Good morning. Welcome to the PQ Group Holdings First Quarter Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Nahla Azmy, Vice President of Investor Relations. Go ahead.

Thank you. Welcome to everyone joining us for our first-quarter 2020 earnings results and COVID-19 update call. We will start today with formal remarks from Belgacem Chariag, Chairman, President, and Chief Executive Officer; and Mike Crews, Executive Vice President and Chief Financial Officer. Then we will follow with a Q&A session. Please note that some of the information shared today is forward-looking information about the company's results and plans, including with respect to the anticipated impact of COVID-19. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's filings with the SEC. Reconciliations of the non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures can be found in our earnings release and presentation materials posted on the Investors section of our website at www.pqcorp.com. With that, I'm pleased to turn the call to Belgacem.

Thank you, Nahla. Good morning and thank you all for joining us today. I would first like to acknowledge this unprecedented and challenging time that all of us are managing through. We hope that you and your families are safe and healthy, and our hearts go out in sympathy to all those families who have experienced a loss as a result of the COVID-19 pandemic. In the short time since our last call, we have seen a tremendous disruption in our global economy, the chemical space and market demand across many types of products. This has been driven by a confluence of events: The rapid global spread of COVID-19, the sharp drop in oil prices and the sudden onset of a recession. As a result of these developments, governments and corporate leaders have had to take extreme measures to protect their people and communities. Starting on Slide 3 for an overview of our first quarter activity. As always, we'll begin with safety. On our last earnings call, we shared that our 2019 performance was the best in the last decade. We made further strides this quarter, resulting in more than 65% improvement in total recordable injury rates over the first quarter of last year. Further, the number of our health, safety and environmental perfect safety days increased nearly 27% over this time last year, reflecting a visible commitment and dedication of the whole organization. Moving to a summary of our first-quarter results, which reflected minimal impact from COVID-19. We delivered a year-on-year 3% adjusted EBITDA improvement on 2% higher sales with stable, strong margins. The solid result was driven by volume growth in three of our four businesses, particularly catalysts and performance materials. Refining services also benefited from higher volumes from increased production time and new contract wins for virgin…

Thank you, Belgacem, and good morning. We were pleased with our first-quarter results, which reflected solid performance across the portfolio on improved volumes. During the quarter, we took the opportunity to lock in lower interest rates by repricing and extending our term loan and asset-based revolver. These timely actions have provided us additional financial flexibility during the COVID-19 pandemic. I'll begin by discussing first-quarter results, then our current financial position and outlook, starting on Slide 6 with a review of our consolidated results. On a constant-currency basis, sales of $362 million increased 2% on higher volumes in refining services, performance materials, and catalysts. Adjusted EBITDA of $103 million was up 3% on a constant-currency basis, primarily on higher sales volume and improved results in the Zeolyst joint venture. Margins were in line with the prior year at 26%. I will now briefly review each business segment, beginning with refining services on Slide 7. Sales of $101 million declined 5%, largely on the pass-through of $9 million of lower sulfur pricing, which more than offset increased virgin acid volume from higher production on less turnaround downtime in the current year. Adjusted EBITDA of $37 million declined 6% on higher raw material usage and production costs related to plant start-ups following unplanned maintenance outages. Turning to Slide 8 for catalysts. Silica catalyst sales increased 58% to $25 million, benefiting from higher polyolefin catalyst demand to serve a global customer bringing new capacity online and incremental volume from existing producers. In addition, MMA catalyst sales increased on an order accelerated from the second quarter as acrylic demand rose late in the quarter. In the Zeolyst Joint Venture, sales were up 10% to $32 million as demand for emission control catalyst returned to normal levels. Adjusted EBITDA of $23 million increased 26% on higher…

Thank you, Mike. Turning to Slide 13 for a brief update on our portfolio optimization strategy. We remain committed to growing and strengthening our leading specialty positions. We are also focused on maintaining strong margins to drive improved free cash flows in changing macro environment. We are still targeting additional monetization of noncore assets with a few in advanced stages. As a reminder, to date, we have completed the Performance Materials asset swap, which expanded our beads business with a long-term supply arrangement. We sold 49% interest in a joint venture in South Africa and entered into a long-term toll manufacturing agreement with a former JV company, and we monetized a noncore asset sale within Refining Services. With regards to our transformation plan for Performance Chemicals, we launched the work streams in February. However, given some COVID-19-related constraints on implementation, we now anticipate a delay for completion by 1 or 2 quarters. We continue to target an annualized adjusted EBITDA benefit of $10 million to $15 million. We also anticipate improved cash flows from lower working capital and capital expenditures. In closing, on Slide 14. The safety, health and well-being of our employees will always be our single-highest priority in any circumstance or environment. Now with the pandemic, we have and will continue to be even more vigilant in taking extensive precautions. We are balancing our operational productivity with current customer demand needs while ensuring we have flexibility to scale up or down as demand shifts. We have additional levers within each business to optimize cash to improve liquidity through reductions in capital and discretionary spend should the impact of the pandemic extend beyond 2020. And while we cannot provide clarity beyond the second quarter given the uncertainty related to the timing and pace of economies reopening, particularly throughout the U.S. and Europe, we continue to believe that PQ's portfolio will demonstrate its resilience during this crisis. This is on the basis of the diversity of end users, the criticality of our products and services to our customers for their success and the strength and earnings quality of each of our individual businesses. We expect this resilience to result in the delivery of stable margins and strong free cash flow this year despite the ongoing disruptions and uncertainty. With that, we have concluded our formal remarks. We wish you and your families a safe and healthy time ahead, and we look forward to connecting with you over the course of this year. Thank you, and we're now ready for questions.

[Operator Instructions] Our first question is from Christopher Parkinson from Credit Suisse. Please go ahead.

Good morning. This is Kieran on for Chris. I was just wondering if you can walk me through some of the key tailwinds and headwinds that you foresee impacting margins in 2Q and then kind of in the second half of '20. Specifically, how should I be thinking about the cost absorption, raw materials and maybe any product mix impact? Thank you.

Yes, Kieran, this is Mike. I think from a second-quarter standpoint, the thing to look at is what I referenced in my remarks, which would be the volume declines that we expect in refining services at 25% and then chemicals at 15%. So refining services is a function more of the decline in miles driven, you have high gasoline inventories. Typically, low oil prices would be good for us right now, but with the stay-at-home mandates, that really negatively impacts miles driven. So with that reduction in volume, we're going to see a resulting impact on sales and EBITDA for refining services. And then chemicals, we see sodium silicate weakness just due to a weak macro environment. On the raw materials side for chemicals, we tend to pass-through any changes in raw material pricing, so don't expect a huge impact there. Absorption, there was a fairly large effect on absorption for the Catalyst group in Q1, a little over $5 million. We'll see that same phenomenon, probably more in the high single-digit in 2Q. So our Catalyst sales will be up. We expect sale -- or excuse me, EBITDA will be down year on year. It was a very tough comp, nearly $30 million in Q2. We do have the absorption phenomenon. Well, you may recall that we said we will have favorable absorption, as we built inventory to meet 2020 sales commitments. We'll see that reverse itself in the first half of this year.

Great. Thank you. And then maybe just a quick follow-up. I know it might be a little preliminary, and it might be covered in your remarks. But are there any areas that you would say were a little bit more challenging or any pockets of strength that you saw in April that you might be able to reference as we think kind of 2Q results and the rest of the year? Thank you.

Kieran, for our forecast or estimate that we gave you, we fine-tuned it based on what we saw in April. The impact on refining services, with the lockdown, is impacting it the most. As we go back into reopening the economies in many places, we're going to see that easing up. And the other industries, which are served by our performance chemicals business will still be a little bit impacted, at least through Q3. And as things go back to normal, we should see slight improvements. So it's really nothing different from what we guided you to.

Our next question is from John McNulty from BMO Capital Markets. Please go ahead.

Yes. Thanks for taking my question. With regard to the refining services business, obviously, it's under a decent amount of pressure right now. I know there is expectations, at least in the industry, that refining utilization rates, as we progress even through 2Q and certainly toward 3Q, could bounce back somewhere in the 10 percentage points to 15 percentage points in terms of operating rates. So I guess how should we think about how that starts to impact the refining services business? And how quickly will you feel it? Is there inventory in the channel that we should be kind of thinking about? Are there take-or-pay thresholds that you have to work through before you start to see the incremental benefits? I guess how should we be thinking about how that business comes back?

Hi, John, great question. Obviously, currently, the refining services business probably has the highest impact with the lockdown double effect. It's the lockdown from miles driven, as well as the pricing. And the inventory that is really high today will deplete as the economies reopen. And I'm sitting in Houston. I'm looking off my office and I haven't seen the highway full of as many cars as I'm doing it right now for the last couple of months. So people are coming back to driving. We're going to see some depletion of the inventory with time. As for the take-or-pay, you need to understand that it's a protection measure, it only covers 60% to 70%. It covers more than 85% of our regeneration business, but it covers components of the cost. It is done there not to replace reduced volume, but it's there to protect. I think it's very useful for our margin. That's why our margins shouldn't be seeing a tremendous drop. As we restart, we will increase the volume rates because what we did is we reduced the rates of the manufacturing facilities without stopping anything. We just increase rate of production, and we should see a nice incremental as we bring that up. So, we're not concerned about the low side, we're rather waiting for the right timing for that to start recovering. And the faster it recovers, the faster we see the value of Refining Services and back to the standard normal margins, hopefully by year-end.

And then I guess the only other question would just be on Page 5, where you kind of show the red, yellow and green, kind of depending on how the businesses are going. Is it fair to assume the greens, you're going to see kind of a flat to up; yellows are down. It looks like 10%, give or take, or 0% to 10%; and then the reds are worse than that. Is that kind of -- are we gauging that right? Or is there another way to maybe think about that?

You're not far off. The way we're looking at it is relative to what we normally would expect. For Refining Services, obviously, the impact is large, so it's read. I wouldn't put percentages there. But yes, you're right. Anything below 10% is not considered that serious. The Catalyst business is still very strong. And anything that could happen to the Catalyst business between now and year-end would be just pushes and delays and the typical moves. Performance Materials is very strong in highway. There is improvement to be made on EGM. So, we hopefully expect that EGM brings it back to green, and that's the description of the yellow. And Chemicals is purely because it's dependent on a couple of industries that might be lower between now and year-end, yet there are some components of the Chemicals business that are more positive than it's represented here on personal care and some of the detergent and other stuff that is still under demand, at least for the next quarter or two.

Our next question is from David Begleiter from Deutsche Bank.

Can you talk about the cost actions you're taking this year to offset the impact of the COVID-19 pandemic? And also, I believe you were expecting an incentive comp headwind this year. Will that be the case given the lower earnings we're seeing at least in the first half of the year?

Thank you, David. I'll start on this, and let Mike give you more maybe details on the second part of the question. The actions that we took timely. So, as we started seeing the problem, we started really balancing the productivity, customer demand and cost of our operations. We looked at every single piece of the cost in the last 60 to 90 days, I would say. We focused on maintaining cash and then we maintain -- to maintain stable margin. And all our actions were done so that we don't impair our flexibility for ramp-up capability with the market as it recovers. So, we looked at obvious discretionary spend. We delayed and pushed some of the unnecessary capital investments. We looked at the day-to-day cost, product cost, efficiency improvements and those had an impact on the -- will have an impact on the Q2 results, but we also have a second set and a third set of actions that we're willing to do depending on the length of this problem as it goes forward. So, as we project margin stability, we're fairly confident that our margin components -- our actions are doable and our margin components will be good. The only upside to that would be if we see higher recovery, faster recovery, faster reopening of the economy, more demand, more restocking, that would be icing on the cake in terms of margins because the incrementals will be very high. But what we're talking to you about today is a more reasonable balanced approach to what's going to happen or what could happen in the next few quarters. Mike, could you add any -- do you want to add anything on this?

Yes. On the second part of the question around incentive comp, David, you're correct, we were expecting a bit of a headwind there. I think it's likely that we will not have that now.

Very good. And Mike, just on the cash flow. Can you talk about what type of working capital release you would think could occur this year? And any updated thoughts on debt paydown this year?

Yes. You saw a revised target for the year for cash flow, still working through the working capital. Likely, there'll be some benefit from inventory reduction. There will be an EBITDA consequence associated with that, but it's worth the cash to do so. Preliminarily, that could be in the $10 million range, but that still remains to be seen. So what we've done with the cash flow is we've updated for the things that we're aware of now, which includes the EBITDA profile for Q2. I've mentioned the cash -- the capital expenditures for the first half of the year and then some interest savings. And we noted on the slide that the $15 million for the cash interest is year over year. Some of that was in our original guidance, so that number is probably more like a $7 million number. So as we have better visibility into EBITDA, we'll continue to provide updates on our guidance on cash flow for the year, but providing what we can today -- I mean, debt repayment, it's still our top priority to repay debt with excess cash flow. We're going to be prudent about it. We want to be cautious. As you know, we generate really all of our cash in the second half of the year. So once the cash generation becomes a little more clear, then we'll have an update on what our total debt paydown will be.

Thanks.

You're welcome.

Our next question is from Bob Koort from Goldman Sachs. Please go ahead.

Hi, everyone. This is Tom Glinski on for Bob. So first on price/mix. Across the portfolio, it was pretty strong in the first quarter outside of the lower sulfur pass-through. So could you just speak to the sustainability of the strength there and perhaps a depressed demand environment in the second quarter?

Let me start. Pricing hasn't been an issue, at least for the quarter. And that is simply due to the fact that we have stayed very close, one, to our customers, ensuring that we convince our customers of the validity of our pricing. Two, we do have a strong pass-through program for our cost increases, which means that it kind of saves our pricing capabilities. So we have had approaches from customers -- random approaches, not a trend, on pricing reductions that we managed very well. We actually think our pricing has room for improvements in the coming few quarters when we start implementing more and more the transformation on performance chemicals, which probably covers both to the opportunities that we have on pricing. What was the second half of the question, Tom?

That covered it. And then just kind of pivoting to that performance chemicals transformation program. You previously highlighted with the fourth quarter and then, again, the first quarter here, the expectation for $10 million to $15 million addition to annualized EBITDA. How should we think about progress on that in light of the current environment? Is there any reason progress could be either accelerated or deferred?

Tom, remember, we've talked about four different programs within -- or work streams for the performance chemicals transformation. What we did because of the current work environment is we reprioritized what needs to happen now and what needs to happen later. We're still committed to our annualized savings of $10 million to $15 million through the program. However, there will be delays because of the difficulty to start implementing a few things simply because unavailability of contractors and permits and approvals are sometimes very complicated when everything is locked down. We continue to work in on manufacturing excellence and on our network optimization, and some of these sales that you're going to see from asset sales are a product of this. However, the most interesting part of our efforts is also on the commercial discipline. We didn't throw it away. We kept working on commercial discipline, and this commercial program is going to allow us to maintain our pricing strength, and it's going to allow us to really approach it from a value perspective with customers as volumes pick up. What we didn't spend time on is the integrated business management component, which is the supply and demand planning, which takes longer time and is expensive when it comes to consulting efforts and stuff like that. So we rebalanced focus on creating cash and potentially creating more value toward the fourth quarter. We do believe that we're going to see some value created for this year, 2020, but most of the value will be done within and annualized throughout 2021 and definitely by early 2022. No change in the program with maybe a slippage of a quarter or two.

That's great. Thank you.

Our next question is from P.J. Juvekar from Citigroup. Please go ahead.

Hi, good morning. This is Kara Enomoto on for P.J. Juvekar. I just wanted to ask on polyolefins demand. I know you said it remains very much stable. So I was wondering if you had any further visibility into inventories there and if you have seen any demand drop-off following initial demand boost from stockpiling activities? And then just secondly, I know you said pricing broadly is holding up, but if you could specifically comment on FCC catalyst and how that pricing is holding up.

Thank you, Kara. Let me comment first on the demand. We still see demand was strong in the quarter. And into the second quarter, we still see demand stable as we expected it going forward. We don't see any meaningful inventory-related drop. Most orders are in place, and we have a clear visibility to what could happen between now and the year. We did plan this year to have a very strong growth versus last year anyway when it came to polyethylene. Now for pricing, we haven't seen, and we don't expect any change in pricing. And we anticipate for polyethylene that the forecasted activity could be disrupted maybe a little bit in terms of timing, depending on what the value chain changes in terms of scheduling and everything. But we don't see a major shift. The year will end up almost flattish year over year from a market perspective. But for PQ, our business will definitely see a nice growth year over year by the end of the year.

Our next question is from Laurence Alexander from Jefferies. Please go ahead.

I guess two questions. First, on the productivity program, what is your current thinking in terms of how many years you can reload the program before you shift to one where you just have productivity offsetting cost inflation?

Laurence, it's Mike. I think when you look at the transformation program, where there'll be a step change in cost improvement, as it relates to the reload, there's a lot of work that we've been doing as a company over the last 10 to 15 years to offset fixed cost inflation. Generally, when we set our targets for the year, we have fixed cost increases that are well below the cost of inflation. So, there's still a lot of opportunity here as we work on our logistical models and work on our customer engagement strategy such that we think over the next 2 to 3 years at a minimum that we're going to see step change benefit as we get to the full run rate and then we'll reload for the next set of opportunities. But we're doing the opportunities to offset cost inflation on a year-to-year basis currently.

So, if you can extend this, it sounds then, 3 to 5 years, what are the kind of structural bottlenecks that are harder to go after that you're not going after now, but that you see as the big chunks of opportunity further out?

Well, I think what we started with from a program perspective is what can we do, where are the quick wins, what are the easier things to do, what's going to have the most impact? You always have a pipeline of opportunities. I mean, it remains to be seen what the full value of that's going to be. It's a little bit like our R&D program. You put a lot of things into the funnel. As they crystallize, you identify the benefit, commercialize it and move on. So we're in the first phase of the transformation program. We have a set of targets that are going to get to the next run rate, as Belgacem said, 1 to 2 quarters later. I think once we get that, we get to the full run rate, then we'll see what the next evolution of the program is.

So, Laurence, just to add one more color. The -- we have very specific targets for productivity improvement over the first period of time, very specific in terms of percent uptime and productivity. And also, we have a very specific target in terms of cost of operations in the plants, which leads to making decisions on consolidating and reshuffling productions throughout our assets. We believe we have more assets than we need, a fewer assets that will disappear. And once we get there, as Mike said, that is going to be the benchmark to future improvements. But the biggest improvements on low-hanging fruits will happen in the first 12 to 18 months, now probably more so of a 24-month period than 18 months based on this delay.

And then on the slippage in refinery catalysts, are you resetting up for a bulge in 2021? Or how are you thinking about this slippage into next year?

It is very difficult, Laurence, to really predict who is going to move backwards. It's about when the refiners will decide to schedule their turnarounds. There will be a tendency we expect in the second half of the year. There will be some movements into 2021 from a turnaround, and therefore, change-outs for our hydrocracking catalyst beds. I believe we're going to see disruption in the second half, but not tremendous. And maybe we're going to see -- based on this, we're going to see a lot of the movements of turnarounds into the first half of next year, which could create some also impacts for 2021. But we're not in 2021 at this stage. What we're trying to do is manage the -- maintain as much as possible this strength. As we said in the remarks, for the second quarter, we based our comments on firm orders. And for the third and fourth quarter, we're still monitoring that with customers, usually within six to seven months accuracy based on the programs. We do anticipate there could be some delays, shifts between the quarters and maybe into next year but not material.

Great. Thank you.

Thank you.

Our next question is from Vincent Andrews from Morgan Stanley. Please go ahead.

Good morning, everyone. This is Angel Castillo on for Vincent. Just had a quick question around the free cash flow. If I just take the roughly $100 million at the midpoint that you guided to for EBITDA and just annualize that and kind of look at kind of the change year over year versus the flattish free cash flow you kind of guided to from a year-over-year perspective, can you help me bridge the difference there? It seems to be like EBITDA would come down by about $70 million if you annualize the second quarter and the first quarter. And so as I think about 2020 free cash flow guidance flattish, how much of that is EBITDA improvement versus working capital or other puts and takes that you've kind of discussed?

Yes. This is Mike. Thanks for the question. When I refer to the target updates for this year, because we have not given annual guidance for EBITDA, we've got a bit of a mismatch in terms of what we're able to update today and what we still have to update in the future. We don't have visibility to the EBITDA in the second half at this point. So what we've done is we've taken a look at the original target that we had, the items that we can update today, which would be the second-quarter EBITDA performance, what capital expenditure reductions that are known and our savings on cash interest. I think annualizing the first half in this environment may not make a lot of sense. So I'm not sure that I would focus on the math from that standpoint. I would just look at the changes that we have and the key factors that we've discussed today. And then as it evolves into the third and fourth quarter, we'll be able to provide additional information as we have more clarity.

Got it. Very helpful. And in terms of portfolio optimization and ongoing, I guess, divestitures of the noncore assets, can you just talk about the puts and takes or, I guess, the balance between divesting assets that don't make sense now for PQG versus, perhaps, divesting in a difficult market and making sure that you get the right value for these assets?

Well, Angel, the target remains clear about us looking at our portfolio in great details from major components, as we've said it over and over. Obviously, the current environment is not obvious in terms of what to do. We do have conversations and reviews on trigger lines and trigger points and trigger times for us moving forward with anything, and we will make that considering the market, the value, the timing and the size of the opportunity. So really, there's nothing more details we can say here, except that we will make sure we don't do the wrong thing. We're focusing rather on smaller opportunities on cash generational opportunities, right moment, and to maximize our cash and also to take care of some of the concerns we had within our portfolios on smaller pieces and components as was our strategy from the beginning. But definitely, it is not the perfect environment right now. And as opportunities show and the environment becomes more interesting and more valuable, we will make a decision we have to make.

Our next question is from Roger Spitz from Bank of America. Please go ahead.

Thank you. Good morning. In catalysts, without the first-time polyolefin fill and the Q2 MMA volume pulled into Q1 from Q2, what would have been the year-over-year volume growth?

Your question is around what got pulled into Q1 on MMA?

Yes, partly that. I mean, your volume was up 57% year over year. However, part of it was pull forward of MMA catalyst volumes. And the second part you spoke about in the prepared remarks was a onetime polyolefin reactor fill or first time -- it sounded like a first-time reactor fill, which presumably uses -- that first time uses a lot of polyolefin catalysts. So I'm thinking, those two are kind of onetime if you think about it. If you were to, say, not look at those two, what would have been the year-over-year volume increase in the catalysts segment?

Yes. Between the new sale, the MMA timing, we also had some hydrocracking catalyst sales that moved out of Q1 and into Q2. The net of all that, I would say, is about a third of the volume impact.

Okay, a third of it. Got it. And then secondly, I think you mentioned that in catalysts, absorption added $5 million, which I assume meant $5 million of EBITDA which was, in fact, your year-over-year increase in EBITDA, if I understood that correctly. I would have thought...

No. Actually, the -- I'm sorry to stop. No, it was actually -- I'm glad you brought that up. If that was your understanding, I'd spoken incorrectly. It was unfavorable absorption in the quarter, that was a little over $5 million. So it negatively impacted EBITDA. And we expect the same phenomenon next quarter because we're selling out of inventory this year and not absorbing those fixed costs versus we were building inventory last year and absorbing. So you've got a -- not only do you have a negative this year, but compared to the prior-year positive, it has more of a magnifying impact, if that helps.

Absolutely. So you were selling out of inventory. You weren't producing more. Got it.

Yes. Sure. Thanks for the clarification.

Roger, this is Belgacem. I just want to make sure that we don't get into a lot of itemized details on movements between quarters and everything. In every quarter for catalysts, there's always things moving in and moving out. I look at it on a higher level compared to last year. There were things moving in last year. There are things moving out. And this year, you got MMA coming in. I would probably single out MMA. But on the orders and volumes, they keep moving in and out on the quarter. So it's very difficult to really try to put your arms around an apple-to-apple comparison. I just want to caution you with that because I would probably consider MMA as an event because the frequency of MMA orders is less, but volumes could move anytime. Just remember, our last quarter of 2019, how the volumes moved up on everybody. And as we expected Q1 to be lower, it didn't. Just make sure that you keep that in mind as you're looking at these numbers.

Thank you for your clarification.

Our next question is from David Silver from CL King.

Okay. I was actually hoping to follow-up on the MMA catalyst business. So, if I'm correct, I think the -- that's been a positive surprise for at least two quarters in a row and a positive surprise that merits mention amongst all your businesses. And it does seem to be a bright spot with the pandemic world we're in. So I'm just wondering what might be the possibility that maybe the demand strength could continue to exceed traditional levels by a meaningful amount? And what are the opportunities for you maybe to expand your sales, I don't know, globally or to different customers? And could you also just remind me, I'm not totally familiar with this, but what is the replacement cadence or the timetable for MMA? Is it replaced once a year, every three years? What is typical for that industry?

All right. This is Belgacem. Let me just make a comment -- generic comment on MMA cadence. It is not an annual cadence, but it's almost every 1 to 2 to 2.5 years, depending on utilization. So, the way we plan this is based on the conversations of our main customer. Who -- we have very specific facilities that produce MMA in Asia and in the Middle East. And then we have very clear guidance on when the orders should be because it's timed with other stuff around the facilities. Every once in a while, the orders get increased or gets pulled in based on events that take place in the facilities that they want to have access to the product a bit sooner. It happened a couple of times. But however, on the other side, a year ago or a couple of years ago, we were having the opposite problem where a manufacturing facility wasn't ready and things were pushed, which was very negative on our performance. Demand has increased in the last 3 to 6 months. We could see that. We can also see that future demand longer term, not immediately, is going to be justifying the addition of another facility, which our main customer has announced building in North America for 2025. So, from a longer term, this looks like a very interesting and promising partnership that we have. From a short term, we hope that the strength of the demand during the first quarter could continue, but we can only materialize that based on orders. So there's no orders that are material for us to talk about, which means it is what we think it is right now. That doesn't mean we couldn't see a slight improvement. That's what I have to say on that. I hope I answered your questions.

Yes. If I could just follow-up in a slightly different area. But when your market -- when you have a market-leading position, my theory or my opinion is that when demand is high, you focus on operations, and when demand softens, you start to think maybe strategically. So, I'm using your recent agreement with INEOS in Catalysts as a model. But I'm just wondering if the disruption and the slowdown in, let's say, your -- as an example, your Refining Services business, does that present any opportunities to either gain share or to arrange for a customer to begin to outsource? In other words, what might be some capital-light growth opportunities surrounding your larger businesses that you think might be opportunities in the current kind of disruptive uncertain environment?

That's a great question. Every single business unit has the typical plan. They have their strategic look for the year and for three years, whereby they -- with scenarios of growth which we have committed to. Now this happened. Whatever happened in the first quarter is really a surprise to the whole thing. So then you have to sit back and rethink that strategy and then introduce additional short low-hanging fruit actions that you have to do to make sure your growth gets mitigated or lack of gets mitigated because of what's going on -- from what's going on. So INEOS was an example. And the strategic nature of the INEOS agreement that we signed last year was to penetrate markets we wouldn't participate in otherwise, which is Ziegler-Natta, which is the largest market in the catalyst space at the time. Every business unit has similar thinking in terms of either partnering, selling through different channels, looking at other places where we're not selling and contracting some partnerships to allow us to have our products available in the market. And they are being used today, some of them, and some of them will come online, but maybe not at the magnitude of a big announcement or a big collaboration. The most important thing I want to leave with you is on the chemical space, where we have our performance chemicals, that's where we are present in more places around the world pretty much. And that's where we touch so many industries. We do have in our transformation plan, the commercial piece that I talked about earlier. That talks about that, creating sales channels and opportunities. They could be just new customers, the classic way, or partnerships or exchanges to support the growth in sale. And so all those are ongoing, and they are connected not to the short-term issue but also to the long-term view of our growth.

Thank you very much.

You're welcome.

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