Daniel Rizzo • Jefferies

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President & CEO Denise Dignam emphasized the New Jersey settlement as a major milestone that aligns with the 3-7% liability allocation from the water district settlement. While not providing a specific timeline for North Carolina, she stated the company's intent is to resolve all outstanding litigation in the same spirit. She confirmed that the recent allocation is the blueprint the company thinks about, as it has been holding through settlements.

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CEO David Li stated that the sale of the Industrial Specialties business is in an advanced stage, and a comprehensive review of the entire portfolio is happening in parallel. He expects to share the results of this full review by late 2025 or early 2026. CFO Mary Hall explained that current CTO prices are around $550-$600 per ton and that the company's reduced manufacturing footprint has lowered its overall CTO purchase requirements, making it less dependent on market volatility.

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CFO Mary Hall and CEO David Li confirmed that filtration is a very sizable market capable of absorbing significant capacity, as demonstrated during the COVID-19 pandemic, though they noted it is a lower-margin business than automotive and declined to quantify the difference. Mary Hall reiterated that the company's long-term leverage target remains in the 2.0x to 2.5x range, which they believe provides strategic optionality.

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Interim CEO Luis Fernandez-Moreno stated that while tariffs create uncertainty, they have had a minimal direct impact on Ingevity or its customers so far. CFO Mary Hall clarified that the majority of the 2025 CapEx budget is allocated to maintenance and safety, health, and environmental (SHE) projects, with a smaller portion dedicated to growth.

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Interim CEO Luis Fernandez-Moreno confirmed he is taking a 'fresh look' at the portfolio but would not speculate on specific divestitures, emphasizing that the current three segments provide valuable scale and diversity. He clarified the Industrial Specialties strategy is focused on diversifying raw material sourcing for flexibility, not on hitting specific percentage targets for any single material.

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President, CEO & Executive Director Stephan Tanda clarified that the European nasal spray market is larger for Aptar and that the U.S. market recovered more quickly from a smaller inventory buildup. He stated that Aptar's beverage business is performing well and is not experiencing the overstocking issues mentioned, citing diversification and innovation as strengths.

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President and CEO Stephan Tanda considered the demand-shift hypothesis plausible but premature. He clarified the tough Injectables comparison was a one-off event related to a prior-year ERP catch-up and that current demand is strong. Executive Vice President and CFO Vanessa Kanu detailed the FX rate changes, noting the Q2 guidance uses a spot rate of ~$1.14 versus ~$1.04 for Q1 guidance, resulting in a year-over-year headwind.

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President and CFO Stephan Tanda stated that tariffs are not a major concern due to their 'in-region, for-region' production strategy, where costs have been passed on in special cases. Regarding ROIC, he noted that while performance is improving, any revision to long-term targets would be considered for the Investor Day in September, not on a quarterly call.

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CEO Stephan Tanda stated that while every product ramp is different, he does not believe Narcan has finished its growth trajectory, citing encouraging CDC data and increased municipal distribution. He clarified the cough and cold softness is due to inventory overhang from a weaker-than-expected '23-'24 season, not a fundamental demand issue. For Beauty products, Tanda explained the sales cycle varies widely, from as fast as 4 months in China to 18-36 months for Western clients, with North American indie brands falling in between at 6-8 months.

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President & CEO Adam Greenlee explained that the requirements contract continues to be honored by both parties during the bankruptcy, offering no new flexibility. Regarding weather, he noted this was the first time in his 20 years at the company that cold, wet weather had such a specific impact on the sports drink market and that the company is planning for normalization in 2026, viewing the food can's value proposition as resilient to such factors.

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CEO Adam Greenlee clarified that Silgan did not model any revenue synergies for the Weener acquisition, although cross-selling opportunities are emerging. He reiterated that the company expects to recover about half of the 2024 financial decline from the fruit and vegetable market in 2025 and that underlying demand for soup remains strong, with normalized volumes expected.

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CEO Steve Brass and CFO Sara Hyzer addressed the guidance range by citing the variable timing of promotions and large distributor orders. On gross margins, Hyzer stated the company has supply chain initiatives that could drive margins higher than the 55% target, assuming stable costs. She also indicated that SG&A growth is expected to moderate from the double-digit rates seen recently. Hyzer projected a net positive impact from foreign exchange in Q4, despite headwinds from the Mexican and Brazilian currencies. Finally, Brass confirmed that tariff impacts are being managed and offset by supply chain initiatives without causing significant ordering disruptions.

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President and CEO Steve Brass explained that WD-40's decentralized supply chain, which includes manufacturing in-region (e.g., 'in China for China'), significantly mitigates tariff risks. He noted that ongoing supply chain optimization savings are expected to offset tariff impacts for the fiscal year. VP and CFO Sara Hyzer clarified that the unchanged operating income guidance is due to foreign currency headwinds, not higher SG&A, which are masking the benefit of the improved gross margin. She added that there is no simple rule of thumb for FX sensitivity.

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Sara Hyzer, VP and CFO, explained that the Americas' operating income was impacted by the timing of A&P spending, a one-time $800,000 credit loss from a customer bankruptcy, and higher accruals for a growth reward program. Regarding gross margin, she noted that while the company is close to its target, margins can fluctuate quarterly. She expressed cautious optimism about reaching the 55% goal by the end of fiscal 2025, potentially ahead of the original fiscal 2026 target, but acknowledged headwinds from higher freight and logistics costs in the U.S.

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CFO Sara Hyzer clarified that the perceived pricing headwind was attributable to product mix, not price reductions. She confirmed SG&A expenses will remain elevated due to ongoing ERP investments and the integration of Brazil operations, though the growth rate will moderate. President and CEO Steve Brass highlighted the significant success of the direct models in Mexico and Brazil but stated there are no imminent plans for further conversions, emphasizing the value of their marketing distributor partnerships.

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President & CEO Tom Ferguson clarified that the EBITDA guidance accounts for the loss of equity income from the Avail divestiture, a headwind to EBITDA, which is offset by interest savings that positively impact EPS. He cited operational excellence and the Precoat facility ramp-up as margin levers. For M&A, he indicated the pipeline is mostly single-site bolt-ons, though a few larger multi-site opportunities exist for potential future consideration.

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CEO Thomas Ferguson and Executive David Nark confirmed that a rebound in private sectors like commercial and warehouse construction would provide a significant tailwind, potentially boosting utilization from 65% to 80% and showing up in results within one to two quarters. Regarding capital allocation, Ferguson stated that share buybacks have primarily been used to offset dilution, but the company would consider more significant repurchases, balancing them against debt reduction, M&A opportunities, and potential dividend increases.

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CEO Tod Carpenter clarified that the strong A&D result was due to a push-out of sales from Q2, not a pull-forward. CFO Brad Pogalz added that the Q4 comparison is difficult as sales grew over 20% in the prior-year period. Regarding FX, Brad Pogalz explained that a simple rule of thumb is not practical due to the diverse basket of currencies, though the Euro is the most significant at around 20% of exposure.

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CEO Tod Carpenter explained that the Life Sciences restructuring was a response to market headwinds and elongated project timelines, and the planned adjustments are now complete. He confirmed the business is now focused on projects that can be monetized more quickly and can grow from its current base. Regarding Off-Road, Carpenter stated it is too soon to call an inflection point, citing ongoing uncertainty in agriculture and construction, and described the positive results in China as 'a moment' rather than a new trend.

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CEO Corning Painter stated that Orion expects to see tariff benefits materialize in the second half of 2025 as tire companies work through existing import inventories. He noted that the trend of building tire capacity in the U.S. is already underway and will likely be incentivized further by the new trade paradigm. Regarding the Specialty business, Painter described demand as "choppy" rather than showing clear destocking, with some areas like ink remaining strong, though distributor orders have slowed.

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CEO and President Sean Keohane provided regional capacity utilization estimates for Reinforcement Materials: low 80s in North America, upper 80s in Europe, and around 90% in China. He characterized the current situation as a temporary inventory pullback, not a structural decline. EVP and CFO Erica McLaughlin clarified that of the revised $250-$275 million CapEx forecast, approximately $100 million is allocated to growth projects, with the largest being the new capacity in Indonesia.

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EVP and CFO Erica McLaughlin addressed maintenance, stating that while costs were higher in Q4, no material change is expected year-over-year for fiscal 2025. CEO and President Sean Keohane added that there is evidence of Western tire makers becoming more aggressive to defend their position, likely in their Tier 2 brands. He noted this is counterbalanced by trade actions like tariffs and antidumping duties against imports, creating a dynamic situation.

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CEO Kurt Bitting clarified that they view the opportunities as 'marketing and networking synergies' rather than traditional revenue synergies. He explained that Ecovyst's large commercial team can leverage the combined network capacity to better service customers and capture market opportunities. Bitting confirmed that the company is always evaluating ways to increase capacity, including both organic debottlenecking projects and further inorganic opportunities.

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CEO Sanjiv Lamba stated that while Linde has a strong global pipeline, development in specific regions varies. He characterized Japan primarily as an import market for clean hydrogen derivatives with minimal local project development. In the EU, he noted that a difficult regulatory framework is slowing investment decisions, making it challenging for the region to meet its ambitious hydrogen goals through local production.

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CEO Sanjiv Lamba indicated that while Dow's Phase 2 would be another substantial investment, its size would likely be slightly lower than Phase 1. He also confirmed that Linde continuously evaluates its entire portfolio, actively pursuing both tuck-in acquisitions to add density and divestitures of non-core assets, a process that extends beyond the healthcare segment.

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Chief Financial Officer Melissa Schaeffer stated that the company's outlook does not assume a significant improvement in global industrial production. She noted she would have to follow up with information regarding the impact of the 2017-2018 tariffs.

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CEO Jon Erik Fyrwald stated that the company is focused on continuous improvement in both margins and ROIC. He outlined the key levers as customer focus, innovation, and productivity. Fyrwald also emphasized that capital allocation is being prioritized for higher-margin and higher-return businesses like Scent, Taste (formerly Flavors), and Health & Biosciences, alongside the turnaround of Functional Ingredients.

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Chairman, CEO and President Peter Huntsman tempered expectations, explaining that the aerospace supply chain is complex and will take time to normalize. He believes that by the time the ramp-up in production translates to increased demand for Huntsman's products, it will likely be closer to the end of the year, limiting any immediate Q4 upside.

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CEO Andrew Tometich explained that the negative impact from index-based pricing is already diminishing sequentially and he expects price/cost to stabilize, allowing the company to operate within its 37% to 38% gross margin target. He noted that new business wins are trending at the higher end of their 2% to 4% market outperformance goal. While the pandemic initially stunted post-merger growth synergies, he affirmed that the company is making progress and significant opportunity remains.

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CEO Christophe Beck stated the vitality index (sales from new products in the last 5 years) is around 30% and growing. He emphasized that the quality of innovation is shifting from simple renovation to 'breakthrough' solutions, which are margin-accretive. While not providing a specific cannibalization figure, he indicated the focus is on ensuring new offerings drive overall margin improvement. He did not commit to a specific future target for the vitality index.

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Chairman and CEO Timothy Knavish opined that the decline is driven by multiple factors, including a higher rate of vehicle totals (replace vs. repair) and transitory economic issues causing consumers to delay or not file claims. He believes it is not primarily driven by anti-collision technology, which he noted is often offset by an increase in distracted driving.

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