Good morning, ladies and gentlemen, and welcome to Trinzeo's third quarter 2025 financial results conference call. We welcome the Trinzeo management team, Frank Bozich, President and CEO, David Stasey, Executive Vice President and CFO, and D. Van Castle, Senior Vice President and Corporate Finance and Investor Relations. Today's conference call will include brief remarks by management team, followed by a question and answer session. the company's distributed express release along with its presentation slides after close of market on thursday november 6th these documents are posted on the company's investor relations website and furnished on form 8k filed with the securities and exchange commission if anyone should require operator assistance during the call please press star then zero on your telephone i will now hand the call over to b van kessel please go ahead thank you calvin and hello everyone at this time all participants are in listen only mode after our brief remarks instructions will follow to participate in the question and answer session our disclosure rules

and cautionary notes on forward-looking statements are noted on slide two 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 risk factors set forth in item 1a of our annual report on form 10k or in our other filings made with the Securities and Exchange Commission the company undertakes no obligation to update or revise its forward-looking statements today's presentation includes certain non-GAAP financial measurements the The reconciliation of these measurements to corresponding gap 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. The replay will be available until November 7th, 2026. Now I would like to turn the call over to Frank Bozic.

Thanks, Bea, and welcome to our third quarter 2025 earnings call. I'd like to begin by sharing some information on trade flows in our chemistries, as we believe this is instructive for understanding how the end markets we serve have reacted to tariff uncertainties. We've included some of this information on slide four of our presentation materials. In general, we saw a sharp increase in imports of Asian polymers to both the U.S. and Europe beginning in Q1. We believe this was a reaction to the threatened tariff levels that ultimately were announced in early April and an attempt to fill supply chains in the U.S. ahead of the tariff and a redirection of respect to the U.S. You can clearly see a significant increase in imports of ABS primarily from Asian producers beginning in the first Corp would get ahead of the tariff implementation. Exports from the U.S. of both ABS and PMMA decreased versus prior year, and the decrease was most pronounced in the exports to Canada and Mexico. A similar dynamic occurred in Europe, where Asian material that is typically consumed in China was redirected to the European market, putting margin pressure on the more standard grades of ABS and PMMA. These industry trade flow dynamics continued into the third quarter, resulting in lower volumes versus prior year, but similar volumes quarter over quarter. Whether these new levels of demand are transitory or structural remains to be seen. However, late in the third quarter and into the fourth quarter, we are seeing an increased run rate of sales over more formulated, higher margin products that is higher than the year-to-date average and prior year levels. In the case of our more formulated PMMA residents, the year-over-year increase in volumes was over 10 percent beginning in Lake Kut. We do believe there is a drive to reshore demand even at slight trades longer Asian supply chains and address potential tariff impacts in both Europe and the U.S. Concerning our focus on sustainability, I want to highlight the fact that the European Parliament finalized its vehicle end-of-life directive in September. This mandates that new vehicles must contain 20% recycled plastic within six years, 15% of which must come from end-of-life vehicles. And this increases to 25% within 10 years. This action formalizes the EU's drive for greater product supply chain circularity. We have remained committed for technology for our circular, recycled content-containing platforms and expect these regulations to drive demand in the near term. Our pilot plans for recycled polycarbonate, ABS, and MMA are sold out. The volumes are still small but will become more meaningful as we ramp up. Year to date, our recycled content containing plastic sales grew 2% across all applications, with our recycled solutions and engineered materials growing at 12%. Before I hand the call over to Dave, let me comment on our press release from the 6th of October, in which we announced the discontinuation of Virgin MMA production in Italy and the intention to close our polystyrene production facility in Germany. We took this difficult decision after carefully considering our options and the impact on our employees. However, it is clear to us that these assets will not be competitive in the long term. Our Roe Italy site will remain focused on PMMA resin production and will also be the site for our investments in recycled MMA. Pending works council negotiations in Germany, these projects should lead to $30 million of EBITDA improvement next year, and the cash savings will exceed restructuring costs beginning in 2020. Now I'd like to turn the call over to Dave.

Thanks, Frank. We ended the third quarter with $30 million of adjusted EBITDA, which was impacted by $9 million of unfavorable raw material timing and negative equity affiliate earnings from America's Styrenix due to an $8 million headwind from repair and other costs related to an unplanned outage that occurred in June. At the segment level, engineer materials adjusted EBITDA was flat versus prior year as fixed cost improvements and slightly higher volumes in PMMA resin for building and construction and automotive applications were offset by lower volumes in medical. On medical sales, I want to remind you that we reported increased sales last year related to the closure of our Stodd polycarbonate site and customers stocking up prior to the shutdown. Latex binders adjusted EBITDA was $9 million below prior year, mainly driven by lower volume in Europe paper and board applications, as well as significant pricing pressure in Europe and Asia. Our higher margin targeted growth platforms in case and battery binders continue to outperform the market. Sales volume in battery binders were up 27% versus prior year for the quarter as we continue to enhance our portfolio, including new customer wins and anode binder applications. We're currently working closely with five of the 15 largest lithium-ion battery producers in the world. Lastly, Polymer Solutions Adjusted EBITDA was $19 million below prior year, driven by $9 million of unfavorable timing, lower ABS volumes, and unfavorable mix related to the closure of our polycarbonate plant. Third quarter free cash flow was negative $38 million, and we ended the third quarter with $346 million of available liquidity. The fourth quarter is typically our seasonally strongest quarter for free cash flow due to a working capital release. We expect our free cash flow in the fourth quarter to be positive $20 million and our year-end liquidity to be over $350 million. Now I'll turn the call back over to Frank.

Thanks, Dave. Looking forward, we expect fourth quarter 2025 adjusted EBITDA of roughly $30 to $40 million, and as Dave mentioned, positive free cash flow of $20 million. This forecast assumes a continuation of the year-to-date market dynamics and a somewhat exaggerated seasonal year-end effect, as well as $5 to $10 million of negative raw material timing. We will remain intensely focused on what's under our control including improving our free cash flow in the short and long term through continued inventory management restructuring activities and other actions additionally we continue to believe that there are at least five triggers that could improve the demand environment first trade certainty in any form would improve consumer confidence and provide a landscape for new investments second a continuation of federal reserve interest rates cuts, interest rate cuts, which will lower our own interest expense and improve demand for housing and consumer. A resolution of the conflict in Ukraine. Fourth is a rationalization of higher costs, less environmentally sound chemical assets in Asia. And lastly, stronger support for the EU chemical industry as outlined in the EU chemical industry action plan. Thank you. And now we're happy to take your questions.

Ladies and gentlemen, we will now begin the question and answer session. I would like to remind everyone to ask a question. Please press the star button, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Alex Kelsey of Wells Fargo. Please go ahead.

Hey, everybody. Thanks for hosting the call and taking the question. I wanted to start with slide four on the trade flows. I think one of the dynamics we've seen among a number of chemical companies is just structurally higher imports of China products into Western markets that's just structurally depressed pricing and influence demand.

So I'm just curious, is it your view that this is transitory in nature, truly just getting ahead of tariffs, or are you seeing just a structural difference in how China is behaving with regard to your markets?

Yeah, thanks for the question. Actually, we don't know whether it's structural or transitory. It's too early to tell, as we said in the prepared comments. But I would tell you that in our chemistries, the biggest, I guess, the more problematic dynamics, so the countries that we're seeing the most increase in inflows are actually Taiwan and Korea. And in our chemistries, we believe that, you know, those their domestic markets don't support the significant capacity that's been built over the years. And in where they used to have an outlet to supply China, that volume or that surplus capacity is now being redirected to Europe and North America. And I would point out that at least our analysis would indicate that those are higher costs that's in these chemistries. The other thing I would point out that's problematic from a trade flow standpoint is the use of using imports of resin produced in China and Korea into Mexico that can be compounded, relatively likely compounded locally and then brought into the U.S. under the U.S. MCA tariff convention. tariff-free. Now, our understanding is from our trade associations and our discussions that this closed by the administration, but that would be helpful in our value chains. And, you know, that's where China, Chinese products, we see more of the impact of Chinese flow into Mexico.

Within PMMA and ABS, maybe this is a tricky one, but, you know, how much of the market, Taiwan slash Korea slash China represents today versus, I don't know, 12 months ago, 24 months ago, whatever the right time frame might be?

Well, I can't precisely answer what share of the market that they represent. But what I would tell you is that the import volumes on, for example, the percentage increase in imports to, for example, from into Europe from South Korea in the first half of 2025 was up 18% over prior year. And in Q2, it went up to 26% increase over prior year. And they are by far the biggest importer of ABS In the case of PMMA, imports from, you know, imports from South Korea were up, you know, marginally in the first half, you know, into Europe. But in the case of imports into the U.S., the biggest import, you know, increase in imports, the biggest imports, increase in imports came from South Korea and Taiwan for ABS, where, you know, it was approximately 23 percent increase. But then Mexican product increased 75%. So that was that pathway that we were talking about. Now, I want to point out, though, that remember, we make mass ABS, and these are basic, generally basic grade or standard grade polymers that are coming in under these conventions that are more broadly used and the less specified or formulated products.

Then on the PMMA comment, the formulated PMMA comment, I thought the commentary about seeing sequential ramp in the Q4 was positive. One, has just something changed in that market from a supply or demand dynamic to suggest we're at trough and rising off trough levels?

And then within the EM segment, what percentage of that is, you know, air quotes, formulated PMMA? um yeah i think it's too early to you know we don't know that the market dynamic is changing necessarily um it's too early to tell and it like i said this is a late q3 early q4 dynamic that we observed and we're watching it and trying to understand it we believe that there is you know an effort on behalf of many of the customers in North America and Europe to de-risk their supply chain, you know, from a complexity standpoint and also, you know, with regard to potential tariffs or trade barriers in North America and Europe. So I guess at this point, that's, we're watching it. But it, you know, again, it was good to see that increase over prior year.

And then to that second question that I asked, in terms of however you want to define it, like what percentage of revenue slash EBITDA slash volume in EM would you define as formulated?

Yeah, I wouldn't disclose that, you know, specifically. It's a material part of our EM segment, but we wouldn't share that information generally.

And then on Amstai, one question, maybe accounting related, but if the shutdown unplanned maintenance was taken in Q2, I'm curious why there's an impact on Q3 EBITDA. And then more generically, can you just talk about, you know, what's being done within Amstai to sort of right size that business, just given how underperforming it's been this year?

Alex, this is Dave. So the unplanned outage occurred at the end of the second quarter in June, but, you know, when it was related to the production of styrene, so what that forces them, you know, which is obviously upstream to polystyrene, so what they have to do then is go out and buy styrene, obviously at a cost higher than what they can make it for. And, you know, that increased cost of goods sold in this case, you know, goes through the P&L in the third quarter, right? So, there's both repair costs that are included in the – so, the total impact for the year for Hampstead was $10 million – or, excuse me, the total impact to our equity income was $10 million. $2 million of it was in June, and $8 million of it was in the third quarter. And the composition of that is both the cost of repair, but also the higher cost raw materials from the styrene that they had to buy going through the P&L. So, look, related to the second question about what are we doing to right-size it, I mean, look, I don't think we're doing – I don't think anything is necessary to right-size the business. They've got two styrene units, you know, that are very competitively positioned on the global cost curve for styrene. Seventy percent of the styrene they produce, they consume internally in polystyrene downstream, and the other 30 percent goes into the merchant market. But, again, they're on the, you know, from the left side of the cost curve. So, look, I don't think there's anything necessary to do there from a right-sizing perspective. Clearly, styrene is long globally. I mean, you know, it's why we exited, you know, our European plants. So, styrene margins are lower, you know, a lot lower than they used to be. But, you know, I don't think a necessary step there is going to be any, you know, capacity rationalization.

Okay, that's helpful. And then last one for me, If we, like, when we were entering 2025, and I understand things have changed, you know, the expectation was, you know, flat volumes kind of started us at $200 million-ish of EBITDA, plus cost saves got us to something closer to $300, if I'm remembering correctly. I know it's probably early on 2026, but, you know, again, it feels like we're lower for longer, maybe troughing. But if you kind of take some of that same analogy, you know, where the business is forecasted to be at the end of 2025, like all else equal in like a, you know, up 10% volume environment, down 10% flat, you know, any range of outcomes for what we could think about for 2026?

So, yeah, maybe let me tackle the last thing first. So we've said this consistently that, you know, at 10 percent volume increase across the portfolio results in about 100 million dollars of EBITDA. And so, you know, again, we're not prepared to talk about, you know, we don't have a view on 2026 or prepared to give any guidance for 2026. But I think it might be helpful to go back to, you know, how we were, as we entered the year, how we thought about it. And, you know, our expectation for significant increase was really in 2025 over 24 was driven by five factors. One was stable volume. Number two was the disposition, the sale of our polycarbonate assets to DPAC. the also known business win as well as more normalized earnings from Amstai as well as the cost savings initiatives that we announced last year. What I would tell you is that we got the known business wins or the incremental business wins in our downstream markets. We delivered the cost savings and we executed on the DPAC sale where we've had a shortfall versus our expectation was on the more normalized earnings from Amstai and then the volume development that occurred you know what we would attribute to really global tariff uncertainty. So you know again I think what's in our control we've done a good job of managing but you know that's sort of how this year developed and again too premature it's premature for us to give you guidance for next year there are no further questions at this time and with that ladies and gentlemen concludes today's call we thank you for participating you may now disconnect your lines