FOE - Earnings call transcript Q4 2020

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Operator

Good morning and thank you for joining the Ferro Corporation Fourth Quarter and Full Year 2020 Earnings Conference Call. An archived replay of the 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, Investor Relations and Corporate Communications.

Kevin Cornelius Grant

Thank you, and good morning, everyone. quarter year fourth call. earnings Ferro's to and XXXX full conference Welcome morning, financial XX, ended Ferro's be XXXX. for This reviewing quarter results we'll the fourth December I'm President and Thomas, Financial Officer. by CEO; pleased Ben Chief joined President and Vice Chairman, and Peter Group Schlater, to be our today The and call the presentation in are available earnings Investors section release the of conference deck our website. conditions are on to the see comments making of today of our we everyone based we are some forward-looking circumstances that remind and them I'd like statements as and view are today.

adjusted as financial views is may the and included those presentation. in refer of a contain to However, basis. my Please and to and measures results earnings release and to encourage are It release deck. information forward-looking pass change review Also, Descriptions call in conditions that to disclosure and discussion. operating the circumstances now will reconciliations call presentation today's both various Peter. in statement We change. you over pleasure today's the with these conjunction earnings the on non-GAAP earnings reported

Peter Thomas

Thanks, quarter and our revenue increased and year Adjusted XXXX. consecutive Performance Ferro’s we and for quarter relative for the full and for margins continued. profit to XXXX thank line Kevin. net with gross that good year gross very Ferro prior the products V-shaped was of quarter. increases fourth significantly quarter performance. across quarter delivered stronger the the and gross for and year to us fourth Good Top globe as results described income. morning, previously the sales, profit joining everyone, discuss you recovery than demand in third the second quarter prior expanded strengthened

that Color costs our coming bring performance the and trend this as automotive, segments, continue delivered construction, electronics sets of reduce and gross of services. profit strongest level. Ferro’s products margin pandemic. expect the our growth shuttered lines. baseline as to increased forward quarter, thrown versus we the from fourth We are many impact porcelain the economy enamel comparisons off to with Functional in the second COGS company's and Both quarter market believe global the Coatings and Solutions going of reporting Full sales temporarily for by Especially in product response additional innovative, our at we the We higher were continue year XXXX value industrial, to course increase pandemic. to the XXXX proposition of products in performance parts the the COVID-XX

generally essential at into our this previously services were to we level, have and were because time, during or Ferro continued difficult operate although markets considered sold of explained, As a deemed lower products many essential.

we at and saw early half recovery in quarters will in give the around our customers, to as to world, to markets markets informed and this year. least those The of began economic recover. stayed fourth by that first the these pandemic, which more XXXX, the confidence strengthen we our continue the the close heavily in for in As third impacted increases preparations demand us

for control and and our risks demand, to vaccines, we their trends the innovative happens COVID-XX, products products We businesses. of understand with become vaccines as the services, excellent growth stay is the even the customers, what year COVID-XX close and into potential half widespread. second with with spread in economic recognize clouded of visibility strains by Our continuing the can we do develop more technology variant from but that to somewhat resulting or aligned provide expectations can't their

We also can continue to optimize business. our

strong can we are half second uncertainty that confident of levers, a deliver these the even with XXXX. some With Ferro about year, the

world. really proud than XXXX minute XXX-year the surely challenging Ferro around change one the the more workforce. was a word a our say for me am to history. of our Let gears I years about teams most here in of

West, all served our our level. environment. running chains, East Ferro our the keeping manage at globe, did economies disrupting and challenges this teams and high implementing North paramount, their of and customers new And a the and South, personnel they Despite and the professionalism. operations across supporting team wellbeing safety kept pandemic they their with protocols, manufacturing the responded through spread supply As and extraordinary very while this instituting working, health challenging remote and dedication adapted

day. we February We the our for XX, XXXX, workforce, sale was that have deeply I business functional The am announced Systems solutions I that the associates Tile divestiture on success them these Systems latest company. as and the wish leading Coatings a advanced step transform completed every our the accomplishments Tile of Along and and lives. in their Tile a in want they to thank enter with their Ferro our news Coatings all color grateful to for of contributions accomplished, toward new completion was we in a XXXX. dedicated very to them of our into Coatings business. also coatings have of in chapter talented especially sale release strategy to and years, professional many over the they The Ferro as

a financial margin have and higher will of more operational Going focused portfolio forward, attractive more and businesses. Ferro metrics

has of industry-leading underlying requirements the following strategy. financial of and markets, end-market stronger on report financial reminder, I is and leading consumption, to priorities innovation-driven for cyclical Ben with streamlined and intensity, material and full business, company, I mix, functional Systems margins, our the capital a regional and more to with a concentration Today to higher sustainably on a phase generate performance manufacturing profile quarter reduced more working innovation strategic attractive, a call the less Coatings now color business leverage. lower Ben footprint, exposure After his coatings a creation. technology-led over next capacity comments, lower raw segment technology as the Ferro Ferro his will growth, focus results. year Ferro’s services, finishes profitability markets value on sustainable, for sale and fourth the the greater As turn solutions Tile a Ben? our balanced will lower capital discuss and for

Ben Schlater

the numbers All of the today's discuss for the on a the consolidated I full Thank of how and you, quarter now echo and on pleased X would I performance can the fourth results on to in and with of the quarter completion year line fourth company's morning, the reviewed the everyone. good Tile Coatings the I'll we which are call, are delivered in X, find The be XXXX. business. adjusted advance Investors currency basis extraordinary profit note the X, work can are like basis. the financial to Peter, The effort non-GAAP ferro.com exhibited fourth fourth for expansion continued versus sale around SG&A pandemic growth proud an presentation gross to Peter's They and highlights and quarter necessary they especially quarter time the financial in top the exceptional constant navigate to complete the Tile Please XXXX. comments year XXXX. and mentioned results of accompanying our continuing you and that in sale. comparisons associates the with the and for spend. We're on Slides lower section. world accomplished on same in what refer and operations growth global Ferro are at full business rates

X.X% increase is XX.X% declined an net $X.XX. $XXX to million $XX.X XX.X% X of profit Adjusted were increased $XX EPS profit Slide XXX And sales to adjusted $XX.X the increased in to or Adjusted fourth Adjusted quarter, million. net to to sales, of million. increased margins EBITDA gross increased XX%. expense million. which Adjusted points. Turning X.X% XX.X% gross basis to XX.X% SG&A

or related X.X% performance. reflect costs X.X% XXXX. declined on to million. previously These Adjusted from points. to Now to And for I of for declined now basis corporate XX $XXX.X to businesses, X.X% provide of gross I'll the turning to with to legal go adjustments profit to activities. Adjusted the increase EPS fourth the non-GAAP was through more increase Net adjustments Adjusted associated declined fourth and sales of profit XX.X%, will declined adjusted $XXX Slide million XX.X%. Adjusted SG&A EBITDA $XXX.X $XXX.X XX basis full XX% points million. million. sales, year X.X% optimization net gross primarily declined quarter, X, development $X.XX. quarter of an results certain divested an margin detail our XXXX X.X%

other cost initiatives. and optimization, of assets. we businesses due corporate primarily have approximately in professional sales, related SG&A, certain certain legal, In optimization to adjustments primarily of totaling million, optimization one-time $X.X for approximately adjustments up-costs American expenses manufacturing in to the quarter, including First costs a have and related related divested to $X North $XXX,XXX for million initiatives, development and we consistent to and

acquisition optimization adjustment of an achieve to impairment, related synergies. restructuring actions ongoing $X.X and was and to our to there Turning approximately million initiatives

about in This million. income related adjustments. retirement quarter, we and $X.X was other post mark-to-market of expense, and primarily the benefit to other Finally, under pension an had adjustment

adjusted adjustment or where rate originated. million quarter, the tax fourth Lastly, item had for the statutory was $X.X for expense at special million respective items net effected of $XX SG&A the on we the being $XX.X the as million year prior with The XX.X% an quarter of compared was sales the for in net currency stated basis. compared million to XX.X% quarter prior quarter. a sales quarter expense $X of year Interest million in or $X.X constant

earnings We in for including, brings and to GAAP and the in but the on quarter, from me to working under define flow capital I'll the was flow the but With of which reflects can by seasonality, not cash cash certain the XX cash For inflow found initiatives. each GAAP Peter? from of expenditures cash other be returns. optimization free receivables for press $XX.X operating statement limited year. from that, as I changes cash flow of Peter programs. cash subtract an business flow over our the back operations, walk from we available turn $XX.X year, on arrive benefits $XX.X quarter mentioned in cash to calculate release. following flow the flow activities. cash $XXX.X call of to million of cash items free GAAP also and adjusted strategic metric flows, In discuss service through what capital in million, compared collected add to will shareholder of capital expense our the million securitization this fourth debts, adjusted and received prior $XX.X This or units. from million investments, at flow cash information operations interest lines fourth was for we free adjusted also This then expenditures to $XX.X combining operations we million million table

Peter Thomas

Ben. Thanks

of discussion segment. segments. We'll Functional reporting through operations our Now highlights our fourth I'll take Coatings our begin continuing the performance and you quarter with

Glass a quarter and fourth gross Colors third a the fourth of year the it points sequential includes basis. Coatings of As Performance to margins business. a a XXXX. and constant from Coatings basis XX.X% million to gross Functional increased on $XX.X quarter basis, was reminder, net In and business formally the from X.X% XX.X% to fourth Enamel quarter quarter XX.X% a X% $XX.X sequential XXXX. currency the in from the quarter Adjusted compared basis XXXX. from Adjusted compared Porcelain profit prior now in year of On XX the constant on our currency quarter to increased increased net Functional million prior the increased basis sales X.X% quarter on also called our increased third sales

satellites of digit electronics, our accelerated growth. consumer environments, has be was items saw year that Applications has double In communications fourth And digitalization mid-single here work Electronic in increase which we growth. we Our higher due silver saw such America driven we Asia, Automotive business continues prior growth. in to and our and environmentally use the COVID The quarter. high business, and virtual XX% for elements, share high-single frequency our increased capture North the The as are growth catalyst Europe environment, market demand achieved digit are America, we performed digit low-double strongest approximately and Latin paints, conductive heater to which telemedicine. products to saw systems. well This digit In into in friendly. compared the where incorporated

On of business. our the a compared and bright low-single downside, the and for restocking digits pandemic spending our decoration spots in increased decoration travel to as fourth directly declined circumstances saw capture quarter our of to leisure the America business Decoration The result global inventories. market industry There of less resurgence impacted business Latin the in decorations demand however, in some business were example, beverage share of our in due XXXX. some

sales in business decoration to second quarter of In XX%. the fourth quarter by the point nearly the experienced addition, in relative low XXXX, the increased

in our due also XXXX demand relatively quarter, which weaker digital fourth was strong Asia fourth Our that XXXX, with porcelain for to panels. weaker was I especially Industrial enamels that made outbreak, relative this relatively sales glass strong demand the grown the another greater the solar COVID provide prior but quarter in performance declined in Enamel off-cycle mentioned quarters, power in causing certain Materials Porcelain bright business an for wake to manufacturers our generation home glass in appliance business, efficiency strong spot, backlogs quarter the printing our in sales their flat of products. as enamel offsetting have

business quarter by grew of in PE Our the quarter approximately fourth from fourth XXXX. the XX%

the a declined business declined appliance. to to weakness earlier for year a XX profit to demand $XXX.X points XX.X%, profit of and XXXX million the year relative gross year. full prior strong impact the in Adjusted From to sales gross Adjusted year on million the continuing margins to expect around basis. We $XXX.X declined year COVID to was PE the X.X% our in due constant used world compared prior on products especially basis economies full Coatings currency home perspective, for XXXX. Ferro X.X% Functional other

$XX.X to to sales XXXX. to compared were on our quarter X.X% basis segment, Solutions X.X% fourth of fourth And Color a quarter. gross sequential from increased X.X% quarter currency Adjusted net turning constant year Solutions in third in XXXX quarter prior compared automotive, increased quarter the basis, Now sales and profit attributable Color higher a sales the demand fourth net up the million. compared prior fourth to on XX basis to to currency constant in Adjusted year food XX.X% gross used was points coatings. basis. slightly The a on the increase down packaging, were margins the construction for industrial to pigments mainly

we behavior certain from products demand to our into for a pandemic. Ferro applications. single-use increased the go that packaging of resulting our business example, changes continue demand result consumer Color see mentioned, Solutions higher has In As as products in for disposable and for

surface X.X% $XXX.X We increase XG products our and home. by technology has school NAND $XXX.X driven utilized also been are full and From seeing in year gross strong on to And compared full XXX in impact the for increased in adjusted a to Nevertheless from applications, XX.X% year to basis X.X% increased from XX.X%. of the again margins constant profit COVID XXXX a perspective, declined which near. profit to demand work digitalization the due adjusted basis. prior to points memory earlier million and sales million currency gross

call comments back I'll the now XXXX his So to Ben guidance. on turn for

Ben Schlater

you, Thank Peter.

like Now, I'd to time guidance. our reviewing spend XXXX some

to EBITDA in the in XX% $XXX to million to XXXX. which $X, to would XX% of EPS a expect growth Adjusted XX% Adjusted an to in XX%. range deliver from of million of up range be $XXX sales in a $X.XX of XXXX. We range increase X% XX% to

to roughly $X.XX. reflects USD December, Euro our guidance XXXX spot rate foreign which exchange rates Our of as reflects exchange XXXX, of

dollars. We to million million a in exchange guidance for by practice, of release. As Ferro, of XX% profits the U.S. approximately impact In approximately business change and sensitivity generated $XXX,XXX excluding earnings provided we FX approximately the where euro XX% discontinued XX% overall sales $XXX,XXX. that rates $X the $X in by do foreign revenues and common we XX% in X% in section estimate operating currency have countries to to operations to would its weighted XXXX a

isolate operating sensitivity $XXX,XXX. X% by would $XXX,XXX profits on you the a If for change approximately Euro, to impact

closing the before to call turn provide up leverage that, net over to back EBITDA. the with open to Peter Peter? the times one Q&A. to year comments at approximately a we it will I of We be expect few now And end

Peter Thomas

Ben. again, Thanks

products as phases. next As we water margin we phase drinking value first, Coatings creation for of strategy strategic broadening business This earlier value, over of and The the use such products move building into niche, high strategy, systems of three communications Functional food. high-frequency this with of our specialty medical a our Solutions and materials components as the equipment, of transformation in and Color stage high are; main the are the growth containers on company growth markets. high the and includes areas year-over-year

are about in designed into are future being expanding excited our of involvement the applications vehicles, our We electrification also where prototypes.

Solutions innovation, across continue Coatings market our emphasis optimization, bringing and And drive initiatives deliver margin our customer to to overall will Color applications, redouble global enhancement needs Second and intensified costs operations. advance products on and to and products services. Functional market-leading with solutions lastly we efficiency, new creative will stranded remove to address efforts and we

of before development us our our with the trends aligned and play and strategy strengths this have We in company opportunities we mega to innovation, about customer service. phase our are which enthusiastic that product

We are to partnering customers certain independently products developing products. other and with develop

applications have investments R&D Things, XG, AVs, targeted and of EVs Our the for Internet communications. virtual

have lenses for Viewed inks apps, inorganic in and level, invested and healthcare and smart technologies substrates, and organic markets eco-friendly in higher automotive we plastic We reflections, applications, as in anticorrosives participate surface materials. these continues. and for also customized to used preferences pastes green such electronics, as intend a telemedicine and shift the digital printing at to infrared functions, on with various pigments

As Solutions that demand supplies of in greater changes and resulting in COVID. I behavior earlier, Coatings mentioned Functional also are because Color Ferro from

these of as the into to move past the normal. changes COVID We expect many next and remain we era

a see and develop of extend provides products to brief opportunity leadership we applications. market where this new So overview and our

more see supply gross costs, consolidate above and the From in we stranded so years in sourcing and opportunities Even we efficiencies XXXX. in profitability of logistics to drive reduce at perspective, facilities, company contribution chain. have that material our the with recent our manufacturing and implemented grow X% to step-change the to range costs, raw in XX%. a remove should X% provide initiatives optimization to We an expect relevant margins market

balance in also Our will sheet XXXX improved. substantially be

the to we look proceeds will during questions. sale the with you of one sharing future end forward of leverage intend that your progress approximately I times. reduce Now use completed the Ben glad to be take debt. And to we net from have I our XXXX business, Coatings be expect Ben to continued at to now noted by updates. and the as sale Tile And

Kevin Cornelius Grant

operator, Thanks, let's for up that, Peter. the questions. With call open

Operator

And your [Operator our Instructions] with G. you. proceed Rosemarie with Please question Thank from comes Morbelli question. first Research.

Rosemarie Morbelli

Thank everyone. you. morning, Good

Peter Thomas

morning. Good

Rosemarie Morbelli

XXXX closing Tiles. the for strong congratulations sale And closing on successfully and note for of a

Peter Thomas

you. Thank

Ben Schlater

Thank you.

Rosemarie Morbelli

quick list, of I – if us call you I of to So, Peter, laundry I all that use gave are areas into. can a planning that if grow fast. can't write term, can you the

was top organized wondering if attractive me could fashion of understand, more I but most to new and and line in on end-market, growth but Ferro’s their in descriptions potential the you touch talk within the should a a of the which lot about particular those So them, areas for markets terms not main and level. for profitability of growth products, just of also

Peter Thomas

Okay.

are So questions bunch that – there in a of there.

agreements Day. the talk And about days. we would Investor – lot answer is speak let aware speak have we to of you of from be we're the for which first level we around out that a regarding that careful because very some old of do of unlike leaders of things in the may me innovation, our to confidentiality the be many a aligned because we’ll we try there. What to with high it in So technology technology have looking and framework place, confidential our

XX% X% XX%. means looking X% talked would a of revenue. our to EBITDA and market historically, We've an I XX%. That would a Investor be think at we're And about minimum. range XX%, be range, XX% today remarks, on X% this to plus of conversion prepared think course that Day we particular of or range. cash course, if at of that XX% margins in XX% a portfolio of X% would You that doing that would to is were

growth have, us a pipeline, not include the of the that organic including of the going with do forward, opportunities we starting from today growth, technology leave those with genesis numbers pipelines that its inorganic growth, own the So separate optimization any let's for new as and Again, Ferro. additional pipelines, like. framework plethora

excited have spoke shareholder meaning or I which type value. next the less at that We is those the times X adjusted additional focus than won't three to the you we of business areas you year of to best-in-class. we give have at of What with for value. of year, When of mentioned many sheet the opportunities of creating the you of, emphasis right end optionality is placed can X.X talk like why the creating I is around five as with about can balance I values look additional on, with that for And reasons. the four the year years. by end our second, current being the pretty I vitality course, pipelines for see shareholder to we that to where you the index tell at for a the lot this ended think XX%, And we're

at looking point. a this We’re starting well year, as for as that

pipeline that $XXX million organic show a between million. have five-year of $XXX to sales anywhere an We would

innovation But point. that. it's to at We Ferro, customers referred innovation creative can to advantage get with an about XX%, organic between That I is a new at technology to don't whether pipeline products those and is I note pipeline the but margin XX% of to important level. customers what's gross be earlier. gross specific XX% reasonable have pipeline want at too margin or this is that newly of a pipeline with

of in So the maybe pipeline, you a years perfect we of we storm vitality of XXXX range ago, XX%, set have activities. three two another evolution up or years that comfortable we are, another started from the organic pipeline, of why the index, three see margins, of to all like with can the the because for together, optimization activities, about very discussing innovation coming feel base they gross those which the next

to would look what the the to think would we really at level at the And following Ferro. about with portfolio pretty significant. focus, the gross this is old the lifting be areas. ask When a of continuance going we the profit sound shareholders So different quite bit as and is

If go with XXXX, that doubt our the you transcripts would company. been and people that from a four last the heard quarters, three back you've no to and XXXX versus there's XXXX understand and transformation or XXXX, calls there's what significant listen

to would shareholders, So about our would what thought on, ask is the the focus everyone we we talk following.

You substrates, many things. with in should pigments focus will applications, of digital digital and have printing applications. printing about many equipment, colorants Ferro types aims And heads for combinations organic many like. And tagline on and side the going different we're areas. we've We're digital that mean, world. a about to and color may what of we printer and have types talking across doing the forward have different think these substrate both on inorganic I digitally you various

Dip-Tech You that equipment, in certain we that technology, market our bought a segments. certain heads, has certain know links largest certain

cars, having you accelerated. for Internet co-fired have of low where We smart COVID with the environment, applications. superior you innovation And very Then XG at certainly look and that the segment. We the temperature So we're many applications fitting and and materials broader products big glass applications are of ceramic on look very twice in is sensors, us, familiar in the Things to can for been We XG low types those everywhere. see have to the covering that's portfolio. like at for much digital measuring, application activities third antenna success communications, our have a jumped for we applications, monitoring satellite right? offering frequency end-markets LIDARs, chasm a

say also We the have, would I be, LED next-generation the would fourth lights.

starting another have conduction quarter. the glass traction and gaining area, important, and fourth that actually heat We we're and ceramic properties, with in insulation very materials superior with big

all we concerned be have Next, environmental. to about

I think have environmental a applications. really for companies responsibility to there's programs around

we year. a do our a quickly you'll continue in our everything and mean, green big, is inks. what and have We I environmentally Ferro’s colors again, way next-generation different through that or ourselves we a with course, in extending to we of chemistries do itself as that. lends more another at way efficiency, that can organic MBUs whole And more modifying be range about create product Ferro. one or the And market challenge friendly developed that to segment. of course we move portfolio of we portfolio nicely can energy look organic our again, hearing And the word, big and lines And

reflective for have and IR reduction We applications. materials weight

and for We that greater business. And absorb all mechanism enamels of materials course, this sunlight our about a properties, in electronic advanced for and side have We energy glass again, create electrification applications. medical how the have healthcare? is of

new materials that's medical the coating devices. have mean, for We I the Ferro, that's phase. genesis

and of those five ourselves see leaders on you companies the on in just this even seven new paradigm with to success you would areas. our probably market both And with really on. effort developing redoubling those there's jointly we opportunities. So business cross-fertilize that another three what remarks, can and offer focusing that we technology you to high-tech mentioned would in out, years be prepared look to shift those and/or seven segments, create areas in I've the a we top it are mentioned if the these isolate And really with

to sure have of constraints have I'm of information because secrecy but if So not agreements. the be the understand, furtive everything, somewhat communicate that type we we we with answers on with can everyone

Rosemarie Morbelli

was additional And well, is I yes, just two. quick one wondering I helpful. understand. And very actually question, it

benefits the would optimization then and what that of your the to XXXX? quantify And EBITDA to are high-end the from all, in happen to left you the XXXX? of for range could costs reach First stranded you need eliminate in

Peter Thomas

Yes.

you that? which for at If which the the the order two what important we've for half. separate, is defined Why I said say at I is good and pretty components visibility let's look with you EBITDA. tell order first time book because our that high-end And tell mean, the we is oriented. you, can have that so that pretty look can first all I do let's year. lead back the we – of that is start half and we of

I MBUs, orders couple our can a tell of MBUs, of orders. September, to three cases, look the out. and we there's And five months that them, months on books forward, back a probably five of July, some least and average with may at of with So the August, of if of two you and August couple in in an already you

good the what So of year. we seeing pretty for about half we're first the feel

tell need of way. As I saying lot Every negative. a always to I'm not to it's of it there's mean, either are saying uncertainly, I just a there necessarily People I'm headwind. is, be there either Uncertainty positive, comments. using negative, one be the that will not of it's relates you saying it's but that half careful and uncertainly uncertain as second the means I'm is kind year, way. a what saying negative of doesn't

reasonably half that year, range. what order the we're at feel we is if end that at and is that a seeing a we the our really good, day, taken at fits about what in we book, second feel we've range. with way hit to of we've the may So the be we good that able good half about first the have look backlogs, looked today this into upper we've done But a of

neutral Again, see that's of for year. there? other the negative, So your – what the about Yes, uncertainty question? always it's optimization isn't It's kind And positive. not you but always how Rosemarie, Optimization? us. we was

Kevin Cornelius Grant

No.

Peter Thomas

Okay. dropped? All she right. Is

Okay.

Operator

Please Fargo. Mike from with Our comes Wells proceed. line the next of Sison question

Mike Sison

Hey, finish to the guys. Nice there. year

Peter Thomas

Mike. Hi,

Ben Schlater

Mike. Thanks,

Mike Sison

XQ, past the X%to be similar got little In XQ Can and of you portfolio, outlook, sales Ben, talk about new terms are bit maybe XQ in seasonality? an XQ then XX%. your strongest, with the outside? kind you've a the the obviously easy it and where then XQ would is on the But comp. of growth

Ben Schlater

seasonality change, that's of lot There's Mike, not Yes, right. a to the business. the of

You're out, but the look to to balance how right XQ point is obviously the easiest would be of similar course would they comp, the historically.

Mike Sison

to tough as And of noted, for Peter, second recall of credit seems just then get growth, of in me guidance, in that Right. to I cost you it savings really a maybe going XXXX or what's you you're portion should year. understand the hit. good the sales giving there's some not half And it's in to terms happen your conservatism to

guidance factors of we're may in not a be sort for other negative seeing? any are XXXX that that So the that

Ben Schlater

think both the was And right? us we as adjusted from with materials. the would headwinds spend as Yes, principally let's think expect year well million spend, raw so we would that that of start of the And for positives, as SG&A expect. of I back. then some that we – comp headwinds would some come second half down SG&A about the I $X and you there's then $X growth The in or for to from million. reasons, momentum some two $XX we piece expect optimization was right? year-over-year from million expect expect

look some going probably it back spend did of the the So of lot would of business, pieces as be would part the sort then thing, would now those from SG&A a say into technology that a but headwinds. out Mike. two of that that positive I the back, Obviously, it. stay from you're the And we job of the of come create come both of but of things some the is, the that's to spend. balance I those getting will perspective, growth that as end would A and of higher growth missing, to look, doesn't back. that in outweigh XXXX sales discretionary lot optimization, a say the we comes reinvest But are will good rid are really of

Operator

from of comes Bank, please David question the line next Our with proceed. Deutsche Begleiter

David Begleiter

you Thank looking items we for some flow in Good should you. Ben, the give be XXXX? key cash of of kind morning. can

Ben Schlater

Yes.

we've of and So $XX working be about million. from from cash I the to be capital all by around what times net we one And rate get CapEx perspective, expect perspective perspective total working be capital is to thing. from be interest, a we expect million. not said details a the $XX leverage would base somewhere would think end into XXXX. normally going perspective. to expect taxes, sort probably what relative then CapEx flow from around would of that a would CapEx, Dave an We're typically to a From Those interest you perspective,

the you're that year. type you past, to types up got the all end $XX $XX project by about various spend of boil then when different to of million the So in the projects, we've going for the et to million about that talked projects we've optimization get of And Xx cetera.

David Begleiter

capital And to back Peter allocation, capital on in rank your just buybacks good. Very what the are share for some preference shareholders? allocating

Ben Schlater

that the stronger. don't balance Obviously it's will Peter know can and the now been Look, then in I different sheet than it's past. chime is much Dave start So, I in.

basis. with at at deployment would think will a obviously else And would opportunities, and we at range on look a so to return look we but we anything of like looking that, be I respect capital

will So, as we share debt, of we as buybacks opportunistically we'll M&A. look repayment at will

Operator

question of question. Markets. McNulty the comes John proceed line next Please with with BMO Our Capital your from

John McNulty

like on innovation terms how that's you've it your necessarily appetite I follow-up like heavily was look you also Yes, forward? can that, what thinking think seems and lot a it, of of should we that proven helped did maybe of for M&A seems do or period M&A, It really kind had but huge thanks certainly part portfolio. a not transform you lead think Because Peter maybe more a a question. lot more a mean, you're grow portfolio. about as taking of to the where in that you we my how side. you're the thing little Maybe bit I you for the to

think we So should I for guess, about opportunities the how that?

Peter Thomas

the the of Again, changed growth, the is question. and day, And activity. At is of it we three the next phase. good really has again, optimization. is of we genesis framework end third is a way this with the technology the our one that's nothing Yeah, M&A John, pillars have

different many nothing. of process even that we and process targets, that tile, mean hasn't so going changed sitting closing have M&A the around doesn't were sale that through doing We though were and we

XX between as way, targets soon incremental acquisition M&A an we what continue as which Our to which to socialize least business starting into that, jump on back tile split that worked – and the different for of in was years, at acquisitions did technology always stated they round off, the we've were and that which bolt-on. out We that four the we is innovation our companies. base. ended platforms technical we team look where half not we Remember do closed, in can we a acquired XX acquisitions over to platforms,

we ended. looking machine way it’s now, we opportunities, to of it's always in feel that a plenty clear up, we not at Where again, start and festering, balance a fillers, engage. new a for however going, there on been – like it's smaller business that we we've where it's range right Like until up. the low but of with it leverage been have handful were that I concerned, said, everyone certainly probably been sheet now a start would we are can of we for So look would opportunities off we boil type And have the capability X.X. we about a the good been we start of

may but best that looks So, sitting for business. something there that's the be good, it not at less than one, the

that up anybody. do balance doing would go because a we're sake blowing be for just not something position, big deal that's what the and So the sheet that we not is would for prudent in out of and

or kind really If may market some in don't to coming need deals growth, we them gross a be the we the look the of you of market a it. out in profile of on bigger an those in in don't around longer. have those profile, like have can in that at and shake we businesses things whatever, terms terms M&A. away. or margins, There deals and Because business that's we are terms want looked that of a the terms any have do where of do or of We conversion in created, however of at of them EBITDA funnel margins, environment we may John, bunch the of past cash thrown types

after So this want we're just little company our do we extend. dilute point. how at more appetite much at metrics Maybe changed scrutinized in will terms We anything to the of all. want a targets to this of the financial going types of don't that be hasn't to

John McNulty

guess, admittedly sense. then front, I material makes It question just mean, it. you be I speak And kind can the kind just are? or any material chain kind us disruptions dynamics year? that supply I about a of in on And first given in you any then that seeing changes portfolio. inflation we what Can host baskets just given rolls the thinking of the major guess, whether of all Got the the of raw the would you're of outsized a remind second slates. we're raw all across be crazy to material should of kind that of half raw the, seeing

Peter Thomas

on Yeah, very on things is materials. I are a gone his think the of the disadvantage but RemainCo an tile of like to have systems you things. We materials think the the Lithium there last I us, are points. Ben have business. – But one hit there with half, announcements very business them. raw a raw for chrome another at types with clear we've been it cobalt, mean, us coating second of with I extent that answer titanium, those nickel, state put of on important couple types

are mentioned, Ben some that are there what through. So coming increases

like in in to that as possible. we're and we're you pricing look can have in cover this However, to of talked lot together movements putting around as Like be, certainly you're but the, more everything chain with I'll with seeing environment mentioned sure just everybody, quickly is raw of particularly what ability the but light material those at think structure, try containers plans a back covering, is is do we some do sticky not you we there forth pricing little preserve about, tell you thing this making And case, hearing that increases. everybody's it's together. we're doing we strategies to may margins our industry I disruptions, and that supply be get put And strategies are RemainCo a not that's China. maybe always we maybe one to

do material negative the But to like. and present, to that? of see be the is the be argue clear are that to Ben, we of a want a inflated through would securing and impact bit pass-throughs headwind, passed more you a prices a cost increase but materials. those can raw one doing lot we're raw seems disruptive, be like, container that on everything we little So minimize can containers, it does add to to try but did a

Ben Schlater

No.

think not seeing anything that's I disruption really we're right. from supply I perspective. mean, a

I to we've done mean team going are a bismuth zinc, that in to the that nice big going in has be stuff past, job chrome, cobalt, the boron of the of the keep sort be I and thing. in of is about there, that terms raw talked some to particularly XXXX. think attack, in RemainCo there of materials sort

or So tile we're had not two for but cobalt when the it obviously buying as business we of we us. remains three top much the as still one did

Operator

[Operator our Please question next from proceed of your the Instructions] Global comes Securities. Harrison And question. Seaport line Mike with with

Mike Harrison

Hi, good morning.

Peter Thomas

Hi, Mike.

Mike Harrison

needs poised given to commercial only growth, kind those that but you're a not on that so excited or kind business it of it may know of some in seems spaces the refining that happen headline be of XXXX. like that for construction, Dip be guys of business, But redesigning printing the Tech digital significant the about. commercial about ask back maybe spaces. going areas could that or the to I of you and turnover if recovery Wanted really in in list business seven will is bought very different you the

printing So commercial can you opportunity talk and about as that look XXXX? kind maybe for that of at to in specific the market digital recovering see the, overall you you construction

Peter Thomas

Yes.

you have at at level. think higher a digital So I look printing to

days When at inorganic tile ceramics. printing, colored whatever remember it's on mostly inks, to organic, like we could with talk You digital about, look be the to move digital with just have water-base think old in used you or where it it goes may you digital organic not printing electronic applications. that for Ferro. digital away beyond on about printing, printing from That

is X pipeline going is can I'm I it's You on, XX% XX%. already. we're of there Not quietly There of other percentage not a gross you to because very single did, like printing the that to with emerging, of with the technology etching industry. or and over could some digitally for the are I like concept industrial be type able and involved burned what a – at we that much that. of how mean, digital, sit many going And not certain that, think When the can I have component things seeing and of printing you you that's mentioned the like in electronics laser fluorescent are whether esoteric kind tell we it's us. to have that organic about mention, very things going as quantify, The traction margin like lasers our glass. on substrates and that – bigger, has mentioned plastics, its look to fascinating certain think couple apply I'm us I for particular to onset, apply that really mean be another particularly think. future I and years. board, I can marking that isn't, on be to not off. mean, everything can into on not type as kinds digital get could decals. can We're printing all it's future. can't to we it historically you other printing substrates are precious be give would think already do applications, we what be here we're isn't with – would you digital digital different working a different say printed those you one that fiber last maybe all we of to metals also the as whole of things focus bunch we're on so It's there's in I digitally, of things

fact between that types is twice. growth to very can feel the definitive user like for we value all and touch it's a you to small XX% take doing, the of course And heavy that that just close market, proprietary of to a high the in second, in of real with we the this Remember of and but XX% the because that's moving products like just days, the volumes, of right different So for be X%, margins, we're we a doing. data lot historical animal. margin light, of than to big concept scheme done a of asset cannot question conversion. is what we've think digital, be It what reasons of of it big this end other jumping those we margins old framework cash all it's shareholders, EBITDA of X% is chasm would don't X% on to type we're plus It's gross XX%, isn't create what which the the think good things applications, deal. might the relative technology, X%

Mike Harrison

nice that about last you drivers And really growth, Can that performance margin some Color the Understood. this saw on Solutions XXXX? about in similar year-over-year how Solutions then of quarter it the into think Color to margin year. you business, but where saw you just talk and margin was was pretty to maybe

Ben Schlater

last absorption. obviously is the get Ben. initiatives, most really you're significantly a the Look, perspective from again of Solutions optimization. a Mike, a will Functional Color probably But Hey benefit better fixed in – half I then as they've lot in seeing Yes. the volume Coatings back more the Sure. benefit XXXX. benefited margin from what optimization the of perspective XXXX And Americas it's far. and will benefited comes cost from so think we

are two say So drivers. I biggest the those would

Operator

at there And turn remarks. are questions the closing for to time. this no call back I'll further you

Peter Thomas

everyone like interest results with next your Ferro. our for again the thank to call appreciate We’d in on discussing We you look quarter. we in today. And forward to us joining

Operator

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

Ferro (FOE) 2 Mar 212020 Q4 Earnings call transcript