Quaker Chemical (KWR) 26 Feb 212020 Q4 Earnings call transcript

Welcome to Quaker Houghton Fourth Quarter and Full Year 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce Chairman, CEO and President, Michael Barry. begin. may you Michael

everyone. morning, Good

me today our of CFO; Traub; Hall, and are Counsel; and Mary General Head Accounting our Shane Chief Robert Officer. Joining Hostetter, Finance our

for slides We conference have our call.

in can A with www.quakerhoughton.com. has the the You pandemic. deal them Investor section website great past of the over Relations changed COVID-XX at our year find

meet and For our business and safety health us, protect to the our top our requirements. ensuring our customers' priority our employees been continuity while is to and has customers, of

of XX plants around needs. All we integration. our of team world are very service as customers’ to Houghton what customers, am our the our has well and our continuing continue are done the Quaker continuing operating to I to proud meet to

from increase that results strongest by fourth sales the for negative back our compared was pleased EMEA we as volumes We to impact in showing quarter. with regions our driven quarter. sales increase are on up an businesses of third were saw growth or with COVID-XX our markets. to being higher our revenue primarily XX% sequential all segments us X% sequentially come the as continue in was Overall, end The the which for had

and our sales EMEA gain sales. also due of organic share global contributed X% on significantly being year to total quarter. the was the due but primarily lower down an was still impacted our this I X% from look in market which volumes fourth down were out were think pieces sold were to to specialty sales had increase relatively due analysis primarily Overall by point and which and X% area ‘XX. it taking weak mask to by India. ‘XX quarter our ability XXXX, at of driven to in is business X% as our Asia-Pacific driven interesting of flat had region primarily our down I Americas that changes showed was fourth only an only flat the and of being want when growth course. prior unusually that relatively sales to there end difference our markets COVID volumes quarter China our looking fourth increase and revenue being The shows approximately or we by X% was higher versus was to of net volumes mainly that by on volumes segment. a business new fourth ‘XX performance of pre-COVID versus at gains quarter the in quarter share aerospace volume of

helping share overall on net as So impact pleased see offset back. growth our way not the to why continued of end the flat our we relatively to gains our volumes were COVID Asia-Pacific from X% but made certainly a we're all difference that last I quarter negative the markers. bit the very improvement am

markets like we markets two up some may up our sales which than fully will aerospace years more As approximately estimate for we return of end previously said time makes to X% that. it about and more take take

acquisitions projected to as our now quickly well However, to more which share about. gains expect continued market more as rebound we due talk making ourselves I'll

bolt-on last call acquisitions. conference make you our we may since did noticed have small As two

XXXX. of and EBITDA approximately product applications solutions in $X.X Coral U.S. mid-December adjusted the treatment beverage for first waste in we a can expertise cash net and provides required. in company purchased net and $XX million markets. private Chemical end industrial and metalworking $XX The Coral to million technical in based that was called for the of general Coral approximately million pre-treatment, had sales

next the annualized for EBITDA XX achieve acquisition million market year approximately add of for assets over approximately going this in end $X we sales related steel also to $X year adjusted of million, a February, expect to will full primarily plating Also For million the tin we million and of solutions two which synergies years. $X bought forward. full approximately net

the So purchase we add approximate times which additions are to combination $XX acquisitions. these equates will pleased the of to our EBITDA for with in about strategic XXXX which estimate we portfolio, product million two EBITDA of X multiple an price

we improvement the were EBITDA. Synergy the our pleased this million fourth quarter quarter sales $XX to of with quarter in and a operating also saw overall result the and as achievement was $X we sequential we're given environment achieve factor we So in compared last as in adjusted in good a million year.

reflecting we full is in strong severe cash investors a our by the COVID-XX. But to about with debt XX%, due nature past the million our flow for of past positive year, challenging our seen positive our million have allowed acquisition. the we flow quarter for net full the full cash year debt over been business addition, something reduce we to operating year. addition another months discussed downturn performance. year, and $XX past pleased Coral by the have of during In making reduced the the The $XX to upon and again with this us In have in in overall I'm impact very XX

difficult continue we customers past conditions. and economic the year to despite our service supply Over

and activities We exceeded synergies our $XX cost completed continue able share a realize of estimate part were to in previous to gain and of million. of we which million integration significant our our $XX we markets

to approximately with acquisitions, were able XXXX. acquisitions, And we made XX% or which even $XX also add $XX two debt to in by reduce our additional We million. those addition of EBITDA bolt-on million our adjusted these will

delivering our the are that]. on benefits that we short, in for anticipated So [with we powerful combination

issues continue first headwinds the some expected Despite will positive to we costs look timing material of automotive than XXXX the to our just in and as to from in these Hopefully, As and a our headwinds mainly lower short-term shortage. over further projected step these about short-term a the we complete are adjusted impact expect the of from the integration marketplace, our change feel continue gradual end EBITDA expect to the XXXX higher our market to forward and markets year. cost profitability demand we from recent take see synergies, we share and rebound XXXX volumes the impact XX% raw due a in with semiconductor positive in half benefit increase acquisitions. your

but press our As my I've have CEO retire the in my will the role year, announced as may will continue role board. at you read from in the of I that I Chairman of end as release

the process and to a committed press search internal orderly with that comprehensive candidates. the include strong, in mentioned external board we release and is transition As will

really now, step we decision in As far our will timing and as to be a I we want made profitability. made are. Houghton Quaker strong take a This and why the transition position when change a year this I this we in

reach essentially leverage will complete We and we debt integration our our more targeted will down ratio. and pay

foreseeable in the the strong growth the management opportunities place, have for whole market our throughout right organization a We people tremendous in team, businesses strategy strong for future. and above

everything and company's happy I Quaker most of concludes future valuable proud successfully safety forward going which whose by difficult value to Houghton Quaker want our priority us. to of that and some make asset and to was our customers, financials both and review accomplish future So we with Mary our and in all us time Mary? marketplace. will is top And the to team prepared Houghton to our this how that business continuing our at our and bright and following differentiate and customers Chairman our this transition look you. thank for key and my the customers I so be forward. as for and ensuring shareholders over that it I'll the far critical and can involved of now to the my right in she and dedication very to I expertise of for this able continuing year. and their in I'm proud bright have needs remarks. for In create well-being and is to closing board team has be meeting we'll is very our the me be helps execution, am People with and performed both and a what us continue of retirement. integration so colleagues past are investors now hand for our their servicing

Thank you, Mike and good morning all.

I Before begin.

based remind made which you me on current include statements this comments to actual are assumptions projections materially. and uncertainties are subject which estimates, that differ expectations, to results may and call Let cause risk forward-looking during that

XX-K form our of discussion note XX-K please which and statements and our be form risks SEC. the available XXXX plan form our in also forward-looking quarter For the are These in included filed regarding will with these that factors updated cautionary previously on XXXX our filed statements earnings Please release third XX-Q included week. XXXX in risk next our website. review file to we

We we diluted with and one and with do per visibility non-GAAP XXXX EBITDA we deck the forma some as audit. disclose this excluding including our actual as change XX the pro the well. periods core Houghton as combined investor presenting we format effort our non-GAAP we reflect release believe our and EBITDA shareholders been is to charts for adjusted provided items sales comparison As we certain non-GAAP as items provided operations not and press we'd to deck call QX well better throughout filed XX information all if share, in certain to this and of provide presentation earnings results operating show are our into numbers earnings last pro the company's Reconciliations and night similar our in unaudited in as release adjusted operating subject our an have this used for finalize performance. are certain which in presented. review and release also forma are preliminary press a and press periods In followed where we core our

completed comparisons in Houghton XXXX of XXXX. in as reflect this actual deck results QX Our combination of with and QX forma XXXX pro not we the

year I comparisons you the will XXXX to apples-to-apples For results basis. compare so the that forma generally XXXX pro see on periods an full can

only as net and gradual all was recall recovery sequentially see relatively compared XXXX to impacted we negatively that QX volumes down began gradual were continued were in industrial weak to in the slowdown widespread production a up XXXX that in mentioned, from was business Mike QX, our Europe. QX net increase in segments As a by however through benefited a in X% XXXX, QX, QX. sales X% quarter of sales that especially

the to of net but forma in on X% XXXX downturn in economic were Haye of result Norman in on For QX year, margin up lower increased to volumes sales Gross due XX% due XXXX inventory down which from is a deflated the Houghton reported sales due full global inclusion for the pro to XX.X% basis Haye. production as accounting of a of XX.X% COVID-XX the purchase adjustments for somewhat Norman was QX pandemic. primarily in

XX.X%. XXXX's about we QX gross adjustments of gross these would primarily The estimate in progress Excluding QX procurement been combination increase have is synergies result in margin related our manufacturing. in QX of over logistics, achieving and margin

was and basis XX.X%. gross Our material a product QX rising margin reflecting current versus full-year XX.X% quarter costs approximately somewhat X.X% of sequential QX to one-time margin margin a On pressure down XXXX, gross benefit from was and mix. in gross from raw

XX.X% would costs estimate have Excluding QX XXXX and as respectively. margins our in and we adjustments similar been XX.X% growth XXXX

ahead a expect gradual result synergies we improvement cost realize Looking combination which gross to in margin. to should XXXX throughout additional

QX improved expect margin Please rising combination operating we impacts QX operating we the of both measures. the our offset of realize significantly. is raw and this reflecting took a XX% GAAP a as COVID-XX. for non-GAAP versus income X.X% manage Full-year synergies this operating year certain our mitigate of to cost-saving combination year the financial costs. key a income and gross improves significantly refer On basis up area and and non-GAAP our year XX.X% later to towards to head to actions our XX in also slide further last sales We GAAP sequential material recovery margin prices and non-GAAP and snapshot synergies

sales we in QX in pressure However, operating QX decline and the call. which fixed volumes resulting margin to steep absorption, earnings in full-year declined due our COVID-related discussed the from cost and

in Our versus tax in of benefit X.X% a of expense QX of was an QX of reported effective XX.X% 'XX 'XX. rate

QX effective our respectively. approximately Excluding various been items, and one-time have rates XX% would tax XX%

year. line For full-year with and been guidance this XXXX, our non-core we effective in rates, and XXXX that for and our items, one-time would excluding tax respectively, approximately XX% estimate XX% have

our expect we full-year in XXXX, range the XX% of effective tax For XX%. rate be will to

is of in XX% operating improved from of due $X.XX QX I QX income to EPS earlier. up the 'XX, discussed primarily non-GAAP Our for $X.XX

but full Slide of trend Our show EPS our year adjusted down ahead $X.XX XX, was of consensus $X.XX from the we pro year of EBITDA. last non-GAAP in forma On $X.XX.

from of QX and margins million million Our EBITDA for both EBITDA $X consensus. up Also, is year EBITDA full-year sequentially. of And QX adjusted our the $X of last is year. ahead million and improved $XX $XXX quarter up adjusted adjusted our the full million

we our lower Our XX, QX XX% margins sales forma realized, our provide the to update XX%. partially to are year EBITDA offset on impact a margin liquidity. last margin by adjusted on X.X% by On year of The XX.X% leverage of margin increased the adjusted EBITDA our -- XX.X% up basis, an is COVID-XX. primarily of versus XXXX combination-related due synergies Slide impact and from full and due pro lower to improved the we've

we and net As pay equipment million cash capital flow to acquired frequently the released our the nature commitment which opportunities pandemic. record was of to this allowing was dividends. seizing our prioritizing XXXX. about and saw capital Mike debt economic paid and flow approximately to reduction, investment during to the strategic allocate of million, capital by the and during COVID saw is while delivering and and acquisition, sense. and for pay working downturns million reduce $X We're noted, our asset-light $XXX.X working Operating cash the financial main the on million, year cash we weather star in full in prudently XXXX cash for increased We continuing downturns. us talked in year plant to in as flow business dividends debt a by Coral this growth make $XX generate net XX% We $XXX.X us versus property, helps how crisis our

was capital prudent As leverage a of continues covenant and adjusted of result times year months net at versus X.X trailing times year. EBITDA primary our to debt allocation, XXXX X.X improve our XX end last to

of to net end at EBITDA level by expect to the X.X be XXXX. target adjusted debt our of times We

from certainly way pandemic to It a with of sales savings be turned ahead share on cost and continued that conditions synergy In to its summary, addition, year very fact this in our rate and fall X%. We benefit integration, no the of but to cost under knowing Houghton execution deliver in with control. on current schedule, commitments interest year, we debt in In our to continues cost borrowing on can we out and kept actions Quaker track to XXXX our was difficult was market challenging were I that environment very very of stages faced. time, mitigate said ball At the despite of to during capture early implemented additional off the we last we what murky. call focused what my come. crystal the we continued in we deliver the gains. market

result, And make the and cash to on to reduce continuing record year. able during in and the year sense. achieved expect end adjusted interest synergy In we in now, strategic as execute a we the to financial XXXX, than Quaker acquisitions you, expansion EBITDA XX% to our greater see flow Houghton. for while over further of the all full a increase were you debt your that we As benefits margins Mike. toward Thank of realize back

we And open Mary. it questions. Thanks, will for up now,

with line question Instructions] comes Thank you. Mike Securities. with the proceed Harrison Seaport your Global first Our Please [Operator of question. from

morning. Hi. Good

morning, Mike. Good

Mike. a well on year It's as deserved. finish well an and on and been congrats run nice to And retirement, impressive the your congratulations

And Thank you, another we've the of year here got to bulk do. Mike. still

focusing we're So but on that, I it. appreciate

Understood.

to question I about you guidance. ask So, a the wanted

had said XX%-plus You previously, you EBITDA growth on the in QX call, earnings XXXX. expected that

more this than are kind you a EBITDA of in also that you And to but of you little bit announced X% that, adding, acquisitions XXXX year. be call with the then reiterated couple EBITDA at ended So had it, been time, may a same you expecting. up

expectations meantime? understand conservative us maybe help you stayed your a the whether or XXXX bit can little have earnings So, gotten more same underlying the around improved, in

Overall, it's organic has growth. a nothing views changed question. from of say, good really I'd our

course up that uncertainties of said here and our at a we've we of as part are still Raw I because company materials and have it's the where these when were out we're the floor historically meant good and and going I now the perfect to think, is over added to But there. some really we've XX% a I of there still And imagining feel we're still here, generally COVID acquisitions. really I quarter, we growth, that think, we're know, now, going be so XX%. a of think been world. in in position never you end are conservative situations organic

I I said is, you're EBITDA full year we year our So, we'd and you what seeing and or thought feel -- million. $XXX conservatism and just also least give example, million the we an at be we in last good came for so of to $XXX think

just for it's of kind So, setting we're floor probably just that. -- a

Coral tin-plating product number, finishing terms the forward give I deal deals but tins And a general those bring All you like synergy going opportunity more do acquisitions, right. and the how deal. bigger, businesses? little cross-selling on portfolio? think was in you little mentioned it's what is see fluids. to focused bit Can these color industrial the cost And on there for maybe And bit sounds a you also a the of the

-- a and portfolio, actually, strengthens a really Coral, have with licensing had there a I'll was a had we the had So, agreement with aspects. I relationship Houghton Houghton with and It Quaker certain portfolio think, historical can -- this, for can start Coral. --

So, complete has Quaker that that kind industry and I even actually we during been course with portfolio Houghton really times the that very think really in have. adding And to sell can the us portfolio a an of one Coral industry. markets been COVID legacy's industry that's of stronger presence to products our gives strengthens of of end

So, ago that that really And and good bought between as our we addition to compete the product of go other a good into the will to about means technologies is that tin-plating -- we these of had in take in strength share technologies we penetrating have came really growing already tin-plating. future was a we against the that and of maybe up that are how think the thought will that technologies well. now we we our our be market. used And is portfolio sale. area asset believe just And we other And in have be we ability have years we'll kind for we -- technologies these McDermott. technologies. of market that many many, sets in the This these tin-plating from two faster than kind that getting that this for feel

grow So to those we're as ability well. in with markets the encouraged

are those time to global going the parked acquisitions specialties in or Okay. be going And the are being? be to going they into regions for

beverage the out regions managed region and be then well. global in global aspect be tin-plating And will parts so the the be of other certainly the operate be put being as will question. can It's And then actually hits piece. specialties, general well, -- the and Coral the a specialties but be our of -- it's into great will piece separate, Americas as will that into can specialties. global industrial business put we will

have Really is last step-change All you business. aware margin had EMEA I'm question you performance for nice And the looks then, there. in like were the right. now And I a on EMEA? some prior-year off coming But unusual contributed do dynamics as sustainable there strength easy level this the that to in an XX%-plus there a see number or were comp. you margin

benefits picking really pleased the normal is same the there of to, very what you are of EMEA time, volumes more popping It's I it getting the getting up At as see what back see the we're regions. synergies level. of from integration. our kind I the call, with We sequentially combination and sustainable.

And kind so, year. level. at sequential those when showed to that throughout And things, that you expect the that continue of two on nice we put improvement do

I are margins sustainable. in that of be of do of price But because putting goes increases, a these the year, absent do Now, place pressure we that. first to there lag in issue this to see effect on with that expect kind but we're quarter material raw is expect nature, the that having. we But short-term

All right. very much. Thanks

Thanks, Mike.

Thank you.

Our question. with Please the comes Katherine questions Bank. from with Deutsche proceed line next your Griffin of

Good strong And a on also Mike. I'll congratulations year morning. Thank you, retirement and end to you. to well-deserved on echo a the

you. Thank

industries market I wins? just on you're regions X% wanted First, business can this the with new most the highlight ask, having net where to success you share quarter, gains or any

we're It's areas. It's up product kind things -- of pieces of pretty are of made all in all these broad-based. up picking that lines of and business different different kind

So, pretty -- it's broad-based. actually we're

not area another. it's really So just one major or

And pretty well-distributed. it's so,

similar are you markets specialized of related at just forward? Okay. into answering little to could bit then, I Thank a your also question. just more the in transactions finishing, strategy or you into M&A you in? end mean, kind that, going differentiated bolt-on have two are this core you. that metal more cross-selling opportunities and there about that about I steel interest But on you applications to focusing know talk looking Are talked to get recent expanding more my And like or opportunities

combination. it's Yes, really a

larger we So, the is Then, our only smaller opportunities. be, which in that acquisition place at be at end until of are will looking the the ratio look we'll want think short-term, we exclusively opportunities we year. at at the leverage to

to develop with that be of at working relationships in these we short-term, of tend time. have feel And our companies technologies Most various that we we're good bolt-ons [indiscernible]. we that to two discussions good once these time, will portfolio. acquisitions to the additions and the are these most on, examples or in be over So, tend these have

come to a come are So talking And kind that. when to acquisitions the price. to at us about of can on they attractive we an generally conclusion market, they

feel out is too that can add technology relatively number small a or of to application product perspective a of well that to really companies something our there, we there So maybe those really it's as can whole that customer add a us couple from we've service done for still or these offering base. opportunities perspective a a our

Thanks Great. much. so

Thanks, Katherine.

you. Thank

questions next line Jon from Our come Securities. the CJS proceed question. with of with Tanwanteng your Please

guys. my Hey. you team questions. Mike, And your congratulations pleasure off, Good morning, way a for a your great on working with taking done Thank but you retirement. a and I it's job. real know been it's you've and

Thank you, Jon.

I was about just quarter. margin the you your talk for wondering if first expectations could gross first

maybe headwinds and wondering as some Given the are shortages headwinds and them expectations prices, when there, might you you to input what that just through. the expect your pricing for I'm rising logistics are pass from quarter out first these volume recover

Yes.

the guidance, number So, the they're And that costs get definitely just is impacted getting specific like on. price increases. reasons container effect of that kind give up increases things we are be a and are things first our general then to lag materials stated, in you going in in and our for There generally yes, not price the going that on, are our like go prices raw going we to marketplace. of in that process going but that just we're the and

to to somewhat and price quarter. but increases in through absent was through margins, thing, first the XX% it if And would margins. on But we in impact depressed XX% range forth. expect we probably this kind so some we the they a that would be of be be get will as there our year, get So

be her that materials at which more in getting of we once line where kind Mary XX% As area, into expect stage to we're remarks, mentioned is kind longer-term of think out. back we do this raw

it. Got

And year. was had Okay. that. if know I realization synergy the target total couple better of a the I years. wondering done past you've you for in Thank you for

and there for phase for when a year Just had wondering is and target a schedule this if a -- you that?

Sure.

of ultimately ago quarter so XXXX. this at, $XX get be if look I that of synergies the the guidance target in we this expect at -- or at It's we more believe for when the $XX we year rate will kind you our probably to Our going forward. a run million, $XX upped is full be we but million two to announced year you by end expect year, of just kind we that and effect million. that get

Great. more Okay. Mary. a a is little expect maybe revenues returns to flow just And the back working then, to Do capital in or you're EBITDA for to quick grow? improve it as as held be year question degree going cash same by this capex you and investing bit

to rebound well. working steam. Yes. as expect improvement more be to we depends That's we than we a the up fair Again, in reinvestment have If capital, picks question. expect a how by would working the up threw quickly, Certainly that earnings quickly the answer would the picks some on rebound situation that's off lot of but offset if capital XXXX. in

scaled capex bit a and announced would out, our more back So, invest year perspective, last COVID, our post a little I this capex bit year. difficult to call. we we to expectations a that from the we original onslaught capex of should From in expect point

more So, very and we'll a later way in year the long-winded of see rebound healthy, but expect I the quarters. cash progress talk of to remain saying, this flow

enough. Okay. Thank Fair you, guys.

Thank you.

Thank you.

of comes O'Hara questions questions. Steve from with line next Sidoti. with your the proceed Please Our

and taking morning the question. thanks Good for Hi.

Steve. morning, Good

Yes.

some like I lot left after year, you [[indiscernible]. still had the talked just connectivity echo the the EBITDA half And with growth there was the lag, a prices, forecasting. with guess, is last And maybe again. first the talk of -- year though impact pretty but I headwinds two-quarter congratulations And that? guess, first, is here green the kind that raw sounds Just, through in kind about on of hopefully customers than there is of and year -- little the can the you I like of the a expect issues, bit passing about it for but you're it this [smoothish] process things then, typical and from in -- straightforward what year? you it material is

question. great a That's

So, price -- Most in in we to that quarter. ball these once hit depends this we we and some the And costs. we ways, been going of continue a me back to be way. as then our to is today, in the in materials price going crystal half upon really the because yet, out -- different the line I on sometimes some And or are of it of based in speak. something this have a go have wish I kind raw is putting because a of had of question is, the increases seen will us happen But quarter. price of increases hitting evolves kind of are to throughout a step-change and increases of what customers us to kind kind kind our

you your the guidance, capture kind up what three-month months this that it see times we that. give find some anything sometimes and then, customers question lag of any do at there and a like to were And on of generally like dependent guidance but fully of six specific over everything. to generally we upon time is before is -- given So -- kind haven't not we we don't can take around

something to will and get we'll short-term, So on just go a and out worry a a perspective. from line just longer-term not things issue then or It's hopefully there timing more about from it it is through is get got and concerned there. it sit and of we that

or mean, have -- And competitors just then, helpful. kind on inflation than favorable more Okay. impact raw that, materials, things of maybe side I you would same any is kind like guys inflation move or in with is feel like sticking you'd the from see footing else as there of a you a you That's the or be do positive, on there negative a everyone if prices? continued

or relative I materials. yes. a at competitive think raw Yes, don't to we're advantage disadvantage

down, it generally raw whole think -- would generally it's up the industry. materials I hitting go if throughout or people

Is mean to them when about management And that company, thing tend mention something your then, I where bring you outside I'm that I for seems you're somebody it guys, search in thrive the or have -- etc? Okay. explore all will that have talk terms mean, options your good where the of just missing to the what to for a mean, and And might maybe company I think you talent. just you of you strength are things the do team. it's bench -- is right it shareholders of from pretty like replacement, there to right people the in for lastly, something just the you I currently

Right.

of good And good of but kind part as our our I governance management candidates know Board considered the be I team. -- very very all at happy is there. we for to at Board options. think, myself, speak look have it's process it is, as the I Myself to with way looks the well strong

governance. sure so, it's And says just wouldn't options read into direction, at to that around it's really we're good anything that going we and doing we're -- more make I that not all want look

All Great. for Okay. right. the Thanks time.

you. Thank

you. Thank

from come Alexander Our of Jefferies. your proceed the with with Please question. next Laurence questions line

morning. Good of -- you of successor Houghton a it, is an and for of little but I be status what patient bit Quaker talk be of and you just something can to finding problem the culture opportunities bring question, speak going sort you terms or culture the it's guess, unfair skillsets? about leaving sort straight I your the sort just what's business. expanding little seems creates cultural that think acquisition been can limits mean that where also, just either the with if bit assets challenge. right element managed outside about the well or a you're a you've into in in existing it for again the challenges And real to of the that? Mike, And that or what is -- unsolved of Houghton as the

about just can you two things? those little talk a So, bit

I a again, question, On think now. of around really, I And didn't very is really that strong -- right a a in good the leave a your Sure. is timing -- I first challenge place believe company of to really big it's -- place. we part want and the do had now are my rationale

down those the And to our believe, will lease strategy. in and [indiscernible]. to really and our be, believes which we kind our looking really want. integration high in capacity believe me place, to in are strategy, -- I foundations mean strategy year certainly good we for have our in still debt have Board I do this target not our of at are we major at any profitability changes So, our think we we all-time the then area in having I

can market continue we So organically. our above grow we to feel

market. to within look opportunities our going to at are We continue acquisition

the And on out. looking will so, I executing really that that for think CEO strategy a it's we've put continue

the company. As really far acquisitions. we something is fabric culture culture And as to we cognizant it's of our believe we very a something is the when aspects, are core make

people fabric I've continue that -- trying teamwork, As highlighting are valuable upon and improve We asset. diversity want is and whole inclusiveness, something to as of we're in really our organization. have mentioned, collaboration, to our to throughout most the part

a to time spend of something that's culture. making culture anything have Houghton as Quaker and than of company sure now we -- time lot we put a we want good a the and So on into has and probably kind combined energy more

-- I'm acquisitions We guess, at, happy there. component forward are I'm that -- fit making there have I we're so, a progress will key people we that we always impacts wouldn't very look perspective, to I there is something do from a going negatively but be from just, question, want and culture. And didn't to good our And other that. a sure make into just read if acquisitions the always not I know sure your make with

competitors in of potentially do talk industry? where, happened as Can staff and the we things XXXX? us or of to are at the And within a for on pent-up kind normalize, you just a sense where churn can at more talent any risks give migration take yourselves also, either churn? then, bit sort or then, little of And see sort at you turnover What about of you people become willing move?

something with Sure. critical. people we having talent having and sure try to Again, are because Quaker people to to kind just today. And now, And of of people. we really the above to X,XXX on. and the I constantly that before X,XXX most combination mean, people good we are And people retain need we've growing valuable Quaker our we went market, want part with and key the customers' attract talent and historic perspective, to people over and Houghton. from really the our we time, company forth is keep make organization. we understand attract have now work to it processes new size doubled so X,XXX in we'll That's Houghton continue people over

we look something that is rate at. retention Our

it's where on somebody voluntary have but chooses don't is relatively rate Our leave And low. numbers range. below the that in X%, us to me, I exact retention definitely

we making time So effort on retain something it's and attract that and a talent. definitely put sure key and we of lot can

Thank you.

next with line the with Palisade proceed Please Our Management. questions. from of questions Garo come Norian Capital your

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Mary. be for this may more Thanks. And great. Okay,

$XX I the million a last think of guys this had for starting maybe about that you a number Is to for at beginning place talked year, capex year. the year? good about think

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it. Got

lastly, just impact curious on electric of where am then And to had time. if world has accelerated move of you at thoughts I been in a just there in bit the since vehicle company possibly on done your that anyway? guys that you've feel Okay. compared your I like Investor the maybe very thoughts were the Day, refined

Yes.

continue and evolve study. some at and with have to We look

that shared haven't We lately.

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on of we still kind our valid, Investor I it. think updated our So conclusions but view overall have are from Day

like highlight anything there? could and Got it. related days these then things update [indiscernible] And most investor have you lastly, events sort just some seems calls on ESG of

Sure.

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come out We March. the later are to in in process

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goals you'll ESG very -- later So coming aspects from out material around and be of the there year. whole us the seeing are this

question. Thank queue you. Securities. Global Harrison Seaport with Instructions] Rejoining [Operator is proceed Mike your with Please the

Hi.

talked couple or impact about then, terms obviously logistical the Mike, weather maybe more. thing. impact some unusual saw materials. maybe challenges the of Just temporary suppliers? of from raw some the a some near-term maybe outages maybe the of your And you that of and you touch see, winter in you related of the you on Can a

serious You concern the mentioned around view in the a you issue some as? of And uncertainty How the up business do it shortage. you rest a that timing do the as just that auto semiconductor year? and you'll of see make

Sure.

event been us. hasn't happened what supply big the to and Texas in issues the far, real so around So, chains that for a

are world may far reducing So, that so time. or be the some plants for good definitely products on be and the certain around where of are the supplying so so period From production that we we a semiconductors, may seeing automotive front. perspective

will have made So more later impact something of that is Mike it that clear will spring. up then be issue year. think with And -- and a it's temporary now in in volumes is maybe We the us. from will everything is, on some this up read, we this the

there could in then, be in quarter certainly the second the first it So, made again quarter. to maybe year. into But some the up that'll be impact of or half the be would some all of hopefully, -- kind the second us

into quarters also it see that about we APAC was quite in business fourth even or more talk high-XX%s level quarter? the It XX% margin margin. the you QX? is And XXXX, it like the to Can three the that like was should a as up the impacting a operating bit first that ask it mid-XX%s weakened wanted in or was in like then, what like sequentially. guess, looks And right. look I into All about

for us. So, as it's business we a think great about Asia-Pacific,

some were costs you back-end timing issue saw we I to think a had really certain in that what that quarter costs. of more our And relative loaded. was

China China. a within year. really they thresholds, have you bonuses. accrue And bonuses example, for hit certain had as us year for great last more For to

the like I things I quarter that to first was back-ended lowered certain year. and don't that something unusual had fourth that would into that, expect quarter, kind that you We that be was in think expect a more, nature seen of say, but like we -- for So That in anything aberration. example. don't

So it's not going carries something to that be forward.

are comments. like further turn to this management you. closing any There time, the at questions Thank would I call to no for back over

Okay.

no thank all are And questions, will conference end Given other there now. for want of call we to our interest I you your today.

questions or Our to if the be Thanks Houghton. April free Mary contact May. next early Quaker meantime, interest your feel for any late you quarter or please the first And for myself. in in conference have will call again in

This you teleconference. your today. Thank conclude participation today's does for

your disconnect at a this day. Have lines time. great may You