Erik Aldag: Yes. sure, Mike. So, yes, that $7 million of improvement in the cost bucket versus last year, that includes the very strong operating performance. That includes the productivities we’re seeing. Particularly around the pet care business, we’re seeing a lot of improvements there and a lot of cost savings versus last year. It also includes the $10 million cost savings program that we’ve achieved full run rate in the first quarter, so call it, $2.5 million of savings there from the restructuring program. And yes, we have favorable freight and energy, primarily versus last year. That’s really a year-over-year comparison. If you think about last Q1, we were still working through some significantly higher cost inventory levels.
So energy and freight, that played a role in the year-over-year favorability, but that’s really been embedded in the margin heading into the quarter. If you think about it on a sequential basis, we didn’t have a huge change in input costs sequentially, Q4 to Q1. Maybe $1 million favorability from an energy perspective. So, that sequential margin improvement we saw was mostly driven by that improved volume and mix in the Consumer & Specialties side, the pricing and the productivity, and the variable conversion cost performance.
Mike Harrison: Alright. That’s very helpful. And then, I wanted to dig in from the last question here on the High-Temperature Technologies business. It sounds like you’re seeing relatively strong demand trends, even though the underlying sales number was down a little bit year-on-year. But maybe just give us a little bit more detail on what you’re seeing in terms of market drivers and some of the actions that you guys are taking to benefit from new customer wins and kind of new product-related growth. Thank you.
Doug Dietrich: Yes. I’ll start. Mike, in the High-Temperature Technologies product line, yes, sales were relatively flat. I think, as Erik mentioned, the decline over last year was a couple of outages that we saw in North America that didn’t happen last year, maintenance outages that were extended. But volumes and demand picked up through the quarter, and we see that being relatively stable going forward. Major end markets, automotive, heavy truck, industrial, and some good volume growth in Asia, we see continuing. So, stable markets. We got a good feel for it, at least as we sit today. And it looks like through the back half of the year, unless macro trends change. But right now, we’re feeling good about that product line. Brett, do you want to take kind of new products, what’s going on? What’s driving some of the future growth that I mentioned?
Brett Argirakis: Yes. For the High-Temperature Technologies, really, when you take a look at it, the Refractories business is really, really strong right now. Both – if you look at the foundry business first, foundry business, North America, pretty stable, as Doug said. There was some slowdowns in North America. Asia is still kind of flat, but they’re doing okay. We don’t see any major drop-offs yet. The steel business from the Refractories side has been pretty solid, about 77% utilization rates now. That’s been – that’s a little bit higher than the first quarter was, but it’s very stable. We anticipate maybe some Q2 spring outages, which is fairly normal for some maintenance outages. So there might be a slight dip.
But we’re not seeing anything major. From the European side, it’s still very soft. So the steel industry there is soft. There’s a couple of steel plants, one in the UK, one in Eastern Europe, that is – that are ramping down and probably closing permanently. But in Europe, we are seeing green steel, as we saw in the United States, the move from integrated steelmaking to non-integrated or BOF to electric arc furnace. And that’s starting to transition. In North America, we – as you saw in the presentation, we have acquired 15 new automated MINSCAN units, and we’re going to do eight of those that are planned for this year. Those units really was – it’s about the automation and optimization of these units. It was really driving from that transition from BOF to EAF.
And we were well positioned to make that move with our steel customers. This is – this approach really ties in the laser. It ties in – so you can laser the furnace. You can – it’s automated with PLC controls, so it automatically applies product to the low spots of the furnace. And really, most importantly, it’s pulling employees off the shop floor and away from molten steel. So, this has been really a great accomplishment by the team and a work through our key customers. So, in parallel, what we did is that technology, while we were developing the equipment, was developing high-grade products. For instance, I will give you an example. We normally, what we call gunning or applying our refractory products over brick that has been worn away by the molten steel, we normally did that in the upper portion of an electric furnace.
We have developed products that now go deeper into the furnace, into what we call the banks and the bottoms of the furnace. This is technology that we haven’t really participated much in. And now, our technology is tied into these 5-year contracts that include that refractory. And that portion of the refractory is 2x more – consumes 2x more than the refractory that we are currently utilizing. So, this is really exciting for the business and that is a growth market. We anticipate having, as we said, 15 units through ‘25. In fact we have our employees from Europe coming over next week, and they are going to be visiting so that we can promote this even further into the European business. But I will mention, we do have two units already in Turkey.
We have some units in Europe, but with this green steel technology change, we plan to drive this even further like we did in North America.
Doug Dietrich: Does that help, Mike?
Mike Harrison: Alright. Very good. Yes. Appreciate the detail there. Thanks very much.
Doug Dietrich: Thanks Mike.
Operator: We will take our next question from David Silver with C.L. King.
David Silver: Yes. Hi. Good morning. Thanks a lot.
Doug Dietrich: Hi David.
David Silver: Hey. So, I have a couple of questions. I hope the first one is not too confusing, but I am just trying to scratch my head and get – I am scratching my head and just trying to get my arms around the price versus volume, I guess drivers this quarter. So, revenues on an underlying basis were basically flat. And you did talk about volume strength in H&PC, or home and personal care, and a couple of other areas. But again, to get back to kind of a flattish revenue profile year-over-year, is really all of the volume softness pretty much on the Environmental & Infrastructure side, or are there some other pockets or areas where improved price kind of made up for maybe some decline in the units sold? Just trying to get a finer sense of which parts of the business were growing volume or units wise versus which ones maybe were not and how price played a bigger role, let’s say, in the revenue performance. Thank you.
Erik Aldag: Sure. Thanks Dave. This is Erik. So, yes, the volume decline was all in the environmental and infrastructure product line, as we mentioned, soft commercial construction conditions and those larger projects that we had last year. The High-Temperature was relatively flat. The High-Temperature Technologies product line was relatively flat. I mean we pointed to some customer maintenance outages early in the quarter this year, from the foundry perspective, but overall volume is relatively flat. And then in the other product lines, we saw volume growth. So, that’s what you are seeing. Kind of the net, net of all that ended up being relatively flat volume growth, but mainly driven by that Environmental & Infrastructure product line.
David Silver: Okay. Thank you for that. I was hoping to hone in a little bit on the Specialty Additives side, and in particular, the five new satellites that are scheduled to be brought online this year. And I guess I was hoping D.J. might be able to characterize them. In other words, I have to kind of check my press releases, but I am just wondering how many of the five would you categorize as kind of the legacy PCC for copier paper or that type of grade of paper. And I see there are two NewYield opportunities. Maybe if you could just discuss how those came about? And then I am assuming there are some new satellites for packaging. Is that the white box or the pizza box type of packaging, or is that maybe making some inroads onto the brown paper side, so just an overview of what newer projects are going to be coming online this year.
D.J. Monagle: Hi David. Let me try and address those as best I can for you. First one, just to look at it from that Packaging segment, one of the new opportunities that has already contributed growth is for packaging in China. That’s on a white box and it is where we brought some innovation into the ground calcium carbonate space. So, that’s already in those numbers. One of the new ones to which Doug referred earlier was – it’s a GCC and a NewYield combination. So, that will also be in the specialty papers and packaging papers, and some printing and writing grades in that one. So, those are the two on packaging. One of the items that just came on is standard PCC, kind of the legacy PCC, with some updates and tweaks to it.
It is in a printing and writing application currently, but it is located with someone who also makes a board, and we are hoping we can grow with that customer. So, that was a strategically placed standard PCC contract in a – on a paper machine that is printing and writing grades, but the customer makes packaging, and we are growing our relationship with them. The other opportunities we have was a small standard PCC plant in India, a standard PCC printing and writing grades. And then the other NewYield opportunity that we had was in Brazil. Now, this particular one is retrofitting an existing satellite into a printing and writing grade and taking advantage of – and working with the customer of a waste stream that they were landfilling and being able to convert that into a useful pigment.
So, I guess the additional color that I would provide is that this NewYield technology that applies our crystal engineering technologies, we are seeing increased interest in that. We are seeing increased interest in both the printing and writing space and in the packaging space. It basically presents itself as a customer is throwing away waste that comes from the pulping operation. And so, what we are able to do is share savings with them and make good paper or packaging products. So, that’s an opportunistic technology that has a growing interest, given the need for a growing circular economy. Does that provide the color you were looking for, David?
David Silver: Yes. And then maybe just a brief comment on the new project funnel. And if you were doing a pie chart, I mean what percentage of the new project funnel, as you see it, is comprised of, I will just call it, the non-traditional satellite plant opportunities, in other words, white paper packaging, brown paper, and NewYield, just not the printing and writing papers that you – that would dominate the legacy satellite projects?
