Cabot Corporation [CBT] Conference call transcript for 2023 q1
2023-05-09 14:33:09
Fiscal: 2023 q2
Operator: Thank you for standing by and Welcome to Cabot's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the call over to Vice President, Treasurer. Investor Relations, Steve Delahunt. Please go ahead.
Steve Delahunt : Good morning. I would like to welcome you to the Cabot Corporation earnings teleconference. With me today are Sean Keohane, CEO and President and Erica McLaughlin, Executive Vice President and CFO. Last night we released results for our second quarter of fiscal year 2023 copies of which are posted in the investor relations section of our website. The 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 statements 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 ended our 10-K for the fiscal year ended September 30, 2022 and in subsequent filings we make with the SEC, all of which are also 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 involve adjustments to GAAP results. The 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, including progress against our sustainability strategy, and an update on our battery material business. Eric will review the company and business segment results along with some corporate financial details. Following this, Sean will provide a strategic summary and closing comments and open the floor to questions. Sean?
Sean Keohane : Thank you, Steve. Good morning, ladies and gentlemen, and welcome to our call today. I am pleased with results in the second quarter and the tremendous effort of the Cabot team to execute against the challenging macroeconomic backdrop. In the second fiscal quarter, we delivered adjusted earnings per share of $1.33 in-line with our expectations and up 35% sequentially. Reinforcement materials delivered a record quarter with EBIT up 21% year-over-year. The outlook for this business remains strong driven by our leading market position, the long-term resilience of the replacement tire market and favorable structural dynamics in this business. The Performance Chemicals segment had a challenging quarter, as we experienced lower demand in China due to significant levels of COVID outbreak, softness in key end markets and continued inventory destocking. As expected cash flow was strong in the quarter with operating cash flow of $162 million and free cash flow of $111 million, of which we've returned $37 million to shareholders through dividends and share repurchases. Given the strength of our underlying business fundamentals and conviction in the long-term cash flow generation of our portfolio, yesterday we announced an 8% increase in our quarterly dividend. Cabot has a long history of growing the dividend and it would be our expectation to continue increasing the dividend over time as the earnings and cash flow of our business grow. On the strategic front, we continue to make important long-term progress in battery materials, with volumes growing 45% in the quarter despite a sharp sequential slowdown in electric vehicle sales in the March quarter. Additionally, we secured another key customer win in the quarter and now have sales to nine of the top-10 global battery manufacturers. Diving a bit deeper into battery materials. The electrification of mobility represents a significant growth opportunity for Cabot and we continue to invest behind this macro trend. While we believe the long-term trend of electric vehicle penetration is undeniable, market developments from quarter-to-quarter can be uneven. This is certainly what the electric vehicle sector experienced in the March quarter. Electric vehicle sales declined sequentially by 27% in the March quarter driven principally by COVID impacts in China, and a sharp decline in prices of key raw materials for batteries such as lithium carbonate, which drove a sharp destocking across the industry value chain. While Cabot's volumes for battery materials continued to reflect strong year-over-year growth of 45%, sequential sales volumes decreased by 11%. We expect these impacts to be short term in nature, and anticipate sequential improvement in the coming quarters in-line with the Bloomberg EV forecast. So far through April, our volumes are aligned with this improving trend. The temporary loss of market momentum sequentially in the second quarter, and the projection for recovery of EV sales over the next two quarters puts us behind where we expect it to be year-to-date, and sales volumes for battery materials. Additionally, we are seeing some delays in battery production scale up of a key U.S. auto OEM. Based on these factors in our continued investment profile to support long-term growth, we now anticipate fiscal year 2023 EBITDA to be in the range of $30 million to $35 million for battery materials. We continue to believe that electrification will transform the mobility sector and are very pleased with our commercial progress today. We've been qualified and are selling commercially to nine of the top-10 battery producers, and are well positioned with key auto OEMs as they build out battery production capability. Cabot's value proposition built on our unique product breadth, global footprint, and ability to scale capacity to meet the industry's regionalization needs is resonating with customers. While the growth pathway may be uneven at times, we are investing to win over the long term and remain confident in our Investor Day projections of 50% plus EBIT growth between 2021 and 2024. Sustainability is at the core of our purpose and are creating for tomorrow's strategy. And during the quarter we made important progress on several strategic fronts. At the recent Tire Technology Expo in Hannover, Germany, we launched our EVOLVE Sustainable Solutions Technology Platform, which is focused on advancing sustainable reinforcing carbons. Our goal to this technology platform is to develop products for our customers that offer sustainable content with reliable performance, and importantly, an industrial scale. We plan to do this by leveraging circular value chains and materials recovered from end-of-life tires, using renewable or bio-based materials, and enabling processes that reduce greenhouse gas emissions. As part of the EVOLVE platform, we also launched Cabot's first ISCC-PLUS Certified Solutions, which are enabling our tire customers to bring demonstration products to the market made from circular materials. Our market leadership, global footprint and broad EVOLVE and E2C technology platforms position Cabot to partner and win with leading customers, as the mobility sector transitions to meet society's sustainability demands. In addition, last week, we announced the launch of our new ENTERA aerogel particles portfolio. ENTERA aerogel particles are a thermal insulation additive targeted for thermal barrier solutions for electric vehicle lithium-ion batteries. We believe thermal management will be an important design feature of safe batteries, and expect there will be a variety of application forms that serve this market. Cabot's aerogel products provide customers with formulations flexibility to develop very thin forms including blankets, pads, sheets, films, phones and coatings. Overtime, we believe that aerogel solutions can develop into a meaningful addition to our battery materials' addressable market, and further position Cabot as a critical material supplier to support the global transition to vehicle electrification. And finally, our sustainability leadership continues to gain recognition from leading ESG rating services. Most recently, Cabot received a Platinum rating from EcoVadis, the highest recognition available for the third consecutive year. The Platinum rating recognizes Cabot's environmental, social and governance efforts in places Cabot among the top 1% of companies assessed by EcoVadis. EcoVadis is one of the world's leading sustainability ratings platforms, and one that many of our customers rely on to evaluate their supply chains. I'll now turn the call over to Erica, to discuss the segment and financial performance. Erica?
Erica McLaughlin : Thanks, Sean. I will start with discussing results for the company and then review the segment results. Adjusted EPS for the second quarter of fiscal 2023 was $1.33, compared to $1.69 in the second quarter of fiscal 2022, with growth in the Reinforcement Materials segment offset by declines in the Performance Chemical segments. The quarter was also impacted by higher net interest expense of $7 million year-over-year, and unfavorable foreign currency exchange impacts of $7 million. Year-to-date impacts from increases in net interest expenses are $14 million, and our expectation for the fiscal year is unchanged from last quarter at approximately $20 million. Year-to-date unfavorable impacts when foreign currency exchange were $19 million, and we expect the year-over-year impacts to be somewhat minimal going forward for the second half of the year. Discretionary free cash flow in the quarter was $76 million and we ended the quarter with $205 million of cash. Cash flow from operations was $162 million, which included a reduction in net working capital in the quarter of $59 million. The reduction was in line with what I highlighted in our expectation last quarter. And looking ahead, we expect to further reduction in net working capital in excess of $50 million over the two remaining quarters of the fiscal year, based on the current future expectation for oil prices. CapEx in the quarter was $51 million and we expect full year CapEx to be between $250 million and $300 million. The balance sheet remains strong with total liquidity of $1.2 billion and net debt-to-EBITDA of 1.8 times as of March 31. Our operating tax rate was 25% for the quarter, and we anticipate the fiscal year rate will be between 24% and 26%. Now moving to Reinforcement Materials. During the second quarter EBIT for reinforcement materials increased by $21 million, as compared to the same period in the prior year, to a record EBIT of $122 million. The increase is driven by improved unit margins from higher pricing and product mix and our 2023 calendar year customer agreements partially offset by 7% lower volumes and higher fixed cost. Globally, volumes were down in all regions in the second quarter as compared to the same period of the prior year, with declines of 2% in the Americas 2% in Europe and 12% in Asia. Lower volumes in Asia were driven by the effects from the COVID outbreaks in China. Looking to the third quarter of fiscal 2023, we expect the Reinforcement Materials' EBIT to increase sequentially as volumes are expected to improve, particularly in Asia as demand strengthens after the impact on the COVID-19 outbreaks. Year-over-year, volumes in the third quarter are expected to be slightly down as compared to the prior year aligned with external market expectations. We also anticipate margins to be maintained as pricing in our calendar year agreements are set for the rest of the year. On a fiscal year basis, we continue to expect strong double-digit EBIT growth as compared to last year, largely due to the improved unit margins from higher pricing and product mix in our 2023 calendar year customer agreements. Now turning to Performance Chemicals, EBIT decreased by $42 million in the second fiscal quarter, as compared to the same period in fiscal 2022. The decrease was principally driven by a fumed metal oxide product line and we experienced a 22% volume decline year-over-year and lower unit margins. Lower volumes are driven by weaker demand and silicones applications and the impact from the COVID outbreaks in China. Lower margins were driven by the comparison to the prior year, where we experienced temporary margin expansion from pricing out of raw materials last year. In addition, the segment also experienced lower volumes in our Specialty Carbons product line, as well as the negative impact from unabsorbed costs as we reduce the inventory level and unfavorable foreign exchange impacts. In summary, year-over-year the decline was driven by $18 million of lower volumes, $15 million of lower unit margins, $4 million from the impact of reducing inventory levels, and $4 million of unfavorable foreign currency impacts. Looking ahead to the third quarter of fiscal 2023, we expect EBIT to be up sequentially due to higher volumes across all of our product lines, as demand in our key and markets improves and margins remain relatively stable. We have seen improvement in segment volumes month-to-month as we move through the second quarter. We have also reduced costs across the segment given the weaker demand environment, which we expect will help improve EBIT levels in the second half of the year. I will now turn the call back over to Sean.
Sean Keohane : Thanks, Erica. Moving to the 2023 outlook, I feel very good about the continued progress we were making as a company despite the short term macroeconomic headwinds. At a strategic level, the key drivers of earnings growth remain unchanged. The impact from our calendar year 2023 reinforcement materials customer agreements is driving the record second quarter EBIT in this segment, and the replacement nature of the tire market provides a certain resilience in this business. We expect volumes to pick up in the second half of the year with reasonable supply demand dynamics expected to remain tight. All of which drives our expectation for another year of strong double digit EBIT growth in the Reinforcement Materials segment. And while performance chemicals has been impacted by the weak external demand environment in the first half of our fiscal year, we expect volumes and all product lines to pick up in the second half of the year. We also expect our growth vectors to be strong contributors to the segment recovery in the second half of the year, as sequential volumes improving battery materials, and inkjet volumes accelerate driven by penetration in our targeted growth applications. However, given the slower than expected recovery across our Performance Chemicals end markets, particularly in China, and a temporary slowdown of sequential momentum and battery materials, we're adjusting our full year guidance to be in the range of $6.10 to $6.50. The midpoint of our guidance would imply modest growth of adjusted earnings per share for the fiscal year, which for us, given our fiscal year includes a very weak December destocking quarter. As we think about the quarter we shape of earnings for the full fiscal year, we expect a significant step-up in the second half relative to the first half, providing strong momentum heading into fiscal year 2024. As the earnings increase in the second half of our fiscal year, and based on the anticipated working capital release, we expect operating cash flow and free cash flow to be very strong. In closing, we are confident in our strategic position and believe that Cabot offers a unique growth opportunity. Reinforcement Materials is a structurally improved business with strong earnings and cash flow generation. Performance Chemicals is comprised of industry leading positions with exposure to long-term macro tailwinds. Battery Materials offers the potential for breakout growth. And we have the conviction and the balance sheet to invest behind this transformational shift in mobility. Our portfolio has strong cash flow characteristics which can fund or advantage growth investments and return cash to shareholders. And finally, we're a recognized leader in sustainability. And this strength underpins our purpose and our creating for tomorrow strategy. With these value drivers firmly in place, we remain on track to achieve the targets outlined in our December 2021 Investor day. Thank you very much for joining us today. And I'll now turn the call over for our Q&A session.
Operator: [Operator Instructions] Our first question comes from the line of John Roberts of Credit Suisse. Your question please. John.
John Roberts : Thank you. In Reinforcement, I assume you've got more price in the U.S. than elsewhere. Could you at least give us a qualitative discussion of the regional price trends?
Sean Keohane : Sure, John. I would say the pricing trends across the western market -- the western regions were pretty consistent actually. And that lines up with the pretty consistent structural dynamics in the regions in terms of supply demand, growth in tire production, the importance of regionalization of the supply chain all those factors. So I would say they're actually quite consistent across the Western markets.
John Roberts : And then within the Performance segment, we did talk about masterbatch versus fumed metal oxides, and within few metal oxides, I didn't hear any discussion about the semiconductor market weakness.
Sean Keohane : Yeah. So, let me touch on the fumed metal oxides first, because that's certainly the single biggest driver of the weakness in performance chemicals. Now, this fumed metal oxides market serves principally applications in the silicone space. This is by far the largest volume space in the market. And silicones were down very, very sharply in this quarter. There were several public company comps in this silicone space. And you can see that their results were down sharply. So I think our dynamic is similar to the overall market. And as Erica said, volumes are down 22% year-over-year in this in this product line. And as you might recall from the past or Investor Day, this product line is the highest margin business in the segment. So when you combine that with the high operating leverage in the business, it's a pretty significant. Now, there are also silica sales, silica sales into the semiconductor space. Those have diminished over time as next generation nodes have moved to other forms of abrasive particle either colloidal silica or [Indiscernible], products that we don't participate in. That being said, we do still have a meaningful legacy tail of silica into the CMP or semiconductor space. And that too, was declining, but the largest driver here John, was the contraction or the lower demand in the overall silicones space.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Josh Spector, UBS. Your question, please, Josh?
Josh Spector: Yeah. Hi. Thanks for taking my question. In your slides, you have a comment on Performance Chems that margins are expected to remain stable from 2Q'23 levels. I wanted to really understand that more. I mean, your margins were about 9% in the quarter. You talked about cost savings, you cost about improvements. Do you mean that they're going to be stable at that level, or they're going to improve on those levels?
Sean Keohane : What we mean, Josh, is that the unit margin, so price minus variable cost will remain stable. Obviously, the EBITDA margins will improve over the quarter, as we get higher volumes and more coverage of the cost base, and then some of the cost actions that we're talking about flow through. So when we say margins, we're talking about that that sort of price minus raw spread. That's what we mean.
Josh Spector: Okay, got it. Makes sense. And just on your battery materials business, were you talk about the new wind where you now serving nine of the 10 largest producers. I wonder if you can give some context around there. Are any of those exclusive? Are you supplying the majority of the conductive carbon into those formulations? Or are you more qualified for that platform? So how much of it materializes into sales specifically for Cabot versus giving you the optionality to do so?
Sean Keohane : Yeah. So the way it typically works in battery materials is you get qualified into a battery program or a battery platform. And then as that platform grows and proliferate, then with it. So that's typically how it how it works. So for example, legacy platforms that Cabot may not have been in, typically those don't get switched out, it has much more to do with winning new programs. So as the program ramps, then we would expect our sales volumes to ramp up with that. Now, typically, because these are going into automotive applications, there's usually a primary and a secondary supplier to a program because the auto OEs require that sort of supply redundancy. But it's really program-driven, Josh. And so as the program ramps, assuming this success that the customer intense, then we would see the flow through that.
Josh Spector: Okay, thanks, Sean.
Operator: Thank you. Our next question comes from the line of Jeff Zekauskas of JPMorgan.Your line is open, Jeff.
Unidentified Analyst: Hi, morning. This is Lydia on for Jeff. It seems like -- hi. It seems like contracts contract negotiation for Rubber Black has started early this year. What are you seeing across different regions?
Sean Keohane : Sorry, Lydia, could you just say that again? I said something about contracts and in regions? Sorry.
Unidentified Analyst: Yeah, it's just -- we've heard that the contract negotiation for Rubber Black has started early this year. So just wondering, what are you seeing for pricing across different regions?
Sean Keohane : Yeah, so it is early in the process. So normally, the contract discussions began over the course of the summer, and then progress into the fall period. And so certain customers have approached us to start negotiations for 2024. I think there are a lot of moving parts. However, I think what happens as the Russia sanction date nears in 2024, and how to China feedstock economics as potential replacement for the Russia material for example, in Europe. These are important dynamics to watch. So I would say it's early in the process here. I would remind you that we did close some negotiations in 2023 that were multiyear agreements with incremental pricing in 2024. So I think this does give us some momentum, heading into '24. And it does set a market reference. But I would say, while certain conversations have begun, it's early in the process. That said, I would say the structural supply demand dynamics in the Western markets remain unchanged and favorable. And so we expect that to continue.
Unidentified Analyst: Thank you. And your cash flow from operations this quarter is higher than for your full year last year. So can you talk about the changes here and maybe talk more about your expectation for the rest of the year?
Erica McLaughlin : Sure. So Operating cash flow was strong this quarter, as the EBITDA improved from earlier in the year, that's part of it. And then I would say it's really working capital. And so last year, we had increasing raw material costs that cause increasing levels of investment into the working capital. We see that those raw material costs are coming down this year. And so you see a positive contribution or source of cash from working capital in the second quarter. We expect that to continue as we move through the year. So that goes to the comments I made where we would think another in excess of $50 million would be released at a working capital in the back half of the year. And so expect continued very strong cash flow from operations as we go through the rest of 2023.
Unidentified Analyst: Thank you.
Operator: Thank you. Our next question comes from the line of Laurence Alexander of Jeffries. Please go ahead, Laurence.
Dan Rizzo : Hi, it's Dan Rizzo on for Laurence. You mentioned the circular tires, the new product. I was just wondering how we should think about the growth within that product. Is it going to be something, I assume not, but is it the growth steam growth trajectory as battery materials? Could there be something of that magnitude or will be maybe a longer timeline?
Sean Keohane : Yeah, you're referring to the EVOLVE Sustainable Solutions Product -- Technology launch, Dan?
Dan Rizzo : Yeah, that's correct.
Sean Keohane : Yeah. The technology platform that we launched, our goal here is to develop products that offer sustainable content with reliable performance. And I think most importantly, at industrial scale. And I think we're in a great position to do that. And so we'll be leveraging the circular value chains and materials that are recovered from end-of-life tires, as well as any renewable or bio-based material options, feedstock options and processes that can reduce the greenhouse gas emission. So these are the levers that we're pulling under the EVOLVE platform. And so if you think about overtime, how this should develop, we anticipate driving revenue starting in this year. And we expect to see a material impact from the EVOLVE Sustainable Solutions over a five to 10-year period is how you ought to think about it. This is driven by the speed of adoption of new technologies. in the rubber industry, as well as how our tire customers, greenhouse gas goals set up between here and in 2050 carbon neutrality, which they all have goals for that. But how they're -- how exactly their interim goals in 2030 and between 2030 and 2050, how those line out, will drive things to. But I would think about this as a longer term play, that's really getting at the sustainability needs of our customers, and frankly, society's pressures around sustainability. So we're excited about it. Because we think we bring an ability to commercialize, -- develop and commercialize these technologies. And do it at scale, which there are startups and the like that play in this space, but can't really bring things to market at scale the way we can. So that's how I would think about it, Dan.
Dan Rizzo : All right. Thank you. And then you mentioned or it was mentioned that, that there was an improvement in working capital because of the drop in oil prices. I was wondering if there's a rule of thumb with oil, and its relation to working capital, such as a $10 move movement in oil translates into an X movement in working capital, or how we should think about that?
Erica McLaughlin : Sure, Dan. So I can answer that. The general rule of thumb is about a $1 change in oil is about $5 million in working capital. And so it does usually happen over a really two quarters, usually, as you'll see the inventory repriced quickly and then the accounts receivable might move into the following quarter. But that's the rule of thumb.
Dan Rizzo : Thank you very much.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Chris Kapsch of Loop Capital. Please go ahead, Chris.
Chris Kapsch : Good morning. So if I think about the -- morning. So if I think about the guidance, modest guidance reduction, it sounds like it's predominantly attributable to trends in the Performance Chemical segment. And you mentioned in [Indiscernible] goes into the silicon industry is the biggest. I don't know if it's -- if you can rank order the other contributors, especially maybe especially carbons, maybe there's a residual destock there. I don't know if that second, but then the slower momentum and the least temporarily and battery materials. You also mentioned them, I'm curious if that's the kind of the right way to think in terms of order of magnitude, but also just you mentioned improving demand transfer this segment on a monthly basis. Just wondering if you could characterize if that's characteristic of each of those different businesses and how it's persisted, how those trends have persisted thus far into the third quarter through April?
Sean Keohane : Maybe on the first question, Erica will take that. And then I'll come back on the second one, Chris.
Erica McLaughlin : Yeah, Chris, I think if you think of the impact in the quarter fumed metal oxide is by far the largest and majority of the decline. Next, I would say it would be our Specialty Carbons business. Our volumes are down about 5% in that in that business, which drove a reduction in most of the inventory or unabsorbed costs because of the inventory reductions is also in carbon. So that would probably be secondary. And then as John talked about battery materials, the temporary decline here in EV sales in Q2 was also impactful. So I would probably say it's in those that order. As we think about the volume recovery, I'd say through Q2, pretty broad based in terms of month-to-month improvement as we move through the quarter. I would say Battery Materials also improved in April. So from the exit in Q2 into April volumes and battery materials have improved. So I think that's good. In some of the other businesses, I'd say April, was a bit weaker than March, but I would characterize it as stronger than kind of the January-February run-rate. So that's what we've seen in April. And then I'd say the order book for May looks pretty strong across the businesses. And so that's what in our outlook takes into consideration.
Chris Kapsch : Okay, and then --
Sean Keohane : Yeah. And maybe, Chris, just a couple of additional comments there. So again, the midpoint of the range is would be roughly flat to fiscal '22. But that was a record in our 25% over fiscal '21. And so a couple of things here. One is that would be a result after offsetting about $0.50 EPS headwind from interest and unfavorable FX. And then also important to remember that given our fiscal year-end of September 30, we're pulling in that very weak December quarter. So when you look at second half momentum, I think that's an important picture to look at there. I think the monthly trends Erica, Erica touched on well. I don't have anything more to add on that one.
Chris Kapsch : Got it. And then my follow up is focused on the Battery Materials space. And a key theme here has been more broadly, has been just the security of supply concerns for really a variety of battery materials. And to the extent that you're having tremendous success, nine out of the top-10 lithium-ion battery producers globally and partnering with them supplying them. Just curious how that theme plays into your relationships with those customers? And obviously, you're supplying those now, but are they -- do they have expectations for you to partner with them globally? How is that playing out or do you have visibility to what their demand requirements are going to be in different regions? And is that -- is that starting to play into your growth capital plan? Thank you.
Sean Keohane : Yeah, sure. Well, certainly, I think a couple of things are going on in the battery market. It's been principally a China market up until now is, well, I think some 75%-ish of batteries, I think are made in China. So outside of China is relatively small. But there are significant battery investments that are being constructed as we speak, and coming online over the next two-three years and out into the end of the decade. And so I think a couple of things are going to happen, Chris. First of all, you're seeing a lot of non-Chinese battery players building outside of China. And I think you'll probably see some sort of a bifurcation between battery market for China, and then a rest of world. And so certainly the customers that we're working with in Europe and the U.S. really value regional supply. And so, I think the ability to provide that to them is very important. Now, typically, what happens here is that you get qualified in a program with a given battery maker. And then as that particular program or platform proliferates, then you grow with that. So as you get qualified and begin to win, there's a ramp schedule. Sometimes hard to predict. That's why I think there can be some unevenness in the way this market develops. But that's how that's how you want to think about it. And I think Cabot's global scale, our footprint, our ability to build out capacity regionally for these customers as this market bifurcates. And I think that's, I think an advantage for Cabot. And so we're investing behind that, and are building out capacity to meet that.
Chris Kapsch : Thank you.
Operator: Thank you. At this time, I would like to turn the conference back to Sean Keohane for closing remarks. Sir?
Sean Keohane : Great. Well, thank you very much for joining today. Thank you for your continued support of Cabot Corporation. And hope you have a safe day, you will.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
