Q1 2022 Cabot Corp Earnings Call
Speaker 1: Good day and welcome to the fourth quarter of two thousand...
Good day and welcome to the fourth quarter.
Speaker 1: I'm sorry. Good day and welcome to the first quarter 2022 Cabot Earnings conference call.
I'm sorry, good day and welcome to the first quarter. So I was just wanting to Cabot earnings conference call.
Speaker 1: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your touch-tone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Steve Delahun, Vice President Investor Relations. You may begin.
At this time all participants are in listen only mode. After the speaker's presentation there'll be a question answer session.
Ask a question during this session you will need to press Star then one on you touched on the telephone.
And even once you require assistance during the conference. Please press Star then two more suites and operator.
As a reminder, this call is being recorded.
I would now like to turn the call over to Steve Delahunt, Vice President Investor Relations you may begin.
Speaker 2: Thanks, Michelle, and good morning. I would like to welcome you to the Cabot Corporation earnings telecom.
Thanks, Michelle and good morning, I would like to welcome you to the Cabot Corporation earnings teleconference.
Speaker 2: me today are Sean Coohing, CEO and President and Eric M. Gloff, senior vice president.
With me today are Sean Keohane, CEO , and President and Erica Mclaughlin Senior Vice President and CFO .
Speaker 2: Last night we released results for our first quarter of fiscal year 2022, copies of which are posted in the investor relations section of our website.
Last night, we released results for our first quarter of fiscal year 2022 copies of which are posted in the Investor Relations section of our website.
Speaker 2: So, I think that the company's this call is also available when we invest the relations portion of our website and we'll be available in conjunction with the replay of the call.
A slide deck that accompany this call are also available on the Investor relations portion of our website and will be available in conjunction with the replay of the call.
During this conference call, we will make forward looking statements about our expected future operational and financial performance.
Speaker 2: During this conference call, we will make forward-looking statements about our expected future operational and financial performance.
Speaker 2: for looking staying in subject to risks and uncertainties that could cause actual results to different materially from...
Each forward looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.
Speaker 2: additional information regarding these factors appears in the press release we should last night, in the NAR 10K for the fiscal year ended September 30, 2021. And in subsequent filings we make with the FDC, all of which are...
Additional information regarding these factors appears in the press release, we issued last night and.
In our 10-K for the fiscal year ended September 32021, and in subsequent filings, we make with the SEC all of which are available on the company's website.
Speaker 2: In order to provide greater transparency regarding our operating performance, we refer to certain non-GAF financial measures that involve adjustment to gap results. Any noise?
In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures.
Adjustments to GAAP results.
Any non-GAAP financial measure referenced on this call.
Speaker 2: is reckoning the most directly comparable GAAP financial measure in a table at the end of our earnings really
This reconciled to the most directly comparable GAAP financial measure in a table at the end of our earnings release issued last night and available in the investors section of our website.
Speaker 2: I will now turn the call over to Sean who will discuss the first quarter highlights. Provide an update on our strategy and then discuss our progress in the areas of battery.
I will now turn the call over to Sean who will discuss our first quarter highlights provide an update on our strategy and then discuss our progress in the areas of battery materials and ESG.
Erica will review the company and business segment results, along with some corporate financial detail.
Following this Sean will provide closing comments and open the floor to questions.
Sean.
Thank you, Steve Good morning, ladies and gentlemen, and welcome to our call today.
I am very pleased with the results in the first quarter as we delivered adjusted earnings per share of $1 29, which is up 9% compared to the same quarter last year.
Speaker 3: performance across our businesses was strong and I'm very proud of our execution discipline across all facets of the company.
Performance across our businesses was strong and I'm very proud of our execution discipline across all facets of the company.
Speaker 3: Additionally, our discretionary free cash flow during the quarter was robust and this supported the repurchase of shares and an increase to the dividend of 6%.
Additionally, our discretionary free cash flow during the quarter was robust and this supported the repurchase of shares and an increase to the dividend of 6%.
Speaker 3: Our team executed exceptionally well in the quarter. And this made the difference in successfully navigating a dynamic macro-environment.
Our team executed exceptionally well in the quarter and this made the difference in successfully navigating a dynamic macro environment.
Speaker 3: My quarter was marked by strong progress against our key strategic objectives. And I would like to highlight if you know where the accomplice is.
The quarter was marked by strong progress against our key strategic objectives, and I would like to highlight a few noteworthy accomplishments.
Speaker 3: recently concluded our calendar year 2022 reinforcement materials customer.
We recently concluded our calendar year 2022 reinforcement materials customer agreements and are very pleased with the outcomes, having achieved substantial price increases in all regions.
Speaker 3: and are very pleased with the outcomes, having achieved substantial price increases in all.
Speaker 3: As we share during investor day, the market environment remains supportive and cabbage value proposition of supplier liability, quality, and global reach continues to resonate with customers.
As we shared during Investor day, the market environment remained supportive and cabinets value proposition of supply reliability quality and global reach continues to resonate with customers. This is especially true in this period, where supply chains are stressed and customers are increasingly looking to derisk their operation.
Speaker 3: especially true in this period where supply chains are stressed and customers are increasingly looking to de-risk their operations through regionalization of the supply.
Through regionalization of the supply base.
Speaker 3: well-do our strengths as a company as we can support our global customers with local supply.
Plays very well to our strengths as a company as we can support our global customers with local supply in all regions.
Speaker 3: During the quarter, we also continue to build momentum and battery materials, and we advance the number of ESP priorities.
During the quarter. We also continued to build momentum in battery materials, and we advanced a number of ESG priorities.
Speaker 3: I will elaborate on both of these fronts, but before I do, I think it's important to connect our priorities to our strategy.
I will elaborate on both of these fronts, but before I do I think it's important to connect our priorities to our strategy.
Speaker 3: During our recent investor day, we launched our new creating for tomorrow's To our beloved U.N.
During our recent Investor day, we launched our new creating for tomorrow strategy.
Speaker 3: This strategy is inspired by our purpose to create materials that improve daily life and enable a more sustainable...
This strategy is inspired by our purpose to create materials that improve daily life and enable a more sustainable future.
As we execute our strategy, we will leverage our strengths to lead in performance and sustainability today and into the future and.
Speaker 3: As we execute our strategy, we will leverage our strengths to lead in performance and sustainability today and into the future.
Speaker 3: and we will deliver on this strategy by advancing three key pillars.
And we will deliver on this strategy by advancing three key pillars driving advantage growth.
Speaker 3: delivering innovative chemistry to enable a better future and relentlessly pursuing continuous improvement in everything that we do.
Delivering innovative chemistry to enable a better future and relentlessly pursuing continuous improvement in everything that we do.
By pursuing our creating for tomorrow strategy, we will grow transform and reshape the valuation potential of the company.
Speaker 3: By pursuing our creating for tomorrow's strategy, we will grow, transform, and reshape the valuation potential of the company.
Our strategic outlook is underpinned by an expectation of a supportive market environment and the clear connection of our products and compelling macro trends.
Speaker 3: Our strategic outlook is underpinned by an expectation of a supportive market environment and the clear connection of our products to compelling macro trends.
Speaker 3: As a result, our target targets call for strong growth of adjusted earnings per share and robust discretionary free cash flow to fund growth and return capital to share.
As a result, our target targets call for strong growth of adjusted earnings per share and robust discretionary free cash flow to fund growth and return capital to shareholders.
Speaker 3: Of our many compelling growth options, we are particularly excited about the momentum we are building in battery materials.
Of our many compelling growth options, we are particularly excited about the momentum we're building in battery materials and so I'd like to transition now to give you an update on our progress in this critical growth vector.
Speaker 3: And so I'd like to transition now to give you an update on our progress in this critical growth back.
Speaker 3: One of our key growth vectors along with INJET and E2C, battery materials is a key part of our creating for tomorrow's strategy. And it's expected to be a major driver of our growth and reshaping the valuation of the company.
As one of our key growth vectors, along with inkjet and E. Two C battery materials is a key part of our creating for tomorrow strategy and is expected to be a major driver of our growth and reshaping the valuation of the company.
Speaker 3: The market size for conductive carbon additives and lithium ion batteries is expected to be approximately 2 billion dollars by 2025.
The market size for conductive carbon additives in lithium ion batteries is expected to be approximately $2 billion by 2025.
Speaker 3: 30% pause growth expected through 23rd
With 30% plus growth expected through 2030.
Speaker 3: Cabot is very well positioned given the breadth of our conductive carbon additive portfolio, our global footprint of assets, and our strong local commercial and technical support.
Cabot is very well positioned given the breadth of our conductive carbon additives portfolio, our global footprint of assets and our strong local commercial and technical support.
Speaker 3: The Cabot Value Proposition is resonating strongly with leading customers as evidenced by our success and selling the six of the top eight battery producers, which represent a proxy
The cabinet value proposition is resonating strongly with leading customers as evidenced by our success in selling to six of the top eight battery producers, which represent approximately 90% of the market.
During the first quarter volumes increased 58% year over year, and we were recently qualified and a new EV platform with a top five battery manufacturer with sales expected to start in fiscal Q3.
Speaker 3: During the first quarter, volumes increased 58% year-over-year, and we were recently qualified in a new EV platform with a top 5 battery manufacturer with sales expected to start.
Speaker 3: Given the strong demand outlook, we advanced important capacity projects in the quarter, including the announced acquisition of a plant in Shenzhen, China.
Given the strong demand outlook, we advanced important capacity projects in the quarter, including the announced acquisition of a plant in Tianjin China.
Speaker 3: We expect to close this deal in the second quarter of this year when we will start our upgrade and conversion of equipment to produce battery.
We expect to close this deal in the second quarter of this year, when we will start our upgrade and conversion of equipment to produce battery material products.
Speaker 3: Also, we are on schedule to start up our new specialty carbons plant in Shuzhou, China, which is expected to free up additional battery material capacity in other parts of our network.
Also we are on schedule to start up our new specialty carbons plant in Xuzhou, China, which is expected to free up additional battery material capacity in other parts of our network.
Speaker 3: Given this strong momentum, we expect our fiscal year 2022 full year EBITDA to be in the range of $25 million to $35 million.
Given this strong momentum we expect our fiscal year 2022 full year EBITDA to be in the range of $25 million to $35 million.
Speaker 3: The lithium ion battery application holds great promise for Cabot, and we are both capable and determined to realize its full potential.
So lithium ion battery application holds great promise for Cabot and we are both capable and determined to realize its full potential.
Sustainability is integrated into everything we do with Cabot and we advanced a number of important ESG priorities in the quarter.
Speaker 3: Sustainability is integrated into everything we do at Cabin. We advance a number of important ESG priorities in the quarter.
Speaker 3: We are committed to reducing our environmental impact while supporting our customers with innovative materials to help them achieve their sustainability goals.
We are committed to reducing our environmental impact while supporting our customers with innovative materials to help them achieve their sustainability goals.
Speaker 3: We recently announced that we are joining other leading companies to align our sustainability agenda with the Paris Climate Agreement to achieve net zero carbon dioxide emissions by 2050.
We recently announced that we are joining other leading companies to align our sustainability agenda with the Paris climate agreement to achieve net zero carbon dioxide emissions by 2050.
Speaker 3: For many years we have focused on reducing our environmental impact, and our net zero ambition is a natural progression in our sustainability journey.
For many years, we have focused on reducing our environmental impact and our net zero ambition is a natural progression in our sustainability journey.
Speaker 3: Aligned with this ambition, we recently completed an assessment according to the Task Force on Climate-Related Financial Disclosure, or TCFD, and published our Risk and Opportunity Matrix.
Aligned with this ambition, we recently completed an assessment. According to the task force on climate related financial disclosure or TCE, FD and published our risk and opportunity matrix.
Matrix is posted on our website.
Speaker 3: Our continued leadership in ESG was also further recognized with two notable achievements.
Our continued leadership in ESG was also further recognized with two notable achievements.
Speaker 3: First, we were recognized by Newsweek as one of America's most responsible companies.
First we were recognized by Newsweek as one of America's most responsible companies.
Speaker 3: third consecutive year that we have been included on Newsweek's list, and we are very proud of this recognition.
The third consecutive year, we have been included on Newsweek's list and we are very proud of this recognition.
Speaker 3: Second, we were named by Investors Business Daily as one of their 100 best ESG companies in 2021.
Second we were named by Investor's business Daily as one of their 100 best ESG companies in 2021.
Speaker 3: Bringing the power of innovative chemistry to solve our customer's sustainability challenges and reduce our impact is what motivates us, and it's essential.
Bringing the power of innovative chemistry to solve our customers' sustainability challenges and reduce our impact is what motivates us.
Central to our purpose.
Speaker 3: I look forward to updating you on further developments as we progress on our journey.
Look forward to updating you on further developments as we progress in our journey.
Speaker 4: I will now turn the call over to Erica to discuss the financial results of the quarter in more detail. Erica? Thanks, Sean. I will start with discussing results for the company and then review the same results. We reported another strong quarter with a just...
I'll now turn the call over to Erica to discuss the financial results of the quarter in more detail Erica Thanks, Sean.
Start with discussing results for the company.
We reported another strong quarter with adjusted EPS.
Quarter of $1 29 up 9% compared to the first quarter fiscal 2021.
16% sequentially.
Better than expected results.
Materials.
On the chemical segment.
Speaker 4: Extraordinary free cash flow in the quarter was $72 million driven by strong EBITDA, and we ended the quarter with $179 million of cash. Cap-ex in the quarter was $30 million, and we expect full-year cap-ex to be in the range of $250 to $275 million. This is an increase from our range last quarter, largely due to higher growth investments expected for battery materials in relation to the acquisition and conversion of the new plant in Tamjin China.
Discretionary free cash flow in the quarter.
Okay.
EBITDA.
Ended the quarter with 100.
$79 million of cash.
Capex in the quarter was $30 million and we expect.
Full year capex to be in the range of 250.
$75 million.
This is an increase from a range last quarter, largely due to higher growth investment executive for battery materials.
The acquisition and conversion of the new plant.
Okay.
Yes.
The balance sheet remains strong with total liquidity of $1 2 billion and net debt to EBITDA of one eight times.
Yes.
Our operating tax rate was 27% for the quarter and we anticipate the fiscal year rate will be between 27 and 28%.
Now moving to reinforcement materials.
First quarter EBIT for reinforcement materials decreased by $3 million.
For the same period in the prior year.
<unk> was principally due to higher costs associated with utilities.
Alright by higher volumes and margin.
Globally volumes are up 4% in the first quarter as compared to the same period prior year.
2% growth in Asia flat volumes in the Americas, and a temporary thing.
The decrease in Europe .
Our volumes in Asia were given by strong demand for replacement and off the road tires.
Higher margins were driven by the benefit of higher energy prices on our energy Center.
Looking to the second quarter of fiscal 2022.
The reinforcement materials EBIT.
The outcome of our calendar year 2022 customers.
We expect volumes will remain solid with sequential improvement expected in Europe , and the Americas and the normal seasonal pattern in China related.
Speaker 4: and the Americas, and the normal seasonal pattern in China related to the Lunar New Year.
Now turning to performance chemicals, EBIT decreased by $2 million.
First fiscal quarter.
In period 2010.
Your line primarily volume.
Year over year volumes in the first fiscal quarter decreased by 3% in performance additives.
Planned downtime of our fence line partners and our fume metal oxides product line.
20% in formulated.
Yes.
The continued planned outage at our Belgium facility.
Right.
Speaker 4: While overall segment volume declined, we delivered impressive volume growth of 58%, as Sean noted, in product sold to battery materials applications, as we continue to see growth driven by higher...
While overall segment volume decline, we delivered impressive volume growth of 58% as Sean noted in products sold to battery materials applications as we continue to see growth driven by higher demand.
Partially offsetting impact we delivered higher unit margins and favorable product mix in both our specialty carbons.
Metal oxides product line.
On pricing.
Thanks Scott.
Looking ahead to the second quarter of fiscal 2022, we expect a step up in sequential volumes as our specialty compounds.
Oxide plant come back online.
As we achieved continued momentum in our battery materials and inkjet growth sectors. We.
We expect to continue to successfully implement price increases to offset rising input and operating cost across the segment.
Moving to the next slide as we talked about at Investor Day in December .
Speaker 4: Moving to the next slide, as we talked about it investor day in December , we are making capital allocation decisions that align with and support our Creating for Tomorrow strategy.
Capital allocation decisions aligned with and support our creators for tomorrow strategy.
Capital investments and the acquisition announced this quarter are to support our growth agenda.
These growth investments. We are also focused on providing an attractive return of cash to shareholders.
During the quarter, we increased our dividend, 6% and returned $40 million this year.
Shareholder dividends and share repurchases.
We were able to make these growth investments and return cash to shareholders, while maintaining a healthy balance sheet with $1 2 billion in liquidity.
Debt to EBITDA of one eight times, we were able to do it all while retaining an investment grade credit rating.
I will not turn the call back over to John .
Speaker 3: Thank you, Erica. I'll close out my prepared comments today by talking about our outlook for the remainder of the
Thank you Erica.
Goes out my prepared comments today by talking about our outlook for the remainder of the year.
Speaker 3: We are very pleased with the momentum coming out of the first quarter, and we feel very good about how the rest of the year is shaping up.
We're very pleased with the momentum coming out of the first quarter and we feel very good about how the rest of the year is shaping up.
Speaker 3: Based on our first quarter results and the outlook across our business.
Based on our first quarter results and the outlook across our businesses. We are raising our guidance for adjusted earnings per share to be in the range of $5 50 to $5 90 for the fiscal year.
Speaker 3: We are raising our guidance for adjusted earnings per share to be in the range of $5.50 to $5.90.
Speaker 3: We expect demand to remain strong due to the resilience of the replacement tire market and our diversified application portfolio in performance chemicals.
We expect demand to remain strong due to the resilience of the replacement tire market and our diversified application portfolio and performance chemicals.
Speaker 3: As I mentioned earlier, we are very pleased with the outcome of our calendar year 2022 reinforcement.
As I mentioned earlier, we are very pleased with the outcome of our calendar year 2022 reinforcement materials customer agreements and expect to see a corresponding step up in earnings starting in the second quarter.
Speaker 3: and expect to see a corresponding step up in earnings starting in the second.
Speaker 3: We're also seeing strength across our performance chemical segment with strong volumes, robust margins in product mix.
Also seeing strength across our performance chemicals segment with strong volumes robust margins and product mix and disciplined pricing execution.
Speaker 3: The second quarter results are expected to improve on a sequential and year-over-year basis, with adjusted EPS increasing.
The second quarter results are expected to improve on a sequential and year over year basis with adjusted EPS, increasing as we move through the year.
Speaker 3: This profile is expected as we continue to build momentum in battery materials and as demand increases in inkjet for packaging applications.
This profile is expected as we continue to build momentum in battery materials and as demand increases in inkjet for packaging applications. Additionally.
Speaker 3: Additionally, our new specialty carbon's plans is expected to come online in the second half of fiscal 2020.
Additionally, our new specialty carbons plant is expected to come online in the second half of fiscal 2022.
Overall I am very excited about where we are as a company and where we are going.
Speaker 3: Overall, I'm very excited about where we are as a company and where we are going.
Speaker 3: The long-term fundamentals of our businesses are strong, our end markets remain robust, and we continue to execute.
The long term fundamentals of our businesses are strong our end markets remain robust and we continue to execute at a high level.
Speaker 3: Looking ahead, we believe we have a winning formula, a talented team, an excellent portfolio of businesses set for growth, and a strong balance.
Looking ahead, we believe we have a winning formula a talented team and excellent portfolio of businesses set for growth and a strong balance sheet.
Speaker 3: all of which position us to deliver on our strategic objectives and continue to grow.
All of which position us to deliver on our strategic objectives and continue to grow and lead in our industry.
Speaker 3: Thank you very much for joining us today, and I will now turn the call back over for a question and answers.
Thank you very much for joining us today and I'll now turn the call back over for our question and answer session.
As a reminder to ask a question. Please press Star then one thank.
Speaker 1: As a reminder, to ask a question, please press star then one. If your question hasn't answered and you wish to remove yourself from the queue, press the pound key. Our first question comes from David Begleiter with Deutsche Bank. Your line is open.
Thank you. Your question has been answered or you wish to remove yourself from the queue.
Keith.
Our first question comes from David Begleiter with Deutsche Bank. Your line is open.
Speaker 5: Hi, this is David Huang here for Dave. I guess first, can you quantify the benefits from higher unit margins due to higher energy prices and I guess what's the new oil price assumption that you baked in your new guidance and is there kind of a sensitivity you can provide on oil prices in your energy center and your investment earnings?
Hi, This is David long here for David I guess first can you quantify the benefit from higher unit margins due to higher energy prices and I guess whats the new oil price assumption that you baked in your guidance and is there kind of sensitivity you can provide that oil prices Junior energy Center.
Earnings.
Speaker 3: Sure, let me turn it over to Erica to try to provide a little color on that.
Sure let me.
Turn it over to Erica to try to provide a little color on that that question sure. So in terms of reinforcement materials. I think you were asking about higher margins and the quantification.
Speaker 4: Sure, so in terms of reinforcement materials, I think you are asking about higher margin.
Speaker 4: The increase in margins was $5 million year over year in the quarter. And as we do each quarter...
And margin was $5 million year over year in the quarter.
And as we do each quarter when.
When we forecast we use the forward curve.
So we would have used.
The latest forward curve.
In terms of what the oil price impact would be for the remaining.
Speaker 5: Thank you. And then to some demand, can you talk about your visibility for demand? I guess for your end markets, where are you seeing any restocking happening? And are you seeing any destocking at your auto-Orient customers?
Thank you and then just on demand can you talk about your visibility for demand.
I guess for your end markets, where do you see any restocking happening and are you seeing any destocking at your auto OEM customers.
Speaker 3: So, the demand profile remains pretty robust. So, across reinforcement materials, given the resilience of the replacement tire market, as well as some real strength in the OTR off the road market, that is definitely providing.
So the demand profile remains pretty pretty robust so across reinforcement materials, given the resilience of the replacement tire market as well as some real strength in the OTR off the road market.
That is definitely providing.
Speaker 3: good demand support in the business, so just as a reminder, somewhere in the 75-80% of the tire market is replacement, and that tends to be more resilient.
Good demand support in the business.
As a reminder.
Somewhere in the 75% to 80%.
The tire market as replacement and that tends to be more more resilient more stable more durable in in performance chemicals, it's a more diverse portfolio of applications, but.
Speaker 3: In performance chemicals is the more diverse portfolio of applications, but there's real strength across these applications.
There is real strength across.
These applications due to a combination of.
Speaker 3: due to a combination of factors, infrastructure related applications continue to grow very nicely and emerging applications like batteries given the growth in EVs, you know, continues to be.
Factors and infrastructure related applications continue to.
To grow very nicely.
In emerging applications like batteries, given the growth in <unk>.
<unk>.
Continues to be quite strong in terms of.
Restocking.
Speaker 3: restocking I think in general inventory levels remain a pretty tight across most value chain So we're not really seeing any any level of restocking in fact I would say that probably Inventory levels for most customers in the various value chains We serve our our dinner than they would like them to be So that's sort of a
I think in general inventory levels remain pretty tight across most value chain. So we're not really seeing any any level of restocking in fact, I would say that probably.
Inventory levels for most customers in the various value chains. We serve are are thinner than they would like them to be.
So that's sort of a general a general comment.
On a restocking point.
Thank you.
Speaker 1: Our next question comes from Mike Lighthead with Barclays. Your line is open.
Our next question comes from Mike <unk> with Barclays. Your line is open.
Speaker 6: Great, thanks. Good morning, guys. First question for Sean. I hope you could flesh out a bit more with striving the higher EPS outlook. Obviously, the first quarter was ahead, but it looks like there are main three-quarters are now expected to be incrementally better than you thought a few months ago. So I hope you can just unpack a bit more with striving that better out.
Great. Thanks, Good morning, guys.
Alright.
First question for Sean I was hoping you could flesh out a bit more what's driving the higher EPS outlook. Obviously first quarter was ahead, but it looks like the remaining three quarters are now expected to be incrementally better than you thought a few months ago. So I was hoping you could just unpack a bit more what's driving that better outlook.
Speaker 3: Yeah, so demand remains quite robust, Mike, but overall it's really strong execution on pricing. So let me try to give you a bit of color there. So in reinforcement materials, we realized better than expected outcomes for the 2022 tire customer agreement.
Yes, so demand remains.
Quite robust, Mike, but overall, it's really strong execution on pricing and so.
Let me try to give you a bit of color there so in reinforcement materials.
We realized better than.
Expected outcomes for the 2022.
Higher customer agreements and so that definitely contributed to the raise in outlook for that business and then in performance chemicals, while input factors are rising pretty.
Speaker 3: contributed to the raise and outlook for that.
Speaker 3: And then in performance chemicals, while input factors are rising pretty much everywhere. And you know,
Pretty much everywhere in the chemical industry.
Speaker 3: is having to address that like everyone else are efforts to recover those rising input costs.
Is having to address that like everyone else our efforts to recover those rising input costs through.
Speaker 3: pricing action has been very successful and the execution of our teams has exceeded our previous outlook. You know, you'll remember.
Pricing actions has been it's been very successful in the execution of our.
Teams has exceeded our previous outlook Youll, Youll remember and in performance chemicals, it tends to be more spot oriented rather than <unk>.
Speaker 3: performance chemicals tends to be more spot-oriented rather than, you know, contractual. And so sometimes in a period of rising inputs, we may be chasing it a little bit, but the team's really done a fantastic job and executing really well. And so that strength and time-movingness of pricing acts.
Contractual.
And so sometimes in a period of rising inputs, we may be chasing it a little bit but the team has really done a fantastic job and executing really well and so.
That strength and timeliness of pricing action is.
Speaker 3: is contributing and then finally, I say continued confidence in how the businesses are performing in terms of our growth factors in particular battery materials, but across a number of the growth areas that we spent some time on during investor day. So continued confidence building in those is also a factor here. So, just.
Is contributing and then finally I'd say continued confidence in how the businesses.
Are performing in terms of our growth vectors in particular battery materials, but.
Across a number of the growth.
Areas that we we spent some time on during Investor day. So continued confidence building in those it's also a factor here. So those would be the primary drivers Mike.
Speaker 6: Great, that's super helpful. And then second question for Erica, maybe two quick things on cashflow this quarter.
Great. That's Super helpful. And then second question for Eric maybe two quick things on cash flow this quarter.
Speaker 6: First, working capital was 143 million use of cash. So is that a function of higher oil, or is there something else lumpy in there? And second, I think if I look at the press release.
First working capital was $143 million use of cash so is that a function of higher oil or is there something else lumpy in there and sell.
I think if I look at the press release the change in other assets bond was a 36 million use of operating cash in the other financing line was 27 million use of cash. So is there any lumpy items in there that you would flag as well.
Speaker 4: The change in other asset bond was a 36 million use of operating cash and the other financing line was 27 million use of cash. So is there any lumpy items in there that you flag as well? Sure. So the first question which is the working capital, it is me.
Sure.
The first question, which is the working capital. It is mainly the higher oil prices. So the increase you can see is driven by higher inventory and receivables balances.
Speaker 4: The imagery balance is largely driven by the oil flow through within those balances. And some planned imagery built heading into Q2, the higher receivables is driven by the higher sales price, largely from the pricing we passed on to recover the higher sales price.
The inventory balance is largely driven by the oil.
Did those balances.
And some planned inventory build heading into Q2.
The higher receivables as given by the higher sales price largely from the pricing.
To recover the higher input costs, so I would not say there's anything unusual.
Working capital.
Going forward, obviously depends not only on prices.
If we assume that the global feedstock prices remain in line with current levels and we would expect a level off of the east.
Cash for working capital, we will see higher receivables balances at the higher pricing in the esports fit materials contact contract flows to the Q2, but then the oil impact moderate.
Assuming we have flat.
Flattish going forward.
And then in terms of the cash flow into other operating items.
I'd say the only notable.
Items flowing through there are impacts from elsewhere.
Speaker 4: there are impacts from, as we're restoring our plant in Belgium, there are impacts in there in terms of repairing the site and then the insurance proceeds that come through that are...
During our plant in Belgium, there are impacts in there in terms of preparing the site and then the insurance proceeds that come through that are.
She has pretty much offset that over time, but it is a bit lumpy in terms of what we receive in any given quarter.
What we are spending versus what insurance coming down.
Great. Thank you.
Okay.
Speaker 1: Our next question comes from Drosh Spector with UBS. Your line is open.
Our next question comes from Josh Spector with UBS. Your line is open.
Speaker 7: Hi, thanks for taking my question and congrats on a really strong quarter and outlook. I just want to ask broadly on China. You're giving you guys have a leading position there. There's definitely increased focus around what's going on in China, demand and COVID impacts, etc.
Yeah, Hi, Thanks for taking my question and congrats on a really strong quarter and outlook.
Just wanted to ask broadly on China, given you guys have a leading position there. So there's definitely increased focused around what's going on in China demand.
Covid impacts et cetera curious if you could share what you saw in the quarter and how cabot's operations in your customers' operations ran and if you have any thoughts about if China shifts the coli policy management to kind of from a tight control to perhaps more of managing an endemic type situation.
Speaker 7: I'm curious if you could share what you saw in the quarter and how cabits operations and your customers operations ran. And if you have any thoughts about if China shifts their COVID policy management to kind of from a tight control to perhaps more of managing an endemic type situation, does that provide, create any risk to your outlook at all? I'm gonna take generally your comments seem to be kind of business as usual. So just making sure that we're taking about that right. Thanks.
Does that provide create any risk to your outlook at all and I would say.
Generally your comments seem to be kind of business as usual.
Sure that were thinking about that right.
Speaker 3: Yeah sure so thanks Josh for the for the comments and the question were certainly very pleased with
Yes sure.
So thanks, Josh for the comments and the question, we're certainly very pleased with the.
Performance and in the outlook. So first in terms of China, what we saw in the quarter.
Speaker 3: So first in terms of China, what we saw in the quarter was quite strong performance.
It's quite quite strong performance and so.
Speaker 3: in reinforced materials across Asia-Pac, volumes were up strongly, and our performance in China is a big piece of that. Our performance in China continued to go quite well in the quarter. So as we elaborated during the recent investor day, we really consider ourselves a great operator in China.
In reinforcement materials across Asia Pac volumes, we're up we're.
Were up strongly.
And our perform and China's it'd be a big piece of that.
Our performance in China.
Continued to go quite well in the quarter. So as we elaborated during the recent Investor day.
We really consider ourselves a great operator in China.
Speaker 3: And I think that that continued to show through.
And I think that continued to show through.
Speaker 3: in the quarter where plants ran well and
In the quarter were plants ran well and.
Speaker 3: while the situation is at times dynamic, we're well able to...
While the situation is at times dynamic.
We're well able to manage that now as we as we go forward here our expectation is for a.
Speaker 3: Now, as we go forward here, our expectation is for a fairly stable economic environment in China through the balance of 2022.
Fairly stable economic environment in China through the balance of 2022.
Speaker 3: I think the government there has recently adopted some new policies related to this power shortage issue that was well discussed in the early fall autumn period. They're now allowing electricity prices to float up, which is then stimulating power.
I think the government there has recently adopted some new policies.
Related to this power shortage issue that was well discussed.
In the in the early fall autumn period.
They are now, allowing electricity prices to float up which has been.
Stimulating power producers.
Speaker 3: to produce more energy. So there were some issues related to policies there that I think have improved the situation and so we don't expect any...
Produce more energy. So there were some issues related to policies there that I think have.
Have improved the situation and so we don't we don't expect any any.
Speaker 3: going forward. And the government is also, you know, in an effort to balance economic growth, along with their other priorities, you know, has been looking to stimulate the economy in certain ways.
Any material disruption going forward.
And the government is also.
In an effort to.
To balance.
Economic growth.
Along with their other priorities.
As Ben has been looking to stimulate.
The economy in certain ways, reducing interest rates and accelerating spending in infrastructure and some of these areas that.
Speaker 3: rates and accelerating and spending and infrastructure and some of these areas that are helpful. So I think they're sort of keenly focused on trying to balance this.
Are they are helpful. So I think there.
You should are keenly focused on trying to.
Trying to balance this now.
Speaker 3: Now, you know, on the COVID front, they've definitely managed in terms of at least reported cases to a much lower level than anywhere else in the world and have had this zero COVID policy. I think ultimately sustaining that policy will probably...
On the Covid front they are definitely managed.
In terms of at least reported cases to a much lower level than anywhere else in the world that have had this zero.
Covid.
Policy I think ultimately.
Sustaining that policy will probably prove to be.
Speaker 3: be challenging, but on balance, I actually consider it to be positive as it relates to our businesses because when there are COVID outbreaks, they tend to take fairly draconian actions which can cause disruptions.
Challenging but on balance I.
I actually.
Consider it to be.
Positive as it relates to our businesses because.
When when there are COVID-19 outbreaks day.
Tend to take.
Fairly draconian actions, which can cause disruptions.
Speaker 3: I think if it over time transitions tomorrow a management, managing co-with approach, then there probably...
I think if.
Overtime transitions to more of.
Our management managing Covid approach then.
Hopefully it will be a little more.
Speaker 3: a little more stability in that that will on balance beat.
Stability in that that will on balance b.
I think a good thing so so.
Speaker 3: So that's how I see it, but I think that they probably will have to make a transition at some point here from...
That's how I, that's how I see it but.
I think that they.
They probably will have to.
Make a transition at some point here.
From from what has been a very tight.
<unk> policy.
Speaker 7: Thanks, and I appreciate those thoughts. And just quickly on performance volumes, when you're talking about a lot of things flowing through perhaps later this year, and obviously I think you get past some of the plant shutdowns, curious just how high volumes could be year-over-year in the second half in performance.
Thanks, and I appreciate those thoughts and just quickly on performance and volumes.
Talking about a lot of things kind of flowing through perhaps later this year.
Obviously, I think you get past some of the plant shutdowns curious just how high volumes could be year over year in the second half performance.
Speaker 3: Yeah, so we're definitely, have been impacted in the first quarter with some, some plant related impacts. We're pleased that this quarter, the Belgian Master of Aged Plant will be coming back online, so that's positive. And some of the impacts from our FMO Penn's Line Partners Disruptions should work themselves out here as well. So I think we'll...
Yes, so we're definitely.
Have been impacted in the first quarter with some.
Some plant related.
Impacts.
We're pleased that.
This quarter, the Belgian master batch plant will be coming back online. So that's positive and some of the impacts from.
<unk> partners disruptions.
Should work themselves out here as well so I think we will.
We'll see.
More.
Speaker 3: volume profile.
Normal volume profile as we as we move forward I think the best way to think about that.
Speaker 3: as we move forward. I think the best way to think about first of all, it's a diverse portfolio across performance.
First of all it's a diverse portfolio.
Performance chemicals of applications, but on balance fees. These grow at somewhere one five to two times GDP with course differences by.
By application and so I think thats.
Speaker 3: still the best way to think about it. So pretty solid growth. Now there are some areas where we are outperforming and expect to continue to outperform and go well above those numbers. The best example there, of course, are our efforts and batteries.
Still the best way to think about it so pretty pretty pretty solid growth now there were some areas where.
We are outperforming and expect to continue to.
Outperform.
Go well above those numbers.
The Best example, there of course, there are efforts in batteries, where we're expecting to grow at a very.
Speaker 3: We're expecting to grow at a very high rate above the market growth rate for that business. So we feel pretty good about the volume.
A very high rate above the.
The market growth rate for that business. So.
So we feel we feel pretty good about.
About the.
Volume the.
The volume outlook in this business and as we bring on some new.
Speaker 3: capacity later in the year, particularly around specialty carbons, that will
Capacity later in the year, particularly around specialty carbons that will continue to support.
The volume growth both for our sort of legacy specialty carbons applications, but also will have some capacity support for batteries.
Speaker 3: for our sort of legacy, especially carbon applications, but also we'll have some capacity support for batteries.
Okay. Thanks, Congrats again.
Thanks, Josh.
Speaker 6: Our next question comes from Lawrence, Alexander, with Jeffrey. Your line is open. Good morning. Dan Rizal and Florence, how are you? Hey, Dan. So I think you mentioned that the battery market is going to grow 30% a year starting in 2025. And I think you just said, you're going to outpace that. I was wondering what kind of capacity expansion is going to be needed to kind of keep up with that growth, not necessarily with the next two years, but still over the next, I don't know, 8 to 10 years.
Our next question comes from Laurence Alexander with Jefferies. Your line is open.
Good morning, it's Dan Rizzo on for Laurence how are you.
Alright so.
You mentioned that the battery market is going to grow 30% a year starting point 25.
And I think just said are you going to outpace that I was wondering what kind of capacity expansion is going to be needed to kind of keep up with that growth not necessarily over the next two years, but say over the next I don't know 10 years.
Speaker 3: Yeah, so the market just to recap, and so the market for the DeMine batteries is growing at 30 is 30%, based on a number of reported market studies. So that's something that's happening right now, and we project that to go out through the end of the decade through 2030. Now, as we shared during our investor day.
Yes, yes, so the market just just to recap Dan so the market for lithium ion batteries is growing at 30 ish, 30% based on a number of.
Reported market studies, so that's something that's happening right now and we project.
That to go.
Sure.
Through the end of the decade through 2030 now as we shared during our Investor day.
Speaker 3: We have expectations to outpace that. And so over the next three years, we're expecting.
And we have expectations to outpace that and so over the next three years, we're expecting to grow this business at 50%.
Speaker 3: grow this business at 50 plus percent. And I think that's really a function of the capital-e-proposition here in terms of the breadth of our conducted carbon-added portfolio, our global footprint of assets, and the fact that we've got application technology labs and technical and commercial teams, you know, all over the world. This is really a...
And I think that's really a function of the cabot value proposition here.
In terms of the breadth of our conductive carbon additives portfolio, our global footprint of assets and the fact that we've got application technology labs, and technical and commercial teams.
All over the World. This is really I think a real strength of Cabot and I think that resonates with customers now on the on the capacity front for sure there'll be capacity adds that are required here a number of them.
Speaker 8: Now, on the capacity front, for sure, there will be capacity ads that are required here and number of them.
Speaker 8: I have been underway over the last couple years to meet the growth that we're already putting up in this business.
Have been underway over the last couple of years to meet the growth that we're already putting up in this business and then.
Speaker 8: And then, they'll be further ads that will be required here as our plant in Chujo, China comes on for specialty carbons that'll unlock some capacity.
There'll be further adds that will be required here.
As our plant in Xuzhou, China comes on for specialty carbons that will unlock some capacity elsewhere in our network to support batteries and then Tien tsin.
Speaker 8: elsewhere in our network to support batteries and then the TNGIN.
Speaker 8: announcement that we just made, where we'll convert and upgrade that facility will provide then further runway for these high-value conductive carbons.
Announcement that we just made we will convert an upgrade that facility will provide then further runway for these high value conductive.
Carbons.
Speaker 8: On the carbon nanotube front, we also have capacity expansions underway.
On the call.
Carbon nanotubes front.
We also have the capacity expansions.
Underway.
Speaker 8: So if you think about over the next three years, there's somewhere on the order of $100 million of cat-backs that we'll be spending across the conductive carbon whack and carbon nanotube footprint.
On your way there so.
If you think about over the next.
Over the next three years.
Somewhere on the order of.
$100 million of Capex that we'll be spending across.
Conductive carbon black and carbon nanotubes.
Footprint to build capacity.
Keep fueling this.
Speaker 8: We've got a good line of sight on it. We're building great momentum and we're putting the plans in place to continue.
This growth here so.
We've got at a good line of sight on it we're building great momentum and we're putting the plans in place to continue.
Continue to have the capacity to meet the needs of this market again, where I think it holds great promise and we're.
Speaker 8: market again where I think it holds great promise and we're certainly
We're certainly determined in our efforts here.
Speaker 9: OK, thank you for the call on that. And then I think you said that dual control in China is easing. But I was wondering, has it affected you guys really or your customers that much at all? It doesn't seem like it's been a headwind, as highlighted by others within the chemical world.
Thank you for the color on that and then.
I think you said the dual control in China is easing, but I was wondering.
If I could you guys or your customers that much at all it doesn't seem like it's been a headwind as highlighted by others within the chemical world.
Speaker 8: Yeah, so it hasn't had a material impact on us.
Yes so.
It Hasnt had.
A material a material impact on us.
Speaker 8: And as I said, I think there were some actions taken by China a few months ago that have eased some of the power shortages there. So I think that's good in the short term, and China will obviously have to continue to...
And as I said I think there.
There were some actions taken by China, a few months ago.
That have eased some of the power shortages there. So so I think that's good in the short term in China will obviously have to continue to balance.
Speaker 8: to balance how it supports economic growth and how it transitions to...
How it supports economic growth and how it.
It transitions to.
We continue to reduce fee.
Speaker 8: the environmental impact, but in terms of cabits operations, we've not had any material impact, we've been operating really well and very pleased with that. I think it's again, it's a function of all of the things that was built over the years and why we're a great operator. There's certainly a lot of experience in our 30 plus years, really strong joint venture partners.
The environmental impact, but in terms of Cabot's operations, we have not had.
Any any material impact we've been operating really well I'm very pleased with that and I think it's.
Again, it's a function of all of the things that was built over the years and why we are a great. Operator, there is certainly a lot of.
Our experience and our 30 plus years really strong.
<unk> venture partners.
We're together we can we can manage we can manage through these things.
Speaker 8: and the way we operate, run our plants, the level of environmental performance that we deliver, I think, is appreciated by...
The way we operate run our plants.
The level of environmental performance that we deliver I think is appreciated by.
Bye.
By the Chinese.
Tori authorities and so we're able to manage it.
Speaker 8: You know, it's always a fairly dynamic situation in China, but again, I can't.
But it's always a.
Fairly dynamic situation in China, but again it comes down to good management.
Alright, Thank you very much.
Speaker 1: Our next question comes from Chris Katch with Loop Capital. Your line is open.
Our next question comes from Chris <unk> with loop capital. Your line is open.
Sure.
Speaker 10: Hi, good morning. So one question I had was in the context of your revised guidance, or you characterize the better expected pricing realization from those contract negotiations of the key, or maybe the key driver. Just wondering if there's any way you could quantify that benefit either in terms of carbon black prices, on a year of a year basis, or perhaps in terms of gross profit metrics for the segment, all else equal.
Hi, Good morning. So one question I had was in the context of your revised garden guidance are you characterize that.
The better expected pricing realization from the contract negotiations at the key where maybe the key driver. So just wondering if theres any way you could quantify.
That benefit either in terms of carbon black prices on a year over year basis or perhaps in terms of gross profit metrics for the segment all else equal.
Speaker 8: Yeah, sure. So, Chris, just as a recap, I think a few things driving the upward revision on guidance, certainly the outcomes from the prior
Yes sure.
Chris just.
As a recap I think a few things driving the upward revision on guidance certainly, but the outcomes from the entire customer agreements and I'll comment on that a bit more of it also.
Speaker 3: but also, I think, really strong execution on pricing.
Think really strong execution on.
On pricing in performance chemicals, and really real time, we pass through there and then and then third.
Speaker 8: passed through there and then and then heard the
The continued momentum in in these growth vectors.
Speaker 8: of the growth vectors of battery materials, but also in jet.
Battery materials, but also inkjet.
So those are those are really the three three drivers.
Speaker 8: drivers. You know, on the agreements, the tire customer agreements,
On.
The.
Agreements that tire customer agreements were definitely overall very pleased with the outcome.
Speaker 3: We're definitely overall very pleased with the outcome. I think the supply chain situation impacting the world really creates a lot of value on on cabinet as a reliable global supplier.
I think the <unk>.
Supply chain situation impacting.
The world really placed a lot of value on.
On Cabot is it reliable global supplier.
And so we're pleased with that.
Speaker 3: that has resulted in some fairly substantial price increases but also volumes that we expect to be in line with the regional demand.
Resulted in.
Some fairly substantial price increases but also.
Volumes that we expect to be in line with the regional demand.
So so again overall.
Speaker 8: wrong results. Now, you know, the net impact of all of this, probably the best way to think about it is maybe, you know, somewhere in the order of $15 million per quarter net of rising costs around the world. So, you know, these...
Pretty strong results.
Now.
The net impact of all of this probably the best way to think about it is maybe somewhere in the order of $15 million per quarter.
Net of rising cost around the world. So.
These these.
Speaker 3: contract outcomes included factors like cost-based prices, but also factors to recover rising costs like higher natural gas costs or in certain parts of the world if you're a CO2 cost with with with enabled
Contract outcomes included factors like cost base prices, but also.
Factors to recover.
Rising costs like higher natural gas costs or in.
Certain parts of the World. If you were of Sidoti <unk> co.
Costs with.
We've been able to negotiate.
Speaker 3: the recovery of those. So important to understand that point, but netto those rising costs.
The recovery of those so.
<unk>.
Understand that point, but net of those.
Those those rising costs, which we've recovered net.
The net impact is somewhere in that $15 million per quarter range is probably the best way to think about it.
Speaker 10: That's helpful. And then you alluded to the follow-up, but just the spike in gas and energy prices in Europe , were you simply able to mitigate that through DCAs or other actions? Or was there converse, I guess, any benefit from your energy center co-gen operations from what's going on over there?
That's helpful and then.
You alluded to.
Follow up but just.
The spike in gas and energy prices in Europe , where you simply able to mitigate that through dth or other actions or was there Conversely, I guess any benefit.
From your Energy Center co Gen operations from what's going on over there.
Speaker 8: Yes, so certainly as energy prices are higher, then that benefits in terms of the energy center contribution.
So it certainly is as energy prices are higher than that benefits in terms of the.
The energy Center.
Contributions for sure.
Speaker 3: And then as energy prices are higher than some of the technology and yield work.
And then as energy prices are higher than.
Some of the.
Technology and yields work.
We do is more valuable so so.
That's been.
Long been the case and that is that is the case now.
Speaker 8: that is the case now. You know, with respect to higher natural gas costs, certainly they've shot up in Europe , but we've been able to largely offset that through combination of DCA adjustment flow-throughs and on the more spot side of the business, whether it's in reinforcement or...
With respect to <unk>.
Higher natural gas costs, certainly they've shot up.
In in Europe , but we've been able to largely.
Offset that through combination of.
DCA adjust.
Adjustment flow throughs.
No more spot side of the business.
Whether it's in reinforcement or in specialty carbons through through.
Speaker 8: spot market action. So certainly a dynamic situation, but
Spot market action so.
Certainly a dynamic situation, but pleased with the way the team has been able to manage it.
Speaker 10: Great and thanks, and I could just sneak in one more. So in the battery materials business, you talked about that market growing, and I get it 30, 35% a year through the decade and you guys outperforming that. So how do you gauge that outperforming? Is it on a, do you have visibility on a customer by customer basis from the specifications where you get qualified that you're sort of getting an outside benefit ...
Great. Thank you and I could just sneak in one more so.
In the battery materials business.
Talked about that market growing again at 30%, 35% a year through the decade, and you guys outperforming that so how do you gauge that outperformance or is it on the are you do you have visibility on a customer by customer basis.
From the specifications, where you get qualified.
That you are sort of getting an outsized benefit from.
Speaker 10: you know, relative to the market growth or any way to, you know, just comment on how you're validating that outperformance relative to the market. Thank you.
Relative to the market growth or any way to.
Just comment on how youre validating that that outperformance.
Relative to the market. Thank you.
Speaker 3: Yeah, thanks, Chris. So I think a couple of ways. So one is certainly, you know, our, our volume growth and that's a backward looking indicator, but in the quarter, our volume.
Yeah. Thanks, Chris So I think a couple of ways. So one is certainly are.
Our volume growth in that.
Backward looking.
Indicator, but in the quarter our volumes in this business grew at 58%, So certainly that's well above.
Speaker 3: So certainly that's well above the market growth and an indicator of our strong.
The market growth and an indicator of.
Our strong performance here, but again, that's a bit more of a backward looking one in terms of forward looking.
Speaker 3: here. But again, that's a bit more of a backward-looking one. In terms of forward-looking, we do have pretty good visibility. So the market is fairly concentrated. I think I've commented in the past that the top eight producers represent about 90 percent of the market. That can move around a little bit, and certainly there's a long tail after the top eight. But, you know, it's a fairly concentrated market.
We do have pretty good visibility so that the market is fairly concentrated I think commented in the past that.
Top eight producers.
Represent about 90% of the market and that can move around a little bit and certainly there's a long tail after the top eight but.
It's a fairly concentrated.
Group, a big battery producers.
Speaker 8: big battery producers. And so we certainly know how we're connected in.
And so we certainly.
No how we're connected into.
Speaker 3: various programs and how our qualification efforts are progressing. So that gives a certain measure of visibility. What is difficult to project is exactly who will win and at what rate. And so that's something that...
Various programs.
Our qualification efforts are.
<unk> are progressing so so that gives a certain measure of visibility what what is difficult to project is exactly who will win and at what rate.
So that's that.
That's something that is.
No.
Speaker 8: always a little bit of a moving target, but our participation is pretty broad here. We're currently serving six of those top eight with development programs with the others.
As always a little bit of a.
Moving target, but our participation is pretty broad here. We're currently serving six of those top eight with development programs with the others.
Speaker 3: in process here, so the winners and the ultimate winners and losers, if I could state it that way, is somewhat less of an issue because we're able to participate.
In in process here so.
The winners in the ultimate winners and losers, if I could state it that way.
Is somewhat less of it.
An issue because we're able to participate broadly here, but hopefully that gives you a little bit of color on how we.
How we try to look at things both from a backward looking at ROE.
Speaker 8: backward-looking, are we achieving our objectives, and
Are we achieving our objectives.
And then the forward look.
Sure.
Thanks for the color I appreciate it.
Yes.
Speaker 1: There are no further questions like to turn the call back over to Sean co-hain.
There are no further questions I'd like to turn the call back over to Sean Cohan.
Great. Thank you. Thank you very much Michelle and thank you all for joining us today.
Speaker 8: Great. Thank you. Thank you very much, Michelle. And thank you all for joining today. And we look forward to engaging with you again next quarter. And thank you for your support.
And we look forward to engaging with you again next.
<unk> quarter and thank you for your support of Cabot have a great day.
Speaker 11: This does conclude the program. You may now disconnect. Everyone, have a great day. Thank you for watching.
This does conclude the program you may now disconnect everyone have a great day.
Okay.
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Yes.
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Speaker 11: No.
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Speaker 11: St.
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