Q2 2022 Cabot Corp Earnings Call
Good day, ladies and gentlemen, thank you for standing by and welcome to the <unk> second quarter suites wanted to earnings conference call. At this time, all participants are in a listen only mode.
For the speaker's presentation, there will be a question and answer session. Just a question. During this session you will need to press. The Star then the one key on your Touchtone telephone.
If you recall offer assistance at any time. Please press Star then zero.
I'd now like to turn the conference over to your Speaker host, Steve Delahunt Cabinet Investor Relations. Please go ahead.
Thanks, Olivia good morning, I would like to welcome you to the Cabot Corporation second quarter earnings teleconference. With me today are Sean Keohane, CEO , and President and Erica Mclaughlin Senior Vice President and CFO .
Last night, we released results for our second quarter of fiscal year 2022 copies of which are posted in the Investor Relations section of our website.
Slide deck that accompanies this call is also available in 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.
Each forward looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.
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.
In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that are all adjustments to GAAP results.
Any non-GAAP financial measures referenced on this call are 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.
I will now turn the call over to Sean who will discuss the second quarter highlights and provide an update on our progress in the areas of battery materials and ESG.
Erica will review the company and business segment results, along with some corporate financial details.
Following this Sean will provide some closing comments and open the floor to questions.
Sean.
Thank you, Steve and good morning, ladies and gentlemen, and welcome to our call today.
I am very pleased with results in the second quarter as we delivered record adjusted earnings per share of $1 69.
Which was up 22% compared to the same quarter last year.
Demand across all businesses were strong and we continue to leverage our global scale.
<unk> portfolio and our strong track record of operational excellence.
While geopolitical events, the persistence of COVID-19, and global supply chain disruptions presented execution challenges industries globally. We demonstrated continued resilience across our operations driving strong earnings and discretionary free cash flow generation.
Results across our businesses were very strong with record performance in both our reinforcement materials and performance chemicals segments as we delivered volume growth, while mitigating the impacts of rising raw material and energy costs.
During the quarter, we made important progress on our creating for tomorrow strategy.
We completed the sale of purification solutions.
We are now solely focused on growing our industry leading portfolio of businesses.
Central to our purpose and strategy is a commitment to sustainability leadership and during the quarter, we achieved important recognition, earning a platinum rating from Echo vedis.
And finally on the capital allocation front, we move forward, which to treat strategic high value growth investments, while continuing to return capital to shareholders through our robust dividend and share repurchases.
I've talked quite a bit about battery materials over the last few quarters as I believe it represents a transformational opportunity for Cabot.
Over the past several years, we've been systematically building out the product portfolio technical expertise customer support and global footprint required by the leading with BMI and battery producers.
Battery technology is complex and rapidly changing as manufacturers look to improve safety and battery range, while reducing costs and shortening charging time.
Conductive carbon additives are one of the critical ingredients to address these evolving market needs and we will be required regardless of whether the battery roadmap evolves from current chemistry to dry process or solid state.
Cabot is the only global conductive carbon additive player that has the broad product range of conductive carbons carbon nanotubes and carbon nano structures, each of which offers different levels of connectivity and formulation flexibility for battery manufacturers.
Our portfolio breadth and ability to formulate blends of conductive carbon additives allows us to tailor the solution for our customers unique battery chemistries.
During our recent Investor day, we outlined an investment plan that will triple capacity over the next three years across our battery materials portfolio.
Recently, we completed technical upgrades at our shoe Joe specialty carbons plan with the first unit commissioned in April .
This will immediately free up additional conductive carbons capacity in our global network to support growth in battery materials.
We've also commenced the Debottleneck project to expand capacity at our carbon nanotubes plant in Zhuhai, China and have begun the technology conversion of our newly acquired plant in Tianjin to further add capacity for battery materials.
This portfolio of projects is capital efficient and we intend to execute these projects with speed to capture the market growth opportunity and meet the needs of our customers.
Results in our battery materials business have continued to surpass expectations year to date EBITDA in this business increased by approximately 80% compared to the prior year driven by rapid market growth for electric vehicles and continued momentum with customer adoption for our products.
We believe there is tremendous potential to deliver greater performance from lithium iron battery chemistries through innovation and optimization of conductive carbon additives plans and we are seeing active engagement with our customers in this area.
In the quarter, we achieved a key conductive carbon additives blend win with a top five battery manufacturer that will be utilizing a blend of our conductive carbons and carbon nanotubes.
This customer win win further supports our belief that blends of conductive carbon additives will play a key role in the future battery innovation as the formulations can be tailored to optimize both short range and long range connectivity.
Given our strong momentum we are tightening our EBITDA guidance range to $30 million to $35 million for fiscal year 2022.
The midpoint of this range represents a 100% year over year growth rate of earnings for battery materials.
Sustainability is at the heart of our purpose and integral to everything we do.
Given that we're especially proud of the various forms of external recognition. We have received over the years for our sustainability leadership.
At the top of this list is the platinum rating. We recently received from Echo Vegas, the highest recognition available for the second consecutive year.
<unk> is the world's largest and most trusted provider of business sustainability ratings with more than 90000 rated companies.
Latin am rating recognizes our sustainability efforts in places Cabot among the top 1% of companies in the manufacturing of basic chemicals group.
This prestigious recognition underscores cabot's commitment to transparency and provides customers with a better understanding of our sustainability performance.
We are very pleased with our progress this quarter, both on the operational execution front and on our strategic priorities.
I'll now turn the call over to Erica to discuss the financial and performance results of the quarter in more detail Erica.
Thanks, Sean.
I'll start with discussing results for the company and then review the segment results.
<unk> had record results in both reinforcement materials and performance chemicals with adjusted EPS in the second quarter of $1 69.
22% compared to the second quarter of fiscal 2021 and up 31% sequentially.
Discretionary free cash flow in the quarter was $96 million driven by strong EBITDA and we ended the quarter with $215 million of cash.
Capex in the quarter was $41 million and year to date, we are at $71 million, we expect full year capex to be approximately $250 million.
Our balance sheet also remains strong with total liquidity of $1 2 billion and net debt to EBITDA of one eight times as of March 31st.
We plan to refinance $350 million in public bonds in the third fiscal quarter.
Rising interest rates affecting both our bond refinancing and our short term commercial paper are expected to increase our quarterly interest expense by approximately $3 million per quarter for the back half of the year.
This expectation has been included in our updated adjusted EPS guidance range.
Our operating tax rate was 27% for the quarter and we anticipate that fiscal year rate will be between 26 and 27%.
Now moving to reinforcement materials.
The second quarter EBIT for reinforcement materials increased by $12 million as compared to the same period in the prior year.
The increase was principally driven by improved unit margins from higher pricing in our 2022 calendar year customer agreements and higher volumes across all regions. This was partially offset by higher fixed costs associated with increased utilities and maintenance costs.
<unk> volumes were up 3% in the second quarter as compared to the same period of the prior year.
6% growth in the Americas.
Present in Europe , and 1% in Asia.
Higher volumes in Europe , and the Americas are largely due to volume gains in our customer agreements and our unique position in Mexico, which is enabling us to capture the strong volume growth in that country.
Looking to the third quarter of fiscal 2022, we expect the reinforcement materials EBIT to improve sequentially.
Expectation that strong volume levels will continue with seasonally stronger growth.
Also we anticipate unit margins to be maintained at healthy levels and prices will adjust for changing input costs.
Now turning to performance chemicals, EBIT increased by $12 million in the second fiscal quarter as compared to the same period in fiscal 2021.
The increase was driven by higher unit margins as a result of improved pricing and product mix in our specialty carbons and fumed metal oxides product line.
This included the successful implementation of price increases ahead of rising input and operating costs and a few metal oxide product line.
Year over year volumes in the second fiscal quarter increased by 1% in performance additives and decreased by 17% in formulated solutions. The decrease in formulated solutions is due to the continued plant downtime at our Belgium specialty compounds site.
They came back online in April and is expected to return to full production in the third quarter.
We delivered impressive volume growth in products sold to battery materials applications. As we continue to see growth driven by higher EV demand and adoption of our products by top battery producers.
As we look ahead to the third quarter, we expect the sequential volume increase led by growth in battery materials applications and the benefit from our specialty compounds plant being fully back online.
We anticipate that unit margins will remain strong.
We do not expect to see the same benefit from price increases ahead of raw materials in our fumed metal oxides product line.
This contributed $10 million in the second quarter, and we do not expect to repeat sequentially.
In addition, we expect fixed cost to increase due to the plant start ups and higher utilities.
Now moving to capital allocation as we discussed at Investor Day, our capital allocate allocation framework supports are creating for tomorrow strategy.
John has discussed the investments and the acquisition completed this quarter to support the growth in battery materials. In addition, we broke ground on our Indonesian capacity expansion to support growth in our specialty compounds product line.
Your high confidence high return projects to support our growth agenda.
In addition, we are also focused on providing an attractive return of cash to shareholders during.
During the quarter, we returned $36 million to shareholders through $21 million in dividends and $15 million in share repurchases.
Year to date, we've returned $76 million.
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 and net debt to EBITDA of one eight times.
I will now turn the call back over to Sean.
Thanks Erica.
I'll close out my prepared comments today by talking about our outlook for the remainder of the fiscal year.
We are very pleased with our momentum coming out of the second quarter and we feel very good about the second half of the year.
Based on our second 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 80.
The $6 20 for the fiscal year.
The upward revision represents a <unk> <unk> increase at the midpoint compared to our prior guidance as we anticipate the strength of the first half of the year to continue with second half results at a similar level to those in the first half of the fiscal year.
In the second half, we expect underlying customer demand remains strong in both segments.
We continue to closely monitor the dynamic situation in China regarding COVID-19 restrictions and the impacts from the war in Ukraine.
To date, our plants have continued to operate with limited impact in China, and our local team has done an exceptional job navigating lockdown related supply chain disruptions.
However, we are expecting some impact on the economy and our China volumes in Q3 from Covid, driven Lockdowns, which is included in our fiscal 'twenty two guidance.
Regarding the Russian invasion of Ukraine, We don't have operations in Russia, or the Ukraine and the impacts so far our business has been minimal.
Margins are expected to remain strong in the second half as we realize the full year benefit from the calendar year 2022, reinforcement materials customer agreements and spot market pricing actions remain timely to address dynamic input costs.
I continue to be very excited about the momentum across our growth vectors, particularly in battery materials.
We are performing at a very high level and are making the investments necessary to win as the automotive industry undergoes the transition to electric vehicles.
Overall, I am very pleased with our strong execution and the progress against our creating for tomorrow strategy.
The long term fundamentals of our businesses are strong our end markets remain robust and we continue to execute at a high level.
Thank you very much for joining us today.
I'll now turn the call back over for our Q&A session.
Ladies and gentlemen, and good luck.
At this time, you will need to press. The Star then the one John you touched on California.
Please standby, while we compile the Q&A roster.
And our first question coming from the lineup David Begleiter with Deutsche Bank. Your line is open.
Good morning, everyone. This is Anthony <unk> on for David Begleiter.
In battery materials.
Will the win you announced impact this year's results and just as a follow up can you maybe give some insight into the pipeline for future better battery materials wins.
Thank you.
Sure. Good morning, good morning, Anthony so.
Certainly the recent customer win we commented on we will.
Have impact in in the back half of the year and is embedded in.
The tightened guidance range for this business that we provided on the call here.
No.
As you may recall from our Investor day materials we.
We outlined our strategy here.
For this business.
It's a very high growth opportunity really a transformational opportunity as the automotive industry transforms from internal combustion to evs and we're making the investments.
To.
Capitalize on that and we've outlined I think a pretty compelling strategy.
Pretty aggressive set of targets. So we're working with all of the major battery producers in the world.
And we're making the investments to support their growth needs and I would say.
Debt.
The value proposition of Cabot is resonating with customers, we bring a broad portfolio of winning conductive carbon additives in ability to formulate blends for optimal performance.
Unmatched global footprint of manufacturing assets and application labs in the commercial and technical support that our customers need in order for us to work closely with them and we've built a long standing culture of operational excellence.
And this application is the demanding one and I think our customers value.
Value that so overall very excited about.
Our progress here and.
Where we're performing at a very very high level and we expect the momentum to continue.
Thank you.
Our next question coming from the line of Joshua Spector with UBS. Your line is open.
Good morning, This is Lucas Beaumont answer Josh.
I just wanted to talk about the impact.
Russia, a little bit if we can so I mean there are.
A significant exporter of carbon black into Western Europe . So I was just wondering if you could give us your thoughts on <unk> customers have reacted.
Any sort of lack of supply.
Is that something that's going to benefit you in Europe as the year progresses do you think or has that benefited you China supply in any way.
Yes.
Good morning, good morning Lucas.
Certainly, it's let me start with the.
The reality that it's been a very.
Trying time for many of our European colleagues, who are impacted by this.
War in the Russian invasion in Ukraine, and we.
We're fortunate that.
All of our.
<unk> are safe and their families and we have known that.
That work in Russia or <unk>.
Ukraine.
And as I commented, our business has not been material impact materially impacted to date.
Don't have operations there.
At the moment, we are seeing significant interest from customers and.
Customers that we already serve as well as some customers that we do not serve.
That are urgently looking for carbon black supply and I think that debt.
Links directly to.
Your comment which is correct that the European market does import a significant amount of carbon black today from Russia and that has suffered significant disruption.
From the war in Ukraine, I think both in terms of sort of supply chain potential.
For sanctions and perhaps most importantly, I think customers just concerned about long term reputation of impacts of continuing to source.
Source from from Russia.
So our view here as we go forward as we're trying to work with customers to.
Help them in any way that we can although.
Most of our capacity is contractually committed in Europe . So.
There are limits to.
What we can do we are working with customers to try to help them from the rest of our global network.
Including in Asia and China.
If the pricing and logistics makes sense for.
For for <unk>.
Customers here.
And then as we go forward.
<unk>.
It's more a question of.
What happens over the.
Over the longer term.
And again I think the uncertainty.
Net customers.
We have right now.
Has caused.
Many of our customers to <unk>.
<unk> out early to begin negotiations.
For 2023 this is much much earlier than typical and.
And what we're hearing from customers is that they are concerned with the security of supply as well as the reputation risk of continuing to do business with Russian suppliers and I think given our restaurant consistent reliable performance customers are definitely eager to secure secure supply with us.
And so we've begun we've begun negotiations given the balanced supply demand conditions and I think the uncertainty around.
Russia, we feel very good about our prospects.
And the importance placed on the Cabot value proposition by customers here. So.
I think thats, maybe a bit of commentary on the on the longer term.
Alright, Thanks, and then within performance specifically in the specialty black business.
Are you seeing any change in the response to pricing sort of in any region.
Think there's going to be a point here whether.
You have to sort of expect to we'll start to see some more pushback on that front.
I mean, this seems to be quite different to prior cycles, whether it's usually sort of more of a lag and so why is this time different thanks.
Yeah sure. So our team has done an exceptional job here not only this quarter, but I think this has been a consistent narrative over the last year when we've had.
More dynamic input cost movements. Our team has done just a great job of.
Moving quickly in the market and.
And getting knees.
<unk> through to customers through pricing actions and again, we saw that.
This quarter, so I think in terms of.
The execution level.
Great and we expect that to continue.
There are a couple of factors here that.
Me comfortable that.
What we're executing on right now is a sustainable way of doing business I think first and foremost.
Products that we provide in specialty carbons go into a range of applications.
And.
The loading in those applications, while it varies.
<unk> to be on the lower end yet the performance requirements in the application tends to be very high.
Number one so there's real performance orientation first and foremost.
In customers' minds second I would say is supply reliability, our network of plants are operational reliability.
That we can serve customers.
All over the world and given the general tightness and.
The disruptions.
That are out there in the in the sort of macro environment I think all of that is.
Leading customers to place a certain premium on.
On supply reliability, so given the performance and application aspect of this product line and the supply reliability.
I think customers are understanding of.
That.
We're needing to pass on these.
Input costs and.
I would expect that to continue.
Alright, thank you.
And our next question coming from the line of Laurence Alexander with Jefferies. Your line is open.
Hey, guys, it's Dan Rizzo on for Laurence Thank you for taking my call.
You mentioned, meaning some European demand from I guess your regions.
Work in other regions.
I was wondering a question thats kind of difficult to do that shipping of course confidential request oceans is not something that really happens a lot within them within your with your products.
Yes, good morning, Dan.
Youre absolutely right.
This business.
Particularly in reinforcement materials tends to be making region sell in region business.
For a whole host of supply chain reasons.
It's a pretty low bulk density products are shipping costs are our high most of these volumes tend to be shipped in.
Bulk and so that means rail and the like rather than in bags, which is what typically international shipping.
As done by so there are a whole bunch of reasons why it just makes sense. This business as a regional one I think right now given the stress that the industry is under because of.
Russian the lack of Russian supply.
Customers are.
Certainly reaching out and having to entertain a range of different options, including.
Importing from other parts of the world. So the stability of that from a logistics standpoint, given the global freight challenges for that every company is facing that's a real issue and then the costs are.
Not immaterial either but.
We're working with customers to try to help them out from our network to the extent that.
The cost in the supply chain the lead time makes sense, but I think it's more of an urgency issue Dan and then than it is.
Alright. Thanks.
So that actually makes sense and then within battery materials, you seem to be growing.
Fairly well organically and taking advantage of opportunities, but I was wondering if there was other I don't know.
Small companies out there that might be a target because of the technology that they have or something they can offer just because it kind of broaden our portfolio and if youre thinking about growing in that.
That direction, yes, yes, well definitely very very pleased with the performance here in battery materials and as I said I think our.
Our value proposition with customers in terms of conductive carbon additives is definitely definitely resonating.
<unk> here and we think we're in a great spot because the market's growing and we're growing much faster than that market because of the value proposition now with respect to M&A. It is definitely something that we're actively evaluating if in fact, it was not long ago that we.
We made an acquisition to buy carbon nanotubes player in China to do exactly that broadened our portfolio and support our growth strategy. So things like that are very much in scope and we're.
We're actively looking for opportunities that that would make sense for us. So we think about.
What makes sense.
Through a couple of different.
Lenses one is that.
It has to be a material, where we really feel that we can bring some value to two that it's complementary to our existing chemistry.
And where we really feel that we would have a right to win.
And so but I would say this is very much in scope because I think this is a transformational opportunity here as the whole industry shifts from Ice's to GE.
Yes.
Thank you very much.
And ladies and gentlemen to ask a question. Please press star one.
Next question coming from the line of Chris Scott.
Capital markets. Your line is open.
Yes. Good morning. Thank you just wondering if you could elaborate a little bit more on the situation in China.
In wake of the Covid Lockdowns, you mentioned that your operations haven't really been impacted that much. So I'm curious if you've seen.
Some impact that your higher maker customers and if that represents some risk for I don't know like a lag.
Demand sluggishness into the second I'm, sorry into the June quarter at all.
Good morning, Chris So, yes, as we commented in the prepared remarks, so far we've only seen minimal impacts.
Our business may be very immaterial.
And as I think you know we haven't we have a number of manufacturing sites in China, but we have one in Shanghai.
Thanks to the extraordinary.
Performance of our staff there we've been able to operate during the entirety of the Shanghai Covid Lockdown.
Now currently logistics are becoming a little bit of a bigger challenge for a company, so simply moving raw materials or feedstocks and in getting finished product out is becoming a little bit more of a challenge. Although we are navigating that and again so far.
I've not had any any any material impact as we look forward though.
We have adjusted down our forecasted Q3, China volumes and this is implied in the guidance range that we gave on the call here today for exactly that we do expect that there will be some.
The impact to economic growth.
And we expect that.
There will be some some impact to our customers and then and then on our volume so.
We've taken that down it ranges by specific business, but we've taken down the <unk>.
Q3 expectation in the 5% to 15% range in China again, depending on the specific business that we have and we think this is.
This is.
Appropriate based on the best information we have at this point.
Okay. That's helpful. So basically it's softening.
Some sequential softness in your guidance it sounds like the <unk>.
Correct, Yeah. So.
And then just following.
Following up on <unk>.
To the extent that European tire makers have relied on Russia carbon black and to the extent they can are able to.
I guess transition away from that that that carbon black.
Presumably the Russians will still want to find a home for it and someone suggested that.
Look to maybe China end market just curious if there's any evidence of.
Much Russian carbon black finding its way into the Chinese market. Currently it seems like that also would be somewhat logistically challenge and not necessarily cost competitive with.
Stablish.
<unk> operations in China, and including Yours, obviously, which is probably.
Produce much more.
In a sustainable manner than carbon black that's produced in Russia.
Yeah. So.
Xactly what plays out.
Longer term from.
This.
Russia.
Invasion of Ukraine, this whole situation.
I think is still.
To be determined but I think at this point customers are I.
I think rightly concerned about long term supply reliability.
And I think the reputation will impact so.
Of sourcing even if you can the.
The reputation of impacts are becoming more pronounced certainly for the.
The global tire customers so.
Now.
They're going to they're going to need carbon black and so how the rest of the world.
Kind of adjust course here.
To to flow some carbon black to meet their needs and.
I mean that will that will happen.
Yet much higher costs.
Landing carbon black from a place like China, which is.
Where where some excess would be available.
Trying to land that into Europe .
Is is pretty expensive you've got.
<unk> costs that are very high there as an export duty on carbon black I think it's 17% or something like that it's pretty high.
By the time you do the landed economics, plus coal tar prices are pretty high in China right. Now. So I think it is a tough proposition from an economic standpoint, but.
There will be some flows that will have to happen and we are working with our customers to try to help them from our global network now.
Does Russian material flow other places I don't think we've seen any evidence that it is flowing into China and that would really surprise me my own personal perspective.
I doubt that that would happen.
I think China has its own material to support its own supply chains and.
I don't think that would that would happen. So there's some russian material flow into some other smaller markets in the world.
It's very possible that.
That happens but.
It's.
It's quite a disruption here.
<unk> for the for the for the tire in the industries that use carbon black.
Thanks for that and if I could just sneak in one more about the battery materials business.
The currently.
The lithium ion battery industry, it's sort of Asia really China centric and even your assets are there, but if you look at the bigger picture and the pipeline of Giga factories globally.
Tremendous ramp of Giga factories.
Under design.
In both Europe , and North America, and you flagged your sort of global network.
Our commercial advantage in terms of.
Positioning yourselves to those customers. So I'm wondering if that if the.
The engagement with these down.
Downstream battery customers as is.
If you are seeing evidence that that your global footprint and scope is translating into.
Advantage.
Dialogue with those potential customers as those pipeline giga factories come into greater visibility. Thank you.
Well definitely.
Chris our view in terms of how this industry plays out in the long term is that supply chains, we'll regionalize and you're exactly right. There are.
Significant.
Plants that are either coming on or under construction right now in Europe .
<unk> like north bolt in and others and some of the Asian players are building plants in Europe and those are those are.
Those will be coming on here, so I think the regionalization in Europe will occur.
Occur.
First.
And a little faster than the U S.
But the U S will will follow certainly Tesla is leading the way.
In the U S. So I think regionalization of supply chain is very much or.
Our view on this one and I think our network of assets positions us very well here, we have assets in the U S that produce certain battery materials grades today and.
And we would.
Expand then.
And broadening the product portfolio as those those plants come online and then the same is true in Europe , we produced battery material grades in Europe today.
And would expand and broaden the product portfolio as those plants come online I think the is the.
Is the Cabot network.
Leading to advantaged conversations.
I'd say that Cabot value propositions, resonating very well with customers and as a result, youre seeing us outpace the market.
By a significant margin in terms of growth and I think it's because of that and I think theres a few things I would I would.
Just underscore one is the portfolio of products that we have the broad range of conductive carbon additives in the ability to formulate plans I think our view on this one is right and there is evidence that that's that's the way. This industry will go over the longer term and then the second is our our unmatched global footprint.
I think people in the battery space right now are really trying to work with suppliers that can provide long term supply reliability and move with speed to meet their needs and and I think we're best positioned to do that and then finally.
One thing to develop a product that works and build the capacity, but the culture around operational excellence. This is a demanding application, but we have a lot of experience in demanding applications like this.
From CMP back some some years ago selling directly to fab.
Chip producers are very demanding application inkjet, a very demanding applications. So our ability to dial in the operational excellence that that these battery customers needed our need is.
Not not trivial so I think all those things are coming to light for customers and.
It's part of what's what's driving our significant outperformance in growth relative to the market.
Very helpful. Thank you.
Yeah.
Thank you I would now like to turn the call back over to Mr. Cohen for any closing remarks.
Great well. Thank you. Thank you again for joining the call today.
As I said at the end of my prepared comments very pleased with our performance.
In the quarter here, both at the operational execution level, but also on the strategic front and we believe we're well positioned to deliver on our creating for tomorrow strategy.
And two to grow the company in a differentiated way and we appreciate your support and look forward to speaking with you on future calls.
And have a great day.
Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation you may now disconnect.
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