00:00This is your largest acquisition since 2017, so nine, ten years here.
00:06Talk to us about what you saw in AMS that, you know, you couldn't necessarily do at home organically.
00:13Yeah, thanks for having me, Katie.
00:15So we are the largest pure play adhesives company in the world,
00:19and we have a medical adhesives business deep within our portfolio.
00:24What AMS provides us is a platform to expand that adhesives business
00:31and set it apart as a fourth division within the company,
00:36representing about 10 percent of revenue and growing at high single digits.
00:41So really giving us that growth spark we need to demonstrate to shareholders
00:47that we are moving our portfolio into the higher margin,
00:51faster-growing spaces within this industry.
00:55And I do have to ask a little bit about some pressure you've received
00:59from an activist investor on Cora Holdings
01:02because they had been pressuring your company to abandon this proposed takeover.
01:07They've threatened a proxy fight.
01:09You know, now that the deal has been announced, it's gone through.
01:12I mean, what does your engagement look like with them?
01:16Yeah, so, Katie, we're doing exactly what we said we would do.
01:20We're growing in our medical adhesive space.
01:24And this is something we promised our investors during our investor day last October.
01:30And we've been speaking to this direction for years now.
01:36And, you know, we don't comment on conversations with any individual shareholder,
01:41but actually now that we have been lifted from the U.K. takeover code rules,
01:49we're having a lot of conversations with shareholders
01:53to share with them more about this exciting portfolio that AMS brings
01:58and our deleveraging plan post-acquisition.
02:03Well, talk a little bit about that, because I think there are a lot of people
02:05that are still looking at the balance sheet and wondering how much more progress,
02:08or I should say when we're going to see more progress on that.
02:12Yeah, so, as you know, Romaine, so our target leverage range is two and a half to three times.
02:19And when we consummate this transaction later in the year, we'll be solidly in that range.
02:26It will lift us out of our target, and we have shown in the past that when those occurrences happen,
02:36we're able to deleverage consistently, normally about a half a turn per year.
02:42So over the course of the next 24 months, we'll be bringing that leverage back down in range.
02:49And, you know, we're acquiring a company that's got really great cash flow,
02:54free cash flow conversion. We are increasing our cash flows.
02:58We had a record cash flow in second quarter, in fact.
03:02And so as we continue to increase our cash flow through some of the restructuring programs we're working on,
03:09we also believe that we'll be able to bring down that leverage perhaps faster than the 18 to 24-month
03:16time frame.
03:17Well, give me a sense here, though, too.
03:18I mean, yes, you did have that record number on the cash flow side in the most recent quarter.
03:22We should point out, though, sequentially the quarter before that, though, not so good.
03:26So the question is, is what we saw in the most recent quarter, is that a one-off or is
03:30that sustainable?
03:32No, our first quarter is always our lowest quarter cash flow.
03:36And we've been taking some steps, Romaine, over the last year or two to announce a large restructuring plan.
03:46We're reducing the number of plants in our network from 82 down to 55.
03:54So a significant move there.
03:56That's driving not only lower cost and better cash flow, also lower our Apex utilization as well.
04:05Super demos.
04:05Let's get started.
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