Ecovyst Inc. (ECVT) Q3 2021 Earnings Report, Transcript and Summary

Good morning. My name is Britney and I will be your conference operator today. Welcome to the Ecovyst Third Quarter 2021 Earnings Call and Webcast. Please note, today's call is being recorded and should run approximately one hour. Currently, all participants have been placed in a listen-only mode to prevent any background noise. After the speakers remarks, there will be a question-and-answer period. [Operator Instructions] I would now like to hand the conference over to Nahla Azmy, Vice President of Investor Relations and Financial Communications. Please go ahead.

Thank you. Welcome, everyone and thank you for joining us for the third quarter 2021 earnings call. We will start today with formal remarks from Belgacem Chariag, Chairman, President and Chief Executive Officer; and Mike Feehan, 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, our anticipated end-use demand trends, including the impact of COVID-19 and our 2021 financial outlook. This information is subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. Any forward-looking information shared today speaks only as of this date. These risks are discussed in the company's filings with the SEC, including in the company's annual report on Form 10-K for the year ended December 31, 2020. Reconciliations of non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures can be found in our earnings release and presentation materials posted on the Investors section of our website at www.ecovyst.com. With that, I'm pleased to turn the call to Belgacem.

Thanks, Nahla and good morning, everyone. Today, we're very excited to review Ecovyst first standalone quarter, representing the beginning of a new chapter. As a reminder, during the third quarter, we advanced a portfolio transformation with the closing of the sale of Performance Chemicals. And the rebranding of Ecovyst, a pure-play catalyst and services company. Ecovyst business portfolio and our new leadership team demonstrated an abating resilience through a significant strategic transition, global market complexity challenges and severe weather disruptions in the U.S. We achieved volume growth and expanded margins, optimizing on the demand recovery and advancing our operational efficiency. Let's now turn to Slide 3 for highlights of our third quarter performance. Our safety performance continues to be a positive story. We have remained vigilant throughout the pandemic and during all of our transformation activities. Year-to-date, we continue to deliver historic record results, reinforcing our leadership position among top tier safety performance in the industry. For operations, this was certainly a challenging quarter with another severe weather event and continued supply chain constraints, yet again, the team responded to disruptions with successful outcomes. On the commercial front, we continue to benefit from multiyear contracting successes. This is both in terms of existing and new customers with increased momentum from growing end markets for semiconductor, renewable fuels and emission control product solutions. These contracts were executed with growing volumes and favorable pricing. On strategy; as you know, Ecovyst rebranded to a pure-play sustainability-focused catalyst and services business with a clear growing and greening ambition. We are excited to report on some recent progress in our sustainability journey as we focus on driving solutions and growth for our customers in their transition while also improving our own footprint. First, we joined the European Circular Plastic Alliance. Through this alliance activity, we are looking to be the partner in the Packaging segment as our Zeolyst-based technologies can be an enabler with leading global players in the chemical recycling value chain. Second, as we discussed on prior calls, we are targeting more than 80% of our innovation pipeline to be sustainability focused. I'm extremely excited to report that we have already reached 85% with our recent product development streamlining and restructuring efforts. Finally, while we still have more work ahead we are advancing our own ESG initiatives, developing our integrated pathways to achieve our safe targets for 2025 and 2030. Going to the financial results; on our second quarter call, we shared our expectations for a strong second half recovery. Our financial performance this quarter is a testament to the end-use trends coming in as expected and the immaculate execution by the team. On both year-over-year and sequential basis, we delivered sales growth of 28% and 11%, respectively, with higher adjusted EBITDA growth of 45% and 32%, respectively. Margins grew to nearly 35%, up 420 basis points year-over-year and 540 basis points sequentially. We are proud of this achievement and expect continued momentum into the fourth quarter and 2022. Before we shift to a discussion on our two core businesses and their end-use growth trends, let me offer the following comments on macroeconomic trends, we track as depicted on Slide 4. We expect demand in nearly all our end-use markets to return to pre-pandemic levels in 2022. This is a result of an economic recovery and continued favorable secular trends. Consumer activity continues to recover due to increased vaccination and mobility and U.S. GDP is estimated to grow by nearly 6% and approximately 5% in 2021 and 2022, respectively. Year to date, vehicle miles traveled rose by approximately 12% and we expect them to trend higher as we move into 2022. As a result, 2021 U.S. refinery utilization is forecast to improve to 85%, including the historic storm disruptions this year. With gasoline inventories at the bottom end of their five-year range, 2022 utilization rates are expected to move higher and exceed the pre-pandemic levels to more than 90%. Another key metric underlying our portfolio of products is the U.S. Industrial Production Index. This is showing 4.5% growth in September 2021 relative to September 2020. Although supply chain issues could continue to be a constraint, economic activity is projected to demonstrate further improvements throughout 2022. Now, let's move to some specifics for each of our businesses. Beginning on Slide 5, with Eco Services key business drivers. This business is benefiting from greening end-use demand for sulfuric acid. This is a result of increasing needs for cleaner and more efficient fuels and sustainable industrial applications, specifically with electrification infrastructure. Starting with clean fuels; as we have mentioned on prior calls, alkylate or as nick named liquid gold, is considered one of the highest margin products within the refinery complex. Alkylate demand is expected to grow at approximately 4%. The first part of the growth story is a function of economic recovery with vehicle miles travel projected to exceed 2019 levels in 2022. The second part of the story is increased capacity to meet CAFE fuel efficiency requirements and lowering sulfur emissions for 2020 Tier 3 standards. Industrial applications are well diversified and in total, represent the second largest end-use applications for our special grade high-purity virgin sulfuric acid. We are seeing the benefit of sustained demand growth and improved pricing through at least 2022. Also as seen in the past few quarters, mining for electrification infrastructure is expected to be the fastest-growing component of industrial applications for the foreseeable future. Waste treatment and catalyst activation our rapidly growing niche product areas for the business portfolio with improving manufacturing fundamentals. The need for the sustainable treatment of industrial waste is growing particularly for incumbent players with the appropriate permits and handling capabilities. Finally, as renewable diesel capacity is expected to grow more than 25% CAGR over the 2020, 2025 period, Catalyst activation services will remain in high demand. Moving to Slide 6. Eco Services is differentiated and should outperform the end market growth with resilient adjusted EBITDA margins that range in the high 30s primarily for the following reasons. First, we successfully gained a significant new long-term contract that will ramp beginning in December 2021. This will drive growth in annual regeneration services volumes by mid- to high single-digit range. Second, we coproduced specialty-grade high-purity sulfuric acids and have further debottlenecked the network. We have been able to produce reliable services to meet the surging demand from mining customers in the Southwestern U.S. This has been driven by the shift to more widespread use of key minerals, particularly copper, in low-carbon technologies and electricity grid. Finally, the tightening regulations and accelerating needs by traditional and renewable fuel producers are increasing demand for off-site catalyst activation services. Our unparalleled North American network in the Gulf Coast and California regions is the key element of our strong competitive position. Eco Services has built in production redundancy and diverse modes of transport. We manage the critical end-to-end supply chain and inventories for the largest alkylate producers and secure long-term take-or-pay contracts with cost pass-throughs. Next, for Catalyst Technologies business trends on Slide number 7. As with Eco Services, underlying growth trends for the segment are set to accelerate into 2022 with demand recovering to pre-pandemic levels. Combined with continued favorable secular drivers, this business is set to outgrow it's end markets. Starting with the largest end-use area, clean fuels and air which encompasses emissions control catalysts for transportation fuels. Hydrocracking activity is recovering with increased vehicle miles driven and higher refinery utilization rates. With the anticipation of continued recovery in 2022, global capacity is projected to rise by about 5% CAGR over the period of 2020 to 2025. While still at an early stage, applications for renewable fuels are an exciting and significant growth area for our business, supported by federal and state incentives, renewable diesel is growing 20% to 30% from a combination of converted refinery capacity and new capacity additions. Catalysts are critical for the majority of the production that is either coming online or being converted. Due to the heavy processing rate of biomass, these facilities typically require 2x to 3x more catalyst change-outs than traditional fuels. Heavy-duty diesel or HDD, global production has been the slowest end market to recover due to supply constraints with the expectation this abates by the second half of 2022. HDD production is expected to increase by at least mid-single digit for the largest markets we serve in North America and Europe. Within Engineered Polymers, consumption of packaging and films remains robust and underpins global demand expectations for polyethylene growth of at least 4% CAGR over the period of 2020 to 2025. As a reminder, our proprietary and customized silica-based technologies are typically specified in production facilities for multiple years. We are outgrowing this market by nearly 2x. Lastly, on niche custom catalysts. As we discussed last quarter, this end use is the smallest and has been slow to recover, given timing of project deferrals for our highly specialized and customized products. We are already seeing increasing specialty catalyst orders and expecting promising trial launches for new technologies in 2022. Turning to Slide 8. Catalyst Technologies business with it's leading competitive position has exciting growth prospects for higher adjusted EBITDA margins in the upper 30s percent. We expect full recovery of all the significant end-use markets with the potential growth inflection by the second half of 2022. Throughout the pandemic period, we seized the opportunity with customer production deferrals to further strengthen our own manufacturing network strategically and successfully repivoting the business. We have projects underway to debottleneck production by 10% to 20% for several products that are in high demand. Additionally, with the anticipated commercialization of 8 new products in the near term, this business should outperform it's underlying market growth rates. So to summarize on both businesses; we expect to see accelerating growth trends through 2022 and beyond as we approach a full market recovery. This is complemented by additional contract gains for existing products and services, coupled with favorable growth inflections from new markets. In particular, we are most excited about our continuing rapid growth in renewable diesel with increasing demand on our Zeolyst Technologies and catalyst reactivation services. Now, I will turn the call over to Mike to discuss our third quarter financial results and outlook.

Thank you, Belgacem. Good morning, everyone. I'm glad that you joined us today as I'm excited to share our third quarter results and 2021 outlook with you. As mentioned during our second quarter earnings call in early August, we expected to see significant improvements in sales and adjusted EBITDA, both sequentially and compared to prior year during the second half of the year. This morning, I'm excited to report that we delivered ahead of our performance expectations. Our third quarter results showed significant improvement over the second quarter, with sales increasing 11% as we continue to see strong demand for the majority of our product lines. Volume increases, favorable pricing and product mix contributed to a 32% adjusted EBITDA growth and a 550 basis point improvement in adjusted EBITDA margin. Moreover, we are particularly encouraged with the recovery in refinery utilization, driving our regeneration services demand and continued growth of our catalyst used in polyethylene and renewable fuels. Comparing to the prior year, strong volumes in both businesses, favorable product mix driven by the demand for renewable fuels and polyethylene as well as the acquisition of the Chem32 Catalyst activation business resulted in a 27% increase in sales and a 44% increase in adjusted EBITDA as well as 420 basis point improvement in adjusted EBITDA margins. Let me dive a little deeper into the businesses as we turn to our Eco Services segment on Slide 10. During the quarter, we experienced challenges due to the hurricane activity in the Gulf Coast and rail delays in certain areas. However, as compared to the second quarter, we saw an overall 14% increase in sales from favorable pricing and higher volume of virgin sulfuric acid. Adjusted EBITDA grew 28% as virgin asset volumes and pricing favorability contributed $9 million of the increase with the addition of $3 million of lower turnaround expense compared to the second quarter. Comparing to the prior year, sales increased $30 million or 28%, driven by the pass-through of $15 million of higher sulfur costs, the broader economic recovery and our acquisition of Chem32. Adjusted EBITDA increased $8 million or 17%, primarily on the higher regeneration services volumes stable pricing in virgin sulfuric acid and Chem32. While adjusted EBITDA grew, margins in this segment were pressured by nearly 700 basis points related to both the pass-through of higher sulfur costs and higher plant turnaround costs. On Slide 11, you'll find the results of our Catalyst Technologies segment. This segment includes the results of our silica catalyst business and our Zeolyst joint venture. Compared to the second quarter, including our 50% share of the dealers joint venture, sales and adjusted EBITDA increased 6% and 23%, respectively. Sales in our Silica Catalysts business increased, driven by the timing of chemical catalyst sales, primarily catalyst used in methyl methacrylate. Sales in the Zeolyst joint venture were in line with prior quarter. As increased demand for catalyst used in renewable fuels was offset by timing of hydrocracking catalyst orders. Adjusted EBITDA improved 23% on higher sales volume and favorable product mix, particularly with the growth of catalyst used and renewable fuels. Looking at the prior year, sales improved 27% and adjusted EBITDA more than doubled. The sales increase in silica catalyst was driven by the continued demand for polyethylene and the timing of chemical catalyst sales. Within the Zeolyst joint venture, sales of our pressure product catalyst grew on increased demand for catalyst used in renewable fuels and demand recovery for emission control catalysts. Adjusted EBITDA and margin benefited from higher volumes and mix of higher-margin products. Turning to Slide 12. As we continue advancing our business portfolio transformation, Ecovyst has the financial flexibility and a strong cash flow profile to enable an opportunistic capital allocation strategy. Since our IPO in 2017, we have reduced debt by approximately $1.8 billion and lowered our cash interest costs by $130 million, all while returning $5 per share to our shareholders. Earlier this year, we entered into a favorable $900 million term loan and $100 million ABL facility with no significant financial covenants and no near-term maturities until 2028. With our proven track record of leverage reduction and opportunistic acquisitions like Chem32, we expect that our future cash generation, combined with our flexible balance sheet will allow for additional opportunistic bolt-on acquisitions as well as further debt reduction. Moving to Slide 13 and our outlook for the remainder of the year. We remain very positive on both sales and adjusted EBITDA. In Eco Services, we expect refinery utilization rates to continue to remain strong through the end of the year. While we have seen a significant increase in sulfur prices in the first half of the year and through the third quarter, our expectation is that sulfur prices will stabilize in the fourth quarter. Based on the impact of the pass-through of higher sulfur costs as well as the strength of our third quarter and our outlook for the fourth quarter, we are raising our GAAP sales guidance by $25 million to between $590 million and $600 million. In addition, we are tightening our full year adjusted EBITDA guidance to between $220 million and $225 million given our strong performance to date. Our improving cash generation has continued through the third quarter and with higher expected cash from operations we are raising our adjusted free cash flow guidance to between $70 million and $80 million. Finally, we continue to expect our net leverage to be in the mid-3x by year-end. In summary, we delivered robust earnings and cash flow this quarter. We are very happy to come out of the gate in the first quarter as the newly rebranded Ecovyst with very strong sequential and year-over-year financial results in both businesses with positive momentum as we finish the year strong and look forward to further growth in 2022. With that, I'll turn the call back to Belgacem.

Thanks, Mike. Now I'll close on Slide 14 with our growing and greening strategy which reflects our near to midterm objectives. Ecovyst with it's differentiated portfolio and strong leadership team execution is strategically well positioned to benefit from the near-term tailwinds of the global economic recovery and the mid- to long-term sustainability-driven secular trends. And finally, I would like to leave you with the following comments on our performance. This has been a momentous year-to-date as we completed the portfolio transformation and pivoted to Ecovyst, a pure-play sustainability-focused catalyst and services company. We have executed and delivered on our key financial commitments and continue to demonstrate the resilience of our portfolio. We are tracking favorably with the economic recovery and advancing our competitive positions with the new market gains and we are well on track to deliver on our 2021 financial objectives and expect continuing positive trends through 2022 and beyond. This concludes our formal remarks. But before we turn to Q&A, I would like to announce that this is Nahla Azmy's last call with Ecovyst. She has been here for four years and was an essential contributor to the company's success. I would like to thank her for her contribution and wish her well in her future endeavors. We thank you for your time and interest in Ecovyst and wish you and your families to stay safe and healthy. We're now ready to take your questions.

[Operator Instructions] And we will take our first question from John McNulty with BMO Capital Markets. Your line is now open.

Yes, good morning. Thanks for taking my questions. And thanks to Nahla for all the help over the years. Maybe just a couple of quick ones. First of all, can you quantify what the impact was around the hurricanes and what that either from a cost perspective may have nicked you or if there were any customer delays or delayed demand or anything like that, that we should be thinking about in terms of what the impact would have been on 3Q?

John, it's Mike. I can take that one. The impact of Hurricane Ida was not that significant for us. It was only a few million dollars. The customer delays impacted us slightly but we were able to recover a lot of that, as you can see in our results for the quarter. They were very favorable, both in our regeneration service business as well as our virgin sulfuric acid business.

Got it, okay. And then, can you speak to like the pricing that you're seeing in the asset side of the business? And how do you expect that to trend? I know sulfur prices, you indicated that you're kind of expecting to level off? How should we be thinking about asset pricing as we go forward?

Yes. For the sulfur pricing, I think the way we're looking at that is we think it's going to moderate in the fourth quarter. We did see an uptick, obviously, with the sulfur costs that we saw earlier this year and into a little bit in the third quarter but we do see it moderating in the fourth quarter. On the virgin sulfuric acid more specifically to pricing with our customers that are independent of the sulfur pass-through. We are seeing some favorability there and we're able to capture some of those higher prices that we saw in the third quarter here. So we'll see what that looks like coming into the fourth quarter but we do see that flattening out in the fourth quarter.

Got it. And then, maybe just one last question. Just on the HPC catalyst side. I know there was some demand that have been pushed off and it looked like it kind of got pushed to 2022 and 2023. I guess at this point, just given that schedules start to get built. And I guess, what kind of granularity do you have? How should we be thinking about how the HPC catalyst business growth should look as we're looking to 2022?

John, yes, we started with the visibility on the seven to eight months lead time on orders we started seeing the order book filing. It depends on what happens in Q4, we are going to have one of the strongest quarters in Q4 hydrocracking activity. It depends on how much we could capture in the fourth quarter that's going to impact 2022 as well. But if you could think of it as a ramp up, slow ramp-up, maybe peaking at the second half of next year. But we're very confident that this activity is returning with the rest of the indicators, starting on -- we had a decent quarter this quarter, we can have a nice strong quarter in Q4 and we should see the same trend continuing towards end of '22. I've said before that '22, '23 peak hydrocracking year, it's questionable depending on how fast the recovery is I can't still tell you is at '22, the peak or '23 but it's most likely heading towards end of '22, early '23, where we're going to see probably the peak activity that is comparable to the high peaks we had in '19 and '15 before.

Got it. Thanks very much for the color. And great job on a -- in a really tough environment.

Thanks, John.

[Operator Instructions] And we will take our next question from Angel Castillo with Morgan Stanley. Your line is now open.

Hi, thanks for taking my question. Nahla, it's been a pleasure worked with you and wishing you all the best. So, just -- I was hoping to get a little bit more color on the fourth quarter and as we think you add a little bit of color there in terms of the catalyst segment. But as we think about refining -- or sorry, the Eco Services now segment, how should we think about kind of the seasonality that you typically see in the fourth quarter here? And what kind of expectations are baked into the fourth quarter?

Yes. Angel, the typical year seasonality in Q4 forces the activity to go slightly down, weather-related and other reasons. This year, as we are really ramping up activity in Q3, we're going to see some of that going on. But we're also going to see the impact of the normal seasonality of the fourth quarter. Add on that some of the turnarounds that are going to probably be accelerated and taken on in the fourth quarter that's going to impact it. So we will see a typical a drop in activity in refining services. That is probably not as strong as it used to be because of the momentum that we have right now. But that's no surprises on fourth quarter trends.

That's very helpful. And I appreciate the comments earlier on HPC and of order book. Could you just talk a little bit more specifically to kind of the polyethylene or the polymer catalyst? And then just, I guess, on the silica side of what you're seeing in terms of order books?

We see the same strength going on. We're having good visibility on the polyethylene on the silica side. And our commentary about the strength of the business and the strength of the demand is consistently there and it's continuing through 2022.

That's very helpful. Thank you.

Sure.

And we will take our final question from David Silver with CL King. Your line is now open.

Okay, hi. Can you hear me? I'm sorry.

We can hear you, David.

Sorry about that. So, a couple of questions. For actually, first off, I also want to extend my thoughts for Nahla. I consider her a superior investment contact over number of years. I did want to ask maybe starting out with Eco Services. You highlighted the acquisition of a new long-term large customer contract. And I was wondering if you could just drill down on that a little bit. Was this the case where a refiner decided to outsource after handling the sulfur responsibilities themselves? Or did you displace a competitor? And if you could, what in your opinion was kind of the key element in your value proposition? And then maybe what are the prospects for other customer acquisitions, let's say, over a two-year to three-year period?

David, this is -- we talked about this contract a quarter or two ago when we won the work. It's going to kick in, in December. We do business with the customer already but this is a different level of activity. We won this contract on several fronts. First of all, this contract was an existing contract with different players. The volume has changed, the expansion of the customer force them to go and get a bigger contract for the main service provider. We did displace, I would say, a competitor. And we are expecting that volume that of the allocated volume for our business to be probably even bigger than what we anticipated. And the reason we want to work is, again, the same fundamental reasons why our Eco Services is strong. One is the network of logistics being in the area and being able to have redundancy. We were able to debottleneck like 35% capacity over the last three, four years which allows us to react in emergency time and create security supply for the customer. The second element is the reliability and the consistency of products and performance and services. And the third is our flexibility in allowing the customer to expand and flex up or down depending on what their activity is which I think is going to be flexing up. So, it's more -- this is a service business. So it's more service superiority that we provide this customer that they could not jump on it. So we're very proud and very happy and thankful for the customers have seen that and observed that over the years. And we think this is just an indicator that should there be more opportunities in the region with the model we have, the business model, we should have the opportunity to grab more share and to continue to grow as long as we continue to provide flexibility of supply which we're working hard on.

Okay, great. I'd like to maybe just shift over. I noticed in the back of the release, you once again called out methyl methacrylate, chemical catalyst sales as a source of strength and in my own unscientific memory or it seems like about every other quarter that, that particular business is being called out in a positive direction. And I was just wondering if you could maybe highlight what's going on there? Is this the case where demand is exceptionally strong or whether there's been a customer share gain? Or what might be the drivers that once again led to you calling out that business? And then maybe what are the prospects for continued strength in that area maybe over the next year or two?

So methyl methacrylate business started with a collaboration with a key customer on a process called the alpha process that our technology qualified for. And we have been growing with that customer. The volumes for the customer kept growing from Asia to Middle East. They have strong plans to grow in North America in 2024, 2025 based on their expansion plans. And we know we're going to grow with them. We have also been working with them on new generation products for methyl methacrylate product. And then we think we're still going to continue to be a favorable supplier. On the other side, parallel to that, the alpha process itself and the way the process works is going to probably be the most favorable methodology of producing those products in the new construction for other customers in the future. So we think we are on the sweet spot of the best technology from an environmental sustainability perspective, safety and efficiency. And then the ability to have worked with our key customer for the last four or five years in preparing and delivering new technology is positioning in the market. I purposely bring it up every time to remind that this is a growth vector that is probably going to show much more value as we go forward. And it's a great business and we've made the investments on it already. So, all we have to do is now fill up the orders and go chase new customers and make sure that this approach or alpha process approach or equivalent is going to be the predominant business model or technology process going forward. It's a very important one. It hasn't shown -- I don't think we've seen anything on it yet in terms of growth potential.

All right. And then maybe one last question and this would be directly, I guess, for you, Belgacem. But since you've assumed the CEO role, I mean, you've been moving without stop or you've been moving very quickly. I remember right away, you started delayering management and now you've streamlined and simplified the company structure. As you sit here today with the structure that you have, I mean, what incremental changes or what incremental goals do you have for maybe, I don't know, being more customer responsive or simplifying or speeding up business processes goals you've targeted for a while. I mean how far on a scale of, I don't know, 0 to 100, where do you think you are in kind of establishing the organization structure that you would hope to get to ultimately?

It's a great question, David and I thank you for that. First of all, the first phase which is the delayering, the restructuring, the sales and everything is really the beginning of the strategy which means, okay which path we're going to go? Are we going right? Are we going to left? Are we going to be more commoditized? Are we going to depend on day-to-day logistics? Or are we going to be an innovation and technology company operating in an environment where all the end-use drivers are favorable? We picked the second and that's where we are where we are today. That also requires that we have a clear vision and strategy for the next four, five years to make sure we test the principle of -- we are in the high growth, high margin high cash flow company. We're doing that right now. There's a lot going on in the background on how the company should look like. And I guarantee you, we're definitely a different company. We're a smaller company. We're going to be more agile. Our corporate presence is going to shrink and the businesses are going to be definitely driving their destiny more and more. We are going to see a growth with the maintained margin which is really the trick. And how do you grow at high growth, yet face all these challenges and keep our margins growing to a number we throw in there is mid- to high 30s in the coming three, four years which is a top quartile performance. That requires new leadership. That requires a very crisp and clear strategy and that requires a very agile organization. So leadership is in place. The strategy at high level is in place. What we're working on now is specific business strategies that are going to execute that growth or maybe beat it. And simplification efficiency in manufacturing, we're a manufacturing company after all and then a much stronger participation of our innovation process into our growth. renewable technology, plastic circularity, efficiency in producing emission products that are fit for purpose for the new regulations and all that. So, I can't give you a number but scale of 1 to 10 in terms of where we are. But I would say for the ease of -- for simplicity, from a structural perspective, we're at probably 8. From a strategy perspective, we're probably at five or six in terms of making sure that we have all the t's crossed and the eyes dotted and then empowering my leaders, the team to start delivering execution. This quarter is an example. And we're going to say what Q4 is about. And when we talk about 2022, early next year, you're probably going to understand how we believe in this new structure and this new company going forward.

Very clear. Thank you very much.

Thank you.

We have no further questions in the queue at this time. This does conclude the Ecovyst third quarter 2021 earnings call and webcast. Thank you for your participation and you may disconnect at any time.