Q1 2022 Ecovyst Inc Earnings Call
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Good morning, My name is Catherine and I will be your conference operator today welcome to the Eco best first quarter 2022 earnings call and webcast. Please note today's call is being recorded and should run approximately one hour.
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Lastly, if you should need operator assistance. Please press star Zero I would now like to hand, the conference over to Mike <unk> Chief Financial Officer. Please go ahead.
Thank you Catherine and welcome everyone and thank you for joining us for our first quarter 2022 earnings call.
I would first like to introduce Kurt bidding, our new CEO , who will be joining me today. In addition, Tom Schneberger, our new President of <unk> will also be joining us and available during our Q&A session should any questions need to be directed his way.
We will start today with formal remarks, then followed by a Q&A session.
Please note that some of the information shared today is forward looking information including information.
Formation about the company's financial and operating performance strategies, our anticipated end use demand trends.
Our 2022 financial outlook.
This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially.
Any forward looking information shared today speaks only as of this date these.
These risks are discussed in the Companys filings with the SEC reconciliations of non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures can be found in our earnings release and presentation materials posted on the investors section of our website at www.
<unk> Dot <unk> dot com.
Now I'd like to turn the call over to Kurt.
Thank you, Mike and thank you to everyone joining us today.
First I'd like to say, how excited I am to be taking the reins as CEO of Eco list.
I have been with the eco services business for more than 15 years, serving in several capacities. Most recently as president of the business, but I have never been more confident in the growth potential of this company than I am today.
<unk> provides products and services critical for the production of clean fuels polymers and growing technologies that will aid in de carbonization efforts.
We are uniquely positioned to play an important role in the green energy transition and to help our customers achieve their own sustainability goals.
As you have seen in today's press release <unk> Board has decided to make a leadership change to accelerate the growth of the company. This includes my promotion to Chief Executive Officer, and the promotion of Tom Schneberger to President in.
In addition, Kevin Fogarty has joined the board as a nonexecutive chairman.
Happy to welcome Kevin to the team and we are fortunate to be able to draw on his vast experience in the chemical industry. Following his retirement from great times.
I also want to thank Doug Awesome Jerry.
Past three years of leadership.
The year has kicked off on a positive note.
End markets, we supply have demonstrated resilience and growth during this period of inflation and geopolitical conflicts.
As you know we are a critical supplier for the production of transportation fuels and many industrial applications, but we are also uniquely positioned to support sustainability trends.
In fact, we provide critical materials and services that support sustainability, enabling technologies, including sulphuric acid supply into mining for metals <unk> minerals production essential to electrification as well as catalyst and activation services use for renewable fuels production.
I am very proud of the eco this team's ability to deliver strong sales and adjusted EBIT. This quarter following closely on the heels of our stellar financial performance in 2021.
The confidence we have in our growth momentum gives us the flexibility to continue to pursue accretive bolt on acquisitions similar to the addition of <unk> 32.
While returning value to our shareholders through the share buyback program, we have announced Mike will elaborate on our capital allocation strategy in a few minutes.
I would like to highlight several key financial operational and safety metrics that we track closely.
Our strong performance this quarter on all fronts is a testament to the team as well as the key strategic partners that we have built our long term customer contracts for critical products and services and our robust production and logistical operations that allow us to reliably deliver our solutions to our valuable customers.
We continue to outpace industry growth rates and peers as evidenced in our Q1 2022 results with year over year gains of 34% in sales.
40% growth in adjusted EBITDA, and a strong 74% cash conversion ratio.
<unk> also increased amid inflationary pressures as we are able to pass through rising raw material freight and energy cost to customers.
The growth trends of our products are expected to continue through the remainder of the year and into 2023.
With the need for sustainable solutions front of mind for many investors customers and employees. We continue to invest in technology that supports and advances these trends with 85% of our research and development focused on sustainable solutions.
We value the health and safety of our colleagues above all else.
Our safety record has shown consistent improvement year over year, but our work in this area is not complete and we remain committed to continuous safety improvement.
There is a lot of concern around the current inflationary and geopolitical environment.
Want to take a moment to highlight how well <unk> is performing through this period of volatility.
First eco.
<unk> had success and more than offsetting the inflationary pressures in raw materials and transportation as a result of contractual cost pass throughs and price increases to our customers.
From a demand standpoint, many of our customers are located in the U S, particularly on the Gulf Coast and Theyre advantaged access to energy and raw materials has allowed them to benefit from our strong global pool for their refined products and petrochemicals, which rely on supply from eco services in catalyst technologies.
And finally, because of order timing and transportation issues, primarily in catalyst technologies, we have.
<unk> built up an order backlog that we will fulfill in the coming months, which gives us confidence for the remainder of the year.
Moving to a discussion of our industry demand drivers I would again like to highlight the eco vis supplies numerous customer segments that have proven critical in today's geopolitical environment, including clean fuels industrial and polymers. This alignment along with our support of sustainable technologies has.
<unk> enabled us to deliver strong results.
The recent geopolitical events have created a strong need for exports of additional refined products from the U S. The return of U S gasoline demand coupled with the global demand for U S. Gasoline exports has led to healthy refining margins and increased refinery utilization in the U S, which is projected to increase by.
5% in 2022.
This has continued to benefit regeneration, which support calculation one of the highest value processes in a refinery.
On the industrial side, we see strong sentiment continuing for the materials that are used in the automotive industry, such as lightweight vehicle parts fuel efficient low rolling resistance tires and lead acid batteries.
Mining sector growth remains strong as the supply of metals and minerals is critical for the production of electric vehicles, and Green energy infrastructure, such as solar and wind.
Renewable fuels demand continues to grow in the high double digits year on year as government policies push to reduce emissions and heavy duty transport and aviation fuel.
As a reminder, the expanding production of renewable fuels benefits, both catalyst technologies, and our Kent 32 catalyst activation business because renewable catalyst generally require more frequent catalyst bed change outs we are.
We're well prepared to handle increasing customer needs in the coming quarters as the renewable sector continues to expand.
Polyethylene continues to play an expanding role for <unk> as well as the global economy.
We had strong growth through the pandemic.
With the current geopolitical uncertainties demand for polyethylene remains strong similar to what we experienced during the pandemic.
In traditional fuels, where hydrocracking units are operating at high production rates, our sales of HCC catalyst materials increased by more than 90% versus prior year.
Strong refinery utilization also resulted in orders placed for niche cut some catalysts in line with our expectations.
Our development of novel catalyst for sustainable solutions continues to progress with the receipt of orders for manufacturing trial quantities of catalysts for novel Biomaterials.
Our exposure to both established and developing segment.
Of our customer base gives us confidence in our growth momentum through 2030.
Transitioning to sustainability.
On our previous quarterly quarterly call, we talked about our sustainable solutions in three key areas clean air by reducing sulfur and nitrogen oxide emissions in heavy duty transport plastics circularity, enabling the reuse of lightweight durable plastics and renewables to transform biomass.
In the fuel and other materials the pool for our renewable solutions is strong in fact, our sales to renewable fuels tripled in 2021 and represent more than 10% of sales at our catalyst technologies business. We expect further growth in 2022.
We will continue to partner with our customers and providing innovative solutions to industry problems that will transform our world in the coming decades.
I will now turn the call over to Mike for a review of our Q1 2022 results.
Thank you Kurt as mentioned during our fourth quarter earnings call in late February we expected the strong sales and adjusted EBITDA growth that we experienced in 2021 to continue into the first quarter.
Today I am pleased to report that we delivered in line with those expectations.
During the quarter total sales, including our 50% share of Gi increased 34% year over year with adjusted EBITDA, increasing by 40%.
Demand for regeneration services and Virgin sulfuric acid in our eco services business led the way along with strong demand for polyethylene catalyst in our catalyst technologies segment.
We continue to implement price increases, which more than offset higher variable costs, such as sulfur natural gas and free allowing strong earnings growth to continue despite cost pressures.
Adjusted EBITDA margins increased 120 basis points to 28, 4%.
Moving to the next slide we will take a look at the key components of our earnings growth in the quarter.
Adjusted EBITDA increased $17 million to $59 million on two key drivers first strong demand in various product lines led to higher volumes.
Second.
Our business fundamentals have allowed us to raise prices to offset the impact of inflation on input costs, creating a positive price to cost dynamic.
And eco services changes in sulfur cost pass through in price on a dollar for dollar basis.
As other cost change, including labor natural gas and free contractual index provisions offer price protection further shielding this against inflation.
Moving to our eco services results sales increased $54 million or 54% driven.
Driven by higher regeneration services, and Virgin sulfuric acid volume and increased pricing to cover higher input costs, including the pass through of $21 million of higher sulfur costs.
Adjusted EBITDA increased $16 million or 50% on the drop through of favorable pricing and higher volume as well as the impact from the <unk> 32 acquisition.
Earnings growth of 50% in this segment was exceptionally strong however.
However margins were negatively impacted by 510 basis points related to the pass through of higher sulfur costs.
Adjusting for the impact of the higher sulfur cost pass throughs.
Adjusted EBITDA margins for Eco services would have been just over 37%.
And our catalyst technologies business silica catalyst sales were down slightly while sales in our Zelus joint venture were flat with the prior year.
While demand for polyethylene catalyst continues to remain strong we experienced delayed shipments and.
And an impact from the timing of niche custom catalyst sales.
Within the Zelus joint venture sales.
Sales growth in both hydrocracking catalyst and niche custom catalysts were offset by order timing within the year for our pressure product catalysts.
Adjusted EBITDA of $17 million decreased $1 $5 million with reduced margins on lower volumes due to order timing and shipping delays and higher production costs.
The strong demand environment across our key markets.
Expect improved performance in the second quarter.
On this next slide we are reiterating our guidance for nearly all of our metrics as we continued to benefit from the strong growth momentum experienced by our key demand drivers.
With the recent spike in sulfur costs, we're increasing our GAAP sales guidance by $80 million.
From a range of $730 to $750 million.
Through a range of $810 million to $830 million.
This leads to our expectation that sulfur costs will be higher by approximately $140 million year over year.
As a reminder, this contractual pass through of higher sulfur costs does not impact our adjusted EBITDA, but would have a negative impact on adjusted EBIT margins.
We are reiterating our adjusted EBIT guidance, which is expected to be up 16% at the midpoint of our range compared to the prior year and our adjusted free cash flow expected to improved 30% year over year.
With respect to the second quarter of 2022.
We anticipate continued sales and adjusted EBIT growth in both businesses.
Earnings are expected to be up compared to the prior year.
And the first quarter of 2022.
But slightly lower than the fourth quarter of 2021 in both businesses.
On the topline eco services sales in the second quarter are expected to continue to increase related to the pass through of higher estimated sulfur costs and other input costs.
Shifting to our financial position <unk> strong cash generation continues to drive the reduction in leverage and increase in available liquidity.
Since the recent sale of our performance chemicals segment in August of 2021, we have reduced our leverage by more than half of a turn and are now just above three times.
During the same timeframe available liquidity, which we define as cash on hand, plus the availability under our revolving credit facility has increased 24% to more than $200 million.
This strong financial position allows us the flexibility to provide our updated capital allocation strategy on the next slide.
With our strong cash generation and lower leverage position.
<unk> is positioned to increase shareholder value through return of capital and opportunistic bolt on acquisitions.
We will continue to use cash from operations to support organic growth initiatives, then look for opportunities to target accretive and strategic M&A with a focus on sustainable technologies aligning our goal is to create a more sustainable future.
This flexibility allows the company to return capital to shareholders.
Including negotiated transactions with our sponsors while keeping our leverage level and an appropriate range.
We expect to use our available cash on hand, and free cash flow generated from operations to fund the program.
This strategy represents an attractive use of our cash as part of our balanced approach to capital allocation.
With that I'll turn the call back to Kurt for some closing remarks.
Thanks, Mike.
In summary, our business has delivered great results in the first quarter.
We have long term customer contracts that help to protect against inflation.
Our north American customer base appears to be well positioned to manage through the current geopolitical situation and.
And we have the demonstrated ability to generate strong cash flow.
This along with a strong balance sheet gives us the confidence in our new capital allocation strategy, including our newly approved stock buyback program, which we believe will increase shareholder value.
We expect to have a strong second quarter and keep the positive momentum for the rest of the year.
I'd like to reiterate that I am truly honored to be taking on the CEO role at <unk> at such an exciting time for the company.
I also want to take the opportunity to thank all of our dedicated <unk> employees, who delivered these outstanding results.
We are intently focused on continuing to serve our long term customers as well as developing the solutions that will enable low carbon technologies and green infrastructure in the future.
In the coming weeks and months I look forward to hitting the road to meet many of you who are on this call.
Thank you for your time and interest in our Great Company. This concludes our prepared remarks, and we will now open it up for Q&A.
At this time, if you would like to ask a question. Please press star one on your telephone keypad again that is star and one if you would like to ask a question you can remove yourself from the queue at any time by pressing the pound Keith we will take our first question today from John Mcnulty with BMO capital markets. Your line is open.
Yeah. Thanks for taking my question and congratulations on the on the new role correct.
So I guess my first question really is to that I think look it's a.
It's great to see you kind of in the seat at this point I guess when you think about what changes you may bring as a leader to eco risks I guess, how should we be thinking about what those might be is it more of a capital allocation change or shift in direction is it strategic and some of the businesses I guess, how would you characterize it.
Yes, Thanks John .
As president and Eco services I really heavily participate in the development of our current strategic plan and as you know <unk> plays a key role in the production of clean fuels and sustainable technologies in our portfolio, our technology assets and.
Really great highly capable team, we haven't really well positioned to capture.
The growth in those sustainability trends so.
We like we're going to continue to look at.
Organic opportunities, which we have a rich pipeline as well as bolt on M&A opportunities.
Got it fair enough and then maybe just a question with regard to the capital allocation strategy. I guess can you help us to frame your comfort with leverage and what you think kind of the right leverage level would be given that you do have you have a large.
Buyback program in place, but it's over a four year period. So I guess, how should we how should we be thinking about leverage.
Leverage levels and the velocity at which you might enact that share repurchase program.
Hey, John It's Mike I'll answer that one so great question and what we were able to do is we have a long term financial plan.
We have a very strong free cash flow profile over the next three to four years.
We've been demonstrating over the past several years, our ability to generate cash flow, we reduced our leverage about a half a turn every year.
And in the last six months.
At the end of the third.
Third quarter, we reduced leverage over half a turn.
At the three just over three now so.
So we're starting to get into that sweet spot, where we have a lot of flexibility and knowing the cash on hand that we have today the available liquidity that we have under our credit facility and the ability of free cash flow generation of the future that will be very adequately set to do a few things one first take any excess.
Cash that we have and reinvest it back in the company through growth projects as Curt mentioned, we do have a pipeline of great organic growth opportunities. Then we'll look to see what do we want to do next whether it continues with in another bolt on acquisition like a <unk> 32, something thats accretive or strategic or has the right technology and then we also have this.
New buyback program. So we're very comfortable with our plan our forecast and what we'll be able to do too.
Support this program.
Thanks, very much sorry go ahead.
As a follow up the net leverage position that yes, I mean youre based question, we're going to be comfortable with the leverage in the threes right, that's where we'll be.
Operability.
Got it thanks for the color and good luck congratulations on the new position.
Thanks.
Our next question comes from Alexia <unk> with Keybanc. Your line is open.
Thank you and good evening, everyone. Congratulations on the new roles for for everyone. Just if I may follow up on the buyback question is it kind of safe to assume that if youre not making bolt on acquisitions that majority of your free cash flow.
Any given year going forward would be kind of dedicated to buybacks.
Yes, Alexia it's Mike.
Yes, I think the plan is if you just look at kind of the mechanics behind our capital allocation strategy like I said any any initial cash from operations, we're going to try to reinvest in that first dollar goes back into organic growth opportunities and if there isn't anything from a bolt on acquisition on the horizon, We would look to do.
This buyback program and.
See how the most accretive use of the cashes right. So we're looking to figure out how best use of our cash to increase shareholder value and believe that that's the best opportunity.
For us at the moment.
Thanks for this and just on the resolve it sounded like there were some delayed shipments in various areas in Q1.
Any thoughts on whether you catch up on those in Q2 so.
So.
What's the approximate size in terms of EBITDA or sales for.
For those missed shipments.
Yes, aleksey, so it's Mike I mean, the first one.
Very happy with our results right and our EBITDA was up 40% year over year.
Did see some.
Order timing and shipping delays in the catalyst business.
As you know from from past calls our hydrocracking catalyst does have some potential shift between months and we did see that go from March to April . So all of those shipments that we have planned our out the door and already sold.
So that's going to just be a movement from Q2 Q1 into Q2, there were some shipping delays.
Fly chain challenges that created an order backlog that backlog is set to unwind over the next several months. So we're very comfortable with.
Our plan and as I mentioned, we are reiterating our guidance for the full year, we think that the demand drivers that we've been seeing great tailwind over the last several months and into this year is really going to take us to meet our goals for the end of the year.
Thanks, a lot.
We'll go next to David Begleiter with Deutsche Bank. Your line is open.
Thank you incurred congratulations on the new role.
Kirk going back to leverage if you thought we were heading into a period of slower growth or even a recession.
Look to take down leverage below three times.
Yes. So this is this is Mike David So yes.
If leverage can if we can get leverage down below three times. That's the goal that's our intention but we also know that we have this buyback program.
That will use some of that cash over over time and again, we will keep it in the time.
<unk> spot.
<unk> three times Levered and David. Thank you for thank you for that comment also that our business is really highly consistent if you look at the.
Consistent cash flows that has generated over the course of the year over the course of time so.
We're really comfortable with the program's flexibility and it's.
In terms of the portfolio of the business being able to maintain that program.
Got it.
Curt I think you mentioned, maybe that growth has lagged in certain areas of business.
Where does that then you will be most pronounced and what plans you have to perhaps accelerate that growth going forward.
We're really really excited about the growth in certainly in all in all the aspects of the business. There is some that.
Particularly in the areas of focus on sustainable technologies, and green infrastructure that are probably growing faster than the others. One of them is the renewable fuels comes to mind deal. We mentioned on earlier on the call how much growth there has been in that since into 2019, it's really.
We kind of have a double investment in there right now right with our catalyst technologies is making great innovations and.
Great progress in that area as well as our recent investment in <unk> 32, which does a lot of catalysts activation in that space, but beyond that there's other things.
We are exposed to other green technologies elsewhere in Eco services business, we mentioned mining, which obviously metals and minerals are going to play a huge part in green infrastructure going forward and our position in the market.
There is fantastic, where our plants are and our ability to service those customers polyethylene demand continues to grow.
Continues to grow very strongly right I mean with all with all the light weighting and used for plastics single use all of that is very positive for polyethylene.
Thank you very much and best of luck.
Yes.
Well go now to Angel Castillo with Morgan Stanley . Your line is open.
Hi.
For taking my question and congratulations on the new role Kurt I was wondering if you could give us a little bit more color as to what youre seeing in some of these you mentioned good demand and kind of packaging, but also in EMEA and some of the other kind of areas.
Are you kind of catalysts business cash more color that would be helpful.
Yes, I'm going to actually pass that question to Tom Snee, Berger, who runs our catalyst technologies business, Yes, hi, and thanks for the question.
In terms of polyethylene were seeing polyethylene as a clear choice and material and preferred material and packaging and films as we saw even during the COVID-19 downturn consistent mid single digit growth overall for polyethylene and because they are trying to get to circular plastic polyethylene is being used more.
So with the intent to recycle, but also we're starting to see recovery.
As the.
As the <unk>.
Refineries start to increase rate and the HCC catalyst change outs as well as niche custom catalyst change outs.
To pick up again as we expected. So we've got good tailwind not only in polyethylene, but in some other areas in our business as well.
That's very helpful and then.
I don't know if you mentioned this so you have very good pass through on raw materials is there anything on the logistics for supply chain side that you.
You would highlight.
And that is maybe.
Stood out as maybe an issue or something that youre working through as well.
No we Pat.
And how we pass through the businesses do a really good job of passing through transportation costs.
A lot of cases, it's prepaid and add type situations with customers or customers are paying the freight freight directly. So we have a really high pass through component on transportation. So no issues there.
That's helpful. Thank you.
Okay.
Our next question comes from David Silver with CL King Your line is open.
Yes, hi, good afternoon and congratulations.
<unk>.
So I had a couple of questions first on the capital allocation strategy.
There is a paragraph in today's release, where.
I think Kurt is quoted as saying youre supportive of increasing the float and the liquidity for the stock.
And then while you were also talking about the accelerated buyback program.
Could you maybe talk about the balance how do you strike that balance between may be directing more of your cash flow into the repurchases well.
Maintaining I think what I would characterize it as like a hard fought.
Increase in your float and you're trading liquidity, that's been achieved over the last year or so.
How do you balance those.
Those twin goals. Thank you.
Yes, Hi, David It's Mike.
From our strategy with the capital allocation I mean, there's a couple of different mechanisms to use with the buyback program.
Our initial usage will probably be geared more towards directed.
Grants with the with in conjunction with our sponsor selling down.
Such that we are not going to reduce the float.
It would actually help increase as they do sell downs and we participate and then down the road, we would have more open market traditional buyback programs that we would decide whether that's the optimal use of cash at the time, given all the market dynamics and the power so.
We are actually helping reducing the overhang and helping increase the float over over this program.
Okay. Thank you for that.
Hi.
I'd like to maybe ask Curt.
<unk> about the sulfur market not so much eco services, but that sulfur.
And.
With this release you put a meaningfully increased your revenue guidance, but.
Solely due to the.
Assumed increase in the pass through cost of sulfur.
<unk>.
Not doing it now, but I have followed the fertilizer industry for quite a while and I think Curt if you go back to your early days with Eco services, you said 15 years plus.
I think you were there at the last time, the sulfur market kind of froze up.
I believe as April of 2008, there was no.
Clearing transactions done.
It's my opinion that the sulfur market is going to get as tight or tighter. This time around I could make the case.
The demand side.
Fertilizer is going to outpace the supply side for fuel from fuels for quite a few.
Quite a few quarters may be a couple of years.
I know everything in your business works fine when the.
The supply demand balances within normal ranges, but.
Sure.
Curt do you have any sense that this market is going to get as tight or tighter than it was when normal business transactions were kind of just.
Disrupted back in 2008, or so or how do you think about that and how does eco services prepared to.
Continue operating or even exploit.
The unusual tightness that seems to be building in the global sulfur.
Yeah. Thanks for the question David.
I always appreciate questions on sulfur because people talk about it and I've got a lot of experience in that area. So yes, I was around for the last run up in 2008, So clearly whats youre spot on whats driving it right now is heavy fertilizer demand.
There was a lot of refinery capacity.
Went down during the Covid period and in the Winter storm and it took a lot of sulfur inventory off.
We're really well positioned to ride through that for a couple of reasons one.
A lot of our regeneration customers are actually our software suppliers. So we're in very close proximity to them. We have long term agreements with them, we have lots of multiple suppliers and we're probably better positioned than maybe some others that are hundreds of miles away from their sulfur stores or something like that and we do have.
Asleep.
Our Virgin acid business has a very high degree of pass through on sulfur where you.
Nine.
90, plus percent of the contracts, where it's just automatic where it's passing whatever the sulfur changes through to the customers and the other <unk>.
Remaining percentage really is just on a more of a 30 day or quarterly basis, where we move move the price with sulfur, but I would also say on just speaking on the on the pricing as well as you know.
Pricing in the market has also been good because the demand has been very high.
There has been supply disruptions there as well so we've been able to even.
Increase.
Increase our prices above and beyond what the sulphur change.
Has happened so I hope that answers your question.
Yes, if you wouldn't mind.
I totally agree with your comment earlier theres not a lot of people who talk about sulfur.
But if I could just.
If you could indulge me for one more just one more question on that but.
Under your standard.
Supply under your standard contracts, where sulfur handling and whatnot for your.
Customers.
Yeah.
Are there <unk>.
Striction or are there outs out it.
I'm doing a terrible job are there aspects of the contract that.
Allow you to allow customers not to let's say take their normal asset volumes, assuming that they would have to be responsible for the <unk>.
Hi pass through costs and in those instances where maybe.
Your customers kind of choose not to take their contracted volumes or minimize it I mean, what kind of flexibility do you have to turn to other markets I mean, how how much flexibility do you have in those contracts assuming.
It kind of market extreme like in my opinion, I think we're heading towards.
Well I would say most of our customer agreements. The overwhelming majority of them are 100% requirements agreements. So we match what they are what their requirements are.
But I would also state that there is a very.
Very healthy opportunity to sell.
Excess sulphuric acid elsewhere, if our customers aren't taking it because again.
<unk>.
The market.
The supply is I would say has been impacted with.
With numerous things so the supply is not great in demand really across all sectors sectors.
For sulfuric acid and here in North America is strong you've got again mining, which is heavily linked to the.
The green infrastructure that I talked about before with copper in <unk>.
Different minerals, drawing a lot of sulphuric.
The industrial segment's things like polyethylene or PVC.
Lead acid batteries really everything is a strong pull on it right now so theres lots of opportunities.
The place Sulphuric acid, if one would need to do that.
Okay, great. Thank you very much.
Okay.
We will go now to correspond with dws financials. Your line is open.
Hi, Thank you for taking the question.
I just wanted to get an understanding of why now as far as the management changed the board additions.
Inflection point that you are seeing in the business that requires these changes.
Hi, Amit this is Kurt.
Well the change was the decision that the board took but really I would just like to say that we are delighted.
I am delighted to have the opportunity to lead lead this great company.
Got a great portfolio of business that we're really looking at our highly aligned to the sustainability trends that are going to play a critical role supplying services services and materials really to make clean transportation fuels and other green technologies I would like to.
We have a really highly experienced <unk>.
Executive leadership team that we really have confidence in gulfport in executing the strategic plan that we've laid out and really delivering at the end of the day delivering strong shareholder value.
Okay.
And then the other question I had was on the renewable fuel side.
Is the ramp in matter for you if it's.
The feedstock being soybean oil or youre really agnostic to it.
Yes, I think.
Yes.
Our standpoint, we're agnostic private to the feedstock.
The type of feedstock.
Theres clearly renewable.
Renewable fuels is picking up pace, not only with greenfield sites, but convert converted refineries and where that benefit our businesses renewable fuels plants tend to use a lot more catalyst it has to get changed out a lot more.
Which benefits not only the sale of new catalysts into the units, but our Kent 32 business, which activates the catalyst before before it goes in so yes pretty.
Pretty much agnostic to what the what the feedstock is but clearly.
It's a real high growth area.
Okay I appreciate it thank you.
And as a reminder, that is star and one for your questions today, and we will go next to Laurence Alexander with Jefferies. Your line is open.
Hi, guys. This is Kevin on for Laurence Alexander.
So you mentioned that a strong order backlog.
Hi, good momentum going forward and I guess I was just wondering if you could share to what degree the order backlog was growing and maybe to what degrees of supply chain issues.
Contributing to that.
Any detail there would be helpful. Thanks.
Yeah sure Kevin It's Mike I mean, the board the order backlog was really a result of some of the supply chain challenges that we saw in the last few months, but but it's starting to already unwind and we're expecting that to come back over the next couple of months. So it's more of just a timing aspect as anything else.
Okay, great. Thank you.
Welcome.
We have no further questions in queue. At this time. This does conclude the ecosystem first quarter 2022 earnings call and webcast. Thank you for your participation and you may disconnect at any time.
Okay.
Thank you.
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Okay.
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