Quaker Chemical (KWR) 3 Nov 232023 Q3 Earnings call transcript

Greetings, and welcome to the Quaker Houghton Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Jeffrey Schnell, Vice President of Investor Relations. Mr. Schnell, you may begin.

Thank you. to quarter welcome call. earnings and morning, our XXXX third conference Good

and and the Tometich, Hostetter, Officer; President Andy today our Financial President Vice On are Executive our call General Traub, Robert our and Chief Executive Chief Counsel. Officer; Shane

to relate released information U.S. financial of after X, yesterday, November the XXXX. close the comments Our the markets

these forward-looking contain presentation certain the The press the and and and actual accompanying company comparable cause financial presentation discussion materials, our to current contains Both differ. the website. Relations the website. commentary statements. This future measures, are is release measure non-GAAP on directly their slides and most on events of reflecting and involve may to measures Our provided potential GAAP Quaker the this non-GAAP obligation performance. during financial forward-looking company view of financial may effect uncertainties call our Investor these to in statements available which These reconciliations to the company's of has Houghton's can be no also statements, results updates financial prepared under provide and which subsequent risks, found appendix operating on

refer please filings information, additional SEC. our For the with to

Andy. pleasure the my to Now it's call over hand to

morning, Thank you, Jeff, and good everyone.

adjusted for quarter bringing business, another top quarter third and further The the also quarter. was achieved earnings profitability another double-digit higher non-GAAP flow of our was consecutive in Quaker consistent enhanced increases We Houghton. EBITDA strong per line in of the performance share. Cash and quarter

sales year. providing for the flow the million quarter, in approximately a generated cash significant the were record sheet prior the million company, $XXX to third have balance We $XXX similar optionality year-to-date, enterprise. Net operating for of

prior activity divested for wind from impact continue the the a as cost pricing X% in after soft of combination. our challenging market end management, tolling excluding products which down We of compared of and environment. Volumes to operating the helped year approximately the offset sustained, declined benefit actions part to value-based

the improved largely and volumes throughout year. have we progressed sequentially, been However, slightly stable as

resilience market XXXX. customers of our quarter, pricing in the business by demand we softer China are and Europe. Positively, well we customer providing Americas pleased new X% environment. doing current the and increased and the We these compared outperform our of portfolio our markets to by are in to continuing as industrial also diversification and gains gain impacted as has are provide. and existing primarily high And activity dynamic the our The range. we services third our us end the continue customers on the in productivity, order automotive and we steel aerospace, company. In is earning drives patterns, year-to-date. in but focused to people for customers trending supporting of we and encouraged our at broad with growth our sustainability an businesses, value and as the with additional remain that and prior are being We products XX% are are end additional to increased This our year long-term deliver,

prior slight This points and material of the balancing management was While a have improvement. and were of quarter costs the a we Gross of raw year nearly implement prior quarters. Throughout moderation well pricing to significant to quarter, elevated quarter our $XX value-based actions, third than we non-GAAP million cost profile, consecutive year. result to our earnings of recovering and our of $X.XX a per historically year-over-year that levels. In pricing is XX.X%, our share, as the margin remain the while relationships made combination gains that cost diluted generated with a of higher actions progress margins business. increase EBITDA product the to coming customer at percentage XXXX, in mix in we serve, long-term fifth pace our third continue targeted the margin and slow as the still aspirations in X adjusted compared balanced are XX% anticipated of

the results in recovery strong can Quaker operating focusing in a increase continue Our control driven complex in are we The margins, working our in also challenges, approximately of capital consistent generated cash by these but execution, value $XXX our capabilities This of our the testament solutions, a million We $XX quarter what third primarily and ongoing cash on Houghton. manage cash financial year-over-year reflects environment. Despite driving by only market unsettled customers and the as earnings, flow improvement year-to-date. is improved management. the million to our generation we generation not we control. to

We on our million position financial we well opportunities ahead. $XXX have strengthen have the further paid continued organic inorganic to capitalize the this and in XXXX. debt company of With to positioned down and performance, is

year-over-year margin a to on sequential again performance our all once Turning segments in segments. of and our delivered and basis. earnings We

in Asia our in volumes EMEA broad and a line in to basis, continue with Americas year, volume Pacific, Pacific the the underlying a are our EMEA sequential with improvement generally results underlying overall a improved comprised We Notwithstanding, especially soft in an increase segment. flat environment compared decline Asia of demand. and markets. On Americas. segment demand in in the Volumes the due increased to in prior contend to a

both to new above-market metal working. pleased by wins volume in China We business performance in Asia are metals led in and see Pacific,

quarter in packaging That in continues continue uncertainty. not to quarter of strike have share levels incremental the the driver market industrial said, the was some we soft markets. increase to We and from a in Americas. in Asia low and in our The the grow in these continued UAW in Pacific third in remained XXXX. Sequentially, in volumes fourth of the to the the by current significant despite to expect headwinds Americas XXXX conditions impacted impact wallet and be quarter. EMEA steady

at remain the market trough to EMEA the like the in levels demand end of through expect We year.

and and EMEA the in position in coming improve begin Americas optimistic market We to the our are EMEA in continued have the recover year. and cautiously will to financial performance cost

difficult a visibility in XXXX amount despite market our have of markets limited uncertainty, very well end and considerable and in We many of conditions regions. executed

Looking to are quarter, in products encouraged end by some we markets. the improvement and fourth

will continue the demand current the balance through the expect year. tepid likely environment of We

fourth We in ratified, also UAW region, agreements anticipate the their the some announced increased variability we manage tentative as in patterns X customer fourth expect fourth order quarter If the recently lessen quarter. By with working will impact the companies capital. region, in own the a trend more levels and anticipate Americas compared recent in in years. will normal Pacific a at sequential lower led to the improvement quarter to remain have by seasonal and the regions. the We the demand Asia for China, EMEA

another continue we to However, expect deliver EBITDA. to of in adjusted improvement year-over-year quarter

quarter earnings cash deliver on generation. In another expect increase in a We in margins improvement double-digit solid summary, are also track XXXX. strong we meaningful in and of to a

flow, year, significant generated in increased cash dividend we this business, throughout have our our Additionally, position. strengthened invested and our financial overall

squarely Looking growth towards contemporizing value XXXX, including enhancing focused are strategy, advancing the our the and on our profitable we organization by customers. to we provide

destocking and emerging for well have largely as on end aerospace our visibility of While businesses. optimistic customers and are XXXX, China remains macro us, markets we and end limited, we our many impacts cautiously as our behind faced automotive are markets believe including market and the

rates XXXX. Taken in together, we expect our above to market grow volumes

of and laser remain also through and valued efficiency focused cost share additional making actions solutions. on progress are wallet earning We on our customer

We business have we and positioned XXXX. built are into momentum in heading well our

valued and centered has and growth and immediate around our financial we focus customer committed operational strategy As faced X efficiencies realities the and to the world, mitigating of manage of over further the optimize enterprise driving fully the continue Houghton the remains years solutions. team our company for the Much risks value leadership past driving to of stakeholders. top at to Quaker delivery our long-term services

future simultaneously financial Our in also strong opportunities. enabled investing to us business model has and continue developing position

strategic As our Houghton several around area initiatives pleased the current customers focus highlighted and are One of centered shareholders. company quarters, continue to deploying digital meet There intimacy in to for is early of commercial the to I of I to am our and value needs leading advance in with have our positioning sustainability. model. our our are leverage progress. are deliver pillars global and scale scale, underway, Quaker our and previous capabilities our These and the leveraging long-term pillars

For are we example, indirect channel our optimizing strategy. current direct and

strategy exactly. and complement service improve our well We turn effectively to our enhanced as intelligence efficiently in fluid our to which customers' both our model, productivity we the of customers partner level our digital offering and service with relationships as will will as This people and our to more of capabilities capabilities advancing and deepen provide the further value are deliver that customers with be support operations. deployed openings

full better and markets. whether sustainability to opportunities share, example accelerate and our geographies. including global operating technology to We expanded portfolio, developed our by existing through is are also for with our One new is into working or advanced solutions, wallet supported portfolio true of increase especially scale. emerging leveraging This options

teams have many experts closely with which combination. our our and working of who global local are and by advance R&D possible We talented the to added leaders were strategy, other efforts, made

we making benefit ongoing on good bringing are the differentiated to foundation from initiatives enterprise scale are fully strategy which life. These on to capitalizing activities focused are positive There our we on are beyond. summary, of natural providing some are of efforts, in ongoing committed momentum XXXX realize and our that and to our the have extensions intimacy. In building these unlocking the use expect additional customer just of further we We are of some built, important potential. approach, our global

position in market characteristics. long-term which, strong our a has have growth We attractive in industry turn,

have the and capabilities our We balance cash-generating financial strengthened Houghton. are and operational margin on sheet meaningful Quaker are progress improved significantly demonstrating profile, and our of priorities strong making

focused new new as our challenges pursue well customers they the We and impacting business. for manage their opportunities and driving on success customers earning with business through our as as are supporting

strong have Houghton investing as XXXX growth beyond. together prudently and It differentiated pillars foundation. growth our our the business that value and opportunities continue portfolio business our above-market discuss pass through to profitable, enhance deliver on initiatives, I'm will to of our strategic intimate deploy is our continue advance proud of to XXXX, in by and it we and value team impacted We myriad services like objectives operational I'd in to excited Quaker shareholders. With our us and for execution through the we financials. generate long-term our remain in leading develop our products that the of and I through managing and a that, am model. challenges our delivering confident have Shane the of customers. to strategic financial, who customer on I over we our while solution-based customers building to

in primary The we In of morning, reflects impact quarter volumes to points in actions of to previous performance second combination. Sequentially, and good costs X% the third year. volumes Americas decline X%, our everyone. compared wind selling of Gross increase by at in and third on well The a sales third volumes. in our primarily sales price represents increased XXX basis XXX million, with sales Andy, which down which and we from single-digit a execution and the volumes and an XXXX. in year on a Thanks, XX.X%, due sequentially. in consistent driven continued quarter basis XX.X% $XXX X% mix in increase in EMEA of of our prior by our were XX.X% an approximately up X% foreign divested and pricing product offset quarter, softer the drivers but by was as slight delivered the favorable as was was as quarter the low in a price prior net by X%, part compared foreign material offset were decline the of raw market points decline decline the the our conditions, exchange. margins improvement the segments to in This currency and tolling mix to

increase. or our year-over-year $XX onetime third costs, Excluding is increase levels impacts to on X% as labor quarter, of foreign reflect the year well increased and million year the as inflationary items, annual and in compensation These to fifth our prior SG&A timing which our $X million exchange. We the and compared prior sequentially. of incentive XX% compared XX% increases $XX adjusted impact delivered year-over-year EBITDA due or consecutive the to of an million

which selling reflect margins volumes our an by EBITDA XX.X%, prior strategy basis the compared an increase increase XXX improvements our priorities by XXX mix lower to prior volumes in year sequentially. segments. end and advancing points The activity to exchange. as pricing impacted compared the to to as expanded product volumes declined were near-term the some while Americas. we've were of sales working profitable offset and by Net strategy, foreign market sequential points primarily comparison, UAW by Our made the and of our new was our direct well business decline year growth and to including demand, driven year-over-year, basis indirect declines These of value-based adjusted delivering progress metal flat with and balancing in sales a approximately due X% the price offset wins. Volumes strike. the our in the lower impact were long-term higher due partially Americas initiatives. Switching to On

the net to decline foreign EMEA increases price year, prior exchange, Our due partially sales to in offset and by increased mix sales X% primarily compared volumes. in selling and

in The by wins. the ramp sequentially improvement due beginning end wind also market the of quarter will in in Volumes as in while the noted headwind as increased automotive declined demand we EMEA, markets. the improved segment contend Pacific. divested combination modest in metals, to modest to the the as foreign these especially segment conditions end new as to in Asia for we offset contributed a tolling were first of market and experienced soft down Pacific in also in performance, this many contributed the due across working quarter the XXXX. Volumes and earlier. compared was the to but to China sales both well EMEA a in the quarter. year decline, Pacific new improvement metals exchange and increased metal Net conditions in continue wins business broad-based partially business expected sales in of second as Asia to part We improvements Also, compared broader soft business to prior with Asia underlying to

quarter, all we on of across having to third all and performance progress the improving delivered the prior third delivered to our we the in line, year-over-year interest make progress XXXX, segments. operating segments, we the profitability Overall, strong year-over-year and the our basis, our expense continued are margin build of on on both in flat in a During higher we in sequential we quarter year, increased continue recovery sequentially. increases was and the significant compared strong half to first the but making business. Below our of earnings

with approximately where exited X%, cost which quarter in Our quarter. third of the debt is in prior the was we line

and third XX% excluding the quarter. Our noncore nonrecurring effective approximately tax rate, items, was in

we expenditures, $XXX working improvement through $XXX $XX year-over-year operating Year-to-date, reduced million shareholders Year-to-date, to and quarter. generated in increase driven were $X.XX, by we and operations GAAP non-GAAP our capital of efficiency. increase, reflects of share our flow. solid a Our dividends This $XX million our $XX debt per in third the X% million have our earnings represents This diluted both earnings. Switching per improvements in cash million. have and earnings liquidity. capital cash share generated invested $X.XX. diluted earnings improvement were and an We by million operating in XX% paid sequential the from year-over-year to

and strong. liquidity remains Our balance sheet

at to and leverage to the adjusted beginning Xx ratio quarter debt net last million, EBITDA at of of year. the Xx improved our third X.Xx end at the and end of quarter net $XXX compared Our the was the

allocation inorganically. business capital capital remain invest strengthen and to through our organically Our balance priorities sheet the both return grow dividends, and consistent:

at unchanged approximately X.X% CapEx of XXXX, remains full net spend anticipated For year X% sales. our to

and we of conviction We have have opportunities cash to flow ample drive growth, business. our generation the in

backdrop. summarize, flow in the earnings short-term strong despite difficult thus continue shareholder very we've to growth We've will far XXXX. and executed with record long-term outlook We deliver macroeconomic environment a macroeconomic cash balance to current well our strategy and returns. To delivered

growth power the to this remain committed earnings and and generation in it strategy that, company. With cash confident I'll turn are of Andy. our back capabilities to We over

that, their Thank to opportunities And their you, dedication happy your to we'd with questions. and to like the commitment our and with I'd our ahead. customers I'm thank for for the be company Shane, organization and and partnership. trust entire address excited

from Partners. Our Seaport first with is Harrison question Instructions] Mike Research [Operator

guys guess, pace of another these may you're margin we some delivering more quickly through this changes margin, walk exceeded you strong us your I that exactly that kind but keep of that's you in doing. might shouldn't on step you of have materialized here. assume Has you've Congratulations quarter what Andy, expectations told can expansion gross that the the year? have drivers And than anticipated? gross

Yes. Thanks, your comments. We appreciate Mike.

be highlighted, For for But sure, particular as in And not margins XXXX. about to I we've necessarily time. it some made going been talking progress considerable journey in our we've quite linear. was in

year-to-date we're but at look at basis, closer, consistently. our on we're which you not getting If still about is at XX%, a it target

there's think is us delivery constant going all use to still we mobility So that there. Obviously, to upward some require levers.

continue most with space. on efficiencies continue focused use, that and that So work to on be accretive new our while to value business customers drive going we'll wins to we're and the in are

execute think and continued I that continuing to deliver each one We'll forward, over our going is So of cycle. the those goal it's that levers. do we've -- on to entire

All right.

about guess, strong, challenges? can that, despite margin Europe. cost continued was particularly I an that's been I on particularly But standpoint. generate to structure. regional the in were improvement been working margin you've working impressive volume changed -- talk You such The what's area there you know where from a you're

Thanks. Yes.

markets better continues bottom. are well. as for industrial journey And We steel us, most we're where we trough again, So have adding sure, value program, to highlighted as of continued move be to underlying profitability the we still the to Overall, and we standpoint, forward efforts, it look but that's kind them. a have characterize Europe weak. on our operating continued like, and are the forward working creating. we've the kind of from a customers bit we with position to We've still little a contributing struggle we're a the front of at near and focused position in but and cost for our as

does position demand we improve, to believe underlying As very in good we'll serve our a be customers.

on or on you're to for little of kind on detail how and you where X you you've Americas up said us in is hopefully year-over-year, which could walk off expect just but be EBITDA towards it what maybe to know we I a through straight better takes how might impact that bit more. compare touch quarters -- just of maybe more year-on-year I'm But curious some your from and delivered you coming its XX% puts way maybe much strike, been UAW also in the see key the just and resolution. QX.

Yes. A there, couple of questions Mike.

let at them So come me to sequence. in try

Europe. think the So going in we that the market. seasonality some in that we on it, we're fourth to quarter the highlight XXXX. momentum has developed is the and still over typically in the uncertainty fourth build particularly associated quarter, There we've Americas in with And

We a about not there capital us QX. and on cash process. generation. we're impacts could XXXX, working are necessarily I that didn't also this very we're all it's with the our quite our closely. UAW, beyond that. at their customers with budgeting think ask But year-over-year as But EBITDA some again where look flow clear be still strong in early, in horizon, And then total, think leads appears we little on to about pattern I the QX resolution think to watching start unclear. year think bit the We're but to we happy that grows very, you be impacts order associated as it's indirect

that business. There we that see believe We're our So advanced the But progress we and again, underlying we markets will some we are made our on in on encouraging signs be growth We've we growing by and signals always expect we'll grow -- where our in as build we aerospace. strategy automotive to showing think, continue markets. now. that and, seeing to to improving are this have there with as enterprise limited targets some here we'll happening look, operate profitable continue XXXX. it the above could believe be we've visibility. done, market end we've rates execute And

management. there's thing highlight, is, still there our our last I'll and to on will the I improvement too, be We mentioned margins. us, executing as margins, for cost room on grow So some on we'll think keep

built that So to XXXX some XXXX. we in in momentum we've continue positive here intend

Anderson [Operator with Instructions] is Vincent question Stifel. Our next from

I'm Yes. material your I wanted where the I material pricing, improvement, pricing raw on a willing products Echoing headwind you're indexes. guessing if more to of this on that particularly Mike, actually magnitude comment raw to the is start. of excluding job front quarter. turned if correct, really curious nice quarter, those mean, I'm on index And in into which that's

Yes. Thanks, Vincent.

related materials. the importantly, giving sure, For only the value Generally use But speaking, and back about on to you're on material not business, our business material are our of value to is on we raw a portion focus because providing to a rarely but pricing X/X cost, though. customers. related our more that is index raw we're pricing correct, also of It's that of not approach. our raw there's single

mix. So it's a

our customers, We balancing and team against to that value a on serve. working with our The done continue has really execution. on their job nice focus delivering the cost to most

not we we've move it while component been a as a one So forward. has component. and It's what been to only will continue talking the about, of pricing be key

Sure.

a to what's of remarks, but on going I then spoke about in Okay. wanted bit you And your Fair enough. just this Asia prepared Pacific. in clarify kind

seem in trailing be half mentioned did improvements you to So the indicators limited though the market volumes, we of driving China. least have first for year APAC broader what at in results

quarter. kind points I saw of relative first that steel could like production, So data product was this your square those versus specifically production aluminum you hoping the in half to improvement volumes you

obviously, second kind Pacific half. improvements seeing really it, in working. general seen and improvements we have component although of across, a We're Asia the key In metal apply comments Vincent. and China both Thanks, is of Yes. metals in

with with that of And doing differentiated see we're targeting relatively their both our to the from half, job grow also Now the levels, I customers function business. think low you right being as a of we business happening and a them. what's indicated first in

So continue. it's factors, a hopeful combination going and that's but it's to of encouraging, we're

in And could one quick here. I if one -- right. All quick sneak a in

Just continued next the market year days a how maybe in couple different playing is of given I'm in overall, tuck-in health balance for your cash the appetite through and macroeconomic sheet scenarios. flow looking the again these improvement curious M&A that and

Yes. Thanks, Vincent.

sure, key to of to M&A strategy, For is shareholder a part allocation continue focused be where we going and our on we're add capital value.

lined with in also We enterprise growth strategy. our up disciplined a fashion it

So invest in that while with we opportunities. organic growth, we want to inorganic align

for forward solutions our of move to and active an success and over sheet a that those take have Houghton bolt-ons of to years We've we with progress in model We lot we'll number a ability service position to of Quaker to our more make as pipeline. make provide balance expand We're continuing will opportunities. had overall their at that spend, advantage reinforce our of the our even continue use it. with customers a do

John Tanwanteng Our from next CJS is with Securities. question

is This Justin for John. on

substantially. So leverage down has come

be you you think flexible a were little I more So capital allocation can mentioning. on the

debt can or changes? just of share priorities your as pay your rates dividend, down, And internal how further repurchases, rank that you go up So M&A, between kind price might change investments?

I your I here consistent, Shane don't at and add capital our end capital on remains mean shareholder Why allocation strategy, strategy value. on focusing can start Yes. some the But question. with details then the

our throughout is down in extremely I million as for also levers possible -- earlier, are highlighted, $XXX We've as growth, payer shareholder us how been increased as appropriate, successful that opportunities year. And paying efficiently the history. important. First if innovation highlighted, where are organic X% our deliver debt over We can can be committed and our pursue foremost, dividend returns more little even focusing if year-to-date, and just again we're dividend this there bolt-ons, to our investing with bit we customers. M&A been a a we'll those. other on our the as to I and then provide for we've

Yes.

shareholder fact hit and important the most Andy think value. on is that I

other items buybacks about may talking think due was we have we to that definitely, we with changed M&A, we Andy and As rates levers consider a rates about what to hurdle have similar improving, interest consider. bit

So avenue most return overall, appropriate value our to shareholders. is balance the what we'll to

All That's ability one on to more, deflation in And the for through helpful. term may. I expectations to if or are What price? pass right. your near and inflation, then the hold

of has we've think story the the different Yes. that for what time. fundamental shift quarter, raw materials, are materials, about we see we But some directionally the overall, are in have quite got Well, a based certainly, When and see there's I with mixed part raw very of a kind big fourth over a that inflation been in X,XXX a some moving fashion. stabilized. up, some don't mean, move to We're we upon it -- expecting necessarily at significant moment. not bag

question next Our RBC Markets. is from Arun Capital Viswanathan with

Yes.

did this growth lingering into the in but this pricing back outlook, year-on-year you've most QX may going in and in double-digit seasonality some you're year, of quarter then impacts you of mix. play some some like there's of that kind hold Is just of to guess, know EBITDA. quarters been to you the thinking magnitude still I maybe that. strong that off, first QX? I the So the efforts There's some as of maybe on destocking, gain

So maybe in QX you you of can size the of growth that kind just of impact year-on-year. kind see

that. low digits highlighted, that's relative particular, the to part the of mid-single in to guidance as typically, and the provide on don't other Americas of as quarter, Europe and seasonality I But equation Yes. detailed kind Arun, in quarters. we any fourth in typically

I We do probably to expect with our would pattern highlight also we will contribute customers management order to some -- the that. of the capital working

grow. margin. growth agree be you growth? to like we know do growth in for next year-on-year in margin it expect EBITDA 'XX more than saw Okay. still And little modeled Again, more a of but you year, what modest modest that expect recovery that year nice would some you targeting will I some maybe had next in you're growth 'XX, then similarly the versus now 'XX, that on you right sounds in we Again, 'XX. have 'XX, bit

think early proven with and valuable see would customers' we still to highlight, that above happening as it win I continue over But I what we what's business have XXXX. right we're now, new business, able pretty business. our for it's to underlying

We play is continue continue like and business Pac automotive to We'll signs. to Asia continue do And those think we're that are aerospace serve we in see But costs going overall. some and in to encouraging markets our expect manage out. to There how the to to encouraging. that.

still our go sorry, respect and to I -- margins. think we We with missed think room the a to of margins. So there's bit

always expect So stage. to but we're to business, anticipating this and not grow going at quantifying it we're this we're

you And think the then chain. and restocking do of just There's or there's how regional working been Quaker capital lot supply about destocking, I in flow differences. volatility itself? been think, within inventory again, a cash lastly,

So what capital a build be Do And portend year? working of that use you greater likely free little is would a maybe bit inventory? so and next the how of flow? to cash to see -- need for kind

Thanks, Yes. Arun.

our some improve couple and in working inventory to safety capital of a imagine, we it Coming security years. stock little a focus through. inefficiencies into more year, of supply that to those you come over were have of just you last given see was on As cash bit flow carrying and the this

capital job about year, into good I improve the into levels. continue rest done we'll and that on continuing historical at as next working this we've think year to for percentage our inventory a improving As really now, focus so receivables roughly this and XX% of and year to

is Our Begleiter David from next Deutsche question Bank. with

next but quarter-over-quarter. said decline I you year should a big were you maybe believe think And similar I next mentioned low expect in impact well? not materials, single they in digits down as Would raw down they be year, QX? you On QX a

low was did in raw there yes, David, third continued. kind that quarter, deflation materials. the highlight in I of a We've single-digit

we X,XXX As move we raw are that mixed more a forward, there many little are There while though, see the others to moving up and materials some that are of buy a we continue stable. bag. are

it as the seeing relatively without -- be to expect we quarter we're stable So we we're -- significant at any fourth see shift. moment,

will there now but right deviation. there's that, a just to not be major that Beyond visibility, there's nothing suggest clear

raws Andy, you seeing which right are up now? being sequentially

that products moment. of the Yes, basket been derivative to is high oil-based the some the where incredibly versus ones have that it's whole for and historically. the at products sure, pressure related are the And

still Understood. And to up next year, would on year-over-year? expect pricing you year pricing, next be

think focus we're to we're cost to I on looks our what's exactly what understanding like. providing what on that customers in value will and So going to influence serve, which happening

share necessarily we're Houghton in movements. part model where pricing value the So any been that of value-based adding not continue think value at with has customers. we'll always and are we forecasting to But I our significant Quaker

Our next with Partners. is Harrison from Seaport Mike question Research

for more me. couple A

is and on First of little prepared of you Andy, more all, give might that talked your optimization efficiency for what to color and at in about channel the looking you Can areas that direct of us a remarks do looking what your you're one entail? strategy. you're indirect there

Yes. Mike. Yes. Thanks,

the we here we're make need It's our I to overserving partners purchase really levels to servicing right we we is organization that service exactly efficient support each want journeys, capabilities sure, when do using working exactly on their the fully be be customers' and serviced, work customers that both indirect on them. customer sure the repeating the an of match and with. to and to channel that choosing, and way basis. they're to not an them not align journey And and and how products. our with mean, we're of the digital about deploy they use understanding able really, underserving different goal We're our level the to direct For channel, intimate talk about referencing

one And quick right. for then All Shane. a

us what mix your You floating I year? tell And today? rate you of Can your debt now mentioned debt looks right the the what cost like versus blended that that next of guess expectations fixed X%. into for is interest means about

sure. Yes,

goes roughly from increase think next that have the to on is steady like an X/X at you At depends mentioned, fixed and Fed for cost Obviously, is on I moment, be or this in as where seems decrease it future. We is our quarter. variable. now, side debt rest -- the the XX the But roughly about of X%. the

going our into as quarter we focus will the well on paydown, fourth debt well XXXX. that obviously expense as for interest to as However, as continue impact

to on Is it say portion? paydown fair that be the going debt is to focus your variable

yes. It's fair, Mike,

There to the Andy are no back further for to floor Tometich comments. like questions at this over hand closing time. I'd

just and Yes. everybody Houghton. for Quaker Thanks want appreciation to very in much. I my interest extend their

talking. look the we're opportunity for of Thanks front continued interest, well to performance in with to forward the positioned looking your next the think I and and of and execution forward really that we have opportunities us. we

concludes conference. This today's

disconnect You Thank this lines at may your for time. participation. you your