Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to Orion Engineered Carbons Full Year and Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

will of the Investor I Wendy over time, Head Wilson, Relations. this now conference turn to At Wendy, you may begin.

Wendy Wilson

and discuss Thank Glajch, you, Engineered fourth results. to Orion today Wilson, With Jeff Head Corning welcome and XXXX of quarter I'm our Investor Wendy Rob. Good and Carbons Painter, Officer. morning, conference Chief Chief everyone, Officer; full Financial financial year me Relations. to are call Executive

presentation we press our market after the also of posted portion release slide and issued We posted our a the to site. Relations Investor yesterday, Web

will this We referencing presentation be during the call.

filings like call. remind the the made to statements. actual our I'd the begin, we differ SEC, the are statements of These that risks comments and Before those and today's forward-looking with call described may to during company's results you uncertainties subject some from described are on the in

are all revised the discussed The obligated call to is most not forward-looking addition, table February on are in attached GAAP release. during today, directly circumstances the In any based XX. our statements financial to measures as reconciled measures company All statements non-GAAP press new update made to this of comparable forward-looking expectations. or

referring we on we when to EBITDA Additionally, adjusted will today be EBITDA. comment

call Painter. I'll over to now turn the Cory

Corning Painter

sustainability, treated welcome Thank to challenges that out the We and Wendy. and year you, the multiple as year, Good conference agenda Many morning, for opportunities. challenges financial face thanks go of tremendous our to call. in advancing earnings our growth everyone, we in had throughout team XXXX. a the great Orion

strength our customer increase with first time of approximately due premium EBITDA products our $XXX the level. million, EBITDA the million, specialty to delivered destocking. $XXX fourth full team Moreover, XX% million expectations some quarter record year of a delivered adjusted breaking We despite outperforming our of adjusted the $XX

four key Let by me accomplishments. start highlighting out

for are differently price, mentioned, to taking XXXX XXXX say equation, I volume substantial made be the contracts. cycle XXXX we where of rubber our of progress and quarter XXXX XX% third structured on contracts to volume out as in tire the negotiation multiyear terms. First, our will over on because call, we Asia

that progress our demand our Our to supply quality, continue dynamics favor. and value, customer's in global work dependability the and reflects the

a North on demand that increasing shoring invested we For example, in sustainable is XXXX. $XX expect profit carbon Couple alone, black for capacity to of you returns bit in tight. pricing gross remaining more this to see sustainability on including underlying Based $XXX rubber I'll the increase America, to tonne due capital, production. we on need show with on later. tire capital, per

a CDP, completion. its worked we around air in our but environmental related and by for upgraded number Second, contractors be our The track, U.S emissions kept challenges. suppliers round of on still people, We milestones. environment to second reporting having achieved the the project and XXXX, level. many one project most third We recently execution highest sustainability serious of is improved were announced platforms respected which

tools. rating EcoVadis, received scoring world's comprehensive of we week past by the This most our one

in Our points XXXX. percentile, X putting score and medal huge a earning gold XX from in score us the improved to XX our a us improvement XXth

for ISCC plants. our grades from bio-circular certification We achieved three also

in dual Europe. increased our Third, team our flexibility fuel

us passed As we forward. as this of crisis gas today, gas Europe provides The we to in but can with natural for about XX%. flexibility now, reduce great usage have by natural XX% may move

Then, to action, We they host But plant, crew workers are accommodations safety were at many were forethought zero food, China quarter, was the say proud ensure kept the not am prompt I and COVID track zero able plant with site sure lifted, new and health before fourth we site. quick entertainment compromised. finally of Huaibei, COVID and well the our meaning living at our work and COVID that that came out. to despite In to challenges. wave and were we policy good was on worker had living Fourth, taken to remain the construction the to team was after the their that care locked and action lifted, comfortable Thanks in through commissioning schedule budget on we are dedication, currently infections. a facility. of made huge COVID to our

higher key increased and flow. and items, expansion cash several [indiscernible] acetylene-based like capacity, other our these With announced earnings of conducted power

on adjusted capacity of are a confident $XXX this. and track We EBITDA cycle in to million mid are

turn to call I'll over the that, Jeff. With

Jeffrey Glajch

a quite touch have and I spend charts I them. more to you graphs. detailed briefly, Corning. reviewing but you, few encourage slides will with Thank each on time

were Slide X, shortly. I billion per record consolidated business to in will gross full and about all adjusted provides depth adjusted and with was year talk up This strong Revenue in tonne results profit for $X.XX XX% full $X highs. and EPS revenue, grew full each metrics XXXX. year On over slide from to rubber our $X.XX some year businesses. specialty key EBITDA

full across On for outweigh base consolidated businesses key year both Slide the can the price far The the volume lower improvements specialty X, occurred see and XXXX. in factors which you only. mix gains

rubber In year. up fact, X% was in volume the

exchange occurred XXXX, $XX XXX in year million EBITDA FX average million $XX We headwinds. this from the XXX. despite strong as euro full went to dollar have rate a FX The of increase headwind to

QX On tonne decline of EPS drivers over increase adjusted Slide additional EBITDA. at a X, QX, EBITDA an Slide continued achieve in despite XX%. XX% volume, of helped strong some X us increase the and per looking for GP adjusted small provides our insight a

profitability. continue mix businesses both base see cogeneration in and benefit high and We pricing to of the

demand X, expected, QX, we customer reflecting global looking market at decreased and and and as weaker specialty On destocking. volumes Slide

offset Adjusted the months. EBITDA to However, realization strong, quarter that revenue be the the trailing both per price profit decreased was gross tonne volume. improved due flat to and mix XX%. lower aforementioned and in XX Note by continues

the our products capacity our per XX% EBITDA portfolio million an of part this year. helped above last differentiated This Day, with Investor delivered our of at impact that in tonne shared highest most realization new power compared earnings Corning price QX $XX over our positive and EBITDA of recall XXXX, with by that products margins. margins at had improve as specialty expected the may and to value, XX% along You

X the shows key factors Slide year. to affecting for EBITDA business adjusted compared specialty last the

earlier, volume and cogeneration noted low As products. higher volume in value pricing by as improved was significant, nearly as benefits. reduction was offset well particularly decrease mix The

we at improvements our customers and looks and valued customer China all XX QX and APAC, reliability in the year-over-year in Americas believe quality. as on the in a business to Slide increased metrics basis. specifically Volume rubber with Korea

from also to pricing. benefit strong We continue

Gross tonne the quarter. $XXX profit was per in

over on We past capital begin continue operating XXXX our at return X the gross profit requirement an costs. cycle, This reflects control achieve trailing our to was per years. air see a nice to to upward acceptable now emissions up which driven our -- trend quality sharply tonne our XXX, pricing and in by related air the XX-month emissions

we expect step our GP alone significant with another Corning $XXX. up well price XXXX, in per expected above As noted, tonne to move

for key and as rubber cogeneration Strong adjusted favorable Slide were base mix EBITDA affecting business. factors was all XX pricing income. shows the the

to on of is the approx that shares, approximately buyback Corning, back Today, our pass have which outstanding. X.X% in November. like repurchased over announced program -- was an we which I'd shares stock I we the Before to call provide update XXX,XXX

of nearly $XX million $XX We million have or spent approved approximately one-third the authorization.

noted As buyback be a in in more sometime November, call later to we summer. on quarters this I the completed expect likely couple this

expenditures and guidance, capital the to to discuss Corning turn cash multiyear call over and XXXX expectations our will I path. our comment on growth flow

Corning Painter

Thanks, Jeff.

normally in the midpoint. business is of We at economy, for particularly are XXXX something guidance million, two our provide Despite and but provide, establishing we we XX. helpful in it confident Turning up to segments. $XXX we the a guidance split the Slide not for is business believe our uncertainties $XXX global This XXXX. to our for XX% million of our would

that be about moved have our XX%, driven. on This a what gives from rubber of softening rates our our reflects European would about P&L $XX and impact figure Note projection shared of power bracketed all takes up in quarter. or million. we the If XXXX the miles down by last we EBITDA

up guidance in plan capital to to million approximately share, range the adjusted $XXX at spending. midpoint. is invest $X.XX We Our $X.XX a EPS XX%

move some on Slide provide color that. and XX, additional Let's I'll to

color With commentary U.S the will spending of significant. be U.S of our million And as final some high shows spending our the modeling cash and smaller, be we third emission plant also purposes. flow air our longer no XXXX $XX the of to we have about we've probably bandwidth now expect only it spending speak emission expect backlog air online, slide value components tapers some to have particularly controls control The on you for This off, as spending, will given less we last take project. projects. of to for about time that

significant Slide on $XXX $XXX XX, cash million to $XXX of shown million free million. around flow cash As bracketed and expect we flow discretionary

high As decisions debt our and our projects, we in flow cash value shareholders. balance investing cash increases, capital between lowering will returning allocation to

reach XX, that With flows confident of in place progress in flow our goals. earned we and value share believe have our make creation change that at company our our the pricing are steady we a mindset Looking cash the projects, to blocks step EBITDA on we price. to value building adjusted cash XXXX and our exceeds Slide intrinsic greatly and the projected our

Now wrap up, you things to XX. Slide I before point to want I

continues business carbon which The key that As [indiscernible] demand call, in baseline I the that supply are black for to firmly many our believe rubber mentioned grow. we rubber of fact outstrip our earlier we gains markets. remains can in from

shifted You be the has tight can to supply years we America, to that come. for and clearly to balance expect time, continue see it demand North over

capacity. North chain investment the increasing production, of to the shoring to Russian and of Europe. in Russian carbon by while demand to in black China. amounts a is costs to significant it some of Significant due impact continue new now supply Europe, at flows war to Underlying carbon flow high In tire supply some black on black its Europe complicated is into plant situation customers and remain even America carbon secure on

coupled this carbon an increase we in For believe reason, the will European capacity, tire with market further. tighten European black

a In you consider ask thoughts. to closing, few I would

us was for XXXX year I better. a be even going and XXXX believe to record First, is

low business oil grown oil a have becoming demonstrated as how resilient as and Second, we of periods high since prices, company, prices periods through through those we well is. have public the

chemical a valuation. achieve to specialty company are are a and we determined specialty We

supply challenging new we Fourth, rubber are continued terms proven dedication black, baseline. to imbalances the carbon and and due agility during for our contract Third, times. their pricing rubber demand believe has team our

our well-positioned but The Iranian for customers. in our and sustainability, in is for in momentum have XXXX, come. markets, years team to with only new products We our not

on well now increase goals. the earnings with The past in are way our we Finally, years few over capacity line is considering outlook. we flow laid and evident have factors, all mid-cycle our cash to foundation flow these our XXXX results that financial and in and earnings free significantly cash

Operator, Thank please line you. now. for open questions the

Operator

of our line proceed [Operator UBS. your first Instructions] comes Josh Thank question the Spector with from you. And questions. Please with

Josh Spector

And XXXX big here, a Yes, on and hi. my taking team for to solid I question. a lot congrats of you the to firstly, pretty accomplishments. Thanks guess, end

Corning Painter

Thank you, Josh.

Josh Spector

My yes, you’re welcome. question first --

have down close So year-over-year. quarter. question, challenging are guide of your the coming right companies Most specialty, some fourth that's volumes rate. have pretty look in plus And down. capacity a things not is coming raw new it's run clearly, online, I quarter material to first some mean, annualizing the annualized of costs kind quarter, When saying don't guys fourth Jeff, you XX% at you maybe I

specialty what's next basically bridge where wondering, to just up we year your in flat to I'm are So from today? slightly

Jeffrey Glajch

more into first half our forecast Well, going this all, year. I'd of say repeating is like second

I challenging, still still zero even China markets COVID is think us. in policy are the though pretty behind

we how we to now see customers. when and of right our kind it that's So talk

Josh Spector

a and when I contribution Okay. from online Huaibei? the your of should I we in that guess comments? changes what there what maybe Any prior be there? more And bit terms dig comes for is assuming

Corning Painter

to that. in in and particular, Huaibei with think associated I be there's a So qualification going period specialty,

see think in contribution we'd of more I So the second half. that

We now. are in startup right

quarter, could that and you calendar there to second be start qualification of say would volumes second see more half. out So going in you the loading into the

Josh Spector

under on, I could then the just we've on don't interesting was I if think seen supply. And I Slide I really demand. pretty know supply sustained Okay. a mean, ask if XX

So scenario closing What's America? up? still in see out? what the playing at to point where you'd North destruction? demand not happen happened, see you a that incremental Is [indiscernible] there prices Are prices gap investment move

Corning Painter

some a see into do [indiscernible] is there. of we is capital curve, our that -- that additional The situation investment at incremental lot look going you if Well, capacity going understood, right. with well on, very

creates other make as example, that an areas, I conductive assessment well from overhang an very investments think of to just a for attractive carbons. as anyone wanting further bit in there's some

the So I U.S tight. is -- going market to think remain tart

year achieved think I this call, like foundation, the base, we I is, as think the said what the I new front. there's upside do new in

Josh Spector

thank you. Okay,

Operator

from your proceed Jefferies. with the comes Alexander with Please question next The of line questions. Laurence

Laurence Alexander

morning. Good

of So I guess follow just a to couple on that.

first, year-over-year, profit we synchronized global a in do think you specialty tonne improved and tonne when or the China environment recovery do gross pretty per million about So soft $XXX at the acceleration business, look by What in a gross million, will profit $XXX in per period? Europe.

Corning Painter

it one mind keep just this to the is make, about that, -- attended point up So to that think just was or you I there. tonne, one correct make me, you [indiscernible] of that need element per $XXX in

our per So a be tonne is going big element, and GP to always mixed.

and you loading and forth, dilutive what we advantage terms in coming like in see the so of here fixed it. volume products. greater masterbatch also will we areas so back bit a of is costs. And an absorption differentiated the see have our little of see of impact When most in But great like strength

want were tonne going modeling. say is do anything GP $XXX, in of we if $XXX number terms add a per to fine think range Jeff, I in probably that? So the to for to you

Jeffrey Glajch

makes that sense. think I

tonne weighted than just we noted. volume as of see the average per the XXXX end XXXX see we volume, in, you of think I could back GP coming look in at actually the as low if you lower because

Laurence Alexander

contracts already have sense you contracts give just 'XX, signed? price secondly, you how then 'XX, in And in a have net contract tailwind much for baked already given already you've Right. the can into have -- extending you

Corning Painter

We 'XX. that it's I have do what going we sensitive upside see commercially somewhat into in have them.

Laurence Alexander

Okay. And sense can a for you estimates thinking or of free cycle M&A then adding the do possibility you're of on years, over allocation, X that or flow kind mid flexibility lastly, about cash what your adjacencies, give can of $XXX the how next next? implies bolt-on million what sort of you capital for

Corning Painter

we've but So up work doing something of plant years this we're so-called done lithium and a that And we range years in [indiscernible] work options always the get took to create look to us aspire battery the option, of that there. creates have real to it at for buying now. standards, settling to open where to then it ion option do we're like right what ago,

in now. doing we very, opportunities are for core where more be adjustment. returning cash could well as we business balancing will shareholders, let's a between to very other as simply kind something we the make out It right an could space expansions, connectivity that that's say, which continuing growth, a invest debottlenecking be in decision when near at more look that, of to between expansion our So in

And stewards capital, of options. a to to We're this for us, options not I ours, just spend think it's going this now. money, having growth. the enjoying right Laurence, point, for of we're and shareholders those at options open leave really it those very ourselves be there's careful well, variety

Jeffrey Glajch

a debt we in Yes, extent Laurence, look as is XXXX could reducing one little we thing to additional too. our will some also bit

Laurence Alexander

Yes, excellent.

Corning Painter

powder nothing in -- the you future else That that that if allows dry also.

Laurence Alexander

Okay, great.

Thank Okay. you.

Corning Painter

you. Thank

Operator

you. Thank

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

Jon Tanwanteng

you that was even outlook really the Thanks report the here. you really to market the nice gave in outlook? you when SCB My what or When is reported, when questions quarter uncertain one compared do and -- I QX, for fairly Hi. think last it my first and dire changed taking maybe.

that So you're understand upgrade delta wasn't Help macro in there? a looking same And then different an the that the in is strength? of thinking? expected? the what you just that is Or us as that Or at? came it maybe continuation outlook look forward, contracts you're

Corning Painter

the expected. better coming prices the repeat receive of Number natural kind last And two, really than versus facilities. EU a think of premium artificially into year, the Number going particularly year, do now perspective, say to the some were I think look costs, was than our we that build nations things. I not one, balance by better power I'd up buying specialty well up we're Sure. the we and gas whole we mechanical expected. two natural held volume, pumped storage gas of volume these almost cost their from to

year. came more really more markets coming So we was things than the in anticipated. it going Europe forward energy favorable a stable those the But a bit bit had see we for being in two

Jon Tanwanteng

natural great. next chunk from getting wondering you. I working cash the at And year, a is new releases, which for kind it reduction nice flow Thank how some going capital capital Okay, swings that see. that's is forward? and just then flow and we What or energy you're looking versus prices needs, going really should your permanent just working like of contracts movements fair of much the looks in just to was expect on? other thing in some

Corning Painter

Jon. Sure,

to from -- reduction the particularly oil we quarter, you are permanent in along the a fourth think with in around customer the related contracts. in really saw our really bit focused it's if our down strong that and a the a working to reduction negotiate prices that reduction one XXXX we little is coming on quarter. a terms our look, XXXX fourth customers quarter, -- But coming pricing I pretty in will reduction in capital was you the the We that rubber talked last for And quarter permanent that's numbers that about primarily contracts. see better where in, were in terms. able

Jeffrey Glajch

in AR, pricing the is moved one notable just terms. improving that would this shows in of terms increase it normally in And thing importance that's up we've significantly, I the think sense working which your and the of contract these capital

Jon Tanwanteng

Thank after the want Got mean, you. allocation And it. cash investing all I rehash free growth flow million to do. even finally, $XXX just capital question, then to the you just maybe in in

You of just any that, interesting Are you're spend all to return used beyond? to won't that don't other this projects starting may us organic if be in repurchase it. 'XX, and that understand high be cover specifically which or eventually there terms 'XX even may have plan, for, you looking of either it that help repurchases at, options look year a what

Jeffrey Glajch

like I'd good to Jon, cash. of Well, sense convey steward being a a of this

we're and acting comment this And The not that. take last be So what us outcome reducing be hole our like burning way would of pocket. a in for ratio. debt fine a that's easiest added it's a good to outcome just all for that our some would just to

deferring worst, Orion debt I simply positive at reduce to for conditions, that thing time. a towards We the purchase, most first fine think our and will ratio, some green this want year, see return we see our other at have which that, a if the of to that be is, We'll more do now. we small. later of conclusion come for high we And to projects, we projects, attractive is light what in on at kind do share as might right our But large decide what's would time us. other the we business

that way really other now. the one a we don't to have or pressing So right have we move like need,

be careful. Let's

Jon Tanwanteng

Or increases scale one you room think Fair if how for squeeze Actually, as expecting? to longer to in was pricing this be going much I Is supply going is muted enough. I you year, already? term just demand just given there your wondering it half you're the I degree up, be that of Thank in of given for is it possible? 'XX, could already like in to imbalance just clients contracts locked the is that. more, more a same

Corning Painter

Yes.

for a up but much next than more, than more year, half bit locked year. significant half amount for volume, more of a we've our little next So not

a step expect don't sort America. in same up the North I of particularly So

in situation Russian As Europe black. was it a is a I said, bit more on I still decent dicey, dependency think carbon the

I think year. could see more that's that for market next the much pressure

Jon Tanwanteng

Thanks Great. again.

Jeffrey Glajch

you, Jon. Thank

Corning Painter

Thanks, Jon.

Operator

of comes question with questions. JPMorgan. line from Our proceed the Jeff [indiscernible] your next with Please

Unidentified Analyst

all your very in Ravenna you Europe? those Can Thanks when size you pumps? expansion And remind came the much. me on have sold

Corning Painter

that by end say want the in and out, March for of was that I on Yes, of sales, end commercial March. came approved sold to February

Unidentified Analyst

tonnes And or what block? are -- specialty to your and those do to rubber -- you allocated

Corning Painter

invasion there So rubber in we And already committed that suddenly volume the certain carbon interest made great was for of amount then that after Ukraine. have of invasion, before a black Europe.

lot specialty We multiyear we had all of And already on area remaining a almost that specialty the market. reallocated a the when do rubber. it So of that been about then capacity portion into given a to all this over committed happened. the were to agreement

So rubber for more And point. bit but mix. change win-win a than a at our little and in it's Its think a of this that's it been a has specialty, customers. I us I'd our say plans,

Unidentified Analyst

volumes How European And in a given new did grow quarter? your lot, shouldn't capacity the -- the So, they got? you've grow

Corning Painter

I quarters market in referring European think a a our market volumes, so that's three did and step have perhaps not up looking contracted now other see forward different we year. results, appropriate what pricing some have the view year's that we for Well, in of the our people last We is to XXXX. in big that of

Unidentified Analyst

they grow down right? a be should volumes is the year-over-year, or in specialty sequentially lot first that quarter, Your

Jeffrey Glajch

Little bit.

Unidentified Analyst

fourth Or of outlook like specialty the an the Is really quarter? of in the your you kind same Because there weakness volumes first little a first quarter? that expect quarter? maybe give us the bit in came for

Corning Painter

at coming of bit general would say, remains of, there over China, in New COVID say slowed a manufactured -- real Chinese like of I the estate a down challenge. might look year, I in many zeros we lot services. China think the in later is consumer weaker we terms the I than be China that. of goods you but let's quarter quarters. a Year this have and first think the all But some still bit players, if in think in consumer I is and a And the and buying little

So and think lag, something? perhaps X. you normal and weaker Qs this will Jeff, little for QX year certainly want I add that a seasonally be than X to

Jeffrey Glajch

maybe into think is it over I around if your then specialty, to Last reading question quarter relative came versus QX, QX last your question QX down think our in the volume came half pretty Jeff, I And specialty that was high came about if the year's year and starting the QX the I'm high think QX lower in -- second lot volume year's looking standpoint. down on second QX. year. of the XXXX, of year. in off look half volume we've I the Sure. of was you to we're going by at the of both as in to last year in a If Qs, quite and volume closer into before, end talked down

come that recognizing volume not back yet. is So low still end

think I way appropriate an probably it's at it. to look

Corning Painter

Yes.

Unidentified Analyst

book cogen What quarter you for your were them? do and the and where year the credits

Jeffrey Glajch

that give angst we down they our our the of one of market. come equally. don't our we there was And side And about perhaps than but expected between the in the cogen, to we on had didn't as that. the reasons lot concern far our cogen a in particularly November. QX businesses call when expected was numbers QX expectation, down about, European in a of a little There we it And than actually we our specialty further come in of lot in little better a QX details did. both relatively talked So was as was they split

XXXX, the extreme and market, at much mitigated of calmer as As we in will think we noted, has look perhaps XXXX. the volatility market, the Corning be

Unidentified Analyst

last I disclose terms? know base of you volume expecting, in segments, Are think or case that volume growth I both don't in as your competitors the Maybe X% kind for growth segments? two in X% question, what's information. your

Corning Painter

to speak first disclosure. just me Let the

volumes in disclosure with use not comments November level that expected really our of regard year-over-year a had increase And to some call us. or and still all, a the Other sensitivity second that's pretty again, in might at see the look scary the noted, all we scary specialty that I relative about rubber year. With good. time. on We think rates in at a to volumes, first think for move is prepared volume last higher this volumes, what we guidance that looking very commercial to XX I XX% power XXXX gave some be we point would how one. fair to year, half year, of about high kt, half number in level much our

of then I on specialty. the of think the half the be we And XXXX going year the little of probably as you'll improvement at XXXX into reasonable volume side the go bit to volumes. XXXX at start would -- perhaps second through a year, see

given we expect half of the year, wouldn't low value I volumes year-over-year the improvement the saw think volumes. high, the I year-over-year, first in

second in of with XXXX. first we the improvement what half recover XXXX. in was more an to perhaps second with I in But half year what year-over-year the we of the lost saw decrease to not expecting fact, in volumes, In be line again, the of half in

Operator

is question from the line Chris Capital with Markets. next Loop Our of Please Instructions] Kapsch [Operator your with proceed questions.

Chris Kapsch

morning. good Hey,

Corning Painter

Good morning, Chris.

Chris Kapsch

is one first about good yes, My morning. --

tonnage the the or dynamic is about is that, mutual one of I'm Russian norms. as kind year assuming meaningfully it sort side versus motivated the the given historic one than a Curious it rubber black multi are a now. is supplies greater of the the that's guess, comment is maybe in First do customers -- North desire Or half I am tightness balanced? to and commitment? in about it deals, greater is I I to to sort just propensity of of structural fade really of trying the just the to as follow-up your do those then understand how Europe, of much and on want being, multiyear regions America, to of they in other?

Corning Painter

mutual back a it's definitely, right, and commitment, Look, forth.

It is XX% right. an a increase to multiple First volumes -- year. geographies. more were which XX% historical probably Typically our one-third, in Chris, was will you're XX levels, absolutely of of all, across to on cutting multi customer there the from

it more, well. So well, really and prevents I'd does together end up sense, being in of year possible us right. all that as balanced. getting next None that like That's saying,

So options. those think I all remain

Chris Kapsch

customers upside And you the volume to upside lanes. upside but about, it in to said America there? you pricing the pronounced sensitivity, you you're to commercial those like than upside in I it's just what talk more as I Europe 'XX, sounds make in going sure And have understand you understood when not with that's just are little the about? North said magnitude pricing saying of Is a the opposed bit

Corning Painter

Yes, of so a things. we’ve couple

of Chris. even multipliers all And clarification, go First let's good course, of has oil further. Price, input these costs. and for one all,

margin I margin. talk let's So mean, enhancement.

year. who just However, loaded the Europe. this not this sometime served non-Russian there that. improvements are front same that, many vulnerability magnitude achieved big for for or now say in those market. where change, to we to how those still year clear My of element is under contracts it's in achieved into for of but carbon next confident. I one of see might work like change contract And next assuming and end we not be that the year, just for like improvement another. And between a there's from for Russian we And a but belief what be difference contract And remains season, into wouldn't step is next some year, necessarily, the those personal to what this up belief in year and we those took for this carbon wealthy going on want people geography would quite pricing the that our black now. European I push wouldn't We -- for another is market, contract come right the aren't year, to the have black we're a the desire back step

for volume Europe. I think we'd also see increased in need

Chris Kapsch

skewed that. that America, of kind with Okay, the I looking tightness guess. chart appreciate And at structural North then

underlying growth so extra of sort on curious unit you to forth. winding of for process operational tonnage opportunity You've in Is investments. extent over for that eke and improve kind an market to incremental EPA that technology better the of, end your lack you what that address and margins manifest out just term of your focus excellence or how associated down with to and can shoring, time? the terms the on would I'm

Corning Painter

you Chris, well. Yes, understand this

sense I a North think make America or field. an is Europe, line than green could a that in kind what rather further investment new reactor or in of

attractive. the very opinion, think -- for costs be of be projects sort I could very in capital my not those

that yield that. have risk flow. more cash, could we're that good low uptime, demands We as instead of things. projects sorts free the us. cash our improvements was like up when at That's a be. We expansions, we confident of taken in things those small know for We thought about capital we in million of think increasing lay year, would why slide, out our where in plants, look $XX spending debottleneck, debottlenecking you there, our next use I the put to for

even So project I I very could think, in very, of competitors think and that it's remain tight. don't North think a doing ourselves with kind however, that, America, I perhaps going you to that see.

Chris Kapsch

which area of highest [indiscernible], Right, the lower varied destocking And the the absence in sort now. that specialty. just some being in on polymers guess sort of with like of to enhances ways dynamic that of been right talking then I has follow-up appearance one about, your industry. the there's mix been of mix the probably margin where automotive strength masterbatch got But it. brunt the application. you're dynamic of And margin, other this feeling is

be abates. wondering, So the of it higher per 'XX years of How a chip the does as watch? feed this comes argue, tonne into for automotive some are when higher as could gross shortage builds in that would that couple in about you're out and talking specialties I'm all profit

Corning Painter

bottlenecking Chris, Yes, positive so a as some the is that done for us, that obviously area. is, we've of in

yes, destocking come. But our of masterbatch, price. markets who oftentimes in that seen know positive of came also be with when on guidance. net makes with [indiscernible] reenter this with The and we'll the several we've So a a their have for they've customers compete people in our you years, issue and commanders for I that's also come think masterbatch, for our of into probably think, back whole to European And some I that's factors in them, bit that they as our brought we we one [indiscernible] forward little back line.

Chris Kapsch

Thanks for the color.

Corning Painter

right. All you, Thank Chris.

Operator

you. this Painter I'll time, At Thank for closing turn back the floor Corning to remarks.

Corning Painter

exacting business Rubber you have so of this emission it suggest air the seem requires not international out regional rewarding would a materials, everyone, look making differentiated that good but chemical. sold I'd time thought. like us standards, the it think based at and grades. for to a the you today. I commodity and dynamics plant your on is this for this very Black local is. its to is Carbon we a to largely addition capacity, on Yes, most laid you, Thank raw business joining we've Thank permits, capable of ASTM Its with day. to you call. much in leave

Operator

today's conference. This conclude will

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

Orion Engineered Carbons (OEC) 17 Feb 232022 Q4 Earnings call transcript