Trecora Resources (TREC) Provides Update on First Quarter 2021 Financial Impact from Gulf Coast Winter Freeze Event
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Trecora Resources ("Trecora" or the "Company") (NYSE: TREC), a leading provider of specialty hydrocarbons and specialty waxes, today provided an update on the financial impact for first quarter 2021, reflecting the effects from the unprecedented winter freeze in Texas and the Gulf Coast region.
During February 2021, a prolonged duration of sub-freezing temperatures and snow resulted in widespread utilities failures and rolling blackouts across the state and region. This caused significant disruptions for Trecora's suppliers, customers and its own facilities.
In advance of the anticipated weather, the Company's manufacturing facilities were brought down proactively in order to prepare them for the cold. As a result of the winter freeze, the South Hampton facility ("SHR") was out of operation for one week, while Trecora Chemical ("TC") operations were down roughly two weeks. The Company's SHR facility resumed operations on February 23rd, and the TC facility began resuming operations on March 4th.
The winter freeze ultimately resulted in higher utility, repair and maintenance costs, as well as loss of sales at both facilities. In light of these factors, the Company expects a preliminary negative impact to its first quarter net income from continuing operations, tax-effected at 21%, of between approximately $3.5 million to $4.5 million. While the Company currently expects the effects of the freeze to be a one-time event, it should be noted that certain customers continue to experience curtailment.
The Company has not completed its financial closing procedures for the first quarter of 2021, and actual results could vary from these preliminary estimates.
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