ASH - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Ashland's First Quarter Fiscal 2021 Earnings Conference Call. At this time all participants lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker, Seth Mrozek, Director of Investor Relations. sir. ahead, go Please

Seth Mrozek

Good year and and XXXX Seth Investor name Phyllis. first webcast. to quarter is Relations. Ashland Director, fiscal earnings Mrozek, morning you, welcome everyone Ashland's My Thank conference call

This today call a Officer X:XX December Financial release XX, quarter to Executive Willis, news Officer. the on released Kevin February Eastern me are Novo, Time results and SEC and and Ashland's President the Vice night approximately Form ended preliminary last XXXX PM was Guillermo yesterday Senior We X-K. at Chief Chairman Chief Xrd. issued the Joining for furnished in

During the this Relations during call, will Relations to website. our Investor Investor also you section. our on are turn slide reference slides two. can morning's section being follow webcast, of webcast currently the the encourage along we during Ashland.com We the The on under to Please found website call. slides that be

also an refer measures. non-GAAP that today's and several cause of on are from Ashland statements making risks uncertainties We the presentation Please expectations that complete during or such forward-looking projections. which be statements uncertainties financial actual adjusted metrics will of call, subject will will those be forward-looking basis, our are reminder, and we to risks differ and to based events certain limits Please such to the year explanation statements. two slide results note, achieved. These believe today's fiscal on be financial for projected reasonable to could that including of a referring more applicable are a assumptions, for cannot and but assure matters any As XXXX. we on future to statements materially forward-looking outlook

not are as adjusted with in three. We our slide the should non-GAAP assessment and GAAP will supplement GAAP. business. refer morning in considered most the directly reconciliations Ashland's understanding comparable or measures, superior the measures performance your these order calculated in Guillermo a accordance and available on of financial to to Non-GAAP of for first financial of of measures slide as those be ongoing substitute quarter. and GAAP present our turn overview in the today's fiscal begin measures an will them The measures the this website call to of as with well results presentation. Please measures to appendix to

Next, provide for financial Kevin more the detailed review quarter. a will of results

Finally, Guillermo important his the will to close environment providing current on with in in thoughts planning steps. priorities addition key and economic next

for We open questions. will line the then

his will to to the turn I X over please slide Guillermo call Guillermo. turn and Now, for opening comments,

Guillermo Novo

you, Seth, and Thank everyone. good to morning

I Before you thank to like morning. this your for participation begin, I'd

this quarter's overall successfully business are foremost, and First our demonstrates we are improving strategy. executing the conditions results and

of safety well-being all We on a employees operate difficult through clear we focus with to the and manage continue our this as pandemic. safely

As remain expanding organic free demonstrating we improving our execute strategy, cash growth, unchanged margins our flow. business priorities and

of During our on the delivered team each these quarter, priorities. successfully

growth during of X%, continue strong currency. resilient demand the sales science life quarter. markets Ashland's with the demonstrate to Most consumer of grew inclusive favorable delivering end

behaviors. pandemic to However, global linked the impacting is businesses some consumer still

have to recreational activities grooming not and We improve Sun Styling, by changes in in seen social Care other businesses impacted dynamics. demand Hair linked and

and mix, businesses lower quarter. well SARD higher our across multiple lower volumes, improved with led the as saw demand was exiting on end Consistent of We EBITDA began based lower markets This to of improvement seasonality. as We call. last growth recovery our margins. EBITDA expenses lines continued operating also well the process commented broad demand product we the and strategy in executed and industrial reduced margin industrial during

disciplined working free and cash flow. growth control on focus capital growth significant Our earnings and delivered

be agreement in to & to fiscal opportunities Lastly, business. made leveraging announced impacts to year QX Mayr's the Kevin's Care of I'm continues review the team very goal Personal support with progress Kevin? strategy, momentum XX our acquire by pleased momentum following in what M&A the global Shulke bolt-on with for this we will line improving preservative deliver of to uncertain an marketplace. I the outlook how our results. Ashland discuss improved our

Kevin Willis

Guillermo Industrial currency X% Please consumer the results quarter. you, X% and Thank million, the in to Ashland contributed our continued in growth year. everyone. $XXX to good slide These businesses Total strong were morning improvement seven. reflect businesses. turn prior in Favorable resilience quarter our up during sales and versus

we the items, million, our prior EBITDA SG&A a extended turnaround quarter. key positive In million of increase that year year realized cost the programs. solvents. Note costs total, reduction Excluding R&D impact and Ashland's $XX over in an included Intermediates XX% plant for as within cost of the quarter adjusted $XXX the declined again prior was and

from over EBITDA improvement point XX.X%, Ashland's the adjusted year. share. margin year. per was $X.XX XXX was last XXX% excluding basis acquisition a prior up EPS amortization Adjusted

down to progress and up several versus quarter Within pharma supply labor digits XX% and each constraints. up from prior well up the turn primarily quarter. life sales other increased I'll and of perform total, groups. factors X%. Care up to at year was Personal quarter our Sciences, like the of cost in Life the we improvements. Sales and while year favorable for growth to Nutrition were to team Currency X% Sales quarter. eight. Consumer EBITDA due million, In down XX% profit I'd strong results Please continue making. $XXX excipients to prior mid-single quarter the to mix by due with business nutraceutical sales be by double markets end to end slide while were during Sales to markets Now, by sciences review continued during Specialties. the to begin three pleased Gross impacted strong favorably the was is pharma digits. were due modestly demand chain the with the were driven sales

exit favorably impacted margins. began but decline and year-over-year margin mix accounted of to we discussed, some which the about lines, previously sales product half both lower As for

with previously of by We is well COVID-XX be there Each more the [indiscernible] also In committed that are high challenge such progress while pandemic the Care understood accounted to actively these and entirety products The areas And as quarter. team. to certain continues exit Care. Hair the during lower the of of is previously work being on making consumer impact and to Personal product are the Sun and the Styling work and continue total, declined to the for line, Care issues through addressed household by communicated sales margin decline. challenges Avoca team Personal related behaviors X% the done.

Household turn consumer lower Life adjusted expenses EBITDA Personal SARD improved Sciences to and earnings favorable XX% and to basis margins. XX.X%, improved EBITDA all to specialties, to led mix Please Care Specialties' point Consumer EBITDA in improvement. Adjusted margin improved a XX%. XX% slide versus margin a nine. improved of million while For $XX total, margin at XXX adjusted in prior of and In to up year

sales Specialties $XXX quarter. saw the impacted industrial X% end Industrial prior favorably broad-based with recovery. from were to growth up We year million, demand Currency X%. Turning sales industrial by markets across consistent

in drilling products, demand to around activity increased quarter. building double-digit and applications. growth strong Specialty volume during food In preparing applications demand from business customers automotive Coatings Brexit. performance Adhesives the in strong for double for was and sales globe. which growth were the construction be energy digits increases include And demonstrating total, adhesives, down Laminated for during the total, Adhesives by by modest the our XX% saw continues Our Structural DIY the Coatings We modest and quarter. paints, business architectural packaging. did In Additive strong in sales X% Performance demand global increased reflecting reflecting improvement quarter lower certain sales generated our and during due to we some particularly grew while up adhesive for business up, significantly

earnings XX. XXX and mix EBITDA XX.X%, Adhesives improved XX%. Industrial improvement lower while margins. Adjusted of all improved Please Specialties' Additives and point improved to prior to improved For year. total, Industrial million margin EBITDA Specialties, a adjusted EBITDA led in $XX In and Slide to turn XX% of basis to margin expenses to Specialty Performance over and SARD adjusted EBITDA favorable

$X period, which of prior-year from to turnaround sales at was INEOS year. Please intercompany million the Adjusted turn period. increase ago included up EBITDA Solvents, prior Turning the $XX year the for versus and [ph] from up negative XX% higher sales of was in Intermediates million majority $X the sales to XX. impact of million, extended Ohio Lima, by driven The were an facility. Slide up the the

million cash an our and included improvement management turn the cash by programs. to Total a to minutes It's flow business great cost $XXX talking is I result flow example excellent across of also year's call in capital compared about capability. flow cash SARD Before Guillermo, units. last free few spend COGS free million, quarter. million reduction the generation $XX working cash like related The a free payments million deficit. to I'd growth a to $XX earnings restructuring driven back was Ashland's $XX the This of over and disciplined ongoing

Guillermo. our to back cash expect we expect to For With our which over 'XX, will convert priorities, a And for the EBITDA now costs are inclusive fiscal rate. to restructuring to to and that, I rate we on cash expect and free of to year. around cash we of Guillermo be call strategic XX% north million conversion the $XX flow outlook continue address focus, improving focused turn to at

Guillermo Novo

Kevin. Please slide turn XX. to Thank you,

cash year and first Drive productivity business capture capital and margin segment mix free which enhanced 'XX the and have in with to complete, strategic flow for very feel we align million with resilience exit discipline in expansion COGS have and working these remain achieve and million SARD capitalize quarter priorities. $XX we profitable we priorities priorities commitment and act continue same accelerate $XX the consistent of we was conversion plan reductions of profitable To lines lower most And clear. demonstrate accelerate improve. we to from implementation capital on growth. cost innovation, identified. With end allocation CapEx strategic on our and more operating fiscal Finalized the on focus levers of savings cannot XXXX. showed clear Drive and objectives, our we of that the our market completed improvement and the in XXXX

business our underlying of the opportunity operating as fiscal During discipline. improved XXXX, well we our year the as demonstrate to resilience had

We will of driving improvement operating this focused our remain continuous and business-centric on model discipline. the

of Personal customers our to business in Care as the about to We're incredibly and back, Slide to Please a inorganic. to definitive growth to the organic profitable accelerating drivers agreement of opportunity continues acquire breadth excited Care Specialty can turn weeks Additive Personal broadens focus it the both markets. shifting bring we Mayr. Shulke signing XX. this few announced A from Our be & solutions we end

business Personal us combined give Household be expand and forward market. will applications. & capabilities Our presence this We'll of help talented Ashland a and and global the will This Shulke us advance enable Care will for at a preservative business of customers the our Care Mayr and of to both family. meaningful team our that drive the look this a experienced we Personal preservative agenda will will and create center us consumers. our our biotechnology center We microbiology excellence to team growth welcoming in has to business out to important trends and in Hamburg. participate for ESG driving

about Given the we are a to sensitive very specific market preservative and technology focused details specific area, this sharing very is business. on competitive acquisition

the other be earnings not we transaction, allocation close, On and financial can sharing as in was capital space. will our transaction the of remain it transactions with comment Although in and growth, business will immediately information profile to and valuation strategic we improvement on that objectives. be the our discipline growth focused firmly line accretive aligns margins profitability with this specific we on

end We Ashland. XX. year the Slide of Care June I Please also this of to as Shulke to team & welcoming expect the to close quarter the the turn to acquisition look and forward indicated, we at Personal Mayr

key what we we've of the As spend fiscal few as to a minutes a performance of year. I'd remainder see the each drivers discussing quarters, for the for last like done

First, business. improvement as mix we strengthening stated is key before, to our

and drive leveraging will pipeline improvement innovation focusing M&A. on this by higher businesses, We priority bolt-on expanding our

saw growth. we will product expect earnings we quarter, that continue drive As favorable this to mix

self-help we believe our to what from Second, we we deliver actions. working our incremental last can We savings indicated call. in accelerate are

industrial Improving While favorable COVID in improvement anticipate positive demand demand. persist, we uncertainties Industrial continued foreign tailwinds. will be expected and global currency

the well the must in as complexities segments to hand, the virus recovery be both the our that and impact the business will On other evolution pandemic continue behaviors, the impacted by challenges of probably the vaccination there have still rollout. of This COVID to we're specific challenges seeing been continue manage. consumer which the of linked uncertainty to we in rate of as pandemic. persist The

may other such While of these It's recovery to these changes in Hair Styling, be forecast too segments, Care consumer and behavior the of early segments. temporary. Sun some

Given of hand important positive timing the sanitizer The end a by was in impacted business fiscal some year weakness the the the XXXX seasonality of recovery some for significant segments, offset is our growth behavior COVID. in of the consumer the driven performance. demand in to in markets

we production saw that near-term continue coming business industry levels as adjustments growth a inventory will years, aggressive customers Although XXXX. normalizes be this seen all and some over to the are have in the after and demand push adjust indications supply we

of then QX fiscal demand in half more to second see normalized and year. expect in the lower our We demand

this segments a in recovered other given developments, happen Our see expectations bit disconnect two. were prior current consumer or quarter that may of the as a next normalization but we would

stated we we the As one the greatest pandemic, risk the at view supply beginning as of uncertainties. of chain COVID

We provide and to to challenges continue shipping and manage labor continue issues. to will these expect availability of we

impact any we're exists. still our significant uncertainty nonetheless, expecting on business, Although not

Performance Please very strategy petrochem Finally, a an while Slide volatility of manageable a Regardless strategic XX. derived see within to some adhesive be team Ashland The volatility volatility turn do and they're is to confident COVID uncertainty, and record Adhesives raw the of managing track expect greater raw periods has continued to of confident material material the pursuing. the excellent whole, that continue to we trajectory. we through has exposure enhanced which on materials. segment, in raw as our I'm performance for

Although for to on forward-looking me does fiscal of the bit guidance specific ongoing different resilience X% our activities. we X% some of businesses, growth This will year. recovery and update some growth side, consumer mix include impact let expect foreign more year the of not From not a recovery 'XX, favorable M&A This a our sales industrial in continued be for we and end of the markets prolonged exchange. a based insights. is giving

do in and online impact operation, strike is part negative we volumes, cost offset we'll Although favorable shut The expect be absorption of most the December plant of They labor stronger was at our a and our for by from on to expected cost have but plant Belgium. are January. full absorption. down back impact in

Given of accelerating changes but increase the the are impact term. These impact $XX our we to self-help the to and We believe businesses continued can million related these fiscal high actions actions strategic year for COVID level will in of on our COVID the of $XX long rather not uncertainty, company net strengthen we're focused actions. the our 'XX. that

factors building thank closing, leadership the for environment. Please turn again resilience do the uncertain we want focused Our team Slide capitalize for In the path developments is control and to I in control. proactive our business XX. once We're on to changed. the in not to we Ashland and an their and on participation market actions driving agility not

Thank fortunate to you. lie and specialty look be have We businesses a the high company are leadership move the forward that with our in resilience with ahead. by defensive and people Q&A. premier opportunities quality markets. let's demonstrated materials to I'm to businesses positions pleased that Operator,

Operator

the Roberts comes with question Instructions] [Operator John our UBS. from first line of

John Roberts

and little else quarter you've talked the do fitness Could talk and a pipeline. have synergies, looks acquisition done in customer bit about you about the last you anything overlap. pivoting And growth Guillermo, you it overlap product good to here. a like

Guillermo Novo

thanks, So, John.

preservatives. portfolio would Personal and my us. additives position of very friendly, is our They to their focusing very, fit more clean to customer. in have were perfect strong I [indiscernible] [ph]. Rohm into to for shifted more, critical you beauty just the have Care call, a your more So Mayr, history even Haas. is on added Schulke specifically very biocides This on portfolio, known from what & years, a They a many and our acquisition them consumer strategy lot a of big this and question side They've

really enhances portfolio we drivers. it more have driven that towards the So, ESG the

a good and we'll have a This Care ours, So will segments it's for their the become position very significant be business us. to probably the Personal larger fit one going Between market. our in pretty portfolio. of within

here. They of team. So record. in a a experienced just it's track moving into be going part a some sites. nice but manufacturing. our want not good, the proven We'll to very of to own keep acquisition. really that synergies be activities the We strong see very team. They're They a We the central have have manufacturing

the and we're going So, team enhancing in to those be keeping Hamburg capabilities.

what scale, think to labs around I leveraging support the world the our business. global is can we bring

We new have new actives, to to customers. products a I'll reputation in we're have in and things formulations. accelerate And be developing commercialization, able that of us help new the think strong lot we pipeline they say they'll bring I with very the want working a on

us. all very for that's So positive

John Roberts

I a had guess. now forgotten and you DuPont guess IFF, that's had now Rohm the part Haas business experience I with I of new of and [indiscernible]

Guillermo Novo

well. Yes,

this a always so, liked, [indiscernible]. business Finally, is finally I've

John Roberts

secondly could at had a sales decline up elaborate anniversaried had you last think bit on that challenging. that. it you quarter turned about actually little more the Avoca a because your comments like the I relapse had sounds they And least beginning then, had. there of you've Maybe

Guillermo Novo

different an one and fragrance product much say it's was that we relapse issues. and came business the big the disrupted while is carrier already we was, had market was we mean on. alternative that lines. communicate about develop we I sort our from through have the The message we I challenge think the Ashland legacy customers the I working technology We're business of when Yes, that When was continuation. side wouldn't of I the of [indiscernible] have, Avoca, so into that the that going talk

little capabilities but not So, is a we more has. focus business capability that develop issue using Avoca have that's the coming. the new than is it's stabilizing. developing and the - was biotech purification This slower we to business expected, is improvement stable. the seeing level - We're fermentation, applications bit The extraction, getting that new that

companies been of other a so development lot scale-up So, more time. purification longer, but little bit a and for has it's products we're just doing the a business, the we're of getting ramp-up new of

there an As been message a hasn't we of view really it's and impacting. hasn't much Care. the of just and commentary it the a markets some other path the is forward. is side a the of we've expect had Personal about lot say timing say I just said I in has we change confident that the would there really before, just COVID changed issue, here, just it, look The growth much. issues, but I'm the but executing on questions that Obviously, would would overcome. of been the Avoca we'll the And see it's on I market

softer socializing. So going the salons, to strong. going The segments out, People strong styling, hair, haven't recovered. remains aren't segments cut

it's that So consumer about more habit.

be the ready and recovery about will it's So we'll when that when happen happens.

bolt-on had. we're working, priority M&A as we have making said call, more you we last opportunity forward. opportunities do Do in and question the and we move that I pipeline a we in see for the in the our are other M&A as The

John Roberts

thank Great, you.

Operator

next the Chris Parkinson from Credit line with Your Suisse. question of comes

Chris Parkinson

Great, you. thank

you're Just a what just corollary kind discussing. of

to the margin a some portfolio putting clearly PC from the within away making lower Just businesses. portfolio concerted effort you're

Fraction of legacy also terms in into additional you're Zeta You've avenues to the acquisition ingredients, strides discussing etcetera. in platform natural made addition your the just

the in skin it current appear growth about how your positioning which and be As when growth core algorithm today, to and the ESG the think to trajectory. you and your hair more care, actual incremental about be normalized just components should also Thank you. becoming we stands all future thinking

Guillermo Novo

Yes, question. so Right. great a

the recovery at that. the side, can the very that you look on we're would to continues from have behaviors. the say taking the Care demand ride if to And think we're are strong care, so to we on the that Personal then think look growth that better. dynamics, is I impact what impacted for one growth again, that's at Hair COVID and core actions be the us. going skin just been demand market I will obviously consumer growth space I

in that and think about So a wait we'll what is to just the broader based recovery, see this of everything I technologies. space driving is portfolio ESG

look, drivers our the some we're we this profitability EBITDA can the The business, in change we order, XXXX bolt-on and to the doing, two use first to and all self-help our So been of these XXXX be that the our going innovation get significant our are improve has work the use let's portfolio years, our deliver of growth, want for strategy, actions, innovation approach to activities house change to future and growth do. time. do

both front, the take innovation time do. On they to

as So, we so portfolio reposition to use two a that really new better these want first to years going we're technologies. out of this, have come we of to

that what products the based are side in or Is obviously So our doing the natural products. expanding innovation naturally-derived we're things

is big a can area. going We these and of capabilities to Biodegradability with bring hopefully it bolt-ons a more. of have we be some lot

a strong and of in parts other the putting there already of portfolio, lot of there. more portfolio So a pretty but our given nature areas, our lot a have we're emphasis cellulosics we

that we start much rolling can we end of what commercialization is year portfolio. So this out we a hope as stronger

in year We're I will this more some revenue of start will but year. next of And impact think happen. the lot a itself, the that doing that

greener, then more can segments growth in segments where driven more. expect look you So ESG grow to bringing those market can you and technologies then those at you're

growing that in few good years. is segments of that think the in have a I the even teens example bio-functional, last our been

segments. fully So that we're those specific positioned make in that to we sure to want capture growth higher

Chris Parkinson

very helpful. That's

of flow most solid to quarter, PowerPoint expected of that obviously it percent Kevin, during question, speak just you includes and sounds the during free how the cash share estimate it to saw For second to very like the future the a per heard timeframe. I made one sure current want your Can and you've you targets intermediate which $XX very, we on conversion current still appear million of the front, as you. should growth leap does over flow forecasting the the free of three be I long-term. make the just did And cash XX% the Thank restructuring. correctly, EBITDA, the

Guillermo Novo

think are segments. justify our can't, growth. turn we can believe just them a the very our quick let segments, giving around a where doing let in, we cash we that which comment Frankly, costs. increase make So our areas think you've then specific and want give us. of and lot me we're the I or margin the year businesses, long-term production you them. for strategy, and Kevin, has a to of really and changing free parts that We're we know and them If reduce the clearly core we've they'll EBITDA allocation I'll to been investment aligning it conversion self-help the more of talking It's details, core at return to priority but base, a and looking generation in invest capital impacting the and lot taking year, discipline, for want flow and we that this the we is us. we'll improvements not the opportunity perspective last we're lot are not exit cash taking obviously seen actions to been critical improve everything I continued be about in

And the driver keep discipline forward. both and the self-help we then are going obviously for profitable term discipline So, be longer while will capital action the bigger then that us. growth critical

our over the the have better getting that's I'll targets we want above XX, color. you really flow really give free to it pass some you above on So XX% it higher and targeting to the but if and we're objective to cash Kevin, get the time into

Kevin Willis

several obviously year. was really things. EBITDA to quarter, in Sure. mean well I mean prior point the above I I

up So $XXX inventory capital quarter the XX/XX/XXXX Working level versus To that perspective, ended about We quarter. inventory in that was if about was a contributor. lower. in the We're discipline huge little at put maybe. a the major bit September we you ended quarter. XX/XX/XXXX with the same look million was just that

the So the discipline continued quarter. in

on on saw receivable a receivable. the cash equation. bit focused this the of last working accounts call. to contribution nice We're also We the really accounts talked side free from We about a flow

Our fine -- [ph]. and overall cycle and collections are at fine manage on of cycle working just looking really we're continuing that. components cash We're the to cash all the the

we much solid we're So, the to look during would clearly, a XX% obviously difference the contributors the the at Yes, Yes, that that higher at comments prior of of and $XX things. good the all The speaking were made XX%. did costs. expectation of bare direction echo threshold going full minimum in a I just on those quarter December And million Guillermo fiscal reminder, looking for huge as use. than the depending just number could $X say to certain minus as be versus be But generally timing is quarter. we're that million $XX Yes, push year. or that's is and internally, looking current restructuring to perhaps year, a $X million it good or the either cash plus around occur of

Chris Parkinson

much. Thank you very

Kevin Willis

Sure.

Operator

Harrison Securities. of comes Your Mike next Global from line Seaport the with question

Mike Harrison

by $X cost some net you. good number looks at self-help like Hi, it midpoint. you morning. increased at and action of about Well, looking new million Guillermo the takes, the the puts guidance thank

the we percentage increased a now number point, You have sales Belgium. by but this issue in

more EBITDA increase your the of puts a full-year So guidance talk intention and and puts number, to million $XX maybe takes, type of just kind I by million, was some $X guess like about given takes. those is of it

Guillermo Novo

the your calculate gross think, positives and I the is increased one, right self-help. can margin the increased EBITDA and Mike, revenue, normal two you math profit

higher. think absorption have been would I the

I could It's behind we has impact. QX think quarter in been it's us. already impacted, actually that higher, better but a an had a even

want did be there, over, QX, make it of but it there the focus will obviously to will of and improved if absorption high. offsetting next the the on had impact. I it year. impact this lot probably on for the part a roll volume that was offset strike more high-single that It an impact on will will last is but is So think there part absorption. in and call, year it we digits there XXXX be I we have QX would don't impact, will a sure I flow another say into that have But this in

Mike Harrison

of price picture, terms pricing play material the of increase. materials and recently announced expecting a Maybe acetylenic about both And versus you talk you are out on side then, bit how a raw business. cellulosic raw the the little in the cellulosics

Guillermo Novo

Right.

bit us, that's are the on think a we we're that an materials, are pricing is raw pet are the that. just more headwind changes that this we thing. chem of we little timing seeing up, is that is drive the the will going we're issue, chain think of has we part capacity to business, through raw managing but there very chemistries, areas, for markets is tighter, those that other polyurethane more and of gotten proceed markets, these have of given the increased in side demand additive has acrylic, to raw and We've demand, it's more multiple and managing I issue We're more some new be the materials And and as it's don't on. prices well are the see team market, a across supply the more biggest that's for moving they in activities been the because the big propylene of where tightness some based some not I the and going the in it. some seeing freight we're over so impacted positioned materials use, just is the you'll going of adhesive changes. think on of see I but going the changes not written ones across through things years how it the

that. there. That's side. few And the months we'll will see team quarters, biggest bit over next materials raw a on through area I So, the of the and our think manage just little volatility

Mike Harrison

that maybe for quarter. All Kevin. project question the the took charge impairment right. an quickly And guys during capital What's on you just a

Kevin Willis

and we've done the was big It had kind the engineering activities was, project work valuable that thing could was direction it ahead potentially conservative and that some than HEC strategy to just the that our got valid felt related and and really ago was is go it three just at keep another We the two, ahead shelf HEC the write years of future, principles, HEC with ongoing right we and using is accounting primarily be go that on off, around value work, just all The off. rather but decided write to do, related. in still and we to so.

Mike Harrison

thanks Understood. All much. very right,

Kevin Willis

Sure.

Operator

of question Begleiter the comes David next Bank. line from with Your Deutsche

Katherine Griffin

thanks is for Hi, taking the Katherine for This Griffin on question. David.

forward thinking your sales going kind think into businesses. that full about Is the and going So the to how just be rate for the that quarter for impact lower the first quantifying year. just of should that on in how to plays for X% margin how just QX, impact run just we about X% exiting the right should fiscal next you but or maybe wondering Thanks and growth. then expectation that

Guillermo Novo

business, through in. some part includes least of We'll end probably it. of managing Yes, that's out Obviously, in through business and profitable year managing on contracts. lower next exit that of this exiting the the we're we'll X% year. of X% be we of into factors year, next the the have the be already already the By to businesses, it, margin exit that so baked

I we're on about just look, materials it's is And This in right differentiation, ESG sustainable and that can the continue get manage to going focused we future. really invest not better bigger the areas is, for the that through. and areas strategic the we where message by just want think selling to think returns segments. priority that's us. we're sell But differentiation the We we process So see is which it our the to anything.

Katherine Griffin

the Okay, XXXX. flow you the savings talk great. cost could curious And then, through just temporary of about if from

those for flow. how half how relates in your and then Just through the expectation to flow second the cash that

Guillermo Novo

that of first get identified. phase, going the done. we've most the value mean to I the phase are So, SARD is the we

activities know It's Kevin timing the communicated. related let a to because on pretty I'll happen. so to work maybe an some of but finishing comment few those, We that's have it's bit issue well a we've of just what's [indiscernible], that People defined. little off of going timing just we are specific and areas,

are in COGS part and different and what moving need people explaining we're we're regions we different strike side, that work doing the doing, that, we're mean, the On Belgium to we thing. of paces at obviously that's we're we changes had same through Obviously, a engaging I the doing.

with explain were like the part doing think what customers, changes, cost the we we're that. our reductions with investors, even just on we we're and with things like everybody been transparent them think with working we're need questions situation, employees, with doing this so understands is I strategy. very future. our our our This as making to on, saw the is I there we've clear everybody that do our for that DOL and is

clear I this long of these been are to very or think we do term. sustainable in need not we've some the of, operations

the everybody little and timing that but to it's bit operations, timing to think back more realizes the process comment want a you it's of I a Kevin, But through we're on purely that. going things. of do side and

Kevin Willis

plans on right through the the sure. are our would of right the, of on where piece, vast terms SARD I I target, we way the on schedule majority Sure, initial mean, on in that. say

increasing set fine and of team and help with continues year going range the would for we're which the are things of have year. midpoint schedule, specific certain we're there. I full wind business. we'll and ahead job down within part on execute side, We for we this a confident I'm That'll to why happen to is the of COGS the them some our closing areas fiscal nice really that do well that as and done say out other be has

I of your or part I related. fair think lot when of is what part maybe think to companies We something that normal think we're avoidance about be about very that and I again of that down everybody question thinking of internally a we've back and permanent. going was is a an pandemic that thinking, back It's to to a think it and to comes and lot are a levels, around, call whatever the of interesting the, means travel actively the and I that don't savings internally etcetera. reset going we're over lot case it's that's bit cost pretty and been is talking is to question to then pandemic XXXX were initially it normal talking about think and our bodies are going cost

there will ever I basically be now. we're be maybe to of because resets. course, will mean travel don't there going none there I mean think So are more right XXXX But see levels again. Yes, I

partly And at think it's an pandemic, beginning is going and were to for extended to the a we like sorts remain than P&L other about so of thinking looks to be chunk differently the permanent of just while. going because been period those I the like in companies things of we that such many continue and perhaps it's are

put there to So part for you. out I just wanted the

Katherine Griffin

thank you so Great, much.

Operator

with Markets. comes McNulty from of next Capital line John BMO Your question the

John McNulty

Yes, thanks for taking my question.

guess, in so, on get the has I thoughts a lot you least what three say acquired been, some the think understanding so can a putting maybe But give business it. know I us out at over of growth of about you're we just not years how So financials that to or better the could last terms of business. I guess, on

Guillermo Novo

right. All

high growth digits, make So no, over in we've the single digits X%. solid mid-single been the having

industry So more. is that these the traction newer preservatives they've really of good valuing some got a around Personal Care

we it's our strategy, it's growth, margins, the to accretive accretive accretive it's accretive, it's think to I when So, to ESG. say

So This nice fit a really us. is the lot for positives. of a

John McNulty

Fair But just is sounds definitely largely XQ, the on it. get put to strike. margins, else. strong when kind I first points and And about if the of there seasonality It year. up XXX enough. about bit will. think is unusual right whatever go the noticeably given helps. the than And an throughout that you lighter Got of like And or quarter or as normally the guess just little other may be is XXX the basis then you quarter numbers your another think way that that's than you blip a you this everything that to track maybe it sequencing then we of

Guillermo Novo

seasonality Sun comments look you established vacations if but revenue Care comment give I'll So at or let mean is Kevin, longer you the side, well seasonality. is rare, coatings, the just businesses are here, I term some for me also and ask to those

more. less things I think seen We seasonality pent have and up there that is have little and just right moved now projects a bit

than on think side, probably stronger been I So it's the a revenue little bit normal.

equation. but see a on industrial been we'll clearly the happens So next what especially side thing of it's year very positive the

is impact, the and to an the mean self-help not driver is side, If recognize you at for us part look important has that I the major EBITDA seasonal. been

because So the the cost actions, taken the things now we've mix improvement coming actions, all action. are these

not see think I earning seasonality. to going that, of things, the you're the So side

has I I it don't seasonal Kevin, that We more side but get and revenue color. But it of will get provide we one any impact, is been it is if think could less. you as the know the other the

Kevin Willis

many just basis to by helps, certainly margin we're it's around resets completely there the mix a come margin I business. That your but of XXX focus portfolio the those our a to of are granted No. we perspective it's and and continue really in improve focus a our long a show terms mean, that, our in agree to of is that that's term and change through parts at EBITDA take improvement I commentary, and as out to more real in sustainable work these expectation of on lines that mix but the some our margin the margin is the that parts we profitability seeing that continue profile step on definitely across with and think all execute that and in self-help top on doing of cost change continue cases business we're the lower no I lower improvement sales, about a looking is with grow units. my we're overall exiting from higher improve do means and do product and and again starting of that it's and permanent in going as margin we're business see to to

John McNulty

Thanks very much for the color.

Kevin Willis

Sure.

Operator

next of Your the with line comes Jefferies. question Edlain Rodriguez from

Edlain Rodriguez

mean like impacted good guys. with issues can do business. you mitigate you, that of been Thank that COVID, or softness to the in morning on some by been what I waves, managing the you you're you've that how have like Personal businesses Care. question Quick are the having what doing

Guillermo Novo

things mean, I things think things. control don't the the no, there's we we and I two Yes, control.

So core demand has been softer.

can ignoring much not activities. is have to Personal there we They been people's Grooming has the changed going social obviously So have and a going and Care lot that until do people salons, activities their to with out. do start

our we we the issue control. strong can And the the on position that that, are areas strengthening time things So seeing what the is in is using growth.

other with areas, Launching our lot think in there's repositioning new I products friendly. environmentally of offerings an areas, bio-functional we in the new and XXXX, more hand a sanitizers that offset. area more as saw been

of We for the rheology microplastics, applications lot can use microplastics, new for goes give and our of variety solutions have sanitizers customers. additives areas we of a formulations in other including of formulation example, hand space, for have that lot avoiding a but a it into where

these Even positioning that customers. have been you and driven you growth drive can differentiate in equation we and our non-impacted that you. about impacted, with the but come rates to achieve higher and technologies can products alternatives driven if the it's segments So we're ESG as skin more the with as ESG side in also both that growth introduce of that areas bio-functionals can seeing

saw XX% bio-functionals can and X%, XX%, can segment that line but can we that a skin at grow with XX%, have a product get at growth. that as So you grows you

of the making sure Kevin new and time. bit a about those areas. that it's So takes I we're was on technology, it taking focus talking that mix little part that's action strategy think With the more

work getting time ourselves, that self-help this want actions and to of use levels products that we're kick off, in we our the can position part to so innovation. as with some new So, of of growth of the we the tailwinds

M&A area think that that will help in be space. I will another the us

Edlain Rodriguez

one to lines, that's started of yes, is in terms product the great. quick And exit great. you've one which margin of, Okay. And some lower

just there So, you that when to more if the don't right even like current where at now, see. candidates portfolio you look have you but are think is names, lines business exit as be it for might

Guillermo Novo

You cost know, said, I out. to just actions, think get trying our this and I not self-help squeezing about as is

some being units. The returns. now. side, that purposeful that I the difference and businesses, that think we're Frankly, the on can margins at have look giving cost technology we are taking you if have improve We production by lower in unit we're especially of see is very some do not just we're changes, those We take where cost but on growth increase the process that are we're exiting COGS the going loading. units we that can plant actions right businesses not than we that plant, actions and going by production some

to to example. take so. we up can we turn said can't in around. The approach we going clear if fix, can, lower then that's those I is Belgium was things we invest issue try the look are not if significant we'll fix we our think, feel first And with it, identifying there really it, production margin We're can can't in So if had them feel is other a do We we're segments. situation some exit actions. if plant follow but units, we we'll And we our we to action.

there a my past company plants. we mean we invest but then very recognized that was experience in, really later some years was nice I and we day not reinvested production and end part more sustainable and that can of the we with from it a like we're working in place get everybody approach they're growth. doing. only driver back think realized but the last it because And return, just with to not getting a drive exited business of at I all different we're it, that's can just I these that different we were that transparent And about that reinvested that grateful the businesses team that technology, say made I in the the us I the of the in a and two we and has let's self-help. work and profitable that core whole it that's think

company just important businesses cutting, about led business model have, the message So to it's not we is cost an not are all business adopting our same. it's that self-help the about that

has a one company. not proposition. fits it's rightsizing smaller So value size ourselves It's about to all, different everybody a

We are now materials company. a pure-play specialty $X.X billion

that, profitable for want that forward and billion $X, make purposeful a So dollar growth. we that businesses, for have carry what have sure And a company. we're structure on then structure turnaround not to a being specific we're doing $X the because ultimately we is

Edlain Rodriguez

That sense. makes you very much. Thank

Operator

line next from the Mike Sison comes Mike. Fargo. Your question of Wells with

open. Your line is

Mike Sison

guys. Sorry,

for Just the sales between acquisition, the what synergies business run contribute your that and their business & overlapping are Mayr and term. longer on question Shulke rate Guillermo. annualized one then What's sales business the that'll

Guillermo Novo

Yes.

will you combined & we're it, you the said, be say Shulke for of and is So which of Like the itself, the business, question. part be I not of will the Mike, giving the majority specifics thanks $XXX same but customers, Mayr business it would range, profitable are. segment just the to in will in over let's a We're Care million be our very areas. same longer-term $XXX to what our selling largest with million, expectations Personal probably line say give to

on leverage want important only talent our not to side, us, see can synergies People, very make their we we manufacturing we for is lot of opportunities the sure So so that production. so them part They interested lot keeping a become a growing, of we're more that aligned ESG the driving product we're have offerings advanced, core in. but experience with business forward. they that more faster the to

we global looking have a footprint, labs significant globally, company, much synergies side, just not is the bigger we have of regions. smaller that we're not the preservative think on lot to more we synergies. a for Personal much is much Care in there's overall. there. a And This going So have And business synergies I be that but growth

So a it's going infrastructure to to their this plug bring of growth. of leverage plug overall momentum to in, us. this them And us our lot in parts more we're really and case, can our drive But into business some and a and really then areas. play for give capabilities in allow

Mike Sison

it. Got you. Thank

Operator

turn back time like At would to this to over questions. there Novo no call for I are remarks. the further Guillermo closing

Guillermo Novo

Thanks, wanted Phyllis. interest. Well, thank to for I say just to your everybody you

not about an very the light we're and take meantime, hope actions taking had, on terms in very not really but just we're XXXX post if at segments outlook. I improvements XXXX exciting but the with of performance we a look of some we're it's for COVID in we've just position I seeing, I think And very maybe seeing will well, that of time for making. it's the all be seems us. bit going the to is not end and the and control improving about of but at as rest when think of little these we There be come. that. us the things As progress longer, to It's we're more it and tunnel happy And beyond, it'll will the we're There even you're that the about a are issue excited timing.

the So, talking in for to you forward near thank look And you your to future. interest.

Bye. So, everyone. thanks

Operator

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

disconnect. now may You

Ashland (ASH) 4 Feb 212021 Q1 Earnings call transcript