Cabot (CBT) 24 Nov 202020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Cabot Corporation Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Steve Delahunt, Vice President, Treasury and Investor Relations. Thank you. Please go ahead, sir.

Shana. you, Thank Good morning. you earnings welcome the Corporation to Cabot to quarter like teleconference. fourth would I are CEO Sean Erica today me With Keohane, Vice and McLaughlin, and President CFO. Senior and President; of are posted the released our results Last our section in XXXX, night, which fourth Investor we quarter of copies fiscal of for website. Relations year that in call portion is deck website and conjunction our the of the will available of on slide The available also accompanies this be with replay Relations the Investor call.

will we operational materially call, cause conference forward-looking These statements statements statements. future this During to to from could expected our make in such uncertainties and forward-looking differ about projected actual results that performance. financial those risks are subject and

discuss business details. comparable and non-GAAP now to table directly earnings review will the measures Any Erica are most night all we the last XX, we filings our transparency and of operating referenced measures in last website. financial are section at Sean subsequent Form press the in considered turn measures night segment to and be to I financial Additional report the to report the to not performance, full-year to provide this measures the involve our quarter quarter annual call required presented on measures GAAP be of we last should ended release non-GAAP March XXXX In the regarding information issued by certain regarding adjustments which factors financial will an make in available appears alternative issued our these the Any results. highlights. GAAP. Form the greater our the fiscal financial on in under end quarterly and in XX-K, over on that refer reconciled XX-Q, the SEC, McLaughlin financial fourth call corporate GAAP company's Investors and Statements to website. release and the heading Keohane, financial order non-GAAP of available who'll our with on Forward-Looking

will provide floor this, Sean? the Following comments closing open and questions. Sean to

our Steve, commitment by Thank everyone to to this world morning, employees begin their quarter to I on to recognizing and I'd like and the you, to continued have their front, gentlemen. company, the XXXX our and earnings never our pandemic want for team. to been around welcome of Managing proud and good call. customers fourth challenged through more community. I every us our has ladies

at house manage recovery be through to win As performance pandemic, here first a protect that balance. to established our principles prepare this we ourselves and the believe hold. of I as Cabot we reflects to takes guiding the set date to ready

better market. EBIT with $XX This a Purification $X.XX transformation a the results improved was principally million Performance Solutions, supply of and automotive took long-term agreement step activated began removal and took In ADES, our we mercury in self-help quarter related as the of for recovery structuring initiatives serve the with in mine another hold. the us plan demands carbon forward our our to basis. For quarter. to the which by sale end $X.XX, nicely positions demand third quarter, driven was segment sequential earnings and in as was materials, on also up our sharply compared Chemicals share as the and results markets improved increased reinforcement per total recovered adjusted key result which

the on XXXX the call. bit share segment communicated cash like will operating our later of first more flow in back and would year third as operating cash the There intense well the health fiscal million the for generation Erica flow crisis on that results. battle public we've delivering a half expectation in year we other no perspective the in million experienced, global into XXXX cash of the I doubt the The and was quarter go previously unlike the customers, is in results. fallout. our And second global to the full continued automotive was any of economic that million ahead quarter. fiscal key my affected $XXX the of on pandemic associated year fiscal reflected focus severely tire year. $XX our We demand results full half, in from impact in $XXX especially our detail and

On earnings adjusted per $X.XX. front, share we the delivered performance

of result prior and pleased was the crisis, was through Cabot the how with we strength very this company, While am below and levels of revealed. I the I potential well earnings managed the believe

power remaining focused generation and allowed the the strong our core advancing team us management cash to Our navigate sheet on and our experienced while balance pandemic, strategy.

our know, pillars. built is you strategy three on As

carbon. customer a related core year. to Sanshun our of and with measures of Solution Shenzhen and pandemic entered reductions delivering mine inkjet In partially MARPOL sale into In supply volatility in commercial driven agreements, successfully producer executed offset a growth of growth momentum. in in levels. groundwork and the the activated and Texas build feedstock the was of for improves segment, a delivering Nano, The ADES self-help lithium-ion transaction on the year high battery number the long-term great investing we flows while our formulations removing second, acquisition to and specialty to a impact manage businesses; demand during Chemical the closed innovation higher offset calendar qualifications the XXXX optimization. divestiture We laying focused segment, feedstock for driving on efficiency business. of terms This cash the finally, new agreement increases in year, nanotubes continue we carbon also restore In cost in leading Materials through application generating to priorities efficiency, hurdle lignite our price Marshall, to lignite Performance increases costs. a and our closed on packaging historical of significant Purification our the the applications First, also market, implementing strategic and to the job strong for segment the customer the The In did on reduction. Reinforcement team necessary customers; to team to carbons implemented segment, price profitability

While the focused balance intensely earnings generation sheet cash on was strength. challenging, and flow we remained environment

During diversity capital strong tight and launched cash updated XXXX goals, development, through And By the position. year strict dividends, The and $XXX CapEx maintain long for sustainability, of will focus ever and which Sanshun We million are our I strong a ESG cash investment repay our stakeholders recently becoming such important focus our to time, of grade has along believe existing management. our ready inclusion, product fund working flow a and supplier a win of credit our build it and million, generation the with team, involvement. sustainability and environmental expanding $XXX we our us on believe largely community cash free operating ours include stakeholders. debt, participate as our to we areas in our delivered to Overall, acquisition, finally, commitments success. the We beyond our leadership hold. goals been leadership of recovery and well-positioned retain flow I'm flow is takes as more proud rating. all allowed to extremely

the in public recovery health is demand The stabilizing and current on continuing both to October linked and the month-on-month improvement environment. and into with automotive unquestionably to underlying strengthening September economic business crisis the tire turning through has an Now confidence the We with update see trends to its a X% to this in of is transmission up year-over-year economy where bringing remains potential. consumer good strengthening the back low and China key and GDP quarter. the economy example full COVID remained November. is

of is Chemicals, production positive. including forecasting adhesives, to X% down of XX% to quarter a Looking an coatings approximately in year, global at of batteries, full industry as from structural in for June a auto globally for trend compared drop our quarter. Current for report new the year-over-year small quarter. decline tires Automotive Performance forecast XXXX September in builds and call the on XX% the host as applications production plastics. markets, sales decrease XX% such the External key December auto in the light ranging our X% vehicle a of firms end represents cars

are XXXX in calendar the decline Now to vehicle compared in June tire from to LMC. improved Light now production. in to replacement XX% X% moving down quarter, a of estimates sales of the industry full September all regions the sales on for tire expected tire based year-over-year year replacement XX% Global decline only quarter.

to consistent vehicles as in mobility terms As continue sales X% in this replacement terms well to replacement with auto expected we demand and approach on improvement September well year-over-year passenger be Building quarter the the see bus. bodes driven, down is truck LMC. and miles XXXX and production, as to of quarter, December both tires, for in V-shaped the total the according projected with levels to recovery tire of of

the tire replacement transportation sector. more of market quarter Erica the resilient detail. to historically parts compared reminder, results to more now has to the of financial been broader a over turn call the As Erica? in the discuss I'll other

Reinforcement I discussing the results Thanks, with Materials in segment. Sean. start will

the $XX primarily China margins in partially improved quarter period higher operating economic compared Asia. but demand Japan margins. in Higher million global by Materials the as fiscal of customer with XXXX lower in higher driven fourth to year by environment, global by was the quarter XX% segment on Given prior $XX up pricing offset the and pricing of as COVID compared and China prior compared The Europe, of third quarter. outside by impact our to largely calendar from sequentially EBIT million volumes, to EBIT the improved contracts. XXXX, the same volumes decrease Globally and demand Reinforcement year fiscal year, the in results the due automotive tire strong Americas, to delivered down driven the to Southeast our were declined same due tire in

pricing This expect driven EBIT to in first we sequential continued from expanded an unit of to XXXX, Looking increase ahead for margins. the expectation in is by Asia. improvement our quarter due

quarter the the strengths recovery offsets normal are Volumes with As levels patterns. to on to market line in expected as fourth remain seasonal continues recover.

year-over-year in energy metal increased Additives and Solutions X% a driven specialty lines Formulated metal compared third million our oxides business. by the due Solutions $X the our of volumes volumes EBIT fumed recent and products and X% X% driven fourth increased materials Now by In turning related million -- volumes fumed our to a in higher in line increased Formulated Chemicals. Performance Sequentially, quarter, to in pricing by the product oxides acquisition. quarter, automotive carbons Additives demand COVID-XX From EBIT our applications. volumes lower to from automotive lower product in competitive impact demand fiscal $XX increased decreased mix to related Performance more volumes by primarily by Performance environment product applications. increased as year-over-year, in metal weaker X%.

to volumes, we're in the for to the pandemic, construction impacted applications. be While see sequential in volumes pleased by and improvement particularly continue demand segment automotive

up applications and the including cable hold regions. and wire While infrastructure continued pipe well all in market, and to

first quarter improvement EBIT Looking the key in our ahead major sequential of and fiscal and recovery end product to driven end automotive across compounds. leverage specialty continue recover, expect XXXX, in as the market volumes by as higher markets the up to to we drive a we mix lines the step carbons in material product

as We and pricing offset price the higher costs. in business improvement environmental rising prices from and metal to restore carbons also specialty our see we to expect fumed actions benefits a segment as oxides to execute

year. the results. the lower Moving fourth and reducing decreased unfavorable to in and flow EBIT applications mercury decrease fourth XXXX drive was inventory The of to improved quarter driven last by the volumes compared levels removal the to Purification from cash $X impact by quarter of Solutions, million

$XXX with offset turn depreciation the cash due ended a position sale. costs costs lower of by the I our supply mine fixed is to sequential the be one Looking and of volume quarter, will mercury and water partially decline in announced applications remains due ahead and balance plants. to strong million billion. to maintenance to a lower corporate and $X.X quarter seasonal driven by This outage to higher our recently at liquidity fixed to removal We a now see we agreement items. first and volumes at expected expect

During capital and $XX the the the operating uses fourth million flow dividends. from were of fiscal expenditures $X million $XX during cash for fourth networking XXXX activities million. quarter $XX million, quarter Capital of including for decrease fourth in of additional included fiscal of we're cash quarter XXXX, a

North flow American XXXX the cash investments capital XXXX, in we a the targeted and to million fiscal million. including of During generated growth of $XXX decrease EPA $XXX spend related which Capital were for million, included from expenditures fiscal operations, compliance. $XXX our both working year

Additional repurchases. million dividends uses for year of cash during included $XX share the $XX million fiscal for and

XX% tax fiscal fourth anticipate rate fiscal During our tax we be operating XX%. 'XX of XX% was in for and for the to operating quarter, the to year XXXX the rate range

$XXX upgrading call our black capital estimate plant And includes We million back million now XXXX. I continued this specialty and spend expect expenditures to related related be over to EPA Sean? $XXX compliance between new the produce and to Sean. capital turn carbon products. China to in will

Thanks, Erica.

for upcoming way ahead would remain XXXX, we our expect another COVID-XX, it focused we'll the in manage to I XXXX. As did with that we challenges share be year on any the like as to the in much will future to you and priorities and from look year. have we the same impacts dynamic I Notwithstanding strategy, pandemic of our executing

support differentiate reliability, commitment and customers through to needs product our their we'll to evolving Cabot quality, close First, service with to sustainability. stay continue our and

to and execute strategic initiatives, growth EXC packaging. inkjet on materials, continue particularly we'll for our energy Second,

of the and are so full in this excited We on about capitalize that potential growth have our businesses, investment we coming their downturn years. can sustained these potential the we throughout

optimization efficiency to across continue drive we'll and operation. Third, our

power a year the increase services that to global fiscal organization our we and of those efficiency business. 'XX, During doing effectiveness way established of business processes

of our an the and leverage further digital I'm to story. role automate existing our growth efforts. working, part will about of investment important growth Fourth, here in our ways strategic businesses remains the the our of to simplify We potential M&A compliment through this bolt-on of and excited tools

Over few through strategic Canada of in in we in through extending specialty CNTs our including core extending acquisition the acquisitions by our Southeast our and product spaces, our geographic made materials business, Asia our past have to important very offering in presence years, Sanshun. compounds include energy acquisitions and

of for types. opportunities and to build We these will our look opportunities out execute pipeline continue to on

control environment, in cost uncertain you some in and it cost into XXXX feel of remain vigilant an gives capital. working color must the Finally, about I and this on tight be and but 'XX, how that critical hope priorities on year capital will working We pleased momentum dynamic good fiscal we keep XXXX. our we and my extend leadership out feel prepared by first the with our I fiscal the today outlook momentum about they our to 'XX. up. quarter will is of are XXXX, help good we Cabot comments shaping we out the as coming fourth talking of position. start very will close year we about how Clearly, quarter and

and expect As segment and the step Performance Asian strong rise up pricing, spot a Erica discussed, material costs Reinforcement we in the Materials, strengthening in is by feedstock further performance there where be the driven $X.XX. Chemical this, and range on of to volume some stronger per underlying by strength quarter first we level replenishment. adjusted expect demand driven Based share in inventory to $X.XX in being earnings of the

though levels absolute will increase that anticipate even 'XX, with improve side, volumes. levels fiscal operating year-over-year working cash cash net higher we be aligned the will earnings On strong in as flow capital

year there fiscal still is visibility. impacts the that 'XX, full to COVID-XX term uncertainty the our of related pandemic longer to Looking

our recovery, outcome dynamic results sustainability the by Our agreements, to returning pricing influenced how pace manage customer business be of will economic tire the support of this the in the the we and costs recovery environment. the to of

our Overall, face the good environment. that I'm year. The any and we quarter unfolds, I long-term team performed the remain respond throughout fundamentals in the year we've the we the about challenges the are unprecedented robust. progress first optimistic carefully this about team and way has will of businesses will the to may confident feel factors environment. to these match be made dynamic managing As very the

for global liquidity session. positions sheet confident over I presence turn our and you market Thank our provides for and unmatched ahead and our in call strategic strength the is on growth opportunities and very our today. us back And deliver joining question-and-answer I'm to balance will in much flexibility. ability objectives. Our our now

[Operator Mike Barclays. Instructions] comes Leithead Our from question with first

Your line open. is

Good guys. Great. morning, Thanks.

morning, Mike. Good

morning. Good

as first seeing specifically bit and maybe first seasonality? you can quarter around guess, handle trends give year-end inventory Sean, you're the on levels how And the outlook, more general into us fiscal I and demand customers for your color first a quarter that the of as related abnormal year as that, Erica funky rest for or we the anything kind baseline we use we maybe to consider about out guidance, the should models? of think in our a building

So, Mike, the first Erica. hand I'll take part then maybe and off to

we through here. we're progress So our definitely as improve end quarter key markets seeing the

end replenishment Automotive definitely pretty happening to really continues see and there's forecasters But in think look exactly. to because difficult some I tire that's the production inventories some forecasters, the market. extreme likely there everybody to likely so strengthen And is that there's if a tire quarter. as And level. auto you that encouraging. market just It's paired at does replenishment

we're some a seeing so that levels. happening of here. And there's likely said, stage to not is this That full-on being historical restocking at

people uncertain. a outlook think is still in operating of here are Certainly, the the related I most pandemic measure because pretty caseloads world, to of is caution are discouraging. with which rising the

Now guide. over would our around still inventory timing on the how side by cautious vaccine, but posture, But is all to encouraging that markets, some leaving in bit QX a say. it on that's key Erica fairly news that's in plays the out seeing end the a we're further what for offset people I of maybe commentary but and

Sure.

as continue So think inventory anything there of quite on quarters. may latter pricing strong. Asia unusual some think we the And replenishment not in in I mentioned, the is terribly level there's Sean going might QX, but don't in is that happening

price ahead the to the And through of so enhances rising we costs margin. often they’re feedstock that as flow able or and our

happening that's QX. so in And

for of mostly Asia, the it's unknown. still a the out As bit remainder you quarter how spot and a in that is market plays know, specifically

not the flow I the we recovery increases, What So will like, have through would probably first quarter happen? does volume well. costs think by and pricing then of terms does how as because uncertainty I volume levels related out caution to as some our the multiply take come look inventory in there dynamics? four And the to through

the Sean influence those factors talked about the through will So QX that are quarters. QX as likely

And around Is today you're to quickly in the commentary business language to your some the you say Solutions. on around alternatives. conversations fair it just position a have is on Purification it conversations you. transformation the we a mine, Thank and to those Great. outlook fair up then that release probably as in just plan reintroduced you better say strategic that to In today? the executing exploring sold Obviously, degree business. sit here monetizing and picking maybe are

So, Mike, that one. take I'll

as that on sale and process. also a activated the is the mercury believe of the couple here know, the for of relates last a we and that market. part And serving it years of And particularly been buyer's the believe the improves So mine working hurdle from perspective. supply to this efficiency that we've transaction you removes of removal agreement business, the the plan for transformation as we carbon

more And Cabot. than be so the marketing current selling timing right, environment, that remains when be the the term. the anticipate given for we'll would business top is but longer near-term I the priority in a to still likely it And

Thank Okay. you.

you. Thank

next Bank. comes David from with Our question Begleiter Deutsche

is line open. Your

morning. Thank you. Good

Hi, David.

on on is negotiations? stand not that just I tire today? any but status price of where you comment yet, know your still they update Hi Can there. the done

Yes.

in So major well. as know, David, agreements the case the customers of negotiate this these year that's we And well, year. with as annual back you half the our

sure share I think as we're As specifics that at I such is driven that. And you say indicators information of increasing What sensitive. a can as with is number I commercially can we're data. understand customers, that negotiating still looking can't I'm miles external any

any production think so and customers can't terms But pattern in further. upward the of the demand. of still and tire carbon comment is commented I given and I our months this in in recovery forecast revisions from we're the on that favorable middle that I black forecasts in tire and auto recent earlier order

about And of in Sean, of terms on cost able into the how the they think that back realize costs temporary flow Understood. 'XX in were as XXXX side, you versus should in 'XX 'XX? just costs we some to

yes. Yes,

of aggressively obviously protect manage like house, everyone, we bunch So of the to I costs implemented 'XX, think sort actions said. in pretty as here a I

of temporary. these structural some them are are some so and And of

example, services well side, And our temporary for a global streamlining maintenance things, and business demand. on would down, those rebalancing structural our function more back structural. et that related as our have the costs coming cetera, So things volume really with spend of of like office match things types be to you creating processes, as would then

down half we to million. costs took onto of And so base operating by those costs sort these the expect And in of year, full $XX reductions. approximately we'd hold

portion it You of strong level as Half step and at back demand assets maintenance, can so that likely we them the keep of the up think return that's flow if part proposition. will running because about our the is will preventative value roughly to related half. some volume want we'll the

is would David I say half, half So reasonable.

much. you very Thank

Thank you.

next Josh with from comes Our question UBS. Spector

line is open. Your

Good everyone. morning, Hi.

Good morning.

morning. Hey, good

rest So just domestic you market if quarter, export Asia volumes the could China in I within did was of what your for the out Asia. wondering the of versus versus parse market the terms

granularity So maybe got that. around some we've

Yes.

pandemic I I the was of in Josh, pretty recovering in that's say, with and well the think a overall related return would So, China's to handling volumes. quarter. couple Asia consumer of particular, of in think confidence. the I respect And to China things

So quite strong. I think that was

biggest with biggest XX% Our mean single China's tires, the the clearly making the volumes that's to -- world's of XX% China market. and part, I

volumes Our the by design quarter. the lags there market in

to prices was of volume we the there with this to will the play this specific higher continue as the volumes think at approach margins, So expense volume. And Cabot that's think much begin but on and and stage. then market, here. our margin at right pricing we very We were picture restoration more focused normalize strengthen to

tire because South, so about pretty ASEAN think in been was I in that as thing there's other the broadly, region producers, some in think it last you say Asia them, would part duties Thailand into preferential strong they the could concerned demand is I that investment also are And about of over region those U.S. when example, years. on few the tires for into pending

was of any of the of there so that. get I would some, channel And there ahead building say, to out

strong also pretty and tires oriented about but was flows towards there, in we terms and and think demand more price market And behave could being in the big China way. black, restoration So carbon almost ASEAN quarter. they margin in of you one a somewhat similar

focused And because underlying recovery so had the the like been just but has crisis we low there. strong pricing, demand were China more were public very, of on trends in terms quite a been COVID in good quite cases, very of the little health China

Thanks. Is helpful. your on region? where is I that single-digit catch guess, up that within And math percent guess, by of up it is or Thanks. that of you're volume, my on Asia I up there's guiding world XQ to within looking Okay. side the volumes guide mean, most two, things. I Reinforcement up at high catch is side. That's like correct? maybe it sticking the some One, And rest the on

Yes. Yes.

QX the QX. is our consistent with expectation So pretty volume

being flattish, I think pretty would could you about say. So this sequentially

offset -- we some softness. so building traditionally some And by recovery have continued seasonal seasonal

is view of offsetting those sequentially will flat. pretty volumes are our and that be so sort And

expect not Yes. higher you're prior QX. be about thinking we'd than year-over-year, would the if would And be We volumes I year year-over-year. down the think still slightly

you. Thank

question JPMorgan. Zekauskas with Jeff comes Our from next

is open. Your line

much. very Thanks

Jeff. morning, Good

gain were black Did operating you lose this they prices this are or us going morning. Can EV you profits what to of bit specialty good revenues volumes review the last do there? Could what little discuss market you goes up did into what's happens a that down, your is you year carbon year? What a that That give year? the Hi, change? go share, of on or share?

Sure, Yes. Jeff.

key EV of is in And us that traditional CNT that compliment and the our is of strategic to think carbon trend formulations right we also towards market additives mix battery for continue obviously, acquisition Sanshun investing we we're of and So for with CNTs part CNTs carbon blacks, the but furnace only the a the new will and because one conductive grades market But chemistry. acquisition. not of of go we important an forward. a see blends blacks as be

think So in is quite areas our actually position we industry. unique the

terms the automotive the for obviously pretty impacted XX% to good batteries we being But of if here. intact. there been XXXX, here of rate to One Now EV somewhat intact. And in with pullback market the market general, EV things. I the because growth the was by of through a couple in in strength has is that. look a that that, X, X we in the that XX% see the X, months, strategy and was lithium-ion year assumption last key our being see This as try our

close you kind Sanshun, months sales of a about might of materials got trailing $XX sales transition to that a our million. traditional into on remember was then purchased year range. think the had which million before. $XX we've to our the And in a of that to because million way XX period commented here, We've Now sales, $XX energy we

million market now And million normal could rate. that you $XX seems in kind about sales it that level. to is to $XX of rate think of kind a the back run So -- that run EV it's

base share You here. that expect base, the consistent than to we then would grow as or and we win better could call that market

we developing phase we they we're has capacity. investment as the products right terms an profitability with Sanshun the -- a much acquisition that In of we now plant are -- of but very unused new new and in that, disclose don't acquired business, we

of that kind there's a filling to So up happen. needs

in additives growing and value costs consistent over -- of over qualification products, a this this business And carbon X view for going market combination we billion our conductive to to remains see years on revenue. the new carbon build the of coming so next additive And unused this remains capacity, profits the years. about conductive the that are $X

in I margins you specialty market range And are build material Performance over see we've Chemicals achieve that to a our and the had and is, years, levels traditionally, assumptions. that those contribution X share in X, we both of unit can for so have reasonable should next think Then this carbons where if of the we Cabot.

Thank matrix? its When that to of black and a old value? and the invest do Cabot need like fumed Okay. think go strategic tends business. Or Cabot Sean to Formulated focused in answer. business Solutions in create from forward, oxides is flow in you in new really order for you you to field carbon further businesses, to small cash of what tends carbon it sort take path Historically, you acquisition the is metal that black and do complete feel

Yes. question, long follow strategy best the the Yes. parts strategies a previous is in really for our advancing Jeff. I core the And Cabot. would of A good company and say, you taking time,

businesses So compounds, core good them, these businesses underlying fundamentals in invest one, have to to want continue of carbon we number businesses. believe and for to our fumed we black silica, growth specialty those

business strategy of of drive Sam So the That strengthen we're businesses, to a new a We in some harvest our want and years we the more businesses, businesses Bodman in chemistry back making where said, leadership harvesting continue to executed there. new new being invest it a to some we new way of broad core that these are targeted position portfolio not and position think was businesses. invest investments.

-- strategy. of from this that but brilliance pulling is And some of bits the in And places sense. make so is on this Sam's

conductive of given places. clearly one importance additives is those carbon materials of energy So the

still another business, printing, moves sense. we us. exploiting moves evolves believe analog industry packaging more we the as it's one tire and makes sense more and then towards the And from for our solutions, to clearly think sustainable one clearly inkjet As position digital EXC in tire this makes but is printing where

our growth of of we pursuing. is So stuff strategy are and things targeted then core we businesses. going we're core fits with past do investments. we're what things That's very core to are businesses like is and and as good with get want these far field the what advancing intent the our the And that that? leverage the strengthen in doing aerogel like No, the

Erica. earnings revenues $XX And quarter you burning with your for in last you revenues. Materials million. The in roughly were million if back is go then segment were and million And year, million Reinforcement Okay. maybe $XXX lastly, $XXX to $XX in this the were

revenues the So that less more you million. of talk What is is about even can these level though $XXX us lower the to real dynamics EBIT are or why the by same the allow changes? understand

Yes.

the So oil of just the on driver, really revenue. price major is the Jeff,

while we adjust think know, for So as input we the margins to you would that whole. top the as price, the our pricing. our EBIT, try line formulas we be holding we we adjust But what with do as is about our drives

then factors, essentially say so you And that's what the you the I'd And costs. input and the volume because lower. of other decline see material see raw revenue is obviously,

to year-on-year, said we've best When has So but can we reductions. declined. the with volume offset XX% been we as able that cost

of So volume that's offset impact. line helped some EBIT the the

year, so and earlier you much or raw material raw lower of in lower materials getting statement raw benefit the fell the have Do not? now those costs you're through rippling income material because costs your

mismatched to If the flowing formulas are to material don't you intended those cost But our benefit But yes, at down. have of input lower in through pricing costs I point. line, say just margins and revenue do the as have I profile, not think raw terms while that. we we a wouldn't we've this come at able looked costs margin have been hold are our our our to no.

come the And see the not so but you down, revenue margin.

so Okay, great. much. you Thank

Sure.

you. Thank

Laurence from Jefferies. comes Alexander with question next Our

open. Your is line

I have two morning. Good quick ones.

the but back give a back -- need effect for be sense the blacks, with so sheer next that secondly, year? for into for business negative that can just kind might with timing, not reinforcement happen specialty specialty to blacks, expect First, mix the of in to volume the positive a restocking system or bring you or respect to to the to -- And needs amount be to much normal of your you industry would the recalibrate the to need more range? get that do

that? Yes. From a volume standpoint, on Laurence

Right, right.

Just are they so to or to speak? behind, how underwater, much speak so

Yes. Yes.

good. Okay,

me presented take that in you let them. order So the

good all, of First morning.

in will adhesives, would to seeing in see more our margin And expect tend as there, orient like and coatings, margin automotive flowing plastic of things the like would XXXX, improvement products the higher terms -- we mix through auto end those a products. be we structural carbons, a high-end because applications, be things are automotive so engineered market higher recovery. those And specialty would we recovery in

battery So, yes, that energy as in to grow to of an participation improved even accented a mix. be continues it. And I as think that will piece probably more the our bit materials by

the point. So first that's

think way year I the some of XXXX, distortions. to to best it's such try the because look think it volume through about to full ways question, On is in a

so And LMC still but in versus will somewhere range. X%, of that very if what you certainly sharp 'XX maybe is at order something projecting the down, 'XX 'XX, industry look in you if of that tire recovery the 'XX, in be versus it off in 'XX, X% a look

I cleanest look think the so probably And to way that's through.

now, as impacts. COVID which recovery we back don't 'XX ground sharp terms further cover is what might I as very get good say what the seeing long normal we're big to likely of there'll economic that recovery reversal related you little continue volume to But and is going levels. in a a or to still So call to be with have

you much. very Thank Okay.

Thanks, Laurence.

comes Kapsch Instructions] Our next Chris [Operator Markets. Thank with Loop you. question Capital from

Your line open. is

morning. good Hi,

Chris. morning, Good

surge Good wondering most the black just spot carbon you increase from you prices. on. quarter. been comments on portion But fundamentals morning. But what's provide going can in of in the has that's if color could fourth a part characterize that further I'm been I follow-up of had the what the And in I the about on made the Chinese market. also see, or pronounced

was well. You a it mentioned a costs feedstock the but as recovery some strong to obviously ongoing linkage being push, there underlying

think monthly positive sales having I sees turned everybody year-over-year. auto

in wondering, And move price the is a really I a of or move more just if then is carbon push pull I more pricing it cost follow-up. of guess it move? So have black prices, demand spot

Yes.

demand would say I led, Chris. it's So

there, So pullback. after sharp a sharply very also improved demand has

bit experienced little earlier they a Now world. than the rest the of

sharp experienced inventory And led recovery, the link Yet And also function little across spot because that industry. standpoint bit they feedstock but a March a declined, we seeing operates, coal and result price what we're accounting feedstock and more very have quarter, that it's lag how up, a in to which was But but pull every it demand sort a of is margins is we see from of declined would market as tend as because flow would prices is you So of demand. good. say. just priced month. an market in volumes through back The it now the tar this that finished to I instantaneously, a we the prices have in moved product.

it's sort of lag. an accounting So

And which function so in positive play benefit, a be tend get contracted not spot a is some we for how the in result, whereas more. market China, as the part to play we of really that's in those but of matched market,

of and coal is competitive is for the advantage just this past, But you I'm be players. wondering Got you now, that -- terms there with mom there advantage your it. stocks to color with some, still even an the And raw in moving of dynamics sourcing or have in will you and smaller of know be that? material on take that further been And or competitors solely had pops sophisticated -- those to lean regional, the as tar. not a crude of And feed at array and there is as any those positioning And competitive around may feedstock in landscape helpful. I think the you. shuttered have some on characterized have to Thank vis-à-vis lot pretty in the been opportunity the pop you've any dynamic costs the of past opportunity characterization even any fragmented Any local then arbitrage there? has the of China advantage permanently. competing over mom given sort I having

Yes.

in industry scale the are And in carbon at our something competitive our I and black, that say from comes So tons would position, the in we of China. XXX,XXX most range. lead advantage almost player our profitable

is included. coal is the side, feedstock yields, energy all throughputs So scale based for recovery, a tar us. ourselves we China how an market and on carbon technology predominantly And then and drive that advantage of black

important around is your the suppliers strategic and partners. you management think how lever I arrangements have strategic feedstock with

our the relationships. and And relationships so strategic they're those coal just venture some who with coking cases, businesses. in In joint other are partners fence in tar line cases, purchasing related are

here. strategic a combination And so we advantage think the of gives these us

in forces. outperform those of is the why So I and primary because benefit think competitors China we our

tar oil. terms really the ARB, to -- In of ARB coal story one the decant of so is related

What Chinese where right you It's actually now prices of saw ARB example, oil, decant out tar closed. fuel. the And so the times oil carbon have prices black flowing for higher China. was outside at is coal to than you tar of China, inside China, then opposite are of the when actually see and low fuel of kind tar is the very disconnected, relative coal when coal

flows any of So and being enhanced open not carbon don't be any see the are there, so ARB. for China China we by will black China now ARB out right of

Sean. Thank helpful. you, That's

Okay.

you. Thank

a Josh follow-up UBS. Our Spector is next from question with

is open. line Your

my taking follow-up. for thanks Hey,

tax ones. Just guide higher on about Erica, guess, to a year for quick what was I you term medium the year. next this the I thinking your couple similar longer of rate, are for rate guess for tax question Cabot?

year think I we is year. for were we guided where XXXX so to Yes, XX% XX% in this is XX% next

that's the geographic big is probably drive help down. earnings, think of I there so sensitivity what and that could mix

think, get probably to, longer term So mix. once as a XX% bit, I a see a we to I to bit a XX% you start so is that or full down a more rate get of think demand move back we type state, recovered normal could to

earlier of guidance helpful. much of and is just temporary back actions, come XQ year? cost in trying Okay. And temporary costs the much Thanks. left the the back of some cost how around the your in how are rolling the That's back rest already about think and the comments guess, I savings to to rolled that

Yes, little I would there's through say coming QX. in very probably

think I have very tight cost place. very, still we controls in

more of QX of be that most through So QX. a would

Thank it. you. Got

Sure.

you. Thank

Hocevar comes Kevin Northcoast from Research. question next with Our

open. is line Your

everybody. morning, good Hey,

Kevin. morning, Good

it of Asia, down there. Asia the of Sean, couple comments and given a strength the made quarter. volumes terms reconcile the market in XX% in specifically to that pricing hoping was strong like, sounds comments I But are in of on good some because your underlying

you can what fairly overall did help the guess, the I me because markets understand were sounds strong. it So like --

others think quarter what where versus catch maybe you that like do And you terms as price others. market of sounds the it progressed were? maybe volumes Are So industry. where the I'm your to the did the pricing you ended the were the on and firmer first to see underlying up than just to your your starting terms in you to of volumes in trying narrow quarter good commentary at point, gap seeing reconcile currently. the the pricing guess, volumes versus and on and versus start I maybe volumes you'll are

Yes. Yes.

we So, Kevin, underlying demand, wanted I volume I standpoint much China as the the think XXXX carbon and lagged oriented price commented, in industry to think because as the strong. strong pressure a pricing of the -- was China, given in black said, good occurred demand levels. I margin and in because from already margin by And design historical restoring that that I the we in first on demand, collapse across we

so initially the volume. comes that of expense at And

would you're given this to spot China, boxed are some price black what place It's as out, back every but comment to month, can't are volumes doing, but things as that's the you're toggle in and on expect the margin. was pricing a start market ability up. firm up for not your others that market, Now right And published and in there. there clearly is on I I indices carbon like

this that appears industry money XXXX. me and and the the to surprise a it was making So we industry in that not track be wouldn't -- others,

have margin a need healthier So to they level.

things orientation prices in market normalizes would our XXXX progressed I volume that are and think when connect on But dots, restoration performance as initially those moving with was up. our clearly So I is. expect I them where margin

I fairly maybe think would then see some the ramping believe Performance fourth new last with indicated think I and quarter that I think Okay, that some sizable the quarter, headwind great. the customers, And your you some associated a on -- turnarounds from of facility. I your in segment, Chemicals costs

is the you over? Are you it quarter. pretty expected things quarter So the behind So strong curious sounds improvement think like headwind that was you big improvement, and how sequential at those you're, point? first that the of in a when into this about that sequential

Yes.

So we’re up material historical this we're us to in self-help expecting and a more profitability, there. in sequentially step move to where we've been a the expecting back material and of step on measures segment definitely focused levels up profitability

are driving in the And the things pull the importantly be it'll in September that. but few that that mix. a quarter, more December while in volume, both think is I quarter, began One there think automotive clearly and being through recovery December firmer quarter. more pronounced I the

So that will definitely help.

we're We And are commented, just beginning on as moving take particularly pricing maintaining management of up that's as Erica tight pretty kind to maintaining cost posture and silica, a fumed still that. China hold. we're still more then, in broadly in

drivers. the so major be material up, would those be pushing Kevin. would And It step the

Okay. you. All right. Thank

Thank over the at no remarks. to showing you. time. like Keohane back Sean I call for I'm currently turn questions this closing further And to would

Cabot. look forward next And with again speaking support of again Great. quarter. Thank I a your to for you for you us and joining Have great day.

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