ASH - Earnings call transcript Q3 2021

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Operator

Good day. And thank you for standing by, and welcome to the Ashland Global Holdings Inc.

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

Seth Mrozek

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

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

will webcast currently we call. during the that this to encourage under ashland.com, webcast morning's on website, Relations along reference being section. Investor We the follow you call, are slides the our with During

and such expectations limits Slide presentation during but several cause are from reminder, reasonable risks based a are or assure that the forward-looking applicable more projections. complete today's statements uncertainties refer making cannot subject will our be a for to statements. risks differ such to any on uncertainties XX events year those believe will We results and These Please statements achieved. the today's fiscal could that including forward-looking As for and matters, be assumptions, statements XXXX. we on future to call, to materially forward-looking of of outlook explanation

note metrics adjusted Ashland of our projected measures. under comprehensive most certain be also Xa review XX-K financial are the business. that basis, for of factors financial referring will discussion our non-GAAP and to can risk an You we actual impacting on which Item Please also Form a recent

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

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

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

open then We Day. a On will planning the an Investor for continue line for work on final upcoming questions. we note, to

over calendar Our intent XX during is Guillermo? Guillermo opening call Please to turn comments. of will Slide to end turn year. I the event the his back for host this the and to

Guillermo Novo

Thank morning you, your and everyone. participation you and this Seth, interest Thank Ashland good to in for morning. your

any review I Before I business. to our ongoing process clarify making like questions any for Performance start, our about we not or comments be responding will strategic that to Adhesive will

process the going underway that is interest. I well comment now, For well with just significant would and

of in supply the during raw revolved performance shipping availability constraints chain QX pace challenges June XXth to major hear material and line impacting raw well call, cost our the will as you As update, the around the as with linked issues our material inflation.

line calls. to focus underlying continue prior with to commentary our businesses making for our strategy. with behaved we from Despite business business headwinds, wellbeing dynamics clear market units part, as of most in as operate a the safety we supply we chain our or the safely performance the continue For the execute of challenges the manage and also our pleased by employees through the I'm are our on pandemic. progress

of the self-help headwinds cost progress some QX a planned. on quarter. we the by side, in the saw performance, activities me tailwinds Before as savings From our comment and I side let summarizing tailwind start

strong We market saw of BDO our also deliver FX recovery and pricing. strong the and impact Schulke continue And cash of favorable to conversion. capital to acquisition in performance. demand nutrition industrial see discipline improved and We flow business nutraceuticals continue pre-cash flow and free and our delivered

On headwind sales to logistics side, the cost. constraints on continue global and and impact shipping

been June significant on customers shipments impacted drop confirmed the As in to This an theme example, on-time the by liability. last for freight few orders has were direct like ocean recurring shipping months. for

we to were $XX million but be of to in $XX loaded these invoiced warehouses at arrivals For loading. to Most on June, shipping orders had of due delays not were ships were ready will million Indications in orders and that negatively impacted continues cost. persist challenges material as our challenge the the for causing availability in shutdowns that as that July. Raw manufacturing future. are invoiced be well liability to on-plan shipping productivity inefficiencies a foreseeable early

The magnitude margins. timing our impacted act continues much continues pandemic the to but demand related was and changed pricing margin consumer recovery. increases material of inflation the incremental cover recovery. volume cost For impacted inflation pace care as has Adhesives on Personal not raw the Performance have strong these business the impact to delay of to on behaviors but business, dynamics

through businesses. cost hand-sanitizers see the challenges last these all in discussed to longer-term to managing XX. in we for supply we dynamics and Additionally, the critical Please inflation priority remained demand turn favorable, Avoca. is call, Slide focus and and near-term although weakness as dynamics Clearly, continue a

and quarter teams This our for our new customers. presented challenges

up hold. continued these our continue continued businesses. resilience to We're BDO to this challenges, and of Currency our of million were of driven see by However, to pandemic Life prior-year Nutraceutical starting Sales period year-over-year pricing. we in has some shipping to impact businesses recreational regardless industrial remains was global Schulke of strong the team compared market to the Sciences consumer pandemic Personal strong the demand the acquisition, change worked by strong build the and the strength and challenges. social thanks linked impacted and took also considered Sales the also performance. Care, growth In strong the to efforts deliver demonstrated by recovery improve were quarter continues inventory $XXX as near-term down X%. behavior. the business of perform acquiring were sales segments ocean favorable pharma was to freight by customers benefits well, to growth, continues to global trajectory. as XX% consumer

by the Global coatings will seen business to Additives once that not but across have develop see Specialty demonstrated vaccination We segments. energy. except continues driven DIY strong significant contractor and volume globe. confident all to-date demand the architectural demand is we're global recovery there across the broader recovery it both markets, recovery

Adhesive applications. saw across growth also business Performance broad-based Our

However, raw in and as of the million offset impact to was self-help a certain manufacturing up constraint cost strong sales raw availability higher continues by of from The as impacting were chain actions costs in of our materials supply mix. logistics well material and sales. materials X%. EBITDA cost raw $XXX

material Although are More being we pricing pricing actions, already implemented. took actions incremental they significant cost were inflation. additional by practical raw offset

including challenges employees Our they cash flow Ashland conversion safety focus then the free quarter, continues of the deliver flow organic these ensuring our growth, progress that margins during I'm and well pleased priorities cash our of the expanding team $XXX and by quarter by business demonstrating quarter. free to Despite performance. remain challenge cash flow. we unchanged, the free the generating were all the quarter strong made in during results to our our of supplied very difficult during managed the customers maximized external another million

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

Kevin Willis

up Please a turn year. morning, the good everyone. you, X% Ashland during to And currency the versus Thank XX% quarter. Guillermo. prior in sales XX. $XXX Total were Favorable million contributed Slide growth quarter

adjusted in primarily differed $XXX increases plus & incentive reflecting SG&A, Excluding to year and million. X% quarter accruals compensation items, adjusted increased increase R&D modestly to million addition the amortization a the key Mayr of the business. EBITDA was the a EBITDA costs and $XXX total, compared intangible In a prior of $XXX to Schulke a Ashland's million

again amortization Ashlands $X.XX EPS share was prior basis the XX.X%, from XXX X% deluded items a was compared discussed per point a prior adjusted to decline Adjusted year. margin acquisition excluding the EBITDA above. year up reflecting

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

growing currency. were sales the year global behaviors Within and science's during sun Sales The built certain by behavior. were sales quarter down double-digits Currency also inventory improved levels consumer chain million prior supply of reflecting impact Sciences, the as customers X% quarter. the trends up favorably and inclusive sales continues with again Sales team and begin Sales nutrition the Personal were business. of X%. down from related quarter on year favorable factors. due $XXX oral end-markets pharma quarter has total, our to and to social the in end-markets care and pandemic sales other In context Care the strong compared the care mask the I'll to First, global down several by activities impact X% activities, Life excellent to Nutraceutical X% during stabilizing pandemic's impacted leisure wearing. in prior job specialties. as increased life were styling, for question. done consumer the to an hair to consumer dining grew double-digits was

in ingredients levels. addition, at formulations have below used our for hand-sanitizer year In prior demand normalized

planned care technology of We which & the during months two and team Mayr also to acquisition proceeding portfolio. bring earnings our as about the on results. quarter growth and future to we're integration the excited opportunities personal Schulke is the The roughly closed contributed and sales that

million implemented June manufacturing margins $XXX pandemic-driven million. prior of the over all growth increased a XX. to demand SARD turn and broad-based industrial adjusted significantly globe. $XX million very improve lockdowns Specialties XX.X% For industrial In total, recovery. with of a strong across have the in adjusted consumer specialties, consistent by point up sales across to improved had end-markets $X expenses quarter consumer to the with been Industrial from Slide led XX Industrial compared was saw basis the We increase quarter to year. demand year. specialties XX% EBITDA XXXX of prior Please EBITDA when lower

to contributed quarter Industrial seen of X% In fiscal overall Favorable pre-pandemic fact, Specialty the Xrd last XXXX. essentially currency of sales sales returned levels growth. in

sales Our was only reflecting markets to total, Sales end across XX%. were during in strong In quarter growth for to DIY Industrial Performance reflecting XX% strong specialty globe. three energy the Primary weak applications. Specialties and The up markets. paints exception demand contractor by in for for double-digits all by the demand grew business both coatings remain Adhesives global in growth for additives grew Adhesive sales continued architectural

XXX While costs, material margin These demand. XX.X%. customer demand hampered basis issues strong, availability logistics shipping raw raw in our Adjusted EBITDA combination costs the increased to overall by meet availability resulted impacted points of were constrained incremental Industrial and and and in Specialties global to material higher sales ability declined for margins.

However, given the was the strong sales EBITDA $X turn year. million, million Slide XX. a above to increase prior $XX growth, adjusted Please

to up measures expect the we Turning million our contributed in and balance & were $XX period. sales levels, period. pricing prior the pricing to $XX year compared and dynamics at to BDO growth turn Extended I&S the the for year. Intermediates force for million from EBITDA was over facilities for Solvents, to year elevated fiscal Slide experience Please Pricing $XX to prior million the related in derivatives XX. of sales up drove Adjusted the to continue outages these a competitors XX% quarter.

component the million for strategy. important free to million a of cash cash in spend creation be flow like $XXX compared the was $XX prior a I've I'd which free continues to quarters, quarter talking few year. increase about Total done value our So, flow minutes an to last few

securitization earnings part generated as greater receive during expenditures, flow program While lower lower the accounts we implemented This higher sales from quarter. also program replaces $XX of US and interest capital A/R previous receivable we we sales that million expense, the the cash new cash program.

to outflows inflows of flow company. And to push still the that rate the to sales the significantly expect in free fiscal year's we XXXX. continue cash future to more program, from A/R we adjusted convert of Excluding our free XX% cash than new or in higher capability testimony conversion generation to EBITDA year any expect flow

fiscal goal that, Guillermo? now our at and convert our stated, the closing call in Guillermo. discussing to was to outlook remarks. we back will assumptions to 'XX more free cash his As With flow. underlying over least turn XX% of consistently I'll our Guillermo EBITDA spend time

Guillermo Novo

Please Kevin. XX. to you, Thank turn Slide

Science nutraceuticals demand look we continue pharma, market to at our and remain strong Life see outlook, we demand to nutrition. expected As dynamics. positive for is

some Care COVID strengthening our are in to Personal regarding pace has there some business Although U.S. still place, take where the uncertainty the started to reopening starting of demand. is see reopening in

strong. in Although that recovery although Industrial to do are the challenges note to a hand-sanitizer we to part is to end remain I it's also from come raw-material small the part see starting revenue to of would continue to would in note any experiencing. continue our small and demand we the expected risk expect Clearly I and application. the that of and is margins portfolio, biggest demand portfolio, see energy markets. uncertainty a not our recovery world the will And supply-chain

uncertain As result, a for nature, impact. forecast us their given very their broadened it's to difficult

million EBITDA we the As operating sales industrial science $XXX unknown, expected quickly and no resilience acceleration did outlook to of in that of we're demand stable global the positive we context negatives. business. raw Personal costs billion and segments, the beginning in building is material changes to and continue mind, year demand in the contribute our on to our based $X.X for to of so full-year recovery significant range. maintain on to to developments performance, in Care. No $XXX rather actions the to minimizing the we business be maximizing Schulke that than last and Please XX. in offset billion pricing can continued million will at to guidance COVID, $X.X continued continue Slide of favourably focussing implemented to turn This higher life acquired predict With trying demand underlying respond

one-off chain events the factored To business, dynamics the are our the excluding have the would cannot that outlook our unique qualify in lower current of the guidance, of we unknown. we forecast impact Although Schulke be acquisition, our in on some supply of range. end

of the Schulke results range. middle in the acquisition With outlook included, be our would the

forecasting items raw one-off not major caused material issues any are We shortfalls. shutdowns such by supply-chain or plant major as

positive quarter. supply XX. X% or could business a the that on X% well, revenue to of the summary, execute Please to performing impact report to drive raw improvement regardless and quarter-end our turn Additionally, headwinds, material logistics I'm to have uncertainty in Slide In negative strategy. pleased are units and chain their continue

our expansion maintaining margin conversions. growth, on focus and cash are We flow resilience, long-term free business

for recognize am supply-chain through closing, material I improved through challenges. recover customers and and markets. that open the during up However, the manage resilience I business our raw once look on We're defensive manage higher active specialty premier want near-term let's to your uncertain high-quality uncertainty for of teams am the cost and urgency Q&A. leadership our their pricing supply-chain the businesses and attention an of added we suppliers Ashland are by opportunities to businesses and building have in managing and in I that Slide our Thank resilience to team again forward planning, to to and turn pleased management. through these with fortunate Managing environment. positions company and We the margins focus challenges. thank dynamics business with a operating be change materials for leadership current through with the do lie and and ready and people levels units you for demonstrated XXXX to ahead. confident that operator Please In ownership communication and XX.

Operator

you. [Operator our Instructions] from question from thank first John And BMO Markets. Capital comes And McNulty

now open. is line Your

John McNulty

Yes, thanks for my question. taking

of kind ended of XQ think on still the should the issues a things. on improves it of the million industry, how that kind plagued these a to quarter yet, sounds lot of reeking EBITDA even I really of sounds guess question because rest be think like you kind it $XX+ low-end you're are like I where freight of based So, of what for about of habit And lot these the on fourth by looking at in a range. kind the that

that? improvement guess you think I side. that of kind about comes to incremental the So, and have catch what of can kind when us up start confidence you Can you do it help get this that to freight

Guillermo Novo

the unlike their based products. of most terms very or on demand still think discussion most and as of across the positioning for the I outlook strong the in another needs perspective have important customers the it's is fact our board. situation, And how is what does of to what

lot have a we question we of confident how we're of what some is issue have at We these so now hand. hand, the do orders forecast The in uncertainties.

some be in that repeated. that the material factored demand some impacted kinds items don’t plant have of especially our We raw closings, around to We those had expect things we of availability. of

So, we factored in. that

guidance, quarter. we like so major a by expect in we of that we cannot this felt there's ease have qualified things as for measure plan going of some these improving, recognize think off. Things uncertainty, supplier our force to do some we be we to I are degree

us, actually We produce For The is it's unique the had things core is and part for availability a about that to supply biggest of demand that's for deliver I were of of our us. planned. think the Really, problem constraints the that really shipping in we our out had the us, one chain lot shipping. control. we able but

I we ready and ship. ready As example, in have the material the said to

two I we we've at define the upside, captured to quarter. frankly that talking just think see weeks potential is in that and September things. what's the going of happen to the it's the there's what's And about some So, We're quarter, of of in end then, could not downside September the outlook. last going

for hard that negative. So, to it's and to very easy it's forecast us be very

that our that negativity no but for have point-in-time. this of facts all pile at disposal in concrete at real there's to terms want you foundation we If that

provide to update is time. estimate but best we need we'll our the So, this if additional at

Kevin Willis

thing across have that QX impact actions the from and end would QX. only would The been taking completely we teams agree add some actions pricing during that, John have early been board pricing during taken Yes, expect QX and positive the of Guillermo. I I significant with is

items So, that perspective momentum. cost also. is that And provide also be there with ship. the from improved the us could And but some one-off really really operating should it some about positive it's were net a

John McNulty

Okay.

Guillermo Novo

build especially react don’t that recover would be incremental to have there the to in the is it that -- comes. by Current on and will Current as quarter. Adhesive Kevin's inflation are just that would the we more outlook outlook. Like we'll part of that the end business to come, know margins

John McNulty

the the actually of and you you that helpful from a of think Got that, the price it can And that the you XQ? on When we guess material inflation raw final kind about I actually saw and to into it. in quantify And answered you little answer. that's had. just I question that think colour. that difference do bit the goes that But how as maybe last back get you look much quarter

Kevin Willis

Yes.

that's board mean raw look and the But the items. in ability about on I and on I really the think Adhesives very I and ability it's if pass across look the noise broader across to than drivers the and the you some clear at speed, big the smaller then two the the pretty passing material, on. on you things more industry know the are very are core would speed it's there's what at pass of the items

that pace the pricing, with of past most on need these moving we've catch to that. in increases up have of just raw we We material the it's new pricing increases, recovered just

out. that's played being So,

Life BDO is big but are and is mostly impact at raw the Personal material other which market. impacts Science core and a and mostly think we Life it Science transferring I Care

that broad-based benefit materials rest, through. those and So, the seeing moving freight in drivers. raw things the on inflation point-in-time. we're too. this coming at would as I of and But and managing those we're areas pricing Obviously segment classify the just The secondary which kinds seeing two we're I&S on are biggest the are the they're through inflation also

John McNulty

Great. Thanks the colour. for very much

Kevin Willis

you. Thank

Operator

from Thank UBS. you. our from Roberts And next question John comes

Your line is now open.

John Roberts

what know proceeds? for Thank be I taking the but on adhesive review the would the questions not priority you're you. process

Guillermo Novo

year at major invest communicating where growth But to be as where for going do. that next there's to we'll once us our capital and big a to priority John, a part to what what's allocation going we shareholders order for on we be of is have all and obviously plans clarity we want look we is once our happen. also we

important there the So, of part more is that very our for this to come but portfolio. plans longer-term a

John Roberts

I would it Okay. probably pretty Does I to was for like And that it segment. down? deconsolidated, does been mean for you've What's business, or us earnings reporting in outlook this one to see least spike you think stay although back highest more some had at the have it I&S good quarter of I quarter a that up the the guess fold. since

Guillermo Novo

the see how strength I think fourth least at we continued starting think we'll I quarter, see play during XXXX. will. out We things

is like into we'll we of supply-chains, dynamics evolves. the there. an some to that see we'll does how I think impact at I XXXX pricing things the that shipping global pricing think and But have when on look softening some

John Roberts

But Okay. September this in not quarter?

Guillermo Novo

the September quarter. in Not

John Roberts

you. Thank

Guillermo Novo

should be to strong. continue It

Operator

And from Zekauskas you. JPMorgan. next Thank our from question comes Jeff

Your open. line is now

Jeff Zekauskas

the pricing the Can what businesses, are much prices the supply were materials granularity industrial increases to quarter, very about How you up what price talk the that tale. through? Thanks, raw some up, put trying you're more you trends can in of in much. your

Kevin Willis

moving would recovery, the aggressively that pricing. issues Adhesive is is has it's the inflation say And very pricing through the we've moving been the but on been reacting new area So, equation. the not across board. quarter the side come obviously we've to biggest I I the on said the of in

I you of able in think it it the for would we to in a of were and thing if I QX. lot the all the but XX% dint cover we quarter the quarter of same at cover say pricing look

pricing now there's on quarter right the up the of side. we'll end expectation be raw-material the another caught our inflation wave that by unless of -- is we So, fourth

go said, in -- prior I ahead. As the

Guillermo Novo

mostly great the the just doing there's to that in and front. No, job other is in team correct And on the Adhesives. is it's Adhesives, most to going reiterate, that's again margin It's but pricing little does of be Yes. question. recovery, a it's a just of -- in there some the of businesses that bit most

Jeff Zekauskas

Right. Okay.

Guillermo Novo

And the be of end there. the by QX, should we

Kevin Willis

I mentioned favorable quarter. the moved favorable, this other the prior in very We've one is on pricing and it'll it is question was And BDO. be as

next there little it up we're passing expect side quarter. pricing. bit a there on, how contracts of In the way on is be are more a I&S could we We consumer on and very side, favorable just the our set the pass lag

So, take to longer a than the that will on little fourth up too Those pricing. quarter catch bit are the two. main

broader all I base freight secondary cost, think know that. you materials raw and

to We needed moving as product pricing specific on lines, but lines. that's are more much product specific

hard So, level generic it's to or make there. the high comments

Jeff Zekauskas

What volume. industrial Of organic the specialties your productions in growth in consumer quarter? was and volume

Guillermo Novo

The this yes, side organic volume because we with few will call And the back total exits growth, the organic you a other for of growth have number. the you had I and volume specific it get the -- we had Kevin to do so the just let's other items.

Jeff Zekauskas

right. All

Guillermo Novo

organically we year mean and if prior I in the the majority you in that as majority, The the it the up at were were nutraceutical look said nutrition double-digit. parts and the versus call,

The with the strong. the inventory per versus that prior much demand se, very it's So, it's occurred I pharma, of more last year. not quarter, building comp it's think

care, for oral, really fairly skin, the most year a that Avoca. were think it Personal the the prior they volume of stronger I quarter is in biggest it's what's The Care, much in was talking us. you'll although us comp the drop versus significant marks have flat. at businesses I headwinds hair for basically mean, next down, and we're see been slightly small, a be if you the just the hand-sanitizers been the look will it's

had growth didn’t segments we but of net-net, by So significant each variation segment. have we organic a lot within

Kevin Willis

overall That's and growth you right, XX% some other side items than growth hand-sanitizer year-over-year But Guillermo. industrial year-over-year. do up is driving volume more with is XX% piece some equation. said organic like being volume or focus the In total XX% the part consumer the that of company up on is up

Jeff Zekauskas

much. very you, Thank

Operator

Thank our Deutsche Bank. question you. from David from And comes next Begleiter

David Begleiter

on Thank an good as approach year we versus you, cadence think do Guillermo, year? this how XXXX, view should have you morning. earnings next about we the early

Guillermo Novo

favorable. still I think conditions are overall and very demand overall

As call, positive. I these you've longer-term of to in the business the If look heard are all for dynamics. at really the about they current talking mean, some very dynamics each I of reacting we're

at see how that I to have take -- So, improves. to how as to think we ocean situation the the the especially freight that's the look supply-chain we'll XXXX, going longest clarify it

I raw-materials We see a part or that supply that the entire think to big a something it. buying recovered of storm continue causes disruption in should industry. across

XXXX, be overall side early when into the we significant products significant Promote on and longer-term comes. we're as business going the and dynamics. going focus of are priority of we're and portfolio new a normalizing to it's lot going some be made So, top these launching. the organic to change that our R&D backend That's new And And from be it been our But of launches growth more there we've be Day. a making going progress. around lot Look Investor it's really we're of in focusing we're but fourth very and and innovation that's longer-term activity growth. excited part the is means that making the the time on of the to outlook. to about what to terms very second positive into of of a focus of quarter that what the we at want go we cover in on

is have part supply the there. the we're like else, to think going everybody I manage to chain

David Begleiter

you add good. in just QX and and Very on And on what EBITDA? Schulke, think do what add it will both QX in did sales

Guillermo Novo

Yes.

the that just you qualify, we in run had the provide lower numbers normal transitions you But a was be normal a want provide terms quarter, of the a there? to and of months Kevin, little just integration normal to slightly the the impact want ongoing color that for all transitions, may next So, activities bit this quarter. Kevin first obviously should What but would it of inventory more it wasn’t quarter two a but out. rate I

Kevin Willis

Yes.

months high-single you been bounded. on On there front, But indicated, we an been overall that with QX the normalized do impact. Dave, some five perspective. dealing just stuff you've upfront digits it'll in this think digits high-single basis as be we've for then an Again, more full-year for the initial costs from Guillermo EBITDA that normal transition but got

David Begleiter

Thank you.

Kevin Willis

be QX mid-to-high business that And call probably for XX's give-or-take. going to revenues are it

David Begleiter

you Great. much, very Thank Kevin.

Kevin Willis

Uh-huh.

Operator

you. Mike question next Fargo. comes from thank Wells from And our And Sison

is now line open. Your

Mike Sison

doing? Hey guys, you how are

Guillermo Novo

Mike. Hey,

Mike Sison

apologize your your maybe that it sort of was key guidance in if hit comments recall the are XX risk degree a negative some to in XXX? million the include $X I third, the understand terms of that I to didn’t In including negatives something so like for but that, XXXX I XX, you XXX does million $XX of and and

Kevin Willis

Yes.

and the saw say the maybe I results. actual worse. that would was QX, of comment $X $XX a million communicated XXth, million million a top So, actual for the was than have to slightly range June QX in you we higher the we the

but little costs it's been and offsets we the have and positives things better included in that's offsetted and had We that numbers.

now a end lower Schulke, range. it with lot is the So, the built consensus of of the would numbers the and which are be Schulke, XXX Without more the Schulke. in range. will With XX

to monitor there's we we It lot potential demand missed major as not But would material little be quarter-end communication. major unknown ready we predict no think think I sitting more any way raw major that's forecasting is on any because in screen month, and would shipping not pent up if And orders. the of have frankly a So, the and load material of supply-chain any the and it's drop that and very a Schulke was force impact out can of on included biggest difficult was they for get up And were the issue and not do availability and need raw not is warehouses mid-month than shutdowns there the there there. to that this the not challenges. XX%. in have part by be middle. And as the a that's And to because said, the lot revenue is a give side didn’t I saw really it plus report are we minus during that. we'll and availability invoiced the forecast shows we issue the material it's warehouses less to ocean did reliabilities radar in I

Mike Sison

it. then, got And for -- the sorry. fourth Got it --

Kevin Willis

teams knowledge so, we new have. the And -- into what Mike, the are account taking look teams

said, which do to the So, But what positives of point, out best going either the big we let And the mean, as if months, tweaked could we do hatch, if to as or see be we'll so. estimate to unknowns. processes unknowns don’t happen. some has our offset at unknown this Guillermo's I mitigate of looking big what's it's believed the several update coming progressed has appropriate QX last And we'll each some happen business we negatives you of to their they when we can of to over to forecast. know that still forecasted of these for what units have know.

Mike Sison

Got about will consumer it. about into for do generating feel or go think organic the quarter, terms quarter specialties turning in and and you that the term in growth? mid-XX's how And you some Schulke, then, 'XX, XX organic business the positive sort now of of then sales excluding if fourth

Guillermo Novo

Yes.

on of go side consumer the look So, give the for lot segment-by-segment. to longer-term at if the you and outlook just some I'll color

that is think several Care, points that there we never can plus just so basis I recovery we Personal really growth dropped, market is continued the pharma the feel here XXX achieve.

comp think we built different dynamics we're last is and COVID the behaviors going see was was of dynamics that this that's continue. I the several when momentum inventory because might of to have outlook year, continued quarters there. year but that Obviously, to the going

the mentioned, were And see new we the have are market This do recovery in business recovery, to business. is Kevin team the see just the equation. are As has side I issues nutraceuticals to really of improving. you're just think and this the the teams we a starting got Its payoff. good with year is had margins last strong, the it's remained work hard from starting nutrition

phase we we and turns do We're strengthening was is seems something markets will mentioned opening. recovery. pandemic and to see them. opening, Personal U.S. but result the starting that and to say I play really a recovery see to a is the start the outlook continue unless as Care, see we're In to the it's vaccination of already rollout it's it’s Hair continues how a demand the in I still if think So, just the very we are and the the that market, as in we around good it for seeing U.S. it going wouldn’t I good from of side, care example

Europe that carry next the and hope probably continue, we will then it'll around. will be So,

momentum for So, more positive us.

and there. I will this year, year have year be the us think behind next will of we last hand-sanitizer would dynamics not

headwind for So, us. that a be won't

really about new demand be going the launches. more it's product recovery and So, the to

Care as big launching, the new Industrial, comes that and continues very good usually We lot stronger we products there low be QX to because demand project. up question think for in hit have the seasonal side so pent about Industrial, in a And to of of the going our of is equation. be the QX lot normal feel will strong Personal is we're a we than that I demand be

will would probably because that So, be of normal outlook stronger demand. now right be pent it my up that than

overall products supply-chain and the supply So, of U.S. to Europe. out be going a come these for really on Remember, dependent questions. our lot of it's the

to us. Europe not U.S. China and U.S. shipping the impact from or issues shipping, out. It's So more out would

Europe shipping quarter, the European and ports biggest for was biggest the us. This the challenge problem in were

favorable next So that open year into be us. for things will as those up

Mike Sison

Thank you.

Operator

Harrison from our comes you. next Seaport question And thank Mike Research. from And

Your line is open. now

Mike Harrison

morning. good Hi,

Guillermo Novo

Hi Mike.

Mike Harrison

business. your ask I wanted questions coatings to on couple a

the come that You've contractor such used are expecting for in mentioned sales strong and into your your on we remains end if could improve architectural are Are now off pretty additive types drag and DIYers actually more that see by to that activity coatings. intensively that in demand DIY additives paints contractor DIY of demand higher used the coatings market?

Guillermo Novo

Yes.

at So, broad based Flow. continues one synthetics, both [HEC] Aqua Aqua be being the if rheology in into our would more goes major cellulose-based is the and across to the Flow additive the and look is the the very be that's it DIY you board. driver strong. then biggest Demand coatings the the

very strong. the market prior DIY to strong year. to a stabilize It's seeing still very We starting relative are

are and global We customer of base. we're pretty very broad terms base in the

more more are are focus mixed, are customers Some DIY contractor some focus. others

probably year. portfolio of market into as the So, will HEC example out we part say the stronger of of market we'll contractor a an entire tight of next very see little that as I the go is capacity. bit dynamic being the running

is going pricing So, up.

capacity for the tight incremental capacity So both recovery markets demand based for as we more are given as and industry is that high. and interest going well to very of fundamental area. additions is But the and obviously more products demand the applications strong from be in investing added cellulosic many the markets natural cellulosic the in the and from consumer of new especially still

Mike Harrison

counteract divestiture with to any then All and be there? costs order maybe associated costs? process. stranded question just you the those Can what not in if that would right, taking potential wondering on be discuss a actions quantify But adhesives you really will there a

Guillermo Novo

Right.

of our for taking additive more we actions as the we look based, transformation petrochemical natural theme ingredient more at portfolio. That's Day much of our Investor big are terms less company, of our it in becoming So based.

company become So different this much with different a dynamics. is going to

issues into these plants. all factoring are We smaller

we're grow the actions planning taking replace the at look we're impact. you and to Schulke If acquisition,

the and So at becoming full in we present do this we time. picture we'll But what will all what that do want we transformation. as factored communicate and want to more is of the to appropriate company the be

Mike Harrison

thanks right, very All much.

Operator

thank comes from And Jefferies. you. And Laurence question our next Alexander from

now is open. line Your

Laurence Alexander

for incremental secondly your the for above four new thinking in tailwind next a below Two eight be as about it margins? to or XXXX, think morning. Good questions significantly quarters normal in firm about lumpiness to setting you the kind going And first. the is it innovation compared we lumpiness to How or normal? of are cadence is

Guillermo Novo

some first question. on your plant from to your of lumpiness question outlooks and around the assuming just It's the – more So, load I'm and demand

Laurence Alexander

just of If it be helps used just to like getting have of the [indiscernible]. I lumpiness, called like out sort really it to you level X% a you'd them unpredictability X% X% of sort at think

So, factors it total current how about environment the normalizes? do in quarter and think swing by quarter you what the

Kevin Willis

Okay.

to So that. through as as would supply be than manufacturing and more right the our very out. manufacturing lumpy managing in our and bigger the costs, have logistics I great going But that's been the we're fill loading point example. costs, that chain it's a [HCC] is we're products demand think now of we're side plants lumpiness tight seeing market to plants our lot inflating, of running this regards at is of very many with a and mean is in time. our strong I the not

that'll the that as off an because from some lumpiness across producing can used much from that So as year. operating and level to of the we be come we'll

the There to in perspective year. seasonality the the seasonality is is comes be issue do pace especially that not the as the portfolio. I And we, innovation, of think a which this are accelerate, how revenue calls, focusing activity. and a be the new equation we industrial can in issue about much question that of into the from the more launches on see launch that lot we've the lumpiness the the a the is that in last see quarter changed lot and right of now we talked second now really side tend of areas continued to first products. said, we're What which we've we're of accelerating second strength where going as to think demand terms is lot on So, I going and side of I do might

If really we're in is around you of most is it care, personal of what – trends at in doing starting look some get lane. especially to the ESG apologies that and more

working and customer. them it's about then it through launching So

of lot excited Very there. new a So innovations. portfolio about the

Laurence Alexander

Okay. you. Thank

Operator

question you. from comes from our Anderson next Stiefel. And thank Vincent And

open. now is line Your

Vincent Anderson

Yes, my good taking morning. questions. Thanks for

and maybe How much compare contract stage clearly I and So cost sense solution? from does for drag on point of long other issue? out walk wanted touch while make [indiscernible] and the that term a is to then at a And just more a to fixed what just capacity away better quickly. currently find it

Guillermo Novo

Right.

application. as issue developing is team of portfolio. out, the on So I new the [scleral] say you side it's would business, is point the new The

of going the equation well. part is that So

think inventory. worked year, actually That we've of loading this off actually last the I issue the was it year. more production

bigger So more is production stabilize. and to The customers order it's pattern orders. a lumpier place bigger issue that

As portfolio. the strong quarter an there part that some the orders is very example of fourth in

regions. very around that closely those monitoring and other Europe, lot we're goes A So to shipping. especially of

monitoring really making view the new is team term going that. And it's No, good are innovation there. come applications. I about I that's So is what very on working is we and think through stabilizing, longer growth progress and to think that's the

Vincent Anderson

great. Okay,

And development that that kind pipeline, in is specifically in that more example forward yes, feeling you more your lacking of trying need an customer bit flavors nutrition just a So obvious there at world as I pretty of the to order timing then just table end to an just in address? looking have perspective. there's a seat and they're like on products geared guess Is some anything conversations. quickly to pipeline the product you're towards

Guillermo Novo

Yes.

you of is at on of a side focused we're on nutrition it, the lot plant right that now protein. if look based growth the So

of that well. very lot we a area and other products the additives So cellulosic growing that have for that's

activities would tier our portfolio. at where are parts markets, look of we major that of and the ones. as personal the markets of be we sort additive innovation leveraged coatings is like this This care from bigger pharma, the So second these

continue good not we do. what and opportunities secondary in business. That's of is this the not major It food the to So a we core But is see there. flavors. market. not our We're

Vincent Anderson

Right. All I appreciate it. you. Well, right. thank

Operator

closing back showing now call like you. turn over for would to questions. remarks. further to no thank the And I'm I Novo Guillermo And

Guillermo Novo

you. thank want your interest. thank Well, for Okay, everyone to I

some is if you trends and about hope outlooks you've dynamics. the I challenges for As excited. at of the term external term But this the and these very look seen longer the of quarter near we're for some

look a to we're position. you continued are really environment. said and we I teams forward this Thank the very through great think the as job in weeks. managing talking you good doing I much coming And uncertain very in in to

Operator

concludes conference Thank participating. This today's you call. for

may disconnect. You now

Ashland (ASH) 28 Jul 212021 Q3 Earnings call transcript