Good morning, or good afternoon, all, and welcome to the Ingevity First quarter 2023 Earnings Webcast. My name is Adam and I'll be your representative today. [Operator Instructions]. I will now hand the call over to John Nypaver to begin. So John, please go ahead when you're ready.

Thank you, Adam. Good morning, and welcome to Ingevity's First Quarter 2023 Earnings Call. Early this morning, we posted a presentation on our Investor site that you can use to follow today's discussion. It can be found on ir.ingevity.com under Events and Presentations. Also, throughout this call, we may refer to non-GAAP financial measures which are intended to supplement, not substitute for comparable GAAP measures. Definitions of these non-GAAP financial measures and reconciliations to comparable GAAP measures are included in our earnings release and are also in our Form 10-K. We may also make forward-looking statements regarding future events and future financial performance of the company during this call. And we caution you that these statements are just projections, and actual results or events may differ materially from those projections as further described in our earnings release. Our agenda is on Slide 3. Our speakers today are: John Fortson, our President and CEO; and Mary Hall, our CFO; our business leads which include Ed Woodcock, President of Performance Materials; Rich White, President of Performance Chemicals; and Steve Hume, President of Advanced Polymer Technologies, are available for questions and comments. John will start us off with some highlights for the quarter. Mary will follow with a review of our consolidated financial performance in the business segment results for the first quarter. John will then provide an update on guidance followed by closing comments. With that, over to you John.

Thanks, John, and hello, everyone. On Slide 4, you can see our highlights for Q1. After a slow start, we put up a solid quarter. The quarter ended with what we would consider more normal sales levels. However, it was not enough to offset the weakness of the start. This manifested itself in lower volumes and all of our businesses except Pavement Technologies. We did have a number of positive developments in the quarter. Auto production started picking up in North America, which is obviously good for Performance Materials and also for APT, which also sells a lot into the automobile industry. Another positive for APT was that we saw higher demand for bioplastics in the U.S. Pavement Technologies enjoyed strong organic growth in the quarter, which is good news for Performance Chemicals. But the quarter also had its challenges. The slower China recovery affected all the business segments in some way, and we're still seeing some customers who have not restocked to normal expected levels most acutely in the adhesives markets. As we have discussed, CTO prices continue to rise in the quarter, offsetting gains we have made in reducing costs elsewhere. When comparing the last year, remember the Q1 2022 was a record for both revenue and EBITDA as demand was picking up and inflation hadn't quite peaked, which allowed us to raise prices to offset higher input costs. It is a tough comp. This is the first quarter we get to share the details of the business line formerly known as Engineered Polymers. The segment is now called Advanced Polymer Technologies, or APT for short. The new name better reflects what we do today and where we are going. We produce specialty caprolactone products with tremendously sustainable characteristics including improved durability and biodegradability in its end users.…

Thanks, John, and good morning, all. Please turn to Slide 5. Sales were up 2.6% for the quarter as Advanced Polymer technologies and legacy pavement had year-over-year revenue growth, plus we had the benefit in including the Ozark road markings business in this year's numbers. Adjusted gross profit was lower by 250 basis points as lower volumes and higher input costs, primarily for CTO, outpaced price increases. SG&A was up about $7.8 million, excluding depreciation and amortization, due primarily to employee-related costs. Adjusted EBITDA for the quarter was $103.9 million, down 12.7% as a result of the gross margin pressure and increased SG&A, but adjusted EBITDA margin remained solid at 26.5%. Diluted adjusted EPS of $1.09 reflects the margin pressure as well as the increased interest expense and D&A associated with the Ozark acquisition. Turning to Slide 6. You'll see that our free cash flow for the quarter was negative $20 million. The first quarter is typically a negative free cash flow quarter as it is usually our lowest earnings quarter of the year, and we build working capital for the seasonal paving upswing. 2020 to 2022 during COVID were the exception to this norm. Our net leverage is similar to year-end and reflects the Q4 Ozark acquisition. As we move into the second quarter, we expect to see our free cash flow pick up and leverage to improve throughout the year towards our year-end target of around 2.5x. We remained active in share repurchases, with $33 million of repurchases in the quarter. Turning to Performance Chemicals on Slide 7. It was a mixed quarter. Despite lower sales volume, primarily from rosin that is sold into adhesives, revenue was up over 7% to $186 million due to higher pricing across the segment and the addition of revenue from Ozark. The…

Thanks, Mary. We've made the decision to lower our revenue and EBITDA guidance for 2023. We continue to see increased CTO costs, and our strategy to deal with this has been explained to you. However, as Mary described, this CTO inflation is not insignificant, and we expect it to continue to sequentially increase each quarter over the course of the year, albeit at a slower pace in the back half of the year. Our decision to lower our guidance though is really being driven by softness that has materialized over the last few months in several of our other core markets. We do expect the paving season to be strong. However, the broader global economy appears to be weakening and this is particularly true in China, where we have not seen the level of recovery that was expected even a few months ago. These trends are impacting both our Advanced Polymer Technologies and Performance Materials segments. The lack of robust restocking and its impact on sales volumes indicates a softer next several quarters. However, we expect both these segments to grow and increase margins, but not at the rates we had previously forecasted. We are adjusting our full year guidance to sales between $1.75 billion and $1.95 billion and adjusted EBITDA of between $450 million and $480 million. We will also reduce our capital expenditures in this environment and focus on debt reduction. To the extent we do see some acceleration of an economic recovery in China or in the U.S., we would obviously be a beneficiary of that. Let me end by formally inviting all of you to our Investor Day on Monday, May 22 in New York City. John or Meredith can ensure you have an invitation and all the details. We are excited about what will be our first Investor Day in over 5 years. Senior management from across the company will present and showcase many of our technologies. At the reception, you will have a chance to touch and feel our products and ask any questions of our leadership team that you might have. We consider this day an important milestone for investors. Despite the near-term challenges of the economic environment, we view the changes in our markets as tremendous opportunities. As we transition both our legacy Pine Chemicals and Performance Materials businesses over the next 18 months, we will emerge a stronger, more customer-focused company that offers a range of solutions to the end markets we serve. We will improve our position as a best-in-class specialty chemical company with industry-leading financial performance. This Investor Day will be our opportunity to show you our road map. With that, I'll turn it over for questions.

[Operator Instructions]. Our first question today comes from Vincent Anderson from Stifel.

Yes. Let's just spend a little bit of time on the guidance because there's a lot of moving parts. But how much of that is kind of implying the carrying costs, carrying the fixed cost and any noncapitalized expenses across the conversion?

Are you talking about transition-related costs related to the AFA?

Yes.

Okay. We are -- ultimately, we will plan to pool those costs together and decide how to treat them going forward. But the guidance that we presented today does not reflect largely costs related to the transition. It is primarily related to our view that we are seeing softening in markets other than just the adhesives markets as reflected in volume softness really across the board other than in the pavement business.

So if I kind of led that with the CTO pressures -- I mean, as far as I can tell, CTO prices aren't much different than where you set guidance -- when you last that guidance. But it sounds like you have a pretty heavy lag impact in your contract structures if you're expecting sequential increases throughout?

That's correct. You're looking at it the right way.

That's right. If anything, the CTO market, spot market is actually probably softening a little bit, right? It's uptake in the biofuels market has been more muted this year because of just how fast it's run up in costs. But there's definitely a timing lag in the nature of our contracts, which is why we said what we said. And the issue with guidance, just to build on what Mary said. I mean, look, we have a pretty good line of sight, as you know, into what we're going to pay for CTO over the course of the year, right, because of the nature of our contracts, right? Now that is becoming a little bit more dynamic as it moves closer to sort of a true market price. But what's really causing our guidance to be adjusted, as what Mary alluded to, as we went into the year, we were expecting probably more upside from our other businesses to offset the CTO inflation. And it looks like -- it just looks a little shaky right now relative to where we are -- were at the start of the year, right? China has not come back like we thought it would. The U.S. is doing okay, but not crazy or really all that great. And we just have not seen the restocking on the adhesives. Now this could change at some point that the customer will have to start buying. But it's just -- I personally think we want to be conservative, and we're not going to overpromise and we'll just see how the rest of the year shakes out.

And the way to think about those CTO contracts, Vincent, you mentioned perhaps a significant lag. It's more like a quarter lag was pretty typical in terms of contract pricing reset. And when you look at kind of the trajectory of CTO prices in the market, I think it makes sense that what we -- as we talked about significant tick-up in Q2, when you look at where the big escalation was in CTO prices in the market, it was in Q1, so we'll feel that in Q2.

If I could just ask a couple on Crossett briefly. So you mentioned soy, palm and canola fatty acids, those are more longer chain oleo chemicals. In the past, you've maybe acknowledged, if not mentioned proactively, opportunity for something a little bit shorter chain. So just curious if this decision is more of a stepping stone for your AFA portfolio or if there are some other constraints to processing lighter oils at Crossett?

No, it's a stepping stone. I mean, look, I believe that if you were to flash forward a couple of years from now, you're going to see us offering a much broader array of both short and long chain. I think what's happening is that we've discovered and uncovered some really exciting opportunities with these sort of critical , both in terms of product substitution for our existing customers, but also new market applications and it lends itself to the way we're kind of reconfiguring Crossett to kind of go after these 3 first. So it's pretty exciting stuff. And we're going to feel it, to Mary's point and in our prepared comments -- I mean, it's down the month of April and will be up soon. So we're not going to get that absorption that you normally see. But as this thing gains momentum over the course of the year, it's a real volume opportunity for the company. It's just, as Mary said, going to be a little choppy as we cut over.

And then just super quick on that because you did mention it recently. Wondering if it's now a higher priority to either come up with a plan for the rosin side of the Crossett asset base, whether that's an alternative feedstock or just minimizing any stranded costs associated with that?

Well, the beauty of those raw materials is they don't generate rosin.

But you have assets associated with processing the rosin cuts?

We do.

But it's how they are?

But they're not fixed to an individual site.

The next question comes from John McNulty from BMO Capital Markets.

This is on for John. So just given kind of the expectations for the big jump in China autos for Q2, just kind of wondering how you're thinking about the trajectory in PM and how steep do you think the ramp might be for the rest of the year?

Yes. Obviously, Q1 was a little light in China as -- is impacted to a large degree to do the end of incentives in December, which pulled forward a lot of vehicles out of Q1 into Q4. So Q1, relatively light from a production standpoint, but we do expect that to continue to grow throughout the year as China gets into a better frame of chip issues as well as supply chain issues and being able to increase the overall output in China for the year. So we have high expectations for them. We do feel that they will continue to crank out internal combustion engine vehicles. And we are obviously in place to serve those vehicles with the products that they want.

And then how should we think about the puts and takes for free cash flow for the rest of the year given kind of spiking CTO, but then volumes are off?

Yes. So we see a pretty normal pattern for free cash flow this year. Again, free cash flow is typically negative in Q1, excluding the COVID period. So really no surprise there. And we look forward -- we held the guidance, I'm sure you noted on free cash flow, and debt reduction, and feel good about that. And sometimes we get the question, well, what about -- if the recession does play out, things continue to slow down, how does that impact free cash flow. And as you know, in this business, actually, if we really got into recessionary scenario, free cash flow improves because then you're not building inventory, you're not building accounts receivable. So we are holding steady on that free cash flow projection and feel good about it.

The next question comes from Jon Tanwanteng from CJS Securities.

My first one is on the APT business, which I'm happy you guys are breaking out. Historically, that's been a fairly high-margin business. And I know you have the price increases and maybe some weakness in China and some other places to start the year. But where do you see that ending the year just given the strength of demand there? What your recovery expectations are from volume and just that activity perspective?

Yes. I mean, look, as we talked about, Jon, in last quarter, and we'll talk more, I guess, during the Investor Day, I mean it is a high-margin business with great secular tailwinds behind it. It did have some issues over the last year or so because of all the challenges that were going on in Europe, whether it was Brexit or natural gas, energy, lot of different challenges, freight and logistics. I think you can see in fourth quarter of last year and first quarter of this year that it's gaining a lot of momentum. We would like to see that business to be sort of in the mid-20s, which is where we're headed. And we're on that journey, and I think you'll see it manifest itself over the course of the year.

And then just a question on the non-CTO, the AFA businesses that you're getting into, or turning the string over to. Are the margins there better today than on your CTO-based derivatives? Or if not, can you describe the economics you're getting there? And as a second part of that question?

Our expectation is that the margins that we will produce from AFA will be better or at the levels of what I would call sort of our normalized historical margins. The margins today, obviously, because of the CTO price escalations and our legacy products, are under some pressure, right? But we believe that once we get the AFA, you get the plant fully utilized, get the absorption cost, get the pricing dynamics properly beaten out into the market, we will find ourselves with a business that's got margins comparable to what has been sort of our historical normal margins. And to add on to that?

Jon, if I could add on to that. As you know, in our historical business, it was all about derivatization. So we've talked about fatty acids and going from soy, which -- 1 year ago, we only talked about soy, we didn't talk about canola or palm. But as we talk about all these short chain or long chain fatty acids, it's really about when do we -- how we will derivatize those additionally, get the value that we have come to know from our historical business.

And when do you expect to complete that transition to the full 100% usage of AFA?

As I've said in my comments, right, I mean, I think our goal is to sort of have this transition moving by the end of the year. Whether we can get it up to full volumes at that point, we'll see. But we're trying to -- we want this transition affected by the end of the year. I mean we've sent hundreds of product samples out. We are working very rapidly. The amount of progress that we've made is pretty stunning actually. And honestly, you'll see at the Investor Day -- and this can be somewhat controversial in our company just because of our history, but some of these products like the canola fatty acid are honestly better than some of our legacy fatty acids, right? And because canola is a more transparent raw material, if you will, we have big expectations for that over the long-term, right? Big opportunities. It's just going to take us a little time to get -- any time you cut over something, it just takes a little time.

And just to clarify that end of year, is that just the changing of the facility itself or is that including qualification?

No, the facility will be cut over, hopefully, by the end of this month, right? But in terms of getting volumes back up to a more normalized level where we can get the absorption for the plant, it's probably going to take truthfully to the end of the year.

The next question comes from Chris Kapsch from Loop Capital Markets.

I had a couple. Just wanted to make sure I understood the guidance reduction. You're attributing that to incremental softness at either materialized or sustained in the APT and PM segments. Or is some of that also attributable to incremental softness in adhesives within Pine Chem and/or incremental CTO?

No, it definitely includes adhesives, Chris. Yes. I mean it's -- I would characterize it as sort of incremental softness across all of our businesses, with the exception of maybe of Pavement Technologies, right?

Versus when we spoke at the end of February.

And not attributable to incremental inflation in CTO, correct?

Well, we knew -- look, I mean, we've been pretty open. The difference between this year and last year, the CTO inflation is definitely a part of it, but we've been able to factor that in from day 1. What's changed from a quarter ago is just the sort of weakness that we've seen in the other markets, right? The CTO market -- like I said earlier, if anything actually may look a little bit better from where we were a quarter ago, but it's still not enough to move the needle. The issue here is around the other markets. We just have not seen the recovery in China and the U.S. market remains pretty muted.

And then on the CTO inflation, can you just remind us, presumably where you can, you would try to push along pricing. I'm assuming the biggest challenge is in the TORrosin side. Are you able to get pricing through on TOFA and TOFA derivatives or is that becoming also challenging, given the macro?

Yes. Chris, we still are seeing good pricing in our TOFA and fatty acid markets as well as the merchant and derivatives [indiscernible] products. We will continue to push that as we see fit, but know that there certainly will be an upper limit as on anything else.

We haven't really dropped rosin pricing. It's just -- when you look at -- and you can see this in our waterfalls, I mean it's just been more of a volume. We've seen some degradations in volumes.

And then if I could ask a question about the press releases that came out with WestRock looking to shut the mill there in North Charleston.

Yes.

You guys have a fence line relationship. If I look at their materials, it looks like their overall mill capacity may just represent less than 4%. So I don't know if that's a commensurate level of the ?

You can't look at it that way, Chris. The contract -- as we mentioned in our press release, the contract with WestRock with regards to crude tall oil remains unchanged, right? So their shutting this mill down will not impact us with regard to crude tall oil. There is another product, lignin, that we do get from this mill, but we have alternate sources which we will be able to replace that through other providers. The -- What will impact us though is there are a number of what I call shared services. So think utilities, power, steam, water, waste -- managed wastewater, that we will have to cut over to independent or stand-alone use. We have done this many times. So Wickliffe -- at one point there was a paper mill down the road, right? We co-locate today with Covington in Virginia. I mean if you go to Crossett, it is a Georgia-Pacific mill down -- 1.5 mile away. So we know what we're doing here. We just -- it's just going to cost some incremental costs to do it, but it's not going to impact our operations at the site at all.

So it doesn't change anything logistically in terms of sourcing feedstock? It's just about some incremental costs because it's just co-location?

Right. Other than the lignin -- we'll have to buy more lignin from third-party providers. But yes, it's just a logistics cutover cost.

And I'm assuming, given that their decision to do this is for August, that you knew this was happening, and therefore, these incremental costs are also -- have been baked into the guidance? Is that fair?

Well, so, the answer is -- I mean, look, we have been an independent company from WestRock since May of 2016. We obviously have a shared heritage and we have been co-located, right? So we have been watching and been aware of that mill's performance and opportunities and challenges for a long period very time. The decision to do something is not ours, it belongs to WestRock. But we've always had to plan and be thoughtful around that this could happen. This is, like, as I said earlier, not a new phenomenon in this industry. So we -- the time is here and we're now going to have to execute on the plans that we have.

Next question comes from Ian Zaffino from Oppenheimer.

Just a follow-up on that WestRock question. I mean, do you see any incremental cost pressure in the overall CTO market coming from this closure or...?

No. Not really. I mean they're -- to the global market, there's obviously going to be some reduction, but it's pretty minimal, right? This plant did not produce a lot of CTO.

Their CTO, Ian, was less than 1% of the total market coming out of thatplant.

Coming out of that plant. But let me be clear, it will not impact our relationship with WestRock.

And then on the AFA transition, when that's all said and done, how much of the raw materials will now come from AFA versus CTO? And then what is sort of the goal over -- I don't know if you look at the next 12, 18 months as far as mix of raw material between, let's just say, CTO and AFA?

Yes. But -- So this is important Ian, and I'll answer this, and Rick can chime in, too. But when you look historically over the last 4 or 5 years, set aside financial performance, our capacity or asset utilization was really running around 2/3, right? So we had put another way. We were running a 3-plant network with each plant running at basically a 2/3 utilization, right, running on CTO, right? What we're doing is we're going to move that CTO to go to Charleston and DeRidder. So those plants will now run at or near max utilization, right? And so we can then load Crossett. So you should see a 1/3 volume pick up over time, right? That's the opportunity for us, both from a revenue, volume, raw material, whatever. So once we get that to full utilization, then about 1/3 of our raw materials will be non-CTO related and about 1/3 of our sales will be non-CTO related, 1/3 of our profitability will be non-CTO related. That's the goal. But it will also be 1/3 bigger, right, than it is today because right now, we're -- that capacity has been sitting unused.

[Operator Instructions]. Next question comes from Mike Sison from Wells Fargo.

When I take a look at your outlook for the year, $450 million to $480 million, given the weaker environment, U.S. recession slow down, you're still going to be flat to maybe up growth. So pretty good outlook, I guess, in a tough environment. What do you think -- are there any other risks to volume, I guess, in each of the businesses? We see -- we hear a lot about destocking and you talked about it a little bit, but are there any other risks that you see within that outlook for the year?

I think -- look, I mean, one of the advantages of resetting guidance, Mike, is you get to reset guidance, right? So I mean, we've tried to be really balanced and sort of -- we sit here today and we see weakness, right? And we have the advantage, I guess, of reporting earnings maybe a little bit later than some of the other companies or what have you. But we -- and you know us by nature, we're pretty conservative, right? So in our minds, we've reset this to numbers that sitting here today we think we'll meet, right? Now if Ukraine revolves World War 3 or something happens in Taiwan or there's other geopolitical issues, I mean, that could change things -- or the debt default, I guess. I was listening to that today on CNBC. Those are exogenous things that are not fact in our guidance. But the current and anticipated weakness in the economy is in our guidance.

And then for Performance Materials, are you still looking for some growth in auto build this year? And I guess that if China continues to recover, the second half will be stronger than the first half for its materials?

I think as you listen to the OEMs and as they talk about chip shortages and issues still in the first half, our expectation and I think what we see in the marketplace is that we're expecting the chip issues will be in a much better position in the back half of the year. And so we're planning to run at full rates based on what we've got coming up in the back half of the year.

And then one follow-up on Advanced Polymer Technologies. It's a business where customers want to innovate potentially. Do you still see that activity in this environment? And is that some upside potential as the year unfolds for that segment?

Yes. I mean, that's a good point. I mean the answer is yes. We do continue to see a lot of innovation and development going on. We continue to see a lot of innovation and work being done. We're really excited about sort of the next-gen applications that are associated with this. And we have great expectations and aspirations for that business and there probably is some upside assuming that the economy continues on as we forecasted.

The next question comes from Daniel Rizzo from Jefferies.

Just a couple of quick questions. Have you ever -- in history, how to grow the spot market for CTO? Is that something that occasionally crops up?

Go ahead.

Yes, we procure about 15% of our CTO from the spot market on an annual basis and have been doing that for some time now.

And then more importantly, just something a little different. With the Advanced Polymers, how much of that is tied to the auto end market versus elsewhere?

Steve, you want to take that or?

Yes, I can take that. So the automotive market has always been an important market for this business. But in recent years, with the growth of the protective films, the epoxy materials have become more important. So we've kind of seen growth of about 25% of the business up to about 1/3 of the business now.

I'm sorry, 25%, what was the last thing you said?

25% to 30%.

Around about 30%.

So is it fair to say that a lot of the growth or a lot of the performance in that business is just coming from auto restock cycle? Is that kind of accurate?

I don't know if I agree with that because a lot of what he's doing is new product application, right? So one of the things that -- the picture that was on the slide is a protective film that is pretty popular in Asia, in particular, in China, right? It's an aftermarket application that -- because their roads are a little tougher than in the Western Europe and in the United States, a lot of the people will put this film on their car because it helps avoid the dings and the dashes that you would get from rocks or other things that are on the road, right? That's really a technology or product development as opposed to just being tied to , right? They're also -- there's a lot of work being done where the applications were tied to electric vehicles in terms of these basically bounce choice, which are -- think of them as sort of rubber shock pads that the batteries sit on, Dan. So yes, it's benefiting. But I think it's more a function of it's move into new applications.

I think for the next few quarters, what I would add to that is, again, if we see a China bounce back and stronger recovery, APT -- because of the auto exposure, particularly those products that John referenced in China, APT will see a stronger bounce back as well.

[Operator Instructions]. We do have a follow-up question from Jon Tanwanteng from CJS Securities.

Any thoughts on sequential expectations in Q2? I know pavement is usually up maybe from China improvement, but maybe more than offset by CTO, the transition these are going on. Just help me understand the puts and takes of what you're normally seeing on a seasonal basis this year?

Yes. I mean, look, I think we've tried to describe it as best as we can, Jon. I mean at the end of the day, we're dealing with some pretty significant CTO inflation in the legacy Inspec markets. We were anticipating growth in oil field, which we are seeing some growth in oil field, some great growth. But we're also seeing from a negative side pressure on the adhesives that are sort of more than offsetting opportunities that sit in the other legacy Inspec markets. It's unfortunate, but that's kind of what we're seeing. Pavement Technologies, I think, will continue to have a very robust year. It's a very strong business. It had great performance last year. It will have great performance this year. It's off to the races with a really strong start this quarter, and they've been working really hard. I think we feel good about that business. When you look at Advanced Polymer Technologies, the type of growth that you saw in Q1, I think, is probably what we would sort of expect for the year with some potential for upside. But obviously, we're sensitive to its sort of broader economic exposure. And then as Ed has kind of alluded to, the auto business has -- is going to be up from last year, but probably not as up as it could have been in a better economic environment. And that -- I mean as we alluded to in our prepared remarks, that's really the issue. Both APT and Performance Materials are going to grow, and our margins are going to improve, just probably not as much as would otherwise have been in a more normal environment, right? So those are really the puts and takes.

And if I could tack on, just a second point I wanted to mention. Earlier when we talk about the pavement business -- now, of course, we have Ozark as part of that as well -- it did appear that some of the analysts and others that we have talked to perhaps underappreciated the seasonality of Ozark as well. I mean, again, we're talking asphalt paving and road markings. And when you got to put a snow on the ground in the northern half of the United States, you're not doing road work. So again, the seasonality that we've always talked about with respect to Pavement applies to that whole business line that now includes Ozark. So just keep that in mind as people are doing their modeling.

And if I could switch gears a little bit. Could you just give us a little bit more of an update on Nexeon and how that investment is doing and how the business there is doing? I've seen a lot of its competitors receiving a lot of funding, offtake contracts. Can you talk about where they're standing, the progress with the development of customers, you know, funding and then getting into new applications?

Yes. Nexeon is a privately held company, and we respect that, obviously, but they are continuing to test our products. And as we continue to work with them, we're going to help them with their overall projects. Nexeon is what we consider to be the leader in silicon-based composite anode materials. And as we want to integrate with them, we are working hard to evaluate different samples, and we expect to see something in the next, what, 4 to 5 years from an activity standpoint. But in the meantime, we continue to work with them to develop new products for their applications.

We have no further questions at this time. So I'll turn the call back to the management team for any concluding remarks.

That concludes our call. Thank you for your interest in Ingevity, and we'll talk to you again next quarter.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.