Chris Pappas - President and CEO Barry Niziolek - EVP and CFO David Stasse - VP of Treasury and Corporate Finance.

David Begleiter - Deutsche Bank Robert Koort - Goldman Sachs Vincent Andrews - Morgan Stanley Hassan Ahmed - Alembic Global Duffy Fischer - Barclays Eric Petrie - Citi Roger Spitz - Bank of America.

Good morning, ladies and gentlemen and welcome to the Trinseo Third Quarter 2016 Financial Results Conference Call.

Turning to slide 2, we welcome the Trinseo management team, Chris Pappas, President and CEO, Barry Niziolek, Executive Vice President and CFO and David Stasse, Vice President of Treasury and Corporate Finance, who will be conducting the call. I will now hand the call over to Mr. David Stasse..

Thank you, Catherine and good morning, everyone. [Operator Instructions] 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 November 2, 2017. Our disclosure rules and a cautionary note on forward-looking statements are noted on Slide 2.

During this presentation, we may make certain forward-looking statements, including issuing guidance and describing our future expectations. We must caution you that actual results could differ materially from what is described or implied in these statements.

Factors that could cause actual results to differ include, but are not limited to, factors set forth in our Annual Report on Form 10-K under the Item 1A, Risk Factors. Today’s presentation includes certain non-GAAP measurements. Reconciliation of these measurements is provided on our earnings release and in the appendix of this presentation.

I will now hand the call over to Chris Pappas. .

Thank you, Dave. Good morning, everyone and thank you for joining us. Please turn to slide 3 where I'd like to highlight the key points you should take away from this call.

First, we had a very good third quarter with 143 million of adjusted EBITDA, which reflects an expected result from all businesses, except for a slight decline in styrene monomer margins in September. We had about $7 million of favorable raw material timing impact in the third quarter.

Excluding the acceleration of the $3 million of expense related to the secondary offerings, we were at the low end of our guidance of $140 million to $150 million of EBITDA. Our styrene margin shortfall for the quarter was about $5 million, well within forecast capability across the 1.4 million tons of styrene monomer to which Trinseo is leveraged.

Second, our Q3 cash generation was very strong, with cash from operations of $145 million and free cash flow of $115 million. We repurchased 1.8 million shares of stock for about $100 million in the quarter, indicative of our continued focus on returning cash to shareholders.

Also, we recently received board authorization to repurchase the remaining 2.7 million shares that are available under the 4.5 million share authorization approved by shareholders earlier this year.

Third, we're introducing a modification to our segment reporting in Q4 that we believe will add significant clarity to the performance of our basic plastics and feedstock division. As of Q4, we report feedstocks, which is essentially our styrene monomer business, basic plastics and Americas Styrenics as discrete reporting segments.

This is to help address the number of questions we get on the performance of basic plastics and feedstocks and in particular on styrene monomer profitability. It will also provide clarity into our basic plastics business and Americas Styrenics. More on this later in our call.

Also to better align our financial reporting with recent SEC guidance, beginning in the fourth quarter, we will no longer use adjusted EBITDA, excluding inventory revaluation as a separate performance measure. We will however continue to present adjusted EBITDA and separately highlight the impact of raw material timing as appropriate.

Starting this quarter, we will present adjusted EBITDA for all discussions on forward-looking guidance. Fourth, during an unexpected low level of styrene monomer outages in Q4 as well as continued low styrenics inventories, we’re now forecasting our Q4 to be between $115 million and $125 million of adjusted EBITDA.

This will lead to a full-year 2016 forecast of $585 million to $595 million of adjusted EBITDA. Year-to-date, we have realized about $10 million of favorable raw material timing impact.

This is about $30 million below the midpoint of our last guided range for the full year and most of this shortfall is due to lower expected styrene monomer margins at both Trinseo and Americas Styrenics in the fourth quarter for the reasons stated earlier.

All in, our 2016 guide of $585 million to $595 million of adjusted EBITDA is about $90 million above our 2015 result. Recall that, 2015 included about $60 million of favorability from the high level of styrene outages, which was offset by about $60 million of unfavorable raw material timing.

Therefore, our outlook represents a significant year-over-year EBITDA improvement, due to structural improvement in basic plastics and feedstocks and from delivering 5% EBITDA growth in performance materials. I need to add that at the moment, the world of styrene monomer is experiencing a series of production issues in Europe and the US.

These issues are occurring as we report and it is too early to tell the impact they will have on our revised fourth quarter and year-end 2016 guidance. It will depend on the duration of the outages, inventory management response and other factors.

Recall that Trinseo sensitivity to styrene monomer is about $35 million of annual EBITDA for a $25 per metric ton change in styrene margin. Our full-year 2016 cash flow from operations is forecasted at $485 million and full-year free cash flow is forecasted at about $350 million, an excellent result.

This brings me to our adjusted EBITDA expectation for 2017. Let me first mention a couple of things, which underpin our view of next year. One, we see no fundamental change in the styrene monomer global dynamic over the next few years.

Our view is that limited new supply, some demand growth, continued outages and generally rising margins will continue for the next few years. Quarterly EBITDA variation driven by the dynamics of outages, inventory shifts, trade flows and other factors will also likely continue.

[indiscernible] and a series of other important factors that are drivers of the effective operating rate of styrene monomer at our Investor Day conference on November 11th. In 2017, we see performance materials, basic plastics and Americas Styrenics continuing to perform well. We are forecasting adjusted EBITDA for 2017 of $580 million.

This is essentially the same as our current view of 2016 and we will go through some more details on this 2017 guidance later in this call. Now, I would like to discuss a few highlights from the third quarter and please turn to slide 4.

We recently announced some important growth projects for Performance Materials, as we strive to ramp up our growth in this division.

These include our latest 50kT SSBR expansion, our new SSBR pilot plant, future ABS capacity in China to support our automotive and consumer essentials market growth in Asia and some exciting new long glass fiber compounds for added growth in performance plastics.

We also announced discontinuation of manufacturing activities at our Livorno, Italy latex plant as our most recent asset base step to improve our overall latex business. You will hear more on these and other activities to drive higher EBITDA growth in performance materials at Investor Day on November 11th.

Also in the third quarter, Trinseo became a fully publicly traded company with improved trading liquidity. I’m very proud of the work by all of the Trinseo employees who have made this result possible. We have accomplished a lot over the last six years and we have an exciting future ahead of us.

Now, I'd like to turn the call over to Barry who will discuss the financial details of our third quarter performance..

Thanks, Chris and good morning, everyone. Please turn to slide 5 for an overview of our financial performance this quarter. Third quarter adjusted EBITDA was $143 million. This included a $7 million benefit from raw material climbing in the quarter.

Performance materials continued to deliver results to meet our year-over-year commitment of at least 5% EBITDA growth, with $84 million of adjusted EBITDA. Basic plastics and feedstocks division delivered $86 million of adjusted EBITDA in the third quarter, which was impacted by slightly lower than expected September styrene margins.

All else in the division was essentially in line. On slide 6, you can see our performance versus prior year. Revenue of $935 million was 9% lower due to the pass-through of lower raw material costs.

Third quarter net income of $67 million was $15 million higher than prior year, driven primarily by favorable raw material timing, which was partly offset by restructuring charges in the current period.

As a result of the planned discontinuation of manufacturing activities at the Livorno, Italy latex facility during the third quarter, we recorded about $16 million of pre-tax restructuring charges, including $14 million of impairment charges to write down assets to the net realized book value and $2 million related to other expenses, such as severance and contract termination costs.

Now, turning to slide 7. Let's go through our segment results. Latex revenue of $243 million was 5% below prior year, primarily from the pass-through of lower raw material costs in Europe and Asia with slightly higher sales volume.

Latex adjusted EBITDA of $30 million was $6 million higher than prior year, driven by higher sales volume to the paper and carpet markets in North America and Asia. This result was about $5 million higher than our guidance, driven by favorable raw material timing and higher volume.

Latex volume for the quarter was 318 million pounds, which was the highest result since the third quarter of 2012.

Turning to slide 8, revenue for synthetic rubber of $113 million decreased 11% versus prior year, driven by the pass-through of raw material costs as well as lower SSBR volume due to delayed shipments, which will move into the fourth quarter.

Adjusted EBITDA of $28 million was ahead of guidance and was $1 million higher than prior year, as higher margin more than offset lower sales volume. Now, turning to slide 9. Performance plastics revenue of $175 million was 3% below prior year, due to the pass-through of lower raw material costs.

Adjusted EBITDA of $25 million was in line with our guidance and was about $10 million higher than prior year, due mainly to higher margin in Europe as well as favorable raw material timing. Moving to slide 10, basic plastics and feedstocks revenue of $405 million was 13% below prior year, driven by the pass-through of lower raw material costs.

Adjusted EBITDA of $86 million was $16 million higher than prior year. This increase was driven by favorable raw material timing, which was partly offset by lower styrene margin in Europe and in Asia. Now, let's turn to slide 11 for a discussion on cash. Cash from operations was $145 million in the third quarter.

Free cash flow, defined as cash from operations less capital expenditures, was $115 million in the third quarter. This included $40 million in dividends from Americas Styrenics, $30 million of capital expenditures and $6 million of cash interest payments.

At the end of the quarter, we had $466 million of cash after the $100 million share repurchase in the quarter. Now, I'd like to move to slide 12 and provide more details on our new segment reporting. As Chris mentioned, we will adjust our segment reporting starting in Q4 to provide more clarity around the drivers of Trinseo results.

We believe this new segmentation provides investors and analysts with more of the information they need to assess historical results and make judgments about future performance. First, we will provide more granularity within basic plastics and feedstocks division, splitting this into three reporting segments.

Basic plastics, which includes polystyrene, ABS and polycarbonate; Feedstocks, which is primarily styrene and Americas Styrenics, our 50% owned joint venture, which includes styrene and polystyrene.

Given that styrene margins are generally the most difficult part of our business to forecast and have the most quarter-to-quarter variation, we believe this additional disclosure will improve the understanding of our performance.

Second, we are improving the clarity of how ABS profitability is shown between the basic plastics and feedstocks and performance plastics segments.

Under the old segmentation, the entire profitability of ABS was shown in basic plastics and feedstocks, including the high grades that are sold as differentiated products in our performance plastics segment.

Going forward, the ABS profitability from differentiated products sold into performance plastics end markets will be included in performance plastics. We’re renaming the latex segment to latex binders to more accurately reflect our product offerings in this segment.

Please note that there is no change to our divisions, performance materials and basic plastics and feedstocks. We will continue to manage and operate these as before, driving accelerated growth in performance materials businesses and optimizing profitability of the basic plastics and feedstocks businesses for cash generation.

In the appendix, we've presented the last three years of quarterly financials on both the new and the old segmentation methods. Please turn to slide 13 for a few additional comments on our new segment reporting.

First, you can see while we've moved the ABS profitability associated with markets served by performance plastics, which on a Q3 last 12-month basis, resulted in about $25 million increase in performance plastics profitability.

Second, you can see the additional disclosure of adjusted EBITDA in the three new segments within basic plastics and feedstocks. Third, with this additional level of disclosure, you can now see the EBITDA contribution and trend of each of these three segments.

The basic plastics segment, which is generally consistent -- with generally consistent quarterly EBITDA.

Our feedstock segment with annually rising EBITDA due to rising operating rates, but with significant quarter-to-quarter variation and equity income from Americas Styrenics, which also is generally rising, but has less variation on a quarter-to-quarter basis, because just under half of this equity income is generated from styrene.

Now, I'll turn the call back over to Chris who will discuss performance expectations for the fourth quarter, the rest of the year and our initial view of 2017..

Thanks, Barry. Please turn to slide 14 for a discussion on styrene monomer. These are the same charges we always show and here you can see the expected sequential Q4 drop in styrene monomer margins in Europe, which is being driven by a very low level of outages and continued low styrenics inventories.

These Q4 margins as well as those that we expect for Americas Styrenics are also lower than we expected in our Q4 prior guidance and these account for essentially all of the decline in Q4 versus our prior guidance. Please take a look at slide 15 to review of 2016 styrene monomer outages.

We regularly mention outages as a driver of quarterly margins for styrene, but there are other factors we have talked about as well. These factors include inventory dynamics, global trade flows, absolute demand, et cetera. While turnarounds are somewhat predictable in the near term, they can vary an absolute amount and duration, among other things.

The key to note here is the generally low level of styrene outages in Q4 of 2016. We believe this plus low inventory dynamics are driving the lower than expected styrene margins we saw in October. Recall my comments earlier regarding the current state of the styrene world, as we speak with the several outages that are ongoing.

We will have to see how these develop through the balance of the year to have more clarity regarding Q4 and year-end results as well as these outages influence on the first quarter of 2017. So with that backdrop for styrene margins, let's move to slide 16 to discuss our guidance for the fourth quarter.

Please keep in mind that all discussion of EBITDA going forward, including our guidance, is on an adjusted basis and a new segmentation basis, including the ABS profitability split. This ABS profitability split should add about $3 million of EBITDA to performance plastics in the fourth quarter, with a matching reduction in basic plastics.

We expect the performance materials division to continue its steady performance in to the fourth quarter with adjusted EBITDA of about $80 million. Latex binders and synthetic rubber adjusted EBITDA should each have another strong quarter of approximately $25 million.

Performance plastics adjusted EBITDA should be about $30 million, similar performance to Q3. Overall, we project an adjusted EBITDA in the normal range for the performance materials division. Now moving to basic plastics and feedstocks, we believe the fourth quarter will be between $55 million and $65 million of adjusted EBITDA.

This is lower than the previous guidance due to primarily lower styrene margins for Trinseo and Americas Styrenics. Corporate expense should be about $22 million for the quarter, in line with previous expectations. At this point, we see minimal effects of raw material timing in the fourth quarter.

In total, we expect to generate between $115 million and $125 million of adjusted EBITDA on the fourth quarter and this translates into an adjusted EPS range of $1.19 to $1.36 per share. Now, let's look at slide 17 for our guidance for the full year. We are adjusting our full year 2016 guidance to $585 million to $595 million of adjusted EBITDA.

Substantially all of this reduction in guidance can be attributed to lower than expected styrene margin in the fourth quarter for Trinseo and Americas Styrenics.

I would like to highlight, as you can see on the bottom of this slide that we expect to generate sequentially more EBITDA in our feedstocks segment and a consistent level of equity income from Americas Styrenics, despite a much lower level of styrene monomer outages in 2016.

We believe this is further proof of our thesis that styrene margins are continuing to improve on a year-over-year basis due to structurally improving supply demand dynamics and higher operating rates.

For performance materials, we are reaffirming our 2016 growth in adjusted EBITDA of at least 5% and we believe we'll achieve between $330 million and $340 million of EBITDA this year. We also expect to continue to generate significant cash. We now expect full year 2016 cash from operations of $485 million and free cash flow of $350 [ph] million.

Finally, turn to slide 18 for a breakdown of the $580 million of adjusted EBITDA that I mentioned earlier. We will have much more detailed discussion at our upcoming Investor Day, but I at least want to give you some of the detail now. Let's begin with performance materials.

We recently announced that we'll be expanding our enhanced SSBR synthetic rubber capacity in 2017 by 50kT at our manufacturing site in Schkopau, Germany. We expect this project to increase our annual EBITDA in synthetic rubber by about $20 million when we reach full rate commercialization in 2020.

This project entails upgrading existing capacity that currently produces other low margin grades of synthetic rubber. Because its capacity will be offline for much of 2017 and because we’ll have added costs related to the expansion project, we expect synthetic rubber EBITDA to decline by about $15 million from 2016.

We expect this decline to be offset by another year or positive momentum in latex binders and performance plastics. And in aggregate, we expect performance materials division to deliver between $330 million -- about $330 million of adjusted EBITDA, roughly flat to 2016.

In basic plastics and feedstocks, we expect the following for 2017 again based on our new segmentation. For basic plastics, we expect a sequential decline due to the expiration of a royalty agreement and incremental fixed costs related to our ABS expansion in China.

For Americas Styrenics, we expect a similar result, as in 2016, about $135 million of equity income. For feedstocks, we also expect a similar level of profitability as compared to 2016 at about $75 million of adjusted EBITDA. Now, I know we covered a lot of ground on this call, but I do want to remind you a couple of items before we move to Q&A.

In 2016, Trinseo was performing essentially as guided with the exception of styrene margins in the fourth quarter. In our view, this is a function of the factors described earlier and not a shift in our thesis on styrene monomer in the future.

We have consistently talked about quarterly influences of outages and other events on styrene margins and also delivered rising annual styrene related EBITDA contributions both at Trinseo and Americas Styrenics for two years now as our thesis suggests.

We expect 2016 will generate significant year-over-year improvement in both performance materials and basic plastics and feedstocks, especially when you consider the impact that unplanned styrene monomer outages have on 2015.

Our new segmentation will provide more clarity and direction on the drivers of Trinseo profitability especially with the additional granularity and basic plastics and feedstocks.

Our initial guide for 2017 is a strong indication of our view of sustainable EBITDA to generate significant cash flow to support more growth in performance materials and prudent use of excess cash for investments and shareholder returns. Lastly, I'd like to remind you to attend our Investor Day on November 11 in New York.

You can see the details on slide 18.

Our objective will be to provide you with more detail of why we believe in our styrene monomer thesis going forward to illuminated more on the drivers of basic plastics EBITDA to provide a picture of enhanced growth in performance materials and importantly to describe our use of cash going forward to support shareholder value.

We hope to see you there. And now Catherine you may open the phone line for questions..

[Operator Instructions] And our first question comes from David Begleiter with Deutsche Bank. Your line is open..

Chris, on your 2017 guidance for feedstocks are you assuming that styrene margins were flat in ‘17 versus Q4?.

We are assuming that the aggregate contribution of our styrene days in ’17 will be similar to ’16 and you can see that now in kind of the new segmentation that we have.

So we believe the margins in the fourth quarter as we stated are unusually low at the moment, I should say in October, driven by the low outages and low inventories, we expect that ’17 will be a year of continued styrene margin variability by quarter, but at this point what we're saying is in aggregate we expect year-over-year the total amount of margin in styrene to be about the same..

Chris, can you update us on your view of new styrene capacity over the next two, three, four years globally and how it comes on stream?.

Sure, there are two small styrene plants that are slated to comp in China in 2017, they have both been on the docket to come up for some time now and they have not yet come up but they're at this point planned for 2017.

They equal about 2% of nameplate capacity, they are both facilities that are generally not integrated to styrene and are relatively small and are not from large normal styrenic producers.

In 2018, there are no new capacity additions in China and the one capacity addition that was slated for late 2018, [indiscernible], our understanding now from market information is that plant is now been moved to a fourth quarter 2019 start-up and that is the only plant that is due to start up in 1919 [ph] styrene and that facility is 1.7% of global capacity and again our understanding - current understanding from the market is that facility is scheduled for fourth quarter 2019.

So a very small amount in ’17, two small producers, none in ’18, one facility in late ’19 is the entire announced styrene capacity for Asia going forward or for the world for that matter..

Thank you. And our next question comes from Robert Koort with Goldman Sachs. Your line is open..

Chris, I got I guess applaud you for attempting to clear it all up for us by providing more disclosure here that’s always a good thing for the analyst community.

I wanted to ask you on the segmentation within basics, I guess when I look at the data you provide what it illuminates is that the variability of your feedstock business from profit standpoint is about three or four fold what it would be for Americas Styrenics, I’m wondering if you would talk a little bit about why the Americas Styrenics cash flow stream tends to be so much more stable and is there any way you can get more stability into that feedstock stream.

And then secondly I guess you, are you hopeful in doing this that maybe folks will recognize lower volatility across the portfolio and reward you with a better multiple is that part of the objective?.

Bob, thanks for bringing this up and first of all we just do it for more clarity so thank you for mentioning that and to the last part of your statement, yes, we are quite hopeful that this segmentation will help investors understand the parts of our portfolio that are more volatile or variable by quarter and the parts that are more stable.

So our expectation would be that that people put that into their thinking. On the specific question of Americas Styrenics compared to our own feedstocks. Americas Styrenics as reported contains both their styrene and their polystyrene business. We do not report them separately.

We do however and have however disclosed annually most recently is the end of 2015, the rough percentage of, Bob, Americas Styrenics styrene that number is 15%. So first of all that segment as reported as it will be recorded is 45% styrene on a 2015 basis, 55% polystyrene.

So the volatility is already dampened because it's not 100% styrene which is fundamentally our feedstocks, okay.

And number two the volatility quarter variation of US styrene is generally lower than Europe styrene, which is what we're reporting and Asia and ours, because US is where we have the highest operating rates and therefore generally somewhat lower quarter to quarter variation. So it’s those two factors that drive that, Bob, in the calculation..

And then secondly, I think you spoke positively about your view on the world of styrene, you have the feedstocks number, it looks flat to 2017, is that just a function of the fourth quarter being weak so you're starting from a lower base as you build into ’17 or why wouldn’t we see more improvement in ’17 given what you talked about in terms of capacity - moderate capacity bill..

Well, I think first of all Bob, we're coming out with our guidance on ’17 I think pretty early. We think we're leaning forward frankly to provide guidance of ’17 at this point. And we just feel comfortable at the moment providing styrene guidance in ’17 that’s comparable to ‘16.

We’ll have to see how the world develops, our thesis is what we stated that generally speaking we should see rising operating rates et cetera. But at this stage of the game, we just felt comfortable guiding to that aggregate level and the components that you see..

Thank you. Our next question comes from Frank Mitsch with Wells Fargo. Your line is open. .

Hi, good morning fellows, this is [indiscernible] on for Frank Mitsch. So my question was around 2017 guidance, given all the investments that are going into performance materials. I just wanted to get your thoughts on free cash flow, when do you expect to grow at the same pace as in 2016 for 2017..

For performance materials in 2017 we guided essentially flat to the 2016 expected results.

And that's because of really two dynamics, the investment we’re making in rubber, which will come online early in the 2018, we’ll take certain capacity in rubber out of our system in 2017 and that capacity being out while we modify it and while we have extra costs to do that modification that will create a $15 million year-over-year in rubber in performance materials.

That decline will be offset by EBITDA growth in latex and performance plastics and that construct is what gives us the equal year-over-year performance in performance materials..

And this is Barry, to look at total company 2017 cash flow, we’re starting with the adjusted EBITDA of about 580 million. We could – you can expect – we are estimating CapEx about 175 million, cash taxes about 90 million and cash interest of about 75 million..

A follow-up on the latex there, kind of offsetting the offline capacity, are you seeing any impact on the Livorno shutdown this early or are you still waiting to see how that will come in for the quarter?.

No, we are seeing some impacts from that similar to what we saw in Allyn's Point in North America where our operating rates have moved up and operating rate rise is always helpful in these businesses.

We're seeing some results from that as we do through the fourth quarter but it is that and other things in latex binders in 2017 that we think will drive us higher in latex binders but remember we're also improving our performance plastics business in 2017 verse 2016.

So the offset of the rubber decline is the combination of growth in EBITDA in latex binders and performance plastics..

Thank you. Our next question comes from Vincent Andrews with Morgan Stanley. Your line is open..

Thanks and good morning everyone.

Just a question on, as you think about the composition of styrene margins in ’17, you talked about the higher operating rates so does that, should we assume that you're anticipating some improvement in styrene prices somewhat offset by maybe some higher raw material costs and I guess to that end, we’ve had some volatility around oil and sort of noise coming out of OPEC, how important it all to your 2017 forecast is where the price of oil settles out and what if any of view do you have there?.

Our view continues to be that the profitability of styrene is largely driven by the operating rate of styrene and whether we have high oil, low oil, obviously that is influence on the economy and other things but the fundamental driver of styrene profitability is the operating rate of styrene.

If the raw material components of styrene move up and the operating rates of styrene are high, the styrene complex should be able to raise price to offset that and maintain or grow margins and conversely if operating rates are low. Now specific to oil, there is a lot of question about oil and where it is going.

At Investor Day, one of the things we're going to really focus on is analyzing with some I think pretty interesting data.

What does styrene do in relationship to oil over time, how does benzene in relationship to styrene behave over time and we're going to try and kind of disaggregate a number of these factors again at Investor Day to give everybody a good view of what we think are the components to drive the effective operating rates of styrene.

And there maybe some surprising data in there, which I'll just tip our hand a little bit. There isn't really a good correlation at all between the price of oil and the margin of styrene over the last 20 years and we'll show some of that data..

And just a follow up in performance plastics for ’17, what are your expectations for auto volume?.

We continue to be generally constructive on automotive recognizing that the US has got a pretty high build rates. We still think Europe is going to be fundamentally strong, solid. Asia Pacific we think is going to be solid and we think Brazil or Latin America I should say more broadly might be a little stronger than this year.

But auto builds, remember we have new technology we're introducing for exterior structural parts and we have the continued light weighting of autos. So independent of auto builds we have those dynamics going on to drive our automotive business. .

Thank you. And our next question comes from Hassan Ahmed with Alembic Global. Your line is open..

Chris, thank you first of all to providing the ‘17 guidance early. Obviously you’re guiding to relatively flat year on year EBITDA. So what I'm trying to sort of get a sense of is that obviously through the - so if I get the midpoint of ‘16 EPS guidance, its’ 6.93 [ph], right.

And obviously through the course of 2016, you guys were quite active in buying back shares. So what I'm trying to sort of understand is that ‘17 EBITDA guidance of 580 million, what would that translate to in terms of EPS.

Obviously factoring in what you have already bought back, but also sort of maybe possibly giving us a sense of what to expect in terms of buybacks as we look with ’17 as well..

I’ll let Barry address the buyback question, Hassan, but the short answer that 580 million as you said is flat and we are not going to give a expected outcome of share buyback, but Barry why don’t you comment on….

We have the net income numbers out there and I think going forward end of the quarter we’d about 46 shares outstanding..

Understood, but my question is that I understand that obviously getting authorization for buybacks is an annual event, if I remember correctly it’s sometime around June, July. As it stands right now looking at business conditions, looking at your guidance, your free cash flow sort of forecast and the like.

Are you guys leaning you know with all of that sort of in your mind, are you leaning towards maybe potentially another round of buybacks going forward..

I think it just - let me clarify a couple things. One is the end of the quarter, we have about 46 million shares outstanding, two, as we did, we mentioned in our announcement the board has authorized the remaining 2.7 million shares of what was authorized by our shareholders of the 4.5 million.

So we have authorization to buyback the remaining 2.7 shares. Obviously this is reflecting confidence in the cash flow.

We're going to balance the rate of that buyback with growth investments that you've heard Chris speak to relative to our cash flows and share repurchase and you're going to hear as Chris mentioned on November 11 at our Investor Day we're going to speak more to our overall cash deployment plan..

Thank you. And our next question comes from Duffy Fischer with Barclays. Your line is open..

Question just on the new segments.

Can you walk through the major product flows between the segments to include the ABS and which of that is going to be priced at market and which would be priced at cost?.

Well, hi Duffy, thanks for joining, it’s Chris. First of all when we move product as we said from division to division in our company we move it up market that's been our policy principal from day one and that continues to be our policy and principal.

The change is segmentation for ABS includes one change only, we have certain ABS grades that are sold as of performance plastics generally as a neat product in other words not compound as ABS and in our prior segmentation, the margin for that ABS was captured in basic plastics and we've taken the view that because those ABS grades are really performance plastics in their market behavior their market dynamic and we sell them in performance plastic segments, notably automotive and consumer essential markets we've shifted the margin from basic plastics to performance plastics for those particular ABS grades.

Now the ABS grades that remain in basic plastics are the ones that behave and act in the market like a basic plastic. They tend to be in relatively less specified applications. They're more influenced by supply and demand and they will remain in basic plastics as will their margin and that's really the whole chain in a nutshell, Duffy..

So just one clarification, so when the ABS that goes in the performance that will not capture the margin you guys would make on say the styrene molecule and just the second part of that is if you look at that part of the ABS just financially over the last three, five, seven years does it behave similarly to the rest of the performance plastics division, how margins growth rates that type us stuff..

So your first question we have never captured the margin of styrene in any of our polymers, we capture it in our feedstocks, so we have not done that and have not changed that. We always had styrene margin in styrene. We transfer styrene at market to the polymer business, so that's no change and that will continue.

On ABS, yes, the general performance of the performance plastics type of ABS is more reflective of performance plastics both in the way it’s sold, the way it’s positioned, the way the market interface works and it is generally rising in growth and profitability like the rest of the performance plastics. That's why we put it in there.

It looks more like, acts more like, quacks like, walks like a performance plastic..

Thank you. Our next question comes from PJ Juvekar from Citi. Your line is open..

Good morning guys it’s Eric Petrie for PJ. Peachtree. You noted that the EBITDA impact from your 50,000 tonne SSBR expansion in Germany was 20 million. What’s the associated CapEx with the project and then after the expansion can you remind us your split between SSBR and lower grade rubber..

Eric, we're going to give a lot more detail on Investor Day about the growth projects not only as announced in performance materials but some other things we're contemplating, so I'd like to the save on that for that period of time.

Suffice it to say that investment which will yield $20 million of incremental EBITDA is a very high return investment for us in rubber. And so we're going to talk as I said a lot more about that later. Now the second part of your question, well is….

The split between SSBR and lower grade rubber..

Oh, the volume split. Well it obviously ramps it up. So it's another 50 KT and it's going to put us at well over 50% probably 60% 65% of our volume of rubber will now be high value SSBR at the completion of that project..

And then secondly if I could ask a broader styrene industry question, on slide 15, where you showed the styrene outages over the last two years.

Do you believe the industry styrene producers are investing to increase their plant reliability and you could see low single and mid-single outages rather than spikes going forward or how would you comment on that?.

Well, it's hard to tell what others might be doing in the industry, we do know that the amount of planned outages were sometimes known as turnarounds various from year to year and this year especially in the fourth quarter there were relatively low amount of us.

We also know that the age of the styrene asset base is what it is, it's very aged and it's kind of hard to judge but some of these plants, many of these plants are very, very old and it's not just a matter of a little incremental basements capital, it's just a matter of the age and essentially the overall structure of these assets to create these outages.

So I would not expect material shift in that is my short answer. The margins of styrene well improved are as we've said many times are clearly not healthy from any kind of reinvestment standpoint and they're generally not that great, they’re just better than they were in the horrific periods of 2012 and 2013.

So I don't want to speak too much for other people, but I generally wouldn’t expect a big change there..

Thank you. And our last question comes from Roger Spitz with Bank of America. Your line is open..

Regarding the new basic plastics EBITDA there is move in ’14 from a negative ’15 to 152 in LTM, Q3 EBITDA, Q3 ‘16. Can you break that down, how much was the movement up from polycarbonate versus the residual ABS SAN business and/or the poly….

About 90, about 90, Roger..

I figure this most.

In latex bidders, where have you been seeing, you talk about strength in paper and carpet, where you've been seeing that it feels like your direct competitors are still seeing softer market share, for instance you always talk about China, you're still taking share in China and papers is that where this is driven from?.

Generally the increase we've had has been in North America, Roger, and it's a combination of just our relationship with the mills that were involved in.

The board producers that tend to be, we've been winning some of the board conversions if you will, board mill conversion, but also as you've heard from us we've had a lot of investment in new technology in paper and board coating generally in the starch blend area and that product line is taken off for us and has allowed us to maintain and incrementally grow our volume..

Thank you. That concludes our Q&A. Ladies and gentlemen thank you for participating in today's third quarter 2016 Trinseo Financial Results Conference Call. This concludes today's program, you may all disconnect, everyone have a great day..