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Operator
Good morning, ladies and gentlemen, and welcome to the Trendzeo Fourth Quarter 2020 Financial Results Conference Call. We welcome the Trendzeo Market Management Team, Frank Bovich, President and CEO David Stacey, Executive Vice President and CFO, and Andy Myers, Director of Investor Relations. Today's conference call will include brief remarks by the management team, followed by a question and answer session. The company distributed its press release along with its presentation slides at close of market yesterday. These documents are posted on the company's investor relations website and furnished on the Form 8K filed with Securities and Exchange Commission. If anyone should need operator assistance during the call, please press star then zero on your telephone. I will now turn the call over to Andy Myers.
Frank Bovich
Thank you, Christelle, and good morning, everyone. At this time, all participants are in a listen-only mode. After our brief remarks, instructions will follow to participate in the question and answer session. Our disclosure rules and cautionary note 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 10-K 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 measurements A reconciliation of these measurements to corresponding GAAP 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 February 4, 2022. Now, I'd like to turn the call over to Frank Bozich.
Christelle
Thanks, Andy, and welcome to Trinzio's fourth quarter earnings call. First and foremost, I'd like to start by thanking our employees for all of their continued hard work, especially given the unprecedented economic and social issues during 2020, which made for the most challenging environment I've experienced in my 35 years in the industry. I was very impressed with how agile our team was and how they adapted to rapidly changing working conditions. We were never overwhelmed by the crisis, as everyone remained very collaborative, focused, and engaged throughout the year. I have no doubt that their passion enabled us to successfully weather the storm and emerge in an even stronger financial position compared to the beginning of 2020. I'm very proud of what we accomplished, and I'm looking forward to a very bright future for Trinzeo. Moving to our financial performance, I'm overall very pleased with our 2020 results. As we noted in our December issued guidance, we continued to see improved demand and profitability across the company in the fourth quarter, with strong pre-tax income and adjusted EBITDA at its highest level in more than three years. Excluding feedstocks, our total sales volume in the fourth quarter was 6% higher than prior year, as we observe strength in demand in many of our end markets, including appliances, tires, and especially automotive, where fourth quarter volume was 7% higher than the prior year after declines of 65% in the second quarter and 13% in the third quarter. Stronger automotive demand led to tighter ABS market, which along with our commercial excellence actions, resulted in the highest quarterly adjusted EBITDA for our base plastic segments since the beginning of 2018. In addition, our polystyrene segment enjoyed its highest full-year adjusted EBITDA ever. The polystyrene team has done an excellent job of implemented value-based pricing in its more differentiated products like high-impact polystyrene for appliances. For the full year, Our engineered material segment achieved its highest adjusted EBITDA ever, despite a challenging macroeconomic environment. The fourth quarter, which was our highest earnings quarter ever for the segment, experienced volume improvement from prior quarters due to demand strength mainly in consumer electronics and footwear applications. In latex binders, sales volume for the full year was essentially flat versus prior year. as increases to the higher margin case and board applications were offset by a decrease in graphical paper. Case volumes grew by 5% over the course of the year, including a 13% growth in the fourth quarter. This mix improvement in latex binders is in line with our strategy for the segment, and we expect continued growth in case applications as the Rhinemunster acquisition from the fourth quarter of 2019 has enabled us to expand into alternative chemistries in more attractive applications. Looking back at 2020, when we celebrated our 10-year anniversary as a company, I'm very proud of what we were able to accomplish. The safety of our employees remains the utmost important to Trinzio, and I'm happy to announce that in 2020, 16 of our 25 plants earned the Triple Zero Award. meaning that there were no injuries, spills, or process safety incidents at those facilities during the year. That impressive statistic reflects the commitment to safety that our employees and site leaders adhere to daily. And our goal is to achieve one or more years of zero recordable injuries for all of our global employees and contractors by 2030. This is an example of one of the 2030 sustainability goals that we set for ourselves this year. These goals, which include initiatives like increasing our offering of sustainably advantaged products, further reducing our carbon emissions, and increasing the percentage of women in senior management and executive positions, were released in July along with our annual sustainability report. Setting these goals is part of our vision to become a leader in providing sustainable solutions and to position ourselves as a workplace which attracts top talent while we successfully compete in a sustainable economy. I was pleased with the sustainability progress that we made in 2020, especially the ways in which we increased the sustainability of our product portfolio. There were several milestones that were truly market leading, including the launch of our Pulse Echo series of recycled containing resins for the automotive market. In polystyrene, we partnered with the German food packaging customer, Fernholz, to use form fill seal formulations with 40% recycled polystyrene. In engineered materials, sales with recycled based polycarbonate compounds which are used mainly in consumer electronics applications, grew 50% in 2020, and sales volume doubled in bio-based footwear applications. Three of our sites achieved mass balance certification in 2020, which will allow for a more transparent tracking of sustainably advantaged materials at a large scale. Most importantly, we can expand our offering of circular materials to our key customers. Lastly, we made further progress on our joint plan with INEOS for our polystyrene recycling plant in Europe. This plant will represent a significant step forward for polystyrene circularity, as its goal is to break down polystyrene back to styrene monomer for use in numerous applications. While we'll still have more to accomplish in sustainability, I'm proud of this year's achievements, and we continue to be recognized as a leader in this area, as evidenced by Newsweek naming us as one of the top 100 most responsible companies for 2021, which made us number three in the materials industry. I look forward to sharing more sustainability updates and accomplishments over the course of 2021. 2020 was an excellent year for cash generation. Our full-year cash from operations was $255 million, which led to free cash flow of $173 million. Throughout the year, we were able to effectively manage costs from structural programs put in place prior to the pandemic, as well as short-term cost actions in response to the pandemic, which were successful thanks to the quick and thorough implementation by our employees. For the full year, we captured cost savings of $30 million, which were split roughly equally between structural and short-term savings. Going forward, we expect structural savings of $25 million per year, and we will keep short-term cost actions in place as long as we feel this is prudent. We ended the year with $589 million in cash, and enter 2021 with a strong balance sheet and liquidity position. Perhaps the biggest development of the past year was our agreement to acquire Arkema's PMMA business, which represents the first steps in the transformation of Trendzeo into an advanced materials specialty solutions provider. We're very excited to add this business to our portfolio, as we believe it will significantly increase our scale in engineered materials and provide higher margins, high free cash flow conversion, and lower volatility throughout the cycle. In addition to being a strong strategic fit, we anticipate that the transaction will allow us to harmonize IT systems within Trinzio, which will create significant efficiency in the legacy Trinzio organization. In the time since we announced the acquisition, we have established and fully staffed an integration management office comprised of members of both Arkema and Trinzio. Integrating this business is one of our highest priorities, and we're still targeting closing the acquisition by the middle of the year. 2020 ended the year with a favorable market conditions for many of our segments. That positive momentum has continued into the first quarter. as we are now observing similar, and in some instances, improved market conditions. Demand strength in applications such as automotive and appliances are not only providing volume benefits to many of our segments, but the increased demand is contributing to higher margins in ABS, polycarbonate, and polystyrene. However, despite this improvement in underlying market performance, we expect first quarter adjusted EBITDA to be sequentially lower as we don't expect to enjoy the favorable net timing benefit of $29 million that we did in Q4 to repeat itself in Q1. Given the strong start to the year, we estimate full year earnings in 2021 to be significantly higher than each of the prior two years with an estimated net income of $167 million to $200 million and adjusted EBITDA of $400 million to $450 million. This range assumes a full year contribution from synthetic rubber and no contribution from the announced PMMA acquisition. With this expected performance and resulting cash generation, we are now targeting a net leverage ratio of approximately three times at the end of 2021 pro forma for the PMMA acquisition with further deleveraging thereafter. Let me conclude by saying how excited I am about the company's future and our transformation into a specialty materials and sustainable solution provider, where our success will be determined more by how we differentiate our products and the value we create by working with our customers to solve problems. I'm looking forward to closing the acquisition and integrating the PMMA business, implementing best practices, welcoming our new employees, and upgrading and harmonizing our business systems. In addition, we will continue to pursue additional growth and business optimization activities. I'm equally enthusiastic about the pursuit to achieve our long-term sustainability goals, including working with our customers to provide value-based and sustainable products. As always, we remain extremely focused on maximizing shareholder value. Now, Christelle, you can open the phone line for questions.
Operator
At this time, if you would like to ask an audio question, please press star 1 on your touch-tone phones. Once again, that is star 1 to ask an audio question. One moment for your first question. Your first question comes from the line of Frank Mitsch with Fermium Research.
Frank Mitsch
Excellent job on the pronunciation. Thank you. Hey, Frank, wanted to, nice end to the year, but listen, I wanted to talk about 21, you know, your guidance of 400 to 450 million of EBITDA on the basis of as the company exists today, you know, actually looks like a nice increase relative to where the street is given, you know, there's some confusion as to, you know, who has PMMA in, who doesn't, et cetera, but it does look like a material increase year over year. Where do you see Segment-wise, where do you see the most upside among your various segments as we think about 21 versus 20?
Christelle
So year over year, we would see that in our base plastics. And we're seeing really excellent traction with that group in how their value-based pricing. And then there's a second component that currently there's some supply chain tightness that we're benefiting from. That when we look at that range, we don't anticipate we'll continue for the whole year. It'll normalize after the outage season in Q1. But we're benefiting from those COMX initiatives. Obviously, rubber returning to normal will be a big improvement year over year as we get back to pre-COVID level demands. So those two segments are really where we see the biggest year over year improvement.
Frank Mitsch
Gotcha. Obviously, the second quarter was very negatively impacted in synthetic rubber. Speaking of that business, it seems like the environment for M&A is picking up here. Can you discuss what your thoughts are in terms of the ability to monetize that business? How are you feeling today relative to where you felt a few months ago when you first announced that initiative?
Christelle
We're We've seen significant interest in the business, and we're really confident that we'll conclude our process to evaluate our options by the middle of the year. Gotcha.
Operator
Thank you so much. Thanks, Frank. Your next question comes from the line of David, the leader with Deutsche Bank.
Frank
Hey, good morning. Thanks for taking the question. This is Catherine Griffin. I'm for David. So just first question on guidance. So it seems like excluding the timing impacts EBITDA should be up in Q1 versus Q4. So then if we kind of assume that Q1 is up from, let's say, 120 million X timing, then relative to the full year 2021 guidance, is the right EBITDA cadence for Q2 through Q4 somewhere like in the 100 million range? Am I thinking about that right?
Christelle
Yeah, I think you've got Q1, you know, your assessment of Q1 is accurate. So we, X timing, we would expect Q1 to be better than Q4, but not enough to offset the $29 million in timing benefit that we got in Q4. But, and then we would, but again, we need to remember there's two factors We're currently experiencing some supply chain or enjoying some supply chain tightness in Q1 due to it being a normal outage season and then some market disruptions that are occurring. And we expect those to normalize after Q1. And then we would expect also the normal Q4 seasonality that we typically have in the business. So that's how we get to the range.
Frank
Great. Thank you. And then just thinking about kind of the cadence of temporary cost savings coming back next year, could you just talk about kind of how you expect those to flow through just as like inventories and demand kind of gets better?
Christelle
I think if I understand the question, I think I'm going to answer or address the question of when we think we'll relax the short-term cost savings measures that we've continued to keep in place, if that's what you're asking. Yes.
Frank
No, that's perfect. Thank you.
Christelle
Okay. So we had, in total last year, we had $30 million contribution from a combination of both structural and short-term cost savings initiatives. We will keep those short-term cost savings initiatives in place until we get more certainty that the recovery is here to stay and the market outlook progresses. Again, I don't have an exact timetable for when we would relax that.
Tom Linsky
Yeah, Catherine, this is Dave. Maybe I'll add a couple of things. I mean, look, the elements of, you know, they're really, as Frank said, we took $30 million of cost actions in 20. About half of that was structural and half of that was what I would call temporary. The full year impact of the half that was structural would be $25 million. So over $25 million structural cost savings out of the company in 21. The part that is, you know, the part that it's temporary, you know, I mean, a big part of that's T&E, for example, you know, travel and entertainment. I mean, nobody's traveling in the company right now. So, you know, what we've budgeted, you know, and this is all baked into our guidance, what we've kind of assumed is, you know, those elements, trade shows, T&E, I mean, things like that will, you know, return to kind of pre-COVID levels in the second half of the year. We'll have to see if that plays out or not, but that kind of gives you the perspective, I think, of how we think about that.
Frank
Yeah, great. Thanks so much.
Operator
Your next question comes from the line of Hassan Ahmed with Almedec Global.
Hassan Ahmed
Morning, Frank and David. Morning, Hassan. You know, I was taking a look at your volumes. Obviously, sequentially, you know, really good performance in engineered materials and synthetic rubber. You know, and obviously I understand, you know, certain end markets, autos in particular, you know, picking up quite nicely. You know, as you guys sort of came up with your guidance, you know, could you talk a bit about the sustainability of some of these volume levels that you're seeing particularly in these two segments?
Christelle
So I would say that we feel very confident in both engineered materials and synthetic rubber volumes continuing at the current levels, assuming the recovery sustains itself. So there's a couple of things that are driving that beyond just market recovery. And a lot of it is based on the new products that we're introducing. And as we mentioned in the commentary, in engineered materials, we're really getting good traction with our post-consumer waste containing or recycled containing materials that go into consumer electronics. We're also getting good traction on bio-based materials that go into footwear. So irrespective of market dynamics, we're winning new business with those innovations, and we're winning those at better margins. than non-recycled or sustainable materials. In synthetic rubber, you have a similar dynamic playing itself out where it's an innovation-driven business and performance tires. And we've introduced new grades that are being specified. And those platform wins are going to result in growth going forward. So again, we We think that the volumes that we're enjoying today are sort of pre-COVID level volumes, but the mix has improved because of those commercial activities we've taken.
Hassan Ahmed
Understood. Understood. Very helpful. And, you know, again, on the 2021 guidance, you know, a lot of your sort of raw material supply contracts, you know, were expiring last year, right? So obviously this would be the first year, 2021, when, you know, be it benzene, ethylene, BD, you know, styrene, BPA, a variety of these sort of raw materials will sort of be under the umbrella of new contracts. So could you talk a bit about how we should think about the puts and takes of the 2021 guidance in light of some of these new raw material contracts you guys may have structured?
Christelle
What I would say is that we have more market-based contracts across the board, and in particular in polystyrene or in styrene monomer for benzene and ethylene, we had new contracts that we're operating under. But again, we believe that those reflect the current market conditions. You know, there are some benefits that we're seeing from that that are passing through into our 2021 outlook, but it's not significant. Really, the big driver for 2021 improvement are the market conditions and the commercial actions that we're taking.
Hassan Ahmed
Got it. So overall kind of net neutral in terms of year over year? I would say overall slightly positive. Slightly positive. Perfect. Thank you so much, Frank.
Operator
Your next question comes from the line of Matthew Blair with TPH Coal.
Matthew Blair
Good morning. I was hoping you could just elaborate a little bit more on your expectations for polystyrene in 2021, and just in particular, how sustainable are the strong 2020 results? So, I...
Christelle
At this point, we believe the benefits we're seeing in 2020 are pretty sticky. A lot of that is driven by commercial actions and demand for packaged foods and increased demand for appliances and from changing conditions that were driven by COVID. So again, we're pretty confident that what we've been doing in polystyrene, we'll see that benefit throughout 2021. And the other thing I want to point out is we're also seeing a significant benefit from the introduction of the circular polystyrene products that we've introduced. And so as we accelerate and shift our mix to more sustainable products, we're going to actually, I would expect that we would see a further improvement in our margins and our growth simply because those products are in very high demand. And most of our end consumers and the end consumer products companies really want to introduce products that are more sustainable. And we're a leader now in that. So as we continue to make progress, I would expect not only sustainability for our performance but improvement.
Tom Linsky
Matthew, this is Dave. I'd like to add one thing. About a quarter of our polystyrene revenue is high-impact polystyrene – excuse me, of our polystyrene volume is high-impact polystyrene that's sold to appliance manufacturers in Asia. And that's, you know, that's clearly a, it's a good market and we've got a differentiated product there. And that's one of the areas where we've, you know, really capitalized on what Frank mentioned earlier on the value-based pricing. So, you know, I just wanted you to keep in mind a quarter of our polystyrene businesses, you know, it is differentiated product. And, you know, just to kind of buttress what Frank said about the stickiness or sustainability of I mean, I just wanted to keep that part in mind that, you know, we do have a differentiated element of the portfolio there.
Matthew Blair
Sounds good. And then how would you characterize the spring 2021 turnaround season for styrene? Is it likely to be above average?
Christelle
No, we think it'll be normal. Great. Thank you.
Operator
Your next question comes from the line of Lawrence Alexander with Jefferies and Company.
Lawrence Alexander
Good morning. Two questions. First of all, on the value-based pricing initiatives, where do you think Trinzio is in terms of capturing the potential of that and how far do you have room to go in terms of structural improvement in your margins? And then secondly, as you think about the characterization of where Trinzeal wants to be as a more solutions-focused, especially chemical company. Can you characterize what skill sets you have internally that really drive that, and how much needs to be brought in through shift in hiring practices or M&A, just in terms of acquiring skill sets and technology platforms?
Christelle
So, yeah, I'm going to start with the second part of that question. It's a great question. And we believe that really a lot of the skills and the expertise that will enable us to be successful as a solution provider comes from the acquired company. And so preserving and successfully integrating those new employees who understand the markets that they serve and their customer needs are really critical. And that's the key to success in specialty businesses is the market understanding and understanding how to fulfill customer needs. So you make the key point is being mindful of acquiring assets or bringing assets in and successfully retaining that skill set to solve problems and being a A solution provider is critical. That's something that we have to acquire. We won't be able to grow that successfully in these new applications or new chemistries. If you think about going to the first part of the question, how much runway do we have to continue to improve in our COMX initiatives, I think there's quite a bit. But again, I would put it more in terms of our shifting our portfolio to the more sustainable solutions type mix. So as you can see, we're really focused on introducing to the customer base recycled containing materials, containing circular polystyrene, could contain bio-based material. And we're seeing high demand for that. As we secure, I would say as they qualify those materials, I believe the rate-limiting factor will really be our ability to secure feed, the appropriate feedstocks for those materials. But I would think there's a long runway for improvement as we continue to introduce and broaden that offering to our customer base.
Lawrence Alexander
And then just lastly, the bio-based materials and the recycled materials, are either of those or both of them delivering higher margins in terms of cents per pound, rather than percentage margins, just in terms of actual cash margins?
Christelle
So the simple answer is yes. Both in percentage margin terms and in absolute dollar terms per unit, they're improving.
Lawrence Alexander
Thank you.
Operator
Your next question comes from the line of Eric Petri with Citi.
Eric Petri
Hey, good morning, Frank.
Christelle
Good morning, Eric.
Eric Petri
If I were to annualize second half 20 EBITDA excluding the inventory resale, you get to 440, and that compares to your range of 400 to 450. So can you talk about, you know, the 10 million upside, where that comes from, and then the 40 million downside?
Christelle
Yeah, I think, you know, when we look at the second half, I'm not sure, you know, there's a pretty difficult exercise to go through when you look at the second half to strip out how much pent-up demand from Q2 slipped into the Q3 and Q4. So I'd rather look at our financial forecast from our customer base and the forward outlook we're getting from our customers, and really build that based on a bottoms-up basis with the product lines. So that's how we got to the range that we've got, is really that detailed forward forecast that we're getting from our customer base. Because again, as you point out, second half 2020 you know, had a lot of moving parts that it's hard to estimate, you know, how much inventory rebuild, how much pent-up demand there was. And so, again, we did more of a bottoms-up build.
Eric Petri
Okay. Secondly, rubber volumes in the quarter, I think, were stronger than expected. How do you see demand this year for ESBR and SSBR grades? And did you see any inventory restocking?
Christelle
What we're seeing right now is strong demand, but little ability from the retailers or the tire producers to build inventory. In fact, inventory levels are staying relatively stable. And the other thing I would point out with our volumes in synthetic rubber is we've been successful in 2020 to win new business with new customers, in particular in Asia, and with some new grades. And so that stronger demand, you know, we're seeing a demand recovery, but also we're seeing a mix change from a historical business where we're seeing more growth and more volume coming from new customers in Asia. Great. Thank you.
Operator
Your next question comes from the line of Angela Castillo with Morgan Stanley. Good morning and thank you for taking my question.
Angela Castillo
I was hoping you could walk us through how you're thinking about working capital in 2021 and the magnitude of potential use of cash as sales recover.
Tom Linsky
Yeah, we, Angel, hi, it's Dave. We gave in our slide deck some kind of the pieces, I guess, you can work your way towards a free cash flow estimate for 20. And if you take the midpoint of our guidance range of 425 EBITDA and walk through those pieces, You'll get to a free cash flow number of $240 million. And that's at working capital neutral. I think, you know, the biggest driver of our working capital is obviously feedstock prices. Now, you know, we don't currently foresee a lot of volatility in feedstock prices through the year. I mean, you know, as far as we can see. So, we've not forecasted anything for the year. in either direction related to feedstock prices. What I would say operationally is, you know, we took our inventories down considerably in 2020. We dropped our inventory volumes about 20% as a company, and we're going to keep it there. So we're not going to be building inventory as a company. I think we do have opportunity in other working capital areas, you know, that we have implemented some initiatives within the company to further reduce our working capital numbers. So, what I guess, you know, the net of the answer to your question is, you know, on a flat feedstock price level, I would, you know, I would estimate that we'll reduce working capital every year. You know, I would put a number of $40 to $50 million probably on it. just through our own operational initiatives.
Angela Castillo
Understood. That's very helpful. And then separately, Frank, I was hoping you could talk a little bit more about your sustainability initiatives. You're clearly having a lot of success with winning new business with your product launches, whether it's Pulse Echo or some of the recycled-based PC and bio-based TPUs that you mentioned. So maybe if you could just kind of expand on that and give us a little more color. What is the EBITDA contribution of kind of your total sustainability portfolio? Some margins are clearly better than kind of the fossil fuel-based products, but how has that progressed over the year as you've ramped up sales? And then at what point does your capacity footprint become kind of a good problem in the sense of needing to expand?
Christelle
Yeah, there's a lot there. And honestly, I couldn't give you an answer for the the uplift in margin across the portfolio of the sustainable products versus none. What I would tell you is, because there's so many different products and so much going on, but I would just say in general, some of the prices are multiples of virgin material in certain categories. In others, it's You should be thinking double-digit unit margin improvements. But again, this is a broad-based effort that we're making across every one of our business units. And actually, I didn't even mention this on the call. What I would also say is we've got our first order for bio-based synthetic rubber at the end of last year. We've received mass balance certification for our Schopau Germany site. And we're seeing the tire companies really looking to change their environmental and sustainability footprint. And so there's a lot of interest in this. Now, again, there's a bit of a long runway in certain industries, like the tire industry, to qualify those materials. The good news where we're using chemically recycled or bio-based feed is that those end products basically have the same performance characteristics when we use that feed as virgin material. So I know I didn't give you specifically the answer you're looking for, but I would just say there's a long runway, and you should be thinking, as we're successful in that, you know, relatively significant improvement in unit margins. That's very helpful. Thank you.
Operator
Your next question comes from the line of Bob Corp with Goldman Sachs.
Dave
Hi, everyone. This is Tom Linsky on for Bob. So, first question, it just sounds like you're expecting to be maybe a year ahead of schedule on the delevering target post the Arkema acquisition. Could you just speak to what we should expect to see on your capital allocation priorities, maybe in the back half of this year and into 2022 between M&A, repurchase, re-upping the dividend?
Tom Linsky
Yeah. Hi, this is Dave Stacey. I'll answer that question. You're right. We are ahead of schedule. And the reason we're ahead of schedule, well, for two things. One is because of the cash generation and also because our EBITDA forecast has risen since we last forecasted number. So we do think we'll be in the neighborhood of three times net lever by the end of 2021. As we announced when we announced the PMMA acquisition, we did reduce our dividend and suspend the share repurchase program. Those two things will be something we'll have to assess as we move forward in the context of other cash needs you know, for the company and, you know, for the new company and those cash needs, you know, could be organic growth projects for the acquired business or other acquisitions. So it's just something we'll have to, you know, look at as we go forward, you know, post-closing.
Christelle
Yeah, I guess maybe just I want to build on the one point that Dave is making. We will continue, as we said in December when we made this announcement, we will continue to explore opportunities to broaden the offering that we have to case and engineered materials customers through M&A and other, you know, bringing in new product lines. Now, obviously, our first priority is to integrate the PMMA business and to get our systems harmonized. The other thing is, too, at the appropriate time, we would also, you know, we will be looking to separate more of the commodity products to help fund that growth. So, you know, we're balancing all of those factors when we think about the future and our capital allocation.
Dave
Got it. That's helpful. And then on case applications, performance was quite strong in 2020. Could you just go through the moving parts and maybe what outperformed, what underperformed within that sub-business?
Christelle
So, well, the case applications, you know, with the acquisition of the Rhein-Munster plant in Germany, we have more flexibility in terms of customizing smaller lot production and more tailored solutions for our customers. But what I think you could read into that is that we saw really strong traction in introducing new products in applications. In particular, I would point out DIY. So the DIY market in adhesives and sealants did quite well that last year. We also introduced other new grades and materials based on the technology that we have now in Rhein-Munster, and those got good traction. I think if I were to point to some end market that really was robust, it was DIY and construction applications. Those were quite strong. Got it. Thanks for the help.
Operator
Your last question is a follow-up from Lawrence Alexander with Jefferies.
Lawrence Alexander
I just want to revisit the discussion around the bio-based and recycled products. Are those, by implication, are those being included or will they be excluded from any divestiture decisions to exit the commodity positions in Trinzio's portfolio?
Christelle
So, the simple answer is no. So, in every one of our product areas and our business segments we are trying we believe in that increasing the ratio of sustainable products is to our advantage and we're seeing big demand from our customers so across every one of our product segments we're introducing those products and you know as we make evaluate what businesses to sell you know, if that were to happen in the future, those products that are intrinsic to that product line would go with it.
Lawrence Alexander
Okay, perfect. Thanks.
Operator
Ladies and gentlemen, that does conclude today's conference call. You may now
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