FOE - Earnings call transcript Q1 2020

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Operator

Good morning and thank you for joining the Ferro Corporation's First Quarter 2020 Earnings Conference Call. An archived replay of this teleconference will be available through the investor information section at ferro.com later today and will be available for approximately seven days.

I would now like to turn the call over to Mr. Kevin Cornelius Grant, Director of Investor Relations and Corporate Communications. Please go ahead.

Kevin Grant

morning, good and you, everyone. Thank First Welcome Earnings Call. XXXX to Ferro's Conference Quarter Ferro's we'll for XXXX. morning, be financial March This reviewing XX, ended results quarter the first am Vice President Peter Chief Financial today and I and and be Chairman, CEO; Group our President by Schlater, Ben Officer. to pleased Thomas, joined

statements available today the I'd see are earnings remind like circumstances and The are everyone and are comments section view Investors that and call conference the release of we them. to making are of forward-looking deck some our conditions on presentation in our based website. of we as

However, statement those change disclosure and the conditions forward-looking earnings Please the circumstances and release change. views may in earnings the refer to presentation. as

a measures adjusted non-GAAP that with and to today's of these information reconciliations Descriptions and presentation reported you conjunction and the Also, contain deck. on will call earnings financial basis. review in included various are in operating encourage release discussion. We both today's results

now pass is pleasure to over the my to It Peter. call

Peter Thomas

market for innovative were position to costs developing As quarter. improve even have our strong as manufacturing the past took to the yesterday, the and We declined, shows in issued at to earnings key efficiency cost growth raw press Ferro our first the you over release customers. facilities commitment seen products raw which were in the leadership results. actions maintain delivered material year factors and of we may our operational value material these constant able Lower our we prices our we believe in

pleased Adjusted to and XX.X%. these share continuing results. XX.X%. income expanded margin XXX adjusted earnings be to a basis Adjusted in increased points Looking Net XX.X% at the gross improved numbers, operations is EBITDA to XX.X%. improved margin first lot improved per There from EBITDA quarter XX%.

over to the we gross the a XX% sustain margin level By expect way, long-term. is that

marketing. smarter initiatives we think higher through optimization additional and it fact, sales In drive and we can

good can very gives the strategic a first business So quarter. the of we I as priorities. of benefits our a generate reap quarter had glimpse our the kind we that believe profitability of

now for our So the we like business first what in beyond on quarter. comment I'd XXXX anticipate to

Here's essence on on strategic continue just the in as COVID-XX these our circumstances even priorities intend We macroeconomic executing message. to turbulent of the by this in through we the year. my brought pandemic, point have

can this several We do we are reasons. confident for

our industry any which in multiple world to sell we markets into exposure limits products First, and or and one services geographies around our region. the the

Ferro our resources serves Second, innovative market to main the products in our developing has and it leading positions we niches continue have for the customers to leadership.

our pandemic. the many world government support products Third, to the have which around allowed critical operate of generally authorities industries even services and during

resilience. Ferro services me discuss which lot, our market such technology, in beverage, and the amplify is with weather energy ample business information this and with to industries the appliance markets, a Let sells construction, products healthcare, And opinion turbulence. we as believe into current we its liquidity fourth, and we That point. have automotive Along a also and model defense. food

facilities the some March early Ferro's activity to of the of indication a all nearly with Health when operate is that it World or of of since brief our have As Organization resilience, suspensions only noting pandemic. COVID-XX declared worth no continued spread

health of our the than our is well-being very we proud facilities at authorities. the about period. implemented around all health word a tremendous of They Now, employees priority work this no employees. done recommendations the consistent greater of our a heightened and to have and our I have hard at them. say and safety employees There throughout I want customers Ferro am supporting have public protocols world been with job

manufacturing our were sourcing, markets? procurement Through focused capacity, streamlining network what we many the and for on optimizing facilities consumptions. logistics and as opportunities even material align our So, about COVID-XX of to redefining we with There agitates raw footprint. are talked transforming XXXX

We sold, improving have margins active been the capital gross enhancing and objectives down our efficiency. goods very of on with of cost driving this front

discussed footprint of manufacturing the optimization One issues significant is most project. our American North previously

We are making on good progress project. this

improves from have cost which moved efficiency our a in material basic portion We of significant newly and facility Villagran, U.S. expanded position. Mexico, production our to the state-of-the-art operational significantly our

partners, Although the restrictions now benefits when we expect created deliver completed. and it generating our benefits it engagement with COVID-XX travel such as limitations international and continue program of full challenges is has to on physical anticipated is the scope business

initiative Europe, significant mentioned previously. footprint in is optimization program was which Another our

we are We initiative and in about that more talk quarters. advancing will with this project upcoming

to objective, to customers as strategic they said is gravity are and margins. markets markets. key We center to that higher shift provide our that essential as we to generate products of their previously want Ferro's trends to services in higher address growth Another innovate

this objective. on We also executing are successfully

next-generation there they providing critical coatings their right for are solutions our products, color customers as them. with develop We and functional

So I some what of are here examples mean.

finishing among in use for the and [indiscernible], optics other electronic precision processors. incorporate friendly First, packaging markets [ph] shift rely for as markets. our Digital materials semiconductor materials electrification, insulating use increasing our demand and which on Ferro preferences which materials surface and to automotive, pigments organic our there organic where digital multilayer technologies colors which paced and is component [indiscernible], polishing materials eco

These make growth customers. are examples partner just a our Ferro's attractive markets of for in us innovation an know-how few and high which the

our and invest of markets positions. we We leadership customer our to continue XX% leadership we these have hold which leadership positions in innovate positions and protect established sales about relationships maintain and to and

and and of portfolio executing with leveraging to products. expertise with diversified growth trends our we position next-generation new are our macro strong from to with a a and strength and are We opportunities expand applications

our strategy. growth Inorganic remains part also of

to to continue expand and consider our and will bolt-on portfolio high-growth gaps in fill to high-margin, technology We in selectively areas. product acquisitions complement

presented. right We were larger transactions consider opportunities also would the if

macroeconomic transactions, of and mindful the potential pipeline our conditions. maintaining current being both while larger are bolt-on We unsettled of

the of making the sale necessary activities complete to on tile We also progress systems coatings our business. are

XXXX. second expect continue to be the of in completed as We transaction planned to half the

systems the and and the reminder, innovation stronger manufacturing exposure the business result end a construction growth, consumption, metrics tile greater underlying balanced industry, more markets coating Ferro megatrends. having focus of streamlined a underlying to with regional in less less operational margins, and divestiture market market more and footprint mix, cyclical As sustainable more including raw including on material technology financial higher a attractive aligned will

up, So for the the believe year. not do Macroeconomic to we believe of COVID-XX will clear our enable model through conditions that on we but get manage confidence have near-term, to are to can remainder circumstances us through circumstances. too visibility uncertain, current brought enthusiasm believe is get give business by positioned for And ahead to that us Ferro economic longer give the about current once just sum term. we we the our then over macroeconomic current the are we circumstances the the say the try that enviable opportunities us characteristics we through the business of

that, performance. I'll turn the call to with Ferro's report And over financial his Ben for on

Benjamin Schlater

our the this you, grateful our around how associates Peter's and for to efforts our of time. echo would during safety The are and we world status like Thank everyone. priority. I top remains teams globally, and good for proud comments their of Peter, morning,

to strategy. Our our associates have remain really and committed stepped up

year. margins the versus strong believe by quarter our first are improvements more profile in efficient last of comprises our the second first primarily material benefit that last by the these first to and operations of businesses portfolio two more continuing operations. earnings, quarter facilities delivered We driven of of tailwinds. in Ferro quarter driven raw versus was our primarily the This markets factors; first, characteristic year,

On due made to process on the half of around several first manufacturing our and are headwinds produced. locations you as the manufacturing in where reasons, may including side, year certain optimizing facilities last we products the comments recall, the

some with these expectations. the are we continuing optimization us, margins operations our and are friction with which behind we As in underlying uncovering advance line our of this efforts of inherent portfolio and

long-term, on heard be our margin Further, progresses, enhancements optimization there as expectation activities our will is have our mention. us work you additional structural

our as know to these some hard and on are worked in have we the teams of efforts themselves results. Our see benefits manifest you pleased

mentioned year be has from excited a benefits to realized in focus additional Our progress are yet Peter about this the strategic efforts. this key regard these remains we and as

more maintain a on to one greater of priced and materials Touching deflation. favorable raw a materials, characteristics bit the in ability a is periods of balance portfolio material raw inflation this raw of

was We have evident seen again the this businesses in quarter. yet first and these in historically it made

focused benefits these of results optimization programs some addition, the actions costs. structurally lower within these of to were In our

going and I'll are will on results from With our non-GAAP that on the the flow this commenting continuing currency constant for operations. Also note a I on quarter Please financial reporting we forward, quarter to XXXX first to and are operations. consolidated refer used with in first mentioned compared adjusted rates and move an beginning cash discuss basis free XXXX. the growth numbers basis of call that, of to on

longer no report flow an adjusted on free cash will basis. We

seen can the Section. accompanying today's X, highlights and in materials can Slides quarter be the financial on results The you in Investors and presentation which for X, X ferro.com the first find call, on

XX.X% the million, to And $XX.X or XX.X% to expense $XX.X and declined sales. of million Adjusted to declined adjusted to Adjusted million. X.X% improved net to $XXX.X Moving gross quarter, EPS EBITDA X.X% $X.XX. net sales to increased $XX.X X.X% X profit by first improved Slide adjusted SG&A to million. XX.X%

we most the the the first the benefits XX.X% was compared Adjusted than profit margin noted, the to SG&A. saw of last and of basis quarter last from As XXX improved year business of across year. first further stronger prior with year quarter margin quarter we to points compared expansion quarter to first gross

previously reflect related fees certain activities. development to results first the corporate divested professional primarily non-GAAP businesses, for associated adjustments optimization quarter and with These

cost to to million sales of adjustments primarily of in we optimization due approximately costs $X.X initiatives. First, related

and million and businesses. adjustments the of we North in costs million related to $X.X $X.X optimization and related expenses divested SG&A fees other one-time to of for optimization development have the including In consisting American corporate professional $X.X million manufacturing initiatives, quarter,

impairment, was to achieve synergies. approximately and our reflecting to initiatives acquisition And ongoing and finally, turning million restructuring adjustment of there an actions optimization $X.X

on Having move sales, SG&A net $XX.X quarter In XX.X% constant compared gross the prior or already SG&A. first basis. of margin, with in quarter lower million adjusted I'll discussed now XX.X% million the a or was sales $XX.X currency X.X% year net by to of to expense

GAAP to me brings cash flow. This

As free an I no earlier, report longer cash flow adjusted on mentioned we will basis.

focus cash operating from will activities. flow we forward GAAP Going on

investments, we cash available service, discuss what We strategic will would but including, operations flow cash flow limited to also and debt view as not or items from returns. free shareholder for

our in of and expenditures, can million. cash from capital release. from as selected the measure the GAAP cash found flow calculate $XX.X operations, securitization on operations table flows. be cash GAAP XX This cash was our statement lines from combining by of under We an press information flow following cash flow programs. In quarter first free outflow

for The million $XX.X add spend $XX.X depreciation sheet few through other subtract more Ferro components million as $XXX.X GAAP the with I'll Corporation a starting most $XX.X details. the of add of then follows, other and and are capital, items. change for quarter net minutes then $XX.X of income walking in attributed million to of non-cash working we amortization, million items, P&L balance meaningful

mentioned And finally reflects operating add arrive of for $X.X restructuring flow the basis. optimization of million which million received seasonality, expenditures subtract receivables other at of capital in certain to add also changes $XX.X $XX.X at cash of in and GAAP arrive used $XX million and activities $XXX,XXX working million we capital but Then normal quarter for of initiatives. cash the in on earnings on cash benefits to first we used a impairments

well the from Continuing with on positioned to is effects near-term of manage liquidity perspective pandemic. through our discussion sheet, a the Ferro balance COVID-XX

revolving we of facilities, had of availability May credit under facility. and approximately X, million Ferro's of our $XXX credit As XXXX cash various consisting liquidity primarily

no significant of to prior maturities debt have We XXXX. February

potential have of second Unfortunately Although going recovery. because quarter the was shape withdrawn an the any can't XXXX. have can or weakness, first predict quarter the our half that we of and in the the is into the predict the we severity know second we guidance. nor impact pandemic economic that of of full-year strong, potentially to duration we the And

taken measures appropriate Further, CapEx as need place there possible be those where in have should a plans further and for steps. expect, we have spending you reduce to and might

and We flow will cash leverage. to continue prioritize

obvious while so opportunities. do challenges even However, macroeconomic exist,

positions, in leadership behaviors We and an evolve the due enhanced changes might times. current increase to market areas think technologies existing as provide markets in there opportunity changing these circumstances with which our may align share, market be to and expand our potential growth

very are all to on economic do markets we changes, maintaining what adapt when while on well-positioned be recover. focused reiterate to would the business and we keeping for efforts I that can to control agile

With back his walk through before call that, take I'll the units to business Peter and add Peter? now each over turn the to questions. comments of we final

Peter Thomas

operations, segments. Continuing reported we

reminder, a we includes segment glass during we As and colors lines business. enamel name also the Coatings quarter segment, our the of changed which performance that thinks better the first porcelain reflects now to former our product which Functional within

our with will Functional segment. discussion the We Coatings begin

million to quarter, So gross million. in period $XX.X on the Functional margin points currency XX% a down Adjusted XX.X%. a basis currency in $XX.X gross Despite to the increased lower the prior XXXX first first net X.X% constant the over profit basis on quarter Coatings basis sales year were improved from from sales, constant by increasing X%.

quarters, serves our the automotive industry of the to experience approximately As part the demand XX%. prior we totaling continued seen weak that have business through global

lower part to able improve points our gross by this business than initiatives. of in XXX optimization through sales despite basis we our more margins were However,

business. off characterize our Our been and We the Glass as trend demand, project large decoration prior chain. Decoration general would by flat. indicative have restaurant low year the not of business compared digits a would single benefited cycle initiation was a business of cycle project in of this from a we to kind as glass off the up global in this Without quarter

Materials Our digits quarter the compared mid-single up the business to prior year. Electronics was in

from demand appliance we manufacturer. quarter the global During large increased saw a

resumed customers our some following production generated production location from we we for additional one shift of another. sales addition, as to In

business automotive decline driven equipment weaker Industrial printer a we our by primarily for demand. digital Materials single saw In and mid digit softer demand continued printing

business Turning manufacturers. to saw appliance our declines low double-digit to we from Enamel due demand U.S. lower Porcelain sales

more optimization XXX in despite programs points. margins we basis this again than improve gross through lower by able our demand, However, were to business

currency our X.X%. of sales million $XX.X XXX on up in net Now profit prior year Color increased a from gross the in basis first quarter. the quarter turning to compared improved prior XX.X% Gross margins to the $XX.X to segment, XX.X% Adjusted points constant Solutions year solutions color quarter were basis million to XX.X%.

business generated Europe in along digit perspective, double-digit region saw Blue, pigments we and from our sector in our U.S. demand products. mid-single demand high digit a regional In our and strong strong growth. Ultramarine pigments Asia-Pacific from paint with Chrome Basic Sulfate, for growth business in anticorrosive single the the growth, Viewed high

overall for offset surface production to pigments demand in used Demand for anticipated. higher our helped lower in batches technology. master demand pigments our demand in however remained lower This weak. The was our

continue previously technology as demand for to we buildup fourth in as inventory to and experienced our expected chipmakers the XXXX quarter started reverse of XXXX we the production. products said, strong chip is XXXX chipmakers surface to through As next-generation in transition

a few COVID-XX not bring impact the have significant this business emphasize first a to quarter. did key me quarter. So points. our comments The let first had our morning, in We pandemic a strong together on

to as our business our on in second softening business the We from quarter in peer being impact of expect due the COVID-XX that with demand to the our greater group. same the a range impact

We don't the COVID-XX remainder year. have of impact clarity of for macroeconomic about the the

current we expect during year confident that However, can market once that model, markets And business opportunities efficiencies, we are withstand with we the the benefits ahead and favourable manufacturing raw we continuing material about and optimization, normalize. our enthusiastic are expenses. from lie the turbulence

transform worked highly company. specialty we efficient high Ferro focused, So chemical to create have hard a and value to

assets, underperforming assets We driven value and have simplified optimization. operations, in invested and higher harvested innovation

and with business, lower have sale company intensity, reduced a financial capital. the working capital of tile the will lower system we After leverage coatings

exposure a We and have higher both balanced more cyclical markets with growth. by with portfolio, end markets concentration geographically reduced market a to end will and greater on

value. about I create drive emerged our trust will additional believe you current from circumstances, When positioned can see and why very optimistic we COVID-XX to we are we Ferro be business. the well

we to and year. recognize the a teamwork our before my in pride our employees. start express Finally, Their to once your I take good want very again very, dedication have given and questions, company

take we Kevin, that, are ready with Then to questions.

Operator

Rosemarie Thank G. [Operator the from we a do Instructions] go have Please you. question Morbelli of Research. line from ahead. And

Rosemarie Morbelli

morning Thank everyone. you. Good

Peter Thomas

morning. Good

Benjamin Schlater

morning. Good

Rosemarie Morbelli

all and quarter. there anything, in expectations, you Was Glad anything example, come to was very when exceeded pulled the Peter alive quarter, out good really you from quarter do for this the confinement? of see a your what that this see happening second out and we

which be to expected less more you of to that quarter or peers, XX%. about mention are did looking line similar a You the at top we decline second

I lot. along that a address could the topline. realized comes incremental with margin a and there you if declining So was that

Peter Thomas

That's just all. excuse an me to gave and okay. you talk that's I'll about, get –

would which first would point realized over of quite on where to start of Let's platforms, the with the it was expectations. all optimization really we things remainco with we of get just start we've our your call it to the are some although, see, that the together. that bring technology gestation first with time exceeded all remainco through and expectations building And done have question execution all we starting programs and our let's to strategy, you

be a of areas. would the would new I quarter we we have be the eight with of that gained introducing market leaders tell our coming would And all share. is thing products. and market with one the share them programs two Again, can One for occur, technology of we to And to emphatically those things. what you a realized is new from there And things mention are we define about these what although positives. what you would better we is than highlight going I'm first And little anticipated. seem handful bit to

dimension is there another interesting of here. kind And

remainco, around gained world. fragmented those a though that applications. share outperform enough, the during that have leader in very smaller from do be have pandemic them we're scale environment. suspect the world fragmented even companies $X competitors, billion high-end And faring And some strangely smaller able the we're may we're I well know, to not we in are and in this you of there a lot we as As in

Another key our point of ability prepared our We've is remarks. through that pricing. heard to hold both

raise enough, higher-end able were to Another that strangely key certain point strategically end in we markets. prices

and initiatives could our the product a the uptick with I margin, we improvement bit think gaining the a are in traction lines different more see gross than optimization anticipated. you lot basis points through in of that maybe

tell environment where have even pulling can you with continued a that companies R&D booked. what in we of with innovation our suppliers the in share and major working lot in new is can customers this thing working opportunities, we are activities is, our back One on their

So working we have generation not do have That in been next for customers stopped. and product our has of preparation launches. with type

about that throughout course, but better reasons, cost And of that course we fruition. of maybe only experienced site only not is the but things not been of particularly favorability of lower doing coming for of and to we targeted areas movement there of position, coming have been in be Mexico, in and the all to the are would too ranges the the world, the world through from competitive our Mexican U.S. now specific haven't we out sub-segment that optimization rest

world and being course, a would to go normalized in So these a that's we anticipated no have to believe the that reason this of better little bit answer away. we than had things and expectations

that's, So part. that's first the

second much in of the to And think with we've to the do And that in has been clear that much the the deal in month scripts. about second very, of in very of that quarter our world to second quarter. very pretty April. your And our peers. be didn't whole with do part very I crisp, want just The line we the is question performance underscore

establish us as give them customers, However, process, we S&OP larger a build their those is to incremental June way May of inventory. many try and surfacing is build information, with and in very to that in customers we don't are particularly excess counting the space, because in our in progressing orderly and automotive really that of can enough to want see kind on uniformed our you startup

to not are We building going deal excess inventory. with

further automotive a are in challenges. regular very of build very now. we through May the very, them But piece with candidly, are is we an about the the you what starting So third really course, on pandemic feel right But drives and because can incremental bit June, communication a little we tell better maybe there to anticipating business, basis that no quarter.

pretty established is should understand other will that manifest continuation much and nicely quarter all the So third quarter. in the the we theme the I and but in the gross of second positives terms optimization throughout line, themselves margin what second in quarter and the performance of mentioned, in

Rosemarie Morbelli

volume revenues I number, the degree, certain a could with have or is my Ben XX%, said. other it understand line is which to if margin on but Yes, was I in wondering what dropped touch incremental as companies

Benjamin Schlater

Rosemarie. Yes, hi,

I the that profit and XX% gross between XX% think of would somewhere line, around XX% be the revenue a sales sensitivity drop number.

Rosemarie Morbelli

you due I little buyer? give Can mean the you. done that thank you is second I more very release you tile in transaction to what - expect talk is Okay, do some the potential said travel understand then project? Can helpful. your presentation in still and on still to in a close still while before? on can diligence the Can there update the they that And prepare fill us was half. is press eliminated, us you coatings that you - Peter, you That can you or

Peter Thomas

sure. Yes,

is I captured Here it say, think we what and all. can you

you think how prior - diligence much if not due believe I signing. you to was done would

I you we know second have that the of know closing. targeting off still TSRs a that, what get we getting that both on we do what so there through. of we tell order are more things say half we add can One And Things to you, companies is that, little we are to wants and some work more we that's to So go checking first to progress everyone is, a this, feel with communication, know, need lot, behind that reasons one boxes say the thing And and year. color good. done. why it. the can't we're because can we of did to continuing to make are and obviously the Lots is momentum together in color we like

think continue we still hey, to it's, I target. so And

Operator

from And we go a have you. Securities. question Mike with ahead. Global Harrison Thank Seaport Please

Michael Harrison

Hi, good morning.

Peter Thomas

Hi Mike.

Benjamin Schlater

Hi Mike.

Michael Harrison

in Congratulations was definitely markets on the encouraging. you put you're markets. your showing. terms little I here? can well you're us that buckets bit and of markets business you critical help hold your on resilient progress more up down wondering the of business being pretty of to those where percentage into expecting impacted in the more a some if us sales QX in to markets be that sales portion size It's detail go give versus significantly, had defensive down I can are that or these and be of If buckets into significantly slightly more,

Benjamin Schlater

sure. Mike. sure, sure, Yes,

the that as - businesses used to and talk about respect call shown segment PPG call Functional which are know, couple the as big obviously some businesses with is fit in industrial right you [ph] both and to now of those of electronics, think I have we a look So, that Coatings. we resiliency,

with around electronics, industrial, that to With the in respect of to that's that business. that's respect continuing with sits operations around current continuing of XX% again XX% So operations. portfolio respect

pigment I business. the again combination total those XX% X% businesses, Mike, of the And and right between then about think end higher remaining say, would would we the of our the and of of more some surface payments. As much around end higher be of businesses tech what of

the the businesses sum of businesses if our roughly you look up another you at the and total, [ph] those looking in Blues well then well, CITPs So of of as when portion versus at payments [indiscernible] Ultramarine you're all as a as business. XX%

strength but are that's to the the that's the to of what year-over-year types happen obviously we those and quarter. is those those tell where food amount area pigments that. really complete part area, would of that's that markets going first and and And we're diversity those the around complete, the business, that see the of go I us beverages, into a - in due healthcare it and of was things. significant you an diversity the are Now saw for

Michael Harrison

All little give was businesses. right, And electronics more you in also on bit the I if then, you're a seeing wondering what it. got could detail related

year in off surface Are we in XXXX, you're of the and pick changeover in slurries are to XXXX expecting mentioned you customers as technologies to very there, You next those forward? up that and happen. guys get some into kind strong customer coming semiconductor a positioned generation back that needed

Peter Thomas

Yes, Mike. we are,

in items of In the one remarks. that prepared that's fact, mentioned we our

And the up round, were As we have to were is position year. know, well to us products. last in do, of life the I what a that, there space as markets we you established our learning as in particular first could those in cycle. be Usually we're and took which generation I as we know a three five-year product

be through start right the and life ramp a are and on second these year particular next course you in generation round, fourth us And to We new of companies take inventory next companies lot is Such was the sales are will case in those is of the product's to generation. we the to. that then that that of the use for products a at then of but ramp draining those to quarter see 'XX, relative of the through lot of probably the know, you and inventory referring up end where third that a a quarter. cycle, those the of start the the lot will products what up of had you'll a as company, we

electronics. around let answer question the But that's me look basically when you -

nitrogen are that lots of there's that our high low be think You oxygen of very are know, specific. we appliance area, prep, there's cut. there a boards with we about do sensors, there's applications, on there's profile although like ceramics, sensors, feel in the are good metal communications about frequency if things there sensors, going can't of electronic pressure we But all lot you printed temperature our circuit

a you're that a to have that of lot the been starting years we is prepared certain the performance past so for business up know, developing stride. as in that interesting And and that remarks, are four mentioned applications You we've hit very year-over-year. because X% novel we've about seeing

report use read. it want to So business, starting we driving pretty is the we were lot more is lot about significantly growth even you're really hear as under to rate, done Automotive growing the we small a particular which was going just applications. whether more, number automotive and concepts Why? like from much that content a of in although and there good the as us is that's is XX%. those you down there – feel example, Because business, year-over-year perfect which our XX% a a

when has always of like we'll we products. our up good, be a content bad. bad, won't So are higher. lot are as things of And to with we've that be said When things more deal

Michael Harrison

All being more QX outlook. in then Could you last issues of benefits see benefits second should the material or timing right. It through to we looks of there quarter. and saw I QX? flowing quarter first think more some question in some raw And is we a maybe in raws benefit the is ask the on wanted are like some that

Benjamin Schlater

to Ben. is – back as expect well think we of to the QX benefits material we see this I half would No, the Mike, in continue Hey raw look should as year. in

raw stabilized those certain band. materials part, have most within a the For

Michael Harrison

much. right, All thanks very

Operator

with Bank. Deutsche ahead. a Please go from David have Begleiter question We

David Begleiter

comment were Ben, what year-over-year? down sales morning. you Thank just actually you, April actually Peter good and can

Peter Thomas

that. do can't we No,

David Begleiter

are Okay. rates? for of half your exchange just QX looking given and the Ben, FX, expectations and second the what at rest current

Benjamin Schlater

we you eight, FX which pretty point with so, sits Yes, sent obviously right press David, dollar we've but would around where a now. it that came in out the are guidance when again our to release, to was sensitivities originally the that close I is withdrawn

So pretty there year. little FX the exchange otherwise was beginning was contemplated the now, where first benefit a with actually sit quarter, rates consistent of the what at but with of bit in that's

David Begleiter

temporary you're And of are the lastly, Peter, taking actions, there costs, impact current the offset crisis? additional actions to

Peter Thomas

really. Not

that went more, bit but it we day, that committed being at and SG&A, needle task the that's still about the feel of you end we're with the program. quite that over what still is of with not this a committed to going think in target on some year, I does way might contribute. we to, XX% Maybe on much million on move to very that, for a we're but candidly, $XX there comfortable, Ben the roughly that

and And again, so, we at it's SG&A are problem mostly seeing it's level things, certain [ph]. a but not real the

David Begleiter

you. Thank

Operator

Markets. question with the BMO And John we McNulty a Capital have go of ahead. line Please from

John McNulty

question. good for taking my Yes, Thanks morning.

So one for this be may Ben.

of looks as on a those where through, in because some your SG&A it the like can lot initiatives bit XX% detrimental seems or to margin we come at them are margin of coming same it's to well. the side line, gross on little in? of the initiatives cost you color you're Is that adding the spoke we taking maybe XX%. a that some back but coming that lighter about expect of to inclusive would like the On that And be want gross the on time

little a be there helpful? maybe So color would

Benjamin Schlater

Sure.

is the that is think think those the been answer initiatives. to lower low-XXs then that in made XX% short So way include costs if made have would all Right? headwind by margins And sort to the you optimization are about are by normal worse basically of XX% the a offsetting absorption, programs. would So and yes, absorption. better

of the question. of first part sort that's the So

of initiatives lines we both line, those gross American Coatings. product profit to would piece in margin both benefit expect we in North Functional Color and benefits the the see and places. both would including impact that We've got expect Solutions If optimization would

front SG&A John. the On

I and spending with focused as we're being more that make judicious and to that's into we what there's period you're part economic uncertainty, prudent where is sure think that a on just get the effort this seeing. our a

John McNulty

it, maybe what the prevent Got running release in fair a you're How that you P&L, cash just through be should terms downturn adjust about we you to growth the Like the as looking at to it you're out see the enough. that And then that given think how look that? can should capital is we're working flow that, that some or year? of when your of much the release? through opportunities looking we rest as of at the able

Benjamin Schlater

of are capital. right? mean, roughly John, of I speaking, in so working it's volumes the fallout context Generally XX% sales XX%,

run operations, continuing and businesses our little remaining a the we lighter. is With capital working a better, so little bit

to facility, that, we're beyond the aside, not the circumstances, world right as thing range. but course that's right get much. outside to it certain the now inventory only in of working with the into happening seasonality capital is into putting you product we ordinary have builds do can around see some So it moving strategic down of respect The sort XX% of business

John McNulty

for it. Got color. the much Thanks very

Peter Thomas

Operator, time for one we have question. last

Operator

you. Thank

from go ahead. have Wells Mike a with Sison question Fargo. We Please

Michael Sison

Hey start the nice year. guys, to

Peter Thomas

Hi, Mike.

Benjamin Schlater

there. Hi

Michael Sison

you is look companies, in could I thoughts broad XX% right? us of you XXXX if what then new then, have your who apologize EBITDA group do are at I when pretty I that some the maybe I'm that? is? XQ, right range down sort Can was seeing about chemicals, coatings, sort I you XQ you be peer down you in Ferro? XX%. talk know, the and think basket if materials EBITDA of you wide and of range, for pro where the wondering just general missed XX%, you forma And would com know, and give

Peter Thomas

in – a it me couple parts. of break let's let up Yes, different

that that's let of have think part, structure. terms think type of think first way germane one really we and where relative to sure to have, I remainco out industry have industry of sub-end we I what all we Because as do think to competition those it I've to me would that to been structure use. The underscore we define I use, each is And relates it something before, sub-end able really, remainco, to And players. with that break in make very, starts. numbers the we've what of accomplish this very when mentioned you limited we the I

talked than companies and environment we they big that coatings in is PPG may you coatings, type big coatings. the of be biggest our in slurry coatings for hear functional, when specialty there. would - just not that about pigmented, of one be names, if glass course may would be [indiscernible], of type are colored, And would look definition They're a decoration, at and our the coatings different example, know, you competitors you that smaller those

but at higher volumes. is higher smaller a that margin, level, But, application our is decoration

where there the So big we've with and some the names compete those less of end we intensity. where is are carved might competitive margins out at a higher niche higher,

margins at of So each because to higher of sustainable end. within kind sustainable we've those gross said, use sub-end the of the our like positioning are

the strategy with one whole end company, is The product a the starting including platform of more tile towards where times we present is down we the stickier, competition put innovation is each know, to what way. limited the you the to of and it in our new important, starting in to been jumping the and move drives business sequential as it's end CASM as higher right up has two one where pricing that you're now business, see or itself that mode introductions

Michael Sison

adjusted XQ range sort Great. the your and And the of just on EBITDA for for XQ what 'XX? comment sort of was

Benjamin Schlater

our on quarter a would for of on in and - basis, that adjusted be EBITDA obviously. Mike second the low operations, continuing XXs. an Yes, sort It's was estimates, the the

Michael Sison

right sort and about EBITDA the sort Okay. to post cost of or into potential EBITDA follow-up, of And we way get as this I a the to savings, through pandemic? of you the and once then of EBITDA, normalized Peter added could think the just get what's the a some guess rebuilding sort pandemic,

Peter Thomas

Mike. Yes,

go our let's maybe in quite up Investor Day, and candidly back we to only XXXX it then tick said what we a bit. back So can

said that. gross XX% margins we XX% probably now. to I think be can going than then it's you, that that would right to back We tell be higher

know that. Of course you

the is very XX%, high average is now today. right our sitting margin remainco with can index, our that we're vitality Understand at tell new at XX. where to a gross starting I has see five-year pipeline You're you XX% and that level a base of

that the the that optimization programs So can contribution see you're that will already benefit. the you innovation seeing and bring the with coupled

after more, or And the closing forget be there cost we have our will come that business signed harvesting it. on stranded don't tile

see see could approaching one, XX of [ph]. with go that XX% gross the the comments year won't There be reason XX the believe made XX% the margins, deal next we So is have no mean into remaining as initiatives, I we we at think to EBITDA would them we range, we tile the and XX% which moving of optimization I to generated through that margins.

sales way the And million the spoke we we costs we to have three, $XX reorganization remainco million from designed technology that, of. the When have type goes again dimension. market that's more to that a about do secondly, and there to product stranded And you $XX cost than oriented of regional strategically that. rather be and be benefits of do will going some marketing our

for attractive, we have all will listened that you EBITDA XX%, the very an Ben math XX%, again, get this one there. framework you margins, I and very, that we EBITDA margins year, think our very, next outlined And very to So approaching the profile of again think distinctly starting business is XX for gross remainco is that. XX% position

this about during and benefits point, what cost Why? I basis of certainly Because Ben attractive which is let is well lot outlined talked us didn't all we have more business just You'll either. a growth as starting think really the call, of last have a and a the say. it

if business very a 'XX. be to you some even put optimistic see and part add mix, 'XX want of growth into to you the level So remainco moving that then the of and will middle attractive very, and

excited the business and we're about So very quarter. today this first

to both special. bringing a it working portfolio, on optimization, back growth important unique it's if interesting as know what well very we years, was business. the so think know said note. it We've trying is that a six and have innovation this result that end taking discussed going inorganic prudent technology was to And leveraging everybody. six it for was was you And a very good that what coherent that as And specialties something to very build you very for something as I had, and really create been we us, the what is us would this Mike, be laid to you And very something years -- out special companies before, very attractive, get, and together we've all it kind characteristics of of there that create are. we for business that our a that performance end

there portfolio that in be the We an said said We segment. sectors. attractive be leadership products to the said to there coherence. market has has be in has to We positions there

technology has very strong said structure, Our be very, and has be good and stripped to there There to growth, be cycle we innovation to there dynamic capabilities. has resiliency.

So all of out. to if laid that you our listen remarks, we prepared

the higher platforms operations, were of following simplifying past remainco, underperforming harvesting value in which investing company. by built strategy XX the assets, the years with the that growth with reducing what our cost, over our opportunities, have So we technology we've into

dynamic which innovation, reorganizing efficiency remainco, little the other European we that at program streamlining, this cost consolidation we're that then financial now, assets attractive spoke a position. much of, stranded things and very, optimization focused all strong have the phase, very business optimizing, we the the is And really streamlined cost, and doing, putting very like seeing much what improving the you're like Villagran on situation,

is you so value it about of course shifting and high it is center all gravity to portfolio. five, the of high-margin know, And

have with heard to those certainly, can you telling mentioned? you how ask look all that And that us how you've and And see that together. of talk at So when question, have then those sustainable. you we about yourself fit brought that six we've higher characteristics see are I've in you we're do characteristics, the margins specifically we six can you

You that portfolio cyclical. see less can the is

more a mix. and can that balanced have You we market end see regional

market that underlying see we growth. have stronger You

raw material less have We positions. incentive

are technology footprint more company. innovation-driven a our manufacturing we have We and led certainly streamlining

over be, because the there characteristics COVID-XX. actually gets six phases are here's after think is characteristics understands So that aligned the create think with that thing us, those key questions. five think What the out And which be focus six strung was next companies, eliminated one this points the game, six that of end model. answering what Rosemarie's COVID-XX? good Well, will you to one just deal. excites with to past big I then should question of when we is years I've of your happens and a we top changes everyone structural

company’s One most whether and the very that and of recycling we the in as with investor, think the know lens you all wide-ranging, are the it's the wherein end investing performance others of else's, what's that important we each and to in, we're the on. look focused which the served or very changes want that important Sustainability remainco. attractiveness is be things an would ours starting And see to of they're by are, fundamental are at are now us and you I things of anybody companies going going strong and structural the where be to to like include those is some most important. it markets

everything that into know have it. that that goes one You package concept the we

that about well You're food our about about business? You're what value leisure, and talking about and entertainment of electronics chain. And we applications have? all XG the talking what

electronics, lot are You at they the go into all products, food of the of they the into at coloring products industry, The they our packaging know all into and specialty all applications. , bottles, beverage those products. look look of pigment go a health into medical go going types all

post-COVID, define what strong So quarter, strong well they we not that established and We characteristics can as course what very what hopefully interesting but positioned now would only in pretty well done those we've very, what are you with see dots to of a remainco first very post-COVID. aligned with we phrased put the is six very, position, to how much has can is is in together are see really characteristics the companies, and really of post-COVID the aligned activities. six we aligned Ferro with performing

Kevin Grant

we for results joining appreciate you would We like and call discussing We us Peter. our quarter. you, again everyone forward today. Thank to to in next your thank interest the with look Ferro on

Operator

ask thank the please you you today. We that disconnect your for conclude and does participation That for line. your call

Ferro (FOE) 12 May 202020 Q1 Earnings call transcript