Good day everyone and welcome to the Third Quarter 2019 Minerals Technologies Earnings Call. [Operator Instructions] At this time I would like to turn the call over to Cindi Buckwalter Head of Investor Relations for Minerals Technologies. Please go ahead Ms. Buckwalter.

Thanks Brad. Good morning everyone and welcome to our third quarter 2019 earnings conference call. Today's call will be led by Chief Executive Officer Doug Dietrich; and Chief Financial Officer Matt Garth. Following Doug and Matt's prepared remarks we will open it up for questions. I would like to remind you that beginning on Page 14 of our 2018 10-K we list the various risk factors and conditions that may affect our future results and I'll also point out the Safe Harbor disclaimer on this slide. Statements related to future performance by members of our team are subject to these limitations cautionary remarks and conditions. Now I'll turn the call over to Doug. Doug?

Thanks Cindy. Good morning everyone and welcome to our third quarter earnings call. I'll begin today by providing high-level commentary on our third quarter results both the positive areas as well as the challenges we faced. I'll then go through the dynamics in our key end markets focusing on some of the areas that have changed since we last spoke. I'd also like to give a brief update on the progress we're making on several strategic growth fronts. And following that, Matt will review our financials in more detail and take you through our fourth quarter outlook. Heading into the third quarter we were prepared to navigate through weaker demand conditions in key end markets and geographies. Our results reflect these persistent challenges but they also underscore how we've managed through them by remaining disciplined and focused on strong execution and by taking decisive measures with our restructuring program to adapt to the changing market demand. We've adjusted our operations to align to lower overall volumes by aggressively managing our variable and fixed costs, and driving efficiencies across our processing and mining activities. Our solid execution extended beyond our operational activities as we advanced several strategic initiatives that support our long-term growth. And I'll discuss these highlights in more detail later in my remarks. From a financial perspective, total sales in the quarter were $450 million and we generated $59 million of operating income. Margins remained at second quarter levels despite lower sales and a weaker product mix, a reflection of our operational adjustments and pricing actions to overcome cost pressures. Our restructuring activities are progressing well and we're on track to achieve the full run rate savings of $12 million in the first quarter of 2020. Importantly, through all of this, our employees have remained focused on safety, operational…

Thanks Doug and hello everyone. I'll review our third quarter results the performance of our 4 segments and also provide you with our outlook for the fourth quarter. Third quarter sales were 3% lower than the prior year. The bridge at the top left shows the sales changed by major driver. Foreign exchange impacted sales by $3.8 million or 1 percentage point. We drove price increases of $5.8 million in the quarter. However these increases were partially offset by $3.8 million of lower market-based pricing for specialty sands and resulted in a net price improvement of $2 million. The biggest driver of the decrease in overall sales versus last year was unfavorable volume and mix primarily due to the continued market weakness in Metalcasting European Refractories and North American Paper PCC that Doug mentioned earlier. Moving to the sales bridge by segment. Performance Materials sales were $12.2 million lower than last year primarily due to the Metalcasting product line. Specialty Minerals was $3.2 million lower on the previously announced paper machine shutdowns and lower processed minerals sales into the automotive and construction markets. Refractory sales were $5.7 million lower on continued weak steel market conditions in Europe and some softening in the U.S. And Energy Services sales grew $6.3 million on increasing filtration and well test activity levels in the Gulf of Mexico and internationally. The operating income bridge shows that the primary driver of the change in operating income was $7.4 million of unfavorable volume and mix. Sales growth in Environmental Products, Pet Care and Energy Services partially offset reductions in Metalcasting and Specialty Minerals. However note that the growth in Environmental Products, Pet Care and Energy Services is at a lower relative margin generating the unfavorable mix in the quarter. Raw material costs increased $2.6 million in the…

[Operator Instructions]. And our first question comes from Daniel Moore with CJS Securities.

Good morning, Doug, good morning, Matt. Thanks for taking the questions. Wanted to start with Metalcasting. Obviously a lot of moving parts between the geographies. But the -- what's the current breakdown mix in terms of revenue between Asia, U.S. and Rest of the world? And I know it's a crystal ball-ish type question. But given that mix in the various moving parts, when do you expect to get back to overall growth in that business?

Yes why don't I kick it off and then I'll let Jon Hastings talk a little bit about it Dan. Our Metalcasting business right now is almost -- with the growth we've seen over the past five years in China almost 50-50 North America and Asia. Our North America volumes have been impacted this year. They're down this year I think it's probably about 10% in total. But in Asia our green sand bond volumes as I mentioned are up 13% in the quarter. So I guess your question is when do you return to growth? I think we've been consistently growing in China albeit at slower rates than in the past. But the bigger volume and income impact because 100% of what we saw in North America is green sand bonds. A blend of blended products and clay in China. So the different profitability mix in China and Asia. But right now it's a little bit hard to call when North America will return to growth. We see at least as far as we can see right now in the fourth quarter things look similar to the third from market conditions in the automotive and heavy truck though we're a bit cautious as Matt mentioned that we might see some extended outages around the end of the year. That's why we're giving you a little bit of variation at least as far as we can see in the fourth quarter. Going into next year it's going to be really hard to call in terms of what automotive is going to do heavy truck I think we'll give you an update on that on our next call. But I gave you some feel. Jon anything you want to add to that?

Dan I appreciate the question. And Doug I can elaborate a little bit if you like. First of all as you know Dan earlier in the year North America was quite robust. China demand had slowed around the China New Year. Southeast Asia was picking up some of the demand from China. But since then what we've seen is some changes in those markets. And several of the industrial sectors have softened as Doug had highlighted. And we've seen predominantly in automotive but we've seen some of the other sectors come off a bit as well. Automotive of course is affecting many of our primary markets U.S., China, Japan, India. Most of those markets worldwide. We highlighted the specialty sands. We've encountered a couple of new competitors because the pricing went pretty high in previous years. And that's caused unfortunately an oversupply in that market and caused some of the declining prices and that's what kind of came off in specialty sands. So against that backdrop we continue to work with our customers. As Doug mentioned in China and Thailand our customers continue to demand the high-end products that we're providing. So our conversion strategy to the blended products continues to work. And we continue to stay in touch with all of our foundries worldwide all of our customers. And so there's a lot of uncertainty. Some customers are saying we're in a down market for the next month or two or three others are saying it's relatively flat. And so it's hard to read. And like I say the major word right now that we're using is it's highly uncertain. We'll see how the holidays play out and what demand comes in as far as fourth quarter and into the first. Hope that helps. Hope that gives you some color.

I'm just going to pull on that string a little bit more. In terms of North America specialty sands. Can you give us a sense for whether it was more price versus volume? And in your experience when demand comes back does pricing tend to snap back relatively quickly?

Yes. North America and also China the vast majority of the specialty sands softness was in China. We do sell into North America. We do have some specialty sands. And yes you're right it's predominantly pricing. But we've also seen volume come off based on demand. Pricing does -- it is pretty volatile. It can go up fairly quickly and it can go down very quickly. Right now it's pretty low. As the market tightens up and the industry comes back, we expect that it will modulate some. How fast? It’s hard to predict.

Dan, I was just going to say I don't want to confuse things. But Matt mentioned in his comments that Metalcasting has two pieces that green sand bond piece which we talk often about in terms of penetration of that blended product and the specialty sands which goes into stainless steel casting and Jon mentioned primarily China. The biggest piece I think our green sand bond volumes in the quarter were off about 1.5%. It was North America offset by that 13% growth in China. So it's kind of hanging in there. That growth in China is offsetting. So if you take that piece. Relatively stable and growing -- continue to grow in China. The biggest impact this quarter was the specialty sands piece and that was in China largely due to pricing had the outside impact on the sales decline.

Very helpful. And then switching to PCC continue to win new satellites you've got nice volumes coming in next year. The hole in the bucket in North America when we kind of feel like we're at high levels of capacity utilization overall volume keep coming down with the Domtar announcement. So I guess what does your crystal ball tell you for 2020 and post the Domtar do we feel like we're at a new sort of big level in North America in terms of capacity? I know it's hard to say but it does have implications for overall growth given all that new volume coming up.

Yes. I can -- well it is. It's the challenge that we've been in this business for many years so we're used to it. We -- over time sometimes as you know it's hard to predict which mill will close. But with the decline of paper around 2%, 3% kind of on average over the past 10 years in North America and Europe we tend to see a mill come out. We usually try to predict which one that might be but we're not always successful. We did not expect that Port Hudson mill in the -- earlier in the year to come out. That said we have been very successful in securing new contracts in areas where we see that opportunity to be that is the under-penetration of filler in paper in Asia primarily China and India. So the net-net of all this we lost about 100,000 tons this year but we're adding about 100,000 tons in Indonesia this year. Next year we don't really see we'll see kind of the annualization of what's happening about 30,000 tons of Domtar we're going to see on an annual basis starting this quarter. We have two new satellites in India ramping up in the first quarter to offset that 30,000 tons. Later in the year we've got two new satellites coming on one in China which I mentioned we just secured the permits. So we're beginning that construction. Should be ready in the beginning of the fourth quarter next year. And another one was Century Paper in India for another 40,000 tons. The net-net of that is 200,000 tons coming on next year. So I gave you a bunch of numbers what we see right now given all of those downs and ups is about a 3% to 4% volume growth in PCC next year -- sorry currently looks like highly dependent on if we see any other closures, and if those things come up on time which they should. But right now that's the crystal ball we have Dan is about 3% to 4% volume growth with all that we're bringing on next year and the annualization of what we just heard with Domtar.

Very good. Lastly for me you obviously continue to manage costs very -- let's say acutely. The annualized cost save, how much of that do you expect to generate in Q4 before we hit to sort of that full $12 million annualized run rate in Q1?

Yes. Dan so from an overall restructuring perspective that we took earlier this year. And remember we told you that we would achieve about a $12 million run rate beginning in 2020. We've now said that that's going to be in the first quarter of 2020. And if you remember there's really two components to that. There's the headcount adjustments that are now largely complete. Those are part of the ramp-up of those savings that are taking place now getting to that higher annualized rate. And the fixed cost reduction that was part of that program was already complete. So right now if you look at the annualized rate that we had in the third quarter that was about $7 million translates to about $1.5 million plus here in the third quarter on a year-over-year basis. So you're going to see a nice ramp-up going through the fourth quarter into the first.

Thank you. Our next question comes from Jeff Zekauskas with JPMorgan.

It's Silke Kueck for Jeff. I wanted to like investigate like the PCC question one more time. So can you quantify how much of the two start-ups in the beginning of the year in India will be in terms of like size?

Sure. So we have a new small satellite. Actually I don't think we announced this one Silke. It's about 15,000-ton satellite with a papermaker in India coming online probably at the end of the first quarter. We've got an expansion with the current customer in India that should come online early in the first quarter for about 25,000 tons. So that's between those two in India. In the first quarter about 40,000 tons. Later in the year we have two satellites another one in India and a large one in China. The one in India is another 40,000 tons that's about Q3 should start up. And the one in China for 160,000 tons probably the beginning of Q4 again we just secured the permits it'd probably take us a year to build it and that's 160,000 tons. So about 200,000 tons coming online around Q4 next year, 40,000 tons in Q1. That's the 200,000 tons. The last one that I mentioned is the new contract with a paper maker customers -- sorry in Europe around our packaging application. Right now that's looking like probably part of that will come online in the third quarter. And right now it's looking like 30 of those 1,000 tons will be the end of the fourth quarter. Right now it's really early on. We just signed the contract. So that's probably a fourth quarter end of year type of ramp-up. So it's about 240,000 tons next year.

Okay. And so the way it looks like is that if you really have a lot of volume growth it would all come in the second half of the year because the Domtar closure headwinds will be sort of like offset when the plan come around in India? And then if everything starts up on time then maybe you have like a volume -- then maybe you have like a really big fourth quarter next year. Is that the way to -- is that like the right way to think about it?

Yes. From a capacity standpoint that's when it's coming online and those should be the volumes. That said we've seen some solid demand growth. China so far has been about flat in volumes. North America and Europe again continued to be lower. But in India we saw 12% volume growth. So there is some base volume growth in our system. So you'll have to add some of that to it. Right now India was -- I think we've got seven -- this will be our seventh satellite in India in the past -- seven satellites in India in the past 10 years. I was just looking at D.J. saying our first contract it's coming to renewal which is hard to believe how fast time flies but we've really built up a nice position in India.

Okay. That's helpful. And is pricing in the offshore region is the same so if you offset -- like if you were offset all the lost U.S. tons versus tons in India and Asia does that mean incremental sales growth? Or would the lower cost line have like lower price component and therefore the sales of course will be lower than the 3% to 4% that you anticipate?

Yes. The way we like to look at it is the EBITDA margins on each of those tons -- the percentage of EBITDA is the same. The amount of EBITDA because there are lower capital cost in Asia and lower price points because of kind of the conversion of our raw materials are lower. So it does take more tons in Asia to offset a ton in Europe or a ton in North America. That is the case. However I want to also highlight though that it's not just about tons in paper and filler and paper. Yes we have the best technology we feel in terms of filling paper but we also have -- while we're there on 60 different satellites we have opportunities. I don't want you to forget about increasing our margins and revenues with things like our new high-filler technologies which we've just launched Fulfill plus. We're deploying into -- we have opportunities in packaging which can be higher-margin opportunities and also some of our environmental like Envirofil and NewYield. And those are also a number of opportunities. So as we -- not only just in paper tons in and out it's also these new technologies that we're executing on that should help the growth in that segment and also the profitability in that segment.

That's helpful. But my second question is on your SG&A and R&D costs. So your sales were like 3% lower year-over-year and your SG&A costs and R&D costs are sort of up year-over-year. Why is that? Or like where do we see the cost savings coming through?

Well if you break it down Silke remember the cost savings are going to be across all components of the P&L right? So you have some in the COGS line you have some in the SG&A line. Restructuring was largely focused at redundancies on some of our shared service organization as well as throughout operations. We at the time told you as well that we were keeping the sales force in place as well as our R&D capability in place. When you look on a year-over-year basis you're actually seeing a few things take place. One the mark-to-market impacts this quarter versus what you've seen previous in the year around compensation -- equity compensation -- deferred equity compensation I should say was fairly significant and that's the main driver on that line here sequentially and on a year-over-year basis. The normal SG&A that you're going to see from us is in that 50, 51 range.

Silke can I add just a little bit to that? One sequentially expenses are down. So you're starting to see the -- you'll see the restructuring save that mark-to-market that Matt just mentioned. So you're starting to see those savings come through. And yes some of those savings are in the COGS line. The R&D is generally flat. We've -- I think this quarter we had some more spending on trials. And those trials were primarily in Paper PCC. So you will see from time to time some spikes in that R&D as we go through different trials with our Environmental Products business as I mentioned in Paper PCC. That will kind of spike it in any given quarter. But on -- in general our R&D is kind of flat. So I think what you're looking at is a -- some trial activity in R&D. And some mark-to-market but it's not a structural thing. I think you're seeing -- you start to see those costs come out of that SG&A line.

Okay. And lastly I was wondering whether you can just give me that -- the D&A number in the third quarter if you wouldn't mind?

Yes. D&A in the third quarter was $24.7 million.

Probably a good run rate...

Oh...

Yes no I was about to say it's probably a good run rate. I mean if you think about it Silke the way that CapEx has been layered in through this year. Remember we told you it was going to be in that $70 million to $80 million range. Right now did $52 million throughout the first three quarters if you just bifurcate that across 3 quarters probably looks similar in the fourth quarter. The big difference between that mid-60s and the $70 million to $80 million that we have been talking about is really the delay deferral in the Chenming project which is now going to start to be spent on. So continuing to lay out capital for good projects both sustaining and growth and really just a bit of change here in terms of timing around Chenming.

Thank you. We'll take our next question from Rosemarie Morbelli with G. Research.

I got on the call a little late so I apologize if you already discussed it. But when you look at the environment are you seeing any signs whether it is -- while it may not be in the numbers but at least anecdotally showing that there may be some pickup in some of your end markets if you don't mind going through the company as a whole I mean pieces of the company?

Yes. I think there are some -- I tried to highlight those in my comments Rosemarie.

Yes, which I missed it and I analogize.

That's, okay. Sorry. There's no doubt that -- look industrial activity in our markets again North America Europe and Asia has been lower. We do have a lot of -- number of product lines that serve the automotive kind of off-highway heavy truck markets. And so as we've seen build rates decline about 2.5% 3% in North America. We've seen a 12% decline in automotive in China and we've seen even much deeper declines in India to a lesser extent on us -- impact on us. Those have really impacted across some of the boards. Some of our talc products that go into plastics. Some of our base-sealing products although the new ones are growing and certainly in our foundry market. However on the other side of the ledger would be we see very good markets in many of our consumer-oriented products like Pet Care. That has continued to grow at a good consumer-oriented base around 4% quarter-over-quarter a very steady pace. We're starting to see some of our newer kind of near tendential projects -- products like our fragrance boosters seeing really good take rates with our customers off-the-shelf on those. So we've got some really nice products and really good fundamentals in the Pet Care market. And I tried to highlight that Environmental Products business as well. We've been moving that business through R&D and trial activity to higher-value solutions real solutions for different remediation products -- projects other than base landfills -- municipal landfills. And we've been successful with that. And we've increased those kind of those higher-margin products by almost 40% this quarter and we see the trajectory of those continuing through the fourth and into next year. So our Environmental Products business our Pet Care business though it may not -- we talk a lot…

Some companies have mentioned seeing some slight pickup in China or at least a stop of the decline. Are you seeing it at all?

We're not seeing a large pickup. I will say that our green sand bonds our Metalcasting business in September picked up albeit from a pretty low point throughout the end of the second beginning of the third so we've seen some signs of pickup. I think that's largely due to some increase in build rates in automotive in China. I'm not going to go too far to say that that's a trend as of yet. But we did see some pickup in the automotive in our foundry business.

Okay. And then the Personal Care. Is that affected mostly by the talc issue? Or are there other reasons for the slowdown of the softness in that particular business?

No, no, the Personal Care is a bentonite based -- bentonite. It's in our Performance Materials business. These are additives -- it's a small business but they are additives for rheology modifying for sun creams they're bentonite based that have a delayed release action in kind of over the counter-type products. It's a small business. And I think probably the decline in Personal Care was due to some timing of some projects and nothing structural. But that's kind of one of our Bentonite based businesses.

And just from a -- because you mentioned talc right? Just want to make sure we don't have Personal Care products in our talc sales. So you're not really looking at those two things. Like I said Personal Care for us is on the bentonite side.

Okay. So the fact that some asbestos has been found in some can -- I mean talc containers would not affect your talc operations?

No. So look we're -- we do not -- yes we do not sell-in to Johnson & Johnson and body powder has been a very small piece of our business historically. So, no, that doesn't affect us.

Okay. And looking at PCC you have all of these volume coming up. And did I hear properly is that -- okay, volume up 3% 2020 versus 2019. What is the pricing on that? I know that it will take more in order to recover the dollar amount because of your lower cost. Are you maintaining pricing on all of those volumes?

Yes. The absolute price point is a little bit lower for those newer tons. And that's because the cost points -- the input costs to our customers are lower. We can buy line less expensively in Asia than we can in Europe so to speak. And so the relative price points are a little bit lower. But from a return profile Rosemarie as we invest capital into a satellite the return profile of that project in China is the same as that return profile from a cash standpoint as one in North America or Europe or Latin America. So yes from that aspect we are.

Okay. And then looking at the recent mill shutdown in the in the U.S., is it a permanent shutdown or is it only temporary, can you tell? Or is the production going to be moved into another mill?

Yes. Let me hook D.J. in so...

Yes Rosemarie it's -- Domtar announced they would be changing the grades that that machine makes from uncoated freesheet paper to a fluff pulp. So we would view that machine being down permanently and it'll be a permanent reduction of the uncoated free sheet made in North America.

And you can move the satellite equipment into one of those new satellites you have recently signed up for?

So Rosemarie this particular shutdown is affecting one machine. There are still other machines that operate and so we'll continue to keep that particular satellite open. Service that customer from that satellite. It does create an opportunity to pick up some small volumes on the periphery of that satellite. But no we -- this particular satellite we will not be removing or shutting down. It'll continue to supply the customer at that location.

One thing we have seen a dynamic this year. I know when we announced the Port Hudson closure we thought that that would -- that paper would be moved through the North America. Paper mix that you saw this year is that that production was consumed by imports. Now mostly from Europe which is where we have satellites, I'll tell you that. And we'll probably expect the same thing to happen to this paper from Domtar.

Thank you. We'll take our next question from David Silver with CL King.

Yes, hi, thank you. I have three points I'd like to touch on. First one maybe a clarification. But the new Specialty PCC unit in Europe that you've discussed at several points here am I correct in assuming that that's not a satellite plant? And then if you could just provide a tiny bit more color on the benefits or the qualities that the PCC is going to be used for? In other words is it replacing fiber? Is it replacing pigment filler some combination? Is it net new to improve the characteristics of the end product? Just a little more color on that specialty PC -- large Specialty PCC project?

It would be my pleasure to do that. So first off this PCC and this new agreement that we have is actually going to end up being an extension of an existing satellite. So it's an existing customer that we have the arrangement with. Therefore our terms conditions and general pricing is very consistent with what we have in Europe. The application is new and somewhat unique. The grade that it's going into that the industry will recognize as something called white top liner. That's a premium grade in a linerboard industry and the best way to imagine that is a brown on the -- box that is brown on the inside and white on the outside. My kids recognize it mostly as a pizza box. So that's the application that it's in. What we do is -- PCC is well positioned to bring unique value into that application by providing better coverage. So think of sprinkling that white fiber on top of that brown fiber the opacity the brightness that PPC delivers allows them to use less of that expensive fiber to still get a premium product. So that's the application to it. I would say that it's not the only place where we're trying this out we've got some what I would call advanced trials in -- with other locations making similar grades. And then Doug was also mentioning in general about our pursuit into packaging that's -- we're not just targeting that premium grade. We've got trials going on in various stages around the world that include applying our NewYield technology into packaging grades. And then we also have some coating PCCs that are going on very high end packaging grades. So this particular announcement is in Europe, think of it as an extension of critical customer. By the way that is a new machine going in there, so it's net growth to the industry. And then we've got some more opportunities in the pipeline.

And David, can I ask you a quick question. Were you -- there's two things going on in Europe. You said Specialty PCC and then you talked about a contract. So I just want to be clear there's two things going on in Europe. One is a contract packaging application that D.J. just went through. The Specialty PCC in the UK is an expansion of our facility. That facility is -- when we say Specialty PCC it's everything that's not paper. It goes into construction sealants it goes into calcium fortification it goes into automotive sealants a number of different applications. It's usually submicron sized we call it nano-sized PCC. That is a very, very specific application. I talked about rheology that's an expansion in the UK for the sealant market -- automotive sealant market. Does that help?

I'm going to have to review your comments, just I have a lot of static on my line, so I may have mixed those two up. But I was mostly targeting the 40,000 ton expansion that I believe was not characterized as a satellite.

That's an expansion.

Okay. Yes. So the second question would maybe be for Matt. And I noted this quarter very good cash generation and a lot of the free cash was directed toward debt reduction but some was directed toward share buyback. And I was just curious because I think a long-term goal of yours has been to get your net debt-to-EBITDA to 2.0. And I don't know my model is not nearly as precise as yours but I thought that the $11 million difference -- the $11 million on share buybacks probably made the difference between you hitting that 2.0 metric this quarter versus maybe not hitting it next quarter. And I don't know to me that's a big round number that maybe the rating agencies or somebody on the Board is tracking. So could you maybe just comment on whether you did hit the 2.0 metric already and now you've got incremental financial flexibility. Maybe just if you could just discuss that issue?

Sure. And David let's talk about it from what we've been communicating over the past couple of years and beyond that is that we have a very balanced approach to how we deploy capital. Obviously the first priority is to fund good growth opportunities within the company. And when we look at free cash flow we look at a balance of debt pay down returns to shareholders and then acquisitions. And so over the past couple of years you've seen us deploy in a fairly balanced way across those 3 vehicles. If I put it into the perspective of what happened in the third quarter just like you said we paid down $32 million of debt. We repurchased $11 million in shares. As you are thinking about what that means for a go-forward perspective we are very opportunistic when we see attractive valuations in our share price. And that's what we have been seeing and that's obviously driving the share repurchases and that will continue as we can find ways to deploy our cash opportunistically into the share repurchases. From a net leverage perspective we're still at 2.2 times. I would tell you that we are in the area of about $60 million to $70 million from that 2 times net leverage target. We will continue to deploy capital in a balanced way debt repayment share repurchases finding acquisition opportunities on our way to getting down to that 2 times net leverage target.

Okay. Interesting. Alright. Then last point and I'll preface my remarks by saying I know I'm going to ask you something that you're probably not going to be able to answer directly but one of your major competitors has recently hit a major speed bump and there's been management changes or signals of a ratings downgrade -- it's a -- credit ratings downgrade etc. And from your perspective maybe with this company and maybe in your prior postings with Alcoa or Arconic would I be incorrect -- or would I be correct in assuming that some of your competitors' customers may come knocking at your door looking to diversify their sources of supply. And if that is the case I mean do you have the spare capacity? Do you have the -- I don't know capability to surge let's say in response to new business opportunity in the areas where you overlap with that competitor.

Okay. Let me -- well first I'm going to say I'm -- you're right I'm not going to answer part of your question I'm not going to address issues that are customers and our competitors etc. What I will give you David is that we see -- regardless of that we compete the same way. We do overlap. I think -- I know what you're talking about we do overlap in some of those same end markets with a number of different competitors. But we are in different regions. And when they're -- if somebody is hitting a speed bump I don't think that that necessarily creates or takes away any opportunities for us. We compete for the customers based on the value we have based on what we feel we can deliver to that customer in terms of a product. And so we look at the opportunities out in the market with customers and the ones we overlap and the ones we don't, it's the same way. So we see opportunities around the world for our products. We're pretty laser-focused on what those are and we're going after them. I'm not going to necessarily comment on issues that our other competitors might have, if that helps.

Okay. So just -- and just to wrap up. I mean in your opinion the competitive dynamic in the global industry in particular areas where you might overlap with that other competitor has not significantly changed in the last month or so?

I think -- look I guess and I think we operate in similar markets to a number of our competitors. I think our positioning is different from them. We're in North America, so the dynamics that might be occurring elsewhere in the world where they have larger positions than where we do in North America. The dynamics are not one to one. We're competing for similar customers and we're going to continue to compete for those customers like we normally do. That's what I'll give you.

And at this time, I'd like to turn the conference back to Ms. Buckwalter for any closing remarks.

Thanks, Brad. Thanks, everyone, for joining us today. We look forward to speaking with you again very soon. Have a great day.