased on an Asia cost basis, with the IHS forecast shown through the end of the first quarter of 2015.

As expected, styrene margins increased in the fourth quarter, particularly in Europe. Falling crude oil and naphtha prices drove down the cost of benzene and ethylene. However, styrene prices held more firmly during the quarter due to styrene unit outages.

An early October incident at Shell's facility at Moerdijk in the Netherlands shut down its POSM unit. In addition there was a maintenance outage at BSF's units in Germany.

The combination of these falling raw material costs and styrene unit outages increased styrene margins in the fourth quarter by greater than $100 per metric ton over the third quarter levels. Styrene margins in Asia also expanded quarter over quarter, but to a lesser extent.

Now I discussed these dynamics on our third quarter call, estimating a $50-per-ton margin expansion in both Europe and Asia. We saw an increase in that range in Asia, but it was closer to $100 higher in Europe. One of the drivers of our higher Europe styrene margin is the way we purchased benzene compared to how we price our styrene products.

Please turn to Slide 7 for more on this. We largely price our products in Europe based on the styrene monthly contract price, which is set at the beginning of each month. The benzene contract price, among other things, is an important factor in setting the styrene contract price.

However, we purchased our benzene based on a blend of the contract and spot prices and a falling benzene cost environment, like we saw in the fourth quarter. We can see higher styrene margins due to this dynamic. This chart shows December's benzene contract price of $960 per metric ton, which was set at the beginning of that month.

As you can see, the benzene spot price started out December below $900 per metric ton, fell to as low as $600 per metric ton and then ended up at around $700 per metric ton, a 50/50 blended benzene cost, based on the average of the $960 contract price and the average daily spot price.

Now the difference between the benzene contract price and this 50/50 purchase price in December was about $100 per metric ton or about $4 million. So, for the fourth quarter as a whole, we estimate this resulted in about a $9-million EBITDA in our styrene monomer business.

Now we're telling you this so you understand more about the dynamics of our styrene production margins and the impact during the fourth quarter. We also want you to keep in mind that as benzene costs increase, we could see the opposite effect. A lot depends on the timing of when the spot price differs from the contract price.

Now I would like to turn the call over to John for a more detailed review of our financial results at a consolidated and business-segment level..

Thanks, Chris and good morning. As you heard in Chris's opening comments, we had excellent results when you exclude the inventory revaluation impact. Before I go into the fourth quarter financials, I'd like to discuss a little bit more about this impact and provide some rules of thumb to estimate it in the future.

Please turn to Slide 9 for this discussion. Inventory revaluation represents the difference between the FIFO accounting cost basis and the current period cost. For example, if a business holds 30 days of inventory, then the FIFO-based raw material costs for the month will reflect the prior month's procurement cost.

However, the sales price to our customers during the month is usually based on the current month's cost, creating a timing mismatch between revenue and cost of sales, not in quantity but on the underlying raw material cost basis.

Removing the inventory revaluation impact better aligns the cost basis of revenue and raw materials, which we believe improves the comparability of our results from period to period and better reflects our underlying performance by stripping out the volatile raw material price swings.

As you can see from the chart, the cost of our major raw materials significantly declined from the end of Q3 to the end of Q4, resulting in the fourth quarter inventory revaluation impact of $72 million.

Based on the latest forecast, we expect a further decline through the end of Q1 2015, which could result in a first quarter inventory revaluation of around $40 million. We understand that these impacts can be significant and we'd like to provide you with a method to estimate them in the future.

The table on the right shows an estimation of this impact in the first quarter based on IHS data for a selection of our major feedstocks in our typical inventory levels for each. For example, benzene in Europe is forecasted to decrease by $300 per metric ton in Q1.

When multiplied by 52 kilotons, our typical level of benzene inventory, the rule of thumb suggests approximately $16 million of negative inventory revaluation due to Europe benzene in the first quarter.

Keep in mind that this is based on average inventory levels and product mix, among other things, over a period of time and changes in those factors can cause different impacts. However, we feel that this method will give you a basis to estimate this going forward.

Please turn to Slide 10 where you can see the fourth quarter results for Trinseo, along with two comparison periods; the fourth quarter of 2013 and the third quarter of 2014. Fourth quarter 2014 revenue of $1.2 billion was 10% below prior year, due to the pass-through of lower raw material costs as well as currency.

Fourth quarter adjusted EBITDA, excluding inventory revaluation, was $104 million, including $18 million of equity affiliate income. This compares to $81 million in the fourth quarter of 2013 and $62 million in the third quarter of 2014, on the same basis.

Now turning to Slide 11, the latex revenue of $286 million for the quarter was down 7% versus prior year, due mostly to the pass-through of lower raw material costs, as well as currency. Volume was up slightly, as higher sales to the paper market in Asia and the carpet market in Europe were mostly offset by lower sales to the paper market in Europe.

Paper and paperboard volumes and the Americans were up slightly year-over-year. Adjusted EBITDA of $18 million was below prior year, due primarily to inventory revaluation and below prior quarter due to inventory revaluation and seasonality.

Excluding inventory revaluation, latex was in line with our two-year trend and consistent with our expectations from the third quarter conference call.

Now turning to Slide 12, in synthetic rubber, revenue decreased 7% and 12% versus prior year and prior quarter respectively, driven primarily by the pass-through of lower raw material costs, as well as currency. SSBR volumes were up 21% versus prior year and 3% versus prior quarter.

Adjusted EBITDA of $30 million was $12 million lower than prior year, due mostly to inventory revaluation and currency. Again, excluding inventory revaluation, rubber was in line with our expectations. Sequentially, adjusted EBITDA improved by $3 million, after the third quarter turnaround, despite the impact of inventory revaluation and currency.

Turning to Slide 13, the styrenics segment revenue of $452 million for the quarter was significantly below prior year and prior quarter due to the pass-through of lower raw material costs as well as currency. Lower sales volume during the quarter, particularly on a sequential basis, was driven by weak demand in Asia.

Adjusted EBITDA of negative $4 million it was $56 million below prior, almost entirely driven by inventory revaluation. On a sequential basis, the revaluation was partially offset by higher styrene monomer margins and equity affiliate income from Americas Styrenics.

Turning to Slide 14, engineered polymers revenue was below prior year and prior quarter due mostly to currency. Sales volume was essentially flat after adjusting for the exit of the North American polycarbonate business.

Adjusted EBITDA of $8 million was $6 million above both prior year and prior quarter with the exit of the Freeport polycarbonate contract, despite inventory revaluation impacts. Favorability versus prior year was also driven by higher sales volume to the automotive and consumer electronics markets in Asia.

Sequential favorability was also driven by higher equity affiliate income from SSPC. Now let's turn to Slide 15 for the discussion on cash and liquidity. Free cash flow for the quarter was $86 million, which included $29 million for capital expenditures.

As expected, with the declining raw material prices, working capital was a cash source during the quarter. Free cash flow for the year was $81 million, exclusive of two one-time termination payments related to the emerging markets Latex JV Option Agreement and the Bain Advisory Agreement.

Capital expenditures for the year were $99 million and year-end liquidity was $650 million. For 2015, we still expect capital expenditures of around $120 million and cash taxes of about $35 million. With that, I will now turn the call back to Chris..

Thanks, John. Now let's turn to Slide 17 where I would like to discuss first quarter of 2015 raw material trends. This is the same styrene raw materials Slide that I discussed before. The Shell and BSF styrene units came back on stream in December and this additional supply took some pressure off styrene prices.

However, you can see from the chart that styrene margins have increased from January to March, due to seasonally stronger demand and planned second quarter outages. Overall, first quarter styrene margin, while strengthening, will come in below fourth quarter. And we estimate about $10 million lower sequential EBITDA from this.

You can also see the decline in benzene and ethylene costs from December to March, which is driving the expected first quarter inventory revaluation impact. Now turning to Slide 18, for a look at butadiene. Butadiene prices have fallen with the rest of the energy complex and have shown a recent flattening, similar to benzene and ethylene.

The expected decline from December to March will also contribute to a first quarter unfavorable inventory revaluation impact. As you can see, the prices for each region are very similar, which eliminates any arbitrage opportunity.

Our view is that we have seen a bottoming of our major raw material cost and that we may even see positive inventory revaluation in the second quarter. Now let's turn to Slide 19. We announced our new business alignment in early October.

This was announced and put in place to better reflect the nature of our businesses and we created two new business divisions, performance materials and basic plastics and feedstocks.

These two business divisions are of similar size in terms of sales, but have different margin profiles, different strategic focus, different value drivers and different operating requirements.

By grouping businesses with similar strategies and business drivers, we can manage and operate them more effectively, driving accelerated growth in our performance materials businesses and optimizing profitability of the basic plastics and feedstocks businesses from cash generation.

This new alignment also provides better visibility for investors to understand our company. We have included full year 2014 results on this Slide according to our new reporting, which will be effective January 1, 2015.

You can see that excluding inventory revaluation, adjusted EBITDA for the performance materials division was about 12% of sales in 2014. Of the $99 million of capital spending during the year, about 75% was into this division and a similar percentage is expected in 2015.

This aligns well to the expectations given the margins and focus on growth for the performance materials division. The basic plastics and feedstocks division will be reported separately and includes the following businesses; styrenic polymers, polycarbonate and styrene monomer.

This division will also reflect the results of our two joint ventures, Americas Styrenics and SSPC. A new position, Senior Vice President and Business President for Basic Plastics and Feedstocks, is expected to be filled during 2015.

The strategic intent of basic plastics and feedstocks is also clear; generate cash by a cost-control and margin improvement. Organic investment is not part of the strategy, but consolidation steps are possible. Now returning to Slide 20, you can see some highlights of the first quarter and full year 2015 expectations.

I'd first like to discuss the impacts of inventory revaluation and currency. As John explained earlier, we're estimating a first quarter unfavorable inventory revaluation of approximately $40 million, due to the continued raw material cost decline into the new year.

The fourth quarter $72-million impact was split about 75% to basic plastics and feedstocks and 25% to performance materials. The estimated $40 million impact in the first quarter should be split fairly evenly between the divisions.

The reason for this shift towards performance materials is that butadiene is a decreasing more than styrene-related raw materials. In addition, rubber inventory will be higher at the end of the first quarter due to a second quarter turnaround. It's difficult to estimate inventory revaluation impact for the entire year.

However, an upward movement in our feedstocks should result in a shift to positive inventory revaluation impact, perhaps in the second quarter. Now moving to currency, our first quarter results reflect an 8% sequential devaluation of the euro or about $3 million for the quarter.

Looking out to the remainder of the year, please recall our rule of thumb of a 1% change in the euro compared to the dollar is about a $1.5 million annual EBITDA impact. I would like to give you an update on this.

We expect a higher level of profitability in our polycarbonate business in Europe, due to the restructuring of our raw material contracts, as well as the expected improvement in the market. Therefore, we have a higher level exposure to the euro.

Given this impact, a 1% change in the euro compared to the dollar is now closer to a $2-million annual EBITDA impact. Assuming an exchange rate of $1.15 per euro, for the full year 2015, the year-over-year currency impact will be approximately $25 million.

Outside of inventory revaluation and currency impacts, we expect strong fundamental performance in the first quarter, with significant improvement from the fourth quarter of 2014, as well as sequential year-over-year improvement for the year. Let's go through each segment.

Latex should continue to deliver steady performance, with some sequential improvement in the first quarter from higher volume. And for the full year, we will continue to drive to offset continued coated paper declines in the more developed regions of the world, with growth in Asia, paper, as well as our global focus on carpet and performance latex.

We also expect a sequential improvement, excluding inventory revaluation in rubber, in the first quarter, with seasonally higher volumes, which will be partially offset by a $2-million currency impact.

For the full year in rubber, we expect lower year-over-year EBITDA of about $15 million to $20 million, as we face a currency headwind and as we invest in additional resources to develop new technologies and product lines.

Please note that we have a planned turnaround in the second quarter in rubber that will result in a sequentially lower EBITDA of about $10 million. In performance plastics, we expect significant sequential improvement as margins expand with lower raw material costs.

This impact should be approximately $8 million to $10 million in the first quarter, as compared to the fourth quarter. For the full year, off of a strong quarter, performance plastics will see market prices reset as raw materials stabilize. But overall in 2015, we expect a very strong performance - plastics performance.

In basic plastics and feedstocks, we expect the first quarter EBITDA, excluding inventory revaluation, to be sequentially higher, as polycarbonate, styrenic polymers and Americas Styrenics results more than offset a drop in styrene monomer margins.

For the full year, basic plastics and feedstocks should be well ahead of 2014, driven by polycarbonate restructuring and cyclical rebound, strong Americas Styrenics results and an improving market dynamics for styrene monomer. Adding that all up, I'm very proud of what we achieved and 2014.

Excluding inventory revaluation, we improved our EBITDA sequentially, even with about $40 million of lower styrene margin and 2014 versus 2013. We see a very strong first quarter, excluding inventory revaluation, as restocking, lower cost and higher margins flow through the quarter.

We see 2015 overall stronger than 2014, driven by our performance materials business, coupled with cyclical upside of polycarbonate and styrene monomer. And now Shannon, we can open the lineup for questions..

[Operator Instructions]. Our first question is from Dave Begleiter of Deutsche Bank. You may begin..

Chris, SSBR volume very strong in 2014.

What's your expectations for growth in 2015 for SSBR and ESBR - ESSBR?.

In 2015, Dave, we expect to sell out the balance of the JSR capacity, which we're well on the way to do for SSBR. We expect continued growth in our enhanced grades, as we continue to drive the product mix, and we would expect ESBR for the year to be probably flat with 2014..

And just on polycarbonate, you mentioned expectations above the prior $35 million year-over-year improvement.

How much higher could you go above the prior guidance in 2015 for polycarbonate?.

Well, we've mentioned that the polycarbonate business for us is about 150 kilotons, so $100 change in margin is about [indiscernible] million per year. We did mention that we've seen about $100 of ton improvement in margins through the recent period.

So with the tightening of the polycarbonate markets, it's hard to tell exactly, David, but we're feeling pretty good with the operating rates above 80%. There have been some recent price-increase announcements just in the last week in polycarbonate by ourselves and others.

And we'll have to see how much of that price we can move into the market as margin, as we flow through year. But our expectation is that polycarbonate is well on its way to rebound and we could see a business that's running at breakeven through the second quarter..

Lastly, Chris, restructuring payments in 2015 versus 2014?.

The restructuring payments that we can expect in 2015 will be mainly driven around the potential refinancing. We're in the process of looking at that. That would be the majority of any restructuring type of payments that we will see..

Thank you. Our next question is from Frank Mitsch of Wells Fargo Securities. You may begin..

Chris, I wanted your thoughts on styrene margin. I had a consultant on a call yesterday who was talking about the expectation that actually benzene could snap back fairly materially in a little while here.

And so I know that you were saying that you are seeing a bit of the benefit of lower benzene right now in terms of the margin, but what are your thoughts as we head into the second quarter on styrene margin? And I guess along with that, are we still seeing some of the ill effects of the Shell outage?.

The last part of your question is yes, Frank, we're. And they have another facility that they won't bring back up until the end of this year in Europe. So generally, in styrenics, look, we see the entire styrenic complex is moving up through 2015 and that includes what might be effects from rising benzene.

The reason for that is the industry consolidation, the restructuring of the industry to new players, the limited new capacity and some growth in styrenic derivatives and styrene continues to move operating rates up.

So we do expect year-over-year improvements in our styrene margins, as well as our styrenic polymer and AmSty businesses over the course of 2015.

If you look at the gray bar chart, the question, of course would be, what do the gray bars in 2015 look like, say, compared to 2014? Recall in 2014, we had about $40 million less styrene margin than we did in 2013. So if we repeat the gray bars of 2014 through 2015, then that be a $40-million positive swing year-over-year.

And of course, if you add to that polycarbonate and the swings we see in that, our basic plastics and feedstocks business in 2015 looks pretty promising at this point, Frank. And of course coupled with what we're doing with performance materials, that adds up to what we think could be a pretty decent 2015..

And just on that - speaking of the segmentation that you did, in addition to making our lives a bit more difficult and having to adjust our models, sometimes resegmentation is a precursor to portfolio shifts, divestments, things of that nature.

Can you talk about your sense of your portfolio today and your thoughts about would we still see the same portfolio 2, 3, 4 years into the future? What are your general thoughts their?.

Our segmentation was driven by the factors I mentioned, not a strategic intent to do anything else let's be clear about that first. In terms of actions that might come, we've mentioned that consolidation is a theme we'd be thinking about on the basic plastics and feedstocks.

In terms of your question, which is, is there a strategic intent to do something about the structure, there is not. And the reason for that, Frank, is at least in the near term, the next couple years, say, we certainly see basic plastics and feedstocks in an upcycle.

I just went through that would styrene, polystyrene, Americas Styrenics, all showing cyclical direction that we like, polycarbonate. And reaping that upcycle in both EBITDA and cash is, of course something we want to do, not pass on to somebody else at this point in time..

Thank you. Our next question is from Bob Koort of Goldman Sachs. You may begin..

This is Ryan Berney on for Bob Koort. Firstly, I just saw that you guys have managed to switch to pretty meaningful cash- flow generation in the fourth quarter.

Curious if that's kind of changed your outlook next year and what you're - I know you talked about the refinancing, can you describe with us a little bit of what you're thinking about uses of that cash as you grow that in 2015?.

Sure. Let me start with Q1 and then I'll give you an overview for the full year. A couple of items you need to be cognizant of in Q1, which has historically been a usage for us. In February, we had a $52-million interest payment. We do expect seasonal business activity pick, up so that will AR.

And then we have turnarounds, as Chris alluded to in his comments that we have to prepare for in Q2.

So absent the inventory build for our turnarounds, we think our cash would be close to breakeven in the first quarter, which would be very strong for us if you go back and look at it historically over our first quarter performance over the last three years. As far as the full year, you need to think about in the following context.

As I said in my comments, we expect cash taxes of around $35 million in 2015. Our CapEx will be about $120 million. And our interest pre-any refinancing that we do will be roughly around $110 million. And I think we've got a pretty good track record in managing our working capital. So that's how you need to think about our full year cash flow..

And then, I think on the last quarter's call you were expecting CapEx in 2014 of about $110 million. It looks like you came in a little underneath that.

Can you describe what the difference is and whether or not that's going to - doesn't sound like you floated into 2015, so is that just an expense you're no longer going to take?.

Just again looking very prudently, it's our most precious commodity, making sure we're getting the returns that we expect. Nothing out of the ordinary as far as any changes; it just came in a little bit lower that we projected. And we don't expect it to have any meaningful difference in 2015 of roughly $120 million of we've been talking about..

And one last one, curious about the divergence in performance within your styrenics business versus the performance at AmSty.

Can you talk a little bit about the dynamics there between, obviously America Styrenics doing a lot better?.

Yes, Ryan, this is Chris. Americas Styrenics operates, of course, in the region of the Americans and for that matter, really in North America. The industry structure there is a little more favorable.

They have been able to, based on operating rates and market dynamics, they've been able to drive styrenic polymer margins a little bit harder than we have been able to do in Europe and that's probably the fundamental difference.

In our business, we operate styrenics in both Europe and Asia and our European business operates more closely to Americas Styrenics in terms of performance. And our Asia Styrenics business, as you would expect, is weaker - is the weakest of the three.

So if you had to put a hierarchy out there, you would say the Americas Styrenics business or the North American Styrenics business for that matter, is operating in the highest zone, Europe is pretty close behind that and Asia is a distant third.

And because we have the combination of Europe and Asia, our overall business in styrenics looks weaker and is weaker than the Americas Styrenics business.

Okay?.

Thank you. Our next question is from Laurence Alexander of Jefferies. You may begin..

This is Dan Rizzo in for Laurence.

Just with some of your end markets, particularly carpet in North America is that still in a cyclical decline similar to paper or paper secular, but is it in a decline?.

No. Our carpet business, as we said, had at least globally, we had record volumes in our carpet latex business. We're seeing nice rebounds in the carpet markets around the world, including the U.S. Carpet manufacturers and flooring manufacturers are doing quite well with the rebound in not just housing, but remodeling and so on.

And that's showing up in our carpet latex volumes. So our latex story really is consistent with what we've said we've been trying to do. We have declines in coated paper in the U.S. and Europe. Those declines are continuing, although they're slowing.

And we have been striving to and thus far have been able to offset those declines by focusing on and delivering to the carpet markets great product, growing our performance latex business, growing our paper business in China, which is a growth market and adding all that up has produced the consistent now nine-plus quarters of results for our latex business..

Are you going to see the need to potentially shut anymore or keep the U.S.

SP latex capacity?.

We have since 2008, either as Dow or Styron, shut down substantial quantities of latex capacity. We did some of that as Trinseo. At this moment in time, we're comfortable with our asset base. We continue to invest in better technologies for paper; those are those emulsion blends we talked about, which deliver lower cost to our customers.

And we continue to look at alternative chemistries and technologies to expand our performance latex business..

And then with the tire market you said the high performance was growing fast.

I was wondering if you're seeing a broader restocking cycle in the tire industry or is it just specifically your niche businesses?.

The business we focus on, performance tires, is growing at 3 to 4 times the rate of the tire market. There was in the second half of last year a decline in the overall tire market. And in spite of that, we're able to grow our volumes, as we mentioned.

So the tire market declined a little bit in the second half of last year due to destocking and a slow start to the winter tire season. But our volumes particularly in SSBR were up substantially. And that drove our overall rubber volumes up slightly for the second half of the year and they continue to grow slightly through the first quarter.

So again the focus on high-performing tires, technology to deliver better results, SSBR, enhanced SSBR, neodymium, those products are what's driving our rubber business and our focus on high-performance tires has turned out to be a very good strategy for us..

Thank you. Our next question is from PJ Juvekar of Citi. You may begin..

Chris. If I take a step back and look back at your customers, what kind of inventory destocking did you see as - in SSBR or tires that you talked about, latex or styrenics. As always in raw materials decline, did you see in regulatory destocking and is that continuing? Where do we stand in that dynamic..

The destocking for us, PJ, in our product lines, was primarily in the styrenic polymers arena. We did not see much in latex and you can understand why, given the nature of the product and its storage and so on. Engineered polymers or performance plastics as we call it Now limited but some destocking. Rubber, we saw some because of the tire market.

But most of what we saw was in styrenic polymers, as you would expect. It's a dynamic that occurs and that business line. And it is playing out as restocking, at least so far, through the first quarter.

And that's one reason we talked about sequentially better results in the first quarter in basic plastics and feedstocks, because we're going to offset styrene monomer declines with uplift in styrenic polymers and AmSty and of course, we mentioned polycarbonate as well. So that's really where we saw the inventory destocking dynamic..

And you think that's mostly behind you now? Or do think there is some more to go?.

No, I think it's some more to go. I think it's progressing through the first quarter and we will have to see how the volumes come through and the inventories and then we can make a judgment on whether we're at balance or inventories are low and there still might be more to come and we would say not yet at this stage, PJ..

Okay. And then, secondly, you've done your polycarbonate restructuring; you expect a benefit to come through in 2015? You had talked about a $0.13 a pound eventual trajectory in polycarbonate's margin recoveries.

Where do stand in your current thinking on that sort of recovery?.

I'm sorry, what did you say in cents per pound?.

It was $0.13 a pound, which is half of what you had back in 2010. There was a charge you had put in your presentation..

Right. I think the answer is $35 million from structural, as we've talked about; $5 million that we got in the fourth quarter. The rest of it we will get in 2015. And beyond that, we would expect to see significant amount of margin improvement from rising prices in polycarbonate. A 100 is $15 million, can we get all of $0.13? Yes.

I think we could do that, but it depends on how much price we can push through the market. We have large price increases announced for the next couple months. We will have to see how the market absorbs them. So there could be quite a nice uplift from polycarbonate and the combination of restructuring dynamics and market dynamics..

Thank you. Our next question is from Vincent Andrews from Morgan Stanley. You may begin..

Actually, this is Matt Andrew Kovacs calling in for Vincent.

Just to touch quickly on styrene, I couldn't tell - are you starting to see some elements of restocking? Or is it more maybe less of a destock dynamic that you are seeing in Europe?.

Matt, it's Chris. No. We're seeing restocking in styrenic polymers is what we said and we're seeing restocking in the first quarter in that business. We had commented or I commented that it may or may not be completed by the end of the first quarter.

We will have to see how the inventory levels come out, but we're seeing a restocking in the first quarter in polymers, styrenic polymers..

And then, I know that you focused on the high-performance tires.

Is there any impact to your business from Chinese tires making their way into Europe?.

We're active in selling our product in China and, no, there's been limited impact of those tires coming into Europe at this point in time, Matt..

Matt Andrew Kovacs:.

Thank you. I will now turn the call back over to Mr. Pappas for closing remarks..

Okay, Shannon, thank you. Look guys, thanks a lot. We had a long call. We had a lot of information to put out there. We're very pleased with our year-end. We're very excited about the first quarter, as you can tell and we're starting to get at least cautiously upbeat about the entire year.

So thanks a lot for taking the time to listen and we will be available as required for further questions and comments later. Take care, everybody. Goodbye..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day..