Greetings and welcome to Orion Engineered Carbons First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow a formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Wendy Wilson, Head of Investor Relations. Thank you, and over to you.

Thank you, operator. Good morning, everyone, and welcome to Orion Engineered Carbons conference call to discuss our first quarter 2022 financial results. I'm Wendy Wilson, Head of Investor Relations. With us today are Corning Painter, Chief Executive Officer, and Jeff Glajch, Chief Financial Officer. We issued our press release after the market closed yesterday and we also posted a slide presentation to the Investor Relations portion of our website. We will be referencing this presentation during the call. Before we begin, I would like to remind you that some of the comments made on today's call are forward-looking statements. These statements are subject to the risks and uncertainties as described in the Company's filings with the SEC and our actual results may differ from those described during the call. In addition, all forward-looking statements are made as of today, May 6th, the Company does not undertake to update any forward-looking statements based on new circumstances or revised expectations. All non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the table attached to our press release. I'll now turn the call over to Corning Painter.

Thank you, Wendy. Good morning, everyone, and welcome to our earnings conference call. Before I get started, I would like to recognize the great work Bob Hrivnak has done as our Interim CFO and Chief Accounting Officer and provide our new CFO, Jeff Glajch, with the chance to introduce himself to you. Bob stepped in to fill Jeff's position for the past few months and did a great job, in addition to covering his regular job as Chief Accounting Officer. Bob, thank you for everything you did during the period. I know it was a very busy time for you and the finance team and you managed the transition seamlessly. From the start of the search, I was looking for a CFO who could work with me as a partner, as the company transitions into more of a growth mode. I'm very pleased that we recruited Jeff and I'm excited to welcome Jeff to Orion. Jeff not only has 30 years of experience leading Corporate Finance and Accounting Control functions for both public and private companies, but he also holds an MBA, as well as chemistry and chemical engineering degrees. We are excited about the experience he brings and look forward to him joining the Orion leadership team. Jeff?

Thank you, Corning. I'm excited to be joining Orion at what I see as an inflection point for the business. I look forward to partnering with you and the leadership team to implement and continue to refine the strategy that has been developed. It's going to be an exciting time as we continue to invest in growth and expand our focus on sustainability projects. Although I've only been in Orion for a few weeks, I'm already very impressed with the capabilities, focus, tenacity of the leadership team, and the depth of knowledge and high level of integrity of the Board of Directors. Finally, I would be remiss if I did not thank Bob not only for the work he had done in the interim CFO role but also how helpful he has been to me over the past few weeks. During the short period of time that I've gotten to know Bob, I'm confident that we can work together seamlessly to help make Orion's growth and profitability goals a reality.

Next I'd like to congratulate the team on delivering record results while navigating these challenging times and at the same time progressing several valuable initiatives. As you can see on Slide three, first quarter adjusted EBITDA was $83.2 million, up 17.3% year-over-year and a record for both the entire company and our rubber business. In terms of these valuable initiatives that I mentioned, last night we announced that we are expanding our conductive additives capacity by building a facility in the Houston area to capitalize on the growing demand for lithium-ion battery and other conductivity applications. One of the competitive moats around this business is simply the supply of large quantities of acetylene gas. So we are very happy to have concluded a significant sourcing agreement with LyondellBasell. This is a huge milestone for us, and we'll discuss it more fully shortly. We initiated commercial sales in the quarter on our new reactor in Ravenna and it is already fully loaded with higher-margin specialty and rubber grades. We had expected to be about two-thirds loaded this year, which would have been great, but this is a record for me. We had earmarked this line for a higher-margin specialty business. However, we've also accepted some rubber business at comparable margins to support our European tire customers. While the capacity on this new line is nowhere near the amounts imported from Russia, we were able to support our European customers also from our facility in South Africa. I recently had the pleasure of attending a celebration related to important port-related improvements in South Africa. South Africa's supply is a long-term option for Europe. I'm very proud of the entire organization, as everyone has worked tirelessly to support our customers during this very difficult time in Europe. I would also add that in response to the current humanitarian crisis in Ukraine, the Orion team has raised relief effort funds that are being disbursed through several avenues to Ukraine relief organizations. An additional news this quarter, Tony Davis was nominated to join our Board of Directors. Tony, who is the CEO of the Inherent Group, will be a great addition if elected, as his investment firm is well known for its focus on investing in companies using environmental, social and governance factors. Tony has been a loyal Orion investor for the past several years and I have appreciated his counsel as we embarked on our sustainability journey. I know he will be a great addition to our already strong Board and he will bring much-appreciated advice to the Company. This will be one of the many highlights that we will discuss during the upcoming Investor Day we are holding at the New York Stock Exchange on June 8th. On Slide four, we've provided some highlights for our conductive additives expansion project. The new facility will expand our production capacity by approximately 12 kilotons per year, quadrupling our current capacity for acetylene-based material. With capital expenditures in the range of $120 million to $140 million, commissioning is scheduled for 2024, and we expect sustainable EBITDA levels of $40 million to $45 million. As a reminder, we are one of only a handful of global producers who use high purity gaseous acetylene to make conductive additives. Our conductive additive products are in high demand not only for their purity but for their performance. We view this specialty material expansion as timely, strategic, and a growth accelerator. At approximately $15 million to $20 million EBITDA generated from our conductive business in 2021, we could grow our earnings capacity to over the $70 million range when this project is completed. This new project is an addition to our Huaibei Greenfield project in China producing 65 kilotons to 70 kilotons per year and the high-performance Carbon Black starting in 2023. Our Ravenna expansion, those two projects lay the foundation for a substantial increase in our long-term earnings power of the company by contributing roughly up to $40 million in adjusted EBITDA at steady-state levels. In addition to our other news, we've recently mapped out our aspiration to achieve net-zero carbon emissions as you can see on Slide five. We know this is ambitious, but we wanted to make sure it was meaningful before we shared it publicly. Importantly, we determined to work hard to find sustainable solutions with collaboration, innovation, and the right regulatory environment. 2050 is a long way away, so we also wanted to seek some near-term goals, which are at least as important from my perspective. Our near and long-term aspirations are to launch a broad range of products using recycled materials by 2025 and during the same time period to quadruple the output of products of conductive materials used in lithium-ion batteries for electric vehicles and other applications critical to the electrification of the economy. To generate 30% of our adjusted EBITDA through sustainable solutions by 2030 and to grow our sustainable solutions share of adjusted EBITDA to 50% by 2035. As I've shared in the past, investing in sustainability is core to our growth strategy and key to our success as a corporation. We'll update you on our progress towards these goals in the future and look forward to doing our part to operate responsibly and sustainably for all the stakeholders we serve, including our shareholders. Turning to our first quarter financial results in greater detail on Slide six. This was a record quarter for us with adjusted EBITDA increasing to $83.2 million year-over-year, primarily driven by price realization in both of our businesses and progress towards higher quality business and mix in specialty. These are record results for the full company as well as for our rubber business. And as you'll see on later slides, we also reported record gross profit per ton in both businesses. We've entered a period of demand outstripping global supply. We have been working since early this year to find solutions during this unprecedented period to support our customers, given tight capacity, balancing this with achieving a fair price for our products, given the investments that we've made in our facilities. That concludes my opening remarks. For the remainder of today's call, Jeff and I will cover the first quarter results in greater detail and our outlook for 2022. After our prepared remarks, we'll be happy to take your questions. Jeff?

Thanks, Corning. As noted in our press release yesterday, we plan to file our 10-Q next week, we are finishing up our final review. With that, if you could move to Slide seven revenue increased to $484.5 million, up 34.5% year-over-year, primarily reflecting the impact of passing through higher feedstock costs, strong price realization, and favorable mix. Sequential revenue increased 23.4% from the fourth quarter of 2021, driven by volume growth, as well as the factors I just mentioned which drove the year-over-year improvement. Contribution margin per ton increased 14.1% year-over-year, primarily from strong price realization in both businesses and improved mix in the specialty business with similar drivers supporting the sequential increase. Adjusted EBITDA increased to $83.2 million, up 17.3% year-over-year and 59.1% sequentially, reflecting price realization and improved mix. As Corning mentioned earlier, this is a record EBITDA level for us. On Slide eight, you will see several useful bridges that provide greater financial details supporting the comments I just shared on our quarterly results. Clearly, the price and mix were the strongest contributors to the profit improvement. On to Slide nine, which details our first quarter cash generation and use. While adjusted EBITDA was strong, this was offset by the dramatic increase in net working capital, mainly due to higher oil prices. As a reminder, when oil prices rise, our working capital increases roughly $30 million for every $10 increase per barrel of oil. Clearly, the rapid rise in oil prices across the quarter was a strong headwind. At the end of the first quarter, our net leverage stood at 2.8 times, slightly above our targeted steady-state net leverage range of 2.0 times to 2.5 times. We expect that this to improve and fall well into our target over the second half of 2022. As we look forward, our strong financial standing and capital structure positions us very well to execute the remaining EPA investments as rapidly and safely as possible while also advancing growth initiatives that bolster our earnings capacity. We expect to be approximately 90% complete with the EPA capital by the end of 2022. With that mostly behind us, we anticipate strong discretionary cash flow beginning in 2023 to fund growth investments such as the acetylene black plant, as well as return cash to shareholders. Moving to Slide 10, specialty revenues increased to $177.6 million, up 23.2% year-over-year and 20.3% sequentially, reflecting the pass-through of higher oil prices and improved mix. On a year-over-year basis volumes were slightly lower. This was due to the very strong comparable in Q1 2021, which was driven by pent-up demand from COVID slowdowns in 2020. The gross profit per ton chart you can see that specialty profitability is at high levels, in fact, one is not seen since 2016, driven by extremely favorable mix, including the positive impact of newer products, improved pricing, higher loading, and the associated leverage. The next slide breaks out the major year-over-year drivers of adjusted EBITDA for the specialty business in greater detail, the most significant of which were improved price and mix, partially offset by lower volumes and the effect of FX translation. Moving to Slide 12, rubber revenue increased to $306.9 million, up 42.1% year-over-year and 25.2% sequentially driven by passing through higher feedstock costs and higher pricing. Furthermore, compared with Q4 2021, volume was up nearly 15%. Gross profit per ton grew to $321.4 million, up 19.5% year-over-year and 47% sequentially, reflecting higher price realization which is intended to help us earn a return on our emissions controls and reliability investments. We also benefited from higher cogeneration. Notably, gross profit per ton this quarter is a record. Slide 13 breaks out major year-over-year drivers of adjusted EBITDA for the rubber business in greater detail. Higher base price and mix illustrated the benefit of higher base price and mix, specific to the other category, higher energy prices are positive for us. However, we had increased costs associated with air emission controls and we are working to reduce those costs going forward. With that I will turn the call back to Corning to discuss capital expenditure plans and our updated increased guidance for 2022.

Thanks, Jeff. We've certainly gotten off to an excellent start for 2022. Our pricing has kept up with significant inflation, and we've taken the step to upgrade the quality of our specialty business. With great agility, the team pivoted to find solutions for our European customers and beyond the conflict in Europe, we experienced increased demand globally and we've realized the benefits from our contracting pricing cycle for 2022. We are increasing full-year adjusted EBITDA guidance to $310 million to $340 million with the midpoint of $325 million. We're also increasing adjusted EPS guidance for 2022 within the range of $2 per share to $2.35. The factors driving these increases include pricing realization, increased customer demand for our products, including new products, the accelerated ramp-up of our new line in Ravenna, improved plant on-streams and the higher oil price benefit. Note that we have taken into consideration the uncertain times that we live in today when we increased our guidance range. The risks of achieving our guidance include any escalation of the conflict in Europe that could affect our material suppliers and our natural gas supplies. An escalation of COVID cases, particularly in China, and continued supply chain issues, amongst other things. We manufacture essential materials and we co-generate energy supporting our local grids. So we believe there is a strong case we should be protected in the event of natural gas curtailments. You can see on Slide 14, that the capital spending for this year has been increased to the range of $240 million to $260 million. Slide 15 lays out how that money will be spent and what the near-term benefit is expected to be. Drivers for the increase include that our acetylene project is actually a bit larger than what we had anticipated earlier in the year and increasing maintenance project activity to enhance reliability during this time of high demand and critical supply issues. With approximately $80 million of the U.S. air emission control spending remaining and approximately $55 million of that remaining to be spent in 2022. As far as compliance-related capital expenditures are concerned, 2022 represents an important inflection point for us, as this spending will be dramatically reduced in 2023, allowing us to focus on value-creating activities. In closing, I'd like to leave you with a few thoughts. First, we're increasing our EBITDA midpoint guidance to $325 million, up 21% from last year. Second, we see significant growth opportunities for our conductive additives products. With the strategic sourcing agreement and our new greenfield facility in the Houston area, we will quadruple our capacity within three years, and I expect to increase our earnings capacity by about $40 million. As one of only a handful of producers capable of using acetylene gas as a raw material, we will grow the supply of these materials that are important conductive additives in modern lithium-ion batteries and other high-growth conductive applications. And third, we have the majority of the projected air emission control spending behind us at this time, with only about $80 million to go. Our projects remain on budget and schedule, with our demonstrated earnings power we expect to have significant discretionary cash flow in 2023. With that operator, please open the line for questions.

Thank you. At this time we will be conducting a question-and-answer session. The first question comes from the line of Josh Spector with UBS. Please go ahead.

Yes. Hi, thanks for taking my question. First, congratulations on a really strong quarter.

Thanks, Josh.

So, I mean, you mentioned a pickup in demand in Europe late in the quarter in rubber, and you alluded to it on the call. But is it fair to assume that most of that was directly due to backfilling for Russian supply to various customers in the region? And I guess, on your last call you said you wouldn't really help our customers, I forget the exact words you used unless there was a longer-term angle to it. Are you going to talk about longer-term supply? So curious, if you just comment on how all that evolves and what type of maybe longer-term conversations are occurring to fill that gap assuming it persists longer-term?

Great and you're absolutely right. And I said that and we've been able to achieve it. And it's really only fair because we had a specialty customer lined up who was prepared to do a multi-year agreement for a significant chunk of the capacity, for example from that new line in Ravenna. It was only fair and reasonable to ask for similar terms from our tire customers. I think it was only fair and reasonable and we've had success in that. So I do think we can look forward to higher loading in Europe going forward. I think also, who knows how things are going to play out in Ukraine, and let's also just remember the main thing here is, it's a human tragedy what's going on. But I don't think it's going to be a reluctance about relying on Russia or Belarus as a supplier long-term from a number of perspectives. So I think it's a win-win for both us and the customers to have a longer-term solution put in place.

Okay. No, thanks for that. And just a couple of quick ones and just the new acetylene black plant that you guys are investing in. So first, I mean looking at face value CapEx per ton seems pretty high $10,000 per ton versus maybe less than two for the average carbon black plant. So I'm wondering first is that a fair comparison or are there other costs there that you're adding like utilities and footprint to support further expansion in time?

That's a great question. First, I would point out that the capital cost per ton for this facility is consistent with what we experienced when we acquired the facility in France years ago, which we often use as a benchmark. While we have not previously shared specific numbers regarding our expectations for this project, it's important to note that the manufacturing process is quite different. For instance, no fuel is added during production, as it's an exothermic process, which contributes to its effectiveness as a conductive material. This results in a higher capital investment, which in turn leads to a greater EBITDA per ton. What we're aiming for here is similar performance to what we've successfully achieved at the other facility. I hope that addresses your questions.

Yes, yes. Thank you.

Great.

Thank you. The next question comes from the line of Laurence Alexander with Jefferies. Please go ahead.

Hi, good morning. Two questions, one is can you contrast how your price mix is evolving in the current environment with what happened a few years ago when China had that soft patch and there were all the issues around the European products exporting to China and the negative mix effect that you saw at that time? Can you just characterize some of the differences that you are seeing that are helping the price mix be more resilient this time?

All right, Laurence. Thank you, two good questions there. So on price mix, I think one thing that's on right now is there is pretty robust demand globally. Now, we'll see how things play out with COVID in Asia, and I think a lot of people expect there will be a couple of months here where we see a slowdown in China before that picks back up. The other thing in the mix is, it's not just like you're a passive player in this. There’s more coatings, there’s masterbatch volume and that can move your mix around; obviously that's a component to us, and that goes to underlying market demand. But there is also the ability just to upgrade the mix, the value you're doing, the EBITDA per hour that you're able to produce in your various reactors, simply by optimizing that in terms of new products and paying attention to those opportunities. I think it's also allowed us to improve the quality of our specialty business significantly. And so I think you see that, as well as just the fact that there is strong demand generally right now.

And secondly, how are you thinking about customer interest in formulations as opposed to just specific carbon black compounds? Are there adjacencies where you can bring other materials in-house to develop formulated blends for the battery materials for the battery applications?

All right, Laurence. So there's a lot of different companies who make batteries, who make electrode pace for batteries and so forth. I think that most of the higher-end companies are very proprietary around their mix, including their cathode and anode material mix. For most of those people, they are not going to want an integrated solution; they're going to want to be able to slice and dice and buy each one separately. That doesn't mean there won't be some who do, but I think there is going to be a very substantial proportion that's more interested in the separate products. Although we're focused on acetylene right now because we think it provides advantages for a number of reasons, including competitive moats about other people getting into it, it doesn't preclude that at some point we wouldn't look at other conductive materials, just like you said, whether we do it as a blend, or just use our know-how to make further headway with that material than perhaps the current owner can do with it. That remains an option for us as well.

Thank you.

Thank you. The next question comes from the line of Jon Tanwanteng with CJS Securities. Please go ahead.

Hey, good morning guys. Just echoing the congratulations on the strong quarter and the outlook. I also appreciate the discussion of the ESG target that you're addressing. My first question is what kind of agreements do you have in place or anticipate to have in place for the new acetylene facility? In terms of supply and offtake, are those in place and furthermore, what kind of contracts are there? Are they return on capital base, take or pay, are they short-term in nature or if you haven't done and what would you expect as you get closer to those?

Great, two important questions there. Yes, so offtake is a long-term commitment to offtake. And again I think it's one of the moats for this business because they are not going to sign up with someone who has acetylene, and there aren't that many players; they want to be sure you're going to be able to use it. So you really need to point to, 'Hey, I have an existing facility, this is a valuable business; we will be a reliable offtake for you' as LyondellBasell supplies us currently in France. So their relationship and the proof was very comfortable for both sides there. We actually do at this point have our first long-term take or pay agreement revolving around acetylene with a confidential customer, that's a modest volume right now just because in part we're solely reliant on our current facility in France; we can do more of that as we move forward. The only trade-off though is, as I've talked about for example how we just upgraded our business profile of our specialty business, we're at very high loading, so that does mean cutting back on some things to be able to take on new business and make more advanced products with that reactor. So if you tie yourself up too much with long-term agreements, you do cut back your flexibility; at the same time, there is comfort in long-term agreements. I’d say from my time running the semiconductor supply business for air products, I had a lot of experience with striking that balance between what would be long-term and what would be more short-term, where there is more flexibility for both parties.

Thanks, Corning, that was informative. Could you provide a range for the expected capital expenditures in 2023 and 2024? This would help us establish a range for free cash flow as well.

Yes, so won't surprise you that we’re not going to go to a capital forecast for next year. But you can give you a sense of what the total amount is for this new plan; we would have Huaibei complete; we'd have that expansion project that is shown on that slide complete. We'd be continuing to invest obviously in maintenance, and we probably step that up a little bit given the levels of loading and so forth we see right now. But we're very focused on those specific projects, so I think that gives you a sense of where our capital could be for next year, but we're not going into a specific forecast at this time.

Okay, fair enough. And then my last one, I was wondering if you could discuss the specific risk heading into Q2, both with the China lockdowns and maybe a little bit, not maybe Q2 specifically, but the risk of supply in hydrocarbons in Europe, just given the conflict and the escalations we’re seeing?

Right, so if we speak to China first, so I've a number of people there, our team in Shanghai right in the office space they've been locked down for a long period of time, both our construction site and our plant, we've been able to operate really without incidents at this point. I think if you think about the amount of lockdown activity there, I will be surprised if this doesn't slow things down in China. And I'd say separate from that the high oil prices have probably slowed down a little bit areas like fiber, where some of their other raw materials are really quite linked to that. But at the same time, there's going to be a big party meeting in October. I think this is a big year for China. I think there's going to be a lot of emphasis on supporting the economy. I think things are going to start improving from where they are now in Shanghai, for example. So - why I think there will be perhaps some pressure on China, I think the Chinese economy will recover later this year. Talking to colleagues both inside and outside of Orion, I think that's a pretty common view. If we shift over and we think about Europe, as I've said earlier, we've really done a great job of passing through cost inflation, whether it's natural gas or oil and I think just the fundamentals are there; it's high demand, it's fair, everybody knows it's happening. Gosh knows where oil prices are going to go from here, they could go back down and we'd be giving some of that back. So that's the way the system works, and we'll have to see what happens from here.

Understood. Thank you, Corning.

All right. You're welcome.

Thank you. The next question comes from the line of Barry Haimes with Sage Asset Management. Please go ahead.

Thanks so much and congrats on the good quarter. I've two questions, one is the Russian carbon black material that Europeans want to no longer take, is that material leaking into the market somewhere else? For example, in oil India has been buying Russian oil? Or is that production just down and not getting out at all? So any sense of what's going on with the Russian material would be helpful?

Yes, thanks, two really key questions. So I believe Russian carbon black is still flowing into Europe, and I think it's unlikely that material is going to go to India or China as output markets at this point, in part because this is a pretty robust carbon black industry in China anyway. We'll have to see how that plays out from here. I'd say when this all first got started, the customers went through sort of a panic zone, and people were very, very concerned. I think that's sort of settled down and in part because Russian material is still flowing at this time. Where that's going to go from here, we'll have to see.

Yes, I have a quick follow-up. Regarding the capacity part of your question, I'm curious if there are ways for you to increase capacity within your own network.

We have supported the tire industry by allocating a portion of the new line in Ravenna to them on reasonable terms. There's excess capacity in South Africa that they can consider. We also have one reactor in the U.S. that we plan to switch from soft to hard. We have some flexibility regarding that, but there are limitations based on our past performance. We entered this phase with a high load and experienced a successful pricing and volume cycle in 2021 and 2022, which means there is a cap on what that supply can achieve.

Great, thanks very much.

Thank you. The next question comes from the line of Chris Kapsch with Loop Capital. Please go ahead.

Hey, good morning. So your publicly traded domestic competitor indicated that customers are coming to them. What sounds like to me is early as ever with respect to wanting to talk about supply agreements for rubber black for next year. Just wondering, if you could confirm that, is that something you're seeing? Is it skewed towards Europe? Or is it really a global phenomenon? And what are some of the drivers and characteristics of those conversations?

I can confirm that customers are interested earlier than ever to secure supply for next year. They're interested in doing that, not just in Europe. I think it's clear that from the things I just talked about, right? Carbon black is going to have to be shipped around the world to support things. So I would say pretty much in most markets, people are looking to secure that, and they are interested in locking that up earlier than usual.

Right. It seems that securing supply is really the core issue in this situation, even if it appears to be supportive of pricing.

Yes. So if you're purchasing manager, right, you're a hero if you can save some money and do a good deal and all that. But if you shut down the factory, you're a disaster. The number one job of these groups is to keep their facilities running. We air-freighted multiple aircraft, the entire aircraft booked for supply from South Africa into Europe. That's not inexpensive carbon black, but that was to keep a facility running and I support the South African team who hustled and got the jets and all this other stuff to make that happen for us. That’s the level of commitment that I think goes into this; what's most important to them. Obviously, the supply and demand is a factor for pricing. And I'd say it's a very favorable environment in that regard. I would just add for all my customers who are listening, I think it's also only fair; we're all investing a lot of capital in keeping these facilities operational and keeping these facilities up to the latest specifications. We've seen what happens with under-invested plants, and I think it's just the natural and logical consequences of many years of activity, and here we are.

Corning, you mentioned upgrading the quality of your specialty business. I want to ask about the profitability metric, which I believe was gross profit of $878 per ton. That seems to be the highest since Orion went public. It appears that the mix is driving this, but I assume there’s also some pricing helping to offset cost inflation. What are your thoughts on the trajectory and sustainability of this? What range should we consider regarding the dispersion of profitability within your specialty portfolio moving forward?

Well, it's a very dynamic time. Energy prices are moving around quite a bit. So if I were going to give you a range for this year, it's a wide range, but I would expect that number to bounce around. Let's say between $800 and $900 per ton in terms of GP per ton. Some of that is correct, just having fundamentally upgraded the quality of the business; it’s also high-loading and other factors right now.

Thanks for that. I have a quick question about the investment in acetylene. I'm following the lithium sector and I've noticed how they’ve integrated their value chain. One emerging theme is the strong desire for a regionalized supply chain. I'm curious about building this facility in North America. Is the plan to cater primarily to gigafactories that are set to be built in North America, or do you expect to supply that factory to established battery manufacturers in Asia?

Excellent question, Chris. So it obviously positions us very well for anybody doing things in North America. But now, we would see that as a world-scale, world-class facility, and as someone else mentioned, right, the actual volumes aren't huge, but it's a very valuable material. So all of that lends itself to managing the shipping around it. If you think about our current facility in France, I mean, very little of that is consumed today in France, for example. We ship it mainly into Asia. Initially, I think this will be largely similar, but you can see there are gigafactories coming to North America, coming to Europe, and I think they're all amenable markets to us.

Yes. Hi, thanks for letting me circle back. Just a couple of quick ones and then one longer-term one. So just on the rubber black price-mix, up $11 million year-on-year. Is it fair to assume that most of that is annual contract gains? Or is there anything you would call out that would be either temporary or due to more spot pricing type dynamics?

Sorry for the pause there, I thought that you were giving to me all, but it's better this way. Now that's mainly contract that you're seeing there.

Okay, and then on so Ravenna you're supplying some rubber black out of that facility. Are you doing any more of that on the specialty side, any other facilities to perhaps load up those plants? And does that get reported in specialty? Or does that get reported in rubber?

That gets reported in rubber as that's where the end market is. We have a number of reactors; they can cut either way, but we've got really pretty high demand right now in our specialty so on balance, there is not much shifting from specialty to rubber at this point.

Okay, thanks. And just one more longer-term one is just generally, kind of, thinking about capital allocation over the medium term, you've been pretty clear that you want to invest more in growth, you've been doing that with acetylene plant is now another step in doing that. I guess your stock valuation here isn't really reflecting a growth stock overall. And to the extent that, that it doesn't change over the next six to 18 months, whatever it may be, would you consider shifting your priorities on either slowing the investment in acetylene and put a more cash towards buybacks or doing anything different in terms of how you're thinking about that allocation?

Yes, excellent question really a central one for us. So first of all, to be clear, we really take capital allocation seriously, we discuss it pretty much every Board meeting. We had a guest speaker for investors at our last Board meeting, and you can imagine this was something we talked about in that area. We do see ourselves as undervalued in the current situation and we might look at things differently even right now, even with the current capital spending, if not for working capital and kind of uncertainty in the marketplace and so forth. In terms of next year, if you think about what we have this year, I want to emphasize Huaibei is going to be done; that expansion project is going to be done. So we're putting really the vast majority of our growth, so to speak, or where we're going to invest next year into this project. And I think we will show discretionary cash flow at the same time. We've made a substantial step-up in the earnings power of this company. Next year we're going to have a full year of Ravenna, not just 10 months or nine or 10 months of Ravenna; we're going to have Huaibei coming on next year. So these are all going to be pauses for us as well as that debottlenecking project that's on the sheet; all that's going to raise our EBITDA capacity for next year. And again, we're just really putting our eggs into one big growth project, but one that we think is really strategic and powerful for us in the long haul. So I think we can get to a position where we can satisfy those different perspectives.

Okay, thank you, Corning.

Operator, I think we should assume that we've drained the tank on questions for right now. So let me just say to all of our participants, I really appreciate the questions. I think they were really excellent quality and raised some issues that I think are on many different investors' minds. Thank you for that. Thank you for making the time to be with us. We look forward to seeing you at our first ever Investor Day on June 8th at the New York Stock Exchange. And as a reminder, the event will have a virtual option if you're not able to attend in person. But I hope to see you there whether live or virtually. Have a good rest of your day, looking forward to that date. Bye for now.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.