Kraton Corp (NYSE:KRA) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 09:00 am ET

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Kraton Corp (NYSE:KRA) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Kraton Corporation First Quarter 2018 Earnings Conference Call. My name is Jay, and I'll be conference facilitator. At this time all participants in a listen-only mode. Following the Company's prepared remarks there will be a question and answer period. (Operator Instructions) Today's conference is being recorded. If you have any objections, please disconnect at this time.

I'll now turn the call over to Mr. Gene Shiels, Director of Investor Relations. You may now begin.

Executive
Gene Shiels

Thanks, Jay. Good morning, everyone, and welcome to the Kraton Corporation First Quarter 2018 Earnings Call. With me on the call this morning are Kevin Fogarty, Kraton's President and Chief Executive Officer; and Steve Tremblay, Kraton's Executive Vice President and Chief Financial Officer. A copy of the news release covering our first quarter results as well as the related presentation material are available in the Investor Relations section of our website. Before we review the results for the first quarter of 2018, I want to draw your attention to the disclaimers on forward-looking information and the use of non-GAAP measures included in our presentation this morning and in yesterday's earnings press release.

Our business outlook is subject to a number of risk factors. As the format of this morning's presentation does not permit a full discussion of these risk factors, please refer to our forms 10-K, 10-Q and other regulatory filings available in the Investor Relations section of our website. With regard to the use of non-GAAP financial measures, a reconciliation of each used non-GAAP financial measure to its most comparable GAAP financial measure was provided in yesterday's earnings release and is included in the presentation this morning. I do want to highlight for our listeners, as noted in yesterday's release, that effective January 1, 2018, results for the roads and construction product line under our Chemical segment have been consolidated into our Adhesive and Performance Chemicals product lines. Results for the first quarter of 2017 have been restated to conform to the new reporting structure. Following our prepared remarks, we'll open the line for your questions.

I'll now turn the call over to Kevin Fogarty. Kevin?

Executive
Kevin Fogarty

Thanks, Gene, and good morning, everyone. Business fundamentals remain positive in the first quarter of 2018, and as a result, our first quarter results were in line with our overall expectations. As noted in our press release, we delivered consolidated adjusted EBITDA $88.6 million and this was up 35% compared to the first quarter of 2017. Improved financial results reflected turn -- a return to healthy Polymer segment unit margins compared to the first quarter of 2017, during which margins were adversely impacted by significant increase in raw material cost as well as improved pricing and margins in our Chemical segment particularly for our tall oil fatty acid family of products.

First quarter 2018 adjusted EBITDA for our Polymer segment was $45 million, up nearly 40% compared to the first quarter of 2017. Segment sales volume benefited from a 5.6% increase in Specialty Polymers