Good morning, ladies and gentlemen, and welcome to the Trinseo Fourth Quarter 2019 Financial Results Conference Call. We welcome the Trinseo management team; Frank Bozich, President and CEO; and David Stasse, Executive Vice President and CFO; and Andy Myers, Director of Investor Relations.

Today's conference call will include brief remarks by the management team followed by a question-and-answer session. The company distributed its press release along with its presentation slides at close of market yesterday.

These documents are posted on the company's Investor Relations website and furnished on a Form 8-K filed with the Securities and Exchange Commission. [Operator Instructions] I will now hand the call over to Andy Myers..

Thank you, Julianne, and good morning, everyone. At this time, all participants are in a listen-only mode. After our brief remarks, instructions will follow to participate in the question-and-answer session. Our disclosure rules and cautionary note on forward-looking statements are noted on Slide 2.

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

Factors that could cause actual results to differ include, but are not limited to, factors set forth in our annual report on Form 10-K under Item 1A Risk Factors. The company undertakes no obligation to update or revise its forward looking statements. Today's presentation includes certain non-GAAP measurements.

A reconciliation of these measurements to corresponding GAAP measures is provided in our earnings release and in the appendix of our investor presentation. A replay of the conference call and transcript will be archived on the company's Investor Relations website shortly following the conference call.

Now I would like to turn the call over to Frank Bozich..

Thanks, Andy, and welcome to Trinseo's first quarter 2019 financial results conference call. As I look back at my first year with Trinseo, I'd like to start today's call by sharing some of my thoughts and observations. First, I'm very optimistic about the future of Trinseo for several reasons. First, and most importantly, we have a great culture.

I believe our cultural strength shows up in the leadership that we have demonstrated and safety and sustainability. I'll share more on this later in the call. But it's one of the reasons that we were named as one of the 100 most responsible companies in Newsweek's ranking of top US public companies.

Another reason for my optimism is our ability to generate positive cash flow. Even in relatively weak market conditions, like we saw in Q4, we've been able to generate significant positive cash flow in spite of large one time capital expenditures. Another reason is our ability to identify and deliver on productivity initiatives.

In 2019, for example, we delivered on business excellence opportunities that more than offset fixed cost inflation. And our opportunity landscape will grow in the future.

Lastly, we have some very exciting organic growth applications that perform very well in 2019 and will continue to provide faster growth and higher margin opportunities for us in the future. Now I'd like to discuss some of our specific achievements for 2019. First and foremost, I want to highlight what an exemplary year it was in terms of safety.

We are very proud that Trinseo's overall safety rating in 2019 was one of our best ever with an OSHA Recordable Rate of 0.11, which puts us at the top decile of the chemical industry. Of course, when it comes to safety, our goal is always zero incidents.

So at the end of the year, we recognize those locations with zero injuries, zero spills, and zero process safety incidents for the calendar year with our triple zero award. I'm happy to say that 24 of our manufacturing and R&D sites which represents more than half of our locations achieved triple zero.

In the area of sustainability, we announced in December that we are entering into a joint development agreement with two leading packaging companies to develop high quality polystyrene containing recycled material that will be tested in a wide range of packaging applications.

These collaborations will help demonstrate to the market that polystyrene is uniquely suited to circularity and offers the potential for closed loop recycling.

Circular polystyrene is particularly advantaged as a diverse waste material away from landfills and can be produced with lower energy and a lower greenhouse gas footprint than traditional resins. We're also excited to launch our post eco series of recycled containing resins for the automotive market next month.

These grades of PC ABS contain up to 50% recycled content and are specifically tailored for automotive interior applications. This series will deliver the same quality and consistency our auto customers are asking for, but at 40% lower energy consumption than virgin resins.

I'm also pleased to say that the nonautomotive grades, of post-consumer waste containing residence grew substantially in 2019 with an 88% year-over-year volume growth. Finally, CDP or formerly the Carbon Disclosure Program, is the premier emissions reporting platform and rating provider related to climate change.

They recently increased our rating from B minus two B for 2019, reflecting our efforts on greenhouse gas reduction and climate change initiatives. Our continued work in progress in corporate social responsibility was one of the reasons that Newsweek magazine named Trinseo, in its inaugural top 100 of America's most responsible companies.

This high level of performance in safety and sustainability is what I and our executive team have come to expect from our company. And we should all look forward to further progress in these areas in the future.

One of the first things I implemented after joining the company was a business excellence process, which is a framework for optimizing business processes and driving productivity and efficiency improvements.

As part of this, we established 4 business excellence committees, which focus on commercial, supply chain, operational and functional excellence. The business excellence process is already producing positive results.

For example, in 2019, polystyrene delivered its highest EBITDA since 2013, due largely to an increased commercial focus on strategic pricing and customer segmentation. On the cost side, we were able to deliver class reductions equal to 150% of our total company fixed cost inflation.

In supply chain, we reduced overall inventory levels on a volume basis by 5% in 2019, which contributed to another strong year of cash generation. Over the last 2 years, we've generated $689 million of cash from operations and $457 million of free cash flow and returned $394 million to shareholders via dividends and share repurchases.

Even in the fourth quarter of 2019 with an adjusted EBITDA of $59 million, we generated positive, free cash flow despite spending $34 million on our plant automation upgrades and system separation projects, both of which we view is non recurring.

This ability to generate cash, even in a generally weak macroeconomic environment speaks to the strength of our portfolio and the health of our balance sheet. In the fourth quarter of 2019, we announced changes to our executive leadership team, which is not built on a global functional structure.

This new structure will increase organizational effectiveness through business process optimization. This effort will accelerate in the future as we achieve systems independence from Dow in the first half of the year. The control of our systems and business processes will be a rich area of opportunity for productivity in the future.

This new structure will also enable the organization to better focus its efforts and investments on product offerings serving three application areas, which we believe are less cyclical and offer higher growth and higher margins. The first is coatings, adhesives, sealants and elastomers support tests within the latex binder segments.

These applications which we serve with our styrene butadine and styrene acrylic technologies, are expected to grow at GDP-plus rates over the next five years. Our sales volume into these applications increased 14% in 2019, and had margins of more than two times the segment average.

The second group of applications are consumer electronics, medical, and thermoplastic elastomers or TPEs within Performance Plastic segment, which we're calling engineered materials applications.

The specialty compounds we sell into these applications, which comprise approximately 17% of the Performance Plastic segment revenue, have margins of more than two times the Performance Plastics segment average.

As I mentioned earlier, our post-consumer waste containing resins being offered into these applications are particularly exciting as they're growing rapidly and offer much higher margins than our standard grades. The third is high performance tires within Synthetic Rubber segment, which we serve with SSBR produced their [indiscernible] Germany site.

High performance tire demand has grown three times the growth rate of standard tires over the last five years. And we believe the electrification of vehicles and fuel efficiency standards will accelerate this trend in the future. SSBR comprised 65% of total synthetic rubber segment revenue in 2019.

And its margins are typically two to three times those of ESBR. Now I'd like to briefly discuss the fourth quarter and describe for you the market dynamics we're currently in and how we see them impacting our full year 2020 results. Our fourth quarter results are reflective of similar business conditions to what we experienced in Q3.

But with year-end destocking, customer destocking in polystyrene was more pronounced than usual due to rapidly falling feedstock prices. In our automotive markets, we saw customers shutting down production at the end of the year earlier than usual. This contributed to lower styrene margins as well.

Before I move on to the 2020 outlook, I'd like to take a moment to discuss the coronavirus and how we see it impacting our business in Q1. First and foremost, I'm pleased to say that our employees are safe, and we had no infections among our workforce.

In addition, our operations in Greater China have had no interruptions and the supply of our raw materials have not been affected.

However, based on input from our customers, we are anticipating lower first quarter demand from the automotive, consumer electronics and corporate markets due to the postponed startup of their operations following the Chinese New Year. We estimate the first quarter impact to be $5 million to $10 million.

So please note this is a preliminary estimate for Q1 only and to be sure, this is a dynamic situation that we will continue to monitor closely. Turning to 2020, we are guiding to a net income range of $95 million to $112 million and adjusted EBITDA of $325 million to $350 million.

These ranges are based on an assumption of similar economic conditions to what we observed in the second half of 2019 and include the first quarter impact from the coronavirus that I mentioned. So far this year, we are seeing positive signals in several segments outside of China.

This includes restocking and polystyrene and better order patterns and synthetic rubber.

While European styrene margins declined through the second half of last year they've been essentially flat since December, which we believe is an economic response to the margin levels that have dropped to near cash breakeven for most on purpose styrene producers.

For example we estimate that 13% of global styrene production has voluntarily been taken offline in the last two months due to these conditions. In addition, we're already aware that one large styrene project in China has been delayed indefinitely.

We believe that styrene margins have reached a fundamental threshold where further decline is not sustainable over the long run. In addition, we are seeing similar dynamics in polycarbonate with signs that prices are increasing in many applications.

In the first half of this year, will complete the transition of IT and other administrative services from the Dow Chemical Company, a project that we started about two years ago. The first year costs of these services will be higher than they were last year. But this will decrease over time through productivity and efficiency efforts.

We expect to largely offset lower styrene margin and higher administrative costs with cost savings from our restructuring program and business excellence initiatives, as well as growth in SSBR latex binders to case applications as well as specialty compounds to engineered materials applications.

So, to close, we're entering 2020, with a full year outlook reflecting similar conditions to what we experienced in the second half of 2019, but with some added uncertainty due to the corona virus outbreak.

However, January demand was stronger than Q4 levels across all of our segments, which we view as a positive sign for improving economic conditions in our markets. We will continue to monitor the situation of China as it develops and adjust as appropriate.

As always, we are taking appropriate measures to improve our cost structure, reduce working capital and allocate resources toward resilient, faster growing markets that are complementary to our capabilities.

Before we turn to Q&A, I'd like to share that yesterday evening we received a letter from M&G Investment Management, our largest shareholder, they informed us they intend to file a 13D with the SEC and then intend to engage with the company and discussions on various topics. But with a focus on governance.

We look forward to these discussions and are always willing to consider the views of our shareholders.

Now, Julianne, can you open the line for questions?.

Certainly. Thank you. [Operator Instructions] Our first question comes from David Begleiter from Deutsche Bank. Your line is open..

Good morning. Thank you. Frank, just on the aspiring capacity is offline right now.

What's embedded in your expectations relative to your guidance as to how this capacity comes back on stream if it does over the course of the year?.

David, what we believe is that these levels that the industry will moderate its output to sustain the margins or to operate at a level that is economically feasible. So, we don't see them trying to chase volume or trying to place that capacity rather we see the industry moderating.

And we would also say that those operations that are at the right hand side of the industry cost curve will likely be evaluating their future and we could see some structural changes going forward..

Very good.

And Frank just on the corona virus impact of low and high end, what's the expected duration of these plant shut downs post the New Year holiday? Is it through the end of the month end of the quarter at the higher end the range or we hope they will be pretty soon?.

So, what we've been told right now is and the information that we base the outlook that we provided is that they extended the Chinese New Year holidays for a week. So, they would be back online on February 10. So, that's the information that we based that forecast on. And, again, it's a dynamic situation, and we'll have to see..

Thank you very much..

Your next question comes from Frank Mitsch from Fermium Research. Your line is open..

Terrific. Thank you. And just to follow up on that. So your expectations on corona virus are really more volume related, assuming things come back on February 10. Now, since that's happened, I mean we've had aspiring margins. I'm sorry, aspiring amount of pricing really plunge in Asia.

Is any of that negativity also embedded in kind of that $5 million to $10 million numbers and an expectation that you were going to see a reversal there?.

Yes, the current margin levels are reflected in our outlook. .

All right, terrific. Thank you. And if I could just follow-up on Slide 12. If I'm looking at your adjusted EBITDA for 2020 and then I look at some of the calls on cash. I mean, it almost implies to free cash flow might be $50 million or lower.

How are you thinking about free cash flow in 2020?.

Frank, this is Dave. I think I'll try and take a stab at that and Frank can add if needed. I think the point I would point out is 2020 is somewhat of an unusual year for cash generation for us, for a couple of reasons.

One is the second of 2019, 2020 are the peak spending years for our multiyear control room refresh project that Frank talked about earlier. Spending for that, which is in CapEx is about $30 million in 2020 and that drops to $15 million in 2021. And then drops further after that.

We also have $15 million of spend, as we wrap up the transition from Dow services project in 2020, now obviously go to zero in 2021. The other kind of broad category I would point out for 2020 is turnarounds. We have about $30 million of spending that will do. And this is not on CapEx. It shows up in the cash flow statement obviously.

But $30 million on turnaround spending in 2020 which is about three times our average. Our average is more like $10 million a year. And the reason for that is we have a turnaround that we typically do once every 8 to 10 years at styrene plant Terneuzen which is a very large project several months long, including replacing the catalyst.

So all of that is $30 million. And then also [indiscernible] a large turn around. That's actually replacing reactor. And that turner as on once every 30 years. So [indiscernible] CapEx will be considerably higher in 2020 also. So kind of all of those things contribute to somewhat of an anomaly, I would say for cash outflows in 2020.

The other thing I'd like to highlight though, Frank is and you can see at the bridge we gave on slide 12. One thing we didn't mention was working capital. In 2019 with a big release of working capital is about $125 million. And a lot of that was just due to price declines and feed stocks to the course of the year.

But we also reduced our inventories on a volume basis by 5% in 2019, as through our supply chain excellence process. We've got a similar target for -- in fact, even a larger target for 2020 for reducing inventories. And we've already identified $50 million to $75 million of incremental inventory reduction that we're going to be able to do in 2020.

Again, it's not in these numbers. Now, I just want you to also just keep in mind, Frank, as you know, I mean feedstock prices, changes in feedstock prices kind of over wash anything you're doing on the volume side of the inventory. But feedstock prices are flat pretty stable through the course of the year.

We would expect to have a working capital reduction in the year of $50 million to $75 million in 2020. .

If we have feedstock, we're going to get a $50 million to $75 million benefit on working cap?.

Right. That's the target..

All right, terrific. Thank you so much. .

Maybe just to add one last point to that. No, if clearly, if raw material prices increase and feedstock prices increase. We would have a proportionate draw on working capital. But that would come with economic improvements or business improvements that would drive that feedstock improvements. So we would see that is beneficial. .

Got you. All right. Thank you so much. .

Sure. .

Your next question comes from Laurence Alexander from Jefferies. Your line is open..

Good morning. Two questions.

First, can you give a feel for how you're thinking about the longer term productivity opportunity? After the full separation from Dow is completed? And can you frame it in terms of the potential outlays you might do and the return hurdles you have for those productivity investments? And then secondly, for the targeted growth areas.

Where do you see opportunities? How much can you accelerate penetration in those markets without pursuing M&A? And what would your M&A criteria be?.

Okay. So let me take the first question. When we look at the opportunity landscape for our productivity going forward we would see it in the 10s of millions of dollars range.

And that would include both operational benefits that we would get in supply chain through better control of our order to cash and purchase to pay processes, as well as actually functional spending reductions that would come for example in IT.

So to it to capture those we will have to spend some money and have to scope out some IT systems improvements to migrate away from the systems that we're -- we will separate with from Dow. But, those would have a very quick and strong payback. So we're excited about those opportunities.

And like I said, they're in the 10s of millions of dollars of range.

As it relates to the -- can you repeat the second question? Are the organic growth opportunities…?.

Right. So the growth opportunities that you highlighted, because they're all each smaller parts of different segments.

How do you think about the levers to accelerate the growth of those? Is M&A a component, if you did do M&A what the criteria might be? Just trying to get a feel for what this could look like in five years?.

So let me just first characterize each of those, that group of three application areas. They are -- we find them attractive because they offer much higher margins greater than GDP growth rates. And they tend to be more resilient and less cyclical than our other markets.

And so we think we have very good traction right now on organic growth opportunities. And we're funding those through increases and reallocation of our commercial and R&D resources. And so, our position in, we're well positioned in the market. And if we expand geographically, our presence commercially and with technical resources.

For example, we announced that we would put up a prototyping line in Hsinchu and Thailand related to engineered materials that will help grow those organic growth opportunities. Now, again, M&A is a tactic -- is a tool that you use to support that. So if the right opportunities came along, we would consider those.

But again, we would have to consider those against the opportunity the market segments, et cetera. And I couldn't tell you right now what specific hurdle rates we would put on those would be..

Thank you..

Your next question comes from Bob Koort from Goldman Sachs. Your line is open..

Good morning. This is Dylan Campbell on for Bob. Quick question and follow up on the coronavirus $5 million to $10 million impact. It sounds like you guys are breaking in activity levels start to return following February 10th.

Should that last longer? What would be kind of sensitivity to your EBITDA let's say every week or so that that could be extended?.

Yeah. I think that's really difficult to say because it depends on which customer segments it is and what part of the geography that it's going to. May be stepping back I'd like to characterize our business in China for you a bit.

We produce and we take material -- raw materials from our suppliers who are generally in the coastal region -- Northern coastal regions of China. And these areas have not yet been affected or it's unknown whether they will be affected significantly by the coronavirus.

If I characterize where we shipped to and our customer locations, those customers are largely in the northern and eastern coastal region of China also. So we've gotten feedback that customers are coming back to work. They're asking and already plants are restarting.

So, again, very difficult and dynamic situation other than what we know today with specific feedback from customers to give you any more specifics on that. But I would say in general, the signals we're getting is that the customer plants are restarting our plan -- continue to plan to restart on schedule, or the revised schedule, they've given us. .

Got it. Thanks helpful..

Don, I would just add one other thing. The $5 million to $10 million estimate that we talked about, what that assumes is a phased return in other words, they don't return on February 10 at 100% demand, it's more of a phased approach. .

Got it. That’s helpful. Thank you. And then on free cash flow, kind of less than $50 million outstanding with the working capital benefits for 2020 seems to under shoot last year's dividend payment.

Can you talked a little bit about kind of what your capital deployment priorities are in 2020, considering lower free cash flow? And I guess talk a little bit about your ability to repurchase shares? And what you can do that to similar pace and 2019?.

Well, maybe I'll talk about our capital expenditure priorities first. Given that we have significant one time spending related to the DCS conversions and also our systems migration that's a top priority. And we've also made a priority end of life in the EHS capital as always.

And so where we've moderated our view is on growth capital and what projects that we would fund from a growth capital standpoint and also on productivity capital. And so we prioritize those productivity capital related projects that offer very quick returns. So that's how we would set the priority and that's how we get to the $100 million.

As it relates to our program going forward and returning value to shareholders, we are going to continue to take a balanced approach and use the tools as dividends and share repurchase to do that. .

Your next question comes from Hassan Ahmed from Alembic Global. Your line is open..

Good morning, Frank. Frank job that you guys sort of shared with us about curtailments in styrene, sort of production very helpful. My question is about some of the new supply that's coming online in the near term. Particularly in China, some of the sort of Greenfield styrene supply that's coming online.

What do you guys hearing about that? Should we expect some delays over there keeping in mind the way the economics are? And then for the out years.

I mean are you sort of hearing anything in terms of maybe even, some of the out year projects being canceled?.

So, I'll answer the last question first. And so we have heard that one project scheduled for 2024 for Xing Dong has been put on hold indefinitely. We would see that the newer projects, or the projects that were already scheduled to come on stream in 2020 and 2021 that they will.

And again, those are generally world scale plants that have very favorable economics or much more favorable economics than certainly the Chinese non-integrated producers. And I guess I refer back to our Slide 11, where you look at the industry cost curve. If you look at the right side of the industry cost curve, there's, and we brought this up before.

There is a significant portion of the industry in China with those nonintegrated producers that in this environment will be significantly disadvantaged. And, again, I think we believe even the integrated producers in the middle of the cost curve will be evaluating their long-term viability and they're given at these economics.

So without increased demand at these levels, we would anticipate structural changes as it relates to the industry with capacity being rationalized. Now that would be the logical thing to expect..

Understood, very helpful. And as a follow up it just seems still many moving parts still a bit vague. The story recently announced Chinese plastic ban.

But as you look at that, and as it pertains to trend sale, I mean, what impact would you guys expect, if and again, very cognizant of the fact that not too many details are available, but how are you guys thinking about that?.

So in general we see that as having a minor impact on our business. And we look at our Asians polystyrene volume, only 10% to 15% of that goes into packaging applications. But only even a fraction of that go into the targeted single use areas that the Chinese regulation is targeting, which is plastic bags, straws, hotels' single use items.

So, again, if you think about what our product mix in our end use mixes, it's largely appliance, applications, refrigerators, wipe goods, et cetera. So we see that is having minimal impact upon where we serve our markets. I guess maybe just stepping back and making a more general statement about it.

There our belief is even in the affected applications, it will take time for technically viable substitutes to emerge that would reduce the demand on those applications. And, I've heard estimates of several years before technically viable substitutes emerge that would be widespread in the industry.

So again, we see very little impact in our end users and where it is impactful it would take time. .

Very helpful Frank. Thanks so much..

Your next question comes from Vincent Andrews from Morgan Stanley. Your line is open..

Hi, this is Angel Castillo from Morgan Stanley. Just had a quick question Frank just around the cost curve you discussed.

The high end producers of the high cost producers, just curious as to how trade impacts the entire dynamic of who goes offline, in terms of where prices are at today? If China is a net importer, how does that kind of play, I guess, become a factor into all this dynamic?.

Well, I think everybody will be -- in a reduced demand environment the industry will be looking at their landed costs or the landed revenue, as they supply. And in general, we think they'll factor in those economics. And that's why the World Class plants that are being launched in China will be viable over the long term.

And why we believe that the non-integrateds in China will be particularly disadvantaged. And I guess I'm going to add one other point that I -- that is interesting about the Chinese non-integrated producers. They're sourcing ethylene and benzene from the market to operate.

And in an uncertain environment, let's say a prolonged or a declining fuel demand environment or petrochemical demand environment in China, the availability and the cost of benzene and ethylene would likely go up and be less available.

So we would see this could be a very, very challenging environment for those non-integrated producers, where availability of ethylene because of low output could curtail what they could bring to the market. So we are watching them very closely..

That's very helpful. Thank you. And then you noted some restocking and probably sign, as well as just some better order patterns on synthetic rubber.

I was wondering if you could give us a little bit more color on those dynamics that you're seeing on the first quarter and perhaps a little bit more color around the region overall?.

Yes, so as it relates to polystyrene destocking, what we saw was a more pronounced destocking in Q4 than normal the year-end destocking. Simply because of the sharp drop in the feedstock prices. And the consumers anticipating lower polystyrene prices coming out of that in the future.

Now, I want to remind you in Europe, in 2020 7% of Europeans -- Europe's polystyrene capacity is actually going to be rationalized. These are the announcements for [indiscernible] last year. So, in anticipation of that, we took a value-over-volume approach in Q4. And we opted to hold margins rather than try and place a lot of volume.

And so as that demand drop occurred, anticipating there would be less supply early in 2020 and better fundamentals for us. So I'm happy to say that what we're seeing so far in Q1 is strong restocking with at good margin. So the tactic that we deployed there in our PS business is paying off so far as what we see. Sorry, so that was polystyrene.

You asked about -- what was it, tire?.

The synthetic rubbers as well? You mentioned order patterns. .

Yeah. So synthetic rubber, actually -- demand for SSBR has been very strong in Q1, or in January. It was very strong over Q4 run-rate. So we're optimistic that the continued growth and performance tire and the replacement tire market in North America and Europe will continue to drive that. .

Helpful. Thank you. .

Angel this is Dave. I would just add -- I mean, just generally speaking if you look across the whole portfolio, I think it's safe to say what we see early in the quarter and January is better order patterns, higher demand than we saw on a Q4 run rate basis across all of our businesses notwithstanding the coronavirus in China.

So I think that generally holds true across the whole portfolio. But again, it's very early obviously. .

Got it. Thank you..

Your next question comes from Eric Petrie from Citi. Your line is open..

Hi, good morning, Frank. .

Good morning..

So China is adding at pulling capacity, roughly three crackers are starting in 2020. And by 2023 there's roughly 10 crackers with at least a million tons capacity. So how does that impact the ethylene availability and the cost economics of these non-integrated styrene plants. .

So again, those crackers in that ethylene is destined for basically for polyethylene. And the economics of a non-integrated producer who's not attached to one of those crackers is particularly disadvantaged because you're going to -- you have to ship and deliver compressed gas to those sites.

So inherently there are disadvantage versus an integrated producer.

But what I guess the point I was trying to make is that if we see lower demand or lower outputs for fuels and petrochemicals in China early this year or in the first half of this year -- the end -- the destination for that ethylene will not be prioritized to non-integrated polystyrene producers.

It'll be prioritized to those polyethylene applications. So they could see a very challenging environment with availability of ethylene. And that's a situation that we've seen in the past during periods of slowdown in petrochemical demand. I don't know if that helps..

Okay, thank you. And broader picture, Germany industrial production today sell 3.5% month over month.

What are you seeing in terms of broader Europe and then any comments on China demand?.

I would just go back to the comments that Dave made about how we are seeing the start to the year. In general, in the applications that we're serving and some of our grow applications, we see that we're starting the year with good fundamentals. And tire industry there's probably pent up demand we would believe on replacement tire from last year.

So we're seeing some strong demand in that area and then recovery on the polystyrene side et cetera.

And then there's fundamentals for us in automotive that are somewhat different from the broader automotive market because it's driven by lightweighting and fuel economy, drivers that necessitate the use of plastics and interior applications where we serve.

So again, we feel generally pretty good about what we're seeing so far in this year in the demand side for automotive, despite the macro automotive market..

Your next question comes from Matthew Blair from Tudor, Pickering, Holt. Your line is open..

Good morning, everyone. Frank, I was intrigued by some of the comments in the release, just regarding the improving trends are seen in the consumer electronics market in Asia.

Could you provide any more details here?.

Yes. So actually that's exciting and we really like that. We had a position historically in consumer electronics with their compounds. But it was narrow, I would say with -- or concentrated with a few large clients.

And we've invested in the past several years to broaden our commercial opportunities, or commercial activities and technical activities to other consumer electronics suppliers. And so we're getting good traction abroad by broadening who we're going after. So our big clients, if you will, are becoming a smaller percentage of our overall demand.

So that's what's driving the results that we're seeing. And then the other thing, I would tell you. The desire for post-consumer waste recycled content in your product is really exciting for us, because the demand is very-very strong, especially in consumer electronics. So those customers are particularly interested in sustainability.

And so that's driving very strong demand. And we were quick, if you will to -- we were early on the front edge of offering high recycled content resins. And so we're seeing the benefit of that..

Sounds good. And then just thinking about the turnaround schedule for the year. So you have [indiscernible] sounds like a $10 million impact in Q1. On the Trinseo turnaround.

What quarter would that roll through? And I guess would that be about a $20 million EBITDA impact?.

Matthew, hi, it's Dave. It's -- that turnaround is starting in February. And it will last into May, I believe, so several months. And it's already -- the impact of that is already baked into our guidance number..

Sounds good. Thanks..

Your next question comes from Duffy Fischer from Barclays. Your line is open..

Yes, good morning. Just want to ask a question about the reduction in the economy of plastics and the push from that. And just how you think the polystyrene molecule will end up doing, let's say versus polypropylene, polyethylene. My guess is at the end of this road, we'll find out that there were meaningful differences.

And how much you can decontent? But do you have any preliminary views on how polystyrene will fare versus the other two major molecules?.

Yes, it's a great question. And I would tell you, we believe the fundamentals for polystyrene demand to be sustained for polystyrene, because of its inherent chemical circularity to be sustained. They're very strong relative to the other plastics of now. And this isn't testing any negative aspersions.

The other plastics, they were always purpose appropriate for their applications. But polystyrene is unique in the fact that it can be chemically recycled at very favorable economics back to a virgin monomer. And that's what we've demonstrated through our joint venture in Americas Styrenics.

And we think that as that gains traction and the demand by the end consumer for circular materials continues to drive. We see that being widespread and then collection networks being set up. That would feed recycling plants that would bring us recycled polystyrene that we could turn back into virgin monomer.

So I really liked the fundamentals of polystyrene for those reasons. And it's simply on its chemical. It's a chemical engineering basis for my bias there. But I -- the other thing, I think that's really important for everybody to understand is that the end consumers really want this.

And so there's very high demand, very high interest, and a very high level of engagement with our customer base to bring a solution. And they're talking significantly higher prices they're willing to spend, or materials that have recycled content or could even be 100% recycled.

So bottom line very optimistic and positive about the future of polystyrene because of those reasons..

Great. And then just to clarify, your comment that January volumes were stronger than Q4.

To level set that what would that look like year-over-year?.

Yes, difficult to say, I -- it's hard to extrapolate that because there's always some seasonality that factors into that, but it's materially stronger, it demands in January, then the Q4 run rate. But I couldn't extrapolate that to the full year..

Okay, thank you..

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