Q1 2021 PQ Group Holdings Inc Earnings Call
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Good morning, My name is Catherine and I will be your conference operator today welcome to the PQ Group Holdings first quarter 2021 earnings call and webcast. Please note today's call is being recorded and should run approximately one hour all participants' lines have been placed in a listen only mode to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period. If you would like to ask a question at that time. Please press star one on your telephone keypad. If you want to remove yourself from the queue press the pound Keith when posing your questions. We ask that you. Please pickup your handset to allow for optimal sound quality lastly.
Lastly, if you should need operator assistance press Star Zero I would now like to turn the conference over to Nahla asthma, Vice President of Investor Relations and financial Communications. Please go ahead.
Thank you welcome everyone and thank you for joining us for our first quarter 2021 earnings call.
We will start today with formal remarks from Doug Catherine share Yang Chairman, President and Chief Executive Officer and.
And Mike crews Executive Vice President and Chief Financial Officer, then we will follow with the Q&A session.
Please note that some of the information share today is forward looking information about the company's results from plan, including with respect for the anticipated sale of our performance chemicals business.
Our anticipated end user demand trends, including the impact of COVID-19, and our 2021 financial outlook.
This information is subject to risks and uncertainties the could cause the actual results and the implementation of the company's plans to vary materially.
These risks are discussed in the company's filings with the SEC Inc.
Including in the company's annual report on form 10-K for the year ended December 31 2020.
Reconciliations of non-GAAP financial measure.
On today's call with their corresponding GAAP measures can be found in our earnings release and presentation materials posted on the investors section of our website at Www Dot PQ Corp Dot com.
Dan I'm pleased to turn the call the bulk of them.
Yeah.
Thanks, Rob and good morning, everyone.
This is a very exciting time for PQ.
Since our previous earnings call in early March we have had the opportunity to communicate with many of our investors on two very important occasions and milestones for the company.
First.
We held an Investor conference in early April.
We detailed our strategy sustainability goals and growth outlook through 2025.
And the old equaled the fuel.
True brand for our pure play catalyst and services company.
More recently.
Took the opportunity through a secondary offering to improve the trading liquidity for PQ shares by approximately 35%.
An important challenge that dates back to the company's IPO.
During the first quarter, we remain highly focused on our execution and achieved several accomplishments that I would like to briefly summarize.
Beginning on slide three in the safety, we continued to make positive strides here.
On year key metrics improved 28% for recordable incidents and 16% for perfect day, continuing the trend of significant improvement in the last two years.
From the top management to frontline and support functions of leaving safety and environmental performance is embedded in our culture.
2021 to be an even better year on this front.
On the operational side.
I'm happy to report that our production facilities in Texas have returned to full capacity safely and in time to meet the demands of that by our customers who in some cases, we're even more severely impacted by winter storm jewelry.
Commercially we are mounting momentum as we expand our positions into new and growing end markets.
We continue to grow our cabinets portfolio offering and we are now increasing sales into the renewable fuel space.
For refining services.
With its permits and location advantages, we are seeing higher demand for waste treatment services, largely driven by the construction recovery.
And the only two months since the acquisition close we are already seeing some initial commercial synergies within the chemical the two catalyst of activation business.
Our strategy, we're nearing the completion of our portfolio transformation.
Our plan to close the sale of performance chemicals in the second half of this year.
We now expect net proceeds to be approximately $995 million up from our original estimate of $950 million.
Finally, our financial performance was solid despite the significant impact on our refining services business from winter storm jewelry.
Excluding this impact sales.
<unk> adjusted EBITDA and margins would have been higher than the first quarter of last year.
Before demand levels were impacted by the pandemic.
This outcome demonstrates the recovery trends, we're experiencing and reinforces our confidence in our 2021 outlook.
Turning now to slide for I'll discuss the drivers of these recovery trends in more detail.
Firstly of the economy recovery, which is being led by the larger economies in China, The U S and Europe.
GDP growth rates in these regions are projected to be in the range of mid to high single digit in 2021.
Secondly is increasing consumer confidence, which is estimated to be approximately 15% higher than second quarter.
Year on year and sequentially with the optimism that this continues for the balance of the year.
Third is growing energy consumption, which is expected to be up 4% year on year.
The largest beneficiary of this recovery the transportation and commercial sectors.
Lastly, sustainability of regulations are on the rise, particularly mandates for cleaner and more efficient fuels. For example, Q3 standards implemented in the U S. In 2020 required of two thirds of reduction in sulfur content for gasoline.
In addition fuel economy standards continue to increase also in demand for high horsepower in fuels.
Let's go over what we're seeing in terms of the impact of these trends on demand for our key products and services I'll address them in order of magnitude.
Being with fuel debt emissions control.
Which crosses both of our businesses.
With the reopening of cities around the U S vehicles, Mark travel had been increasing year to date.
Last month of this metric was tracking at 95% of 2019 level.
At the end of last month's mobility data in the U S shows more than 150% improvements year on year.
Recall that this time last year in April our refinery customers in our regeneration services experienced significant demand reduction on the implementation of stay at home mandates.
To support this rebounding activity refinery utilization has been on the rise with the exception of the temporary storm impact in the Gulf Coast.
Higher refinery utilization of greater than 90% expected in the second quarter of this year will benefit regeneration of forecasted recycling services.
Additionally, hydrocracking catalyst products, we'll also see improved demand for refinery turnarounds in the second half of the year.
And finally, the production of heavy duty diesel vehicles continues to exhibit double digit growth in 2021 demand for new light based emission control catalyst is recovering steadily.
Further government incentives are creating additional growth opportunities as refineries to increase production of renewable fuels.
Leading to higher sales of our catalyst materials in the space.
And as refineries and renewable fuels producers seek to reduce the downtime and safety risks associated with traditional onsite catalysts activation. This is benefiting our newest business <unk> 32.
Next for the specialty grade high purity of Virgin sulfuric acid market.
As we mentioned last quarter we.
We had already seen volumes recover to 2019 level with improving demand for industrial and automotive applications.
Mining is another key industry for us and here high single digit demand growth for copper and gold rate is being driven by the rebound in construction coatings and demand for electronics.
Green infrastructure. The initiatives are also expected to propel further copper and bill rate demand for use in electrification and renewable energy.
Finally demand for polyethylene grew steadily throughout the pandemic and we expect the overall polyethylene market to grow by mid single digit again in 2021, and the first quarter, we saw more than 10% year on year increase in catalyst demand for high density polyethylene.
Polyethylene film demand is expected to increase of about 7% year on year on increased packaging demand for food and hygiene applications.
To summarize and over the course of the year, we see demand improvement for nearly all of our products and services.
This will be driven by the economic recovery as well as the secular trends favoring more environmentally friendly.
Favorable product sales solutions.
Both of our businesses are well positioned to capitalize on these growth trends working closely with our customers.
And now I will turn the call over to Mike to discuss our first quarter financial results and outlook.
Thank you Bill Gaslog and good morning.
We are pleased to report first quarter results at the high end of the initial ranges, we provided last week, which also compared favorably to the prior year quarter, when excluding the impact of winter storm here.
Before we begin I would like to remind everyone. Our results are based on continuing operations with both performance materials and performance chemicals now reported as discontinued operations.
Starting with slide five.
The demand in the first quarter continued to improve as the overall economy recovers.
Sales were in line with the prior year, while adjusted EBITDA was lower due to the impact of the storm.
This lowered sales by 5% and adjusted EBITDA by 18% and reduced margin by 460 basis points.
Shifting to the segment discussion that begins on slide six refining services sales for the quarter of $100 million were in line with the prior year as storm effects were mitigated by the pass through of higher sulfur costs and recoveries under our take or pay contracts.
Adjusted EBITDA of $33 million was.
It was reduced by $9 million due to the storm.
The lower sales volume and additional onetime expenses related to outages and facility repairs.
Turning to slide seven.
Sales for silica catalyst improved by 6% to $26 million, the polyethylene catalyst volumes, leading the way the.
<unk> joint venture sales of $29 million were down $3 million.
As hydrocracking and specialty catalyst customers continued to defer change outs as anticipated.
Offsetting the decline was a rapid increase in demand for low sulfur renewable fuel catalyst.
Adjusted EBITDA of $19 million and margin of 33% both declined from prior year on lower sales volumes in the joint venture as well as unfavorable fixed cost absorption on lower inventories versus an inventory build in the prior year quarter.
These trends are expected to reverse in the second half of the year.
Moving to the outlook on slide eight.
We are reaffirming the guidance shared on our last earnings call, which reflected the effect of winter storm area.
Sales are projected to be in the range of $555 million to $565 million.
The <unk> joint venture sales in the range of $140 million to $150 million.
Adjusted EBITDA is expected to be between 215 of $225 million.
With adjusted free cash flow between 75 and $85 million.
We are making good progress with regulatory approvals and expect the sale of performance chemicals to occur sometime in the third quarter.
We are planning to use the net proceeds at closing to pay a special dividend of $2 50 to.
The $3 25 per share and reduced debt by 450 million to $550 million.
This is expected to result in pro forma leverage at the end of this year in the mid to high threes.
I would note that our adjusted free cash flow guidance for the year assumes the sale date of September 30.
We have also assumed approximately $3 million of corporate cost savings this year.
And project to achieve our run rate savings of $10 million to $15 million by the second quarter of next year.
With respect to the second quarter, we expect GAAP sales to be up approximately 15% from the first quarter as refiners are back online and working to make up for loss of production.
Sales for the <unk> joint venture should increase from the first quarter by approximately 10% as we see hydrocracking catalyst change outs rebound.
We are projecting second quarter adjusted EBITDA to be largely in line with the prior year as hydrocracking catalyst orders of second half weighted and we incur $5 million of higher cost from increased turnaround activities.
You may recall, the second quarter last year was very strong for catalyst as customers accelerated orders ahead of the pandemic shutdowns.
For the year, we expect second half adjusted EBITDA to be approximately 40% higher than the first half.
With higher Zelus joint venture sales and the continued rebound in sales volumes for refining services.
To summarize.
First quarter results showed solid improvement absent the effects of the storm.
We see demand building through the year that should drive significant second half improvement and double digit sales and adjusted EBITDA increases for the year.
And we are on track with the sale of performance chemicals and are in position to drive outstanding growth in margins as ecosystem going forward.
With that overview of the financials I will now turn the call back to Bill Ghassan.
Thanks, Mike now I'd like to summarize our financial growth targets, both for the near and long term as shown on slide nine.
Turning first to the near term for.
Earlier I discussed the positive underlying end use market dynamics enabled by the healthy economic recovery and the continuing favorable secular trends.
And Mike just reviewed the 2021 financial outlook for double digit year on year of growth in sales and adjusted EBITDA with margins in the low 30% level.
As a reminder, this is inclusive of the corporate transition cost drag.
Nearly 200 basis points as we transition the performance chemicals business for the new owner.
The deal closed.
As we move into 2022 for a number of fundamental drivers that we expect will further enhance of growth over 2021 and in the following years to sign of few of these in the area of fuels and emissions control.
Generation services volumes are anticipated to rise by high single digit on continuing alkylation demand growth additional volumes from our new long term customer contracts Angolan gasoline exports.
Gross for our catalyst is also projected to accelerate on the recovery of hydrocracking refinery change outs and heavy duty diesel production.
Increasingly renewable fuel production will drive higher demand for our catalyst materials as well as Cam 30, twos upside catalyst activation services.
Virgin sulfuric acid will continue its robust growth into the mining sector driven by the proliferation of green infrastructure and increased needs for automotive and electronics, resulting in strong demand growth for copper.
And polyethylene catalyst growth will continue to outpace the market as a silica based catalyst of our preferentially specified in the production of materials with above market demand growth such as high density polyethylene or <unk> with a high strength to weight ratio.
With the meaningful Unexpendable size of the total addressable markets for our businesses, we have clear focus on the commercial mission to capture further market share.
Our gross journey is also setting up well to build on clear momentum and future tailwind for energy transition and more durable lighter weight plastics.
So as we continue our collaboration with leading global industry players, we anticipate a growing pipeline of new opportunities for eco this growing and greening strategy through 2025 of them beyond.
We view, our 2025 targets of very achievable just to reiterate this is simply pivoting off the current strength of our competitive customer positions, having long story of them with critical proprietary in sustainability focused custom products and services.
This competitive position affords us opportunities for commercially favorable multi year contract that provides stability and visibility.
As the result, we expect to continue our industry, leading track record of high growth in margins with strong cash conversion rates.
In closing the entire team remains focused on execution on multiple fronts.
We expect to complete our portfolio transformation this year on or ahead of plan.
We have laid out our near and long term strategy and pathways for accelerating growth.
And at the forefront of our strategies, we are committed to expanding our current base of sustainability focused products and services.
We look forward to continuing to update you on our progress and hope to see many of you this year of preferably in person.
With that I hope that you and your families remain safe and well.
This concludes our formal remarks, and we're now ready to take your questions.
And again, if you would like to ask a question. Please press star and one on your touch chunk zone, you can remove yourself from the queue by pressing the pound key.
Our first question today from David Begleiter with Deutsche Bank. Please go ahead.
Thank you.
Some of Michael's looking at second half guidance, obviously, there is quite strong.
Yes, Scott.
For the segments of the various drivers of of that strong year over year second half performance.
Hi, David the.
Second half is going to be marked by the.
The strong recovery the.
<unk>.
The calculation business, particularly in the summer time debt.
The season, we're driving becomes much more interesting.
So as we refineries capacity or building up an increasing we are going to see.
An additional level of change outs happening.
Which will drive the hydrocracking recovery to be sooner than later.
Started seeing the order books in the second half for the second half for hour of Hydrocracking and other catalyst products and we feel pretty strong.
The recovery is going to be much stronger than what we're seeing in Q1 at Q2.
That drives the.
The shift and as we increase volume David the margins are going to be.
Really.
Highly accretive with volume because the cost is at a certain level of today when we can get good margins and good good adjusted EBITDA, therefore, the the growth quarter of half to half.
Great and just on the performance chemical sale what drove the increase in the net proceeds and what's the expected the after tax portion of those new proceeds.
Hey, David It's Mike.
Number that we've given of $995 million of after tax.
And the increase is really just due to we had a very preliminary estimate of what we thought our tax of we're going to be when we gave the initial guidance.
There are a lot of commingled assets of entities between chemicals and catalyst. So as we got deeper into it and formulated our plan to separate the entities, we've come up with or more refined out for them.
Thank you very much.
Okay.
We'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead.
Okay.
Okay great.
You can benefit from it.
Okay.
Okay.
Thank you John.
Yep.
Yes.
Okay.
Thanks for that.
Hi, I'm, sorry, I think for weeks I didn't hear the question at all because of the background sound in the river.
The completely cut off.
I'm not the only one sorry Andrew.
Okay.
The Angel Youre, breaking up Theres, a phone ringing in the background.
Your line or in the world.
Okay.
And it does look like we have Los Angeles line in that case, we will continue on to Alexia <unk> with Keybanc. Please go ahead.
Thank you and good morning, everyone.
Refining services price in first quarter was up five 8% what was this entirely due to higher sulfur pass through or was there underlying price increase in addition to cost pass through.
It's a combination of debt most of it is Mike.
The yield can complement it most of it is the higher pass through.
Yes.
Correct, Yes, there is about $3 million of pass through the rest of the price is related to the take or pays the kicked in as a result of the storm. So that helped mitigate part of the volume impact.
Understood. So underlying contract levels are about flat year over year.
Expect it to remain so for for this full year.
You mean, the volume as well as volume.
Hmm.
Yes, sorry, the ZIP volume I mean, the pricing, we talk about two different things probably volumes or price changes or contract kicking in.
Pricing, yes, I think it's the underlying pricing before any cost pass throughs.
That factor sort of.
Of flat, a small positive or maybe low single digit positive per cent.
Go ahead Mike.
Yes. Thank you.
I would say there is the pricing itself has been strong and theres a lot of noise in this quarter between mix and the storm impact and everything else, but generally speaking I would say.
There is low single digit pricing improvement areas, just masked by some of the other movements due to the volume changes and what actually got sold in the quarter, which was truncated by the storm.
Understood and maybe.
Another question on catalysts.
You mentioned, some destocking could you talk about that.
Of Destocking and restocking dynamics that you see in the segment overall.
In the first half of the second half.
Well for the.
I wouldn't refer to them more of the Destocking that from the first half and the first half there was in.
An improved activity.
And particularly on.
And the element of renewable.
Renewable diesel catalyst.
Of which which showed up much stronger in the first quarter.
We are going to see the real improvements in the second half for.
For catalyst as the refineries are going to continue to increase the operation in <unk>, there's going to be more.
More of rhythm in terms of operating of refineries, which will drive more change outs than.
And then anticipate over the previous than the first half which will drive.
An increased demand on our catalyst products.
That's on the catalyst.
The other element that is reflected on the catalyst activation on the refining services, which is similar as driven by refineries as of the activation of demand for activation is going to be probably.
Much stronger since there is going to be demand for.
The.
Renewable.
The catalyst, which we have in our Cam 32 of business.
The ability to deliver some specific technology and know how this is going to be also an element of growth.
From a catalyst perspective, so I wouldn't call that restocking I think it's more of catching up with the potential growth that is going to hit in the second quarter into the third and fourth quarter.
Understood. Thank you.
And as a reminder, that is star and one for your questions for today, we'll go to the annual Castillo with Morgan Stanley. Your line is open.
Hi can you hear me.
Perfect. Thank you, yes, we can welcome back sorry about that yeah, I don't know what happened there.
Just a quick question on leverage you talked about where youll see youll be kind of at the end of the year pro forma as we think about the new portfolio of longer term what is kind of the right level of the leverage that you see.
For the right normal.
That it can sustain.
Okay, if I could take that one so what we've communicated is mid to high threes and the leverage by the end of this year from a capital allocation perspective, we are going to be focused on debt reduction through the end of 2022 <unk>.
<unk> seen our cash flow guidance and when you look at the EBITDA growth and the cash flow generation that we believe we can drive from <unk> of this debt.
Debt, we should be able to continue to de lever of the half a turn of year, we have not set of longer term target but.
If you look to the end of 2022, we should be able to get to the low threes at that point, we'll continue to evaluate.
From a M&A perspective, we've discussed bolt on acquisitions, which are a little more bite size you saw kind of 32, we pay for that out of cash did not meaningful meaningfully move our leverage. So we do believe we have the ability to bring the leverage down over time.
So Andrew just to put more color.
The the equation is got the M&A piece, which we know that it's not it's.
It's not a list debt to go and tap and when you have cash its opportunity. So it's opportunistic and then you have the drive to reduce low to drop the leverage we have those two and the payback debt. So the priority to pay debt is going to be always there and then as opportunities show up we would be reinvesting in the business now when you could have.
The period, where all we do is pay debt and when you could have a period where.
Actually what we see in the near term is that we're going to go to the low threes and we are ahead of we have the ability to bring the leverage down by half a turn of the year, depending on the opportunities, but we're going to be chasing opportunities.
And you also could have any opportunities that show up halfway through and we will just take them.
And then go back to the.
Bringing leverage down so where are we are probably going to be the sweet spot by 2022, it will be low threes, which we think is comfortable enough for us to be able to juggle. The two because we need to grow them based on small tuck in M&A as well. So that's the balance is very difficult to predict what we know is our ability of half a turn reduction and we also know.
In the near term, we're going to focus on bringing.
Bringing leverage down to the low price.
That makes sense.
Yes, that's very helpful.
And then an angel somebody of <unk>.
I'm sorry, one other point that I would make is you may have seen the we expanded our peer set when we did the investor day presentation.
And when you look at these these other companies.
We don't have great direct comps and in the specialty chemical space right, particularly considering that the grace no other via public reporting entity. So when you look at some of these other electronic chemical companies or the environmental recycling businesses. We're in the middle of the pack on leverage that doesn't mean, we need to stay there.
Communicated what our plans are for deleveraging, but I mean, certainly when you've got the high growth high margin high cash conversion of entity like ours compared to these others. We don't feel that we're an outlier, but we will continue to focus on bringing that leverage down.
Understood that's very helpful.
And then just I apologize if somebody already asked this while I dropped off for a second.
To your point on growth one of the things I noticed I guess whats temporary two it sounds like of getting some of the benefits.
Of that acquisition of already flowing through and you talk about renewable fuels and what you're seeing there I was wondering if you could just expand a little bit more on the.
One of the company to synergy opportunity into.
What you are seeing kind of from a renewable fuel and market perspective, if you don't know day discussing okay.
Sure look the reason we have <unk> 32 in our portfolios because we saw and we still see the opportunities one of two growth factors one growth vector is the the drive of the refining industry to outsource some of the units.
So fighting exercise and the activation of <unk>.
The activity there is probably 80% of.
Of the refiners still do that activity on site.
20% are moving away from that and using the smaller units to be sulfide ore price, we'll fight it off site, which presents a huge.
Value for them on several fronts. One is obviously the time saving.
The especially if you go to a more frequent more frequent change outs kind of saving and most of all his hazard and safety remember.
It grew in 2020 simply because of.
Also COVID-19 and health reasons, where people wanted to minimize the presence of individuals on site. So that is going to probably turn to be even more economic for some of the refiners. So we think that the many refiners will go that way that will probably be even the trend to go to a bigger units as opposed to all of the small units to income.
<unk> the chance of refiners getting more.
Saving more time and stay in really in control of the cost and safety. That's one vector of growth we think it's.
We think it's going to be in the favor of kind of 32 market direction. The second vector is on renewables as I said.
The renewable requires the special catalysts special activation and we do have the process in our in our.
In our <unk>.
<unk> to our property the reactor technology that favors us than we have experienced and that we think.
We share we see of renewable activation catalyst activation grow of renewable grow we can have the nice advantage over that so you put those two together and then you add the synergy that we're creating with the customer network remember we operate in the Gulf Coast dislocation is here.
In Texas.
They talk to refiners, we talk to every day, we have deeper relationships with some of the refiners interest expense the commercial end.
The customer network with the reliability of our eco services business that brings more confidence and with the strength of the technology that <unk> 32, as we believe the growth vector could be very interesting the coming years.
Very helpful. Thank you.
And once again that of star and one for your questions today, we will pause to allow any further questions to queue.
We'll go now to David Silver with CL King Your line is open.
Yes, hi, Thank you I appreciate that.
I guess I.
I had kind of maybe more of a clarification question for them.
Mike.
For.
The the <unk>.
Alex <unk> of the proceeds from the sale of performance chemicals, you've given a range for a special dividend and a range for debt pay down the night I think the GAAP in both cases is pretty close to $100 million can you just remind me what the criteria would be for deciding whether youre.
Going to maximize debt paydown maximize the special dividend or.
Something in between thank you.
Yeah.
Hi, David.
It's still under review I mean, we gave a range for a reason because we had finalized our tax position, which is still under review we haven't finalized the closing date.
So all of those factors are still in play so we will be happy to communicate where we come out a little closer to the closing of our upon closing but.
At this point, we're still working inside that range of deciding how best to optimize the mix between debt and special dividend.
Okay. Thank you for that.
And then I had a question for belga from maybe about his view on the evolving regulatory.
Environment that youll be operating in for the next.
Next few years.
So the current administration has started with the flurry of executive orders and then there's a lot of discussion about.
Some additional regulations or.
Environmental.
Lets deflation they might institute.
And the refining of course, the has been driven by continuous.
Regulatory.
Changes for a long time, but.
Can you maybe just help US help me out of call out maybe one or two.
Changes that have occurred since the new administration took place and then maybe are there one or two critical developments you're anticipating.
That may drive demand for your emissions catalysts or the alkylation.
The business in other words, where it would be the key regulatory drivers from your perspective.
Hi, David.
There is let me do that from a U S perspective, but also from a global perspective, because it impacts also some of the refinery activities with respect to catalysts been emission control. So first of all here. We believe that there is going to be some further stringent kind of.
The tightening on.
On the regulations.
I can't cite any specific regulation changes all I know.
<unk> is the cafe standard, particularly is not going to be eased as it was during the previous administration and we might revert back to further tightening of the.
The cafe standards, which means the further tightening the sulfur diesel for rising in the emissions and the.
Which would be of great.
Great opportunity for our isolation business just a note on the of tier three sulfur regulations that are implemented in 2020 towards the end.
That really brings an additional requirements for up to an increased to a level, where it probably tripled the amount of alkylate debt if needed to do that and Thats in practice right. Now so we see that continue and maybe and maybe growing for and.
Of course, we're going to probably see some more of more than executive orders, probably we're going to see more more rules and regulations put in place in and tighter application on the further it's going to be further and further sulfur reduction.
Every time, you remove sulfur you destroy octane and youre going to have to rebuild it.
Which will probably be a positive factor.
On a global basis of course, Youll recall of people stopped talking about IMO 2020, which is the <unk>.
Losses by which also diesel thriving.
Green fuel.
That was starting to be implemented around around.
Around China, particularly with the highest volume of application that is recovering and moving forward. We will also have the emission control rules of the Europe fix in the China six and all of those regulations are going to be pushed forward continue to be pushed forward post pandemic to recreate that momentum off of.
The regulation. So if you look at it as the whole I think we're going to see a nice ramp up of tighter regulation that is the only answer that is there today to create that transition movement into a cleaner air and cleaner fuel, it's just sort of keep tightening and for us as the business if I connect the two the more of that title.
As the more activity for us and the more business for us and I think there was still of lot of room. Its not only the next couple of years, where are we going to see cleaner fuels and cleaner air and clean the water and all of those.
The demands and requirements, that's kind of be good tailwind for our for our business.
Okay.
Okay, great. Thank you for that.
Youre welcome.
We have no further questions in queue. At this time. This does conclude the PQ group Holdings first quarter 2021 earnings call and webcast. Thank you for your participation and you may disconnect at any time.
Okay.