Good day, and thank you for standing by. Welcome to the Q3 2023 Cabot Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Steve Delahunt, Vice President of Investor Relations and Treasury. Sir, please go ahead. Thank you, Chris. 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 Q3 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 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 30, 2022, 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 expected 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 Q3 highlights and the market environment in our Reinforcement Materials and Performance Chemicals segments. Erica 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? Thank you. Thank you, Steve, and good morning, ladies and gentlemen, and welcome to our call today. In our 3rd fiscal quarter, we continued to navigate a challenging macroeconomic environment. Despite lower volumes in both segments and a tax headwind, we delivered sequential earnings improvement due to the continued strength of the Reinforcement Materials segment. Consistent with the commentary in our June announcement, we continue to see weakness in China and soft demand on a global basis across many of our key Performance Chemicals end markets, particularly in the housing and construction sector and across consumer durable applications. In the quarter, we delivered adjusted earnings per share of $1.42, up 7% sequentially. Reinforcement Materials delivered a record quarter with EBIT of $132 million, up 17% year-over-year and 8% sequentially, despite the third consecutive quarter of year-over-year volume declines. This level of performance reflects the resilient nature of this business and the structural improvements we have made over the last several years. EBIT in the Performance Chemicals segment improved sequentially, largely due to cost initiatives across the segment. Demand in the segment remained challenged as we saw continued weakness in our key end markets, with the exception of battery materials. In the quarter, we generated strong operating cash flow of $243 million and free cash flow of $163 million, of which we returned $38 million to shareholders through dividends and share repurchases. Our balance sheet remains strong, with net debt to EBITDA of 1.7x. We have $1.3 billion of committed liquidity that has been recently been extended to 2027. Our balance sheet and investment-grade credit rating gives us the flexibility to continue to advance our long-term strategic priorities, supported by our disciplined and balanced capital allocation strategy. Moving to the market environment. Across both segments, we've been dealing with weak end market demand. I wanted to spend a few minutes to take you through what we are currently seeing. Let's start with Reinforcement Materials, where the key end markets are replacement tires and auto OE production. You will recall that replacement tires account for approximately two-thirds of segment volume, with OE production and industrial applications driving the balance. For the first three quarters of our fiscal year, we've experienced year-over-year volume declines, with year-to-date volumes down 8% in this segment. The decline is principally driven by a deep inventory destocking cycle, and there is some anecdotal evidence that customers are delaying purchases. When we look at the industry demand fundamentals, we see pretty stable conditions. For the passenger car replacement market, miles driven and the global car park are generally good indicators for light vehicle replacement tire demand. In the U.S., for example, passenger miles driven is holding steady, while the global car park continues to expand. For the truck and bus segment, truck tonnage is a good indicator of underlying health, and we can see in the U.S. that this too is holding steady. The performance of these fundamental demand drivers gives us confidence that volumes will normalize when we exit the current destocking cycle. Auto production is the other key end market for this business and accounts for approximately 27% of reinforcement materials volumes. Global auto production is one area we are seeing signs of recovery across North America, Europe, and China. This end market has experienced growth in recent quarters and is projected to grow in 2023, providing some offset to the lower replacement tire volumes. The impact of a pickup in auto production in this segment is seen fairly quickly, given the relatively shallow value chain as compared to the replacement market. In Performance Chemicals, the external environment remains challenging. Most of our industrial sector end markets are experiencing weak demand, particularly housing and construction. On the consumer application side, we have seen that demand for durable goods and electronics has also been weak. Manufacturing PMI has historically been a key indicator of demand in this segment. Currently, manufacturing PMI levels in the US and Europe remain below 50. China has been oscillating around 50, with several recent data points in contraction territory. Recent housing data, both housing starts and building permits, indicates a potential turning point in the US. European permits continue to drop and the China real estate market remains stagnant. Construction and housing demand has a significant impact on our specialty carbons, specialty compounds, and fumed metal oxides product lines. As I mentioned earlier, auto production is one area where we are seeing some promising signs in terms of new car builds. Approximately 25% of Performance Chemicals volume is tied to the transportation OE sector. We have not yet seen the impact in our sales due to lingering destocking and the depth of this value chain. Historically, this has taken about two to three quarters to see the impact of a turn in auto production translate into higher demand for our products. As this happens, we would expect a lift in terms of both volumes and product mix, as the automotive sector pulls through a high% of specialty grades. Finally, the China EV market continues to recover from a sharp sequential slowdown in electric vehicle sales in the March quarter. The June quarter saw a sequential growth, though EV sales volumes still aren't back to the level achieved in the December quarter. Our battery materials volumes recovered in line with this trend, with Q3 volumes increasing 29% on a sequential basis and 50% year-over-year. While the volume trend is encouraging, the auto EV market in China is experiencing an increase in competitive intensity as auto OEMs compete aggressively on price for market share, and this pressure is flowing back upstream to the battery producers and material suppliers. As we transitioned into Q4 and look forward through the balance of the fiscal year, we have experienced pricing pressure that is impacting our margins. The impact is concentrated in our China business, and particularly where our products are sold into batteries for lower-priced domestic vehicles. Where our products are sold into batteries for export to global OEMs or to customers outside of China, we are seeing stable prices. Given this dynamic in China and the continued delay in scale-up of one of our Western auto OEMs, we now expect the fiscal year EBITDA to be in the low $20 million range. As we manage through this unexpected period of turbulence in China, our focus is on three priorities. First, market segmentation to focus our efforts on higher-performing batteries, particularly NCM chemistry, and on those batteries targeted for Western exports. Second, we'll continue to carefully manage the balance between volume and pricing. Third, we're aggressively attacking the cost structure across our base products. Over the long term, we believe that electrification will transform the mobility sector, with most growth forecasts for lithium-ion batteries in the 25%-30% CAGR range through the end of the decade. We also expect that the EV and battery market will bifurcate into a China market and a rest-of-world market. We expect the market outside of China will orient more towards higher-performing NCM chemistry, which requires higher-performing conductive additives. We also expect that customers outside of China, particularly the global auto OEMs, will continue with strict qualification requirements and management of change protocols required by the IATF quality management system. We also expect that the trend towards supply regionalization will accelerate, and this development provides an advantage to a technology leader like Cabot that has a strong global footprint and an ability to scale up capacity in region to meet customer requirements. Over the next decade, the industry will undergo fundamental change as EVs grow in the West, battery supply chains regionalize, and new technologies, such as dry process, take hold. Over this time, we expect that North America and Europe will grow to comprise approximately 50% of the global battery market. We remain excited by the long-term growth prospects for battery materials and believe it can become a meaningful part of our profitability over time. At Cabot, we have the broadest conductive additive portfolio, a leading global footprint, and the capability to expand in North America and Europe to support our customers' requirements. We believe this value proposition is compelling to customers. We continue to see momentum with the leading battery producers. I'll now turn the call over to Erica to discuss the segment and financial performance. Erica? Thanks, Sean. I will start with discussing results for the company and then review the segment results. Adjusted EPS for the Q3 of fiscal 2023 was $1.42, compared to $1.73 in the Q3 of fiscal 2022, with growth in reinforcement materials offset by declines in the performance chemicals segment. Discretionary free cash flow in the quarter was $128 million, and we ended the quarter with $220 million of cash. Cash flow from operations was $243 million, which included a reduction in net working capital in the quarter of $71 million. CapEx in the quarter was $80 million, and we expect full year CapEx to be approximately $250 million. The balance sheet remains strong, with total liquidity at $1.3 billion and net debt to EBITDA of 1.7x as of June 30th. In the Q3, we increased our year-to-date operating tax rate from 25% to 28%, driven by an update to the fiscal year forecast and the geographic mix of earnings within the updated forecast. The increase in the operating tax rate included a catch-up of expense for the H1 of the fiscal year that we booked in the Q3, which resulted in an unfavorable impact of $0.10 of adjusted earnings per share this quarter for the catch-up and a total of $0.17 in the year-to-date impact. We expect the fiscal year operating tax rate range to now be between 27% and 29%. Now moving to reinforcement materials. During the Q3, EBIT for reinforcement materials increased by $19 million as compared to the same period in the prior year, to a record EBIT of $132 million. The increase was driven by improved unit margins from higher pricing and product mix in our 2023 calendar year customer agreements at a higher fixed cost, partially offset by 8% lower volumes. Globally, volumes were down in all regions in the Q3 as compared to the same period of the prior year, with declines of 10% in the Americas, 12% in Europe, and 5% in Asia. Looking to the Q4 of fiscal 2023, we expect reinforcement materials EBIT to decrease sequentially due to seasonally lower volumes in Europe and higher fixed costs driven by the timing of spend. Volumes in the Q4 in regions outside of Europe are expected to be relatively consistent with the third fiscal quarter. Now turning to performance chemicals. EBIT decreased by $31 million in the third fiscal quarter as compared to the same period in fiscal 2022. The decrease was driven by 9% lower volumes and lower unit margins. Volumes were lower across all product lines except battery materials, and most notably, there was a 23% year-over-year decline in few metal oxides volumes. Lower volumes in few metal oxides were driven by weaker demand in silicones applications and the impact from partner-driven downtime. Lower margins were driven by a less favorable product mix in battery materials and specialty carbons. Looking ahead to the Q4 of fiscal 2023, we expect EBIT in performance chemicals to be up sequentially due to higher volumes in our battery materials and inkjet growth vectors, while volumes in our larger product lines are expected to remain consistent with the levels experienced in the third fiscal quarter. We expect pricing pressure in the EV value chain in China, as Sean discussed, in the near term to impact battery materials results. Now moving to our cash performance. Our outlook for the rest of the year is for continued strong cash generation that will continue to enable our growth investments, as well as returning cash to our shareholders through dividends and share repurchases. Year to date, we have generated $457 million in operating cash flow. We have spent $166 million year-to-date for capital expenditures, which included spending on growth investments as well as maintenance and compliance projects. As we have talked about before, returning cash to shareholders is a critical component of our capital allocation strategy and has been supported by our operating cash flow. We raised our dividend by 8% in May, and year-to-date, we have paid $65 million in dividends. In addition, we repurchased $48 million of shares year-to-date, for a total of $113 million of cash returned to shareholders so far this year. Our outlook for cash remains positive for the year. We expect strong operating cash flow to continue, given current assumptions on oil prices. Debt levels are sound and are expected to stay around the current level of net debt to EBITDA at 1.7x, and our full year forecast for capital expenditures is approximately $250 million. We also expect to continue to return cash to our shareholders. In addition to our quarterly dividend, we anticipate increasing the amount of share repurchases in the Q4, given the strong cash flow forecast. I will now turn the call back over to Sean. Thanks, Erica. Moving to the Q4 outlook, I am pleased with how the Cabot team continues to respond despite the challenging macroeconomic environment. The reinforcement materials segment posted record results in the Q3 and is on its way to another year of record EBIT results, despite weak replacement tire demand throughout the fiscal year from a prolonged destocking cycle. In performance chemicals, we expect results to improve sequentially, driven by volume growth in battery materials and inkjet, while the larger product lines in this segment seem to have stabilized, albeit at a level well below recent history. Given these factors, we expect adjusted earnings per share in the Q4 to be in the range of $1.40-$1.55 which would bring our full year range between $5.13 to $5.28. As Erica discussed, we expect the Q4 to be another strong cash flow quarter to support our capital allocation priorities. Fiscal year 2023 certainly has developed differently than expected. The rapid increase in interest rates has dampened demand across the housing sector and for consumer durable goods. Europe has been in a technical recession. China's economy has not been the driver of global growth as was expected following their exit from strict COVID protocols. Despite these headwinds, we believe our Creating for Tomorrow strategy is the right one for Cabot, with a focus on advantage growth, innovation, and continuous improvement. By pursuing this strategy, we believe we will grow, transform, and reshape the valuation potential of the company. We continue to execute against this strategy despite a challenging environment. We have a very resilient, structurally different business in reinforcement materials, as evidenced by record results despite lower year-over-year volumes. The Performance Chemicals segment remains a mix of high growth, high margin businesses with leading market positions and good industry structure, that at the moment is dealing with a unique environment of weakened market demand and a China economy that is yet to rebound post-COVID. We believe that these product lines will recover in line with the underlying end markets. The battery materials product line, while developing slower than we originally expected, remains a compelling growth opportunity for Cabot, and we believe we are well positioned to grow as the EV market expands outside of China. Our cash flow and balance sheet remain very strong and support our balanced capital allocation priorities. Finally, we're a recognized leader in sustainability, and this strength underpins our purpose and our Creating for Tomorrow strategy. I would like to close by again recognizing the entire global Cabot team for their resilience and their commitment to execution as we navigate this challenging macroeconomic period. Thank you very much for joining us today. I will now turn the call back over for our Q&A session. Thank you. As a reminder, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw your question, please press star one one again. Stand by as we compile the Q&A roster. One moment, please, for our first question. Our first question will come from David Begleiter of Deutsche Bank. Your line is open. Thank you. Good morning. Sean, in replacement tires, how long have prior destock cycles lasted for? Good morning, David. I think certainly, the destock that we seem to be experiencing right now, is longer than I think history would say. We're now all 3 of our fiscal quarters have volumes down, year-over-year, and our, our expectation on the Q4, consistent with the outlook that Erica provided, would say that, you know, that'll probably be 4 quarters, where we're down, year-over-year. It certainly feels like a more pronounced destock cycle than history. I think the result, if you know, we listen to what the big tire makers say, I think, you know, we should be coming to an end on this. I think it, it has been more difficult, I think, for, for people to see this because we, we came out of COVID, a sharp bounce, then there was a long period of transportation, logistics, disruptions. And, you know, given, given how many of the, the tires in the world rely on, on Chinese exports, I think there were a lot of tires on ships and in the, in the supply chain that were tied up, and it really created a lot of distortion. I think all of that has been getting worked off here this year. Certainly from our historical experience, David, this one, this one is a bit longer. I think it's because of those distortions coming out of COVID and the, the supply chain disruptions that have now worked their way out. Again, as we, as we, as we look across our customer base, it seems that, that, that should be coming to an end here. As that happens, then, you know, we would expect, you know, a positive turn from a volume standpoint. Given the operating leverage in the business, you know, that can be quite material. Very good. Just on your annual contract negotiations, how are they progressing? I know you had some a number of annual or two-year contracts. Overall, how are they progressing? How are you feeling about pricing for next year in, in, in that business? Yeah, it's early to say at this point, David, but I would say the, the, the annual contract cycle is beginning now and will follow, I would say, a more normal cadence, which is really a, a, a fall, you know, September through end of year cadence. Last year, there was that was pulled forward a little bit. I would say this year's this year's cycle will probably resemble a more traditional pace. Again, discussions in the fall is likely what'll happen. We continue to believe that price increases are needed based on increased sustainability costs, as well as the premium and quality and service that we provide to customers. So while I can't, you know, comment, 'cause it's too early in the process, just as a reminder, we did close several multiyear agreements last year with an incremental price increase in 2024. Our view is that, you know, those price increases are the baseline for the rest of our 2024 contracts and should set the level of price increases expected during the negotiations. We'll certainly be updating on our next call as we're deeper into the cycle, and that would be typical. Thank you. Thank you. One moment, please, for our next question. Our next question will come from John Roberts of Credit Suisse. Your line is open. Thank you. How much has the energy co-product credit declined for earnings with the lower oil prices that we've had until the recent bounce? John, I think, certainly last year, energy prices were higher, and those have moderated. I think in the full year numbers this year, we're running about $5 million per quarter lower in energy center benefits, so, 2023 versus 2022. You know, something on the order of $20 million on a full year basis, 2023 versus 2022, down. Then, are all carbon black producers reducing production similarly, or are you seeing any significant share shifts from some of the suppliers continuing to run full out? No, we're seeing, I think, real stability there. I think, you know, our volume declines are consistent with what on average, the major tire producers are experiencing themselves. So we're not seeing any any any share shift here, and that would not be expected, as, you know, agreements, annual agreements or multiyear agreements have, you know, have certain volume targets attached to them. You typically don't see movements inside of the the contract periods. I think also, you know, if you look at this business, you, you have a business with, you know, relatively, I would say, you know, stable but modest growth rates. So, you know, it's very important in terms of the key levers of success in running the business. You want stability of volumes, grow at the market rate, you know, manage the pricing and product mix in a stable way, and then continue to drive technology and operational efficiency in the plant. High OEE, so we keep our assets and our uptime high, and then also drive the energy recovery that you, you touched on. Those are, those are really the drivers of success here, and not, you know, not really, you know, share, share grab. That's not, how we think about the business. Great. Thank you. Thank you. One moment, please, for our next question. The next question will come from Josh Spector of UBS. Your line is open. Yeah. Hi, just had a couple questions on the, the battery business. I think, Sean, if we look back a couple of quarters, you originally thought that business could do north of $40 million in EBITDA, I believe, this year. Now you're talking low 20s, if I heard you correctly. Can you go through that and maybe parse out how much of that is, is volumes versus some of the pricing pressure here? We'll stop there, and I'll have a, a follow-up there as well. Thanks. Sure. Good morning, Josh. Certainly, you're, you're right. At the beginning of the fiscal year, we had been seeing at that time, really consistent sequential quarterly growth in the market. Our expectation was that this trend would continue for the year. That, that core assumption, in combination with an expected ramp of volumes at new customers, particularly outside of China, is what informed our expectation for the year. Then, as the year progressed in Q2, we saw a significant sequential decline in EV sales in China. The market was down pretty sharply. We commented on that, which, which disrupted this trend of sequential growth that we had been seeing. That was driven by, by several factors. Certainly, the COVID-related disruptions that were occurring at that time had a distorting effect on things, as well as the fact that there was a very significant decline in key raw material prices, particularly lithium, in that March quarter, and so it really drove a behavior of destocking. Finally, the Chinese government had incentives for EVs in place, and those expired at the end of December, and so that impacted buying behavior. This impact in China from all of these things, you know, definitely caused us to lower our outlook in Q2. Now, since that time, we have seen a pickup in volumes in China, starting in April, and this continued through our Q3 as we commented on. However, while volumes began-... You know, this sequential recovery, we have seen price pressure in the EV auto OEM marke t has really intensified. I think, this was very visible as Tesla reduced prices there, and it set off, you know, a bit of a price war, for auto EVs, in China as they were competing for, for market share. This, this created pricing pressure in the battery, you know, flowing back up to both batteries and the materials chain as we move into our Q4. I think this factor, combined with, you know, continued delay in the ramp of some of our Western customers, is impacting our view on the forecast and informs, the outlook that we, that we shared. I'd say, I'd say while the current environment in China is challenging, it is concentrated in the lower-end domestic Chinese vehicle market. The market for the U.S. and Europe remains stable from pricing standpoint, and Chinese batteries that are sold for export to Western auto OEMs, that also remains, remains stable. It's, you really thinking through the segmentation of the market here. This is a real priority for us, focusing our market segmentation on higher-performing batteries. Then, you know, balancing share and pricing and on the more, more base end of our product line, you know, really focusing on cost reduction. Then over time, what we see, Josh, is that the market is clearly bifurcating into a China market and a rest of world market. We expect the rest of world market to behave pretty consistent with the auto market norms, where there are, you know, very strict qualification requirements and management of change protocols, et cetera. We also expect this market's gonna continue to regionalize. All of that creates, I think, you know, momentum for growth outside of China and for, you know, more predictable and durable profit pools. We expect inside of China, that the market too is, is bifurcating there, you know. With lower-end vehicles sort of on one end, where, you know, the Chinese government is promoting EVs aggressively, and the lower end of the market, there are offerings, you know, in the $10,000-$15,000 per vehicle range, which is very, very, very cheap. Then you've got, you know, on the higher-end side, you know, more, more traditional, you know, vehicles that are, you know, a bit more premium. I think in this market, our view is that the lower end will use more base conductive additives, and pricing and margins here will, will probably cycle with demand. This will be probably pretty consistent with what we've experienced in China over the years across our other markets. Then we expect the high end of the market will require higher performing conductive additives, which should command higher pricing and margins. I think it's gonna be critical that we, we manage these segments in a differentiated way. And that'll be, that'll be, you know, really important for us, as we manage through this, this unexpected turbulence in China. In the long term, we see the growth fundamentals here remaining intact, and we see the growth expected outside of China, in U.S. and Europe. Over the next 10 years, it's expected by most forecasters to represent about 50% of the market. I think the requirements and therefore, the profit pools outside of China, you know, will remain very attractive and more durable. Inside of China, it'll be about how we segment the market and choose our places to participate that orient more towards higher value. That's a bit of what's, what's going on in the market and how things have developed over the course of the year, and what, what evolved differently than what was originally expected and informed our, our initial outlook. Thanks, Sean. I appreciate that. Just two quick follow-ups. Just one, your exposure to China today in this business versus where you aim to be a couple of years from now, can you give us some, some numbers there? Second, just has anything changed on the supply side and carbon nanotubes, is that an area you're seeing more pressure, or is it relatively broad across your portfolio? Yes. first I'll take them in the order, Josh. In terms of the, the China market today, it represents, for the whole market, about 70% of batteries are made in China. The world is, is definitely skewed to China, at this point, and our geographic makeup, is similarly skewed, probably even a bit higher, than that, in terms of our, our portfolio. What we would expect as we look out over the next 10 years is that US and Europe will grow to represent about 50% of the battery market. We would certainly be targeting, at least, that, level of breakdown across our portfolio. Given our, our, our position, our global footprint, our breadth of technology, the orientation of... Of the market outside of, of China towards, towards NCM, because they, they, they want longer, longer range, et cetera. Those are, those are gonna orient towards higher performing products, is our view. So we would, we would hope to win a disproportionate share. That's how the market will break out, and we would expect, that our, a percentage of our business would, would, at a minimum, evolve accordingly. Now, on the, the second question on the, on the supply side, the market inside of China is, certainly very dynamic. We have seen, new entrants that, have, have been developing, here over, the recent period. Customers, certainly given the pricing pressure in China right now at the EV level, you're seeing that, you know, push all the way upstream, and customers are getting more aggressive about pricing and about, you know, trying to develop additional alternatives. So, again, our focus is on segmentation, because on the higher end of the market, we see, you know, prices more stable because the performance is, is higher, and certainly on batteries that are exported to global auto OEMs, same, same thing. I think it's, again, in China, gonna be about how we segment the market towards the higher value product lines. That'll be our, our key area of focus. All right. Thanks, Sean. Thank you. One moment, please, for our next question. The next question will come from Jeff Zekauskas of JPMorgan. Your line is open. Thanks very much. I know that it's early to talk about the carbon black price negotiations in Europe and the United States for 2024, but is the general posture that the carbon black companies think that prices should be up, and the customers think that prices should be down? Hi, Jeff. I think that's perhaps a reasonable summary. If you look at our business, we have a percentage of our business that has multiyear agreements with a second year with price increases. Mm-hmm. Yep. Yep. I know, some of our competitors that have commented publicly, have the same. I think that, the view is that those price increases, are kind of the baseline for the rest of our 2024 contracts and should really set the level of price increases, I would say, number one. Number two, you know, the environmental costs, you know, continue to rise in this business, and those costs, have to be, recovered. I, I think the fundamentals there, have not, have not really, have not really changed. As we head into, the negotiations here, I would say, on the supplier side, the supply side capacity is, picture remains as, structurally, as, you know, we've, we've commented on in the past. Yeah. No, no change there. We are gonna see restrictions or sanctions go in place around Russian product into Europe in 2024. I think the supply, the supply picture, remains very important for customers, and I think that, you know, that, that getting supply reliability is gonna be pretty critical for them. Mm-hmm. Okay, in the traditional China carbon black tire markets, can you talk about the price raw material spreads, whether they're narrowing or expanding? Can you talk about the effect of Russian imports of carbon black into China, if there are impacts? Yeah. In terms of our margin profile in China, Jeff, it's pretty stable right now. As, as raws move around, that market, because it's more of a spot market, tends to adjust very quickly. I think the price raws recovery is, is basically matched, and the unit margins are, are, are holding pretty steady. Though, at a lower level than, than, than where they were, you know, a couple years ago. They're holding, they're holding steady. In terms of Russian product into China, maybe I'll just sort of pull the lens back a bit. The Russian exports right now are down about 50%, from into Europe from where they, where they were pre Ukraine Invasion. Again, there are sanctions on the books that will go into effect at the end of June 2024. That number, based on those sanctions, then, you know, arguably has to, has to go to 0. What's happening with the product and where is it going? We're seeing some of the product go into markets like Turkey, which is a pretty good size tire production base and with no carbon black production in country. Some of it's flowing there, some of it's flowing to the Middle East, some of it is flowing into China. We're not seeing that flow have any material impact on the competitive dynamics in China because the market is just so big. A few 100,000 tons flowing into a market that is, you know, I think somewhere in the order of probably 7 million-8 million tons, is, is, is not really changing the dynamic there. I think in China, the, you know, the market, you know, has its competitive intensity, and, and the Russian stuff isn't, isn't really changing that. That's a quick overview of kind of what's happening with Russian exports and where we see them showing up. The expectation is that the exports into Europe, given the sanctions, you know, go to zero by that, by that date of June, end of June. Okay, thank you for that. Lastly, can you talk about, your specialty black volumes, both in the second quarter and year to date? That is, what, what kind of growth or contraction you're experiencing, and how's the profitability of that business? Yeah. Certainly across performance chemicals, we have seen weak, weak volumes, and it's really driven by weakness in the end markets. In specialty carbons, you know, that is definitely the case. Where it's been more pronounced in performance chemicals is in our human oxides business, certainly specialty carbons has seen weaker volumes. I would say the carbons volumes are pretty similar to what we summarized for the overall segment, down around 9% in the quarter. Now, while that's sort of headline volume, you also have a mix factor here, where some of the higher end mix that pulls through, you know, much stronger margins has been weak, while the auto sector is beginning to recover in terms of production. We typically see a lag in that, given the length of these value chains that we sell into. We've not yet seen that translate into our, into our business, and as a result, we're not, we're not getting that mix uplift that we would, we would normally get. Again, as the lag works its way out, you know, from the auto build should flow through. Certainly, there's a mix impact on the business today. In terms of profitability, you know, it is down in the business, very similar to the overall declines in the segment, I would say. That's roughly how it's playing out. Okay, good. Thank you very much. Sure. Thank you. One moment, please, for our next question. The next question will come from Chris Kapsch of Loop Capital. Your line is open. Yeah, good morning. A lot of my questions have been asked, but I do have a couple. One, I wanted to peel back a little bit in the battery materials discussion, and thanks for a lot of the characterization and details on that. I get the bifurcation China versus, you know, Western OE producers, particularly, you know, I guess, low, low price, low value cars and LFP batteries in China, NMC for the longer range in Western markets. It's not intuitive to me that the role of the conductive carbon in these batteries is all that different. They're. My understanding is, regardless of the battery chemistry, they're inputs to just facilitate the flow of electrons from cathode to anode and vice versa. I'm wondering, you know, what is it about the China LFP battery construction that's, that's led to this increase in competitive intensity? Is it, is it simply the mentality of these producers that they, kind of alluded to this, but it sounds like they're, you know, they're not adhering to, you know, strict, and keeping a high bar with the qualifications. I'm curious if, if that's, just how pronounced that dynamic is in the overall battery value chain, and is it more focused on, on carbon nanotubes, or is it also applicable to the conductive carbons that are made in your traditional reactor footprint? Chris, a, a couple of things here. At, at a high level, what you have in China is a market that, a battery market that is more oriented towards LFP, rather than NMC. And outside of China, you have the orientation towards NMC because range matters more. I nside of China, it tends to be more LFP. While it is true that they both require conductive carbon additives and the, the volume loading is, is not, you know, materially different across those two, you can have a very different levels of performance. Some of the, the low-end batteries in China, LFP, you know, might have ranges in the 100 miles, where these are going into EVs that are sold into consumers that are probably in more like tier 3, tier 4 cities in China. It is, it is a lower, a lower performing battery. A couple of things, I think happen there. The, the pricing intensity, given that the cars are selling for such a low price, is definitely higher. Given the performance requirements, you know, they'll, they'll put more pressure on the inputs. Our view, what we see is, they're, they're more aggressive or less less disciplined around around sort of qualification standards because they're being sold as local domestic vehicles at a very low price. These are not products that are being exported, either the batteries or the cars. I think that's, that's a bifurcation that you're, you're seeing how the market plays out at the, the low price end of the EV spectrum. You're gonna see LFP technology, and you're gonna see, you know, the low end of LFP technology. LFP can stretch in terms of its range, but at the low end, for these low-price cars, you're seeing, you know, much, you know, lower performing LFP batteries. That's, that's the dynamic there. In the sort of mid to higher end, you still see an orientation in China towards LFP. It makes up, I think, somewhere maybe close to 70% of the market is LFP, in China today. You have a higher performing end of the market there, where you get more range, and therefore, the requirement for higher conductive additives, better performing conductive additives, you know, higher purity, and a more discerning customer base in terms of their willingness to switch and take quality risks and things like that. Some of it is behavioral or the mentality as you as you put it, but we see the market, you know, kind of bifurcating between that low end and then the domestic, the medium and higher end domestic. Then on the export side, where Chinese producers are exporting batteries to global auto OEMs, we're seeing, you know, real stability there. We're seeing that obviously the, the, the management of change requirements for Western auto or global auto OEMs, are, are pretty strict. You know, we know that from our other participation in the auto sector, but that's, that's pretty strict. That's why we see, the West, developing differently than in China. Got it. Appreciate that. Just as a follow-up, though, I appreciate your comments about, you know, the market segmentation approach and a little bit of a, you know, pivot on the, on the strategy addressing this growth opportunity. Does the evolution of this market dynamic, does it influence your intent with respect to capital allocation to grow capacity as this market grows? In other words, are you gonna focus only on, you know, installing the capability to supply the Western markets and walk from the large and growing domestic market in China? How, how are you approaching that? Thanks. Yeah. I, I wouldn't say any fundamental shift, but a bit of an adjustment, I would say, in terms of our approach. It'll be guided first by our choices around segmentation. Certainly in, in the West, in the US and Europe, you know, we, we continue with our intentions to build capacity there to support customers. That'll be timed with how the customer's projects are advancing. I would say in general, while there are a lot of battery gigafactories under construction right now, most of them are targeted to come on, you know, in the sort of 25 through 2028 period. We'll be looking to synchronize our capacity adds with that. I would say no change in the aiming point here, because we believe those are gonna be valuable and, and, and durable profit pools. With respect to inside of China, again, segmentation will be critical here. And what we'll be doing is managing our capacity adds to to match that. As you know, last year, we brought on a significant tranche of specialty carbons capacity in China. With that market slower to recover, that is making more capacity to make high-value battery grades in China off our existing network. It's creating more more capacity to do that. We can, we can, I think, adequately serve that without, you know, significant, you know, increases in our, our near-term capacity. We're gonna be managing that. very carefully, in China, tied to our segmentation approach. Then outside of China, it's really no change in the aiming point. We're just gonna make sure we synchronize that. I wouldn't call that a change, but, you know, we're, we're gonna make sure we synchronize that with customers' timing. That's, that's helpful. If I could just sneak in one last one about the, the Fumed metal oxide business. Under what scenarios would you be able to, you know, underwrite a recovery, a more pronounced recovery in that business? Is it gonna depend on the semiconductor end market recovery? Is it gonna be, you know, piggybacking off of China stimulus and recovery there? Is there something that, you know, Cabot can do specifically to, to drive a recovery there? Thank you. Yeah. Certainly the semiconductor I mean, the silicone space, which really drives the, the, the largest part of the Fumed silica business, has been very weak. If you look at end markets for silicones, building and construction is, is the largest one, and that has been quite weak globally. I think we would need to see a turn in, in building and construction in order to, you know, provide more stable volumes in that, in that business. 'Cause in this business, volumes are, are off, you know, greater than 20% year-over-year, and, and it is the highest margin business in the performance chemicals portfolio. It is impacting us, you know, with those weaker volumes. I would say housing recovery and building and construction, is one. silicones also go into the automotive sector, and so as, the auto builds improve, again, with a little bit of a lag, we should, we should see, some improvement there. The semiconductors, as you said, electronics, in general, that's, another important area. That certainly looks like it's beginning to pick up a bit more now, which is good. We'd need to see those end markets really improve, Chris, to provide a more normalized, volume picture. In terms of the things that, that we can do in, in terms of self-help, of course, we, we continue to do in terms of, you know, how we segment the market and, you know, the, the products we're selling, the mix, and how we manage our costs. You know, all of that is stuff that we can do, but we need to see the, the end markets improve a bit here. There are some mixed signals. In the U.S., we're seeing maybe some early signs of, of housing and construction beginning to turn. I wouldn't say that's the case yet in Europe or China, but we'll have to see how that evolves here in the coming couple of quarters. Thank you. Thank you. One moment, please, for our next question. Our next question will come from the line of Laurence Alexander of Jefferies. Your line is open. Good morning. I guess, first of all, do you have any end markets by region where customers are clearly telling you inventories are too low? Secondly, can you give an update on how the conductive carbons platform is evolving? Should your operating leverage to an improvement in EV sales be different in 2024-2025 than it was in 2023? Can you just give a sense for what the kind of underlying technology development is looking like? Sure. Thanks, Laurence. In terms of end markets and inventory positioning, you know, it certainly seems like we're at, at the end or near the end of destocking. I mean, as we talk to our customers, we're not seeing inventory levels, you know, at normal safety stock. They're, they're below that, is what, what customers are telling us, and they're basically ordering to meet their current demand, not building stock in anticipation of growth. We do see that translate into order pattern behavior, where, you know, we might find customers order a couple of times a month instead of once a month. They're, truly reacting to their current demand, and I think have a very cautious posture on inventory. Where it can get more, more murky, I think, is, is downstream of them. How good is their visibility, especially in some of these longer value chains? I would say the general sense is that inventory levels are low and below normalized levels of safety stock. People are being cautious and looking for a turning point with, with rates having ratcheted consistently throughout 2023, and question marks around the macroeconomic environment, customers have just been really, really cautious. I would say that's how I would characterize things. As a turning point happens, then I think our expectation is that customers would have to rebuild inventories to a more normal level to, to, to support demand, but we've not seen that yet. That's a bit of characterization on the inventory side. My sense in hearing how other players in the chemical chain are seeing things, I think that's pretty consistent. In terms of the conductive carbons technology evolution here, you know, we have a range of conductive carbon additive technologies in our portfolio, the widest breadth of products compared to any competitor from both conductive carbon furnace black types to carbon nanotubes to carbon nanostructures. Over time, what we see as the battery market evolves here is that as the proportion of NMC batteries increases, then the need for higher performing carbons and blends of things like conductive carbon blacks and CNTs will become more important. No, no real change there. We continue to, you know, develop both of those product lines, because we think they'll, they'll offer differentiated performance, especially in these, in these higher-end batteries. I mean, certainly as, as volumes continue to grow in this market, you know, there'll be some operating leverage benefits. We've been investing ahead on growth, both in terms of capacity, as well as SG&A in this business. You know, as, as those growth investments are absorbed, you know, or, you know, the costs are absorbed with volumes, there'll be some operating leverage that will certainly come. Thank you. Thank you. I see no further questions in the queue. I would now like to turn the conference back to Sean Keohane for closing remarks. Great. Well, thank you very much, Chris. Thank you all for joining the call today. We appreciate your continued support of Cabot and look forward to speaking with you next quarter. Thank you very much. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.