Good day, ladies and gentlemen, and welcome to the Q3 2015 Cabot Earnings Conference Call. My name is Julie, and I will be your operator today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. As a reminder, this call is being recorded for replay purposes. And now I'd now like to turn the call over to Jim Kelly, Interim Vice President of Investor Relations. Please proceed, sir.

Thank you Julie. Good morning. I'd like to welcome you to Cabot Corporation earnings teleconference. Earlier today, we released results for our third quarter of fiscal 2015, copies of which are posted in the Investor Relations sections of our website. For those on our mailing list, you receive the press release either by e-mail or fax. If you're not on our mailing list and you're interested in receiving this information in the future, please contact Investor Relations. 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. I'll remind you that our conversation today will include forward-looking statements, which are subject to risks and uncertainties, and Cabot's actual results may differ materially from those expressed in the forward-looking statements. A list of factors that could affect Cabot's actual results can be found in the press release we issued this morning and are discussed more fully in the reports we file with the Securities and Exchange Commission, particularly in our last Annual Report on Form 10-K. These filings can be found in the Investor Relations portion of our website. I will now turn the call over to Patrick Prevost, who will discuss the key highlights of the company's performance. Eddie Cordeiro will review the business segment and corporate financial details. Following this, Patrick will provide closing comments and open the floor to questions. Patrick? Patrick M. Prevost - President, Chief Executive Officer & Director: Thank you very much, Jim, and good morning, ladies and gentlemen. We experienced another challenging quarter as the global macroeconomic environment and the downturn in the oil and gas sector continued to negatively affect our Reinforcement Materials and Specialty Fluids segments. While our volumes held up well…

The first question comes from the line of Jim Sheehan, SunTrust Robinson Humphrey. Please go ahead, sir.

Thank you. Patrick, could you go over what are the signs of improving markets in the calendar 2016 contract period? What are you seeing that's giving you some optimism there? Patrick M. Prevost - President, Chief Executive Officer & Director: Good morning, Jim. Yes, I mentioned that we were seeing some improvement in the market environment and this is essentially occurring in the – in the western part of the world. We're seeing demand for Carbon Black increasing, both in Europe and North America and this bodes well in terms of improving the supply/demand environment and leading to potentially a stronger contracting position and increasing the margins in the coming year.

Very good. And on the utilization rate, you mentioned it was 80% this quarter. What is your outlook for utilization in the fiscal fourth quarter? Patrick M. Prevost - President, Chief Executive Officer & Director: We do not provide an outlook on utilization, but I would say that there is a, I would say a chance for slight improvement, but in general, we are believing that this may reflect the global situation fairly well.

Great. On Performance Chemicals, you mentioned a potential for margin expansion in the fiscal 4Q. Could you give us some quantification of how much of a benefit you expect? Patrick M. Prevost - President, Chief Executive Officer & Director: We, we are certainly, you know, very bullish on the Performance Chemicals segment. We see – this is a business that's application and technology-driven and we provide solutions to our customers here, so we're continuing to see growth in sectors such as; adhesives, batteries, silicons, electronics that make us confident in the growth. We believe this is a business that will grow in the low to medium single-digit numbers on an annual basis.

Thank you.

Thank you for your question. The next question comes from the line of Ivan Marcuse from KeyBanc.

Hi, thanks for taking my question. The first is, you talked about cost savings in Purification Solutions and Fluids, is there any opportunities to take out some of your fixed costs within reinforcements to improve profitability such as the plant in Asia, sounds like demand over there remains fairly weak and I want to know what your outlook is for that? Patrick M. Prevost - President, Chief Executive Officer & Director: Good morning, Ivan. I think you're certainly touching on a key point and the way we're looking at the Reinforcement Material business right now is that we're – we believe that margin restoration is the key driver of profitability, and we believe that in the short-term, that's where we need to focus our efforts. We think that capacity will be tightening going into next year. Let me remind you of the actions we're taking in the short run. I mean, first of all, we've taken action to increase prices at non-contractual customers and we will be increasing these prices on September 1. There's been publication of the action and it's available on our website. Secondly, we have been successful and continue to be successful in capturing volumes in various geographies around the world to offset some of the contract losses of last year. Of course, these are not of the same quality, which has resulted in some mix effects. But in general, we are successful with that action. Thirdly, we're now into 2016 contracting season and I mentioned that we are seeing the markets tightening in North America and Europe and clearly in that respect we're going to be driving our value over volume strategy and we believe that there's going to be some benefits coming from that. And then finally, on your point on costs, we have been active reducing costs, which we have indicated that our costs in general for the company have been down by $25 million this year over last year. And then we've also been much more prudent with regard to CapEx with the objective of improving our free cash flow. So I think all in all, in Reinforcement Material being a large part of the company, I think we've got the right actions in place. Of course, if the environment does not improve for Reinforcement Material, we will have to look at additional measures.

Great. You mentioned $10 million cost reduction in the quarter that benefited results. what segments did that lie primarily in? Was that all in reinforcements? Patrick M. Prevost - President, Chief Executive Officer & Director: It's across the whole company, that $10 million, Ivan.

Okay. So then if you look at Purification, you mentioned that you're going to be taking out, I believe I may have missed it, but $25 million or so over the next year, with depreciation and amortization coming down, you think EBITDA's going to sort of stay at this level. If you look at least taking into next quarter, with all else equal, would your operating profit within purification rise $4 million for disappeared depreciation, lower depreciation? And then would you also see – and then when do you start seeing the cost savings flow through and how would you expect the trajectory looking out the next three to five quarters? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: So maybe I could take that one, Ivan. So on the purification, the $25 million of cash costs, so the program there was started early this year and the expectation is we would achieve about half of those in 2015, the current year, and about half in 2016. So you're already seeing half of that $25 million in the current EBITDA run rates and so we'll expect, as Patrick mentioned, I think, we expect EBITDA run rates to stay approximately the same for the next couple of quarters until we get greater clarity from the D.C. circuit court as to whether there will be a delay in MATS or how long that might be, et cetera. And then on the depreciation benefit, we saw a $1 million in the third quarter and based on the way that plays out, we should expect to see about $3 to $4 million, close to $4 million per quarter going forward. So next quarter, for example, it should be about $3 million higher, or greater benefit than it was this quarter. Does that answer your question?

Right. So then if you – it does. So if you're going to 2016 within Purification, then you get the second half of the $25 million.... Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yes.

Then you expect to see an additional $3 million on top of that. So all else equal, operating profit should be sort of at that $10 million type of run rate, taking out the effect of whatever demand does up or down? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yes, and I think the way I would think about it, Ivan, is just – we just want to be a bit careful about how many quarters out we can really see. It just really depends on what happens at the end of this calendar year with whatever court decision is made and how, as you said, demand plays out thereafter.

Thanks.

Thank you for your question. We do have another question and it comes from the line of Laurence Alexander. Please go ahead, sir. From Jefferies.

This is Dan who's on for Laurence. How should we think about the – our, with 2016-2017, you said that you're going to be prudent with CapEx this year. Is that going to continue into 2016 and 2017, or are you still just kind of waiting and seeing? Patrick M. Prevost - President, Chief Executive Officer & Director: Well, certainly, Laurence (sic) [Dan], we have adjusted our CapEx profile to deal with the current environment and you may – as you may know, we're looking at depreciation levels in and around $200 million a year, slightly more, I think $210 million and we are going to be at $150 million of CapEx this year. I think this is an adequate number for us considering the current environment. We have the possibility to increase on that number next year and the years ahead, but it is, of course, hinging on the quality of the projects and the opportunity set. So right now I think $150 million is adequate, but certainly we'll be looking at the picture on a regular basis and we'll let you know how we foresee 2016's envelope.

Of that $150 million, is that mostly maintenance? I mean, how much of that is maintenance CapEx? Patrick M. Prevost - President, Chief Executive Officer & Director: I would say maintenance is somewhere of around $100 million to $120 million of that $150 million.

Okay, thanks. Then final question. With regards to the MATS ruling, I understand the write-down is with the assumption that the MATS will be delayed for two years, which I guess would be to the spring of 2017. Is there a number, we should think about, a $10 million potential write-down if you can delay that even more than that or even indefinitely? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: I'm not sure I understood your question, Laurence (sic) [Dan].

Well, you said that I think in the press release and in the comments, you said that the roughly $5 million or $10 million impairment that was taken in for norit (30:11) was with the assumption that MATS would be delayed until 2017. What if it's delayed beyond that? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yes. No, I understand the question now, Laurence (sic) [Dan]. Of course if for example, the court decides to vacate the regulations we're potentially in a much longer delay because the EPA would have to reconsider the whole MATS situation. And then of course we will have to reconsider the impairment analysis and its potential impact on the business. Right now, we have decided that in our best judgment, the two-year, the two-year delay would be the best reflection on what we can see. We're, of course, in a waiting period now. We believe that, and what we've heard is that the DC Circuit Court will potentially take three to six months to come back and provide guidance to the EPA and we'll know better in that respect where we're kind of planning for a delay of about two years at this stage.

All right. Thank you.

Thank you for that. We do have another question and it comes from the line of Christopher Butler from Sidoti & Company. Please go ahead, sir. Christopher W. Butler - Sidoti & Co. LLC: Hi, good morning, everyone. Patrick M. Prevost - President, Chief Executive Officer & Director: Good morning, Chris. Christopher W. Butler - Sidoti & Co. LLC: Sticking with Purification and MATS, could you give us an idea of what that business looks like if the lower courts decide to nullify MATS for the next two years and what are we looking at from that business? Patrick M. Prevost - President, Chief Executive Officer & Director: So I think, you know, what's important to understand is that, we're continuing to supply the, you know, our customer base. There's been actually no cancellation of orders, no cancellation of contracts as a result of the Supreme Court decision. Of course most of the, you know, the potential customers and players that would have started using product in the future seem, you know, are certainly sitting on the fence waiting to find out what the decision is. But the base business is intact and we believe that that will provide us an EBITDA level that is akin to what we have today. The big question will be when will the business ramp up to the expected volumes that we see still in the future to be around £350 million to £400? This is roughly in line with what we said in the past and we believe that will happen, of course, a couple of years later than we had originally estimated. Does that answer your question, Chris? Christopher W. Butler - Sidoti & Co. LLC: It gets to it a little bit. I guess – I mean, with the asset write-down,…

Thank you for your question. We do have a question and it comes from the line of Ivan Marcuse from KeyBanc. Please go ahead, sir.

Real quick, and you may have said this and I missed it. In terms of the price announcement that you did in reinforcements for the spot business, have you done this before mid-year and how successful has it been? And would you anticipate the industry to follow? Are they still – are they saying they're seeing with similar type of costs? Patrick M. Prevost - President, Chief Executive Officer & Director: You know, of course, Ivan, I can't speak for the industry, but we have done some of these in the past and we have been successful. I think this one is slightly more structural in nature because it's linked to the way the feedstock markets have developed. They have developed against us in a multitude of ways where we're seeing a tightening environment, you know, both driven by some differences in feedstock between Asia and the rest of the world, but also we are seeing some alternative use for fuel oils in the Gulf Coast creating a tightness and so we have indicated price increases. It's on our website and we will be increasing at different rates, I believe between 4% and 7% with perhaps an exception in Brazil where the number is going to be higher because of the currency effects that we're experiencing there.

Gotcha. And in total – and that 4% to 7% would be beyond roughly 50% of the reinforcement business? Is that how to think about it? Patrick M. Prevost - President, Chief Executive Officer & Director: It's going to be slightly lower. It's going to be roughly around 25% of the business that will be affected.

Okay. And then last question, in terms of on a year-over-year basis in EBIT for the reinforcement, how big of a headwind was pricing and the higher feed stock costs? Patrick M. Prevost - President, Chief Executive Officer & Director: I, I believe we mentioned -- we had a $30 million headwind on year-over-year quarter, and $20 million of that was linked to contract pricing and feed stock. So about two-thirds if you think about pricing and feed stock effect.

Two thirds will be in price of the $20 million, two-thirds of that have would be pricing or two-thirds would be pricing on feed stock? Patrick M. Prevost - President, Chief Executive Officer & Director: No, the quarter on quarter comparison of 30 million, two-thirds of that was pricing and feed stock effect.

Okay. Thank you.

Thank you for your question. We do have another question and it comes from the line of Jim Sheehan from SunTrust Robinson Humphrey. Please go ahead, sir.

Thank you. You said the currency impact was about $6 million in the quarter. At current exchange rates, do you see the foreign exchange impact being roughly about the same, or a little bit different? Patrick M. Prevost - President, Chief Executive Officer & Director: I'm going to ask Eddie to take that question. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: I would say it's probably going to be in that range, Jim, based on when currency started to move last year. So you are talking about the fourth quarter now?

Fourth quarter, yes. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: I would say, it's probably a similar impact based on when rates really started to move last year, which I think was at the end of September and going into October. So, probably in that range, depending on how, quite frankly, rates evolve between now and then and specific rates.

Great. And can you also update us on the surcharge that you imposed for environmental purposes? Some of your competitors have started to adopt that. I think you updated us last quarter. Can you talk about any further adoption of such surcharges in the industry this quarter? Patrick M. Prevost - President, Chief Executive Officer & Director: Yeah. I'd be happy to do so. So this is the EPA action on the carbon black industry in the U.S. And we, as you may remember, we entered into a consent decree last year and as a result of that, decided that because of the capital imposition that this consent decree required us on, we would have to apply an environmental surcharge starting in 2015. We have been implementing this surcharge. Of course, the success of the surcharge and the reaction from the customers is dependent on the whole industry proceeding with us and we were pleased recently a few weeks ago to hear that one of our competitors had actually entered into the second consent decree and we are also hearing that all the other players are engaged with the EPA and hope that we will see the complete industry having adopted and agreed with the EPA on a path forward in the coming months.

Great. Thank you very much. Patrick M. Prevost - President, Chief Executive Officer & Director: Thank you.

Thank you. I would now like to turn the call over to Patrick Prevost for closing remarks. Please go ahead, sir. Patrick M. Prevost - President, Chief Executive Officer & Director: Thank you very much, and I thank everyone for joining us today and we look forward to speaking with you again next quarter.