PQG - Earnings call transcript Q4 2017

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Operator

Good morning. And welcome to the PQ Group Fourth Quarter and Year End 2017 Conference Call. All participants will be in listen mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to Investor conference Relations. like Azmy, to now President, Vice would turn over the Nahla I Please ahead. go

Nahla Azmy

Thank you, XXXX Gerry. joining us Good morning and our quarter welcome fourth and year earnings call. for results to everyone

today financial some start uncertainties that with Chief Officer the and a subject Please and about Chief Q&A will Gentilcore, Vice the materially. mentioned Then with call we corresponding the These Officer. that Cruz, Executive on today from risks implementation session. company's and remarks and on to We and and GAAP Jim actual that discussed of formal their results we be section statements found posted Chairman at cause material plans Financial measures Executive make Mike are release could the the forward-looking the President with non-GAAP company's www.pqcorp.com. in will our earnings note the follow results investor are SEC. Company's in and of measures vary risks site presentation the an filings today's plans to with can of of Web Reconciliations

Now turn I'm pleased over call Jim. that, the with to to

Jim Gentilcore

Thank we call XXXX turn say we after in our to PQ financial to XXXX. member highlights is us at exceeding healthy positioned I which deliver We today. continue some results a more of why the and how goals, detailed note, our believe you exciting for and me well you let XXXX to very to another and to are and time XXXX. to investments new you, for cover performance setting finished team. financial to us plan strong strategic well the high review X saw objectives of PQ. for as of delighted Please a We're in financial, up Mike PQ year I'll to Slide outlook. turn the you a review our join And have the XXXX pleased Nahla. all first operational have and It's on a PQ

is First end our core and position leading our in foremost markets.

good GDP, innovating also margins margins trends and environmentally contribute our with some grow We groups will continue This continually cash rate. with Through and we services costs. strong is to It our than each add of customers, of value to This provide are serve. high input drives flow. generate expand growth and in favors turn which that the friendly shift a is expect Slide catalyst our to viewpoint solutions highlights. close XXXX excess faster ability the the to the that of to a Please in collaboration our higher inherently you secular markets our environmental company high-growth well cleaner given more we to can expectation their product ultimately mix X safer margins planet. segment our social its cover feel responsibility a as from to about demand

effect and Sovitec the entire from too finish adjusted get even our to in XXXX, Latin lingering from team tuck-in Europe highway levels. synergies strengthening and completed June As the million America. reducing fronts. We interest by posted XX% of our honorable thank reducing nearly refinanced for or We multiple of very the on debt, paid integrated And products. from record Financially, the I margins our strong Strategically, our higher EBITDA a our of year to blending ability cash XXXX and margin our Hurricane in this safety $XX Harvey, was of benefited And year. pre-IPO of growth to we of XX%. by season, it $X a sales full QX successfully and turn down mention. delivered good margin. our with and costs EBITDA just all is the record grow performance was captured leverage late billion business ratio as adjusted not acquisition almost nearly our growth over we earnings in our revenue,

Sovitec make accretive our lines. complement PQ to to is tuck-in example how existing business of is acquisitions well a suited great

experience, team, We we our results continue will adding strong future. the and value to right build diversity thought and skills into the shareholder of well delivering continue that ensure

Now, if you’ll please turn to Slide X.

aligned look goals key commitments. at is our our you team if levels So XXXX, deliver on on to all to focused and

key high in we and adjusted to continue markets, And X XXXX to almost expect will drive sustain be which most digits would for to improvement margin to adjusted chemical our growth our significant PQ. and specialty our strategic another outgrow EBITDA expect in be great a With We secular by we end performance, middle peers. EBITDA profile. with GDP year our sheet, noteworthy free times. single positions balance flow change sales the our growth of the is cash at the in But

us share should cash free our cash move new which XXXX. of reduced increase free flow comes combined and already This flow flow yield XXXX in of our from peer in to is expectations group. generate Our is million which interest, near our nearly to reduction rapidly sustainable top interest good $XXX cost cash cash This the with tax strong enables the into $XXX locked-in. and law growth half million earnings organic company per target

We turns, disciplined to free our we high As accretive we X.X and a growth last communicated investing for opportunistic balanced organic range reach projects to leverage approach priority X combination of cash on repayment to is acquisitions. and target debt a tuck-in flow we our vitality in of call, at sales with our our pipeline. In at area innovation excite collaboration our a our faster looking continues products success by new to to of One XX%. as and quick measure achieve XX% and And customer. index that to that with that next is XXXX, our better a which from me our products $X.X In catalyst, than our pace. from market is the personally chemicals customers, from opening index materials solutions continuously catalyst are bringing innovation focused close technology ThermoDrop examples us. And of percentage methacrylate vitality generation vitality less year. market in choose product, our are index on great five safety, over and many focused overall the be extending our increased is years would industry’s on Two up our billion than our XXXX highway old, lead performance the of methyl sales. by for prior greater leader

and than R&D way into confidence can continue is me have detailed create incremental focus that key index end no on than and the value XXXX. strong better tightly that, our what markets it a we Our growth GDP. pipeline. accelerating shareholder go margin gives I higher With our targeted heading we performance on vitality Mike our is presence high harvest This turn our to growing to efficiently faster of through financial where I of to review more and over outlook. can a to innovation Mike? think will

Mike Cruz

you, be our morning. I that for Jim builds Thank on the our and XXXX primarily good and achievements. reviewing will XXXX on focused provide would for our outlook year results

the to to will gives Please comments us Turning pro Slide XXXX, year X. full to Services. note that back forma with Eco combination of results compare our my which XXXX

solid the and with the the year led highlighted operating EBITDA led EBITDA ever. Jim adjusted finished growth performance to in acquisition, segments best year was we higher very strong sales organic both the are As quarter Sovitec This fourth largely and a have to which pleased adjusted by that driven margins.

Hurricane Harvey. for to XXXX, impacts approximately primarily the year our by emissions from provide groups, Let temporary nearly both that the catalyst all high $X in segment services product from on Slide these specialty octane you and three slide plastics negatively shutdowns Harvey gasoline, this sales million contract create color had X.X% impacted improve million, by products Hurricane renewals and environmental performance day. outstanding improved all performance segment. customer $XXX EC&S visual Sales due of facilities you diesel X. with businesses. X% grew of we use for financial whereas refining or in every and levels to me more show pricing driven delivered and help Starting in This residual spite on nearly some catalyst services.

volumes products XXXX. Our to increase for most specialty the through The XXXX on million. to primarily margins Adjusted sales emission $XXX cost. we points adjusted EBITDA the higher XX% control catalyst. XX% demonstrate was raw and manufacturing for EBITDA impact and to by fixed Adjusted our to pricing control and Zeolyst higher Zeolyst in clearly to recoup the primarily nearly which These lower emission to million, and increased share specialty of catalyst robust and from Harvey attributed XX% margins $X XXX provisions the nearly services, material nearly benefits expect growth increased over our regeneration the from rose EBITDA pricing of of pass basis customers. of joint of value-add This venture higher sales was for venture $XXX rose segment catalyst continued cost. of of joint million

to and segment performance Moving X. the on materials Slide chemical

materials more at on safer. highways things on striping start, Two shows in before big a new we years Now global XXXX. picture the in strengthening lower pick-up costly will come. applications the benefit this the positive very for make Customer and feedback introduced product our ThermoDrop less to time we and makes right earlier, reflective the To group been that segment take to that happened Jim's safer, has growth highway called product look the point efficient.

and silicates and nearly tire position acquisition, increases in finally which silicate the $X due grew one to goes grew capture raw cost. care from the Performance and combined was and the which $XXX price over sodium raw increases to PM&C Second due gives with Sovitec when Sovitec be we EBITDA material our precipitated ThermoDrop and acquisition. grew higher goods billion, over one but X% Europe start to consumer recover a by here volume $XX X%, was for Performance would uses from cost Latin improved and million. also with them contributed of stronger over costs in higher to America. higher by Adjusted our products, quarter there rose to personal material the being us the offset organic cost. lag. volumes acquisition, I toothpaste. million inflation from pricing picture that sales application. then largely a growth benefits X.X% note sales chemicals primarily nearly is can from up associated Sovitec the pricing This industrial do increased most green product that And now driven supply XX% materials of

by While expected year XX% margin, adjusted rise we XX ThermoDrop the EBITDA and XXXX as solid realized. contracted from last Sovitec will cost up lower of points that margins start are basis in posted to synergies it a due

customers of we major lead our expected we Please growth our adjusted GDP the due to I of In positions trends venture end to growth EBITDA us each and similar as in ZI in X, positions leadership to five sales. note Slide ZI EBITDA. our expect as Turning year. growth adjusted customer multiple of to level with be of key expect XXXX. XXXX, includes to at with Slide to XX, and the Capital our this grow forecast XXXX our The strong venture's to excludes markets in highlighted expenditures of share and X% groups. markets have underlying joint positions. segment are these top-line X% last to healthy X% in at joint the X% on D&A And a in slides, product finally,

between XXXX Jobs EBITDA for last the adjusted we're cash offset to driven in million U.S. while tax repatriation effective of anticipated recorded providing to $XXX free $XXX finally, growth approximately interest largely provisional $XXX million. which up the to fourth And the mid items cash approximately is significantly and we for will of I and is Tax toll revaluating greatly This range, would $XX $XXX million, Act. XX% $XX and the flow the XXXX deferred the the results outlook, quarter beyond. drive our in year note by there of the XXXX of range be line to and lower expect that the was given Also on guidance that yields that million be quarter our customers are million and quarter full the in million as our in in the for the improved Despite only XXXX, has factor full the from for traditionally appendix. and overview a for by see cost, reflects mandatory peers, by and results the weather expense of year, we striping But tax issues, XXXX benefit open flow Free tax northern Our rate tax. and is estimated the benefit the Cuts anticipated I you would seasons quarter to slide is our operator, start across first please of a of concentrated seasonality quarters. and of some toward these first business in by XXXX first year that driving XX note been lowest guidance. a noted the of for questions. highway our summer hemisphere. quarter With which second can year third solid the

Operator

begin We Instructions]. session will question-and-answer the [Operator now

question from first comes Koort Sachs. ahead. The Please Goldman Bob with go

Bob Koort

Jim, and I'm dimensionalize this levels, of numbers some next if that change bit, cadence you wondering year could growth a and go how through little quantify then ThermoDrop as help spending should and year. we the the the maybe

Jim Gentilcore

in some had of as XXXX we’ve clearly about startup before, we is behind and the that now. well, us running are gremlins up plant talked of we very the First -- all, had

So note not in Pennsylvania the striking I the least, in as am especially to underway. following period, is season looking out this at press window fully

to going able So to quarter. demand be this the and the inventory, out And sell I product. order book strong to is the building for that we’re year. the ready second plant that we’re in deliver looks very confident am there, third

we build XX in we look the that into further build XX future, are $XX months. and can plants million-ish we these as So that can to for

market to quarter talked $X.X to and continue be that that we’re to as hit and that in million a points So in XXXX I second be we continue critical, optimistic served that after proof about. position the we’ll good go will especially, third

Bob Koort

my follow-up up renewal services some XXXX come there. if in I good in Can might And year? you what business. there’s versus pricing give in the meaningful any sense on could regeneration expirations the the Obviously, last that for you us if there’s change had contract

Jim Gentilcore

last through won’t are price same XXXX. of saw bulk that see being place, when think we will see quarter in renewed year our had contract in this level it’s the towards that in through. so But of year. contracts we still of the step in of I think was once end that And there’s that we carry last carry kind that the we Bob, change or I renewals it’ll the we saw that ’XX change contracts, but won’t ’XX, some

Operator

Your Christopher with next comes from go question Parkinson Credit Please Suisse. ahead.

Unidentified Analyst

you can in key bit there’re between can on walk Thank a growth I range? was where you. for maybe ’XX. us Chris. cash areas depth growth you [Kevin] wondering This is the towards if ’XX the free guidance and flow the of higher any or little end And believe just drivers drive more through you if additional levers of

Mike Cruz

we we that to before where look as had to flow, started we’ll improvement that largest the So we we’ve refinancing mentioned could. cash the items at interest. one IPO is cash in lower we the going de-leveraging IPO really refinance we’re have with the meaningful as continued have free even from process fact of a We the

million were or we in guidance So $XX and really won’t you We’ll then so $XX that improvement The in the million amount recur. in interest, cash actions where due that have I -- that’s discussed costs at growth midpoint, debt, about out for as a And XXXX of working million look of taken. as of to results midpoint. bought EBITDA had fair you believe as that some at the the capital we at expect improvement think have interest $XX about about some do is refinancing XXXX of projected previously. locked we’ve our as we we we XXXX

usage was up a capital year. the drop, the built working have which some over fulfillment of inventory We

Unidentified Analyst

talk think EC&F. more and Can you. we bit MMA you the opportunity And contributions Thank or a little a well? any just quick should about about throughout as on then how follow-up growth XXXX

Jim Gentilcore

my supplier are and to best the The to the this. we in opportunity introduced in want as XXXX remarks larger being a as prepared as -- catalyst third way the catalyst mentioned second exclusive of think X now. specifics add player shot, MMA times color to about might a We've But to is ’XX, incorporated industry than far Mike, this and the some X leader the new to I in that’s by there. long

for we supplier that will a very expecting contribute plants to sole shortly new stronger major and the MMA will and see we’re even the give we’re of the in the site the plant that And of announcement in this performance offs are technology, customer, building place as top which plant beginning beyond. market. large using position So in in that next 'XX the already to hear M&A of and our

Operator

with Andrews ahead. next question comes from Vincent Stanley. go Morgan The Please

Unidentified Analyst

on follow-up assumption provided companies, your is a Just affiliate dividends cash XXXX? from guidance. $XX I What for million cash of in flow flow free your you've benefit think

Mike Cruz

we to think at It in that fund venture have but does where and XXXX came healthy the perform capital out and a we dividend. The based well. growth our levels. inside similar still joint We we’ll ability to to XXXX continues continue on JV the sell some pay very

So for levels we be should XXXX. similar at

Unidentified Analyst

And decline your XQ sales could Was you then in then what by for the XQ touch Zeolyst being touch if it outlook the was and upon wondering driven comp XXXX? more in business I is a for JV.

Mike Cruz

see driven. or whether it’s slide helpful And some fact the you be at be because look it of can because the think if catalyst cracking lot appendix, XX specialty a may you hydro variability I in catalyst can of in

And was mentioned. can in a move tough it the comp fair it from you around amount quarter-to-quarter. So as XXXX

in was expectations, then a it basis. but our So line with down year-over-year it’s on largely

on were up we we at having business. nearly full if XX% said -- at that look look sales in year, that the As you

there control that component been larger has very emission been So good of it's and and business. a consistent and growth larger growth

steady provided incrementally results. in that expand that increase has to continue We

we as would a forward JV So specifically, expect we XXXX. sales the growth to range had in what look for similar we for

cracking the as to of are portfolio. product mix of the their product at the lower a where large a However, margins it's position part relative for catalyst hydro portfolio

still mix will bit a have an on little but expect that impact So growth. of sales

Jim Gentilcore

I most global the at are through for that trucks, way transport, air us the look and rail, is to will strong the business. for in fuels ship emissions drivers be continue the And add important ZI sulphur that tailwinds the venture that that would fuels in just even joint sulphur that transportation lower and lower that moving we to

Operator

comes The go with Zekauskus Please JP next Jeff Morgan. from question ahead.

Unidentified Analyst

[Zoka Good When your and morning, I at million ThermoDrop catalysts that think price $XX was and in full-year environmental it's Cook] Jeff. volumes was probably to in look for there performance, performance achieved in in $XX million addition I services. and materials

you growth MMA and think order comes may second next best think first to if you ThermoDrop to year? have grows had second best in like or you and do where rank do like the do 'XX, in a then just So rank what as from

Mike Cruz

lot So Really accelerated that's about services. We’ve have in maintenance. there Harvey that as volume you contract had it’s locked at look refining XXXX, continues. all price have was XXXX that in that would renewals, down volume and impact about of in is a those been customers with plant

a strong their everybody high position, putting themselves and at to that. a we'll is is be in demand level serving So XXXX perform still in because

chemicals segment, much So led expect you running full grow Sovitec the do pretty look in we led that XXXX. of digits the by ThermoDrop. price more, chemicals by at performance refining the business runs as PM&C double volume growth where then in little digit growth GDP material expect to we high sales with and up and at performance a services of more single ramp benefits year at And in in but than

Unidentified Analyst

rate very year? your be book different cash tax And than secondly, tax rates will next your

Mike Cruz

in of range We million prefer projecting dollars cash it next to just about year. in think and we're taxes terms $XX the

Operator

next ahead. question Please David Begleiter comes go The Deutsche from with Bank.

David Begleiter

in expect catch you in And you when in expecting to catch lag, how but on XXXX? Jim, just XXXX? up fully fully mentioned much that inflation to are incur the, up how did looking the you inflation expect do at raw when do materials, you much to on incur XXXX,

Mike Cruz

shows factors through you the look major XX change cost at would the When line. run variable page that that

then seen plastic, shipping in natural refining and So businesses increase services we prices cost higher little gas. have cost higher a the for and oil for of a little with the -- bit bit for sulfur

either in the contracts. through So in are our pass-throughs have most we we that cases, recovering that

chemicals, of and have contracts America performance nearly North half one contracts quarter raw XX% services in some a example, the So our we provisions there have this. of can on have for in like But inflation of through. lag pass pass be material And refining for through this. over

you covered up when materials have variable our look costs largely us. So of performance in at coming some a out, behind chemicals, bit difference the ThermoDrop versus being we of case it’s that's but created are price where a there, the start that costs and did

the So or material to pass and key I here very the you and grew capture either through and is get year-over-year. margins, raw ability just in price that evidenced to were we go stable whether inflation when cover out which increases think about through think actually have the

Jim Gentilcore

just expect about seen increases And and would if that that continuing always as said, go raw do already few the margins I just in we up. that. blend see in to are Mike talked back you'll our that been capture, with years 'XX better environment Dave, an continue even, we to we've inflationary you we add, a has

in have space. might confident companies don't we're our So in material that we raw see classical you other the that function inflation

David Begleiter

on bolt-ons pipeline just in we maybe the M&A flow, beyond looking And Jim ’XX, Mike how and about just for ’XX? on going how CapEx Jim cash think And forward? -- should XXXX, is

Jim Gentilcore

So beyond, of see ’XX CapEx still in and similar levels CapEx. we

the in the we level. up area, keep that pipeline it in there But place And off back with that small. M&A pipeline, as We’ll pull growth in a that organic demand. in growth in see the capacity far will a our might little businesses, there’re should exciting some the CapEx big start that projects do at we’re the as but keep CapEx, fall Dave other bit. the little we to catalyst Although, investments to

have to to we be disciplined Sovitec’s We and As still that size priority I is repeat, think strategy talked we here there’re synergies, the capture a could allocation get in out disciplined value, last just we’ve want capital going call. existing calls, getting that down. pay last that said that out businesses this good our call to the a add about rails our the at of the guard there, without few of that debt few and

Operator

Aleksey Please next Yefremov comes The ahead. question go with Nomura from Instinet.

Aleksey Yefremov

On ThermoDrop, what is three the year or one know, per opportunity here, assuming everything the you goes I well new this to to plan two plans year could year. the build, What would build be going don’t per forward? of

Jim Gentilcore

how get is in frame the a term I I year-over-years, move a modeling configure ways some good we year we we’ve from to to little way recent that. that if Asia? going a When were plants year, we a but our plans -- are we as about year a first strategy from work there’s would would at think, that plant out capture there. to learned to plant think out So typically about on different lot it because teams it a long Europe the in got from going as forward. a But Aleksey, looking per where our I one, -- do bigger model still bit

Aleksey Yefremov

look we what look strong that a had you Is even is And like? up-trend, somewhere further catalyst, silica What’s down-trend, XXXX was in down. does XXXX, then XXXX guess the that XXXX, if here? in normal In I between?

Mike Cruz

of year a the was for record XXXX because sales. year the big So MMA

expected we to quarter that some So be down those of end year. for that We on line. in were the sides came results XXXX, were projecting the first we in the so to methacrylate have the did of were methyl sales in

be poly think market. next the we’ll high the versus probably So year will silica the on flat but ’XX ethylene side, ’XX be methacrylate driver density we in methyl real catalyst

Jim Gentilcore

to of cost I next because coming in our advantage. you because add just there’s energy of -- not as of U.S. especially, the year know, that would on most that big our capacity but

to we’re well years here, So going several on and growth. coming that HDPE participate capacity see positioned for in to we’re

Aleksey Yefremov

on Are Just plants already this that. to wait? Gulf Thank about to on up start -- or maybe are of to business is HDPE that the some have these you. you follow-up on you

Jim Gentilcore

Yes.

Operator

question of go from next Please Roger America Lynch. comes Spitz with Merrill Bank ahead. The

Roger Spitz

in EC&S variable growth? And this. I that was was of gross region and XXXX was renegotiations profit any you the on variable touched variable, think strongly process in was up the how a XXXX. I in contract drivers, But Thank you. profit bit other the for what much that and we EC&S little driver guess

Mike Cruz

was driver for ourselves XXXX of did that quarter the biggest in we fourth the contract set The renewals up to XXXX.

have So performance. was we systematically dropping biggest basis, the the driver so that quarter-to-quarter that really revenue benefit through a on of

Roger Spitz

for And were principle driver down. this the What quarter ZI volumes was that?

Mike Cruz

really was timing. It just

the you way If look the the was XXXX of in at the year. quarters fell biggest of XXXX, the fourth quarter

sold more are are and hydro are the that ratable event driven. more emission products cracking catalyst a have basis that specially on control sales You catalyst

So it's fall in just the given function of any they quarter. where

Roger Spitz

for green main And What was driver up. lastly tires were the sodium you, else? or or the catalyst silicate something that volumes is

Jim Gentilcore

big of part that. really green a certainly three there They the tires were drivers

Our where also that makes-up also industrial down generally we And then would and other products places had the toothpaste that chemicals lastly just a what into a strong for had and one streams with call further we participate there call feedstock we personal 'XX. 'XX. care of industrial strong the chemicals very

Mike Cruz

places well. a but think climate in other to the and U.S. Peru, macroeconomic as it's in we of Europe the Yes, were not in see I starting function

chemicals, see that saw through which and on good we XXXX. is carry that story a So that into trend continuing

Jim Gentilcore

mentioning general happening that took climate the climate, some environmental we in demand they the the changes that's of just the in offline. other are one of of their regulatory area changes industrial China. a that’s of there as lot biggest assets chemical polluters Yes, in in the is China that worth Because regulatory changes dimension pick-up and saw that

showing So an but not plants. this for impact certainly in little important in an it's at carry bit that's Chinese but trend will hard to a happening tell long had chemical substantial it's I us point of ’XX, think that how forward,

Roger Spitz

When capacity China that those that you China that saying mean shutting and China, processes down who silicate that sodium you off is taking Chinese products, or are silicate do that you are products volumes that displacing are getting you or not therefore is are made getting to you’re their more the -- capacity showing say getting sodium that then use sodium you with and both. silicate are and using westerners capacity

Mike Cruz

that's spot What that us opportunities the plants about, saying down in Asia Chinese silicate opportunities shutting Asia. of rest share the I mostly to to that are capture am short-term in at they exporting sodium least not their giving regulatory meet new requirements is were before, the the

Operator

[Operator Instructions] with comes ahead. KeyBanc. The Mike Please from go question next Sison

Mike Sison

In to is a silica the business. maybe comp your Can which out recently your improves, how changes combination? Albemarle's business, whether I catalysts, pretty talk think bought you about environment for that good compares competitive polyolefin business of because that Grace you just think and

Jim Gentilcore

pretty positioned big market. in the across we're well five Mike, four this or HDPE players

will on is combination those have We we're that any in some Clearly, is said, see As at areas the those of there. of leader demand a two the the strong don't I to us. very point mid-term impact strong. but underlying Grace short second this

in And hearing catalyst in years. position but position support two in market positioned a the next organic the pipeline support. we today, the as well about equally but to us itself of we’ve interesting help in Mike, that the in part catalyst that And We have will continue stronger that end past, and both to them the -- three in take we through we're -- about to profitable all expansions that have things well catalysts the both some over also talked in the to play business. have

Mike Sison

there terms that business your year, And free for is seasonality consume fairly more? in flow throughout are to and then of lot the XXXX, certain any cash a there generated that generate evenly quarters then you

Mike Cruz

going second summer get With likely be season you in third. because seasonality the cash third striping the the more flow our fourth will do the of generated business, in driving season and quarter, that’s the the and to and have

Mike Sison

of strong some is you of now quick 'XX Is And just the pretty lot growth Zeolyst, and on 'XX? had a versus the in 'XX then think 'XX. in a versus growth online capacity up driving that follow capacity I

Jim Gentilcore

We're online. still bringing capacity

both We late of 'XX, some that early underway, of on comes projects CapEx big plants have 'XX. two both some in have it it

as front demand, stay stay earlier, in believe I we for strong which several well of positioned fundamentally we're will is this said So to years out.

in and good 'XX. shape will 'XX, we're stream So and of early late most come 'XX on that

Operator

The Alexander next Please question Jefferies. comes from with go ahead. Laurence

Laurence Alexander

and your the you on first ones, think of update in factors swing thinking Is due the return And quick about appendix. capital not you swings, to on growth raw about that in identified you XXXX? that average that investments? us cost on can were Two embedded that secondly, material how in any the your variable

Mike Cruz

mix. variable mind the had that only one that some As you the about than not come the quarter product we probably think would but cost environmental also only do services to have other be part the movements catalysts and we sulfur in raws, caustic on of as and

we'll But been occasion generally as required. really speaking, raw on inflation. have So the it's variable material by driven additional some costs

think as assets. tax, rate at which tangible it’s the you a capital, return target this return cash tend We XXs, to tax takes in the on though to really are after on we’re lower the does going As we even look projects, in have into about account which upper U.S.

robust where in growth. are that projects that returns have see we areas paybacks at have looking that the shorter demand we’re greatest the So

Operator

closing like any remarks. to This to concludes turn conference session. Jim back the the question-and-answer for I over would Gentilcore

Jim Gentilcore

operator. you Thank

down to closing with key show in year for performance to tuck-in continue PQ’s to points; drive Let morning we will and me this leave for profile; similar XXXX you our and value. paying XXXX cash the us accretive strong free shareholder with being and expect strong earnings next you flow debt XXXX; and these and acquisitions drive Thank call. on margins, was forward be focused look we’ll we to

Operator

now presentation. concluded. you The conference Thank attending for today’s is

You may now disconnect.

Ecovyst (ECVT) 21 Mar 182017 Q4 Earnings call transcript