Restocking and Pre-Buying Help 1Q Volumes, but Margins Affected by Raws Bottom Line—KRA had a soft 1Q as top-line results were boosted by strong volumes from pre-buying/restocking, but the rapid rise in butadiene and other raws in the quarter resulted in EBITDA and margins ex the FIFO benefit coming in lower than our expectations. ■ The Quarter—After adjusting for one-time items, KRA reported 1Q EPS of $0.54 vs. the street at $0.65, or ~$0.45 excluding the FIFO benefit vs. our $0.55 (as we don’t model the FIFO benefit) with a ~$0.02 hit from a higher tax rate. EBITDA came in at $43 mil including a $3.4 mil FIFO benefit, modestly below the street at $44.7 mil (we were at $42.2 mil excluding the FIFO benefit). ■ Sales—rose 18.4%, ahead of our 13.4% estimate, with volumes up 11% to 90KT vs. our +4% estimate, and price/ton up 6.6% below our 9%. The volume strength was led by the Paving & Roofing market driven by paving volumes in N. America & Europe as well as restocking, and from strength in Adhesives, Sealants and Coatings. KRA saw flat results in the higher-value Cariflex (previously known as Emerging Businesses) division, and Adv. Materials saw modest sales declines driven by lower volumes in the more commoditized products. ■ EBITDA—margins came in at 9.7% (excluding the FIFO benefit), below our 10.8% estimate owing to rapid raw material increases in the quarter. EBITDA including the $3 mil FIFO benefit was $43 mil, below the street.