CBT - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Cabot’s First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Steven Delahunt, Vice President, Treasurer, Investor Relations. Thank you. Please go ahead, sir.

Steven Delahunt

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

issued who discuss the McLaughlin performance. now to GAAP. details. about uncertainties table call, with of to the our performance. adjustments are of in measure to conference our will forward-looking XXXX, refer financial at non-GAAP cause of Investors to projected considered call September we additional night the our regarding I financial and SEC, presented the by directly ended in those key transparency and Any report is Forward-Looking turn business and should Erica financial release Statements in financial actual the from non-GAAP our to will future fiscal will to for this to provide this performance, financial not measures any to earnings most make last information XX, which expected statements Keohane, the highlights on regarding reconciled be XX-K end corporate available measures certain section Any During website. also last these that over review Each non-GAAP press on comparable issued call subject and our financial required make Sean operational in greater the we we will annual involve the to segment that results measures the be results. of statement website. referenced the GAAP operating filings appears night forward-looking factors the materially Form that financial release on such risks differ Company’s measures the Company’s available In in year an order are and could all and GAAP alternative subsequent we under

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

Sean Keohane

morning, to quarter Thank conference with gentlemen. the and markets. a strengthening our our I’m and operating have we end ladies first very Welcome call. XXXX reported saw good you, exceptional earnings results across we recoveries Steve, as pleased

and were For and in disciplined margins, The operational our challenged build in to believe our culture our safety and us we improving enabled $X.XX has strengths unit I record possible of while the normal - our performance segment Cabot, of XXXX. and would adjusted us robust our made the growth the people collaboration maintaining million. share trends, will quarter, The on dynamic ways pandemic and we the strong employees whose execution of strong of driven of working, extraordinary for earnings marketplace, commitment targeted to results to generated of $XXX our COVID per of teamwork meet customers it by the these EBIT demand recognize distinguish needs and like continue communities. into to but I connectivity initiatives.

spring. globally tire saw the we with markets the the quarter, the in momentum recovery sharp and last experienced automotive volumes lows as During strong of continued rebound a

improved, have pleased miles pre-COVID We generally to are though that levels. still see lag driven trends

recovery the hold. a prior has similar builds, both taken growth runway below strengthens. optimistic With markets as trend automotive economic of still we about our terms are In peaks, end

quarter in and first previous As and our highlighted strength real calls, fiscal packaging XXXX. of experienced in the sectors, this throughout XXXX for products we infrastructure, into sold continued consumer

cable, global portfolio, reach and pipe infrastructure us trends to enabled have capitalize product on in favorable wire and strong Our support and technical geomembranes.

consumer certain behaviors, changed and COVID supportive the consumer-driven trends and our has are applications. these Additionally, packaging of pandemic

favorable, as chains of most While replenishment trends likely some level the pressure on low of the in inventories created was combination upward channel in are sharply the value there rising orders. end underlying quarter market - and

the major market, real strong us was seeing chain causing very can that seeing was to only in as we years supply I China China. XXXX, production transportation spend are driven and the We a hit would across is modes PMI of economy now in build time QX, for globally, strength surged. disruptions. in and tightness to inventory and also customers now. like mitigate little are a there market recession the likely avoid XX Couple industrial to had softening to some uncertainty some on there

look strategic assumptions forward, strong long-standing in fundamentals the our of we our is remain the and belief market As sound. China

Given We tires differentiated that a silicones, pressures relative competition. there finally, well of environmental markets will overtime. produced foundation of world’s expect way China and world’s the be XX% that feedstock for position in leadership And growth. believe continue of to long-term, the position are Cabot’s provide in and sustainability the are to will XX% should we in in almost stability positioned we balance means differentiated the a over our ratchet will which us extremely

Looking paid at as performance record Reinforcement our quarter, segments, focus driven by off. Asia, strong EBIT margin our very Materials results the in generated in on

in we on our of I believe operational focus customer are and benefits results. the excellence of footprint are value proposition, foundations that our seeing and global Our

the of our we During completed Reinforcement agreements quarter, the XXXX. for year Materials of calendar customer negotiation

a will participate low in visibility. our By with broadly and share, agreements This with period our as pricing maintaining in we line We development in are XXXX outcome, and was the customers. our is of forward negotiated a volumes uncertain positive recovery the demand pleased with share. terms extremely of which we during

growth volumes committed is Energy that carbons. mix plant integration to to provide Suzhou, higher the space, to progress across market This compared and sales to see strategic pandemic, significant additives in carbon growth our are Chemicals adoptions first Customer battery XX to delivered attractive continue the at million, and and our converting well, fiscal Cabot. targeted XXXX. project manufacture Performance continue of long-term process carbons up carbons our first in We that this advance quarter the Materials will strong battery Nano this we are balanced specialty results staying applications, in for quarter in of and complete, sales while are of capital top The we geographically. very all is of create the will high-value believe conductive and business the to the specialty initiatives. growing product we into we meaningful our primarily strategic XX% completion The acquired also grades remain momentum, track for pleased the balanced in EBIT footprint are in grow we XXXX. global complement step-up become will was applications business to on segment fiscal Sanshun segment. This a due project our and In profit framework. build and of producers automotive XX China, the for the allocation In to rates. believe progressing value contributor capacity critical calendar Despite initiatives early so with Shenzhen specialty in we our compounds from

important making progress also our business. are to Inkjet We grow

packaging, of digital been Inkjet space analog over the sector Our to years investment in last the couple with of the has technology. printing that transition begins as focus from a

adoption many space, packaging the product in growing are at positioned with the OEMs. leading and we sales well are of Our printer

so targets, expect growth to are the growth we and supporting three and earnings we over our in that our we well inkjet positioned. next penetration investments cash of been balance to We are in the along technology with shareholders. return we critical years, have disciplined execution accelerate and extremely believe choices These

strategic our their importance industry-leading eyes for Cabot been quarter demonstrate of is and sustainability investments, pleased this stakeholders. highlight leadership In addition have two growing in to and position. that long our our growth I’m ESG achievements to priority a the

in And their peer rating in of of sustainability chemicals. rights, platinum to First, in we chain a partners. rating from labor supply is EcoVadis the and evaluates of environment, procurement. is practices efforts sustainable that our that of companies performance customers EcoVadis. the ranked the company manufacturing assessment in confirms programs Many platinum received utilize areas ethics an our of independent basic sustainability organization human our its recognition Cabot and level among top X% EcoVadis of group confirm

area, I and proud is Cabot. the XX we governance, named engagement in results This Newsweek are one management daily are over Sustainability well in year quarter programs environmental We more and And turn part accomplishment second XXXX will of most detail. This leadership leading of the reporting. reputation industries. and XXXX ensure Companies States being community in of it Cabot by corporate across our received Magazine. to this as United also by the business success. America’s performance all the this the corporate recognizes the that as now to of in has of discuss responsible of Erica. Most was that management Responsible developed strategy stakeholders and responsibility in companies in are will integrated Cabot’s to Erica highlight which financial recognition, transparent

Erica McLaughlin

calendar Thanks, prior prices growth with Asia volumes compared feedstock of higher improvement results level and the our to in region. up tire the recover in as pricing included $XX in ahead XX% replenishment in Sean. Reinforcement I the X% the operating were and by compared Reinforcement X% EBITDA This in customers the volumes agreements year, Materials spot some same along improved margins. costs XXXX driven and demand in Globally, key as will rising start ability the of in drove fiscal continued the with the with XXXX, year Materials discussing inventory of customer unit due to delivered primarily of earlier from to same million to year. results quarter the in draw-downs with Europe record segment market quarter that mix raise segment. strong product period first Americas, The to calendar Asia our of end

largely margin year-over-year, to pricing levels. X% down a scheduled due in were and improve volumes volumes our Asia turnaround to order balance plant and decision to

the by to year-over-year XXXX, as year-over-year higher to quarter volumes. year, compared ahead the second second Looking prior of EBIT driven the expect quarter we stronger in

Looking will tailwind the remain cost first the higher the cost. moderate quarter solid, first as the we in levels than in feedstock we pricing We margins of sequentially, ahead will same volumes seen from and expect slightly to experience not Asia increase quarter. anticipate that fiscal

In addition, maintenance more as in activity. sequentially, a spend anticipate volumes we costs we increase increase and bit on fixed

the in by customer Formulated Now increased both Solutions compounds XXXX, product specialty weaker of the replenishment These quarter. in We businesses, to level product lines which primarily to applications, of automotive product the as volumes during higher carbons specialty product were Performance carbons some inventory and from demand XX the our fiscal our quarter key million demand higher partially fumed of pricing volumes increased the impacts related offset favorable line. lines. to driven improved levels by and drove and and EBIT across all product X% by by Additives experienced and Year-over-year mix line. to turning year-over-year and compared mix in product Chemicals. strong Performance the first in due increases mix favorable silica compounds

in to fiscal quarter as of expect the XXXX, by the quarter the second to ahead compared second Looking volumes. EBIT year, driven higher year-over-year we stronger prior year-over-year

somewhat in compounds Looking costs the the inventory higher carbons lines, drawdown product as expect of and levels moderate expect will costs quarter. with raw from sequentially, we we increased quarter the material and associated in EBIT first the specialty

compared quarter with Texas first inventory reduction to in the levels reduction by of XXXX. in related and of costs agreement long-term removal XXXX the to EBIT offset the Solutions. the resulting sale demand applications the flat mercury from in supply first fixed supply fiscal the was The higher was Marshall, quarter mine and our agreement. Purification to of transition the associated costs in to of reduced related long-term Moving

position quarter, we We approximately specialty fixed of increase with improved remains cash items. a expect quarter and million, sequential our costs. EBIT ended at and balance product I Looking see and second pricing now mix turn strong to applications for corporate ahead XXX liquidity billion. a to X.X the to lower the from will

sales was prior XXXX, activities During by and XX increased million, operating cash of inventory working working as largely change capital from receivables first included higher raw settlement. higher driven a final accounts included fiscal to Capital The net net first in XX of increase the were million the for also increase flows of the of increase with capital quarter capital, which cost million. materials. million. payment related purchases $XX of working XX respirator from fiscal related year XXXX The growth capital quarter the were working expenditures

expect spend we specialty upgrading continued black plant capital full-year, capital related million carbon the $XXX products. our new to and This million. expenditures and to compliance For includes China to be $XXX between EPA-related estimate produce

Additional uses the of $XX for included quarter million cash dividend. during

was quarter turn rate first to fiscal the rate to for continue will now and the will Our XXXX, year XX% operating the between anticipate be call I Sean. tax XX% of over back fiscal and we XX%.

Sean Keohane

Erica. Thanks,

We year. XXXX, execution much fiscal results from are segment. the experienced to Performance fiscal first we organization. record the XXXX very This and across Chemicals the pleased lows great the the our the COVID of materials achieved a results record-setting in in with recovering reinforcement in volumes start great is with quarter We and and improved performance related

we in repeat. to performance, in share benefited adjusted one on As dollar. results second the of to second I we look to $X.XX expect to tailwinds earnings in underlying that range the the quarter our first the there that business quarter expect are the per don’t Based some quarter, be

I expect businesses moderate adjusted our earnings this of performing the quarter quarter in are second first I second from While to well believe our how expected EPS reflects level the segments. in the quarter anticipate the strong, all the end underlying demand year-over-year EBIT remain January during and current in markets our driving volumes will growth environment. robust key were we across quarter,

the we saw should capital moderate working consistent cash with going and our liquidity levels forward. Net will anticipate we volume remain On what increases in from quarter cash first the more robust. side,

closely. there remain year that are the As will managing unfolds, uncertain, expect we fiscal be environment the factors several we and will

the recovery. will on of COVID-XX growth economic economic is of distribution in trends of timing high the level and reducing vaccine favorable in impact the many rates world its remain and on Infection and the first infection. the very depend stability the world, across of The level parts

impact some our logistics, Next in chains Asia. the may cost This in negative of and and begun costs, is where spot is pricing supply availability see have particularly we fully in to chain. being finally, felt of stabilize. And take some influence value and global terms to global in transportation across of movement the time markets input

our have the come. have and what challenge, well to continue our over confidence demonstrated to past the want will that no ability closing, We matter thank In I this the to year global in and execute recognize I team. year Cabot

and proud has showcased focus during character times great these adversity. customers, of team communities resilience how with our one true Company’s the been of a I’m on another. Our has responded and our

Our and are us Company’s exceptional over first for session. back the testament will quarter successful a for true turn well call for I much a today. very results a Thank our to capabilities that position question-and-answer joining And you us now XXXX.

Operator

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

Your line is open.

Michael Leithead

I helpful. first question, Great, sequential very thanks. guys. was guess the commentary Good outlook morning and guidance

normalized worked we XQ of forward? inflation level the model Just curious, you beyond of kind second inventory a about kind that absorbed as to would quarter of can think customer buying your be levels of further we cost and anticipate here, going and through fiscal kind is needs that or and margin

Sean Keohane

Yes.

So I good the feel about that we we given. Mike, have guide think QX

I again, out the because of the these to is will one being carefully the some don’t challenges QX. you highlighted visibility, current that of now, the transportation. think will our But I are managing the talked balance about the managing there. balance view watching well we we gives environment in I performing a repeat remains we there of of how right the QX certainly things factors and expect from think underscores the that carefully the in because level year But challenging that businesses and of be some through factors be factors I year. of

I freight. chains think particular, are in globally, ocean tight, supply

bookings Just is industry experiencing I and of think that impact tightness now. that getting every something the is right

will from will those balance key those that things. to But recovery So year. of impacts of if we as manage are we watching be work have the factors we the we think have on the And to go experience we through things. getting I will that, those

Michael Leithead

Got and And helpful. particular. Asia then China, related maybe two it. in on is just That questions

quarter, lockdowns of for down second, kind is into the volumes, why I products in on were everything have China so reinforcement your think, that? you I Lunar how Chinese recent was First, would New demand X% Year Asia And characterize buying strong, assumed region in some the of what and going Chinese versus the would activity there, the this year year? heading your typical maybe a with

Sean Keohane

Yes.

the the some a at think seeing in up performing metrics. X.X% well. I like our terms avoid business, in economy China, other if is indicators mean, X% Those economy at to if And good respond Obviously, the in year-over-year. types quite look these you China, a were in our major So we recession I of was or things relationship China, QX very way. PMI XXXX. I and of composite have look of indicators, in find it that And GDP you only or robust think we are leading business similar to the

the around I our specifically margin question think and over the on on our focus price think I to quarter call, in China, commented here. and emphasis your volume in has near-term as we last volumes in been

the quarter. so And executed on that we in

to economy the and through uncertainty. And The uncertainty a because And that volume in global go we year. right that of have we is price is manage weaker remains emphasis margin. course, will China, our why we on of impacts, watch and so now, go and around bit But pretty there COVID saw as forward, you lockdowns the strong. a as

Michael Leithead

Thank you. Great.

Operator

you. Thank

from Spector comes UBS. question next with Our Josh

open. line Your is

Joshua Spector

to maybe follow-up hi quarter And I on a question. Mike’s congrats for my taking on first question. guess, first thanks here. Yes, solid

cost performance. what same costs in with fixed and of kind you of fixed and that explicit bucket us costs. give of and actual you is able Are higher more bridge thing some tailwind that number impact reinforcement, fades gave feedstock an to sequentially items those the You sequentially? absolute And

Sean Keohane

Josh. good Yes morning,

help little let QX. bit to on yes, try a me here So QX to the

I will Performance to through and Chemicals. try so Reinforcement at different the two businesses: And walk major least

the Reinforcement EBIT calendar in from first. and and a driven So in mix Asia in XXXX was agreement. year strong product quarter, QX our record obviously by and demand pricing

flow-through December the as we will But of well recall as from been benefited last last the the price costs that thing the demand you And agreements of advance of of in outlook quarter year. from So is was the also intense quarter the increases rising of feedstock kept those the been timing terms think prudent of has in uncertain. here management as very costs have a to I do. that quarter

flow-through EBIT together, these in would the that tight expect of X of ahead in not QX. repeat factors, amounted and Asia $XX of about costs, to So million of the pricing feedstock to management we

Performance work on market pricing controlling MMO actions, obviously energy in Now we the and recover Chemicals, materials QX, like grow very pleased along our largely our to plants. and continued due costs our our areas in in with initiatives are see growth to to strongly new segment targeted segments, executing

And in But that. material QX, flow in in EBITDA we Performance and from higher moderate raw QX all carbons costs sequential expect so a with as we through. specialty are pleased compounds bit will Chemicals

inventory. costs drawdown impact the And from We expect segment. of a increase would million some to that roughly in of we XX estimate combined be also that in planned

strong said, both that in January volumes were So businesses. being

the solid volumes quarter. for so anticipate we And

major to to those So be from movers you QX. bridge the would QX

Joshua Spector

that. I appreciate helpful. Thanks. That is really

side, couple Performance that how expectations improve and business can pricing over for year-over-year. quarters? specifically or on pressure your on that what maybe silicas, and next didn’t at of looking here Erica improved the comment mentioned But sequentially business fumed Just the you down still

Sean Keohane

Yes, sure.

challenge. improvement basis, sequential right you basis, is a still are are some year-over-year that seeing on that here. So seeing on But we a

to So just a recap FMO let little try bit. me

So we are end demand construction improving. as recovering and auto in volumes seeing markets are like

that good. So is

We implemented have also actions restore to pricing.

with. they area on this particularly starting that in us. this pleased hold, to past is I take a think commented are we And I in the for China, are which focus

bit And still have with far so work what back but to seeing pleased So we taking the here. there, hold. lens to do are a pull little more we

remain FMO been business GP. profitability think a our And grows higher at the the attractive. end the above The with of fundamentals has very portfolio. I strong very EBITDA historically this business of business business and margins traditionally

long-term you characteristics. as at If very performance it silicones over have strong look a really

here really Silicones, fundamentals with silicones believe, integration in the position HYC, of positioned or strategic think are the it well terms So of here. business, in Dow we partners, our are we be strong we key ChemChina remains or we

this hold, work challenges, positive particularly overall, beginning take business, in So will actions pricing some near-term is to we to continue good. China, but which and through we the remain on

Joshua Spector

Okay. Great. Thank you.

Operator

Thank you.

Our Begleiter next David question Bank. from Deutsche comes with

is open. Your line

David Begleiter

very nice you morning so quarter, a Thank congrats. good and

can pricing you on in little these year’s got tire provide contract can negotiations, a I anything color comment this Just those you year-over-year. on on guess bit Any negotiations? just negotiations. unusual you of

Sean Keohane

Yes.

we David, acute annual ended despite broadly during share with are where So the we pricing challenges with COVID, a negotiating and of forward-looking XXXX. with - market our tire weakness negotiations to compared position the and we in of pleased uncertainty result as of as an there a outcome maintained customers. Overall

so I during year, this we think an again, volume that are And pleased challenges balance outcome in the with on given XXXX. that is

David Begleiter

well. to the $XXX obviously, going prior And period this million QX very earnings just Performance back think? strong business Can as Very QX, albeit in get do in on upwards forward, we of segment good. you Chemicals, of

Sean Keohane

Yes.

kind $XXX in annually. million XXXX said, EBIT So you the as back around period, XXXX, just if go the was you of business, this level

in And beginning to controlling hard so managing of work helping on pricing cost all saw. here, results lot and is and efforts focus us a you see pleased of off market are and we this the flowing and segments, through pay definitely target our to

a for to it back call XX-ish of level, get to in that business I quarter. let’s sustained sort think the million the

demand. still think in see we to need continuing strength I will

So important market here. for an example, end in automotive,

levels peak below still are auto We builds. of

on my the continue And That one pricing. so there see economics FMO, as in of and better I stabilization think demand through auto And will factor. on FMO sector we commentary continued flow of will see supply progress then help. we need as recovery to

continuing which quarter, that drives be really high-value those progress back sort at know volume rate. $XXX in think When So to improve, a FMO. feel automotive all million important type related that the that of you COVID, we a continued and overall take recovery of will to XX-ish business hold, mix I of level, million

David Begleiter

Thank you.

Operator

you. Thank

Our next comes with question from Alexander Laurence Jefferies.

is line Your open.

Laurence Alexander

products then morning. Can you catch much where think how you the tire and feel an the are effect? effects Good out currently faster there the balance characterize in you for give the years? secondly, replacement of couple there thinking terms up margin market? a higher market and mix growth will business you a over And the of or next is I’m of in just year of how into China, the can they for play lower-margin are in seeing about recovery is offsetting replacement your we of -

Sean Keohane

Laurence. Thanks, Yes.

So bit about let me talk mix. first a little

auto a commented, we last mix that have auto impact with we we the as because is the short recovering had weak. in been have improving couple still though build. of are of years, negative levels has of prior that, terms certainly mix, So And

I there, mix So is think runway there definitely, but improving. more

differentiated also after we position got a where our in the key growth going market think this Company. margins. targeted are on we here is strong and call that very focused what offer have And We really initiatives markets we

call upgrade And core lines here. Performance applications array our opportunities we of is vast are applications clearly, I mix. the Chemicals, so product energy materials what even and in like inside are And always a would there working But important. to of

period that sense market the my the improve mix as and our here, So next off. over target years efforts couple auto should pay is of coming continues strengthen to

a what we value. to So directionally, are focused that create is on

most question Performance in I Chemicals. pronounced mix think this whole is

my here comments that. So related to more are

in got tire truck, passenger course of it XX% to of question the them China, a we its in On significant car replacement China, have component think to XX% replacement and I replacement driven. a being both have

replacement truck, hit years, side building park the I the park of not last car the would the passenger car is in over pretty cycle things, in has mature. cycle car replacement say all still But has replacement cycle the is significantly yet. few that grown of Now as the

the replacement. think side things passenger run has room of And car mature of so a we kind it of to go still to that gets rate before some

on terms In car, are focused trucked. participate, places is is where the and to our as whether as business, I is we replacement TC of truck for what characterize terms passenger hard portfolio. in the us off it percentage to or well of applications mean target is specifically what very customer road

focused what we value really So offer with very the are and Cabot right to align right customers that the applications trying ourselves we and on there.

Laurence Alexander

of just the And vehicle Great. or automotive had to relative mix kind something the this leverage story. balanced the per product we carbon I or has to business the the two such of kind that content kind think tempering of follow-up how that side of service time the cycle in of changed of operating is last truck the or a terms guess, on I between question. markets? operating time leverage the maybe just is dynamics part black on mix strong that the a And cycle, as much bigger

Sean Keohane

don’t so. I No, think

are tire to, I was in years there of I what was referring ago, that of Laurence, market think say, couple regulations were you got perhaps the trucks. around would because a a in of boost overloading truck put China

more trucks in obviously the of same order goods. that carry amount forced into And the fleet so to

on is, say And and tire would view largely think that so I truck has sort there stabilized in of bump a settled my it out the a market I that China. of was to bit here.

a to movement because of And continues of strength goods the as so in build business infrastructure in you China as see truck well infrastructure. of will lot robust China a and continued stimulate

that of cement lot a and steel requires And industrial of goods. movement and so

we outlook. pretty stable think is And that so a

Laurence Alexander

Okay. Thank you.

Operator

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

Your is open. line

Chris Kapsch

morning. Good

that on or have can follow-up there look just extent to way prior visibility, passenger discussion bit versus extent just a is the volumes versus distinguish by what you more to of segments. any Sort tires And now, the of like in quarter? specifically. have RM but each a of you the - a characterize tires global car during your those growth the there granularity terms truck look versus you To OTR in China

Sean Keohane

don’t we Chris, break in out terms Yes. that of reporting.

So I further there. think specific no commentary

Chris Kapsch

Okay. inventory And the replenishment comment demand. may have benefited about quarter the from

color sense are must that I there. into rail you be shipping car, threshold Looking for customers you black some My that via the there have major is given that reached, believe. your Carbon some

And to space limited for them so inventory. there must be increase

of during dynamic if have think contributed color just the you sort as may how you provide any could quarter? that wondering So I’m to much

Sean Keohane

Yes.

And and Chris, So chasing the think up to visibility in some working there published in be demand although very is what think little say more restocking replenishment the of I their as is challenging, that of inventory signals data. can is they which hard question, in data. QX, here orders, is on I restocking, was tells very real likely terms of level there question visibility in which customers our is really downstream happens here. we our filling are to published customers you down course, visibility, that have catch we sort what manage into the unfortunately, point of I just have little when inventories up they of to and silos, customers selling there. we good seem XXXX are and pandemic, pulled the where, got is very to me of that consistent good raised, But Often

shallower. pandemic the then was I a OE here. the modest our stocks I here the auto value look segments, pretty economic to or maker, tire retail tire trends think are Reinforcement I question across about either improve in that still at chain amount to this into would the their likely and cautious the is stabilizes a there recovery us and I Materials, If rebuilding only given channel. bit maker say the in until companies mean,

to chains likely value So And a it bit reinforcement. don’t the is value little in and more layers here. are the easier chain. quarter see the - gets visibility bit the likely Chemicals, Performance given in a modest In saw see amount in as but a through, we tougher we deeper

here, of a all sort It of if definitely we think gather that don’t All some, said, we story of we I piece believe what the I Performance a but in applications restocking don’t just was the customers, probably it So part in a see, the to little what more can inputs together, story. was as was talk part of the data different because material of material Chemicals being that. we QX.

Chris Kapsch

And therefore, and helpful. have or sense this if guess, like U.S. getting domestically to that tires I is the how is That in Commerce for Korea, Okay. volumes extent how Any Do absence of think I guess, then others. a on U.S., was that is finally, imported zero-sum Southeast some implemented there. from countries, game, Thailand, an over and I tariffs may Asian just you any some Department it that you’re couple out? your sense production affect, in of or for dynamic benefit play a the there higher the may benefit of

Sean Keohane

sure. Yes,

is terms little for one I a saw of pretty tariffs, may another. given has in tariffs impact footprint back. demand right. preliminary of been geography in Southeast of you’re us, in So on one bit sometime against manufacturing But cause to similar countries would this our in locations, against we There say some tires terms from to Asia. a China around in impact what a of region determination broad shift

corporate So be earnings, don’t while to significantly be may our on impacted. an earnings there regional we impact expect our

But bit function shared tire industry, it as think pull tariffs the view a So our global of around of the as to I’ve this. that if is on lens back before, sort in just I general my I a relates footprint.

tires, I term. set, medium think the supply least, structurally in the pretty at there chains for

higher only there when for place imported doesn’t And U.S. in tariffs the change example, so a tires, on on that prices U.S., imported mean, capacity likely reliance overnight. structural the the And the U.S., I of the at in while tires. still margin requires is consumers. like would you for expansion I look result some, say,

consumers, prices it of pay game. geographic being so higher impact. specific here, here balance. but We And because in our And that significant it think how impact I, I I really bit Cabot ultimately, ends of not just as a up see the you terms expect big picture a a would of zero-sum any and is

Chris Kapsch

Got it.

one last came to that mind. one sorry, And

and look if Europe your comments, about your at down up China. talked volumes, But in in you in in they strength are segment Americas, formal RM Just you but Asia.

it bit it So as know seems formal and you China, not I’m little be talked the it delta products that has about volume to you on but focused that. a in I saying to trying in just as vis-à-vis to higher-margin are been? reconcile more big strong commentary trying a chasing like volume the variances

Sean Keohane

Yes.

One is there things recap, to our Chris. definitely two focus. So

And is volume where and near-term China. the need margins to So back margin price and the think market this a remember, they we be. to to it spot over important level restoring is in in

participation the emphasis. scheduled So short-term but margins as the in the things But capacity, that is out and our turnaround period a and took production we we also some of restored turnaround think volume we right called can improve a offline. get follow, of this

that the higher volumes maintenance done, support to capacity with there. now So will work be

two a really those combination is it factors. So of

Operator

you. Thank

with next Our question Hocevar comes Research. from Northcoast Kevin

open. Your line is

Kevin Hocevar

time about quarter. good are and the in in is the was pretty lasting first quarter. last ask you at it I quarters. I through this first would it in on that the at had half in pricing the And time, think correctly, got last ended you of nice that P&L. moved China - the seeing the flowing happened nice it a only pricing Hey your expected where if big two ahead of fiscal wanted of Asia, And a quarter like again, up it it remember you raw materials XXXX, up to timing morning benefit was that that benefits sounds a and I

earlier million I an no benefits January, or I’m the is that still go see benefits quarter? factor second question, point, mentioned has that like could curious XX sounds anymore this there that from your at So in away potentially curious, - I’m you guess that timing to away. if and between benefit in like some you earlier will another gone it that

Sean Keohane

Yes.

pricing the costs would expect the in gone see it not to So are we has our is benefits. It flowing anywhere, P&L the QX. is through that not that

And like this, a last are basically good that The you a matching, XXXX. that so in was But is it. time saw a in so run-up right, pricing you remains place. got the we really

material it of combination a there. is And have market, is quickly. because think raw pricing costs moving I a some to would factors up the spot sharply. One follow very that

would So were issues. China. or of was friction level little One environmental factor a I as And again, XXXX, I of very kicked is enforcement the periods with similar. in with of it as moved they in sort strong different the bit, that aggressive through enforcement. I in China slightly XXXX, in degrees to has of that is there was deal of, trade would that impacts the say, the say is ratcheting trying think trade moderated very the a It different, U.S.

at that. now, in with pretty standpoint, look China XXXX that we it has flows carbon peak As out some environmental everything targets clearly, from aggressive an and come from

So and would to to say, sustainability very view But provided serve the our environmental that basis of and overtime was of bit extra there in sustainability, was an customers bump, ability continue that of here. differentiate on enforcement XXXX. benefit ratchet our I pronounced, position a the is us will our some that to and that run and enforcement because XXXX, in

Kevin Hocevar

second on improvement in business rubber seem And be and volumes to materials. your some better. expect getting quarter. sequential reinforcing Okay. It sounds the then Obviously, like you

you kind think volumes, arm’s do think you of it I’m about the like how forget what thinking length think recovery trying XXXX of the can about do curious, You in XXXX? know you just an - XXXX, can come we within or how you here get to you of close XXXX, are If looks in to

Sean Keohane

Yes.

see industry. a there, what tire Kevin, forecast view at best look our we take those So from would be the to

And expectations tire would X%, probably of if are X% XXXX, production look prior at what I be peak in in the below was. what it terms so still

globally terms total tires and XXXX So of XXXX were produced. in pretty flat

So are to look it recent the of but little that is, And let’s XXXX, forecasters something peak. nice at call bump that bit think kind X% where of still XXXX, if a that. we most range, of course, like below a the for in

right now. best into is it our that visibility so And

Operator

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

Sean Keohane

Thanks, Have Great. much, good you speaking call Thank continued and forward day. you for Shannon. your again everyone, a joining Thanks. quarter. We Cabot. look of QX with to support Stay our for today very safe. next

Operator

participating. for today’s Ladies and gentlemen, this concludes conference Thank call. you

disconnect. may You now

Cabot (CBT) 2 Feb 212021 Q1 Earnings call transcript