Q3 2021 Ecovyst Inc Earnings Call
Talking of participants for today's program. Thank you Barbara.
I'll begin in approximately one minute.
[music].
Yeah.
Good morning, My name is Britney and I will be your conference operator today.
To the E Covid third quarter 2021 earnings call and webcast. Please note today's call is being recorded and should run approximately one hour.
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<unk>.
Go ahead.
Thank you.
Welcome everyone and thank you for joining us for our third quarter 2021 earnings call.
Start today with formal remarks by Goffman.
Terry I'm, Chairman, President and Chief Executive Officer, and Mike <unk>, Vice President and Chief Financial Officer, then we will follow with a Q&A session.
Please note that some of the information shared today is forward looking information about the company's results and plans are anticipated.
Including the impact of Covid, 19, and our 2020 over and financial outlook.
This information is subject to risks and uncertainties that could cause the actual results.
And the implementation of the company's plans to vary materially.
Any forward looking information shared today speaks only as of this date.
These risks are discussed in the company's filings with the SEC include.
Including in the company's annual report on the Form 10-K for the year ended December 31.
2020.
Reconciliations of non-GAAP financial measures mentioned on today's call.
Is there a corresponding GAAP measure can be found in our earnings release.
Presentation materials.
Posted on the investors section of our website at Www Dot Dot com.
And with that I'm pleased to turn the call to Buckeye.
Thanks, Noah and good morning, everyone.
Today, we're very excited to review each of its first standalone quarter, representing the beginning of a new chapter.
As a reminder.
Third quarter, we advanced our portfolio transformation with the closing of the sale of performance chemicals, and the rebranding of eco based pure play catalyst and services company.
Can you give us business portfolio and our new leadership team demonstrated.
Resilience.
Significant strategic transition.
Market complexity challenges and severe weather disruptions in the U S.
We achieved volume growth and expanded margins optimizing on the demand recovery in advancing our operational efficiency.
Let's now turn to slide three for highlights of our third quarter performance.
Our safety performance continues to be a positive story.
We have remained vigilant throughout the pandemic and during all of our transformation activities year to date, we continue to deliver historic record resolve reinforcing our leadership position among top tier safety performance in the industry.
For operations.
This was certainly a challenging quarter with another severe weather events and continued supply chain constraints, yet again the team responded to disruptions with successful outcomes.
On the commercial front, we continued to benefit from our multiyear contracting successes.
This is both in terms of existing and new customers with increased momentum from growing end markets for semiconductor renewable fuels and emission control products <unk> solutions. These contracts were executed with growing volumes and favorable pricing.
Our strategy as you know.
This rebranding to a pure play sustainability focus gatos and services business with a clear growing and greening ambition we.
We are excited to report on some recent progress in our sustainability journey as we focus on driving solutions and growth for our customers and their transition while also improving our own footprint.
First we joined the European circular plastic alliance.
Through this alliance activity.
Looking to be the partner in the packaging segment as our <unk> based technologies can be an enabler with leading global players in the chemical recycling value chain.
Second.
As we discussed on prior calls we are targeting more than 80% of our innovation pipeline to be sustainability focused.
I am extremely excited to report that we have already reached 85% without recent product development streamlining and restructuring efforts.
Finally, while we still have more work ahead, we are advancing our own ESG initiatives developing our integrated pathways to achieve our targets for 2025 and 2030.
Now onto the financial results.
On our second quarter call, we shared our expectations for a strong second half recovery.
Our financial performance. This quarter is a testament to the end user trends coming in as expected.
Machilid execution by the team.
On both year over year and sequential basis, we delivered sales growth of 28% and 11%, respectively with higher adjusted EBITDA growth of 45% and 32% respectively.
Margins grew to nearly 35%.
420 basis points year over year, and 540 basis points sequentially.
We're proud of this achievement and expect continued momentum into the fourth quarter and 2022.
Before we shift to a discussion on our two core businesses and their end use growth trends, let me offer the following comments on macroeconomic trends.
We track as depicted on slide four.
We expect demand in nearly all our end use markets to return to pre pandemic levels in 2022.
This is the result of an economic recovery and continued favorable secular trends.
Consumer activity continues to recover due to increased vaccination and mobility and.
And U S. GDP is estimated to grow by nearly 6% and approximately 5% in 2021 and 2022, respectively.
Year to date vehicle miles traveled rose by approximately 12% and we expect them to trend higher as we move into 2022.
As a result, 2021 U S refinery utilization is forecast to improve to 85%, including the historic storm disruption this year.
With gasoline inventories at the bottom end of their five year range 2022 utilization rates are expected to move higher.
And exceed the pre pandemic levels to more than 90%.
Another key metric underlying our portfolio of products in the U S industrial production index.
This is showing four 5% growth in September 2021 relative to September 2020.
Although supply chain issues continued to be a constraint economic activity is projected to demonstrate further improvements throughout 2022.
Now, let's move to some specifics for each of our businesses.
Beginning on slide five with.
With equal services key business drivers.
This business is benefiting from greening and used demands for sulfuric acid.
This is a result of increasing needs for cleaner and more efficient fuels and sustainable industrial applications, specifically with electrification infrastructure.
Starting with clean fuels.
As we have mentioned on prior calls.
Populate or as nicknamed liquid gold is considered one of the highest margin products within the refinery complex power.
Calculate demand is expected to grow at approximately 4%.
First part of the growth story is a function of economic recovery with vehicle miles traveled projected to exceed 2019 levels in 2022.
The second part of the story is increased capacity to meet cafe fuel efficiency requirements.
Lowering sulfur emissions for 2020 tier three standards.
Industrial applications are well diversified and in total represent the second largest end use applications for our special grade high purity Virgin sulfuric acid.
We are seeing the benefit of sustained demand growth and improved pricing through at least 2022.
Also as seen in the past few quarters mining for electrification infrastructure is expected to be the fastest growing component of industrial applications for the foreseeable future.
Waste treatment and catalyst activation, a rapidly growing niche product areas for the business portfolio with improving manufacturing fundamentals.
The needs for the sustainable treatment of industrial waste is growing particularly for incumbent players with the appropriate permits and handling capabilities.
Finally, as renewable diesel capacity is expected to grow more than 25% CAGR over the 2000 22025 period catalyst activation services will remain in high demand.
Moving to slide six.
Eco services is differentiated and should outperform the end market growth with resilient adjusted EBITDA margins that range in the high Thirty's primarily for the following reason.
First we successfully gained a significant new long term contracts that will ramp beginning in December 2021.
This will drive growth in annual regeneration services volumes by mid to high single digit range.
We co produced specialty grade high purity sulfuric acid.
And have further debottleneck the network.
We have been able to produce reliable services to meet the surging demand from mining customers in the southwestern U S.
This has been driven by the shift to more widespread use of key minerals, particularly copper in low carbon technologies and electricity grid.
Finally, the tightening regulations in accelerating needs by traditional and renewable fuel producers are increasing demand for offsite catalyst activation services.
Our unparalleled North American network in the Gulf Coast, and California regions is the key element of our strong competitive position.
Services has built in production redundancy and diverse modes of transport, we manage the critical end to end supply chain and inventories for the largest alkylate producers and secure long term take or pay contract with cost pass throughs.
Next for catalyst technologies business trends on slide number seven.
As with equal services underlying growth trends for the segment are set to accelerate into 2022 with demand recovering to pre pandemic levels.
Combined with continued favorable second will drivers. This business is set to outgrow its end markets.
Starting with our largest end use area.
Clean fuels and air which encompasses emissions control catalysts for transportation fuels.
Hydrocracking activity is recovering with increased vehicle miles driven and higher refinery utilization rates.
With the anticipation of continued recovery in 2022 global capacity is projected to rise by about 5% CAGR over the period of 2022 2025, while still at an early stage applications for renewable fuel.
Exciting and significant growth area for our business.
Supported by Federal and state incentives renewable diesel is growing 20% to 30% from a combination of converting refinery capacity and new capacity additions.
Catalyst are critical for the majority of the production that is either coming online or being converted.
Due to the heavy processing rate of biomass.
Facilities typically require two to three times more catalyst change outs than traditional fuels.
Heavy duty diesel or HDD.
Mobile production has been the slowest and market to recover due to supply constraints with the expectation of this abates by the second half of 2022 HDD production is expected to increase by at least mid single digit for the largest markets. We serve in North America and Europe.
Within engineered polymers consumption of packaging and films remains robust and underpins global demand expectations for polyethylene growth of at least 4% CAGR over the period of 2020 to 2025.
As a reminder, our proprietary and customized silica based technologies are typically specified in production facilities for multiple years.
Are outgrowing this market by nearly two times.
Lastly on niche custom catalysts.
As we discussed last quarter. This end use is the smallest and has been slow to recover given timing of project deferrals for our highly specialized and customized products.
We are already seeing increasing specialty catalyst orders and expecting promising trial launches for new technologies in 2022.
Turning to slide eight.
Catalyst technologies business with its leading competitive position has exciting growth prospects for higher adjusted EBITDA margins in the upper 30%.
We expect full recovery of all the significant end use markets with the potential growth inflection by the second half of 2022.
Throughout the pandemic period, we seize the opportunity with customer production deferrals to further strengthen our own manufacturing network strategically and successfully re pivoting the business.
We have projects underway to debottleneck production by 10% to 20% for several products that are in high demand.
Additionally, with the anticipated commercialization of eight new products in the near term this business should outperform its underlying market growth rates.
So to summarize on both businesses.
We expect to see accelerating growth trends through 2022 and beyond as we approach a full market recovery.
This is complemented by additional contract gains for existing products and services, coupled with favorable growth inflections from new markets.
In particular, we are most excited about our continuing rapid growth in renewable diesel with increasing demand on our zeolite technologies and catalyst reactivation services.
Now I will turn the call over to Mike to discuss our third quarter financial results and outlook.
Thank you Bill gasoline and good morning, everyone I'm glad that you joined US today as I'm excited to share our third quarter results and 2021 outlook with you.
As mentioned during our second quarter earnings call in early August we expected to see significant improvements in sales and adjusted EBITDA, both sequentially and compared to prior year during the second half of the year.
This morning, I'm excited to report that we delivered ahead of our performance expectations.
Our third quarter results showed significant improvement over the second quarter.
With sales increasing 11% as we continued to see strong demand for the majority of our product lines.
Volume increases.
Overall pricing and product mix contributed to the 32% adjusted EBITDA growth.
And a 550 basis point improvement in adjusted EBITDA margins.
Moreover, we're particularly encouraged with the recovery in refinery utilization driving our regeneration services demand and continued growth of our catalyst used in polyethylene and renewable fuels.
Comparing to the prior year strong volumes in both businesses favorable product mix driven by the demand for renewable fuels in polyethylene as well as the acquisition of the <unk> 32 catalyst activation business.
<unk> and a 27% increase in sales.
44% increase in adjusted EBITDA as well as a 420 basis point improvement in <unk>.
Adjusted EBITDA margins.
Let me dive a little deeper into the businesses as we turn to our Eco services segment on slide 10.
During the quarter, we experienced challenges due to the hurricane activity in the Gulf Coast and rail delays at certain areas.
However, as compared to the second quarter, we saw an overall, 14% increase in sales from favorable pricing and higher volume of Virgin sulfuric acid.
Adjusted EBITDA grew 28% as Virgin acid volumes and pricing fair favorability contributed $9 million of the increase with.
With the addition of $3 million of lower turnaround expense compared to the second quarter.
Comparing to the prior year sales increased $30 million or 28%.
Driven by the pass through of $15 million of higher sulfur costs.
<unk> economic recovery and our acquisition of <unk> 32.
Adjusted EBITDA increased $8 million or 17%.
Primarily on the higher regeneration services volumes favorable pricing and Virgin sulfuric acid and Ken 32.
While adjusted EBITDA grew margins in this segment were pressured by nearly 700 basis points related to both the pass through of higher sulfur costs.
And higher plant turnaround cost.
On Slide 11, you will find the results of our catalyst technologies segment.
This segment includes the results of our silica catalyst business.
Our <unk> joint venture.
Compared to the second quarter, including our 50% share of the deal its joint venture sale.
Sales and adjusted EBITDA increased 6% and 23% respectively.
Sales in our silica catalyst business increased driven by the timing of chemical catalyst sales, primarily catalyst used in methyl methacrylate.
Sales into Zelus joint venture were in line with prior quarter.
Increased demand for catalyst used in renewable fuels was offset by timing of hydrocracking catalyst orders.
Adjusted EBITDA improved 23% on higher sales volume and favorable product mix, particularly with the growth of catalysts to use and renewable fuels.
Looking at the prior year sales improved 27%.
Adjusted EBITDA more than doubled.
The sales increase in silica catalyst was driven by the continued demand for polyethylene and the timing of chemical catalyst sales.
Within the Zelus joint venture sales of our pressure product catalysts grew on increased demand for catalyst used in renewable fuels and demand recovery for emission control catalyst.
Adjusted EBITDA and margin benefited from higher volumes and mix of higher margin products.
Turning to slide 12 as.
As we continue advancing our business portfolio transformation ecosystem has the financial flexibility and a strong cash flow profile to enable and opportunistic capital allocation strategy.
Since our IPO in 2017.
We have reduced debt by approximately $1 8 billion and lowered our cash interest cost by $130 million.
All while returning $5 per share to our shareholders.
Earlier this year, we entered into a favorable $900 million term loan and $100 million ABL facility.
With no significant financial covenants and no near term maturities until 2028.
With our proven track record of leverage reduction.
And opportunistic acquisitions like <unk> 32.
We expect that our future cash generation.
Bind with their flexible balance sheet.
We will allow for additional opportunistic bolt on acquisitions as well as further debt reduction.
Okay.
Moving to slide 13, and our outlook for the remainder of the year.
We remain very positive on both sales and adjusted EBITDA.
In Eco services, we expect refinery utilization rates continue to remain strong through the end of the year.
While we have seen a significant increase in sulfur prices in the first half of the year and through the third quarter. Our expectation is that sulfur prices will stabilize in the fourth quarter.
Based on the impact of the pass through of higher sulfur costs as well as the strength of our third quarter and our outlook for the fourth quarter, we are raising our GAAP sales guidance by $25 million to between 590 and $600 million.
In addition, we are tightening our full year adjusted EBITDA guidance to between $220 and $225 million given our strong performance to date.
Our improving cash generation has continued through the third quarter and with higher expected cash from operations, we are raising our adjusted free cash flow guidance to between 70 and $80 million.
Finally, we continue to expect our net leverage to be in the mid three times by year end.
In summary, we delivered robust earnings and cash flow this quarter.
We are very happy to come out of the gate in the first quarter as the newly rebranded <unk> with very strong sequential and year over year financial results in both businesses.
Positive momentum as we finished the year strong and look forward to further growth in 2022.
With that I'll turn the call back to bill gasoline.
Thanks, Mike now I'll close on slide 14, with our growing and greening strategy, which reflects our near to mid term objectives.
<unk> with its differentiated portfolio and strong leadership team execution is strategically well positioned to benefit from the near term tailwind of the global economic recovery and the mid to long term sustainability driven secular trends.
And finally I would like to leave you with the following comments on our performance.
This has been a momentous year to date as we completed the portfolio transformation and pivoted to <unk>, a pure play in sustainability focused catalyst and services company.
We have executed and delivered on our key financial commitments and continue to demonstrate the resilience of our portfolio.
We are tracking favorably with the economic recovery and advancing our competitive position with a new market gains.
And we are well on track to deliver on our 2021 financial objectives and expect continuing positive trends through 2022 and beyond.
This concludes our formal remarks.
But before we turn to Q&A I would like to announce that this is now as <unk> last call with <unk>.
She has been here for four years and was an essential contributor to the company's success.
I would like to thank her for her contribution and wish her well in her future endeavors.
We thank you for your time and interest in <unk> and wish you and your families to stay safe and healthy.
We're now ready to take your questions.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone you may remove yourself from the queue at any time by pressing the pound key.
Again that is star one if you would like to ask a question and we will take our first question from John Mcnulty with BMO capital markets. Your line is now open yes. Good morning, Thanks for taking my questions and thanks for all the help over the years.
Maybe just just a couple of quick ones first of all can you quantify what the impact was.
Round, the hurricanes and what that either from a cost perspective may have Nick to you or if there were any customer delays or delayed demand or anything like that that we should be thinking about in terms of in terms of what the impact would have been on <unk>.
Yeah, Hi, John It's Mike I can take that one the impact of Hurricane Idaho was not that significant for us. It was only a few million dollars.
The customer delays.
Impacted us slightly but we were able to recover a lot of that as you can see in our results for the quarter.
They're very favorable dose in our regeneration service business as well as our Virgin Virgin sulfuric acid business.
Got it Okay, and then can you speak to that.
The pricing that youre seeing in the in the asset side of the business and how do you expect that to trend I know sulfur prices you indicated that youre kind of expecting to level off how should we be thinking about about asset pricing as we go forward.
Yes.
The sulfur pricing I think the way we're looking at that is we think it's going to moderate in the fourth quarter. We did see an uptick obviously with the sulfur costs that we saw earlier this year.
It went into a little bit in the third quarter, but we do see it moderating in the fourth quarter on.
On the Virgin sulfuric acid more specifically to pricing with our customers that are independent of the sulfur pass through we are seeing some favorability there and we're able to capture some of those higher prices that we saw in the third quarter here. So we'll see what that looks like coming into the fourth quarter, but we do.
See that flattening out in the fourth quarter got it and then maybe just one one last question just on the HBC catalysts side I know there there was some demand that had been pushed off and it looks like you kind of got pushed to 2022 and 2023 I guess at this point just given that schedule start to get built and I guess, what kind of granularity do you have.
How should we be thinking about how the HBC catalysts business growth should look as we're looking to 2022.
Hi, John Yes, we started with the visibility on the seven to eight months lead time on orders, we started seeing the order book filling.
It depends on what happens in Q4, we are going to have one of the strongest quarters.
In Q4, and hydrocracking activity depends on how much we could capture.
In the fourth quarter.
That's going to impact 2022, as well, but if you could think of it as a ramp up slow ramp up may be peaking at the second half of next year, but we're very confident that this activity is returning with the rest of the indicators starting on we had a decent quarter. This quarter, we can have a nice strong quarter in Q.
For now we should see the same trend continuing.
Towards towards the end of 'twenty, two I have said before that 'twenty two 'twenty three peak hydrocracking.
Year, it's questionable depending on how fast the recovery years I can't still tell you is at 22, the peak or 'twenty three but it's most likely heading towards the end of 'twenty. Two early 'twenty three where it was going to say probably the peak activity that is comparable to the high peaks, we had $19 50 before.
Got it thanks very much for the color on <unk>.
Great job on a really tough environment.
Thanks, John.
And once again that is star one if you would like to ask a question and we will take our next question from Andrew Castello with Morgan Stanley. Your line is now open.
Alright, Thanks for taking my question now that it's been a pleasure working with you and wishing you all the best.
So just would hope.
I was hoping to get a little bit more color on the fourth quarter and as we think you add a little bit of color there in terms of the <unk>.
Catalyst segment, but as we think about refining our sorry, the eco services now segment.
How should we think about kind of the seasonality that you typically see in the fourth quarter here and what kind of expectations are baked into the fourth quarter. Okay.
Yes.
The typical typical year seasonality in Q4 forces activity to go slightly down weather related and other other reasons. This year as we're really ramping up activity in Q3, we're going to see some of that going on but we're also going to see the impact of the normal seasonality of the fourth quarter add on that some of the.
The turnarounds that are going to probably be accelerated and taken on in.
In the fourth quarter, there is going to impact it. So we will see a typical.
A drop in activity.
Refining services that is probably.
Not as strong as it used to be because of the momentum that we have right now.
No surprises on fourth quarter trends.
That's very helpful and I appreciate the comments earlier on HBC kind of order book could you just talk a little bit more specifically to kind of the polyethylene out of polymer.
And then just I guess on the silica side, what Youre seeing in terms of order books.
We see the same strengths going on.
We're having a.
Good visibility on the.
Polyethylene on the silica side and our commentary about the strength of the business is terrific.
Demand is consistently there and it's continuing through 2022.
That's very helpful. Thank you.
Sure.
And we will take our final question from David Silver with CL King Your line is now open.
Okay Hi.
Can you hear me I'm sorry.
Yes, yes, we can hear you David.
Yes.
All right.
So a couple of question well actually first off I also want to.
Extend my thoughts for now.
Consider her superior investment contact route.
Number number of years.
I did want to ask maybe starting out with eco services you highlighted the acquisition of a new long term <unk>.
Large customer contract and.
And I was wondering if you could just drill down on that a little bit was this the case.
We're a refiner decided to outsource after handling.
The sulfur responsibilities themselves or did you displace the competitor.
If you could what in your opinion, where kind of the key element in your value proposition and then maybe what are the prospects for other cut.
Customer acquisition, let's say over a two to three year period. Thank you.
David This is a company that we've talked about this contract a.
A quarter or two ago, when we wanted to work.
Going to kick in in December.
We do business for the customer who already but this is a different level of activity. We won this contract on several fronts.
The first first of all this contract was an existing contract with different players. The volume has changed the expansion of the quality of the customer.
A forced them to go and get a bigger.
Bigger contract for.
<unk> main service provider, we did this place I would say competitor and we are expecting that volume that.
The allocated volume for our business to be probably even bigger than what we anticipated and the reason we wanted to work is again the same fundamental reasons why our eco services a strong one as the network of logistics.
Be in the area and being able to have redundancy, we were able to debottleneck like 35% capacity over the last three four years, which allows us to react.
An emergency time and create security supply for the customer.
The second element is the reliability and the consistency of products and performance and services.
And the third is our flexibility in allowing the customer to expand then flex up or down depending on what their activity is which I think is going to be flexing up. So it's more of this as a service business. So it's more service superiority that we provide this customer that they couldnt.
They could not jump on it so we're very proud and very happy and thankful.
For the customer haven't seen down and absorb that over the years and we think this is just an indicator that should there be more opportunities in the region with the model we have the business model we should have.
<unk>.
The opportunity to grab more share and to continue to grow as long as we continue to provide flexibility of supply, which we're working hard on.
Okay great.
I'd like to maybe just shift over I noticed in the text of the release you once again called out.
On the tax related chemical catalyst sales as a source of strength.
In my own unscientific.
Memory or.
It seems like every other quarter that that particular business is being called out in a positive direction.
And I was just wondering if.
You could maybe highlight what's going on there.
Where.
Demand is exceptionally strong or whether theres been a customer share gain.
Or what might be the drivers that once again led to you calling out that business and then maybe what are the what are the prospects for continued strength in that area maybe over the next year or two thank you.
So methyl methacrylate business started with.
A collaboration with with a key customer on a process called the alpha process that our technology qualified for and we have been growing with our customers the volumes for the customer kept growing from Asia to middle East there.
Strong plans to grow in North America in 2020 for 2025 based on their expansion plans and we know we're going to grow with them. We have also been working with them on new generation products for <unk>.
Product and then we think we're still going to continue to be favorable supplier on.
On the other side parallel to that the alpha process itself and the way. The process works is going to probably be the most favorable methodology of producing those products in the new construction.
For other customers in the future. So we think we are on the sweet spot of the best technology from an environmental sustainability perspective safety and efficiency and then the ability to have worked with our key customer for the last four or five years.
Preparing and delivering new technology is positioned in the market.
Purposely bring it up every time to remind that this is a growth vector that is probably going to show much more value as we go forward.
As a great business and we've made the investments.
On it already so we have to do is now fill up the orders and go chase new customers and make sure that this approach or alpha process approach or equivalent is going to be the predominant.
Business.
Mark business model or technology process going forward, it's a very important one it hasnt shown I don't think we've seen anything on it yet in terms of growth potential.
Alright. Thank you very much and then maybe one last question and this would be.
Directly I guess for you bill gas, but.
Since you've assumed the CEO role I mean, you've been moving.
Without or you've been moving very quickly I remember right away you started delayering management.
Now <unk> streamlined.
The company structure.
As you see as you sit here today with the structure that you have I mean, what in.
Incremental changes or what incremental goal.
You have or maybe I don't know being more customer responsive.
Simplifying or beating up business processes goals, you've targeted for awhile.
How far are you a little bit I don't know zero to 100, where do you think you are in kind of establishing the organization structure that you.
We'd hope to get to ultimately.
Yes, it's a great question, David and I. Thank you for that first of all the first phase, which is the de layering the restructuring the sales and everything is really the beginning of the strategy, which means okay, which path we're going to go or we go and rate are we going to left or were going to be more commoditized are we going to depend on day to day logistics or are we going to be an innovation and technology.
The company operating in an environment, where all the all the all the end use drivers are favorable we pick the second and Thats, where we are where we are today that also requires that we have a clear vision and strategy for the next four five years to make sure we test this principle where.
We are in the high growth high margin high cash flow company, we're doing that right now there's a lot going on in the background on how the company should look like and I guarantee you. We're definitely a different company were smaller company, we're going to be more agile.
Our corporate presence is going to shrink and the businesses are going to be definitely driving their destiny more and more we are going to see a.
Growth will maintain margins, which is really the trick and how do you grow at high growth yet.
All of these challenges and keep our margins growing too.
A number we throw in there is mid to high Thirty's.
In the coming three or four years, which is top quartile performance that requires new leadership that requires very crisp and clear strategy and that requires a very agile organization. So leadership is in place the strategy high level is in place. What we're working on now is specific business strategies that are going to execute.
That growth or maybe beat it and.
And simplification.
Simplification efficiency in manufacturing, we are a manufacturing company. After all and then a much stronger participation of our innovation process into a growth renewable technology plastics circularity.
<unk> in producing emission emission products that are fit for purpose for the new regulations and all of that so.
I can't give you a number but scale of one to 10 in terms of where we are but I would say for the ease of Sims for simplicity.
<unk> from a structural perspective, we're at probably eight from a strategy perspective, we're probably at five or six in terms of in terms of making sure that we have all the all the.
<unk> crossed and I's dotted and then empowering my leaders the team to start delivering execution. This quarter as an example, and we're going to see what Q4.
It is about and when we talk about 2022 early next year, you're probably going to understand.
We believe in this new structure in this new company going forward.
Very clear thank you very much.
Thank you.
Yes.
We have no further questions in the queue. At this time. This does conclude the equal fifth third quarter 2021 earnings call and webcast. Thank you for your participation and you may disconnect at any time.
Okay.
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Yeah.
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Oh.
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Yeah.