Orion S.A. has announced robust financial results for the first quarter of 2024, with a notable 19% increase in specialty volume year-over-year and a rise in gross profit per ton to $659. Despite facing a challenging geographic mix in its markets, the company anticipates continued growth and a record EBITDA for the year.
The rubber business expects strong demand in Europe but weaker demand in the Americas. Orion's sustainability efforts have been recognized with an upgrade to a platinum EcoVadis rating. Moreover, the company is progressing with its specialty products and plans to open a new plant in Texas.
Still, Corning (NYSE:GLW) Painter, during the earnings call, indicated that the La Porte facility's significant financial contribution may not materialize until well into 2026.
Key Takeaways
- Orion S.A. reports a 19% increase in specialty volume and a gross profit per ton of $659.
- The company maintains a positive outlook for 2024 with expected growth and record EBITDA.
- Strong demand for the rubber business is anticipated in Europe, with weaker demand in the Americas.
- Orion's EcoVadis rating has been upgraded to platinum, reflecting its sustainability achievements.
- Updates on new specialty products and a Texas plant were provided, signaling strategic growth.
- The La Porte facility is expected to offer opportunities for expanding specialty margins by mid-next year.
Company Outlook
- Orion S.A. remains committed to its guidance range for adjusted EBITDA and adjusted diluted EPS.
- The company is focused on strategic and profitable growth in both business units.
Bearish Highlights
- A ban on Russian carbon black in the EU poses supply chain risks.
- Weaker demand is expected in the rubber business in the Americas.
Bullish Highlights
- Positive trend in specialty demand is noted.
- The company expects to capitalize on opportunities in Europe due to the Russian ban.
- Orion is committed to increasing free cash flow and maintaining a strong balance sheet.
Misses
- No significant financial contribution from the La Porte facility is expected in 2025.
Q&A Highlights
- Corning Painter discussed capital allocation, indicating share buybacks are not expected this year but may be reconsidered as the year progresses.
- Painter also commented on the undervalued share price, seeing it as a good opportunity.
- Jeff Glajch provided clarity on expectations to exceed last year's EBITDA for Q2.
- The balance sheet ratio has increased to 2.44 due to EBITDA TTM effects.
In summary, Orion S.A. is navigating a mixed market environment with an eye on future growth and sustainability, underscored by the company's recent platinum EcoVadis rating. The company's strategic initiatives, including the new Texas plant and specialty product advancements, are set to drive its growth trajectory.
Still, investors are advised to note the delayed financial impact of the La Porte facility, which is a key factor in the company's future performance. Orion's ticker and market performance will continue to be closely monitored as these developments unfold.
InvestingPro Insights
Orion S.A.'s financial resilience and strategic initiatives are reflected in the company's recent market performance and analyst expectations. An important aspect to consider is the company's management strategy, which has been focused on shareholder value.
According to InvestingPro Tips, management has been aggressively buying back shares, which is often a sign of confidence in the company's future prospects and a commitment to delivering value to shareholders. This aligns with the company's positive outlook for 2024, with expected growth and record EBITDA.
InvestingPro Data also shows that Orion S.A. has a market capitalization of $1.38 billion, a Price/Earnings (P/E) ratio of 15.69, and a Price/Book (P/B) ratio of 2.8 as of the last twelve months leading up to Q1 2024.
These figures suggest that the company is being valued by the market at a level that reflects its profitability and asset value. Moreover, the company's stock generally trades with low price volatility, which might appeal to investors looking for more stable stock performance in uncertain markets.
For readers interested in a deeper dive into Orion S.A.'s financials and future prospects, InvestingPro offers additional tips. There are currently 5 more InvestingPro Tips available, which can provide further insights into the company's performance and market position. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights.
In summary, Orion S.A.'s aggressive share buybacks and high shareholder yield, combined with a stable trading pattern and positive profitability forecasts, position the company as a potentially strong player in its industry. The InvestingPro platform offers further analysis and tips to help investors make informed decisions about Orion S.A. and other investment opportunities.
Full transcript - Orion Engineered Carbons SARL (NYSE:OEC) Q1 2024:
Operator: Ladies and gentlemen, good morning, and welcome to the Orion S.A. First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Wendy Wilson, Head of Investor Relations. Please go ahead.
Wendy Wilson: Thank you, Ryan. Good morning, everyone, and welcome to Orion's conference call to discuss our first quarter 2024 financial results. I'm Wendy Wilson, Head of Investor Relations. With me today are Corning Painter, our Chief Executive Officer and Jeff Glajch, our 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'd 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, our forward-looking statements are made as of today, May 3, 2024. The company is not obligated to update any forward-looking statements based on our new circumstances or revised expectations. All non-GAAP financial measures discussed during this call are reconciled the most directly comparable GAAP measures in the table attached to our press release. I'll now turn the call over to Corning Painter.
Corning Painter: Thank you, Wendy. Good morning, everyone, and thank you for joining our call today. We started 2024 on a strong footing with adjusted EBITDA of $85 million our second best Q1 behind only last year's results. More importantly, we saw underlying improvement in the business. Our specialty volume grew 19% compared with last year. At the same time, we increased our gross profit per ton from $492 in Q4 to $659 to a level more in line with normal margin levels. Rubber gross profit margins of $435 per ton were well above last year's average of $409 per ton. Prior to 2022, our rubber gross profit margins typically ran in the $200 to $300 per ton range. These results clearly show that our key markets continue to restructure and this is the new normal from which we can build. As a result of our progress in both markets, we continue to expect 2024 to be another year of growth leading to record EBITDA. In summary, we're on track to outperform expectations in specialty and to exceed per ton margins in rubber despite a more challenging geographic mix in both markets. Digging deeper into rubber, we expect strong demand in Europe, but weaker than expected demand in the Americas. We are confident that we can adapt to these changes with agility and remain committed to our guidance range of adjusted EBITDA at $340 million to $360 million and adjusted diluted EPS of $2.05 to $2.20 per share, up 5% and 11% respectively. In sustainability, we were recently notified that our EcoVadis rating has been raised from gold to platinum, the highest possible distinction. That means we are in the place amongst the top 1% of companies assessed by EcoVadis, one of the world's largest providers of business sustainability ratings. This ranking is quite prestigious with a well-respected NGO validating our tremendous progress. A huge congratulations to the whole Orion team on this accomplishment. Thank you and well done. Looking at our 2 business units and starting with rubber, our customers are gaining confidence looking towards 2025. This combined with the EU ban on Russian carbon black, which begins in less than two months, shipping challenges from Asia to Europe, the seeming end of the U.S. trucking recession and the industry restructuring on our value chain, all makes for a very promising 2025 pricing cycle. We see customers already gearing up for the negotiations, perhaps preferring to wrap things up before the market strengthens further. Some are essentially kicking off the negotiations now, while others are in the framing stage, defining parameters for the 2025 negotiation. In terms of framing, for our part, we are open to starting early, but we want to avoid holding volume for a customer and then being left at the altar at the last moment. So, we will be stricter in enforcing time bounded offers, utilizing volume rebates and consider shifting production towards our specialty business to support the strengthening polymer market. In our specialty business, we advanced two significant products in Q1. First, last quarter, we shared that we achieved technical milestones related to the ongoing debottlenecking of our high-performance and unique surface treated gas black grades for the coatings and ink markets. I am happy to report that technical marketing and customer uptake of the additional capacity is going well, exceeding expectations. Second, last month we also announced the introduction of Kappa 10, a new conductive carbon aimed at batteries with more of a cost-based value proposition. Here, I'm happy to say this product has been qualified by a leading player in the lithium ion battery space and commercial sales of the gut. Turning to Slide 4. With the EPA spending behind us, we will now focus our capital allocation on more financial and shareholder rewarding ways. I see capital allocation as management's top responsibility after safety. One priority for us is strategic and profitable growth. Here, we recently celebrated the groundbreaking of our new plant in La Porte, Texas that is scheduled to be online in mid-2025. When completed, this will be the only facility in North America producing high-purity, settling-based conductive additives to support the global shift to electrification. This site will produce conductive additives with about 1/10 the carbon footprint compared with alternative conductive carbon technology. As we've communicated in the past, this not only supports formulations for lithium-ion batteries, but is also an essential material in the high voltage cables that are needed to build out electric grids around the world. With that, I would ask Jeff to provide additional insights into our financial results.
Jeff Glajch: Thank you, Corning. On Slide 5 are the consolidated results for the first quarter. Compared with Q1 last year, volume was up in both businesses with specialty volumes increasing in all regions and rubber increasing in Europe and China. Gross profit and gross profit per ton were down. If you recall, as we discussed last year in Q1 2023, we had some timing and one-time benefits totaling $9 million, those did not repeat. We also saw an adverse impact this year from the regional rubber volume mix with less North American and more China volume. On a sequential basis, all metrics were up especially of note a significant increase in gross profit and gross profit per ton, which was up 28% to $4.92. On Slide 6, we look at the EBITDA drivers. Stronger pricing and volume in rubber was primarily offset by poor regional mix. On the cost side, the $9 million impact in timing and onetime items from last year as previously noted, higher labor costs and operating costs as well as less benefits from cogeneration. On Slide 9, rubber volumes increased in Europe, where we are already seeing the benefit of the upcoming Russian carbon black ban as well as in China, but this was mostly offset by lower demand in the Americas. Compared with Q1 last year, we experienced lower gross profit per ton despite strong contractual price increases. This was due to the timing issues previously mentioned, poorer regional mix namely the weaker North American volume, higher fixed cost and lower cogeneration pricing. However, Q1 gross profit per ton of $4.35 was well above last year's average of $409. Reiterating what Corning said, we expect this higher level of gross profit per ton to continue across 2024. Slide 8 shows the impacts in a waterfall chart of the rubber business. Pricing was up $5 million versus 2023 due to the continued structural market improvement. While volume was up 2.5%, the impact of the regional mix adversely impacted EBITDA by $6 million, cost impacts also offset the improved pricing. Just to be clear on this chart, the $5.8 million cost impact is split roughly between cost increases and lower cogeneration price. On Slide 9 is the financial table for specialty. Volume increased across all regions in nearly all markets. Gross profit per ton decreased on a year-over-year basis, primarily due to the prior year timing impacts previously mentioned and higher fixed costs. As expected, our gross profit per ton was significantly higher than Q4 2023, up 34% to $6.59. While our trailing 12-month gross profit per ton has declined over the past four quarters, our Q1 level is above our trailing 12-month level and we expect the curve will be turning back up as we move into the second half of this year. As we look forward, we also expect specialty volumes to continue stronger as market conditions improve and volume and mix moves toward higher margin products. The surface treated gas black products, which Corning noted earlier are an example of this. Slide 10 shows in the waterfall chart specialty EBITDA as discussed on the previous slide. Increased specialty volumes were offset by the impact of favorable timing items from last year as well as higher operating and labor costs. Slide 11 shows cash flow for the quarter. We had an increase in working capital, but also lower level of CapEx in Q1, compared with what we expect for the rest of 2024. Debt was down slightly, but since our trailing 12-month EBITDA was lower than our year end 2023 EBITDA, our debt ratio increased to 2.4 times still within our targeted 2.0 to 2.5 range. We are comfortable with our debt level as we made a concerted effort to lower it significantly in 2023. Slide 12 shows our expected range for cash generation and usage in 2024. For this year, the majority of our discretionary cash usage will go towards the port plan. On this table, we have not shown any change in working capital for 2024. This is one area of risk as we saw in Q1, where working capital was up $26 million. We will monitor this closely as the year continues. With that, I will turn the call back over to Corning to discuss our 2024 guidance.
Corning Painter: Thanks, Jeff. We're off to a good start and I expect this to be another record year. Turning to Slide 13, we're reaffirming our guidance. Based on current conditions, we project 5% EBITDA growth in 2024 and 11% increase in EPS. This would be our 4th year of growth. Let me close with a few points for you. First, the industry restructuring which has been underway for years will continue. Tire factories, new tire factories continue to be announced in North America and in Europe. The EU ban on Russian carbon black starts in 58 days. The risks of a far-flung supply chain are obvious. The supply demand balance continues to move in our direction and a strengthening polymer earth market also tightens the rubber carbon black supply and demand further. Second, specialty demand is recovering. Third, our La Porte facility is on track for mid-next year providing additional opportunities for expanding specialty margins. And fourth, we take capital deployment seriously. We are committed to increasing free cash flow, maintaining a strong balance sheet and deploying your capital wisely, providing increased returns to investments like La Porte, buying back shares or by reducing our leverage. And Ryan with that, please open up the lines for questions.
Operator: [Operator Instructions]. Our first question is from the line of Josh Spector with UBS. Please go ahead.
Josh Spector: Good morning, everyone. Corning, I was wondering if you could talk a bit about the volume trends that you're seeing in the market today and kind of your some of your forward expectations. So, I think your comments seem pretty optimistic or maybe more upbeat, on where demand is at. But it's pretty clear that your guidance assumption assumes no improvement. So how have things changed and how does that compare versus what's baked into your guidance? Thanks.
Corning Painter: Sure. So, we have never said that we saw for this year like a hockey stick necessary to achieve our guidance nor did we really think there is the confidence in the marketplace to do that. That said, in Q1, there's positive developments in it. I'd say in the specialty area, it's really quite broad across the market. So, for example, some of the higher margin areas like coatings, distributors who are often serving coatings margins or customers those are very high, but so are things like thin film, pipe and so forth. So, you can see that balance in how our GP per ton has developed in specialty. Broadly speaking, we think that it's going to be continuing on this path. I don't see customers being able to really stock up and restock in a big way, but I do think the fear of inventory and that sort of thing is down a bit. On the tire space, you see for example in the North American market increased purchase of tires and that's in the mid-teens, but you see tire production only up maybe like 4%. So, they're still suffering for imports, we're still seeing the trucking volumes while maybe now bottoming, they haven't really come back stronger. So, over the course of the year, it's possible that trend I think has stabilized and we'll have to see the rate at which it improves from here. We do need a little bit of improvement right from an $85 million run rate to hit our guidance. So, there's some growth expected in our numbers.
Josh Spector: And I guess maybe on that last point, I guess trying to think a little bit more near-term here on second quarter. You had some pretty easy volume comps in specialty and rubber. And I mean, there was some noise in the first quarter from cogen credits last year. But I guess, the simple way to ask this is, do you expect EBITDA up year-on-year in 2Q with the higher volumes with some maybe improving profitability in rubber? Or are there other offsets we should be considering? Thanks.
Corning Painter: So, I think on a clean run rate basis, I think that we're in a good position for next year with improved margins and improving specialty market. Does that help, Josh?
Josh Spector: A little bit. I guess, I'll try to talk just on second quarter. I mean, I think volumes could be up something like 10%. I assume that would lift earnings year-on-year. What would be wrong with that thinking?
Corning Painter: Just in terms of last year where and so I'm doing this without having looked precisely at that for you. But I think you have to think about what the power rates were last year and any other sort of timing impacts that can flow in and out of our P&L. So, for example, if a particular input cost moves sharply and quickly then that's the kind of thing that can have a lag in our pricing models. I mean in general, so Josh I'm not trying to be downbeat. I think that we'll be looking at a stronger quarter in Q2. I think that's implied in our guidance without giving out specific numbers.
Jeff Glajch: And Josh, this is Jeff. Just one additional thought. If you think about the midpoint of our guidance relative to the last three quarters of last year or clearly whether it's in one quarter, but certainly over the course of three quarters we got to have significantly higher EBITDA in the last three quarters to hit midpoint of our guidance. So, we would have to be at $265 million in last year, in the last three quarters, we were at roughly $230 to $231. So, it's a pretty significant ramp over the three quarters whether you see some of that in the Q2 or it's more back end loaded we'll have to see. We did have if you look at last year, we did have a bit of a stronger second quarter and then the third and fourth quarter weren't nearly as strong. So, you perhaps would see more growth in the third and fourth quarter year-over-year.
Operator: Our next question is from the line of John Roberts with Mizuho Securities. Please go ahead.
John Roberts: Thank you. It's been a while since we've had kind of normal seasonality, I guess. Would you characterize the Q-over-Q, the March quarter versus the December quarter, 10% volume growth overall, 8% in rubber, 15% Specialty, normal seasonal pickup or better or worse than normal seasonal?
Corning Painter: I would describe the specialty as a little bit better than normal. I looked back over the time. There were a few times when we had a bigger, let's say, EBITDA step change, but that's when we saw, let's say, power prices really move sharply in Europe or a special circumstance like that. So, I'd put the specialty at a little bit better than your normal seasonality.
John Roberts: And then industrial rubber has a fair amount of automotive OEM exposure and it seems like in the least in the developed markets, North America, Europe, auto OEM has slowed here. Are you seeing that in your industrial rubber products?
Corning Painter: Well, as I said, we see North America a bit slower and some of that's probably in the OEM space, some of that I think is also just the impact of import tires on the replacement market. And it's difficult for us to tease out exactly where that is. But I'd say, North America a little bit less. In Europe, I'm not saying the tire to market is like that dramatically better than North America. It's just I think the Russian ban has really tightened things up.
John Roberts: And then lastly, I know China is not that big, but you've got new capacity there and you sounded pretty upbeat about China. It's confusing, I think, to a lot of companies what's actually going on. What's your read in the sustainability of the strength in China right now?
Corning Painter: So, I think sectors of the Chinese economy that are really set on exports, you can look at well is there a recovery in European consumer demand, North American consumer demand that kind of thing. In general, like maybe it's like the story of the purchaser managed index, right? It's like slightly above 50, but not much. So, I think it's a slightly improved situation and sentiment from where like when I was there last in November. But I don't think I wouldn't read into that that it's extremely bullish or that there isn't still some negative sentiment in that market.
Operator: Our next question is from the line of Jon Tanwanteng with CJS Securities. Please go ahead.
Jon Tanwanteng: Hi, good morning. Thanks for taking my questions. I was wondering if you could talk a little bit more about pricing and the remaining capacity you have in 2024 ahead of this Russian import ban. Exactly how much upside are you seeing there or movement, I guess, are you seeing there? First in 2024 and two, is it impacting 2025 pricing negotiations if it doesn't start it yet?
Corning Painter: Sure. So, in Europe specifically, a lot of the, let's say, premier tire brands, they had already locked in their supply and they had locked in their supply without Russian carbon black. So, I'd say it's more a play in the second area. So, I'd see we do see opportunities to pick up some additional volume there. Competition is really with Indian supply in that space. So, it's a positive environment. It's not like it's unchecked positivity I would say. And I think definitely all this sets up for a very strong negotiation for next year.
Jon Tanwanteng: Okay. Have those discussions started yet for next year or is that later this year?
Corning Painter: Yes. I tried to make that clear in it. So, some people are in the framing, some people want to talk numbers. So that's going already.
Jon Tanwanteng: And also, congratulations on the platinum rating. I was wondering if that impacts your pricing ability or is it just more nominal at this point?
Corning Painter: I think that for many of our customers are really concerned about sustainability and that is their preferred metric for sure. So, I think it really is just another validation that we're a leader in this industry that we're a supplier you can count on, you can count on for the long haul. And that sense of reliability and long-term commitment surely is worth something in this. And I think people have learned the risk of not playing the not locking up serious suppliers. So, I think it's a net positive for us.
Jon Tanwanteng: What areas do you still see weakness in and kind of what are the prospects for improvement in those areas as you go through the year?
Corning Painter: Yes. Well, I would say North American tires is still a weaker area. Tire purchases are up much more than manufacture. So, let me clear. What I mean when I say North America tires, I mean North America tire manufacturing to a certain degree European tire manufacturing. And this then relies on the brands with really a better cost of ownership value proposition to customers, start earning back people's business as people adjust to the pricing changes that have happened in the market and incomes are up and people sort of expect the new normal. I think that's a big opportunity for the marketplace. I mean, in general, the in the specialty area, almost every market is up, some more than others. So, for example, in North America, if offshore wind and grid 2.0 and connecting up far flung wind on land, wind farms as that progresses, that's the kind of thing that would increase demand in that particular market, that sort of thing.
Jon Tanwanteng: Thank you. And then finally, just an update on capital allocation you mentioned is important. I'm just wondering where is it most likely that you deploy excess cash in the next six months to 12 months?
Corning Painter: So, when we think about capital allocation, we think number one, just in terms of a framework about hey, what's our cash flow, what are the other uses for cash. We also think about our share price relative to different ways of valuing and thinking about what the share price should be. Of course, the balance sheet and not just the balance sheet today, but what are the exposures to that working capital as Jeff mentioned with oil prices that sort of thing. And significant milestones such as Blue Port starting. So, we were not in the market in the first quarter. And I think if things play out relatively stable for this year and continue the trend, we're likely not to be in the market. We do definitely see the share prices significantly undervalued and a really good opportunity. With the EPA spending, we don't have that draw on us when we do have positive cash flow. But it's not of the magnitude that we'd really like. We did see our balance sheet, the ratio move up to 2.44. That's really an artifact of EBITDA TTM effects. But nonetheless that went a little bit higher. So, on the balance of that, I think we're unlikely to be in the market this year, but things can change as the year plays out.
Operator: [Operator Instructions]. Our next question is from the line of Josh Spector with UBS. Please go ahead.
Josh Spector: So, I'm definitely reading here that you don't want to be specific on 2Q. But I do want to walk through some of the moving parts, I guess, because, obviously, first quarter had the cogen impacts that you specifically called out. Europe gas was higher last year, but it was flat through the quarter. Oil was lower last year. It's higher now. So, I'm looking at trying to think about the energy side of things. Oil is probably a little bit of a positive. That gas, I mean, as it relates to specialty, is probably a little bit of a negative. I guess, is there anything we should be looking at outside of volume growth that should be drivers there? And I guess, I'll ask again specifically if 2Q EBITDA could be higher year-over-year. And I'm focusing that there because, obviously, the second half of last year, the comps are easy. I mean, I would hope you're going to be higher year-over-year. 2Q is probably more informative of the run rate for us, which is why my focus is there. So, any additional color would be helpful.
Jeff Glajch: Let me give you a little more clarity on Q2 last year just to get us all in the same starting place. So our EBITDA last year in Q2 was $87 million included in that was about $4 million of onetime items, which I think we discussed in the call last year as well as we had some cogen benefit, because of some forward sales of power that we had set up in late '22 that benefited all of '23 that across the year is probably about $10 million, so you can kind of think about that as $2.5 million a quarter. So, between that $2.5 and $4 the operating result last year would have been right around $80 million. So, I just want to get us kind of balanced in the same place there.
Corning Painter: So, do we expect to exceed that number? Yes, we do. Do we necessarily think we're going to blow past $87 million? Well, we certainly aspire to, but there's that element. There's the forward power sale that we've talked about before, but just to remind us that's in last year's numbers.
Josh Spector: So, I guess, I mean, if I look at the earnings per ton and assume that some of that's baked in, we think specialty normalizes year-on-year, maybe slightly better than the first quarter. Rubber, you have some benefit. I guess the other piece of that comes down to volumes. I think Jon asked about it before a little bit, but I mean, year-on-year, there's a easy comp that should be up 10% ish. Is that a fair way to think about it?
Corning Painter: Well, I would say if we take the pieces, I would expect specialty GP per ton to continue to improve from where we are today. I would expect the rubber GP per ton to more or less hold where we are just because the majority of the contracts are locked in at this point. And so, yes, volume growth from there as the year progresses on a modest level is sort of what takes us into higher levels. Jeff anything you want to add?
Jeff Glajch: No. I think you did well. We will continue to see weakness in volume in the Americas we believe. But again, that's built into the GP per ton number that we gave you.
Josh Spector: And I do want to ask one beyond focusing on 2Q. On the La Porte project, I mean, it's good to see the groundbreaking. I guess when I look at that startup within a year of groundbreaking seems pretty good. So, I guess there's two questions with that is. One, the level of comfort or maybe buffer baked into that timeline for us to be actually running and commissioning, call it, 12 months or less from now? And then two, how do you see that rent plan ramping up, and what does that mean for profitability over '25, '26? Do we have muted profitability because there's startup costs and other things in '25 or do we actually start to see that in the second half?
Corning Painter: I was wondering if we're going to get that about groundbreaking and then commissioning just a little bit more than a year later. The majority of this plant is being built offshore in super modules. It's I think a leading manufacturing technique. It derisks a lot of the cost inflation that you see in the U.S. Gulf Coast and labor availability. We are right on the Houston Shipping Canal. So, this site is a great opportunity to use those techniques. And that's really where the how the bulk of the plant is going to come in. And that's all on schedule. So, I think we feel really very good for that. Those modules will be coming in late this year. So, we do expect to be in startup, let's say, mid next year, that kind of thing. Now I do not expect any financial contribution in 2025 from La Porte at this point. I think that a qualification process is going to take some time. And the higher the differentiated product, the higher the margin you're striking to achieve, the longer that it takes. And I would say well into 2026 I really wouldn't expect a big contribution.
Josh Spector: Thank you, very much.
Operator: Ladies and gentlemen, as there are no further questions, I now hand the conference over to Corning Painter for his closing comments.
Corning Painter: Well, thank you all again for your time today. As an investor myself, I'd just like to thank you all for the trust that you put into us. And thank you for again for listening and for the thoughtful questions that we received as well. Please reach out if you have any further questions. We'd really be happy to hear from many of our investors. Thank you all and have a good rest of your day.
Operator: Thank you. The conference of Orion S.A. has now concluded. Thank you for your participation. You may now disconnect your lines.
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