Good day, ladies and gentlemen, and welcome to the Cabot Corporation First Quarter 2016 Earnings Teleconference. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Erica McLaughlin, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you. Good afternoon. I'd like to welcome you to the Cabot Corporation earnings teleconference. Last night, we released results for our first quarter of fiscal year 2016, copies of which are posted in the Investor Relations section of our website. For those on our mailing list, you received the press release by e-mail. If you are not on our mailing list and are interested in receiving this information in the future, please contact Investor Relations. The slide deck that accompanies this call is also available in the Investor Relations portion of our website and will be available in conjunction with the replay of the call. I remind you that our conversation today will include forward-looking statements which are subject to risks and uncertainties, and Cabot's actual results may differ materially from those expressed in the forward-looking statements. A list of factors that could affect Cabot's actual results can be found in the press release we issued last night, and are discussed more fully in the reports we filed with the Securities and Exchange Commission, particularly in our last Annual Report on Form 10-K. These filings can be found in the Investor Relations portion of our website. As you saw in our press release yesterday, Eddie Cordeiro will lead the call today. Eddie will discuss the key highlights of the company's performance and review the business segment and corporate financial details. Following this, we will open the floor to questions. Eddie? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Thank you, Erica. And good afternoon, ladies and gentlemen. As expected, we had a challenging first quarter. We continue to face global macroeconomic headwinds, including a slowing demand environment in China and lower energy prices. This environment negatively affected volumes and margins in the Reinforcement Materials…

Thank you. Our first question comes from the line of James Sheehan of SunTrust Robinson Humphrey. Your line is open.

Hi. This is Matthew Stevenson on for Jim. Question, you retained the guidance but it seems like pricing on the contracts came in flat, which was perhaps less than we had expected. Is it some raw material benefits that's counteracting the pricing to enable you to still attain the $0.75 improvement in EPS? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Hi, Matthew. Thank you. Thanks for the question. So I would characterize it as – the big thing that we are doing this year as it relates to the improvement in the EPS is really the restructuring and the cost reduction program. So we would expect to gain most of the benefit there. As it relates to the contracts, yes, pricing was definitely weaker than we had expected, and this is something that we had been tracking through the fall. But we were successful in gaining more volumes so we were able to pivot a bit and recover some of the volumes and so we've been able to balance that out. So I would say that's generally the offset to the pricing.

Thanks. And just a follow-up, of the $55 million in restructuring savings in the year, how much was captured in the quarter? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Good question. So we did see some cost reductions throughout all the segments in the first quarter. A lot of that was really year-over-year reductions based on the 2015 work we had done. Really, we had called that the belt tightening in 2015. And the totality of that for the company was about $10 million. Some of the restructuring probably did come through in the month of December, and so some portion of that $10 million probably was a part of that $55 million. But I would say it was probably less than $5 million.

Thank you very much.

Thank you. Our next question is from Kevin Hocevar of Northcoast Research. Your line is open.

Hey. Good afternoon, everybody. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Hi, Kevin.

Wondering if you could help with the feedstock issue that the carbon black industry has been facing? I think you highlighted it was part of a $30 million – I don't think it was all the $30 million, but contributed to a $30 million headwind that you mentioned during the quarter for the Reinforcement Materials segment. So could you walk me through the dynamics there, because I've been hearing that North America might be getting better but other regions might be getting worse. So if you could help us understand that differentials issue. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Okay. Good question, Kevin. Perhaps I could just give you a bit of context around feedstock, at least from our perspective. So for U.S. Gulf Coast feedstock in 2015, we saw differentials worsen throughout the year. And this was due principally to supply demand factors at the time. At this time, we are seeing that U.S. Gulf Coast differentials are more in line with historical norms, which means that they're a bit more favorable than when they were at the peak in 2015. But they're not as favorable, let's say, as the full-year average of 2015, and certainly not comparable to 2014, for that matter. We buy a mix of feedstocks, including U.S. Gulf Coast decant oil, but also we buy Chinese coal tars. We buy fuel oils from local refineries and crackers, and we try to take advantage of feedstock arbitrages whenever possible. But some of the favorable arbitrages in 2015 are not expected to repeat in 2016. When I take all those factors into account, we expect that our feedstock costs will be marginally less favorable in 2015 (sic) [2016] (16:19) unless the markets change from here. And that's kind of the context around how we view feedstock holistically.

Okay. Got you. That's very helpful. And you mentioned winning back share in North America. Could you give us a sense of the magnitude there? Did you recoup all the 15% share that you lost last year? Or if you can help us understand kind of the magnitude of what you've recouped. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yeah. So, our approach going into the contracts, as we had articulated going back to the summer, was to try to prioritize value over volume. As the markets weakened into the fall, we faced a less supportive competitive environment, and therefore we had to balance volume and price. We were able to maintain our pricing levels but recovered much of the volumes that we had lost in North America in 2015, and so we're now back to 2014 levels. And I would add that, overall globally, we believe that our mix is better as it relates to the volumes that we've captured.

Okay. All right. Great. And then just final question, you mentioned the Purification Solutions segment ramping up, particularly in the back half of the year or fiscal year as math takes hold. So wondering if you could help us understand the magnitude of the types of increases there, and how we should expect kind of that to flow through the rest of the year. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Very good question. I think we've articulated that we are anticipating a meaningful improvement in EBIT in the back half of the year. We are still very much in the midst of negotiating with customers. And really, the magnitude – the more precise magnitude will really depend on how the pricing shakes out, how much volume we're able to capture, what share of that market we get, and all of that is still being negotiated. So at this time, I really can't help too much. I would expect that the second quarter will be stronger than the first, and that upon implementation in April, the third and fourth quarter should be stronger than the second quarter. But much more than that, I really can't help with.

Okay. Great. Thanks very much.

Thank you. Our next question is from Eugene Fedotoff of KeyBanc Capital Markets. Your line is open.

Good afternoon. Thank you for taking my questions. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Hey, Eugene.

Can you provide an update on the timing of cost savings and sort of distribution of those cost savings by segment in 2016? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Sure. So the restructuring was implemented in the first quarter, and so we should start to see an uptick in – or a reduction in the costs starting in the second quarter. This has been essentially split throughout the company and throughout the different regions in the segments. So about $15 million we should see in the reinforcement segment, and $15 million we should see in the performance segment, and I would say that would be ratably through the next three quarters. We also expect to see $12 million throughout the year in Purification Solutions, as well as about $5 million in CSF, and then probably $2 million to $3 million in unallocated. And those should pretty much start up in the second quarter in pretty much full run rate.

Got it. Thanks for the color. And for – just a follow-up on Purification Solution. So I understand that they all depend on the volume and pricing as far as profitability, but sort of what is your long-term earnings expectations for that business given that MATS are in place? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yeah. I think the guidance that we've given over the last year is that we are still targeting to earn about $100 million of EBITDA once MATS is fully implemented and we get through a full year's worth of having those volumes in the business. And again, a lot of that will depend on our ability to capture the 40% share that we are trying to capture, as well as on what the pricing ultimately shakes out at in the marketplace. But about $100 million of EBITDA is what we've been targeting.

Got it. And just a follow-up on Reinforcement Materials, how's pricing in Asia? Is it sort of – are you expecting prices to stabilize throughout the year? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: I would describe Asia as a highly competitive environment right now. It's pretty much spread all throughout Asia. So obviously, when we say that pricing is difficult and we're fortunate that we have a very strong asset base and a strong market position. And so we are very carefully balancing the volume and price trade-offs in Asia as we see how demand evolves, really, over the next year.

Got it. Just a last question, if I may. In the Performance Chemicals, obviously very strong results, and I understand that a small portion – only a small portion of that business sort of pass through raw material prices in contracts. What is the typical lag for the remainder of the business if there is one? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: I would say that the pricing is much more market based, and so there really wouldn't be a typical lag that I could describe.

Got it. Thank you.

Thank you. Our next question is from Chris Kapsch of BB&T Capital Markets. Your line is open. Christopher J. Kapsch - BB&T Capital Markets: Yeah. Good afternoon. I had a couple of follow-ups on the discussion around the Reinforcement Materials contract negotiations. And so I guess you would – in contemplating several quarters back, coming into the season, the idea of getting some pricing, the – I just really want to understand like the inability to capture more value. Was it – you had mentioned a function of the market sort of becoming more competitive. Could you just provide more color? Is it just the weakening sort of macro demand environment or was there some specific competitive behavior which sort of undermined those discussions as the contract negotiations evolved? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yeah. I would not describe it as specific competitor behavior. I would say that when we looked at this initially and started talking about it and planning for it over the summer, the market was stronger in the countries that we do contracts in and – so the regions. So that would be North America, South America and Europe. And what we've seen over the last six months is a little bit of weakening in North America, a lot of weakening in South America. As you know, Brazil is quite challenged right now. And kind of sideways in Europe. And so as we started to get into the actual negotiations with customers, it became clear that the ability to raise prices was not going to be there, and so we wanted to ensure that we were able to maintain the overall value for the contracts. And so we pivoted a bit, and we ended up taking a bit…

Thank you. And it looks like we have a follow-up question from Kevin Hocevar of Northcoast Research. Your line is open.

Hey, everybody. In the Performance Chemicals segment, it looks like we stepped up to about $50 million of profitability a quarter the last couple of quarters, and it seems like that's about taken another somewhat step up with some of the cost savings you're expecting and starting in the second quarter. So is that fair to say? And I know you mentioned that the pricing on – particularly on the specialty carbon black side of things is a little bit more negotiated. Could you give us a sense for how that's holding up, given the raw material declines? Are you expecting that kind of price raw gap to narrow, or how should we think of that going forward? Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Yeah. Thanks, Kevin. So this segment is a real bright spot for our portfolio. As it has demonstrated over the last quarters, the segment is resilient and it's really a true specialty business with differentiated products in broad end markets in both carbon black and silica that are quite sticky. So we are focused on continuing to improve the results. I think that's right. When you look at the cost savings, those should flow through into the next quarter, and we are continuing to focus on developing and commercializing new high-value products and continuing to grow in attractive segments. As it relates to margins and our ability to hold on to margins, it really gets back to the strength of the market and the stickiness of the products.

Okay. And just – I know you've mentioned a couple of times Asia being soft, and I was just curious on the minority interest line that there was a tick up there in the quarter. I mean, it's been at about $1 million or $2 million in the last couple of quarters, that ticked up to $4 million, and I think that's primarily Asian joint ventures that you have in there. So, it seems like that to me indicates that profitability ticked up a little bit. Maybe I remapped wrong. So just of curious your thoughts there as to why that ticked up and how that relates to Asian profitability. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Good question, Kevin. In addition to Asia, the minority interest of our Czech Republic business is also in there. And I have to admit, I don't know that exact answer. We will check into it and get back to you, but I have a feeling it may have something to do with that as well.

Okay. All right. Thanks very much.

Thank you. And that concludes our Q&A session for today. I would now like to turn the call back to Mr. Eddie Cordeiro for any further remarks. Eduardo E. Cordeiro - Executive Vice President, Chief Financial Officer & President-Americas Region: Okay, Christy. Thank you very much. Thank you all for joining us and we look forward to speaking with you next quarter.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.