CBT - Earnings call transcript Q3 2022

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Operator

Good day, and welcome to the Third Quarter 2022 Cabot Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session.

As a reminder, this call is being recorded. I would now like to turn the call over to Steve Delahunt, Vice President-Investor Relations and Treasurer.

begin. may You

Steve Delahunt

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

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

and reconciled provide also our the issued that segment highlights GAAP results, discuss we website. press with company over these website. update an company's corporate Investors Sean, of on order transparency GAAP regarding non-GAAP Materials ended financial financial last our I and end our In Any XXXX, Erica information some Additional issued for of to the performance, of along in financial the which fiscal end this night will results. XX, the progress are our XX-K our September XXXX, available now we in the factors turn third our the at the Battery in earnings the are and regarding and year details. provide who involve ESG. on operating and measure financial refer XX, March call will to will XX-Q most call business non-GAAP the in certain review to to directly in greater areas a to comparable table the available quarter in measures on our quarter adjustments for fiscal release referenced last appears release section night measures

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

Sean Keohane

end and I'm you, pleased to morning, same welcome period with earnings record ladies the to the execution level resilience fiscal the and our and very good call on focus our compared the This quarter vectors. momentum adjusted today. and reflects continued performance $X.XX our and of gentlemen, a high-growth per XXXX. to up was Thank of markets, record in in of our Steve, as performance our XX% share businesses in

As report, grew grew EBITDA rates. Materials quarter, sustainability continued volumes have central XX% continued pandemic a to where the during Materials to Battery performance was Materials while logistics XX% year-over-year, record delivered through strong our impacts were approximately up was sustainability. market and purpose we In progress XX% we to the the actions over EBIT the segment, raw of And penetration. by constraints strategy our outperform Battery result, the strategic higher XX% lockdowns effective period. Year-to-date the the quarter, consecutive strong with and Reinforcement in year-over-year continues in growth execution in and and year-over-year. driven published a and Chemicals pricing mix. And In segment, product enrich Performance very Results EBIT quarterly to finally, to third XXXX market, able our conditions, exceed and XXXX businesses towards energy customer leadership dynamic navigate material achieving continued costs. our commitment execution the our results China, growth is to continued sustainability same across goals. team our market highlighting

outside largest as the battery to factories relationships continue our our customers in significant Europe global the world's the momentum Asia and expand and U.S. region building with We manufacturers build are

The $XX range year-over-year, continued full the driven to For market $XX customers' upgrades to critical growth capacity technical specialty be global optimize for production our plant we Carbons products. by our additional vehicles applications support Battery million rapid up our operational while to the midpoint growth meet the Xuzhou range immediately in with third growth we range strategic completed underpinned a volume with demand are Recently, customer year, electric plant of EBITDA to of in carbons to growth expect by continue the the Specialty million. capacity carbon momentum conductive customer Battery ramp-up to of network Materials. and freeing to quarter. at meet EBITDA of our which this adoptions The Materials facility equates is during The requirements. of across wide XXX% becoming of will our additions network

the technical growth first We Materials. targeted of of Battery which well Tianjin, phase are site, also at in upgrades is specifically underway the our support China to new

Materials carbon dispersion at investments in of will mid finally, Battery online expansion us first capacity above-market give us position at phase the Zhuhai, nanotube our And completed combined a expect the in of expansion enable continue growth July. have capacity will come XXXX. a first We rates. phase to These the that growing capacity fiscal we to facility China

capitalize to three our Materials well-positioned vehicles. portfolio electric the last capacity next we plan transformational are the outlined triple quarter, we we across to opportunity ensure our on to As of Battery years, over

Now ESG moving front. an the to on update

our to includes our published report, which the we Global sustainability disclosures further our report year's This and enhanced annual and to commitment quarter, progress. reaffirms commitment advances Compact. transparency This UN

gas our our we on ambition by net have the our zero achievements the We details achieving focus XXXX. outlines goals XXXX net report following noteworthy The sustainability greenhouse goal are by our achievements. establishing report discusses intensity and ambition sustainability targets and progress of reduction XXXX to end toward made Our the and options our emissions gas achieving of XX% XXXX greenhouse interim realize of by zero for XXXX. evaluating support

fleet of XXXX capturing that low clean great By properties excess achieving energy. end, to evolution a imparting We helping are successful and businesses neighboring energy one we our goal, project test our operating by our in vehicles. an benefits. with against emissions we’re co-generation trucking conduct energy of customers to our other provide our pilot improve units. collaborated XXX% progress to exporting our of continuing transportation significant innovative And zero that operations, see we energy electric products and of made for performance sustainability with to the committed and also provide communities to And that ratio to suppliers We fleet potential carbon to technology. from by finally, develop effectively

scored sustainability products year, benefits. and for their were past the Over XXX% our of new evaluated

to To performance sustainability a to scenario shareholders, Task in aim dedicated the accordance Force climate transparent end, been incorporated the long reporting with climate-related or on Disclosures comprehensive Climate-Related matrix, and and with communities. Financial we provide completed tool have sustainability engagement TCFD our in on analysis and employees we this customers, We for opportunities our and as disclosures risks report. our

with our on pleased front very execution strategic quarter, this operational and priorities. our are the both against progress We

in to of our are in products excited more more discuss quarter opportunities enable the a the results call detail. to and Our Erica Erica? global in and to over were turn helping that about the I’ll the the financial entire now performance us. front to sustainable is team transformation world

Erica McLaughlin

EBITDA the by quarter CapEx strong up Thanks, strong $XX $XXX in in review flow quarter million of EPS Performance then and date by reported we compared quarter, We $XXX start the Chemicals. record $X.XX segment Materials $XXX the with will was the adjusted cash. results. to in discussing quarter quarter the XXXX, record fiscal Sean. Discretionary earnings million and and I third the with was million and in driven to in is results driven free year ended of for the XX% company cash results third million. of Reinforcement

proceeds our million and in rising This commercial of bond full sheet liquidity were to quarter. million. of have be a of the year which short-term We debt refinancing in quarter, maturing a the rates CapEx $X.X bond, of year June our to we as the a resulted net third impacted In and largely $XXX total increase range $XXX to of expense remains EBITDA expect billion interest XX used X.Xx balance strong interest $X the both issued $XXX million to year-over-year bond in The of $XXX XX. repay million with paper. million

yen strengthening The $X the million U.S. of the our addition, driver dollar came the and of dollars. tax compared In as translating in U.S. EBIT business dollar. year-to-date the XX%, rate rate U.S. was the the year, is quarter the in a now due of was against into euro The XXXX. foreign primary fiscal for prior expected headwind the unfavorable to weakening to impact earnings the to from operating which of this operating

XX% which included XX%, rate, third operating the tax rate operating from benefit in Our XX%. anticipated reducing tax quarter was the a from to

results. segment to moving Now

third period the in in the Europe in global the year quarter, to by as The from Americas, prior X% products, improved to position Materials period $XX EBIT prior million in the the XX% Reinforcement margins Higher by demand same as tire in principally the due higher volumes and in year. increased Asia, unit increase driven to same was Americas year, unique pricing the and and During the remained are tightness the in in agreements compared of increased due volumes impact costs Mexico offset Globally, up fixed increased the foreign associated European XXXX X% compared with over market. third in growth and were all higher our to resilience. movements. quarter supply the replacement by Europe demand our customer This largely was higher volumes and calendar as for across X% our regions. unfavorable partially utilities currency

significant growth the and volumes due maintenance to XXXX, EBIT decline of normal the and XXXX Looking to we expect EBIT all agreements due Sequentially, fiscal regions. seasonal Materials both strong effect customer expect activities on our to largely report from the impact to to quarter volumes. European across Reinforcement we fourth year-over-year

$X We increase sequentially to expense in maintenance by quarter. fourth the approximately million expect

period partially higher $X movements. We product in increase margins to by driven the and and in battery costs applications our unfavorable were and as materials continue XXXX. unit and volumes turning as to same of we fixed XX% offset increased Now result associated product in compared demand. few by quarter by currency higher improved higher products Chemicals. as driven These pricing the third oxide to carbons by growth noted the in lines impact The battery Performance Sean mix specialty with fiscal of a growth sold million higher see to EBIT materials. benefits was as utilities increased foreign impressive volume in of metal EV delivered fiscal

seasonal normal look driven our our in growth to and battery line declines we the growth margins. fourth to lines product expect ahead volume by unit and strong maintenance strong and materials be year-over-year offset EBIT strong higher higher product levels volume expect volumes Sequentially, more than quarter, carbons As by in specialty we spending. of we inkjet

fourth expect increase in expense maintenance sequentially to approximately by million quarter. We the $X

allocation going we’ve Now framework moving our committed to the forward. capital We remain to shared priorities previously.

prioritize funding projects we be able our and investments will businesses, to cases confidence, in particularly inkjet grow fund expect we’ll The battery packaging. We growth operating compelling company those on high and in our with that the return growth cash high focused flow. to materials are have business we these

about think projects greater. these the of fund projects, for we IRR we of hurdle an XX% with As type or usually rate

The enhance of businesses growth We attractive acquisitions. in also existing area look areas focus that our to our be vectors. will strengthen bolt-on and performance the execute

in and that for expect The acquisitions excess see ROIC to are positions where in criteria three examples. growth Sean strengthen in opportunities are investment are earlier good accretive of margin China our businesses recent in we competitive first the to Our enhancing that an discussed years. WACC our and five and

industry dividend continue expect We our yield, to repurchase opportunistically leading we maintain to to plan shares. and

Sean. believe both back the the call dividends do a shareholders now million grade with in all quarter, can of XX balance third turn healthy million paid this our We share we During and we to credit the did and sheet $XX over purchases while investment to maintaining of I’ll quarter. rating.

Sean Keohane

the and performance. and performance and at environment. Based of and Thanks, $X.XX with and another $X.XX previous pleased in are the reflects range was expected that to results performance truly $X.XX, our the execution our of a adjusted up quarter, what we’ve of in the strategic year in our of quarter, tightening record exceptional of that fourth midpoint. company on strong of we I’m at $X.XX strong the made is end $X.XX choices earnings This for we outlook our to our high challenging of the share to which for the per Erica. full commercial recent In quarter operating expect is our extremely years. be continuation outlook value a operational fourth guidance

to typical is shifted as requirements. have outlined, year, market to over and excited to particularly the on reflect time, also remain this our have customers security a are led as of industry as transformational volumes the I support with change and rate and the of quarter, Our our necessary represents We turnarounds address about Negotiations customers materials fourth expectations. that same across of vehicles. seasonality double results customers our some our tire momentum the will key to with Erica both XXXX third order reach we and as our to to that multiple very from higher electric the the quarter pricing we’re traditional in materials. environment XXX% to At maintenance growth volume on aligns us midpoint agreements fiscal year-over-year inflationary than making global focused supply. year battery global the increase. years with earlier the in investments customers track for and vectors, the This regional win at several capacity be automotive regional has undergoes outlook the continue EBITDA grow these approximately battery begun

about Turning I’m the the of to market excited longer outlook. businesses our and the term. positioning

less of is and China factors. Materials to that cyclical has normal we was value and stabilized this entire past expected we be a migration very migration business XX the believe the out to chain, years over terms are regional new Reinforcement following structurally the Our for The but played in in is disruptive stronger tire tire production. to due

more supply on customers on material coming growing given and regions driven model supply mature the region. business was for is even in very editions This chains dynamic durable in supply no by preference are announced ensure built Our making There selling and security. fundamentals, is regional our supply/demand to side economic the but balanced.

tighter, Ukraine. only getting In given the of fact, Russian invasion this is

Beyond to these that customers the years we have as commercial to the the laser of include recovery, to energy structural business. Such for of A of formulas improved a over and profitability initiatives and changes on structure range ensure market eliminate focused broad to several of dynamics, operational our and we excellence better ensure initiatives operating we’ve and commercial lag get structurally been last the carbon to remain that investments partner value. emissions. of improve our and costs, yield performance appropriately plant change step our economics in reduce them reinforcing and value strong choice paid practices deliver matching

industry growth Our landscape structure digitalization. of changing and tailwinds an the attractive Performance connected benefits and new increasing compelling the by sustainability more for becoming portfolio Chemicals focus a through of by on and is driven from in macro trend world products poised ever mobility underpinned

battery inflecting, Day and We’ve materials, this that in As growth expect our trend years. Investor we win. growth outlined December across few that volume behind this particularly vectors to great next are transformational we of investing set over nurtured XXXX, strong the a segment we’re

free execution very now fund flow call the shareholders for us session. And our our you with question-and-answer our for growth over and compelling in finally, customers capital And pleased I progress excellence. tomorrow to discretionary today. strategy. creating Overall, and the ESG return to will leader very investments strong strong we’re cash and and for much against turn Thank I’m joining for shareholders. a by recognized expect We our

Operator

Jeff Our [Operator JPMorgan. Instructions] from Zekauskas first question comes with

line Your open. is

Jeff Zekauskas

very much. Thanks

of agreements some volume manufacturers simply You also that multi-year commitments? were that or – price over were said period contracts with negotiated you multi-year those increases a tire part they

Sean Keohane

increases your Those agreements. where agreements Jeff. Hi, we is of price into years in both entered the Sean. were This

Jeff Zekauskas

in lower? same year higher or they than or the the the in first Were second

Sean Keohane

and and and leadership in remain customers think security I I really stand it. supply And That’s can’t these reliability again, I competitive But say is we’ve that’s intact about and that putting supply out. reached. an can remains emphasis information, where that Jeff, what agreements a we’ve the dynamics structural really disclose the premium think environment the factors which that case we I ESG is reflected on talked and the on really placing

Jeff Zekauskas

nine There’s not really much through first flow the months. operating cash very

bit. Your a up have moved inventories quite

talk So so fourth flow quarter? you much, if can your prospects receivables payables about the really not in cash

Erica McLaughlin

It’s Yes, Jeff. sure. Hi, Erica.

Jeff Zekauskas

Hi.

Erica McLaughlin

significant in the We’ve had flow being driver inventory right. biggest working The You’re and balances. higher position. a material increase the receivables pretty the cost that both the capital raw through

In suppliers. have terms of we short terms material with raw payment payables, relatively

balances. not those is in that So as resident

which significant is increase say weeks, now to We usually it we seen come do borrowings you would So seen fund as is a pretty balance I oil in done this starting we’ve as to short-term impact down And that. do we have we with more sheet that. oil would have that see fund is a in diminished. what have rises here. the bit as recent

you the of comes it So immediately see If if oil flat, following values, wouldn’t quarter. in and usually more increases. inventory a in then the from stayed benefit lower have down, further we’ll more

the through the prices down as P&L. So reset flow inventory happens back as to the

So we wouldn’t see that’s significant rose this currently. amount dramatic unless again, a not increase oil to what’s happening continue, expect but

Jeff Zekauskas

business? can talk lastly Then your volumes in specialty black you Okay. about

Sean Keohane

think volume Yes, X%. the I quarter think solid we up trends disclosed, in about were as I

the environment I so of China COVID given think sort in around like, I lockdowns think solid a rolling very dynamic that in And represents the performance.

of it’s also portfolio, front this quite well applications. diverse we’re across geographically. And application both the represented course, and portfolio very a Of on

quite in on think, performed, current the environment And so front. well we’ve I the volume

Jeff Zekauskas

EV X% include growth? Does that the

Erica McLaughlin

quarter. the includes X% if additives, try carbons, X% more isolate a up specialty performance which was does, it’s it we in yes, to Jeff, like EV bit

Jeff Zekauskas

you much. Thank so great. Okay,

Operator

with next UBS. Josh Our Spector question from comes

Your open. line is

Josh Spector

I And talked can into on apparent is, past about if and do detailed there out of guidance this terms some in business. the of quarter more the the five your I higher been in you for clearly called a from so also some seasonality my quarter, of the of has not up years, sequentially exacerbated me drill mean, question. if a ask it, Thanks to Europe. there’s year impact or the looking guess, because the just third maintenance you fourth bridge I Hi. to three bit at for taking fourth performance fourth seasonality, to sequential what Yes. quarter it’s readily you into maybe walk wanted me selling EBIT quarter, in impact

would any So Thanks. color appreciated. be additional

Sean Keohane

Josh. Hi, Sure.

of demand – especially we progress to terms battery we continue in our outlook, in So materials. continue we into and see QX, strong reinforcement as materials

And so current again, expect trend this we continue strength of into to QX.

number help out to and a be As called might QX customers $XX we in typical turnarounds. due annual related profile conscious her about incur in compared million to than a is to push support remarks, This into QX. maintenance as decision expected maintenance turnarounds, demand. of is higher The higher QX more are expecting for site volume for need maintenance to QX our what to to Erica

decision expense. fairly suit in It’s of the a a business business QX. that’s Europe swing of then level, And conscious the at see summer our most there, shutdowns. material volume in impact but a in seasonal So volumes maintenance because pronounced typically to does

at plants flow see historical it’s time in more you pretty very Europe. we’re familiar in typical period long pattern and probably expecting to over of You’re would that very, through seen a with that manufacturing summer And we’ve QX. extended that shutdowns

from are typically pronounced the again, a What QX be are volumes. QX QX that’s is the Christmas the volume be higher you seasonality, a the then quarters QX adjustment quarters And standpoint. and that seasonality, lower a seasonality. would Europe. in and down volume from summer which most Josh seasonal and is So the standpoint, would QX see and The to QX our

we’re point the the is on did pattern historical to tax that QX $X.XX that results about out might expecting that see in basis. the other up I catch I guess increase call that EPS an quarter. by in So with here what QX rate the is

you higher up, the the the sort tax look from you rate of impact squarely maintenance, that in catch I and sort at when think particularly expected there. historical Europe seasonality, So gets of volume

Josh Spector

That’s supplying sustainable if guess stack, I share? up, year of choppy volumes? gain I say Okay. you just Are it’s out that I the couple guess mean, that supply Europe? supplying years, been how strength of next specifically, is more little stays getting other helpful. your I so a construct you Europe a And into regions did really place? more spot follow there in to two-year you volume But Thanks. a bit kind is mean, I on and Are maybe you this guess, challenging. XX% would volume what into drove of growth,

Sean Keohane

given higher supply in XX%. from And but in as a region, impact the in invasion. Yes, said, dynamic contractual grew the now, the on customer increased region certainly Europe of to as so is from due the volumes challenges tight environment Russia Europe inflicted well remains agreements Ukraine, because invasion as XXXX this right Russia spot you this year-over-year our is the volumes given the volumes region

know, balanced you now. structurally and so that As even to market a was prior very more

So some harder volumes a customers And were as well connects push we to the for up picked have the into QX well. maintenance in here. ran looking volumes. our quarter little out We because this as additional

we our more a position, regional supply Europe. being about there's very of on think good We in here, put for think So growing priority I that. feel preference even a

are as And XXXX. we that should so progress position durable secure that to pretty regional therefore, is that looking be our view customers And supply. into

Unidentified Analyst

Okay, thank you.

Operator

Our next Loop Capital. Chris Kapsch comes from question with

Your line is open.

Chris Kapsch

supply characterize hoping I on morning. was further into more wondering granular momentum could you chain. commercial there traction good business. if you're the the little I'm Materials and EV seeing a Battery the Hey, feeding to get

sort manufacturing or for then the portfolio they're of to all the your – skewed And currently may or conventional you investment other sort that. other are global take or I than world-class conductive and nanotubes if carbon these there's that if it footprint, is any part across, other? aren't balanced customers one carbons Thanks. that your innovation solutions traction asking guess, or address or curious asks and your presumable of needs? that quality wondering Just is and of just just towards those from some I'm that needs control

Sean Keohane

Yes. thanks question. the Hey Chris, for

So pleased growth in our this behind Battery we're strategy, the against with I and transitions. auto very and we're we executing as remarks certainly, well putting out Materials, here our to very called investment very, win think in the performance the as industry

So of here. pleased execution and of the are with expectation called running sort full on where Investor we're really The the out we our results ahead for year Day.

So early on blends. here, here. that the is we're running a little continue of bit carbon ahead our build to as belief use mean, conductive key customer momentum wins I additive

quarter, So of And talked one of best this is conductivity. conductive carbon among carbon is our And the we that blends. blend a portfolio carbon and you that direction conductive in. producers blends conductive unique be last the and short-range adopted moving get is manufacturer top and both really to that. battery five would because and long-range about black of chemistry has still additive And see might recall that nanotubes we needs battery here industry the think carbons the is optimal way building momentum the CNTs we

front, So our strategy. That's of continued core which is traction that think, to sort great. on I

bought CNT business out the and the well. in of that's reasons China One I playing why we think

continuing out are that. through to pretty outperform compound We're As XX% to in rate of we course, balance look significant a certainly this to decade, forward expect expectations demand. for XX% CAGR the annual of market here, growth

at our And talked so Day number that target. we about remains the Investor percent XX-plus

the on critical so customers. think having and a front, And very I here. there supply, and our Most Asia-Pacific will be Europe very right now market. the coming proposition the the industry are But on And weak on we're footprint will plants at out role still about well-positioned playing that of build customers that chains. focused in very U.S., think of regional for coming key XX% are under with time. China stream on building global construction I are with and part of over focus, value this is in supply think, there I a

be we'll to requirement support that our So investing alongside customers.

really good are feeling footprint about So here. where things

to investing our support be So we'll alongside requirement that customers.

good certainly on feeling one. for invest where to Chris. a but transformational transformational really real for think And this a So one and things to we automotive opportunity are, about well, Cabot industry, win as intend I the

Chris Kapsch

color. Reinforcement the the appreciate conversation one follow-up And Materials I around agreements the the supply have I quick business. on in

the next talk talk I increases could increase the I'm magnitude the of obviously, this calendar just vis-à-vis got in years. of and couple XXXX, you concern things middle just about because don't for the wasn't, crisis So about you there understand back of XXXX increment magnitude price coming security we're you the of want about But the price to the that for supply. into calendar XXXX. XXXX, in of acute there Ukraine in an asking as sort the of – wasn't

– global they have North vis-à-vis Europe deals but America? if already, skew wondering Thanks. there, towards just the are those tire it. that do color So And in those assuming that place translated appreciate I'm I into increment? do bigger a Any you players,

Sean Keohane

Sure.

mix commented both two-year on, the have we one so as year customers mix have of the reached one-year is them two-year price far, that as terms But a and even here market agreements set Russia. think to this earlier terms the in and of in well certainly, agreements Chris, increases are price certainly, year, on, tire agreements. up the this and customers you years. pronounced regional acute of So And also for that of I and the dynamics the the this to as global supply. supply are and more situation. embedded a tire reflects Russia-Ukraine growth the in structurally they and they And related dynamic increases in it's in prior for outlook the the given commented even And was given preference regional for only more industry I become and

Obviously, as tight wrap try security to definitely I on that we show in and feel middle we on I the as supply the certainly, up for supply and for With XXXX. always last that think of seeing a do magnitude. But about are very the And comment remains talk distinguished you're But some the November through can't reliability. that we're over really market call, in years. on Cabot XXXX. we customers has here. as commentary premium and provide And to negotiations. very still outlook So several we into outlook respect good the about putting on visibility itself that front

Chris Kapsch

Fair enough. Thank you.

Operator

from Jeff Our JP next comes question with Morgan. Zekauskas

Your line is open.

Jeff Zekauskas

States much. Or any very in about capacity expansions you expansions the industry carbon Europe of in outside Can and Thanks talk major United India? in the black?

Sean Keohane

Yes.

and players investments And get down from landscape. of China a China continued of both my China, a big competitive sort as I the rates of Jeff, single-digit there That's established in the the the double-digits part some the sort consolidate. players reordering you not in the their and will see So that bigger of bigger is surprising restructuring seeing what in number term investments what China to the for as number shrink time a growth very mid would you very, have of really are be in long in moderated GDP of see India. players, more view, longer capacity probably, you're think players, typically

of let’s That's to as for investing there's sort players China. happening minute. smaller capacity. the as that at certainly given to off is the China structure transportation the beside of put VAT looking into price, move China so tar the cost then you And how landed the in that in bigger region, export substantial a would characterize I because is the highest players But supply table. fact what's security a structurally economic And think trying just for fall the another costs, higher coal well basically, stood out see cost China export I

these in investments by would announcements, invest. respect by fairly nothing And [indiscernible] particular. to large investments China there been China. there India I With here. So to India, domestic are I well some really continues and there as I have being generally new a mean, player is market leading a in [indiscernible] think for say

of will into historically typically that what flow India, Southeast mostly product Some of Asia, seen. we’ve areas into outside other

investment situation. an pretty I if in a that see continues But and on the is balanced very happen. picture, our Poland think it. And balance you and probably constructive tight what wouldn’t motivated a surprised did by that’s there. They picture market is think I that so be announce pretty balanced [indiscernible], But to view I the pretty on is and and again, Russia

Unidentified Analyst

the of to black or plan over rate you next years? United Europe capacity expand Do several that. And sort utilization in those carbon areas? in for the States roughly your Thanks what’s

Sean Keohane

Jeff. Utilization rates high, are Yes.

been running they’ve tight in in pretty or of is which kind this industry. XX-ish percent, high XXs So

want supporting continue. growth battery expect have the that to in we to we there continue U.S. we materials. And Materials, certainly from time investments requirements. sure. as business both to and respect respect to be priorities allocation around Reinforcement Europe for to so, support that our in that then growth standpoint, a definitely And we’d capital with over situation will growth here customer’s And capacity, With support to

is can drive the And what OEE so our throughputs call first plants. on to – focus that uptime area think this is is Overall Effectiveness. doing about This the in you the we and the up or Equipment

we’ll has to be that pretty push then opportunities continue always debottleneck that. that and And to runway And tend capital efficient. there’s do every further so plant to

the And so next priority not that that Europe, to for I area then units growth. there’s or think whether be of Materials be to And on customer’s seen. would Reinforcement the remains new support our work in would question we

runway – to from how things And years. other these certainly we first, would I we think few that we’ll settle see see out two the work have think there. over we provides good and next areas then growth

Unidentified Analyst

material In that a seems European exported to That was in from grow high the like growth Europe? operations number you themselves? very mean XX%. Does quarter, EMEA into your that

Sean Keohane

from regions running maintenance at not certainly And into OEE. plants into did customers. Europe. very of our moved have our in terms level as to good bit we other import a support also earlier, a We we some mentioned QX Yes, I little

little customers higher the products. that, the factor onstream our So in because was of quarter needed a because

that two that XX% So Jeff it’s really number. grow a by combination factors to allowed of those us

Unidentified Analyst

power that all maybe Erica. cogen in In lastly, States? in discuss sales from of and that sales to you there’s could Are the profit? byproduct the United byproduct – And grid is cogen the for part are sales. then Q a And maybe discussion of sales

Erica McLaughlin

is, exactly just Jeff. but not So revenue what revenue steam the sales, the it saying, the you’re is is byproduct what cogen

we energy the the world what the comes what is centers that’s increase in call basically it that that And So from in increase the happened. I prices our energy that think is. around have

is sales year, the the the last just sales Over number.

So there is which be what from a those, cost cost associated is sales. as required GAAP is would But with running embedded in the profile. disclosed our

Unidentified Analyst

margin to relative What’s margin? carbon or black? like high it low it Is

Erica McLaughlin

stream us. moves think the is based energy. of it I it’s mean, I good on bit It a a quite No, profit around good for price and margin a Yes.

So why we have and them. these are investments profitable made

move we depending are good, at is in given steam they a they might the price do but price as that a on country, electricity sell So well. quite around what either the bit,

And either a natural connected oil price. some type are to or also gas

Unidentified Analyst

that does And mostly? Reinforcement flow through Materials,

Erica McLaughlin

plants goes carbons carbons we to specialty a but have where that Materials, specialty well. Reinforcement also there’s as Mostly piece

Unidentified Analyst

you Okay, Thank great. so much.

Operator

Spector next Our question Josh with from UBS. comes

open. is Your line

Josh Spector

for Yes. Hi. Thanks taking the follow-up.

Chems, the carries curious, startup, your So Performance pieces Performance of the all What thinking at And of your look moving how guys in volumes the I the are volumes I much higher had quarter? guess was outage Chems next startups, just fourth you in site. giving battery like that year? forward year you into Belgium last in

Sean Keohane

Josh. Hey, Yes,

so Xuzhou see commented, but continuation new did volumes the in and became and impact shake the plants the material which usually Chemicals in Performance down will it respect as we get batteries, not kind quarter. commissioning we which the a or everything the is So across well, speaking. quarter, working in operational growth any really really two broadly With higher up, of of plant, to to starting It case. QX have on month was also takes

what a customers in qualified go getting startup where is Now happens you’re they ramp new normally through a units. the on

feel likely slower experience, And our over the in the little time given is than continue. ramp COVID customers ramp adopt you multiple expect to generally investment. about that a off here China, line, in a little this COVID which what of the and historical challenging so bit new quarters that pattern new a is It we’d is be we this really then that will simply to see moving a situation qualify line But definitely dynamic off product good more getting product environment. China around

our in feel Of course, really it for to batteries. carbons immediately we global some network how support also But good going unlocks growth about that’s capacity across the specialty application.

following ramp see and the that up in to you’ll QX begin quarters, Josh. So in

Josh Spector

guess. it Okay, more I thanks. explicitly, I bit Maybe could a try little

kind realistic range quarter. to up you year last something two I Formulated in say and As headwind normalizes teens a mid can not? these the the year-on-year and of Solutions some being year stack, if and guess, in fourth that had at Is I volumes get or I from that look projects. of the growth you new calculate

Erica McLaughlin

Josh. Yes,

I So think right. about thinking it, you’re

think the did one year-over-year plant quarter. on QX numbers particularly specialty compounds, I substantial, have of we the pretty offline for that because most

If they the you year-on-year, for sequentially I’d QX. because in QX, in is inkjet this the were flat as Formulated did back say think Formulated plant it And volumes bigger third Solutions online Solutions QX for driver have quarter. about saw to we roughly you that

pickup you’re less significant plants story, online. given it’s yes, the So a of there should but be looking a pretty year-over-year, as sequential

Josh Spector

you. Okay. That’s helpful. Thank

Operator

Sean to remarks. call further no closing are back to over like questions. turn There the for Keohane I’d

Sean Keohane

joining to support Cabot very of and for you have look forward we much for a thank Well, continued Great. day. today great your and Thank you.

Operator

program. the concludes This

now may disconnect. You

Cabot (CBT) 9 Aug 222022 Q3 Earnings call transcript