ASH - Earnings call transcript Q2 2021

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Operator

Thank you for standing by, and welcome to the Ashland Global Holdings Inc.

Second Quarter 2021 Earnings 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 call is being recorded. now hand would to call I Mrozek. Seth Instructions] like the to over [Operator ahead. go Please

Seth Mrozek

name Michelle. you, Second Earnings Webcast. Ashland Year Ashland's everyone, Quarter XXXX Mrozek, My Investor and Relations. Call Thank Conference morning Fiscal Good and Seth Director, is welcome to

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

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

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

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

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

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

for We open will line then the questions.

Now please turn to I'll slide opening comments. Guillermo? turn to the over his for X. And call Guillermo

Guillermo Novo

and Thank to everyone. good morning you, Seth,

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

foremost, as execute I'm pleased strategy. units our and by our progress First we are making, of the business

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

lose production but our coming in equipment raw teams responded as and impacted through our also in only quickly several of improved, material Coast. repairing did an as impact while the costs storm pumps, online time, offline Gulf of subsequent many be have addition, to facilities additional the of The we in worked chain to freeze safely continues of largely the for availability get weeks. Storm issue. possible. supply challenges, has back and we also In Coast which And dynamics and Texas-based we other two the Gulf these February, US resulted in facilities well Not to pipes incurred Uri

begins improving challenges to global emerge demonstrating expanding growth, priorities we improve and our flow. remain pandemic. discuss world in quarter, As more to these the the unchanged, raw Despite detail, margins as the material business will organic demand during continues from free slowly cash

X%, currency. declined sales Ashland favorable of For the inclusive quarter,

pandemic consistent, the large began to hold. exit global perform segments strong to social changed pharma well, some low-margin the strong year pandemic Life currency. and to pharma were -- remained with trajectory. thanks year-over-year demonstrated prior demand and inclusive strong Science sales to favorable behaviors. flat has pharma with the a producers market reality Care, as planned large with concerted producers patterns the of take recreational consumer, continues global to when the of to as buying businesses, Excluding linked Nutraceuticals continues efforts the with business of change sales growth, year impact Personal team prior period, In

and We Grooming have linked care in Wellness. styling, for not seen hair sun demand hoping to was and businesses, everyone other recovery the

we low-margin exiting For commented also call. we lines, our of Personal Care, product continued on the last process

of Industrial segments, contractor recovery recovery coatings, strong continued demand. globally. we demand our significant architectural Additives see to volume with saw across global as Specialty business up all continues showing markets, picks recovery, For

also business Adhesives saw broad applications. Performance Our across based growth

to lower to quarter impact In SARD potential with free sheet substantial dynamics, caused chain on disciplined well improving profitability. cash negative Storm expenses Industrial supply addition the in the difficult minimize we And strategy, to by Uri. executed demonstrated again, balance flow Please turn management. businesses Consistent the impact had slide a generation, Ashland's from X. our demand dynamics the during to growth meaningful due our largely

million as subsequent total in in our certain also of ability repair QX, million $XX absorption and Consumer of to customers' adjusted the we impacted Of the and EBITDA. $XX costs, loss incurred reported storm to million costs, winter orders. higher in $X and our driven impacted receive Specialties million by result a The $XX costs. As ship freeze, storm this ability

profit million shifted QX. $X roughly such, of from gross QX to As

QX, be us expect into orders also offset shift the trends remaining the we of of will quarter. the be in June by so order this we in far $X April, Demand impact positive seen million of impacting gives costs this confidence the have offset. will there and While

team our the during offset to is absorption behind raw the $XX impact meaningful although would for pleased managed inventories external the impact work Other expectations. the well impact quarter, intent to that employees rebuild us. million Ashland largely ensuring by than the as Specialties is progress our our during the and supplied. the loss very of while freeze our this our current challenge difficult Ashland They of the and I material the So with from making work was were are customers we storm to the another during all safety note quarter. that tightness challenging. Consumer overall is performing the businesses I'm

the the of Fortunately, and stated I Coast impact behind Gulf confident for freeze I of the us am as the are year. outlook the in remainder our in and storm

financial pass update. now it to over me for Let Kevin the Kevin?

Kevin Willis

slide quarter. in the good and Ashland everyone. million, prior sales were down X% $XXX currency turn versus to eight. Guillermo Favorable Total growth Please morning the year. you, during contributed quarter Thank X%

SG&A R&D quarter in Excluding the and the key the we costs declined realized as positive impact again items reduction programs. cost of

experienced costs Gulf previously related US to $XX subsequent Guillermo storm we million the as discussed, of Texas and Coast freeze. additional However,

In environmental expected reserves million of we at addition beginning quarter. our legacy increased more the roughly the $X than

entirety While environmental we year the was year the quarter, than note time-to-time. EBITDA do What's to environmental these EBITDA impact adjusted of beginning not charges the million, that the million. legacy the changing. the I'll of $XXX that very after adjusted decline of environmental freeze $XXX do note prior the remains cost represent at Ashland's from total, a not incremental for consistent more that decline. year important cash is remediation and In and anticipated charges to anticipate X% compared the occur from

executed chain freeze In impact, disruptions impact the of units the related fact, supply and ex all and improved year-over-year the EBITDA in generated very freeze business quarter. spite in well

to year Ashland's $X.XX, down adjusted EPS items XX.X% was basis discussed again amortization excluding prior year. point prior reflecting X% the acquisition the compared margin EBITDA a above. decline from Adjusted XX was

business Please each turn to results of our the review slide groups. let's three Now, of nine.

related markets Life that total, with reflecting business. the impacted favorable Life behavior. prior prior by job quarter the were team during question. care the X% quarter. chain customers end in end X% impact. personal Specialties. dining pandemic's to of strong Sales were excellent and consumer global EBITDA adjusted only XX% other First, million, on pandemic-driven markets impact Life up done $XXX of as Consumer was increased pharma begin sales an nutrition were Sciences down the The when Within freeze currency were from $X down slightly sales In as the were stabilizing Sales sales to pre-bought million. inclusive in quarter I'll down during compared several double-digits sales and has quarter favorably down the approximately by factors. Nutraceutical was impact year to supply Currency the Sciences growing Sciences to Sales year the the impact quarter to X%. the due

care personal accounted of decline exit or As some previously million. the half year-over-year $XX discussed, for over lower-margin which sales within we to lines approximately continued product

margins. Each hair styling top these implications will these administration the this The the to self-directed vaccine during impacted update we care on call, these dynamics. mask they to Guillermo an consumer are Later and also global activities, team. the of related leisure of favorably being and addressed COVID-XX While continues pandemic certain well-understood issues social impact are line in wearing. actions that actively will on impact by provide believe care have activities, consumer mix oral the behaviors context and sun

approximately care over we EBITDA for the some and $X as freeze Finally, personal year. experienced past Avoca lap posted solid in adjusted The the the to million issues gains was quarter. sales begin impact household

Coast SARD margin Care in lower XX.X%, prior recovery. Industrial storm of to X% nearly in from in to growth from We and $XX Personal prior expenses Currency $XXX $XX broad-based Adjusted with consistent $X had by demand slide mix of markets declined XX; X%. also favorable adjusted margins the across a margin XX improved XX% XX%. Specialties total, EBITDA Specialties, million, industrial million strong to impacted Consumer Sciences Consumer In impact inclusive Please up the improved year. adjusted led point with the freeze. to EBITDA quarter the a quarter, million EBITDA end and sales sales million of by all EBITDA basis favorably industrial declined turn Specialties' to saw increase slightly of over Household year. Gulf For while and adjusted only Life

demand was double-digits behind globally. additive all business work markets. Belgium the seeing where confident Performance particularly for The construction lower the coatings facility in are strike now energy demand three demand quarter for and the X% our year. contractor growth fiscal adhesives Our the end reflecting weak only Specialties global DIY paints Adhesives to architectural during sales at facility primary strong Belgian sales the up for issues strike improved by the following earlier remained US in Sales We're were grew us. that strong the Industrial in exception and markets in applications reflecting growth we're in at

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

the Coast turn the Turning intercompany volumes million Gulf of period. from storm following consistent Specialties Please and market EBITDA Texas. XX. to were which for end period. Intermediates Growth slide to sales freeze & continued facilities year offset Solvents, I&S in recovery prior the million from million was in US $X Adjusted prior the Consumer reduced with up sales in was resulted impacted $XX $X year merchant by

have spend the in about strategy. to was important related SARD we testimony did COGS cash programs. compared hard a continues Ashland's working balance to our reduced million year. also driven sheet flow management, minutes increase be to creation an in to cash restructuring million, interest cash is a to $XX million reduction As free $XX last excellent and prior $XX payments capital and Total flow taxes. is the improve included cost generation component cash an quarter, which free value few It done capital, the cash The improved I'd cash like quarter by result million a flow of $XX of I talking free flow ongoing expenditures capability. and including our to and This work lower

first For $XXX Ashland of fiscal free half the million XXXX, generated flow. of cash

$XXX exceed current in our meet expect million flow generated As of second the half of or we second we a last fiscal year. And cash in free half year. that fiscal to of the reminder,

rate a For inclusive this EBITDA the million XXXX, year translates north at we free costs, converting restructuring to expect be to fiscal to which flow approximately of XX%, of $XX full cash cash year. for

Please EBITDA of least stated, post consistently we've to goal turn cash As restructuring. to flow XX% our convert to slide is free at XX.

While there from the I'd of takeaways quarter, three parts moving briefly this lot results. my to were a like summarize

growth of segments margin. the the generated EBITDA excluding business in Specialties, Consumer all impact and strong EBITDA adjusted on adjusted freeze First,

turn was Corporate and the over our to expect the the despite result the Guillermo? in year, consumer time unallocated Guillermo fiscal quarter. underlying while business Second, outlook timing favorable unchanged. approximately items continued And closing quarter. March experienced in million some assumptions expenses high Guillermo. was With in recovery, units now generally will items legacy higher this due back call that, versus onetime $XX of prior remarks. year corporate due per remains year legacy we prior million this spend costs primarily $XX more unfavorable I'll quarter be demand unallocated the quarter our his corporate fiscal $XX our to quarter. XXXX finally, this million to and including fiscal net expenses in while was we discussing global items mentioned, unallocated uncertainty to the to to first for outlook related our And the some

Guillermo Novo

Hey, thanks, Please XX. slide Kevin. to turn

we on capture going the in we productivity capture XXXX. and discipline identified. actions we savings completed act of SARD that innovation, clear mix in working with with planned we exit allocation initiatives, most and we cost which profitable half business same To from of And and goods drive accelerate expansion; margin of levers implemented plan enhance commitment, more year We're free the our capital fiscal resilience; and lines objectives priorities to will priorities. growth. already was first the very we showed million in our of implementation have priorities We're CapEx cannot Between to our lower-end the the we've focus capital conversion; improve. flow operating XX% both remain of XXXX and product sold align of continue accelerate these improvement million to finalizing on the $XX and $XX demonstrate feel strategic clear: XXXX cost our reductions our our cost have complete, over strategic for cash to drive the segments profitable achieve these With we consistent date. and

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

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

inorganic. drivers, shifting continues Please growth be slide XX. to to profitable focus Our on accelerate turn to both organic and

& opportunity we announced the the As of our about to signing We're a Personal end provide can year, personal it incredibly markets. breadth definitive Care reminder, this our agreement Additives customers earlier we the a this broadens acquire Mayr. business solution as of the of excited care in Schülke Specialty

to the close XX. & And to we June Please Ashland. quarter. as expect to continue on to We to previously forward Schülke Care look slide during Mayr acquisition indicated, I the team Personal welcoming turn this

with around uncertainty. COVID recent seeing biggest world, As we're developments remains the the

US in other countries terms leading the Like recovery. China for of likely other countries the are be the global to Although US, most the of versus the economies -- other their drivers types of the impact and vary most economy but promote most demand, vaccinations, to different markets. path vaccinations continue controls Government general and to economic reopening sustainable will actions the will recovery. will support across regions to

and pharma by stay-at-home be to and continue uncertainty, that center health and the concerns line remain trend lifestyles. current most Care the will -- related demand the as nutraceutical for of expectations Personal Demand will are resilient, hygiene our strong show everyone's continue will and driven at unrelated and segments to attention. Assuming segments wellness

recreational and will continue with the contractor expect longer recovery, to take the globally. vaccination major the mix will will will markets. assume global we projects across the of changes primary this to recover reopening the XX. safety If rates, demand be reopening material However, the vary on business. driver economy. increased chain challenges we present recovery given recover achieve Short-term, by countries comfort but advancing of of vaccinations vaccination improved economies outlook some of depend Industrial that most and rates protocols. driver Please to a increased raw economy Acceleration well that likely our occur will recovery, needed consumer their for see turn maintain tightness rates will behaviors it positive the driven global take current to spending to many the year on will to open be supply at of would slide over some fiscal consumer linked our to frame. by in Overall, year and time in vaccination XXXX social segments recovery as as

the Given is business, important the Ashland. global acceleration our to global recovery profile of the of

and Our Performance recovery. continue XX% US-centric Adhesives strong demand should is business to see

is of In Personal additives However, our with outside household, very Care of portfolio the our sales US. the XX% are our outside the of case and global of US. roughly XX% roughly sales

As will demand I of most current continue. continue business recovery, lines indicated, trend if to our see

continue consumer Personal the to segments recreational in and in be Please to changes that are by social impacted mostly COVID turn slide XX. Our behaviors Care.

continues grooming dentures vacation stay the hair mask visiting as is impacted wearing travel. industry to socializing, us. dynamics, impacted reduced some reduced and continue in habits, be prior Styling most robust hand of be behavior sanitizers. same ones, we changes discussed hair demand the see social impacted we've the recreational segments, calls: in adhesives has destocking. styling, consumer for This has consumer segments our given segment impacted Hair impacted continue Care denture home of Use as salons. been and at to largest care, by sun with and Although by in by well changes been by concerns to Sun

worked perspective, of experience a the still that there strong. off. in being Although demand From overstock pandemic, due personal use working is a hand was remain significant hand build to sanitizer have growth and stabilized segment sanitizers XXXX – significant did

and However, has demand the be expected reopening driven of the been by increase in restaurants to schools, delayed. was that travel

demand we the of We'll overall growth, recovery delayed vary. to these in segments, consumer be the that, segments, mix comments, Slide across continue in in Please business care We'll stable our XXXX, issue expect to but line is XX. turn personal to see will so timing recovery these life in insights industrial with For US segments. recovery. recovery especially of line and more about with see China. continued science the the are we demand see may In some the some forward-looking

And actions remain headwinds FX some Storm execute We first offset to we we will expect Uri. the favorable. half to continue of year, of the our Belgium the the and strike in self-help encountered to in

availability and performing & In Schulke Please our that XX. am capture I to and/or are absorption to incremental for excludes businesses, cost the is Our XXXX pleased this that quarter. to they report in fiscal inventory Slide $X.X our than this to raw is to to will material EBITDA to manage outlook business, close the pricing other outlook $X.X million in revenue rebuild past. line material as billion in our demand. dynamics impact, $XXX from range. this contributions Mayr which the be acceleration Storm million especially outlook not in included businesses continue are, in higher raw $XXX to Uri The billion expectations. the adhesives preservative With also Upsides have the with would future be in turn allow us to and expected year summary,

focus. our maintaining are We

including advance pricing raw self-help to executing and dynamics. inorganic our innovation managing and M&A, our furthering continuing profitable material and through our proactively strategy, growth are We actions activities, commercial

we through are recovery the US stabilization working offset we outside global things the the as and of plant While to we supply the material inventories. the Gulf impact raw on COVID-XX freeze following can control. the Coast absorption are improved focused the rebuild of We're that pandemic control, our timing

Ashland's are upcoming profitable the line drive perspective our also We And long-term offering executing share We're objectives portfolio product opportunity are and we on Investor growth. strategy have that excited by segments personal to transformation actions. to expanding continuing care our the internal our about our self-help broader in less strategy Day. We're an impacted and of been in pandemic.

host the recovery While a event, to we an initially pace the warrant of in-person summer. planned the pandemic may this virtual from event

in the We Please want Our and announce to closing, event to turn teams Ashland process you environment. more are we future. an for in sharing their plan I near planning date look forward and Slide working on thank team In internal the leadership to for to the XX. details soon. uncertain participation diligently once the a again with proactive

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

Operator

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

open. is line Your

David Begleiter

can And Guillermo. half likely will in you peaking raw earnings discuss Kevin, the you, material be cadence some second Thank QX? given of costs

Guillermo Novo

it's that's especially note raw It's So we've small need It's is the that talk – the materials. is we product make can't not And materials major it. we for on thing had when we raw and availability. that to ingredient the the a material raw without costs, necessarily important one the about additives biggest impact not costs. business

look a impact the big for part has cost So been at bigger the that the portfolio. things, just of dynamics. raw materials It's – of availability the raw itself side material don't our pricing,

side of in moving That's the In in polyurethanes. cost you QX. see the petrochemical acrylics are impact things, is that We're that. biggest the going on to of adhesives. linked side, and terms the of Most

I some think up there. went materials but Raw availability we wasn't had quarter the impact. in

was So as it's procurement not high. like the

be to We an story. raw Ashland the broad already last than – back some a is story quarter. bit more material a really dynamic raw from rather the of really seeing peaks materials the are But that's adhesive little coming going

Kevin Willis

more a timing over mean, versus is the at of I entire the portion I availability. prior basis, additives look And very cost of portfolio, – on availability for the as indicated would over price our year, balanced it's an overall Guillermo say Yes. you about portfolio. when for outlook the

Guillermo Novo

just a big relative other one bend interject, I message the about striving by sort because a want that, because notes companies I to company. driven the to the stability. much portfolio expectations what's I would side especially towards David, the And some did see pricing, innovation, and It's commodity comment of do consumer we to of are pricing. happening add driver. results to and additive of point make pricing. of talking Yes. a that not has are more become Pricing value more an We're not with is pricing about some

that seen some the not a are So company. of comparisons I've probably not appropriate commodity because we're

to trying areas. would we're more other additives peers our So in be players companies, look at more the of other

So story again, going story, you're material the an petrochemical very dynamic that But more it's much is this raw of pricing a rest forward. to for profile. going more different adhesive of see because

David Begleiter

result No, question up to sharply QX. to a in Is quarter sharply I&S that C unfortunately. contract use in that prices no. assumption? second And prices word earnings a as QX are just up versus the I the Very June be would clear. BDO fair are. expect

Kevin Willis

the That is is. is profile and the already. happening QX commodity it type Yes Yes. that more in of most

David Begleiter

Thank you. you very Thank much.

Operator

with from question John next comes Our UBS. Roberts

is line open. Your

Lucas Beaumont

please? could you turned of, in kind progressing of March? that discuss Lucas on Thanks out Hi, rate April? yet sales adjusting my guys. resale you underlying, see for second for was in In coming positive the the And is the what just This exited half Personal business organic the Beaumont after Care how question. has taking And John. so for on trends there exit

Guillermo Novo

segments some quarter that will the quarter. the recovery to or demand and commit from couldn't shifted orders of say, ship is to in one obviously, because slower. talk the on we I the more forecast lot a about other but we high our couldn't the situation. expressed raw I obviously, customers. being Yes. When sales had that what that's was -- demand we to last to of even We just actually in expected material -- bit -- based is we strong, of we a that actually came would because

a of other supply because there right some couldn't market lot now those noise is are of orders the So either. people

some there's the situation you're see bit more material And short-term. demand think as I in would to definitely core that's not normalize. say these a will going seeing things little with are we're will segments improved raw now So demand segments. longer, that aligned is the the a that that but of with froth, the the the on off little right eases upside more control. But last bit part recovery in I pattern a in My year start view we dynamics take

Lucas Beaumont

going And Thanks. paint shift the largest seems outperforming outperform with coatings, way on more pandemic. paint is Architectural like But end recently. industrial believe. I until as industrial the that Cool. industrial the specialties we to just out been has for market to back that's other come now of

then how is the dynamic more you're to the markets So there help paint that perception that I outlook your But have impact will than and the architectural exposed industrial. maybe business. could you what for us understand

Guillermo Novo

Yes.

said is of So part on you Architectural biggest business -- as Coatings. the our

at business you they've If the equal look our been results to or in ahead.

Has very supply or go global. We everybody customer you world. by customer better. been we're If equal the to in

share I we're really of and everybody. gained a lot done -- great actually the has doing the we've seen demand improvement a team the of We've from work. think lot

very, good. very feel we So

you look company comfortable they'll and As we last people had we this are require a There's leave And developments the and the would contractors -- the be new their move especially at segment it area seeing shorter protocols I house is us shutdown. you -- industrial we is the regardless that -- into do forward and some I if a some But in working the it's market contractors on know get we're People outlook mean impact both the contractor coatings because but that that more working. pandemic think architectural what the let we're point of for at term see new growth on. want countries, in the fear overall that time. who working. But much not year. to safety more

will globally which things the independent of think to contractor business business, and the bigger continue like I that is vaccination recover. the

And So to discussion and I very, will would will and recovery contractor. looking our offset products see some there demand. because is at one strong think DIY we was it that very would the strong continue everybody continue. was it a be is that by up bit little that the for more soften

what both is robust. remaining far that think seeing I so they're we're pretty

Operator

Our question Capital from Markets. John with McNulty next BMO comes

Your open. line is

John McNulty

questions. Yes. Thanks for taking my

levers like the And back. freeze -- sounds guess other kind front like you sounds on help offset it to side like or as whether feel understand related of on we the things what kind throughout I there's you the that rest those then they're cost Can right year? sounds to the it there the they're some issues, revenue can side can like going the it costs are So even cost revenue of of go on the the offset are you help that. you you side us Uri-related of on Texas get enough to it

Guillermo Novo

a So minimum and it's the raw at really about material availability.

enough have We're meeting -- been demand. We availability. our we've

things good. I is situation teams So meeting little actively. we've seen improvement like very still be improving strong. And it's our also straight see improving. But in supply. plants The our And having are you're is that the is say is think with would a and inventory. we confident every risk Other is thing significantly. to rebuilding will news going raw improve with demand the run to we it's the so But one feel remaining that a still that's core The just to raw feel tight. that lowering working materials been the see start have very other are is two significantly. material probably more really level absorption to I'd people can of issues the demand good I that build we availability That we far the can bit week we impact. where inventory.

not more So there going demand build -- improvements situation. on But sell seeing we don't and dependent it that what's And material the is raw be in area. to good we're some right we incremental is more the maybe there we're confident clear news inventory feeling it's really and now and the that that more.

John McNulty

sense. makes that No, it. Got

ahead. go So

Kevin Willis

you in quarter. math John, look at yes, the the

freeze. So quarter specifically $XXX we in reported million the for $XX had million

a raws them do. As likely we that expect to would be to recover Guillermo said, chunk what if do of able to

push don't takes. see weed call if you to changing on And if current $X the segments. and the corporate emphasize this million being environmental Guillermo we chunk so it you the not that. of consensus you We've terms You expect of all And out March the of industrial quarter look in what through the $X remains you, as noise. robust. above to $X talked about legacy into or kind really gets it GP right that the of And numbers million just million about at quarter. really as demand stuff indicated, puts gets the consumer of it can in biggest top We of, of the segments of --

material the -- availability So I that -- think can can impact course chunk the continues that year raw I we a offset we're presuming we think of improve. over to of freeze that confident

John McNulty

it. Got it. Got

on. a makes or That Kevin maybe another to gap help that maybe And question fill can you Okay. in the us sense. then question

XQ maybe to of puts first on longer-term that of cash we cash XQ a kind of should look better of cycle. usual. kind your little target down target usual. the even So that a of rest certainly or I kind temper a flow XX% on than of look the front looks takes much exceed maybe as we bigger fair, this guess and about be that off the year? that are -- there like Is had conversion bit other But some throughout thinking benefits half I And year think to the it than the you're start you're

Kevin Willis

to There good for are over big of course So We're year. fiscal really two question. this of the a about out pieces related going moving year. will that million cash the have cost it's $XX pay restructuring

number. obviously, a to negative that. about that's, So overall talked We've the

and working On is more capital. offsetting the that continuing positive or we're less work to on

business low-margin this product -- care, out And inventory personal some line selling the so as in with of we we're of that. do especially exit of primarily

see working capital. to incremental we should so improvements And continue in

line “normal”. takes over we are things disagree out your assuming our expected I and continuing the sure to And likely pretty fair in made. dynamic terms overall lesser the clearly year. any but problem fair each very with unit and make fiscal it's it the its don't as team of say is play receivables probably on will their collections, And we're extent on in So working way much of on that of -- anyway. have I'm And end own continues capital there I on it's to say terms but disagree inventory, with math days a business puts in that, that how up be way. outstanding. own in I to and the remainder front to think maybe payable yes and working also was with basis that to but each a for pleased But they've payables we're closely receivables QX We to But than bit would reducing just approaching don't on stronger they're don't focus the not with are very progress because terms too long. where in progress an also and

piece, we bit of then the through see tailwind get course the over So capital restructuring working cleaner. to be should the once a side a we numbers And continue on of will lot time. the

John McNulty

Thanks clear. it. Got the much for Very help. very

Kevin Willis

Sure.

Operator

Mike comes Our from next with Seaport question Global. Harrison

Your is line open.

Mike Harrison

morning. good Hi,

Guillermo Novo

Michael. morning Good

Mike Harrison

presence in Within to you to and PC&H? update process? maybe we're of we are that Maybe can us where the the some margin give within the an PC&H you impacted seeing headwind? point business, give applications we expand you that quantified you're on your that where going to your product offering stop then non-pandemic looking exited. the And almost volume examples Are where lower us

Guillermo Novo

Okay. Yeah.

will we're is major I So of A working take through customers. the exit with mean some -- it. this lot

-- we and that. be changing needs to So of it's all we all in terms but sensitive planned need out, supply to their

it year lines that we again but specific areas we're our So specific This exiting. The it this what's And be majority have not specific is year, will time business. this -- of this year. is into and happened customers, in next driving through we're working on.

our other with we activities in have way want the it a do them. So customers just responsible given we to too for

think what work comes really the care segments? And What are our personal that innovation we're your are rebalancing whole around the I on it things the we're question the back doing initiatives. doing? to

you with well all know ESG-driven reformulations innovation. both And good about care ingredients. it's opportunities As as new replacements examples. personal But as very there's that's going drive some growth to just

and styling example, hair is The around a probably XX%, an as hair at segments. XX% is look you conditioner. bit market, more care few the If majority of other little XX% than shampoo there's the less care a because

our big For there's half liquids still can of a we're other by that to that us, It's products bars driven lot whole their example, growing hair ESG. We really segment area. the number and shampoo an huge -- of portfolio. small repositioning. reposition offering in improve It's part customers for of whole from seeing, moving We're help business. but styling a It's a of to a ingredients a segment is the conditioners. as example for ESG segment. the almost There's biggest a our

products. a shipping. excited their is it. reduced The going about area, issue very packaging, reduced we're be the be expected they but So need is to improve to interesting This to

performance be want of do on. So great things more thing. a some for as or in specific other hair develop there's on these then in of products ESG-driven biodegradability criterias that ingredients new to a we And do, that we're segments But specific of can example would areas. working that then can care we products lot across areas we we oral cross-selling care use or

the short-term, and have on. at to we the term service, working looking labs the products, that of near-term in quickly platform-driven innovation; portfolio we're new we regional of we're with team that how the that work the And both in how core is solve we existing tech the do reposition to all existing customers, our long-term it's the that. some these we Long And is short-term. our see market. more innovations our So working on-site, redeploy some opportunities do then

interesting some are time coming take for they -- opportunities there very interesting are be the but going they'll So to years.

Mike Harrison

on XX% the then side? And believe right. complete. you the needs way and on goods mentioned cost you're But on productivity sold to sounds sold cost the like of the I is update an of It about SARD what further of SARD that All goods progress all maybe happen feel you like actions.

Guillermo Novo

meet bit through working well very is working Europe communicated. going just sites. with time we're working concerns. no I and line, think some of longer so big process. our of through been it most But everything the has that We're final little confident worked through a the In to and we're takes

doing actions, I surprises businesses the step is is There just think on back no surprises self-help moving. if are expected. no you -- as there. there. it's actually the we Everything results The

the they we We're the good we going performance on We're and are. about what So underlying feel outlook. know to them. very manage The through challenges recovery working them.

it's forecast mostly to external because some happening. the can't the legacy charge. it's them impact. if chunky. The forecast to them these point environmental, want that be you big storm, So And going the I these have could And out was things. are I think are by you things you to obviously, also definition of And take

have they They do this work data. So Whenever a to definition process. it's reserves. to – action adjust It's by they to get take the the not the is a technical then reserve.

things really reflective the underlying businesses. not of performance the So are of these are that

Mike Harrison

All right. Thanks very much.

Operator

Sison Our question Mike comes Wells next from Fargo. with

open. is line Your

Mike Sison

about to cost storm if gave I Hey, is sort walk-down. make just through EBITDA guys. understood? you I up outlook was $XX Could XXXX volume your so And to you million have want leverage negatives. savings midpoint sure in make of maybe I But I wondering, walk contribution then just us some of think EBITDA want from And FX? better walk the the you the for sure, XXXX. obviously,

Guillermo Novo

Okay.

go you can the talked the make me little the bit when that And in improvement. of through quarter call there self-help a us And first then maybe driver for drivers. about for But year, a of improvement. walk gave be a the terms outlook we we big of let very confidence – we as So some quarter, that in Kevin the obviously did of of the year I few was going mean, comments. year the look the fourth the beginning significant on a of the felt was lot to good details

The and been taking major has would big a is driver, driver. we're actions the So side the say very industrial happening which well. recovery on definitely, I obviously is on that other

more more The you other and puts robust more want go are activities any on more comments? share that's up – that think nuanced into have But mix new of takes I products improvements or the to development the specific last specific those driving. are And those details do held parts year. the businesses that Kevin, we're

Kevin Willis

Yeah.

actually our call outlook the in $XX earlier which was we expectation. we last our $XX terms that, was about million of we in talked on upsized upsized think when year, self-help I the to million

say which industrial has recovery let's to be is Guillermo a As been robust continues plus. way, indicated, that more the and

nice job Looking from of business mix a we've union improved done definitely at with perspective, driving each product in it a really lines. business seen mix the has higher-value

not a a when maybe the much. playing overall. pretty look That's on there. Net-net our full the uplift at much snidge high you seeing for we're target, are role So corporate year for expectations positive but

all on overall basis be that's in but the And bit to negative other to out just that's is negative. talked thing a a bit. And I think of we point important a storm to that's $XX about the an So going million impact.

the range upside – the impact be an how Mayr $X to in It financials was program. process which project for also not goods & the our which the the just from project doesn't to that We on million is there year. of total of does strike, execute that. part And acquisition so recovery our know integration $X any clear some. will to also Schulke we And And be of had any million negative or sold much. don't Doel our and cost

better and not recapturing of Doel million Uri presuming from cost, pretty deal. headwinds of the it – for of the year. Mayr acquisition all at So $XXX be of part storm and million you $XX to plant, strike up the will & believe the the Again, which impact look be our from any it we million also strong Belgium not including integration and a to think at adds $XXX upside I anything considering Schulke

Mike Sison

for And a you growth down road? growth, when we of And it. as Schulke at businesses, whole think you & point Guillermo, do a segment Mayr. terms up follow-up. excluding see in growth? the some of Consumer do the year-over-year just straight what the Got Specialties type think And do quick should

Guillermo Novo

Yeah.

exit you – a because bit little at the the – what demand underlying to much target. look noise of of on If to and out we timing that's a might tend take we're we of but be going internally define. sort it's it The pretty been

segments market underlying target bit overall our a Now, little will of be these growth. plus market

market So X% the – we're to that's underlying X% segments the into. selling

really So portfolio we'd all like innovations to that all But require these will be that. above getting time. the shifts over that

is year. this I think true this

see still some noise. will We

four segments If the the but at I business. highlighted maybe the XX% segments part, roughly are of look that impacted they're biggest that the you not

to point. because is see. part do be that this And when getting economy. mean, really this we at to that working resilience the I through is it the the about I going of part that's the can't the recovery up would think really predict not that, So I like opening is we're of

world. see You around it the

well say delayed, to they in new the country. supply Well, closed. the customers and As an got are and with example, hand business school sanitizer schools we certain European a is system because called orders

of to we vaccinations going that. world. really XXXX, the will I start think rest global through to in definitely the have seeing So start But we're improvement hitting that manage as

opening US-centric hope challenge. pickup very parts, well. up portfolios. in these we're in of think little The lot biggest the a economies. bit it's But we the do I mean that's more of clear. the is a I I other a performing business really a need not the US of

Mike Sison

you. Thank Great.

Operator

JPMorgan. with comes Zekauskas Our from next with Morgan – question Jeff Stanley

Your line is open.

Jeff Zekauskas

much. very Thanks

there? SG&A your second what's a And cost $XX think and happened the the $XXX in quarter, for first million I in think cost I What was quarter? million the it quarter. was SG&A normal

Guillermo Novo

this Kevin, want to one? take do you

Kevin Willis

roll normal going is to say see forward total. $XXX through. continue for going quarter SG&A That's to the be it to a SG&A. place impact in would good of we cost-out I program I Yeah. where say, now positive we should total million the would the around for are right peg

Jeff Zekauskas

So to that -- Is decline? Did quarter? cut so where led what sequential this why like large it low a was comp? such management you

Kevin Willis

comp No. like at I that. I say, it's make more would to than changes didn't major point. of or thing anything we a timing this any anything else mean,

Jeff Zekauskas

Okay. Thank you.

Operator

Morbelli next from Our G.research. comes with question Rosemarie

line Your is open.

Rosemarie Morbelli

morning everyone. you. Thank Good

Guillermo Novo

morning. Good

Rosemarie Morbelli

you above of you that derived your out. question, years more be it. three was is And to could that think wondering product if margins I linked to lines? add your willing for? the to think And naturally to customers about Schulke are understand the could pay going size are what do be going two to traditional you to products that and it I do talk therefore

Guillermo Novo

Yes.

a we bit level. business first be focus details unit level well So question. this company Day big excellent as a And frankly, do more going is when showing to both at the as our little Investor to

biodegradable. part some the cellulosics would a nature products nature naturally just the And on our materials. portfolio, of of I of our significant So derived describe based of the as natural we sustainable see

our So base, a business. especially very additives in starting strong we're with

If you is side look petrochemical. at adhesive the that mostly

it's So polyurethane. and acrylic

our So technology through there our value it's customers more ESG more products. help their -- to we use develop

wood weighting, light those construction. -- composite and of things So wood enabling kinds

willing consumer products. And pay customers' about much for side, our more not I in just pay would own about more it's customers more more for to it's the It's sustainability. But product. So say are value. also our

more as products develop biggest think perform. companies need to is technology the see I ESG-driven The we challenge performance.

as to buy if nobody it's creating example biodegradable it. doesn't work going just -- a an is nice, but So gel or hair it

that's balance and there's existing customers for, own a replace hopefully, -- also and it's So more that for will products opportunities excitement I capture a new IP a creation. where of enable with differentiated where categories. to or Both premium comes newer for IP innovation lot value your share and think the technologies pay

a exciting. product. before I niche was A conditioner and I solid said is little shampoo think, seeing of it now a as lot you're the very example

the players some seeing of coming you're major Now in.

the that be ingredients ESG more more will -- want sustainable type products. is focus those they in by use the nature on So to

our So think and a a of end more. developing I part as the portfolio company, we're is short significant even it we have

an And Avoca past on -- whole our mostly portfolio an that of for in So part focused will an were transformation. from exciting fragrance that example, the part the extracts as example we be as carrier. plant

you'll capabilities -- talk per about develop really and hear extraction se. it's now about less probably to we us expand Now Avoca portfolio. And the

in area. So, we're looking at products to customers ways to in offerings bring new new our that

of lot So us. of center will care for the the personal that be focus a

Rosemarie Morbelli

between And and type is on if mean, a just behavior. see following have you share of been affected up difference you personal I the on consumer in you Europe. the the the us what by in opening you. US other change Thank up. could US what care, wondering or the hair which categories then see with I was in

your a part overall of smaller is though even are So the business? it you seeing benefit

Guillermo Novo

general, seeing benefit we are that for In opening our consumer, this. Yes. on -- seeing some all we up categories are

I is much think how the issue opening up. is the

companies to back are office actions. I of of think COVID, I lower, much a regardless also taking think other is lot because still

more of a little the we're I things. there will in Definitely pickup. of on side of things the social of readjustment work bit be So a -- side, terms think a the versus seeing the side social

side, On working think lot remote. I companies there's a the still still work of

strong as mean, it, the you habits. of historic you more in But people where as has if areas. a lot day-to-day back see I some So do the their or older as it's opening up aspects restaurant, those of cities uses, been those not social getting go of into to happened

Europe, So definitely as And Brazil -- definitely it a see see -- it's in down, we of those lower. down. still the of places out slow of parts Asia, pointed lot in but pandemic we you are because

Rosemarie Morbelli

you. Thank All right.

Operator

further There are no questions.

Let's the to over remarks. Guillermo call Novo for closing back turn

Guillermo Novo

quarter Okay. your this everybody interest Well, participation. want I for your in results thank and to our

importantly, opportunities and our underlying their forward coming you future. think more looking to As more forward for to to are the with margin of opportunities businesses, see very you performance, the so the Day, meeting about out of we're And our details. long-term we all execution I and of Kevin look really more the our we in And talking we excited weeks strategy. we growth we're to can share that where with lay Investor improvement summarized,

interest and So thank stay safe. much you very your for

Operator

conclude Ladies gentlemen, and does this the conference.

day. You have Everyone may a now great disconnect.

Ashland (ASH) 30 Apr 212021 Q2 Earnings call transcript