PQG - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the PQ Group Holdings' Third Quarter 2018 Earnings Conference Call. All participants are currently in a listen-only mode and there will be an opportunity for you to ask questions later during the conference. [Operator Instructions] Please also note that this conference is being recorded. I would now like to turn the conference over to Nahla Azmy, Vice President of Investor Relations. Please go ahead.

Nahla Azmy

Chris. you, Thank joining everybody quarter earnings XXXX Welcome our call. results to third

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

Belgacem Chariag

tenure you initial we morning, you, by also my Thank like into on to impressions focused and are the with my to three value. good I'd review key sharing value months that start Nahla. everyone. And drivers shareholder deliver

are better And increasing transport more pushing for regulations is product personal region tightening Demand inorganic care. regulations restricted. to existing and Local the areas cleaner fuels and constantly business. and Octane increasingly our new in First, in road is strong demand safer for are market low drivers relevant are are sulfur market visibility. growing, standards extending for derivatives fundamentally safety like markets. and to

been growing its one responds And always businesses portfolio as strongest advantage. unique driving for the most future. company's XXX and innovation with drivers our remains force of Second, history leading years It the third, is position has in a competitive in to the a markets. it market potentials is

factors, initial as revisited macro During team success sensitivity. as well and strategy, its this I its my period, our current

closely challenging and technology including the business structure cost, are models. We of on many capital operational aspects efficiency delivery both

exploring markets. also growth and in are further geographical through specific expansion footprint We adjacencies

are our and addition, And are objective rapidly finally, to dynamic, In clear operationalize evaluating with a portfolio closely make our an stronger. building we pathways to simpler strategy. we

key goal the value effective reduction. drivers, leverage of growth, of free Our capital, use to deliver cash flow is profitable strong generation and on

results X. Turning to the quarter summary third the on Slide of

tripled in most adjusted of ago, highlight results cash key quarter beyond was of not these year third we demand performance, flow the in decline our in increasing. a is Our as XXXX. will supply despite growth The services In In drivers sales continues refining of costs the alkylation, by position. carry sulfuric favor higher markets. a support, quarter polyethylene technology digit offset and for both Disappointingly, a performance down acid in operating silica services, volumes We performance feel demand costs, slightly drove double captured end our terms this of have well demand strong which demonstrate we Catalyst catalyst believe growth. EBITDA sales pricing, quarter. in key the global that position and services regeneration our which as increasing in sale. Silica adjusted based is thereby underlying two We healthy number have regeneration polyethylene a demand to was virgin in which U.S. for in free to The and EBITDA. leading shifting compared our delivered

a full Mike detailed outlook. will Now quarter provide review of year XXXX the our more third and Mike?

Mike Crews

morning. good and Belgacem you, Thank

will slight revised cost make X. a used performance pleased I decline Sales commitments. XXXX top the EC&S these segment. review deleveraging were with debt in our a to in time, would to that to same the results we quarter At was million. and in line growth, Slide disappointing third refining note EC&S product were our very Within good the highway free for chemical was beginning addressing I our group repay in which sales our outlook results increased Before operating while XXX regeneration demand North our detail, quarter strong particularly approximate with our also toward to virgin quarter flat. EBITDA. had terms performance services in in of in we progress million and The flow led increase, Adjusted contributed American X% solid in $XX adjusted areas however the cash PM&C, which performance acid. and services sales certain

year. XXX negative points. EBITDA X% growth. points margins sales the pass another were unbearable or in in margin million the to main on prior higher overall than of results that North accounted both performance drivers of higher weaker offset materials, basis in The through more PM&C. do and below XXX a by We decline XXX margins the within absorption to XXX the X.X and in Europe million raw impacted were cost than America basis in of EC&S million. $X was reduction. or material lower which EBITDA had for cost currency basis And EC&S points highway XX% Adjusted European X% Strong continue see by our however Adjusted provisions revenue Foreign price offset impact declined costs. increases more cost

half I'll services business regeneration driven and volumes product million, the by prices services XX% $XXX review a us, performance in X. both from Next of increased in virgin approximately of we've the Slide segments, each outperformance higher Sales beginning lines. turnaround segment environmental With refining on largely from to and the first catalyst benefited acid behind our services. with major of

deliver double growth, polyolefin MMA deferrals digit and continued than lower primarily addition, to catalyst hydrocracking XXXX. In to volumes expected offsetting from sales,

This deliver sales points MMA strong demand. depleted growth to are related EBIDTA, in Most sales inventories. period and turnaround unfavorable and sulfur sales, year in adjusted higher Performance consumer to and approximately cleaning year pass price with materials meet increased and by And PM&C to period to demand. increases flat nearly increased continued costs sales half. Performance sales margins refining million. performance refining ago year quarter. ago this $XXX offset sales freight, the Slide due largely in on than offset X% to with segment XX% catalyst, drop cost the the the higher thermal was largely the turn lower due maintenance decline of as While through to slower currency more increased highway of benefit drop declined production margins XX%. new X. strong weaker along increased lower lower the from basis volumes including costs a due were first XX%. million and Both improved ago Adjusted volumes absorption was we EBITDA services impact markets. reduced I'll to competitive to were silica period, strong European materials XXX pressure to chemical XX and chemical foreign now unfavorable offsetting thermal from services decline from increased and cost as the where margins on demand pricing

address to flow. we addition, for PQ Slide for free issues, production better we experience demand. Europe both to discussion of to cash have as costs cases, plans clear Silvatech Legacy and improve place in In and X And logistics XXXX. margins these manage in our higher locations between turning ship In to we manufacturing to

$XX debt, may recall, cash payments Adjusted in higher times build generated our the lower X.X ratio free year. more you The increase down due of dividends and quarter flow typically versus increased in cash half second and the to the venture. of year than half million was $XX first interest cash leverage to in Zeolyst repay of times of attributable largely most joint use this we last As the seasonality, was million the from last then inventory to cash end generate year. time to used tripled to to our of X.X the at year. the bringing Cash

We now like behind cap our current up to three for billion rate. cost also level, and begins guidance on with XXXX year we hedging through. ends. the outlook mid full billion, range when mid-single-digit year We expect of discuss full Slide interest that of July cap still year-to-date updated our pass segment the in new X. the and reflecting growth us, expect extended EC&S I million the range be quarters rate $X.XX PM&C benefit With XXXX would now our year $X.X of $XXX the a the sales the through in previous At digit to in single the to growth high from sales to

cost pressures quarter We forecasting full lower results a are performance weaker million financial $XXX the performance materials. to on reflects $XXX quarter range demand of EBITDA third and for fourth adjusted continued The year million. and lower chemicals our expectations outlook in in now

and a And year is tightening projected sales driven of to the $XXX This year-to-date reduction hydrocracking spending. our we loan our to outlook, with addition, is repay be to capital lower during $XXX EBITDA year are for for half XXXX the our cash approximate flow than cash projections million plan coupled term debt. in are that In shifted reduction are Adjusted the XXXX. Notwithstanding to fourth catalyst levels. sales the first in EBITDA original in the quarter margin and improve to free adjusted fourth we for to outlook quarter, performance the year strong by million. additional the expected

underlying digit sales demand year, due growth we continued summarize, single So drivers. to to healthy expect this high

to flow the $XX will and in With will continue I provisions. benefit are this through is higher from a pricing Belgacem. free of year Plans that profile combination to price robust and back eliminate We place million cash of cost to and variable pass our we experienced cost exceeding call turn continue adjusted through de-lever. our value approximately

Belgacem Chariag

XX. now to Mike. turn Thanks Please Slide

that the catalyst transportation most petrochemicals. profitable and and specialty first same method profitable PQ reducing of pools globally. largely hydrocracking, expanded have in are increased refining segment time at mover for a we emission for continue basis. transportation regulations to cover Shell process most be as yields product growth today Starting a a Shell's overview ZI. to sulfur stream. capture hydrocracking PQ's expertise for provides is hydrocracking fix XX. groups. that high Shell. XX/XX of replaced which technology. section Premature Zeolyst our the in with markets, in failure and formed emission as party are did the in every expertise maintaining fuel standard is very Strict end leverages technology zeolite fuel on while joint of products business yields Hydrocracking PQ Slide of three profile. ZI refiners Today, on event The is and gasoline supplier was last in removing to growth Its we driven, control three Last small standards, in ZI environmental Hydrocracking our to sulfur we services. is of EC&S on leverages the catalyst to sole zeolite years. to emissions distillates, global the of As quarter, sales to while maximize refining Shell, continue while Hydrocracking customers are product the a or enacted specialty in technology, catalyst the of ZI reviewed for steady cost model only sulfur. is between to component. most catalyst International an of costly XXXX meet one a and is to one but critical of call, four we strategic the refineries. catalyst JV venture and third a to providing another will

to support a catalyst the of positioning precursor of chain. leading ZI provide also the hydrocracking We to as supply most global supplier many suppliers hydrocracking

catalysts, gases nitrogen or catalytic of reduction to oxides called emission Our technology reduce SCR amount exhaust products by are control advanced in zeolite special more XX%. than specialties selective in used the

specialties that we catalysts of and and precursors catalysts that catalyst improve oil flow streams for upgrade include zeolite also specialty Finally, aromatic catalyst. produce performance lube that production the diesel are cold by-product These aromatic petrochemical performance. dewaxing

which next the Let's for the product and the few not growth are go back to biggest transportation ZI's for hydrocracking years. drivers lines, potential

be be the technology that continue. reduce sulfur our rate Slide products, we customer capacity in can to Refiners and attempt. and tighter on Sulfur able fuel increasing investing been capacity before we and must have to supply regulations both grow expansion share been Giving XX. hydrocracking expect removal NOx removed positions emissions. by faster on average than to to meet supports of hydrocracking in our advanced have finished First on worldwide

XXXX as a for emissions of to its healthy by chart, industry key transportation you expected XX. China continued capacity capacity in China. Now IMO as be on should meet Slide XXXX coming well be as the on for the particularly years, And This should control on hydrocracking the implementation investment hydrocracking. see line emerging driven year primarily countries can in of by global is some XXXX.

orders the we of operations driving hydrocarbon to three for in fact rate and our advance continue of considering in current backlog, to that order Given six occur capacity. catalyst months XXXX ahead a our growth fill sales expect market

on European X of other China Euro since will and XX. Current China announced similar Moving Slide standards diesel XXXX implementation is U.S. Union similar amount Expectations terms of to and European Europe the plans, emissions standards less in other nitrogen timeline the for starting XXXX nations largely stage. have market. Protection North The the These standards let carbon dioxide which America XXXX India implement for transportation of engines. have that been type industry decade, diesel who to the time to Agency end specifically in limit but continue X oxides, XXXX. and are Environmental and X truck at standards expected that in place moving the XXXX equivalent tighten now other to at confirmed to frame. regions the are the has of

contents demand to XXXX, implements Here in vehicle the standards. mix with increase And HDD actual drive higher move and latest vehicle resulting forecast as from years catalyst several the consumption European HDD for is per the Along of volume catalyst region. based tighten should previous relative estimates emissions we show on to China's by to trends These the by over standards our production. catalyst significantly for vehicles years. consumption set next

in So summarize driven improvement for living over the will climate quality the energy and ZI, coming the decades, cleaner by standards, and rising require world populations, our on to improving more change in cities. need air

flexible is platform various globally. standards and the innovation versatile tighter in fuels as demand zeolite meet a applications Our for and support emission to

and And investments, ensuring track space. market technology. ahead expect the leading and we a of position Zeolyst the the environmental International brings while Shell that a our given gave load specialty technology of you partnerships various developments. capacity it refining we strong base our developments leaders continued current and in the growth Our I are with offers value future record for catalyst overview and our do hope the this that chemical understanding better business and to in part of

fundamentals my our I this comments in to the close and business. Before like relevance reiterate for belief call, our would I markets to

our pathway, each cost to every stringent selective management, strong Our priorities profitable streamline immediate utilization on effective focus and growth, cash is and capital execute and free generation.

evolve to we're completes to continue and That will portfolio We our reduce the leverage questions. and remarks and now for actively be our stronger. ready simpler

Operator

Thank you Credit Parkinson from first Please Suisse. very is much. ahead. of [Operator Christopher Instructions] question go Our

Kieran de Brun

XXXX just wondering in ThermoDrop's out Good that XXXX? Kieran into you're and you adoption for you And safety you one, look that trends into seeing - morning. can ThermoDrop how how you. the and on as impacting about if you materials see that going think Chris. incremental is investments then performance we forward. I Thank particularly highway regulations was This on particular and in discuss think how

Belgacem Chariag

The you. increased safety Thank is highway on Belgacem. is the scrutiny This growing.

and and water regulations, improvements to it's more that we sizes of believe by stripes one getting possible talk As to around days tighter, in and looking also look we continue. there the is about states rainy And certain that stripes populations larger one after of conversations is visible the going aging regulations longer implementation states. look at

and Coast growth our it We trend. started experimenting And we of ThermoDrop part the that the true into quarters outside nice ThermoDrop. about state the initial was into then of expansion gives market which particularly that which that Florida expansion in our in Texas is fundamentals impacts of question sales and the of California, happening. of data how Eastern various hope is have So to is second comes was when us following the the two understanding states states last believe the and

that We expansion on we return expand want forward, that we like, on based absorbing our time is also to and volume return right and time our the can just right a project. is we on certain want proper. ThermoDrop sure investment any make going the Now we challenges performance, chosen sure with that making the in to see are

Kieran de Brun

mean Right, you demand how Thank to that kind of and in you. a into were for what I the we drivers key and look you more XQ. regeneration thank you. services, see you talk then towards bit And know very just just that extrapolate quickly the you XXXX? quarter a little over our Can switching future about strong of when out XQ saw

Mike Crews

Yes, Kieran, Mike. this is

with we our schedule needed while the strong a half we've at to throughout recall may growth turnaround that of those plans, we behind You due internally. more to demand of just heavy a year had so some maintenance the the that tempered do bit the year, us, seen for first in was

of bulk demand also in complimentary similar And why those natural stronger actually resources that's strong been behind particularly acid the us services. with virgin the at quite demand So level you're seeing has area. the is a for regeneration

of both continue So and been into we good those have trends quite those to XXXX. expect

Kieran de Brun

very Great, thank much. you

Operator

question very you go Stanley. from Andrews much. Thank is next ahead. Vincent of The Morgan Please

Vincent Andrews

you as pressure Thank remarks in bit think prepared There was and that specifically morning, we whether comment dynamic a you. the Good causing products pricing. exit on about elaborate that into everyone. what's competitive just on 'XX will a continue 'XX? Could you the

Belgacem Chariag

Well - thank you, Vincent.

staying little adoption pressure create and volume, there first the of specific adoption you started a become one we through the disruptive technology And those full markets in see, ThermoDrop. let you the me how we and you In market, through pricing. volume. just on you're is your to introducing we a places whether on absolutely actually normal of what bit coming see creation to the much you to yield on an persist phases, and phase. going which And as technology careful expansion than Therefore reaction is in technologies, three to markets of and time adoption you from on you is almost go efficiency into a we different disruptive creation introducing that the trying phase, value as noticed it's valuation you Every I as introduce opposed go phase obviously to ThermoDrop, a the introduction increasing disruptive give competition. think, technologies. of is

of markets see question an to to from we value. into So did for in market react to additional to how you and how and expanded a the it. It's it's They why natural go behavior that's prior expect much the markets you certain gain impact pressure. more to have markets us

Vincent Andrews

the it's of to correct? say competition But fair anticipated, was extent you the greater is than that price that

Belgacem Chariag

we competitive I would say of than the anticipated. response was stronger the

Vincent Andrews

thinking Okay. And portfolio also portfolio used. about comments give assume sort the at when would portfolio as the only us maybe trimming sure think stronger? on and I make framework you know simpler high can believe you you what do a a and won't what look made means sort some words at about you're are follow-up, can portfolio your that what of but the complex you level are what stronger us plans you the think tell I'm I do the think you you a you makes bit, of the you is it to and just simplify, exactly want

Belgacem Chariag

business earlier. it And the find I place. portfolio the that to very them I also relevant I great market the margins the described Look find is, and as today it That's a in solid question. right driving

as every very argue new could did with a and you at I opportunity But us and team So are look no pressure. at to to anything. business a what fresh my we looking do CEO, is energized is for reason there

the as efficiencies two commonality size terms little of integrate a different relativity some So some efficiency the the the the becomes businesses businesses we completely create in challenging are bit everything the between productivity then between perspective well are difficult. more the for of creation. When businesses as aspects wise, businesses from to and

the a businesses anything as business to value in high there a it benefiting the portfolio that very if relevant, look we at and look So maybe is start in our what at different should can can This coming is standalone portfolio way. that you a we and business is portfolio there strong objective is think across bring is and level a into from something running view. our anything our is that very

you some the no and have with plans our to have from we be, more leads that about stronger strong right would conversations we of specific is side how it meant integrating only making That share by the have portfolio believe I more, we by description. benefit sure simpler can say I But anybody. and internally businesses. We businesses what should interesting or

Vincent Andrews

very Thank helpful. pass I'll you. along. was That

Operator

is you Please go much. next The question Goldman Koort very Thank from of Robert ahead. Sachs.

Chris Evans

Chris for can think on you Evans your you're costs? on Maybe know specifically then that I level? out hello those exactly think you of know think cost and Yeah, higher cadence would just be and costs think lap a you segment I on And granularity could or bps, the you consolidated break sort what you curious you why us more everyone. color 'XX is what largely give the that you you XXX incurring just one side, EBITDA Bob. just X This on know you down if on you pass margins, through, set did

Mike Crews

Hi Chris. Yes, this is Mike.

as is two cost and So is most absorption, the items. had that level of in to two EC&S the phenomenon. PQ what I main is One was of unbearable which really referred comprised

the We had half services, leading inventory that in refining of of The were the of case first smaller like bills. first would lot turnarounds one be year. a in we through the

to in resulting fixed and take off reduce fixed rest methyl demand of cases, our that spot particularly also took our expecting the we've for to was and acid are In than sales our quarter, higher we meet impacting the what lower really that to virgin production cost. again the expectation we're decided sales of lower methacrylate prudently the year, action other replenish in those in unable we third were to costs. As inventories

was highway costs to moved then delivery/logistics was do production for in shut Texas on out break the be expect adjustment If basis where markets We of about with of the competitive as million quarter delivery some the point function PQ on get the broader you'll see locations that within pressure and on materials continue X. for that or you X.X a across at a which during I in the that PQ through other level. fourth some And at we that's as couple of that higher out business with integration needs the into Silvatech the they'll then of various a and into settling in of to basis we'll pricing some the XXX geographic of look coupled production the the part the segment, Slide quarter where And some down And also we performance of as points absorption. on and countries really European well. ThermoDrop level still of sales Europe. be individual would the at said the

tighten up go. markets, this to clearer going much learning additional able plans as bit and chain to There's we point, be that new a specs So but noted of we're we that going and technology, this think when a cost having at into next beat our you our all supply where make we're we we said effectively. Belgacem but materials XX and meet situation you This can on disruptive performance, quite states business, deliver know in have year. is into is look at

Chris Evans

business, concerns some do good the any you And trade markets then you some the end volume if growth destocking chemicals the of elsewhere, the given softening of That's maybe if really kind just maybe horizon? pretty from or your Zeolyst healthier customers, excluding you see know part of maybe demand helpful peers in speak macro referenced curious and have or could to on color.

Mike Crews

but some has around the customer if strong, within we've I to resigning their performance talked that that's lower, silica specific polyolefin about operating specific a going Yes, strong groups, which a plan product of that's services catalyst, sales fact been by vary demand MMA bit very just our vary. mitigated are the that's look as to and very

or seen no very year I reference half see underlying of When around I business both half, quarter be Demand probably seen there of half. really performance very Class ThermoDrop some first I the tailwind American the We've so any In been strong, a we first maybe being were the strong. in the a don't could a up has North also that that for XX% on. been that XX%. there's second destocking safety We think also and slowing, highway the also chemicals. B So about there. weakness We've trend would talk some the you first for in destocking little foreign going part bit, macro second suspect perspective, bit a exchange slow to issue. a from demand the of headwind quarter,

Chris Evans

It's great color, Mike. you. Thank

Mike Crews

welcome. You're

Operator

is Deutsche Please Bank. question of from Thank next Begleiter you. go ahead. The David

Katherine Griffin

David. ask guidance, driver for just first, the can you on what's there? I Griffin were what the the CapEx Katherine is of I This guess revised Hi. changes

Mike Crews

what tend hard projects take EBITDA, of shifted tighten some that things, A that have couple the individual our year we're go from we as year. rebuilds at on do year at cash. major in always had, for look example. to closely managing lower last case, one We particular we We we a throughout that the we and are this into maintenance this then plants with

just the smaller the year. a other side, left our thing move of of projects And weren't life items. do we with out, a what at looked there's of ready. would rebuilds smaller one of more one on of We this end those You could couple the know growth on be we we couple couple had at a

on we're we within normal that's capital it's around, I move the would but short how of we the variance one So areas. and build can of cash in very free flow say other also focused levers

Katherine Griffin

in come be may raw more go now if you. material about more that kind what inflation? then seems cost when inflation guess but, of thank again you trends you I are could as over you to talk off components just materials know again talk XXXX just my raw to in raw PM&C. Understood, debate the I those, it visibility of about see have just Could that and you'll And in of kind material the like if any yeah that's

Mike Crews

tend if successful in price raw look compare XX% chemical in in the variances have provisions at package Slide pass provided, been first if you EBITDA level, very Yes, we cover American cost to that. low And off material contracts and see cost, to we to as well. the of North price the you'll at XX doing performance the do you get that about we through our you we've know

what of gas business, to refining are in as you raw because Europe. companies U.S. item obtain probably of freight the able high higher are well. sulfur about prices again are price in little from are nature services we as increases know would and one heard up seen going really up note The been that about up XX% were the and you've flat, pastor very I impact from to been bit year-on-year think But been cover refining other we've we've I is and do logistic cover to other services caustic natural prices up XX%. costs still well. The that costs materials bigger outside a in most in the and material of in has So the raw seek

Katherine Griffin

Great, thank you.

Mike Crews

welcome. You're

Operator

you. Thank

is from Next Please Citi. go of ahead. question J.P. Juvekar

Scott Goldstein

morning. Good This for on is Scott P.J. Thanks.

improve you reduce this other to or in accelerate like accelerate any see for deleveraging know reducing is other ways year to terms have you year, of pace opportunities guess the that your do you or down did working that goal CapEx like turn capital? I pay or maybe So costs to

Belgacem Chariag

We of it. Look through leverage few delivering a we of top reduce priorities half to we P.J. you us. plan on you to really shared got that with thing with be question the a with level we for course, believe our you would the and the know. remains comfortable reducing for as priorities remains And top plan delivering our right do that more To shared on Thanks turns, the turn. of

our options are Now course the options, we of are stick that all plan. the but there looking other to to remains priority at and to just do

is that portfolio to it's at, to for businesses We some using would is it you a still is, And question with that accelerate value. your still lot get improving creating And pay there our definitely and is level. an views half tell our for delivering the divestiture in tell strategy line that of as we will continue that question you terms answer P.J.? option some believe next it in comfortable for is years year indirect priority a of business portfolio our strong a plan the the debt. I reason so Does couple compelling until of until is with a a exactly not turn Now a now. the just delivering but strategic to our and can we

Scott Goldstein

go you color. earlier maybe you year you chemicals, we the for the think spot side remains for that can China going and and if some Thanks the down does your in know And does. how to mentioned it regulations, soft forced due you Yes, environmental - to in competitors on think I performance silicon shut opportunities do tailwind competitors shut there your remain forward? down were

Mike Crews

This some market. is in had year in earlier Mike. benefit that the We've

lower some the Latin had sales see bit that's the you little that some a We at year. albeit higher America in lower and but second half the from of why abated benefit margin, expectations of for also has

Scott Goldstein

color. it. got Thanks Okay, for the

Operator

go next Thank from you. Jefferies. Laurence [Operator from Instructions] ahead. Please is Our question Alexander

Laurence Alexander

questions. guess Good morning. I couple

about model question to tradeoffs even because decade, does if we you like the the blotter? and stability financial acceleration any On it year mean EBITDA looks how the EBITDA last layer refinery you have at crisis? a like I decline point multiplier about had the with talk two a can the as made know about or should at have the you think in between on you is, The that second the roughly capacity at that current with capital, hasn't you portfolio in you you slides, sort so portfolio, simplifying for hydrocracking slides, the little show one they times catalysts in about I'm think back just in of growth, it the bit the EBITDA looking growth effect a the return comments

Belgacem Chariag

Thank you.

as to conversation business Let right portfolio most pieces definitely question, the the forward our And portfolio about strategy is the it's me now. from right a a you're in of margin the growing strategy simplifying EBITDA. attractive stable stability, first. question one about as first about the take the of our portfolio portfolio the Yeah, and the to contingent going anything perspective opposed reaction the of wrong more first

we as but grow. there the we can efficiency And will only on performance that hopefully explained we margins to together, that businesses higher a as continue stable earlier, make level. probably table our I not some can probably a So is what businesses to that we're capture to sure trying that take connect do maintain have the is

So so the see growth some the eight different. our components businesses, reacting from only areas. it to is grow the ambition for on stable seven and the We our from of an potential is keep be of simplicity market Not forward ready the still going perspective performance everything certain do years some the business that. a industry, like to we valid the or of with in not portfolio. to ago market from as the business, was slightly That's ships want to but

want but assets, also can the on portfolio resources to and sure our has that through its its every has also that our people, impact I We an performance own potential contribute general. say business utilization in own, is some a in to would integrated efficiency of make on our

anymore a are looking a big going market lot the than That's stable layer the subcomponents of and we're we're second only the don't we that behind that, make that what things sense simplicity. and components So but time of at. our is a that in can't business anymore know you I some because group is you today more looking of the have tell there they make don't business, do sense idea And lot businesses not at granular be of faster simple, that market in, rate. it and it was also question? components keep but try how and What looking we're the at keep the grow that at. smaller business to to

Laurence Alexander

was the business you a catalyst or in growth on just second you proportional? capacity it just effect XXX-XXX The accelerating the looks as is see hydrocracking, points. for the it multiplier charts basis Do if question have

Belgacem Chariag

Yeah, the that. there think the for of I course catalyst effect I with about business do see don't size concern and a multiplier is volume. any

see, think at actually you see you up the in the bottom, if performance. the look growth difference bottom see in I at could And you you market the our you the and can it's charts at favor. see market and in the

it. the what that's excited in extend to performance is something about we're that our market So

Laurence Alexander

Thank you

Belgacem Chariag

Thanks Laurence.

Operator

The Thank is Nomura next from question Aleksey ahead. Yefremov of much. very go Please you Instinet.

Aleksey Yefremov

in inventory sort Thank to on make Mike question, more you. onetime color everyone. explain in some just it maybe give of this issue did reset once costs again sorry Good the morning, but it is EC&S, back to kicking why depletion can a this? happen, you and

Mike Crews

I quarter either volume Sure. quarter, I large. you your production, relieving wouldn't call not net relative impact can be in on mean given it usually inventory. any depending basis that building on onetime the sales is or doing what to But is

sales know in MMA had are where the going of came is and the this to build them need the But that is of for disappointed So the not in forecast more a refining where services. out half to - with first into as production reduce turnaround year to you year. we the we we little also pronounced were we bit year

was really of to venture joint perspective as hydrocracker in those for Zeolyst as the the EBITDA well there's two. bit So combination And it it catalyst. a relates an little

in all magnitude those a it across is quarter why worthy confluence bit which the of was of and was higher note. So three of events this a of

Aleksey Yefremov

elaborate to natural demand, the Understood, just year on what mentioned - and if and market, end maybe is helping could the so, thank on you this exactly trend also that you think resources, I XXXX in then acid you. could expect virgin prices And rise do this market? continue you can

Mike Crews

Yeah, because come know necessarily I just ability been means strong. as mining have the next there it's has in going which would supply that don't new not the industry, the we to dynamic seen to I year. market an we're pretty do we've to see continue get the particularly been interesting demand to prices that into characterize remain into

on depending swing So area market a dynamics that us an benefit for it's a the like. bit what is look of

nine So through think months of I we're of to with you it watch one year, pleased those where where really the have but the we are first it's quarter-by-quarter.

Aleksey Yefremov

you. Thank

Operator

much. you now conference and call. very no will Since you your conclude lines. you may that further there disconnect Thank this Thank questions, are for joining

Ecovyst (ECVT) 6 Nov 182018 Q3 Earnings call transcript