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Management attributed 2025 performance hurdles to ‘Liberation Day’ market chaos, sustained Chinese domestic weakness, and a lack of industrial competitiveness in Europe.
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Operational focus shifted heavily toward ‘what we can control,’ resulting in the closure of seven facilities and a headcount reduction of approximately 500 employees, or 10% of the workforce.
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Despite volume challenges, the company achieved a 45% EBITDA-to-free-cash-flow conversion rate, prioritizing liquidity and dividend coverage over aggressive expansion.
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The European market remains structurally challenged by high energy costs and a disparate cost curve, leading management to favor consolidation and site closures over further standalone investment.
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In North America, performance was hampered by a lack of growth in housing and durable goods, though the company reported tonnage growth exceeding general market rates in most segments.
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Strategic positioning is increasingly focused on high-value applications in aerospace, power infrastructure, and automotive battery potting to offset legacy commodity volatility.
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Management anticipates a gradual recovery in North American homebuilding and durable goods, alongside early signs of volume and pricing improvement in Europe.
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The 2026 financial framework includes $45 million in expected in-year cost savings, excluding inflation, as part of a broader $100 million annualized run-rate target.
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Strategic growth initiatives are centered on the Geismar MDI splitter, high-purity amines for the tech industry, and expanding aerospace penetration beyond current wide-body build rates.
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The company expects 2026 to be a year of ‘churn,’ actively evaluating mergers, joint ventures, and industry consolidation to drive material cost savings and portfolio optimization.
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Guidance for Q1 2026 Polyurethanes EBITDA of $25 million to $40 million incorporates a $10 million headwind from rising natural gas and benzene costs.
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Management highlighted the failure to sell the German maleic anhydride facility, resulting in a strategic decision to shut down the asset entirely.
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A new $800 million revolving credit facility was established with updated definitions of consolidated EBITDA that provide a cushion of ‘more than a couple of $100,000,000’ for covenant compliance.
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The U.S. MDI market faces potential supply tightness if housing rebounds, as Chinese imports have dropped approximately 80% following the implementation of significant tariffs.
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Aerospace growth is specifically tied to wide-body build rates rather than delivery rates, with management noting that wide-body production remains below 2019 levels.
