CBT - Earnings call 1 2023 | Cabot Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Cabot's First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference may be recorded.

I would now like to turn the conference over to your speaker host, Steve Delahunt, Vice President, Treasury and Investor Relations. Please go ahead.

Steven Delahunt

Thank you, Michelle, and good morning. welcome the to teleconference. Corporation like would you Cabot to earnings I me CEO President Executive Keohane, are and President; With Sean McLaughlin, and today and Erica CFO. Vice

with XXXX, our night, Investor Investor the Relations replay on call. website this of the slide our quarter Last call results The section which and for portion website. available that released of posted of we Relations in fiscal the will the deck copies our in is of are available conjunction first of be accompanies also

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

in ended available are September made XXXX, filings regarding release in by all factors press the and night subsequent which company's information we XX, year XX-K also last these for fiscal SEC, on we our the appears the website. and in the issued Additional of

end measure night call in release earnings website. most the our to this greater -- GAAP that refer available measures directly our at Investors the reconcile certain regarding in GAAP to last comparable of and a to the provide referenced financial transparency operating our financial we adjustments table measures on The issued financial performance, non-GAAP non-GAAP non-GAAP to results. section results involve order In of

the business Materials. the to call ESG some Battery details. along to turn in some now corporate will our results, will Erica of respect in will and over recognition area our the who with segment recent first progress and discuss with received I highlights, Sean, company financial the we review quarter leadership

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

Sean Keohane

Welcome call guide full developments and they remain results in you, with our on Steve, track. I'm ladies informed in our with our quarter year were that good expectations the to today. strategic as pleased first and gentlemen. line and morning, Thank our November

our result, of $X.XX. full earnings As share confident reaffirming per guidance range in and are to a our adjusted $X.XX remain we year outlook of

per to elevated In we headwinds, due most of the first of significant COVID adjusted China including Performance quarter, softness $X.XX of in significant levels value demand lower customer in destocking Chemicals. in outbreak, share delivered end despite and levels chains key across markets fiscal earnings

the Materials up structural was EBIT tire improvements years year-over-year, recent market. replacement the Reinforcement the in in and we've demonstrating resilience XX% to the made of business

back value with and concluded also customer forecasted proposition our underscoring November, than originally supplier entire We liability, of Cabot's we in contracts quality better pricing sustainability.

the strategic on Overall, positioned progress, and front, with of for year outperform Further pleased XX%. we we company to continues very of is year-over-year with market our are Battery growth. another volume earnings the growth well strategic the believe Materials

ESG Our in continued recognized leadership to be the in quarter.

proud of one we were of in most year America's fourth Newsweek's This list on this recognizes performance First, named by governance, companies. environmental, that Newsweek and the we're we've and responsible of included the as very strong social areas which been our consecutive recognition. is

performance. one XXX addition in were ESG we strong in the list Daily and best Second, to The Investor's fundamental companies superior ratings companies named as technical XXXX. by with recognizes Business of stock ESG

companies established but And not diversity celebrate that top finally, Plant-A and we recently workplaces. by Group. X,XXX of Diversity Insights have the Workplaces policies in that Newsweek list been XXXX cultivate U.S. recognizes the named America's newly Great one inclusive for implement This only

our We fostering across as employee continuing available. increasing is score, highest the goals diversity diversity as development to supporting to look all inclusion a in representation of our received encourage testament recognition a advance diverse X-star This promote to to forms. well efforts Cabot recognition and our its and company. forward

central updating is motivation our on forward sustainability acknowledge to the forms to our look further our source our for our and in of I external space these you progress progress employees. strategy journey. of recognition developments and of Leadership we ESG on as

quite expected over materials the believe electric fraction the Materials XX% the additives, driven growth XX% a quarters, next the Battery annually of conductive accelerates the is transformational our demand grow EVs as growth of for in I expected demand to about few decade. bit outpace penetration talked as critical today. Global for last a sales opportunity Growth of global to car from over is ion lithium by a in growth U.S. in it in I've carbon small and the range vehicles Cabot, for represents is battery to batteries. as such potential what

by U.S. is build-out supply recent accelerate announcements battery domestic a U.S. growth of government the chain. to targeted aided The EV

As grants, form of these and governments of state and of Federal the part loans a incentives. implemented variety programs efforts, have in tax

conductive carbon investment planned the additives This facility States. To next our part our the plans in program announced X an meet expectations million recently the Texas located $XXX over growth capacity add approximately customers, of investment existing in to Pampa, United is we at of years.

combination capacity Pampa customers In for nanotubes offering the in blends, critical also our and performance carbons to conductive expansion, addition also we a intend of new investments customers U.S., carbons, in will CNT support These carbon together flexibility. the capacity will invest bring optimal to conductive which of domestic supply. need the and formulation powerful dispersion the our

by growth additional communicated an XXXX conductive from in for XX,XXX investment driving December approximately for metric XX,XXX our During program capacity, carbon are thereby outlined on XXXX. would CCA add we XXXX XXXX. that XXXX, beyond. through Day growth capacity approximately will the expansion tons target The add of Battery and projects tons capacity of through These metric track Materials of Pampa and support plus XX% Investor completion the all of

our in advantage We At customers currently the CCA line Materials which an but also Battery Europe space. security supply of in Cabot Asia, largely are for our which many transformational gives have extending competitors, product capacity the with U.S., over Asia Materials provides position several Cabot, we've and in operating have Battery region. years been building established for out this been CCA leadership our and

Our the us capacity our from to opportunity demand to sharp expected global customers. in ramp expand the footprint quickly meet gives

At sites assets in on China. either or upgrade Cabot, have Materials expand to Tianjin, doing we produce existing as current currently the Battery to flexibility products we're

and track directly supply the ability capacity Our is regionalize that up additions this chain. Cabot, to and customers quickly value their material record to in imperative scale our supports something

our people in planned the support electric transition investments growth on are believe fundamental the The broad network customers the of with our talent the along of to our to vehicles. step positions U.S. another our here strategy offering internal Cabot combustion CCAs engines plants uniquely to our We existing of in of from and capitalize expectations

investments planned solidify electric the transition will global leader Our and as Cabot support Materials. vehicle in help a Battery

to segment now and Erica? financial Erica turn over to performance. will it discuss the I

Erica McLaughlin

will the Materials and quarter I for the the Performance of the first $X.XX with fiscal discussing XXXX growth in was declines earnings segment quarter in fiscal to Sean. offset Thanks, of share compared Chemicals the Reinforcement for $X.XX then start segment 'XX, by results the review Adjusted segment. -- company per with first quarter results. in

$XX is foreign impact just be unfavorable majority higher by unfavorable current impact first the fiscal net million estimated was also year above million. with The year-over-year and of $XX quarter currency now half of million impacted interest to in of from full the of exchange expected comparison be The the exchange year-over-year $X expense foreign the to year.

expense. Our year net $XX net is quarter, million expect higher and year-over-year expectation interest we for of the last unchanged from

oil cash. cash expect free million the million. capital a looking And in million quarter of over source of be of based approximately flow Discretionary was quarters was the ended the to million, $XX ahead, the the and quarter fiscal prices, the cash curves capital of a on of forward $XXX X use remaining Working year. working we of in with we cash $XXX quarter for $XX

in the total XX, sheet of to remains net million. with XXXX. was expenditures million, expect approximately X.Xx $XXX $X.X billion, The as be year strong of Capital debt-to-EBITDA $XX liquidity December balance of full CapEx and we quarter and

rate tax for Our will fiscal rate XX% XX% and quarter, XX%. the the anticipate and be between operating was we year

Reinforcement Now moving to Materials.

to $X million customer driven agreements, compared improved in higher lower impact Materials The was by pricing During calendar by by year. for period increase currency the the and year as partially increased from prior margins Reinforcement first X% XXXX quarter, unit EBIT $X in same the quarter. our a product million offset and the unfavorable in mix volumes foreign

in outbreaks effect the the largely quarter regions in destocking first in Globally, to year, COVID-XX compared prior due the period X% from of as normal of X% the volumes in China. volumes in year-end X% with were Asia. of excess and and same in Lower Europe declines the the impacts regions seasonal Americas, all were to in in down all

improve XXXX. X to our such sequentially is of on of to quarter benefit the energy to now we and the and cost million million to benefit, XXXX a we in fiscal per XXXX, as which the million a expect quarter updates both mix improvements net EBIT foreign year quarters Looking pricing impacts. of product revenues second approximately based center The year-over-year inflation, year-over-year our see approximately customer Materials expected the $XXX benefit calendar the of currency finalization and due outcome results customer contract from agreements. This annualized $XX the and offsetting expect be over to in net fiscal $XX factors of agreements to Reinforcement

and the outbreaks. the expect COVID-XX an volumes on product and from from margins the unfavorable we quarter, pricing impact China in Offsetting second the benefit in mix

represents to volumes, $XX XX% the in second to the As be in $XX approximately you million China we the of segment of impact range in may China estimate recall, million. quarter total and

in return recover normalized the to of to more volumes to Lunar half in anticipate after and second Year the the We fiscal year. holiday levels China New

expect double-digit year recovery sequentially already and will to in and in January. expect see results We percentage started in quarter second we growth. Americas, increase impressive we this segment this the the deliver Overall, having of volumes another in Europe

compared decreased Performance $XX the period was Year-over-year in XXXX. from fixed currency volumes quarter The in in decreased costs decrease quarter capacity Chemicals. EBIT adds impact to fiscal by in quarter. the X%. volumes, turning unfavorable same due segment foreign first higher first million principally to fiscal Now by the the as an and lower to new

and of in key battery and volumes XX% levels oxide markets by another volume fumed COVID-XX declines elevated compounds with strong outbreak offset destocking, the softness our year-over-year. up XX%, metal in growth and in product of specialty volume partially quarter the impacts to to year-end XX% These by declined from lines largely materials China. carbons due end Volumes in were

Materials Battery new increased China And our for driven specialty and Belgium. adds, $X compounds including online in in Fixed came newly our China. plant back by capacity the Tianjin, Xuzhou, costs plant by specialty the new acquired million in the quarter in carbons plant

the In was addition, year-over-year U.S. translation $X impact the unfavorable stronger by the quarter. dollar of in million

the quarter improve recover. our comes to to ahead we to across expect volumes destocking begin key end our of lines fiscal XXXX, markets as Looking larger to second end and product an sequentially

in improvement January seen from product the in have of quarter. the the experienced first We month our levels across lines

However, to we due Battery largely volumes from of on expect in outbreaks Materials. to quarter COVID a lower be in year-over-year quarter continue China, growth by another the to lingering partially basis strong offset effects in the volume second

translation. the from second growth currency be costs unfavorable the to investments impacted and year-over-year expected higher to related of and increased in impact capacity is foreign EBIT also quarter the

the of expected oxide product $XX second These addition, we approximately fiscal we each million in of do are benefit ahead a basis to year-over-year second fumed in realized $XX headwind a metal our million from the of quarter. that In XXXX. items see to of materials for in line the expect price total be not a on raw quarter same increases

year, our As fiscal half we levels. back quarter to half larger product continue of to across with move to the lines we the to the second XXXX of improve volumes each second normalized expect more

half second the year. vectors and substantially as demand step for the the in packaging will also contribute to that We battery earnings our anticipate materials of up profile fiscal inkjet the growth

year-over-year half first the year Overall, see the expected weaker the lower the profile. segment EBIT from volume in is to of

growth vectors, As improve our across EBIT the year. in anticipate the product volumes lines year-over-year to be half the of stronger larger and the we second in momentum continues

back call the Sean. turn now to will over I

Sean Keohane

Thanks, Erica.

Moving to XXXX our outlook.

outlook for feel As the growth are Cabot which per midpoint in we of share drivers $X.XX strategic I good opening the remarks, and year-over-year. to is about our earnings my $X.XX, up the range of mentioned X% reaffirming at very adjusted in

EPS power growth XX%, reflect of midpoint full implies earnings which structural achieve in rate the a the step-up Looking the in of more year X year-over-year closely of the guide, at quarters the to another the company. would of outlook last

our has the remarks. covered that terms these outlook, underpin assumptions key her of In in Erica

the think we with quarter quarterly the up accelerating move second year-over-year are As the year. down be of earnings, but results as about shape through expected EBIT we sequentially to

We earnings per year half fiscal of deliver share. year-on-year will expect the second that the adjusted higher

a regional supply-demand dynamics had drive segment. agreements, year the the EBIT quality of both and key a earnings our to strong year At tight We XXXX develop importance Reinforcement reflecting our the are and customers. drivers expected. strategic another double-digit our will growth to expectation Materials of to the for Reinforcement growth sustainability we in This Materials calendar as level, of customer tremendous outcome continuing

million, be in year $XX $XX up range In XXXX. Battery to expect in fiscal $XX continue to for EBITDA from to Materials, XXXX million million the of year we fiscal

investing the transformational excited and that shift this for are EVs growth We secular the presents by strong are potential to behind trend Cabot.

Chemicals Performance over strong normalizes year of as fiscal in impacted grows term. first year, in by longer demand of the enable the the half recovery demand will external while second then growth the is environment a investments expect And the our half and we

very in Overall, today, year. the pleased positioned with outlook the confident how for I'm company is I'm and the

built Creating strategy very executing Tomorrow reshape and is transform are valuation against Cabot. to potential for this We of our well grow, and the strategy,

that session. joining think Thank now for And call I very will our for over turn I you the for now. ready much today. us we're Q&A Michelle,

Operator

from Deutsche Bank. with David comes Our Begleiter first question Instructions] [Operator

David Begleiter

Sean, you Chinese in in the guys reopening now right are terms Lunar post New China Year? what seeing of

Sean Keohane

through December really and the COVID certainly a as had and think in But quite Yes. on activity well, David, know and chilling the has Well, period, China. just COVID an demand as a on policy fast you I the pretty China consumer burned change result, that effect was abrupt like. in

happening Year, of domestic And sign. so as in out of all, a coming positive think, Chinese a kind was ground which on a of we the level New was, see of lot of China, in high there what's activity first travel I very China,

consumer about seems we're strong. the and and think and is what from I that's it then People that our think and are team has up activity quite ground, hearing And the I on out picked that's positive.

Chinese signs think weak because here, the the and that, in the progress certainly, the quarter year. month January I So New falling through in here this COVID as quarter of terms expectation we support infections that. the January of progress was consumer that is activity, the and as Year holiday just through early But will we move certainly

that's the most half will be normalize more lines what level. And volumes folks, we'll things and most up the with then in expectation, expecting. normal of think see I our So year, economists back are our that at

for a expected I range. confidence the GDP growing think the year pretty there's a there's in percent X-plus -- level around the of

COVID long quickly, demand and a think burned think and stimulus probably having a actions China, COVID right pent-up and in prevailing in through the I there now frustration period seeing lot from of I pent-up I a we're That that's speaks But David. be with what bounce. and that to seems view. very place the to think difficult now, are pretty

David Begleiter

your $XX to And of your some good. the million? I to million XX%, given strong up, $XX guess, on EBITDA upside is there Very year start this volumes just Materials, Battery to forecast

Sean Keohane

I from would strong is million say the a $XX million $XX $XX obviously we that number, million the to posted. pretty up

good given, I about, communicated number that XX-plus than we higher the but strong pretty Investor we that feel a percent we've Day. think So at guide it's very and that

invest we're continuing to a So one. this behind that's very I result, strong and think

I showing our carbons the and product the capacity value is with conductive support from quality, proposition ability the to have, only not we customers think the And of through, that and really range our regional ability then CCAs CNTs them expansions. blend to

of over I years. next think the theme will here the couple be that

So David. we about feel it, good very

Operator

from next UBS. with Our question comes Spector Joshua

James Cannon

Josh. spreads with black had carbon the in Cannon impact that wondering James just seeing? any for the you're was you've on has is I seen about, on This disruption China,

Sean Keohane

black... Carbon the Sorry,

James Cannon

Sorry, the reinforcement spreads.

Sean Keohane

I see.

the as impact. $XX Well, be of we a both China combination in are from Erica outbreaks. $XX the expecting to volume Okay. That's QX range to million in of the some impacts and of impacted to million COVID commented, margin

people and So are holding as there's pressure weaker as inventories, some are pricing. the volumes some naturally, on

But back from be quarter margins out $XX million range demand referenced. expect the traditional then in and would a would here that in range as $XX to Chinese But Erica the we're million to margin level. up begins would unit come expecting pick both New impacts Year, more move as to we the we the that demand the of

James Cannon

just then a quick as And Okay. follow-up.

think hold into Is year, How for think even there strong those? should potential them? Just moving gains more about we a on the you if about have durability next year. pricing we of pricing? this reinforcement pretty for you to Can

Sean Keohane

Yes.

So think the to come dynamics in business. the about back structural the that I to to is think way

And business. so Reinforcement business principally a in the regional is Materials

And so the is the of the West the sustainability, is rising important And no tightening think mature important. happening the are I -- regional capacity additions, regions to number cost over very of what's and which more years with supply-demand in been effectively last a our with there dynamics customers. especially with continued

for again to beyond price that had this agreements recommunicate included terms the customers difficult tightness, we're did So that I trends place XXXX. of multiyear and right we period year, we and those to And pricing feel this very negotiating quite are the we that about think in have therefore, year structural. that closed sustainability, commitment that supply/demand margins. some than in comment these good And agreements increases other to the now in

the in structural sign think we that So that's with industry. the that consistent setup see I would a be

Operator

question comes Our with Jeff from next JPMorgan. Zekauskas

Jeffrey Zekauskas

expense grow in down SG&A quarter. What's the Your expense about? that SG&A year-over-year or should was first year-over-year shrink? And

Sean Keohane

one. ask Erica Yes, Jeff, that take maybe I'll to

Erica McLaughlin

reminder just Solutions So 'XX, Purification numbers. in of in that the a QX was still

a of So zero and EBIT while cost revenue, you'll see sales SG&A. impact, in it

Purification 'XX the at GAAP you the statement. so looking reason from to included that see is Solutions main the in 'XX financial And you're when of being decline number not

question part would SG&A then think, answer. grow? second the be -- on the and so I yes of And your will

think, would. I a in amount, reasonable it

there the adjustments would also living making is investments growth then as would of the Battery the Materials. in some are expect, salaries number. cost vectors, We that And impact particularly you on

Jeffrey Zekauskas

talk Russia the Russia, in the in black XXXX Ukraine In calendar did get they you carbon XXXX? playing for production? [indiscernible] And to out carbon less exports amount or produce? about Can that you end, usually see how do black much the West

Sean Keohane

take Yes, Yes. one, that I'll Jeff.

the So clearly from the think, the I have of but picture, Russian security very in also are impacts think particularly that, who moved obvious I here. supply, decidedly of customers, material both consumers reputational Europe, away the our biggest reasons, for

So trend is I think clear. that very

Now exported. materially difficult there in and but material tightness Russia negotiations. supported produce we to I think a was the it's trace been any It recent further that's can be it's impact material did to conclude Europe. going, continue net even having not There's in to seems it's exactly that -- Europe where creating shortage and

material think not way -- the that on negotiations And into be think I exactly little is view. but Turkey impact to picture think much our difficult. consistent have So flow sense smaller out, other us, places to is and clear dynamics. that out played that's of like is I And might would -- flowing it markets. overall that the My some more a would with that that I is pretty where the

Jeffrey Zekauskas

negative you ] Reinforcement going Materials and China. are quarter, there [ the issues said Your that on in volumes X% in were still for

be in I that So second quarter. will again negative volumes the assume

your expect do terms, for your carbon Reinforcement year? volumes the in rough to in flat So black be about you

Sean Keohane

Yes.

I think a I reasonable Jeff, on picture, think view. the volume that's

to modestly with I from little about our would line that. the bit I for LMC China one, Reinforcement which And in with would we X% be have, in up the like volumes because reasonable think tire is of takeaway production is expectations Obviously, that right something projecting plus now bottom impact. think that. we modestly, LMC. our kind the COVID you line a in shape a expect probably that of expect. would we expect year up full different the would be line of or be volumes is high-level year Jeff, But to is

Jeffrey Zekauskas

what's in a in I maybe the in market? then going and December would destock -- And on and destock that in quarter would there silicones a quarter. been March siloxanes have the have inventory meaningful lastly thought large the

first that And back will to for in maybe you flat, another be where volumes year? So negative one you half? can can't the get is the maybe

Sean Keohane

Yes.

on Chemicals. comment the me let Performance PC segment, So

year-over-year up we of expect year in with to XX% communicated full So expect specifically, Battery in fiscal in second then we'd more be Day. half. volumes that low-single would the course, be the comps the And the Materials, in volumes in Investor year the positive we to at digits that plus

the QX the into in with to roll full Chemicals think we'd of growth digits. shape turning QX into reasonable China second across in a then about destocking low-single year the Performance the segment. a QX effect blend again, comps and and Performance you Chemicals low all our the by some if digit. together, then to That's the in half in positive way expect impacted be But But to single up

Jeffrey Zekauskas

what about metal fumed itself? But oxides

Sean Keohane

Yes. Yes.

definitely because of definitely, construction, and through some and same sure. the are seeing silicones, think goes result, pressure certain and silica into destocking. amount siloxanes flows markets for And there's into as weaker you're like a So silica the that's that and a some those I

about half So also about there's in demand world's then silicones silica. the construction. And to destocking outlook got of world's the of China weaker you've impact. some the China the half and makes reflect

you've QX. with and playing out our December phenomenon in got COVID our China -- in so the And into

silica silicones in similar. the will think I and be So shape

year. first and of it to the then be half improve weaker see in and the beginning half normalize in You'll back our

that's Jeff. we what see, So

Operator

Our with Laurence next Alexander question Jefferies. from comes

Daniel Rizzo

on for Rizzo It's Laurence. Dan

online that coming and Materials, that you're CCA something elsewhere online to new when so capacity have Battery go comes you contracted it the within this customers, With you in have to market already Or with? is the to sold? already the new is capacity and going

Sean Keohane

Dan.

So say in producers way that of we're selling to major think the would today. most world battery I the is the about to

pretty in So industry, and the -- I think with the make of I've make past of currently -- so X to X top concentrated up the a X top commented selling X the the X development to we're the programs top with that it's up -- XX% market, close to players the remaining X.

we're So path a on I think good here.

already with their new so would and be our then And to capacity place volumes, established commercial arrangements really in growth. serve

the -- So about really it's that's think way to it.

online Now new that will XXXX. capacity have after we impacts the recently announced capacity and that is come

already capacity our support we objectives between to and growth have -- So Investor enough already we that Day been what projects existing have communicated. and underway

in supply an So momentum of establish funding build sort this investment to up the here a as particular really real a U.S. next is wave that's the there's the a chain U.S. of on growth with focus in

Daniel Rizzo

know I next don't I or you this guess planning what black do capacity capacity new or new specialty -- industry-wide? And the in then And I or guys meaningful to X expect if missed any you rubber X years also Okay. are in black yourselves? not, but

Sean Keohane

Yes.

China. new on in of plant carbons, capacity our we Xuzhou, in in So bring a terms did specialty

yet So cost in China because of Erica's the of the environment. online the aren't that of she feeling in course, that volumes came weak quarter. comments, mentioned the But

the of give But number that years. us over will next growth

years. investments good investment for that specialty for nicely. business carbons capacity in So the about We need growth support couple further very see the the the beyond will in that. think the Don't feel we of next

respect carbons. that's so with And specialty to

our a creating continue looking improvements then low-cost new customers OEE, as of Materials, or In trying philosophy next effectiveness strategic overall capacity being relates very through we debottlenecks and disciplined by units. in equipment have it to to Reinforcement here support to and at

And us. one the unit would which of specifically in a region where for in be so new Indonesia, in ASEAN, is growth place of capacity the the highest world, envision we

Reinforcement kind than Reinforcement just the it's announcements of pull any in -- Orion But probably I have stage. Materials we in that's sold capacity Europe if what level that seen think industry I a If to other that Materials, so came I contemplating. had primarily markets in this not it are in we at on the up mature tranche of just

the new I think and in of market a be any few something, pretty kind takes build, to that announcements next and it there runway on just the haven't like is fact X-year time. and been you think about the permit years, based snug to expected build some

see So that's view. how would kind of overall we industry the

Operator

Our Kapsch comes Chris with next Loop Capital. question from

Christopher Kapsch

contract outcome in also that negotiations. question But relative upside mix had I and I the curious know of were an of pricing Materials you Reinforcement you the on a to balance if referred were volumes there. year for mentioned -- positive your the calendar I'm those 'XX. prior also And drivers volumes to expectations were

you affecting first quarter least calendar downdraft in 'XX. China of at asking this have Just because the

other And are if consequent, better part curious are of unit in volumes the the upside to variances if it there. regions is lift. So contributing the

Sean Keohane

Yes.

price closed and out. mix, principally So as it's Chris, we

versus So commented that what of call we number our increment is mix. $XX number, million in last $X net million in principally communicated on that and Erica had that price

in closed agreements, final capacity. And so remaining out structural there competition for of as given course, the more and we the the dynamics was more industry,

anticipated And had agreements November. place of closed when at in than communicated in we last a the so the point group stronger last we

there's commented a that million So volume number not Erica on. that net $XX in

Christopher Kapsch

the just the in metal fumed you just and Performance it. oxides, in mentioned wondering, then That's helpful. destocking Got Chemicals fumed silica. And

batches? Just it specialty? as where where would is about be the that across as helpful. you're it or destocking? queued master in, is wondering That softness well Or else Just in regions? seeing what Is kind in silicas it the pronounced of mostly

Sean Keohane

Yes, sure.

could value a of the restocking X, cycle there here, So typically are say, in Materials be destocking destocking, X, Performance and people Chemicals than, because chains terms deeper Reinforcement X experiences longer a to the customer. to way to value chain all tire more end product, in to us Reinforcement, a chain the like shallow, the the business it's whereas producers the then in

of part it's the that's a industry. dynamic, So

just So on a reminder that.

to see early out seems into we here. end part we of to as coming destocking move the be QX of and QX Now that an

caught so which those you when is off they want high-cost And or that's prices, a polymers pull oil Normally, to want to have inventory. see on inventories back Commodity come don't sign. energy good. what commodity start from people prices or their whether because positive you're be peak, talking when dropping, about prices, with

kind you with phenomenon. those so of of destocking phenomenon, a come that this around destocking I peak, I their have think And bit having supports think off stabilizing this

we're that's certain what are consistent and I would across in here. -- the Chemicals. seeing lines Performance major There that's product So say

So I seeing, compounds, here, they're a and at silica fumed high similar Chris. dynamic level, a would carbons, say specialty

Christopher Kapsch

it. And concerns -- constraints a given battery cell of a from nice it's lens And guys. lot companies, for through see obviously on you one one then just and of last a growth of Materials. cathode Got me about battery chain in driver the lithium you on downstream the and supply Materials following story OEs good supply security because that Battery of value Battery the

terms agreements? of relationships how something surfacing concerns that So just customers' your of with is your in supply? that manifesting And wondering, in supply in is that's your discussions about security

Sean Keohane

Yes. Chris. Thanks,

lot that's of chemistry the of essential batteries, security So of for the the sure, a sure, getting for that supply is to attention. materials,

think gets of the what the materials. volume are course, I most attention, large

concentrated the in large the materials, the graphite, volume which China. are lithium, So heavily

in build-out U.S. the battery with were the and it's think supply Europe importance growing you tensions China, the amplifying and seeing I the plants you're security. of of as so -- as And regional

way I and they them see around get. I the Again, generally a compelling is to value capacity to play at want think material it concerns I when ability product we Cabot, that large And would where get it proposition the that have, And because and the in very scale headline the is world, the space would our think of supply. volume that we up needs. true, say, do I think in world and have understand regional the carbon we supports look customers they the clearly But to commitment conductive a additives. that around that in their that our doesn't expand suite

showing are is rate through. some of of consistently have really growth our outperforming the think for and time And been is here. proposition value that think for one I the I drivers -- market volumes why it

materials probably it but dynamic of is like paper the in some materials, our read front on won't page well. important you as the about that the other So of

Operator

like Thank remarks. showing the further at not you. would any back I And for any time. closing call this questions I'm over to Keohane to Sean turn

Sean Keohane

you, Thank quarter. again today. we continued care. support thank your and speaking and Michelle, to Take you for forward you for of Cabot, next everyone, Thank Great. you, with look joining

Operator

Thank call. today's concludes for your participation. This you

Everyone, disconnect. have day. now great You a may

Cabot (CBT) 10 Feb 232023 Q1 Earnings call transcript