Thank you, operator, and good morning, everyone. Welcome to the Trecora Resources First Quarter 2021 Earnings Conference Call.

The earnings release was distributed over the wire services after the close of the financial markets yesterday afternoon. Presenting on our call today will be Pat Quarles, President and Chief Executive Officer; and Sami Ahmad, Chief Financial Officer.

Christopher Groves, our Corporate Controller, will also be available for the question-and-answer session, which follows management's prepared remarks. Before we get started, I would like to review the safe harbor statements.

Statements on this call are not historical facts or forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management's beliefs and expectations only as of the date of this teleconference, May 5, 2021.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks as well as others are discussed in greater detail at Trecora's filings with the SEC, including the company's most recent annual report on form 10-K and subsequent quarterly reports on form 10-Q.

During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP and non-GAAP financial results, please see the earnings release issued after the close of the financial markets yesterday afternoon.

The webcast is accompanied by a slide presentation that is available in the investor section of the company's website, www.trecora.com. At this time, I'd like to turn the call over to Trecora's President and CEO, Pat Quarles.

Thank you, Jason. Good morning, everyone, and thank you for joining us today.

Over the last year, we've been focused on strengthening our balance sheet and managing through the uncertainties and disruptions created by the COVID-19 pandemic, ensuring that Trecora emerged in a position of strength. We've also been very clear that prudent capital allocation, including returning value to our shareholders was among our highest priorities.

While we enter Q1 well positioned to both benefit from the recovery and leverage our evolving growth portfolio, February's subfreezing temperatures in Texas and the Gulf Coast resulted in significant disruptions to our customers and supply chain as well as higher utility repair and maintenance costs at both facilities. At South Hampton, we're fortunate not to experience loss of electricity or natural gas.

We were out of operation for 1 week. During that time, we were able to repair most of the damage to our equipment, which is largely related to water handling equipment, and we avoided any supply disruptions to our customers.

At Trecora Chemical, we lost both electricity and natural gas. Operations at TC were down for roughly 2 weeks, during which time we completed most of the repairs to damage equipment.

From a financial performance perspective, in Q1, we had a net loss from continuing operations of $4.4 million compared to net income from continuing operations at $5.9 million last year. Q1 Adjusted EBITDA from continuing operations was a negative $0.5 million compared to positive $5.5 million dollars last year.

We estimate the total freeze event impact Q1 EBITDA to be between $4.5 million to $5 million. This includes higher utility and maintenance costs as well as loss of sales from our outage and outages at our customers and suppliers.

While the impact of the freeze was largely confined to Q1, certain customers and suppliers continued to experience residual effects into Q2. Following the freeze event in February, the Board authorized a $20 million share repurchase program, which reflects the resilience of our business, our strong balance sheet and ample liquidity.

Our debt at the end of Q1, the lowest level since Q3 of 2014, continues to keep us at our target leverage ratio. By the end of the first quarter, our growth funnel had 12 projects focused on delivering new products or entering new markets, 11 projects focused on driving asset utilization with revenues that don't require significant capital and 5 projects focused on improving productivity and reducing costs.

Of the asset utilization projects, we have converted 2 of our successful commercial trials to new custom processing business beginning in Q2. These projects will allow us to significantly load the new distillation column at TC.

Of productivity, we executed a significant cost reduction project at the beginning of April at TC. In addition to focusing on increased utilization of TC's assets, we have recognized the importance of improving its overall cost structure to benefit its financial performance.

The site restructuring is expected to lower costs at TC by about $1.5 million a year, beginning in April. In addition to the new business in Q2, we are seeing several positive market developments.

The strength of the U.S. economy is driving solid demand across all of our key end users.

It's also supporting price increase initiatives in the market. For our Solvent business, you will recall we increased 9 formula prices last November $0.10 per gallon.

And in February, we increased them a further $0.15 per gallon. We have a further $0.10 per gallon increase currently in the market.

It's not known yet whether this one will be fully successful. Byproduct values are also changing rapidly.

Our byproduct prices move according to a formula linked to benzene, toluene and our feedstock. While feedstock and toluene prices have been relatively stable in the second quarter, benzene has become very tight and pricing is responding.

April contract price for benzene is $3.01 a gallon. May, benzene saw the last week at $4.60 a gallon.

That translates to about $0.44 per gallon improvement and byproduct spread from April to May. I will note, we expect benzene pricing to remain volatile and is currently backwardated.

So while we expect the byproduct spreads to remain strong, they're unlikely to stay at these levels for long. For our waxes, we implemented increases up to $0.06 per pound in April and have announced a $0.12 per pound increase in mid-May.

Like our solvents' price increase, the magnitude of the realized increase is not yet known. We're also seeing a step up in our custom processing activities due both to demand from our pre-existing customers as well as the new business from our growth program I mentioned.

However, there do remain some headwinds in Q2. Some of our solvent customers continue to have production constraints due to the February freeze event and supply chain disruptions generally are a challenge, particularly in the trucking and international markets.

Lastly, I also want to note that we executed a scheduled turnaround of some of our units in Silsbee during the first quarter. Without a plan to turnaround the second quarter, this will sequentially benefit the quarter by about $1 million.

We remain committed to our goal of creating long-term value for our shareholders and returning capital if we don't believe we have higher value opportunities to grow our company. As far as our share repurchase program, during the last few days of March, we purchased approximately 88,000 shares at an average price is $7.86.

Our program continues into the second quarter. Now let me turn it over to Sami to discuss the specifics of our Q1 results.

Thanks, Pat, and good morning to everyone. Let me start with the discussion of liquidity, debt and cash flow, and then I'll discuss our first quarter performance in more detail.

Our first quarter leverage ratio under our bank credit agreement was basically unchanged from year end. With unanimous support from our bank group, we amended our credit agreement EBITDA for covenant purposes to allow for a one-time $5 million add-back to the first quarter, and this was in connection with the financial impact of the freeze event.

With this amendment, our leverage ratio of the first quarter was 1.62x, and this compares to 1.65x at the end of 2020. Additionally, this amendment allowed us to maintain availability under a revolver which is undrawn, a $53 million at the end of the first quarter.

Cash in the balance sheet as of March 31 was $53 million. In addition, on April 1, we received our final tax refund under the CARES Act tax law changes that were implemented last year of $2.4 million.

Thus, our total liquidity, including the tax refund, stands at $108 million. Total bank debt is about $45 million at the end of March.

As you know, in addition to our bank debt, we have $6.1 million of outstanding PPP loans. We expect to complete the forgiveness application process for these loans by the end of the second quarter, and we believe we'll qualify for full forgiveness based on the SBA criteria.

All of our PPP loan funds were segregated from our operating funds and we specifically used them solely for payroll and benefits, thus preserving employment at our sites. Despite the impact of the freeze, operating cash flow from continuing operations for the first quarter was $3.8 million.

CapEx for the first quarter was $4.8 million, which included approximately $1.7 million of plant and equipment restoration related to the freeze event. Our expected capital spending for 2021 remains at approximately $13 million to $14 million.

We will do our best to absorb the extra freeze-related capital expenditures in the 2021 plan, but we won't have clarity on this until later in the year. As you know, 2021 CapEx spending is primarily driven by continued feedstock pipeline work as well as a higher level of plant maintenance and turnaround spending at South Hampton.

As we progress with this plant maintenance work, there may be additional spending related to discoverables that we may not be able to fully absorb or offset. Free cash flow for the quarter, which as you know is a key metric for the company, and defined as cash flow from operations less CapEx and less required debt amortization, was approximately negative $2 million.

Now let's take a closer look at our first quarter performance. We reported net loss from continuing operations in the first quarter of $4.4 million, or negative $0.18 per diluted share, compared to net income from continuing operations of $5.9 million, or $0.24 per diluted share, in the first quarter of 2020.

Adjusted EBITDA from continuing operations was negative $0.5 million for the first quarter compared with adjusted EBITDA from continuing operations of $4.8 million in the fourth quarter and $5.5 million in first quarter of 2020. General, administrative expenses for the first quarter were $7.6 million compared to $6.9 million in the first quarter of 2020.

G&A includes plant level general and administrative expenses as well as corporate expenses. The increase from last year is primarily due to higher insurance costs.

Interest expense for the first quarter was approximately $0.3 million compared with $0.9 million first quarter last year. The reduction in interest expense is due to debt reduction, combined with lower interest rates.

Bank debt has been reduced from $102 million at the end of the first quarter of last year to $45 million at the end of the first quarter of 2021. And our effective interest rate has dropped from 3.83% for Q1 2020 -- from Q1 2020 to 1.88% for first quarter 2021.

Now let me walk you through our business segments, starting with Specialty Petrochemical segment. Adjusted EBITDA for Specialty Petrochemicals in the first quarter was $2.6 million compared to $6.4 million in the fourth quarter and $6.4 million in first quarter of 2020.

Adjusted EBITDA margin for the first quarter was 5.6% for the Specialty Petrochemical segment compared to 13.1% in the fourth quarter and 12.5% in the first quarter a year ago. As mentioned previously, the freeze had a significant negative impact, especially petrochemicals revenue and costs, which are reflected in the Q1 numbers.

Specialty petrochemicals total sales volume in the first quarter of 2021 was 17.2 million gallons compared to 22.1 million gallons in the fourth quarter and 19.7 million gallons in Q1 of 2020. Prime product sales volume in the first quarter was 14.7 million gallons and declined approximately a 1.5 million gallons or 9.5%, from Q1 of 2020.

This decline was mainly due to the freeze events, which resulted in widespread utility failures, rolling blackouts across the state and region, causing significant disruptions for our customers, suppliers as well as our own facilities. In addition, sales were also generally weaker compared to the same period last year due to the continued impact of the COVID-19 pandemic.

Moving on to Specialty Petrochemicals Feedstock. Benchmark natural gasoline feedstock prices have followed a trend of continued increases since bottoming out in the second quarter of 2020 at $0.42 per gallon.

They increased to $0.86 per gallon at the end of the third quarter and to $1 per gallon at the end of last year. At the end of first quarter 2021, natural gasoline was priced at $1.43 per gallon, and it stayed roughly flat through the month of April.

This trend in market pricing and natural gasoline is shown on Slide 8 of the Q1 2021 earnings deck that is posted on our website. As you can see in the slide, feedstock pricing has rebounded back to nearly 2018 levels and are actually higher than 2019 levels.

Now moving on to byproducts. Byproducts sales volumes declined to 2.5 million gallons in the first quarter from 4.5 million gallons in the fourth quarter of 2020.

This was in conjunction with the decrease in prime product sales. Byproducts are produced as a result of prime product production, and their margins are significantly lower than margins for our prime products.

Byproduct spread improved to nearly $0.30 per gallon in the first quarter from a negative $0.04 per gallon in the fourth quarter of 2020 and $0.08 per gallon in Q1 last year. The upward turn in byproduct spread, as Pat explained, was driven by higher byproduct prices as a result of sharply higher prices for the aromatic components, specifically benzene in our byproduct stream.

Moving on to the Specialty Waxes segment. Specialty Waxes segment had adjusted EBITDA of negative $0.5 million in Q1 compared to negative $0.2 million in the fourth quarter and a positive $1.1 million in Q1 of last year.

The Specialty Waxes segment generated revenues of approximately $8.7 million in the first quarter compared to $9 million in the fourth quarter and $10.4 million in Q1 2020. Revenue in Q1 included $6.9 million of wax product sales, an increase of 1.6% compared to Q1 2020.

The Texas freeze event curtailed feedstock supply during the quarter. This loss of supply was significantly offset by sales from our wax inventories.

We continue to be sold out in wax, and we have increased product pricing in the last quarter with further increases announced for May. Processing fees, which were approximately $1.8 million in Q1, decrease 51.5%, or approximately $1.9 million from first quarter of last year, and this, of course, was driven by lower custom processing demand resulting from the Texas freeze event and the absence of custom processing business related to the pandemic.

That concludes the financial summary, and I'd like to turn the call back over to Pat, and then we will open the line for your questions.

Thank you, Sami. Before we take questions, I'd like to take this opportunity to note that Dick Townsend, Trecora's Executive Vice President and Chief Manufacturing Officer, will be retiring effective May 14.

With his involvement as a director on the company's board beginning in 2011, and his subsequent move to the role of Chief Manufacturing Officer, Trecora has undergone a historic transformation, as he helped implement significant beneficial change in our manufacturing work processes. Today, our manufacturing is safer, stronger, and more innovative than ever before, and that is due, in large part, to Dick and his team.

Ralph Pines, previously the Site Leader at South Hampton, is transitioning to the position of Chief Manufacturing Officer. Ralph joined the company a year ago to lead our South Hampton facility as part of our succession planning process.

During the past year, it became abundantly clear to me and the board that Ralph was the ideal candidate to succeed Dick. Ralph has been instrumental in driving strategic and structural change amidst significant market disruption.

His proven leadership and track record of success in manufacturing, specifically in increasing reliability and reducing maintenance costs, will be invaluable to achieving the company's overall goals. Now we'd like to open up the phone line to questions.

Pat, I was wondering if you could give us a little more details on the two new customers, and their size and where they are coming from. Is it for existing product lines?

Is it for new ones? Any details would be appreciated.

Sure, thanks for the question. As we've continued to outline our growth program, kind of the clarity as to how we're segmenting the projects that we're driving, with a real emphasis on really driving utilization over assets, and these are projects that fall into that category.

And these particular projects are against the new distillation column that was installed some years ago. They relate, and you appreciate with custom processing, I can't talk specifically about the customer or the product because that's confidential for them, but it does significantly drive utilization of the distillation column.

That business starts up in 2Q. We're in the midst of that work today, and we anticipate it running on a going forward basis.

So it should be reliable and rateable business. In terms of kind of the magnitude of the step up, I'll hedge it a little bit.

As we've said, our portfolio, particularly on these type projects, are more doubles and singles. They're not really home runs, and I would put this in kind of the double category.

So in excess of $1 million, and we'd expect it to grow from there. So it's meaningful, but -- just to be clear, it's not a game changer.

It's just part of the part of the path we're on.

Sure. With this, what is the new distillation column capacity utilization?

I am assuming that you have a lot of room for growth in there.

We have more room for growth. Yes, we have more room for growth.

We don't talk about specific utilizations. And as you appreciate, it depends also on the product that we're running, the service and the value that we're getting.

So we tend to target a margin on the projects that we do. And if they're slow runners, we have a higher margin who need to get a return on that asset.

That's how we think about value capture.

Okay. And then, could you touch on the Canadian Sand Oil?

I mean the demand was weak. I am assuming it was Canada.

Can you give us some details on that, whether it is a question of demand, whether it is supply or maybe competition?

Sure. So I'm often asked, is 2019 the baseline performance for this company?

And I think, I can answer your question in that context. I would generally agree that it is.

So if I talk about oil sands, and I'll use '19 as kind of the pre-COVID baseline. During '19, we were seeing some reduction from historical levels of demand into oil sands.

However, we were pursuing an opportunity to land a new customer. During that year, we actually had a significant trial which benefited in-use demand into oil sands for '19.

Ultimately, we didn't retain that business. And subsequently, as we consistently talk about here, our existing customer has been driving efficiency programs to reduce their overall requirements for solvents.

So if you fast-forward from '19 to '21, our general expectation, and certain current reality, is that oil sands demand, for us, is down structurally. Now, that said, and this is what can often be very frustrating quarter-to-quarter, there remains a tremendous amount of volatility.

So if you think back to fourth quarter last year, we talked about very strong demand there. First quarter this year, it was very weak, and it's going to step up again in the second quarter, as far as we can see it.

So sequentially, we're going to have more oil sands demand in 2Q, but I don't think the trend is really different than what it's been for some time is that this will continue to be, as we've said before, roughly 5% of our portfolio on a volume basis. Hope that helps.

Yes, it does. And lastly, if I may, if we look at the impact from the Texas freeze, so if I am not mistaken, it was a $4.4 million loss in the first quarter.

There is still some residual in the second. Can you quantify how much you are anticipating to be hit by that particular event?

Sure. So in the notionally $5 million impact during the first quarter.

As we've said, that's comprised of our estimate of lost sales opportunity, either because customer assets were down, our assets were down, our suppliers were down. A combination of all those things.

It also includes significant premiums that we ended up incurring for utility costs during the event and our repair costs. As we look into 2Q, and the comment I made about residual effects, maybe a few comments about in-uses.

As we all know, last year we had a really good, solid demand on the polyethylene in-use, which is our largest in-use, and that was certainly continuing into the first quarter of this year. And as we've all read, the ethylene infrastructure was significantly impacted by the storm, and there were several world-scale crackers that had not really returned to normal operations well into April.

So what we see -- while general market demand is very good as we get into 2Q, we are seeing, sequentially, polyethylene could probably actually be down a little bit first quarter to second quarter on an actual basis. Now that's more than offset by a strong return of our polyiso in-use, which is both strong recovery as well as just the normal seasonal pattern.

I'll also note that, post storm event, with the change in energy values or in fuel values, we saw the return of demand into our refining in-use, which was the first time we've seen that, really, since COVID. So that's a nice step up.

That actually began at the end of 1Q and continues into 2Q. Those are really the principle drivers for the improvements that we'll see next year.

And as I said, oil sands is going to step up sequentially, just because of the normal volatility we see in that market.

Rosemarie, just a couple of points on the impact of the freeze event that Pat outlined.so we believe that the total impact to EBITDA was about $5 million and then there was the additional CapEx of $1.7 million that I mentioned in my remarks. So that $5 million was really the basis for our add-back that we got on the amendment covenant, which by the way was a no-cost, no-fee amendment that we implemented from March 31.

Pat, I'm going to ask you to repeat some information that you shared in your opening remarks. I think it's significant, and you went awfully fast.

It's with the price increases. Would you walk through, again, each of the price increases that you discussed?

And do you have a historical perspective, when the last time was that the business had enough strength that you were able to have this many and this magnitude of price increase?

Sure. And thanks for the question, Bill, and I apologize for going too quickly.

Now you're asking me to dig back into my script. So I've got to make sure I find the right section, but let me just speak to it.

So in the first question, the first element, what was the last time we were actually this successful? So pre -- the end of 2020, the company had not successfully implemented a solvents price increase since 2019 -- I think the middle of 2018.

And there's lots of things that contribute to that, of course. I mean our sophisticated customers understand our cost structure, so they watch things like natural gasoline.

But of course, we keep an eye on supply and demand and the value that we bring to markets, and that really underscored the moves that we started making at the end of last year. So as I mentioned, there was a $0.10 per gallon solvent increase in November, 15% in February and we've announced a further $0.10 in the market today.

Now I will say, we'll see how that one unfolds. As we are in a competitive market, we need to see what responses are out there for us to be successful there.

One thing I didn't mention, but I should, is that we also look at the various channels to market that we have. The drum business, although relatively small, is an extraordinarily high-margin business for us.

The dynamics have changed in the drum business as well, and we've implemented differential price increases for our drumming customers in April as well -- or in May, excuse me. On the wax side, we've been talking for years about our drive to enhance the value of our wax offering.

It's been kind of a multi-step process. We developed and commercialized in 2019 some new products that have higher performance versus FT waxes into the hot-melt adhesive market.

It was important to get established in that market early so we had very competitive pricing. Then COVID hit, and so the world kind of went upside down.

But what we've seen now, on the back end, as market demand recovers, we're offering an attractive value proposition to those customers, and we've begun driving price increases for waxes, particularly for hot-melt adhesive in-uses. The last thing I would comment on for wax is, you'll recall, we talked last year, that while we were able to maintain sales levels despite impacts from COVID, that was largely due to going after alternative channels to market, which included lower-value kind of exports.

And as we get into late this past year, and you see the results in first quarter, we're repatriating that demand -- that volume into higher value in-use. So you do see, in our first quarter results, an improvement on the wax margin.

We'd expect, between that and the price increases, to benefit us in the second quarter as well.

And we're effectively sold out.

And of course, we're sold out, which always helps the story. Does that answer your question, Bill?

It does. And then -- this next question is either remedial or really insightful.

I'll vote for insightful. I'll vote for insightful.

Well, I'm guessing remedial. So we all see the data with economic activity rebounding, but would you discuss kind of what economic drivers that are really leading to the demand that you referenced that's across all end-users?

Is there a way that you can pinpoint and really help clarify what aspect of the economic rebound is helping you or is it -- it's so broad-based that again, the question is too remedial?

I mean certainly, we just benefit generally with GDP growth of consumable goods. I mean we participate broadly in the industrial markets, right?

All the big trends that we've seen with people spending their stimulus on goods rather than services, that just drives general consumption. I think the change of channels to at-home delivery, you think about hot-melt adhesives and some of those end uses are benefit to us.

That's generally helpful. I think specifically in some of our more key in-uses, in some ways, despite the pandemic or despite the resurgence in the economy, a longer-term trend for us is the investment in U.S.

Gulf Coast polyethylene assets. And as you appreciate, they consume our product.

As long as they're running high rates, they have a certain consumption profile. And we had benefited from those plants and will continue to benefit from those plants coming on stream.

We are effectively contracted now against all the new capacity coming on in the next 2.5 years. We'll be the beneficiary of that and that should start to some extent the next increment as soon as the second half of this year we'll see some new assets coming online that we'll be supplying.

That's a structural benefit of our business. The other one in polyiso, which, again, is a component of the composite flat roofing technology that's having a lot of success because of its improved energy efficiency versus alternative technologies.

It's kind of a good story, bad story. But in today's market, what we see is our customers are effectively sold out with the capacity they have.

So we'll see the step up because the storm impacts and so forth into the second quarter, but we do see them somewhat constrained this year. Now they are announcing a new plants and we've seen some of those are public, some of those are just with us as a supplier.

And again, in most instances we're already contracted with that growth anticipated to come or we're in the midst of having the discussions about contracts. So those are some of the more kind of longer term trends that are driving our growth.

And then we do just have frankly the volatile kind of frustrating stuff that comes in and out that really hinges on the market, sitting at the value of byproducts, we appreciate highly volatile, but still leveraging what we see going on in oil sands that's kind of instructional decline. And then refining was disappointing last year because as they de-rated refineries and re-optimized, they took out the consumption of our solvents.

We have seen that reverse. And so we're optimistic that, that should continue now given the value of refining and fuel products generally.

I should say transportation products to be clear. It's downstream refining.

Thank you for making that question not look as remedial as it could have. It really was insightful.

And I do want to do take one more question before I turn the line over. You'd referenced that you have -- you're contracted with all of the new polyethylene capacity coming on in the next two years.

And there's definitely a difference between being contracted as a small component versus the lead supplier. What insights can you share about your position in general across the board for all this capacity that's coming on in the next two years?

You'll appreciate it, I won't be too specific, but what I would say is, and we continue to be recognized for the differentiation of the purity of our product and the reliability of our supply chain into those accounts. So we have a high market share and we've been successful in preserving our position.

I missed a couple of things in terms of understanding how they were flowing. When you talked about the turnarounds that you did in Q1 and that you wouldn't have them, I guess, recurring in this quarter, I think you said that was going to pick up $1 million in EBITDA, is that correct?

Correct.

And the $1 million, again, the turnaround that you were doing in Q1, as we look forward going through the rest of this year, and then next year, do you expect that those turnarounds that you did in Q1, is it an annual thing, is it more of a every few years or do we expect that $1 million of benefit to kind of flow through over a longer period of time?

I guess the way I think about Mitch is, if we do plan these in advance, we don't publish or talk publicly about how too far in advance of the turnarounds that we have. But it's a multi-year plan for us and this is really preventative maintenance, right, either because it's just time to get into the assets and validate their mechanical integrity or if you think about in case our HDS units, it's time to change catalysts.

So they come with some frequency. We do have further turnarounds this year.

There's nothing in the second quarter. And then maybe the next quarter we'll talk about what's happened in the rest of the year.

We have something planned for the second half of the year, Mitch, and we'll provide more details later.

But we had turnarounds last year too and the year before that. This is not something new.

It's just impacts quarter-to-quarter changes.

Then you had mentioned that with the margin on byproduct, I kind of missed that as you went through it, but you could also just talk a little bit about as the economic rebound continues on and as you start to have your polyethylene customers come online over the next 2.5 years with their new plants, can you just talk a little bit about your reformer and how you sort of think that drives profitability into the future?

You're talking about Amex advanced performance?

Yes .

Yes. So -- listen, the premise there, if you rewind time on the contribution of the reformer, it remains the same, which is we get better conversion of those byproducts to the higher value aromatics through the new technology than we had in the past.

What's different, I guess, is the scale of that unit really isn't necessary given the scale of our business today. So it's not as utilized as we would like, but it's performing according to design.

We're getting the upgrade that we expected. We're always optimizing.

One of the things that we're always trying to do is to minimize byproduct production because it is much lower margin towards prime products. We don't break all that stuff out for you guys, I appreciate.

But we have had success in driving a better yield to prime products which has helped us, certainly helped us last year even as poor as it was with COVID. And we think that will give us some benefits going forward as well.

And your margin in the quarter, on the byproduct?

During the first quarter was $0.30 cents, yes, first quarter.

Okay. And then on the projects you got, the 12 new ones, the asset utilization and the productivities.

I think on the productivity, when you talked about a $1.5 million annual savings, just starting April, can you give a little color around that?

Listen, I think, TC we know has been a challenge for us for some time. The cost structure at that site changed materially, negatively when the hydrogenation and distillation units were added.

We've been really focused on efficiently trying to bring those costs down over time. We've been doing it incrementally for really 2 years now.

But we believed we reached a point at the end of last quarter that we had an opportunity to make a more aggressive change. It's hard.

These impact people, which we take seriously, but we built as though as the right thing to do to kind of carve out a certain set of resources that can improve the underlying cost structure there.

Thank you, operator. Thank you all for your questions and interest in Trecora.

I always want to end our call with a thank you to our broader organization. COVID fatigue is something we can relate to these days and our folks are no different.

And on top of that, our organization faced the Herculean task of repairing our facilities from a freeze event. They accomplished those repairs quickly and efficiently, and most importantly, without any injuries, I want to thank them for their attention to detail and keeping everyone safe during those crazy weeks.

We look forward to capitalizing our growth program and getting back to normal as we move further away from COVID-19 pandemic and the Texas freeze event. Thank you, again, for all of your participation.