John Fortson: Well, it depends on what time frame, John. I mean, look, I think we’re not — we’re not giving ’20 guidance yet. So let me be clear. What — you’re right in the sense that the business will lose about $300 million, so it’s going to come to about $800 million of revenue rate. We believe that we can get the operating businesses into the 15% to 20% range as the AFA business ramps up over the course of next year into 2025. I think to be realistic, though, and we’re trying to make sure that everybody understands this, that’s excluding the impacts of the CTO until that situation abates itself, okay? So if you look at it as a consolidated segment, including the CTO sales or resales, if you will, it’s going to take a while to get to those margins, but the operating businesses can get to those margins.
And then as the CTO situation sort of unwinds itself, you’ll see the segment margin get back to those levels. So I want to be careful sort of saying that we’re just going to spring back to those types of numbers.
Mary Hall: I think the other thing that gets lost and John or Rich, correct me if I don’t get the nuance right here. But you can’t look at the DeRidder revenue loss that we’ve said is roughly $300 million. You can’t take the average PC margin and apply it to that. What Rich was saying is that the products and the markets that we sell into the product from DeRidder, the adhesives, certain of the oilfield products, the printing inks, those are the lower-margin businesses within that segment. And those are the businesses we’ll be exiting. So that’s what’s helping to drive that margin improvement as the dust settles.
John Fortson: I would even take it a little bit further, John, just for everybody’s complete understanding of the situation. The EBITDA that will be generated in 2023 in the Performance Chemicals segment comes almost exclusively from the Charleston plant — so by exiting the DeRidder plant, we are removing revenue, but you are not removing profit.
John McNulty: Got it. Okay. No, that’s hugely helpful.
Operator: The next question comes from Daniel Rizzo from Jefferies.
Daniel Rizzo: I just want to change it up a little bit. I know there’s a lot of interest in the restructuring. But just in your Performance Materials segment, you mentioned how strong hybrids are doing. Can you remind us or have you said how much activated carbon goes into a hybrid car versus maybe a traditional ICE car. And also, do hyperdose scrubbers?
Stuart Woodcock: Yes. Dan, this is Ed. They do use activated carbon canisters. They’re typically larger because you’ve got a pressurized fuel tank — so to capture those emissions during refueling, you will have somewhere around a 2-liter canister plus a honeycomb attached to it as well.
Daniel Rizzo: So I think in the past, you said on an SUV in the U.S., it’s — or just any car, I think it’s like $16 to $20 per auto and correct me if I’m wrong on that. I was wondering how that compares to a hybrid.
Stuart Woodcock: Yes. You’ve got a little more content on a hybrid because you’ve got a pressurized fuel tank.
Mary Hall: We used to say thanks fiction is important… It is important, Dan, and thank you. It’s a really good question because we did say that we expected that a hybrid vehicle might be a bit less profitable for us because of the amount of carbon. But given how hybrid structures have evolved and as Ed mentioned, the highly pressurized tank. We’ve had to evolve our carbon to meet the needs of that different tank structure. And so the value we can get for that now is at least equivalent to what we were getting on just an ICE vehicle previously — was that clear on legacy Ice.
Daniel Rizzo: Okay. That’s all that’s amazingly helpful. And with thermoplastics, you mentioned competitive pricing kind of like making it a more difficult market. Are you taking share? Are you guys lowering your prices to match that or just kind of giving it up and waiting for things to more normalize.
John Fortson: We’ve been holding in price, but I think we’re beginning to — we’re seeing some price degradation. We’ve done — and I don’t think we’re all that dissimilar from a lot of other chemical — we’ve been holding price pretty firm. But candidly, I mean, I think as we move forward in the cycle, price will come down a little bit as volumes start — that helps drive volume. So our focus really, and I’m very proud of what those guys have done over there is really on the margin. They have done a great job of getting that business back to levels of profitable — are you talking about — are you talking about APT or are you talking about road markings?
Mary Hall: Are you talking about Ozark and margins? Or are you talking about thermalplastics and APT?
Daniel Rizzo: I was talking about thermalplastics in APT, but I’ll take interest in both.
John Fortson: Listen, I think they’ve done an incredible job over there working very, very hard to get those margins back up. And we — what I’m most encouraged by is they continue to work — they’ve used this period to really be aggressive in product development and making sure that as the markets do sort of normalize, that we’ll get the drop-through that you would expect.
Operator: The next question comes from Chris Kapsch from Loop Capital Markets.
Christopher Kapsch: A follow-up on the PM segment. So John, I know you’ve been saying hybrids for many years. And I know that for a while, the macro sentiment was enamored by EV. So you probably have some feeling some validation that the sentiment has shifted with kind of the world kind of anti-EV certainly less…
