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| Statement |
|---|
| Throughout the year, we took proactive actions to control costs and also successfully executed a significant productivity program that led to a 9% increase in cash generated from operations |
| The team did an excellent job controlling our cash expenses |
| So we're very excited that our sales and R&D teams continue to do a great job bringing new customers into the company |
| And look, when you think about raw material prices and pricing, I think we're in a pretty good position |
| If you look at the pipeline and the backlog of projects on re-roofing in North America, it's still pretty strong and that should provide market growth for the next three to five years |
| We are good margin stewards in the marketplace, and we will continue protecting volumes of margins |
| And I think our Q4, where we reported double-digit volume growth is demonstrating that |
| Within surfactants, we delivered strong volume growth in Personal Care from our low 1, 4 Dioxane investments |
| We also grew volume in the industrial cleaning and market and with our distribution partners |
| Latin American surfactants volume also grew strong double digits as we continued recovering the business |
| So we have good anticipation that we'll start to see those volumes recover in the second half |
| As I mentioned in my earlier comments, the PA Polyol assets were more impacted than the broader site was, and we have obviously more work and more investment to do to fix the areas within the PA Polyol that were disrupted, but overall, I think we're pretty pleased with the improved resiliency we've been able to do through investments over the last couple of years |
| Adjusted EBITDA for polymers nearly doubled due to strong volume growth |
| But I'm happy to report we are recovering our share in the marketplace, and margins should continue to gradually improve going forward |
| We had a strong double-digit growth in Latin America as well in surfactants |
| We remain confident in our long-term growth and innovation initiatives |
| We remain competent in the strength and diversity of our business and its ability to generate cash that will allow us to invest in our current business, pursue strategic M&A opportunities, and return cash to our shareholders |
| I am proud and grateful for the resilience and effort shown by our team in executing the two biggest growth projects in the company's history while concurrently delivering our productivity gains and workforce actions |
| We will cover each segment in more detail, but to summarize, we deliver excellent operating income growth in polymers and lower operating results for surfactants and specialty products |
| A combination of anticipated market recovery, executing our strategic initiatives and the aforementioned cost reductions should position us well to deliver adjusted EBITDA growth and positive free cash flow in 2024 |
| We also grew volume in the industrial cleaning and market and with our distribution partners |
| Latin America's surfactant volume also grew a strong double digits as we continue recovering the business |
| Moving to slide 13, as we look to 2024, we believe volumes and margins will improve due to continued recovery in rigid Polyols demand, growth in surfactant volumes driven by new contracted business, along with the expected recovery of the agricultural business in the second half of the year, and lower overall raw material costs versus 2023 |
| Volume increased 10% driven by a 12% increase in global rigid polyols and higher demand within the specialty polyol business |
| Rigid polyols experiences strong growth in all regions |
| The underlining alkoxylation business that supports the Pasadena investment continued its volume growth during 2023 and at a very attractive unit margin, despite the continued destocking activity happening within the agricultural chemicals market |
| Polymer operating income increased more than four times versus prior year, primarily due to the 12% increase in global rigid polyol volumes and margin improvements |
| The cost reduction activities initiated last year, along with additional productivity and cost out programs underway in 2024, which is centered around improved operational performance across our manufacturing network, are expected to deliver $50 million in pre-tax savings in 2024 |
| So, if you exclude the destocking in Ag, surfactants grew 5% , which is a pretty robust number |
| As you may recall from our October earnings call, we anticipate returning the positive free cash flow generation this year, now that we are approaching the end of our heavy investment phase |
| Statement |
|---|
| Earnings for the full-year were significantly impacted by an 11% decline in volume due to a slowdown in demand across most end-use markets, including significant customer and channel inventory de-stocking |
| Finally, specialty product segment delivered operating income of $11.5 million, down 62% versus prior year, driven by lower volumes and margin contraction due to competitive dynamics |
| Surfactant operating income for the quarter decreased $6.9 million, mainly due to the product mix and lower unit margins in Latin America due to competitive pressures |
| Specialty products was down versus record results last year due to pricing pressure and higher cost raw materials |
| Surfactant net sales were $370 million for the quarter and 19% decreased versus the prior year |
| Total company volume declined 11% due to lower demand and significant customer and channel inventory destocking across most of the company end market |
| With the supply chains disruptions in the second half of 2022, and customers were looking for security of supply, they -- I think, enticed in imports in early in 2023, which caused some of our margin and share issues |
| The surfactant segment delivered operating income of $72 million, down 56% compared to prior year, driven by a 9% reduction in volume, the polymer segment delivered operating income of $61 million, down 27% versus the prior year, driven by a 14% reduction in volume |
| Obviously, the Ag business is dragging there, but I think you mentioned some pricing pressure, some share loss related to imported products |
| This decline was mostly due to lower unit margins and volume within the MCT product line |
| Adjusted EBITDA for 2023 was $180 million, a decrease of 40% versus a record year in 2022 |
| Surfactants EBITDA was lower due to an unfavorable customer and product mix, lower income in agricultural chemicals, and lower revenues within our biocide product line |
| Selling prices were down 22% primarily due to the fast through of lower raw material costs, unfavorable product mix, and competitive pricing pressures in Latin America |
| Latin American surfactants experienced lower volumes and margins due to competitive imports |
| In summary, 2023 was a very challenging year for the company |
| The lower unit margins were primarily due to the competitive pricing pressures |
| In early 2024, our 1,4 Dioxane encountered operational interruptions due to a series of power disruptions from our external power provider, compounded by a period of extremely cold weather in January |
| As Luis mentioned, with that inventory hangover in the first half of last year, we were chewing through high-cost raw materials, which really impacted margins as we competed in the domestic market down there |
| Finally, specialty product operating income decreased $3.9 million |
| Now turning to polymers on a slide eight, net sales were $147 million at 1% decrease versus the prior year |
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