Ashish Khandpur: Yeah. So I think that the big thing on Color in Europe is to drive margin expansion. And while we continue to gain share there as well. So, the teams that are working hard and we have done a lot of restructuring work there and looked at our plant footprints so that our plant footprint optimization is underway and we continue to drive that as well. And additionally, focusing Color in segments which are more accretive on margin. We talked about Healthcare, we talked about certain Packaging applications. Those kinds of applications is going to help us grow our margins better in Color as well. And not just in Europe, but everywhere else. So, we are seeing year-over-year margin expansion in Color. You saw that in Q1 we had 180 basis points adjusted EBITDA margin expansion.
And we expect pretty good margin expansion for the year for Color as well. So, I think Color is on its journey to drive margin expansion as the demand comes back. And then I think the higher volume will also drive help with better favorability on the factory side, which will help us drive margins even more.
Jamie Beggs: I think, Kristen, we have an overall goal for both the segments to be north of 20% so that we can have total company margins above 20%. They’re well on their way to be able to do that. Part of that obviously is in the synergies related to the Clariant acquisition, which we still have a couple more plant closures that we are working through to be able to drive some additional margin expansion. But the majority of that going forward as Ashish talked about, is really growing underlying volumes and also expanding in innovation areas such as Sustainable Solutions and Additives that I think will also expand margins for the space. But 18.8% is closing that gap to be above 20%. And we expect further margin expansion as we look through the strategic plan that we hope to, I guess, to talk more about later in the year.
Kristen Owen: Great. Thank you so much.
Operator: Thank you. And our last questioner coming from the line of Vincent Andrews of Morgan Stanley. Your line is open.
Vincent Andrews: Thank you and good morning, everyone. Wondering if you could drill in a little bit more to Telecom a couple of scores. First. Ashish, I think I heard you say your customers are saying it’s not going to get better until 2025. So what is it that they’re telling you in that regard? And from our perspective on the outside, what do we need to see to kind of help us understand that that inflection is finally going to come there?
Ashish Khandpur: Yeah. So that’s – that specific comment was for Telecommunications. And in the Telecommunications area, we see it is really a two-piece situation. If you look at the market, the biggest markets are in US and Canada and then also in Europe. And we are seeing that market stabilize – the Telecom market stabilize, not yet grow, but stabilize in US, but Europe continues to not stabilize right now. So, when we talk to some of our big customers who are in this 5G and Telecommunication area, there is a lot of destocking still happening. There’s a lot of inventory in the channel. And on the demand side, it’s still low. So – and these are capital-intensive businesses, so the interest rates are not helping deployment of fiber optic cable and so on and so forth. So I think in the end, we, based on our assessment, we believe that this market overall is going to turn around in 2025.
Vincent Andrews: Okay. And if could –
Ashish Khandpur: Earlier on we were expecting it to do it, sorry.
Vincent Andrews: No, go ahead, Ashish, please.
Ashish Khandpur: I was going to say that earlier on, we were expecting it to turn around in towards – in second half of this year. That’s one change from our previous earnings call. We feel like it’s going to go longer than we thought.
Vincent Andrews: Okay, that’s really helpful. If I could follow-up on the raw material costs, no surprise, it’s flattening out in the back half of the year. So maybe two questions. One, could you help us understand that 38% of your raws that are non-carbon based that are a little harder for us to track on the outside? Could you help us understand how those are trending? And then just secondly, as I run some sort of generic raw material models these days, I’m starting to see modest inflation, low single-digit, what have you, for 2025. And obviously a lot can change between now and then. But if we do get back to an inflationary environment, what is your plan? Do you think you’ll sort of proactively go after some further productivity? Or do you think there’s still the ability to price more than to offset it – as well as getting price for mix and innovation?
Jamie Beggs: Yeah. On the other raw materials, those are more stable raw materials. That really call off the ones in the charts in the back of our deck that have a little bit more volatility in terms of market dynamics swing in them. So we don’t expect a whole lot there other than just the general comment that you said before that there is some inflation, those that would be in the single-digits. Really what we’ve been watching is the ones that are highlighted in the back. We do expect inflation to come in the back half of the year, but total for the company, $20 million to $30 million is what we anticipate. Most of that being recognized in the first half with some inflation in the back half, which is causing some of the headwinds that I think Mike talked about from the standpoint of margins.
We’ve always been really good about pricing. The team is very attuned to watch how that work. We do price based on value. That’s the first avenue that we always look at. And then second, if raw materials are moving on us in a material way, we also make sure that we’re aware of that to maintain the margins. And as you’ve seen through the bridges that we provided over the last, I don’t know, eight to nine quarters, we’ve been able to always have a net positive impact from the deflation or inflation based on our pricing initiatives. And we expect to continue to be able to cover that through ‘24 and ‘25 as these conditions continue to evolve.
Vincent Andrews: Thanks very much.
Operator: Thank you. I’m showing no further questions. I will now turn the call back over to Dr. Ashish Khandpur for any closing remarks.
Ashish Khandpur: Yeah. Thank you very much everybody for joining this morning. That concludes this call and good bye and see your next quarter.
Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.
