Q1 2022 Chemours Co Earnings Call
Good morning, My name is Anna and I will be your conference operator today.
At this time I would like to welcome everyone to the <unk> Company first quarter 2022 earnings Conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would.
Like to ask a question during this time simply press star followed by that.
If you would like to withdraw your question again pressed the starwood. Thank you.
Jonathan Lock senior Vice President and Chief Development Officer, you may begin.
Welcome to the <unk> company's first quarter 2022 earnings conference call I'm joined today by Mark Newman, President and Chief Executive Officer, and Sameer, <unk>, Senior Vice President and Chief Financial Officer.
Before we start I'd like to remind you that comments made on this call as well as the supplemental information provided in our presentation and on our website contain forward looking statements that involve risks and uncertainties, including the impact of COVID-19 on our business and operations and the other risks and uncertainties described in the documents <unk> filed.
With the SEC. These forward looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events that may not be realized actual results may differ and to Morris undertakes no duty to update any forward looking statements as a result of future developments.
During the course of this call management will refer to certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance a reconciliation of non-GAAP terms and adjustments are included in our release and at the end of the presentation. As a reminder are prepared.
Mark a full transcript and an audio recording.
Our earnings deck has been posted to our website alongside our earnings release. This morning's call will focus purely on Q&A with that I'll turn the call over to our CEO Mark Newman. Thanks.
Thanks, Jonathan and good morning, everyone I hope everyone is well and thank you for joining us as.
As Jonathan said and in keeping with our refreshing simplicity value. We've made a change to our earnings call format, starting this quarter.
In order to make this time more efficient and useful for everyone here.
So with that Emma we're now ready for Q&A.
At this time, we ask that you limit yourself to one question and one follow up.
Your first question comes from the line of John Mcnulty with BMO capital.
Yes. Good morning, Thanks for taking my question congratulations on some really really solid results.
I guess to that tier.
TSS segment was a lot stronger than expected and I suppose.
To a handful of things whether its the game act or less F gas dumping or maybe even some some mix, but I guess can.
Can you parse out the various buckets as to what drove kind of the huge jump in margins and the strength that youre seeing can you help us to understand that a little bit better and how to think about the sustainability of that as we kind of look through the rest of the year and into next year.
Hey, John Thanks, and good morning.
Let me start first with the quarter and then ill get into TSS, and then I'll ask Samir to sort of reflect on how he sees the numbers for the rest of the year and keeping with our guidance.
The quarter was as you saw was strong it showed kenmore is wide improvements.
We had momentum in all three businesses, despite the limitations, which are affecting TT.
And I think are really the beginning of evidence of long term secular trends.
Which are going to benefit all three businesses, but in particular will benefit.
S on low global warming refrigerants, and propellant and foaming agents and obviously APM as it relates to the Mega trends, which are unfolding.
Today on semi con a hydrogen coming evs here.
There's a lot going on in the company that to me is is showing the importance of our TSS and APM in the quarter and in the year. They are increasing contributions to <unk> earnings, which gives us confidence despite the or limitations.
On the guide that we provided for the year as it relates to your question I think there's a couple of things going on.
In the quarter and in the year that I would like to highlight first of all in of demand refrigerant demand remains very strong as you can imagine folks are coming back to offices, there going into restaurants are going to hotels, so lots of demand here on stationary.
That we like.
Clearly demand on auto OEM is impacted by the ongoing semicon shortage.
Q1 was particularly weak as youll see from the earnings reports by OEM customers.
But full year.
Is it looking as a year over year improvement.
Based on IHS.
Obviously the market there is some structural shifts having in the market here in the U S. Obviously, the implementation of the aim act.
Is taking effect at a time when demand is strong.
Clearly there is some supply issues as it relates to China that are also affecting availability. So Q1 is particularly strong but as we look out to the year.
Our view is demand remains very strong on the institutional stationary side.
The Amax framework is working we're also encouraged by.
The ongoing developments in Europe to make EFT guests better so maybe I'll ask <unk> to see if theres any other commentary on full year, but this is a great business.
Long term secular growth multiyear secular growth and EBITDA margins.
With a 30% yes.
Yes, Mark.
Hey, John just to quickly well only other thing I would add is as you kind of think about the year.
The trends that you talked about regarding the TSS business, we feel very strong about Apollo b will be shipping the rest of the year and Thats all reflected in the guidance that we've given.
The market and the regulatory mechanism is at work and it's benefiting the entire portfolio of the DSS business. So we feel really good.
Despite the automotive OEM demand headwinds.
Really strong place so DSS businesses firing on all cylinders.
Got it.
That's helpful color.
And then maybe mark to one of the other point you brought up.
On the on the ore front it looks like that may be a little bit of an issue and it may drag on a little bit longer than you thought I guess can you give us an update as to how youre thinking about that and also I think you were looking to add capacity.
On the <unk> front through Debottlenecking over the next couple of years I guess, how does the ore supply issues start to factor into that as you think about that capacity coming on.
Yes, so maybe I'll answer the question in a couple of ways.
As we look at our or situation for the full year. We now recognize that we will remain or constrained into the second half.
When exactly in the second half is moving around but our guide contemplates.
Probably not having or constraints resolved meaningfully before Q4.
With that in mind, I think we have been able to narrow the range of outcomes.
Clearly our guidance range got narrowed so yes, we now acknowledged that this is going to go into Q4, but the team has done a phenomenal job of finding or where it can and so now the range of outcomes in terms of ore availability in my view are more well defined.
And then the third point I'd make is we continue to give priority.
To our contracted customers.
And to the highest value applications. So the team.
Has done a nice job.
First on on making sure we're serving our strategic customers with whom we want to grow.
And obviously as we focus on higher value applications and our price mechanisms. We're staying ahead of cost inflation.
Then I think the last question that you asked was.
Capacity, yes, we continue to focus on on capacity.
And releasing the 10% where our constrained for a few more quarters, but that's not the way we plan to run the business and in fact as you saw one of my four.
Focused priorities as CEO is really to continue to take steps on improving the earnings quality of <unk> through the cycle. We have the best book of business, we're servicing those customers despite being more constrained and we're focused on how we expand capacity to grow with those customers.
As well as take actions that will reduce earnings volatility through the cycle.
Got it thanks very much for the color.
Your next question comes from the line of Iran.
Eastern with RBC capital markets. Your line is now open.
Great. Thanks for taking my question congrats.
Congrats on the progress this year.
Yes.
You cited some positive dynamics within stationery.
When you when you include that and maybe some recovery and OEM.
Do you believe what do you think the foundational level of earnings for for TSS would be I guess.
No.
Maybe if you could give us some growth rates or maybe some margin levels or anything that would kind of help us kind of frame how that business is doing.
Yeah.
Arun Great question.
Just to remind everybody we are going to have a TSS mini investor day in May may 16, actually where it will provide.
What more insights into that segment, it's been on our list to do and clearly we feel the time is right.
I view this business and Alicia and her team see this as a business with multi year.
<unk> growth.
Think we would say it's in the mid to high single digit range.
As as people adopt low global warming, not just refrigerants, which are our bread and butter, but propellants for all many many different applications.
As well as forming agent so that team is doing a phenomenal job on making sure we have capacity.
In all of those verticals to really drive the adoption of low global warming.
Products bullets in the EU and in the U S and then around the world. So.
Do we see here. This is a we could we could call. It a decade of secular growth mid to high single digit and a business that we think long term has EBITDA margins in the low <unk> clearly this year, we're off to a great start so it might be higher in this year, but generally speaking.
<unk>, we're looking to capture the growth with EBITDA margins north of 30%.
Sure.
Thanks, that's very helpful.
I said there is a follow up just asked about.
Pete.
Would you expect any updates there by year end, maybe a settlement with water districts, but what are you working on on that side. Thanks.
So you know.
We are we're very focused and its one of my <unk> priority is to continue to manage and resolve.
<unk> liability is consistent with the Mou last year as you know we were able to reach an agreement with the state of Delaware.
In North Carolina.
We're very focused on the remediation work in specific the barrier wall.
Work that will reduce seepage to the Cape Fear River.
Team is very focused on that and then I'd say the three companies are aligned having signed the Mou.
To move forward and to.
Have a bias to resolve legacy liabilities, but do that in a smart way that.
Our shareholders and our stakeholders and our communities.
I applaud so.
The work there is ongoing.
I won't comment to specific outcomes in the future, but you should know that the team here, including our general Counsel, Dave Shelton is quite focused on getting something done here.
Thanks.
Your next question comes from Josh Spector with UBS.
Your line is now open.
Hey, guys. This is James Canada on for Josh.
I was wondering if you could talk about pricing.
Pricing in the quarter was up quite a bit.
Could you share some comments on.
How much of that is <unk>.
Your actions versus market dynamics.
<unk>.
That's it.
Pricing in Hfcs.
Driving a little bit more of a shift towards faster.
Faster than Europe .
Initial expectations.
So thanks.
Thanks for the question, we continue to see increased adoption in opt in and the related improvement in mix as a result of that.
Clearly.
As I said in my earlier remarks, the market demand and stationary which is particularly biased to hfcs today are legacy refrigerants is very strong.
In some respects there is a seasonal factor.
In the year, but there is also I think.
The impact of a lot of folks returning to offices travel picking up as <unk> seen and just to just a greater demand for institutional use of stationary refrigerants, which today remain biased to HFC. So.
The team's very proactive.
From a pricing perspective, I wouldn't want anybody to think that this team has been very focused on the supply demand dynamics and to your point.
There is regulatory impacts aim here in the U S F gas in Europe , which are which are providing a structural shift in the marketplace, which will continue for many years to come.
Yes.
Great. Thank you.
Your next question comes from the line of Mike <unk> with Barclays. Your line is now open.
Thanks, Good morning, guys, maybe just first to comment the switch in the conference call format straight to Q&A is awesome for what it's worth.
I guess I wanted to go back or kind of stick on TNF.
I was hoping could you just kind of talk about what you saw in the market on the legacy or HFC refrigerant pricing side. This quarter and maybe can you just update us on how the illegal import situation in Europe is going.
Yes, well first of all Michael Thanks for the feedback on the call format. Another core value for mortgages being customer centers. So it's good to get some customer feedback in this regard.
No.
On TSS.
The pricing on on Hfcs as he said is really being driven by both the structural shifts in the marketplace driven by.
The aim act here in the U S.
F gas in Europe , as well as the demand that we're seeing for a whole host of factors that I already mentioned.
We're very encouraged by ongoing enforcement actions in Europe .
There are also some draft regulations.
It relates to enforcement in F gas.
Europe that we're encouraged by those regulations are not in effect, but clearly as an industry participant will be.
Very helpful in working with regulators there.
I also want to give recognition to the EPA in the aim regulations here in the U S. They went out of their way to learn from what happened in Europe and to take steps and maybe I'll ask Samir just to comment on some of the EPA.
That we think are helping but clearly this is a combination of both market demand and as well as the favorable impact of the transition from hfcs to opt in.
<unk> place in the quarter Sameer, yes, Thanks, Marc Michael Let me just add a little bit more color on the pricing side first and then ill move to the EPA enforcement on.
On the pricing side as Mark said the.
The market dynamics are strong, but as we kind of step back.
<unk> is a low global warming potential recruits into the future and we are very well positioned to help our customers transition to this new technology over time, and so as we kind of think about the solution offerings of you're providing to the customers ultimately it's a value in use pricing. So the way you should be thinking about the transition of our businesses visa TSS and the APM is all.
About value and use pricing and Thats, what you are seeing in our margin in the DSS as well as in the <unk> businesses.
So thats the first thing on the pricing and then on the <unk>.
On the EPA side, and the enforcement, especially as we kind of looking in the U S. As Mark said, it's been it's.
It's been great to say, how EPA has learned from some of the things in Europe and really.
Putting some mechanisms in place, which gives us comfort and confidence in the ability to enforce the amex.
Won't go into all the specifics are going to hit a law firm Alicia on may 16th on these things, but simple things like having standardized Sds scores for QR tracking even a 14 day advance notice for bringing in any material into the into U S which gives us.
The customs and border control.
All the time to figure out.
Importing the products are very good at allowances or not and also what's been phenomenal looses. There is across agency task force that's already been set up to.
To coordinate all the things, which took a while in Europe to get in place.
And that includes customers in boral.
Border Protection Department of Homeland Security Department, just as we look across all the agencies.
Cross agency thing that was in place and last thing I would say is on the Amax does provide the clean Air Act authority the ability to impose civil and criminal penalties again, if we go back to the Europe experienced it took a while to get people everybody on the same page. So there's a lot of teeth and the mechanisms are already in place, which gives us comfort in how we do.
The structural trends that we're seeing in the transition.
Ah refrigerants is really providing us.
Nice.
Pricing power in the mountain in the market.
Great. That's super helpful context, and then maybe second one for Samir.
If I look at the full year outlook.
EBIT guidance by call it $160 million at the midpoint operating cash flow, though only goes up about $50 million or so which is maybe a little bit lower conversion than I would've thought why is that.
Yes, that's primarily just because of the working capital dynamics as we kind of look at how the supply chain the stress in the marketplace right now as we think about.
Driving the growth in our business that you want to make sure that we are well positioned to have the inventories in place b on the raw side on the product side.
This is nothing more to it is mostly driven by the working capital if.
If I could make a couple of comments, obviously working capital with higher higher.
Input costs.
A bigger investment on our balance sheet today, obviously, we're getting rewarded for that in terms of the margins in our business.
The guide, though indicates that it's greater than $5 50, if you take $5 50 and divided by the midpoint of the range you are at a 36% cash conversion and we typically want to be in that 35% to 40% cash conversion in our business. So.
<unk> view this 550 is.
Floor.
In the guide the other point I would make beyond working capital is as we look, especially in some of our APM businesses, which by the way had a record quarter.
We are seeing demand for.
Our teflon PFA.
That goes into the semicon industry here in the U S.
And we're already we're expanding our capacity, but we are already sold out on that expanded capacity and we're seeing years of CAGR is that our double digit. So we wanted to leave ourselves some flexibility in our free cash flow guide to make very prudent investments in.
Areas of the business, where we see candidly explosive growth.
For multi years to come so.
Again, theres nothing Theres nothing wrong with our cash flow guide, it's a floor.
But I also from a shareholder perspective, we want to make sure that you understand that we're seeing some opportunities in all three businesses.
Consistent with our shareholder value creation focus.
That you would want us to make in this calendar year.
Great. Thank you.
Your next question comes from the line of Hassan Ahmed with Alembic Global Advisors. Your line is now open.
Good morning, Mark.
Mark just wanted to revisit some of your commentary about or constraints just wanted to better understand is it primarily a function of logistics and supply chain slides shipping issues or is there something more secular going on there and if there is something more secular.
What does that say incomes of the prospects.
Industry capacity growth.
Yes.
I wouldn't I wouldn't point to anything that thats more secular at all here clearly within a 12 month frame, which is our fiscal year 2022, I think we're acknowledging that starting the year with Richards Bay minerals, Forcemeat, you're having that further compounded.
By the conflict in Ukraine.
That.
Within this 12 month frame.
There is limitations on what you can do.
And that's just based on.
Our access today on the spot market.
Also you mentioned logistics and your question.
Even if you identify or today it takes a lot longer to get it to our shores here or where our plants are located so.
It's not a circular.
It's not a secular point, it's really just a recognition of where we are with respect to fiscal year 2022, again, I would expect us to be beyond this sometime in Q4.
And again, we just felt like it was time to acknowledge.
And as we updated the guide to make sure. It was clear that it was it was part of our guide.
And clearly it will limit.
<unk> volumes in the coming quarters, I would expect US for example to be flat.
In Q2 in a quarter that normally is higher.
And so I think I just want to maybe call out. This is a fiscal year 2022 issue, which will affect our next two or three quarters.
Understood very helpful and as a follow up sticking to GT.
And obviously, we've seen a fair degree of raw material inflation.
Laurie <unk> or on the other side pricing for pigment has been strong as well.
As you sort of Holistically take a look at the global cost curve.
I mean, how would you see it right now are some of the marginal guys.
Still.
Because of all of these moves still in the Red and if they are what percentage do you feel are in the red right now.
Yes clearly.
Hassan I am not going to comment on our competitors, but.
We're very grateful for where we sit on the cost curve and our continued focus on efficiency. So.
Today, obviously, and we've said on prior calls I'll reinforce it here.
<unk>.
Our EBITDA margin in this business is unlikely to be at its target level of 25%.
Our mid twenties until we are we're not or constrained.
But I'd say as I look at the cost dynamics in the world.
Glad that the majority of our plants are tied to Nash.
Natural gas here in the U S. Even though those prices are also up I think our ability to weather.
Cost input cost increases.
It is good because of how efficient we process or into pigment and again the team has done a great job in working this both from a procurement supply chain.
Perspective, but also in how we run our operations very well.
NTT and in all of our business candidly, but NTT despite being more constrained.
Yes.
Tom This is Sameer I'll just add one more point is look I mean overall is it going to look over the longer term cost curves are definitely important but also is kind of whats, becoming more and more apparent in the market and as we kind of look at from a customers' perspective is our value proposition and lets go back to the Pvs right.
To supply on time.
To meet the commitments even in these tough supply chain conditions is also helping how are we going to think about the growth of the business and ultimately the pricing.
Our product and the margins that we can generate mark talked about the raw material issues that we are seeing look.
On the pricing side. The teams has done a phenomenal job in staying ahead of the inflationary headwinds.
But the order to issue it does play into the margin as well, if that's where you're headed because.
Or constraints do limit our ability to optimize the circuit and thats reflected in the margin profile as well.
Okay very good thanks for your time to market.
Your next question comes from the line of Matthew Deyoe with Bank of America. Your line is now open.
Good morning.
Sticking with TT tier two pricing was 24% higher year over year, just kind of.
Curiously strongly consider the tie ups to PPI and your contracts. So like how are you securing.
Just big of an increase given your sales mix and how much is tied to.
Just like purchase price.
Yes, I think it's a great question and obviously the team has done a really nice job of taking advantage of the tight market place and higher input costs and as Samir just.
Staying ahead.
Of our inflationary impacts.
If you look at the peak.
CPI adjustments that we've seen.
In the last.
Our PPA adjustments take place twice a year.
They have been actually quite high.
Clearly, we continue to improve the book of business and the mix of customers and so as folks come into the fold.
They're paying not yesterday's prices, but todays prices and then finally.
A portion of our business runs through our flex and distribution portal <unk>.
Those are more akin to spot prices.
Which are very high.
If you can get the product so it's a combination of all three factors.
And just.
And there's been a view historically that with Cvs, we wouldn't have pricing power and I think we've proved the market wrong with that regard.
Europe exposure auto exposure et cetera, I mean have you Andrew.
Just given us a lot of concerns on the macro.
Recession coming in a recession in 2023.
Clearly when we when we revised our full year guide.
We're very aware of all the macro issues facing us and so we we wanted to be more constructive in our guide.
Hi.
Identifying what would constitute a low end or high end scenario.
But with the expectation that we would be today, we'd be towards the middle of the guidance range.
<unk>.
As I look across our three businesses.
Demand remains strong North America is clearly the strongest around the world.
But I'd say, even today, we see very good demand in both APAC and EMEA.
And to a lesser degree in Latin America, So demand remains strong.
In several product lines.
We remain sold out.
In APM for example, where we had a record quarter.
There is quite a shift going on in that business.
From a mix perspective so.
Yes, some of the consumer coatings business is down.
In our test Salon PTFE in battery applications for Evs is way up our membrane business on hydrogen Israeli starting to take hold and then as I said early on Semicon, where we're sold out and we're sold out for years to come so yes.
I hear a lot of sort of posturing on global macro.
We take those risks seriously in our planning.
But we're seeing very high demand across our circuit Sameer, yes.
The only other point I would make with respect to the 2022.
Inventories have a role to play in this thing as well because if you look at the inventories at least from our vantage point through the supply chains and replay inventories are pretty depleted. So as we kind of look into 2022, we feel pretty good about the demand from that perspective as well.
Yes.
Your next question comes from the line of P. J <unk> with Citi. Your line is now open.
Hi, This is Eric Petrie on for P. J.
And your check loans and thats, the doubling of capacity.
In the fourth quarter of last year.
I know you finished your corpus Christi expansion back in 2019, how do you see your capacity needs going forward and any associated capex.
Pulled that out.
Yes, great.
Great question Eric.
When we when we installed our corpus capacity.
It was a three X expansion, we were sizing our expansion.
With both the aim act or.
Essentially U S adopting that congrats guests in Europe . So.
We continue to watch capacity on our base refrigerant business.
Yes.
At our.
Last year and.
And Alicia and the team continue to look out on that business.
With respect to staying ahead of the curve.
On capacity.
Clearly this is a business today that.
Not only has very high EBITDA margins.
But it is also generating a lot of free cash flow because essentially we've done a lot of the front end work already in investing in capacity and investing in the molecules, but clear.
Clearly over time, we will need to consider how we invest in capacity to.
To support a decade of secular growth within this space so more to come on that front, but.
We're appropriately sized for where we see the market today.
Thank you.
And then a question back on the pricing of 40% in the quarter is that sticky for the remainder of 2002 or how do you see comps.
Supply issues in China resolve and so forth.
Yes so.
I would say the quarter in my view is a combination of.
No.
Some of the coming off of Covid factors, which continues and as we come into here into Q2.
The structural shifts that I mentioned.
Aided by regulatory actions and just strong economic demand globally. So clearly remember that this business.
Tends to have more seasonality in the first half versus the second half.
And obviously.
Some of our pricing actions are in anticipation.
Some cost increases we see coming through the pipeline that will hit us in the second half so.
Our long term goal for this segment is to be in the low thirty's EBITDA margins with the kind of growth rate that I talked about.
Clearly with the strong start we had to the year, we could be higher.
Thank you Mark.
Your next question comes from the line of Laurence Alexander with Jefferies. Your line is now open.
Hi, This is Kevin Estok on for Laurence. Thank you for taking my question.
First question has to do with.
Non U S operations like I said I was wondering how you expect lockdowns in China to impact your business.
Vendor of the year.
I think in your opinion, just wanted to get any meaningful sales in Ukraine, Russia, Eastern Europe , and whether you can get that congrats that's another location.
Yes.
So.
Clearly.
We're monitoring this situation and impacted in a very.
Stressful way given given the humanitarian issues.
As you saw we did we did.
Suspend any operations in Russia, our business Ms. Russian entities, we had announced that along with charitable contributions to aid in the humanitarian crisis.
Sameer to comment more specifically on.
The impact of both China, which we mentioned as part of our guidance.
And the Ukraine in the quarter.
Thanks Mark.
Is it going to look at it Kevin from the Russia, Ukraine perspective, what we have said as our revenue is.
Around 1%.
The previous year so.
And majority of that goes into the <unk> business, given the supply demand dynamics that youre seeing in the tier two in the industry, we don't see any.
Issues, placing that volume in other parts of the world. So we feel pretty good from the topline perspective that it shouldn't have any any major impact and overall when you look at from a cost perspective.
This quarter, we did take a charge of roughly 10 million tied to our operations tied to some of the receivables and inventory write offs, but other than that we don't anticipate any impact for the rest of the year.
And on the China side look I mean, it's an interesting.
Market.
Are looking keeping a tab very closely on that each business gets impacted in a slightly different way, but overall, we don't expect.
A material impact at this point from a direct not overall, if China stays shut down yes. It will have an impact on the broader Chinese economy and that spillovers into the global economy.
Speculate today.
Sitting today and speculate on that but overall our businesses, we do procure some raw materials from there those supply chains already stretched with those with the shutdowns that we're seeing.
But our businesses and our partners are very constructive in helping us get the materials. So we are in a good position right now and then on electronics chain will be a keeping people in monitoring as well any impact that may have on the APM business. That's the only one I would say with where we are exposed from a demand perspective. So this point the impact that we anticipate are reflected in the guide.
Gabe.
Okay. Thank you.
Your next question comes from the line of Vincent Andrews with Morgan Stanley . Your line is now open.
Hi, guys. This is will hang on improvements and then just a quick follow up for me just on the Chinese.
The China side, we've been seeing kind of Chinese <unk> exports I guess continuing to increase.
Sequentially year to date can you talk about what youre seeing in the region in terms of I guess local production and demand.
To what extent.
Hi, export posing a risk.
Software.
Yes.
First of all we see very limited intersection between China exports great.
Great.
And the markets and customers and applications in which we serve so we've also noticed that but I would say has has limited impact on <unk>.
Our book of business.
Our business in China on the tier two side tends to be at the high end of the spectrum Bostrom.
Coatings, and laminates perspective, a lot of our.
Our work in the laminates area are for.
The export market of high end furniture for example, so.
So far our demand in China on tier two remains very strong.
And I'd say, yes, we understand there is more product coming out of China in part because of Chinese demand being down for those products.
Have very limited impact on our book of business globally.
In terms of the customers and businesses that we serve.
Thank you.
That concludes today's Q&A I'll now turn the call back over to Mark Newman.
Yes, thank you everyone.
Sure.
We look forward to seeing you all very soon.
Our Investor day.
Many investor day with respect to TSS theres been a lot of great questions on the call and we just felt it was it was time.
To share more on that great segment with you going forward in closing I would just like to reinforce that we remain focused on our four key areas of long term value creation.
And some of which you witness firsthand in the quarter. The first is to improve our TT earnings through the cycle, while growing with strategic customers. As I said, we have the best book of business, and we and Ed and his team continue to take steps that will make that business higher earnings quality with the <unk>.
Cash conversion enjoys today.
Our second objective is to drive secular growth in TSS and API APM.
Behind class seating products with innovative chemistry as you see in this quarter TSS is already off to the races.
But there's much more to come.
In APM.
We're starting to see the impact.
The mix shift related to higher value applications.
Our our science in APM.
Is at the heart of clean energy.
Whether youre thinking of hydrogen or evs.
Or in.
Advanced Electronics Revolution, Thats happening today, clearly, where we're very integral to semi con.
We're one of the we're the only U S producer of <unk>.
And our Teflon PFA is key to the global Semicon market, but also to all of the efforts on reestablishing our U S. Semicon supply chain. So we're very excited about our work there.
In that area and as I said earlier the hydrogen.
Revolution is happening on both sides of the Atlantic and our Gnathion membrane will be key.
To driving the de carbonization of the planet.
Our third objective is to continue to manage and this isn't a key.
Area of focus for us.
And as I said earlier.
So all three companies having signed the Mou are key to make progress in this area.
And then finally.
We will continue to.
Yes.
We made.
And meaningful progress.
Existing shareholder authorization.
And in a recent.
We've approved a new 700, okay.
$50 million authorization through 2000.
25, and my way of thinking is we will continue to invest behind one two and three.
For our shareholders, but item four in returning the majority of cash.
Op repurchases has the impact of compounding the value creation over time so.
We're very excited as a leadership team.
As to how we can drive.
Significant value for our shareholders.
I want to share with you that everyone is focused on these four key priorities.
Which we think will pay significant dividends in the years to come.
And have a great day.
Okay.
Yes.
Okay.
Okay.
Yeah.