Albemarle Corporation (ALB) Earnings Call Transcript & Summary

Next up, we have our good friend, Shoukat Ali Bhamani -- sorry, Bhamani. Close?

Hello. Hello. Perfect. Perfect. Thank you.

Shoukat is our #1 facilitator in the HMG platform network. He's a champion. He's a superstar. Shoukat, take it away.

Thank you so much, Hunter. I appreciate it. Again, good time. I think we are waiting also for Patrick to join us. Let's see if Patrick is -- perfect. Perfect. Okay. So again, good discussion, a lot of good insight throughout the discussion. I think from what we understand now, the business and IT is all going through a lot of change. We heard a lot about pandemic. We had a lot of discussions in several CIO sessions how this change has impacted us and then what CIOs have done. What we're going to do today is take a slightly different spin to it. What we're going to focus on what has now changed permanently for us. And we are going to focus on that and seeing how we are managing that. So before we start our panel discussion, I would like to request my -- all of my wonderful panelists here to have a very short introduction about your name, your name of the company, your role within the organization and what industry do you belong to. Swamy, can you go ahead?

Okay. Thank you, Shoukat, and thank you, Hunter and HMG, for giving the opportunity. It is always wonderful to be here. So my name is Chakradhar Swamy Sriperumbudur, but I go short by Swamy, as you know why.

I thought I had the competition, but thank you, Swamy.

Sure. So it's interesting time. So even though I am a CIO at Infomerica, but we are playing multiple roles of Chief Digital Officer, Chief Strategy Officer and Chief Business Officer. So Infomerica is a full-blown IT solutions company, providing the innovative solutions to complex business problems using the cutting-edge technology, and we are completely spread across North America, Europe and Asia and also serving multiple customers in terms of health care, utility, public, state, federal and many more. So it's interesting times and it's -- we are very excited to be in these times in a positive way because it is really kicking the innovation.

Yes. Thank you. Doug?

Hi, everybody. I'm Douglas Krieger. I'm with Herbalife Nutrition. So I'm based out of Winston-Salem, so neighbor to Charlotte. We are headquartered out of Los Angeles, California. I run the global sourcing piece for Herbalife. So under me, I handle a lot of the technology or all the technology purposes as well as a number of the other indirect spends, logistics being one of the other biggest ones, travel and marketing. And so really partnering with the technology team, looking to bring a different twist on how we do things and partner in a way that probably most of your sourcing teams don't do, and really excited for this panel and such a great group of people. And thanks, Hunter, and the team for inviting me to it.

Yes. Thank you, Doug. Patrick?

Thanks. Let me get my video on. I'm sorry, struggling a little bit with -- from one call to the next. So I apologize. No, Patrick Thompson, Albemarle CIO. We are a specialty chemical company. We make the chemicals that make lithium batteries for EV cars, cellphones, things of that nature. We also have a catalyst division that helps with oil and gas. So we kind of have the new black oil and the old black oil role. And then we have bromine, which is a fire retardant chemical that comes from brine in the ground from the Dead Sea and a mine in Little Rock, Arkansas of all places. So we are a special chemical company, 3 billion, 46 locations. We serve 100 countries around the world. And I'm the CIO on a digital journey right now.

Good. And just a short introduction from my side, I'm Shoukat Ali Bhamani, as easy as Swamy's name, okay? And so I'm responsible for the Schaeffler Group as a CIO and CDO, responsible for IT and digitalization. We are an automotive and industrial products manufacturer, worldwide operation in the region Americas. We have about $3.5 billion, $4 billion business with about 13,000 employees that we are supporting right out of our Fort Mill, South Carolina as our regional headquarter here.

So with that, I think we go look at our situation right now. I think we all have gone through a special situation over the last 6 months. And this pandemic has changed a few things for us permanently. What we're going to focus on today, and maybe I'm going to ask my wonderful panelists here, if you could help me to identify what has changed permanently for your business? And then we will further dig deep into that situation. So Doug, if you don't mind, I would like to start with you. What has changed for your business permanently?

Sure. So I think it's a great question and a great topic, obviously, very timely. So for Herbalife, being a multilevel marketing company in 96 countries, and very touch-sensitive in terms of being -- able to have that touch point of our distributors with their customers and us with them, a lot's changed. If I look at it from the very beginning, we're very big on having events, people coming live and getting a feel for the environment and really being excited about it. All that's going away. We've had to move very quickly to a virtual environment, and we've had some virtual events that we've had upwards of 100,000 people attend, globally. So huge events, a lot of work that goes into try to figuring out the platform, the arrangements, the things you learn. Like having the right type of lighting really makes a big difference. We're very fortunate to be -- to have distributors and independent distributors because each one of them is kind of like their own entrepreneur, their own CEO, if you will. And so they all figure out how to make their business work on their own and then they share ideas, which has helped to make us really thrive during this pandemic and hopefully going forward. But I think the thing that's changed from us from an internal standpoint is really how we identify talent, how we keep talent and how we make sure that we're staying relevant in terms of where talent wants to go. And one of the things that I look at for myself, like I mentioned, I'm out of Winston-Salem, but I support a team that's in Winston-Salem that's in L.A., and we support the globe. So I'm not with half of my team. My boss is the other side of the country. So whether we're in a pandemic or where we were before, I was kind of remote, even though I was in the office. And so what it's really done, though, is it's really brought forward the whole idea of where is the talent? Do we need to bring the talent to us? Or could we find the best talent that's out there and search in that type of capacity? And I think when we've taken on that approach, still a hybrid approach, still trying to figure out what we're going to do to make it work going forward, but I think to me, that's the biggest thing that's going to be the change that's going to last for a long time, if not forever, is as opposed to trying to find the people that are just local that have the best talent. We never have to go out and search and find that best talent to make our companies even stronger.

So Doug, are you referring to specifically technical or IT talent? Or in general?

So I'm talking about it in general, talking about for me specifically, when I'm looking at sourcing, I'm looking at -- or telling on my team in marketing, but I'm also looking for it on the technical side as well. We brought people in that have moved. We've brought people in that have wanted to stay remote, and now we're open to all of it. We've had people that live in California, and obviously, for California, it's a big thing. That have said, you know what, I'd like to move from California. And the company on an individual basis is looking to accommodate them where possible. So a lot of things in motion that I think are opening up the eyes to everybody within the C-suite to really try to figure out what is the right path going forward and how do we do that while still keeping the culture of the company, which is a very collaborative culture, built on being able to walk into somebody's office and say hi and have that conversation and talk about something important and. How do you still do that?

Okay. What about you, Patrick? What has changed for your business now permanently?

Well, the -- I guess the good news is the biggest change has been just working from home, right? And I think that's the obvious. And as a result of working from home and having some success, like all of us have had some success, showing that you can roll out technology fast, you can adopt it fast, you can accelerate much quicker than the normal way we used to think about it that we had to be very careful, we had to do change management. We have to study this, we have to analyze it and be slow for just blunt words. That culture has changed. They see now that our workforce are -- we went from 500 to 5,000 people working from home overnight, literally over a weekend, the 15th through the 18th. And they see that we can adopt digital technology to do a lot more, a lot faster in our company, and as a result of that, we're seeing capital being pulled forward to digitize our customer excellence, our manufacturing excellence, our back office excellence, where some of those things were going to be annual budget type items that get cut and reduced. We're seeing -- let's pull that forward because the new norm is we're going to have a hybrid situation for a while, probably into '21. Corporate travel is going to be down. We need to be able to innovate and collaborate with our clients, and [indiscernible]. So the changes, culturally, we've changed. And just tugging on Doug's point, we don't really care where you have to work now, whereas before, we'd be like, you have to come here. You have to be in this building. That's culturally changed and then the flex schedule has changed. People working from home and working in the office, I think that's going to be the new hybrid model going forward. So those are the kind of 3 areas that we're seeing. But we're seeing much more interest in letting us digitize the company much faster and rapidly than we have in the past.

Okay. That's very interesting, Patrick, because from my perspective, in my organization, I think that's also the #1 change I have noticed is there's more acceptability to having a digital workplace and digital environment. A lot of tools that we had offered in the past, we have a lot more requests for upgrading them, for having training, having installations. So again, that's a very positive change. Swamy, what about you? What has been the biggest change for your business, permanent change?

So I think, as everybody said, it is very interesting times, and there are multiple things have changed permanently. One, the biggest thing is the perception. The perception of the customer has changed because, previously, customer says you have to be in house, you have to be in secure area, you have to be in this location. But now when this pandemic has hit, people say, "I don't care where you are, please deliver." Now the whole perception is like 360 degrees, completely changed. And I used to do -- because of this continent, I used to do almost every 3 months to different continents and then meeting with the customers and employees, but it is always challenging to spend time with the family. So with this work from home, we are doing a very good work-life balance. We are able to spend quality time with family. At the same time, and because I'm on road, I'm also not able to spend more time with the employees because it was only a short time. But now people are adopting that they are suitable to come up to video call anytime. It's not really a problem. The mundane 8 to 5 timings are gone. Of course, it is sometimes pro and sometimes con because depending upon how you really look at it, it is always a productivity increase, but there is also stress levels increased. It all depends on how do you really manage it. But in this case, I'm able to spend more time with my employees. I'm doing more than they require, the leadership -- not only the direct leadership, but also the town hall meetings are going on more regularly. Previously, I used to do only once a quarter. And the sales and marketing side, if you see, the whole perfection is different. Previously, we used to do a lot of travel and we need to identify when the customer is available, then we have to go there. We have to spend more time. But now that time to spend with the customer is less because it is virtual, but at the same time, the number of times you are doing more. So instead of meeting once in a month, I'm meeting 3 times in a month with the customer, and I'm meeting only half an hour and then I'm able to judge. And this also is providing some kind of a virtual happy hours. So we are able to completely interact with a more specified way. And also because of this virtual, I'm also able to bring multiple people at the same time irrespective of their location. So we are making more effective because, previously, if I want to travel to a customer and if it is a demo or a production rollouts, then I have to say that, "Okay, I have to have my Chief Architect, I have my Solution Architect, there are 10 people, there is a lot of spend from the customers or the budget-wise. All things are a little different now. People can really do. So there are many things have transformed because of this. I think innovation and giving agility and flexibility from the -- from customer and employee perspective has really changed.

So Swamy, a lot of good things. You mentioned about how our work habits or work approaches have changed. What about from your business point of view, from your products, from your services? Anything significantly changing?

Oh, yes, we have changed significantly in terms of how we are giving solution because we being an IT services company, we are working with multiple customers. So we are giving a lot of education to some of the retailers. So I don't want to name some of the customers, but some of the customers we have told, this e-commerce is really coming. You have to be on top of it. They always were trying to say that, "Okay, we will look into it. It is not in our budget. It is not in our strategy." But because of this pandemic, those companies no longer exist now because they couldn't really -- it is going in a reactive mode than a proactive more. And because of these changes, people are not doing. So one of the important factor from our services point of view is digitization. So we are giving more and more importance to sell for portal, right? For example, now some of the insurance companies, if I have a car problem, previously, I have to ask that adjustor to come and then he has to really look at the car, or even for the home insurance, they really need to look at your -- physically and make sure everything is a problem. Then you have to go to the dealer, then get a court. So it is like taking almost like 3- to 4-week project. And then also, you are really having a difficulty, right? Your comfort level is not there because your car is already broken or your house is already broken. But now with the insurance, you have the mobile apps. Now the digital transformation is really kicking in because it used to be people are thinking it was not really a necessity, but now business is driving them that it is the necessity. Now users are really able to make all the changes right where they are in a comfort level, and the turnaround time has increased. They're also able to send more on videos and also showing the pictures rather than just talking. So I think the way how you do the business, the offerings are completely different.

So let me see if it's possible to just do a quick survey with our participants. So is it possible to pull up a survey at this time? Perfect. So if you could help to answer these 2 questions, please.

It's interesting questions though, Shoukat.

Exactly. Yes. I don't know if it's possible also to pull up the responses now. Or should we give 30 more seconds or so?

Are we AI-enabled?

I don't know yet. Yes. So this will be interesting for us to look into. Yes. It's interesting, okay? So now we look at what IT work has changed prominently, okay? So again, we are looking from the CIO or IT perspective. So significant -- I think it's a little interesting for me to see about 70%, 75% people have more than 20% change. That's very interesting. On the budget side, it's very balanced. I think most of the people will have the same budget next year because of the plus and minuses of the economy. But then we also have our CIOs. They will have less versus we'll have some CIOs more budget. Perfect. Thank you so much. That's such a good insight to see. So now you mentioned a couple of good things, all of you in terms of what has changed permanently. So as a CIO -- either you are a CIO or you are closely working with the CIO. As a CIO, to overcome some of these permanent changes, what are -- what your CIOs are doing -- as a CIO, what are you doing specifically? For example, I think Swamy mentioned some of his customer approaches. The customer solutions have changed. They become more digital and e-commerce-based nature. I think Doug mentioned about the whole virtual event has taken place now as compared to the physical events that they had. Or Patrick mentioned I think a few of these things about the adoption is very fast now, more demand for the digitalization and the culture of excellence. So from those perspective, what CIOs are doing different now because those things have become permanent? Again, Patrick, if I could start with you, please.

Sure. Let me think through that question. But I mean, I think the thing that resonates with me right now is because of COVID and because of the success all of us have had with allowing our people to be productive from home, and we've gotten a pretty high score on that, we're just getting more opportunities to show what we can do for the business. And it just seems like you got a greater seat at the table at this moment than we ever had.

Patrick, do you mind to share some examples, what are you offering more now?

Yes. So we were on an ABC journey, IT transformation, business transformation, digital transformation. And what we're seeing is the appetite to move into the digital transformation quicker. So we are trying to put solutions in place to not only internally get better at communicating and connecting with our internal resources, but how do we connect with our customers from an external perspective? And that's been like customer portals and self-service ordering, almost like the Amazon-like experience with the customer, putting solutions like that in place, manufacturing excellence from a digital perspective. Back office, business process mining, robotic process automation, now all of these technologies that had these 3-letter words or acronyms, they're interested in because they -- they're anticipating a new business horizon in front of us. And they're basically saying we do need to do all these digital things, just in case something else comes along, COVID 2, COVID '21, COVID '22, whatever it might be, we have to get in this -- get these tools in place. These are foundational now. They're not cutting edge, bleeding edge. This is just foundational that we get this stuff in place so that we can pivot quickly, we can move faster with our customers and manufacturing, and so I'm just excited to see that kind of change happening in my organization.

Okay. Good. Swamy, could you share some of the specifics, what you are doing as a CIO to support those permanent changes for your business?

See, I think -- good question. Again, these things, what we are focusing right now is -- a couple of things we are focusing. One is we are purely making sure the BCP plan is completely tied out because previously, when we go to the Board, they say, "Why really you need the money for the BCP? Everything is working. So why that you have strategy? Why you need to spend more money?" But now they are coming the other way around. Now why are you -- take some money. Please go ahead and put it in the BCP at the DR. So the way that things are working is completely different because now in this -- COVID had really shed up almost no one has experience because this is almost reoccurring after 100 years. I don't think very small percentage of people are existing with more than 100 years. So the BCP outcome with the Board is completely different. And another thing is now, I would say now the CIO title is transformed to CBIO, Chief Business and Innovation Officer, because every time now, more than before the, outcome matters. So all the activities what we are doing, how directly it is impacting the business, whether are we getting a new customers -- a new customers? Are the profits are saved are more profits or operational savings? So it is revenue versus operational savings are more clear. So people want to really see in the outcome. So within these 2, we are really changing all our practices and also with going with the more agile in every practice.

So could you give us one or 2 examples, what are you doing to help that situation now?

So one of the situation, what we are trying to do is that we have adopted a lot of the more tools. So now I have, internally and externally, a lot of the conversational RPA and what I would call is, instead of calling RPA, robotic process automation, we are implementing what is called IPA, intelligent process automation. So what does it mean is, I am Swamy plus digital Swamy. So each person has to have a bot because the bot has to do the mundane work, which is very repetitive, which you feel boring. That is the work which bot has to do of your own. But then as a Swamy, I have to use my intellectual property and then see something which I really can use as a human, what I can bring. So these are a couple of things we are quickly implementing and also making -- I mean, we are witnessing the results are much better.

Okay. Good. Good. Doug, could you share a couple of examples? I think you mentioned just virtual events, I assume that keeps your CIO busy now to make sure the infrastructure is ready now.

It's a big thing. I think what Patrick and Swamy said resonate very well, right? In the spirit of transparency, it's about bringing collaborative tools to the mix, and that's a big focus. And I think what we said about the BCDR, right, as we call it, business continuity disaster recovery, that's a big focus as well, gearing up for this, gearing up for when the next issue occurs, that we could continue to meet the needs of our customers. And to talk about the virtual events, it's a very interesting thing to focus on to drive events that occur in every region across the world at different times, different languages, some of them having over 13 or 14 different language translations going on simultaneously. So there's a lot of things that go on with it that really help to drive the organization without missing a beat, right? And I think that's the key thing is still delivering to the customer and the end user as similar an experience as they would have had pre-COVID so that, from their perspective, they can continue to have trust in the organization and continue to thrive.

Okay. So it's very interesting. Whenever we talk about this changing new world the CIOs are going through, it feels very rosy world now, that we have unlimited resources and talent and budget and we are just moving forward with all the changes, but I know that life is not that rosy. So the question -- the next is that now going through this change, what is one of your biggest obstacle? And how are you managing it, okay? Anybody would like to start with that. What's your biggest obstacle?

Sure. I'll take that one. I think as we use technology, and we're all big fans of what's out there, and what we're using to run our companies now, it's the human element that eventually is missing. And it's going to continue to be missing for a while, probably until we get back to a hybrid mode or eventually getting back in the office. And I think it's trying to find the right technology that humanizes the -- what we've missed by the cubicle hugging, the hallway talk, the water cooler talk, the host meetings after the conference meeting face-to-face, that face-to-face innovation, collaboration that doesn't come through a call, doesn't come through a video. And we're trying to use things like we're really taking advantage of the whole team's platform where we're using Yammer now, and we're kind of spinning that as an innovation hub so we're having team channels around the world of like businesses or like processes get together in [ Daly ] and Budapest, Kings Mountain and share the best practices of how to make us better from a business process improvement perspective. And we're kind of using Yammer to be the replacement for the water cooler or the hallway or cubicle by say and just get on there and start chat and start talking about it, let the information start flow. No matter what time zone it's in, 24/7, here's a thread to build off an idea and keep that innovation aspect of the human element of face-to-face somewhat moving. I don't know of another solution. I'm very interested in hearing from the panel or other people participating, but how are we replacing that human aspect of innovation and collaboration? And these tools can only go so far. So that's just one technique we're trying to use.

Okay. Doug, what's your biggest challenge? As a CIO -- for your CIO. Yes.

I'll give you 2 really quick. So our CIO just talked about this yesterday and said, somehow, we've got to figure out how to make this type of mode a 3D-type of mode. There's something more than just looking at a screen all day long. But I think to me, it leads less is a huge challenge as well, which is the burnout factor. Patrick talked about the "follow the sun" kind of methodology and we have the same thing. And I think part of that challenge is we're always working. We're always on. Everybody that I talk to talks about how working from home they're working more now than they probably ever were before, and there's very little downtime. And so now we're home, we're with our families. As Shoukat said, we had -- or excuse me, as Swamy said, we have that ability to see them, yet, we don't see them, right? Within the day, you're working from home and you're still letting lunch from your desk. So I think we've got to figure out that balance. And I think if somebody has that trick, I would definitely love to hear because that's my struggle. And I think it's the struggle for a lot of people.

Maybe Swamy has that. But let's -- Swamy, what's your biggest challenge?

So just to talk to Patrick on this water cooler and the informal discussions which we are missing. So what we have adopted, which is at least something better than our days, of course, we are doing a virtual happy hour. But more than that, we are coming up with some kind of a team building activities, not necessarily putting everybody onto one Zoom meeting, but also taking one option and saying that, okay, we have a marathon session. Whoever has a good marathon session, 5K run, you do on your individual basis, but then again, come back. No more discussion on the official topics, talk about only those things. So we are trying to come up with some virtual team building activities, not necessarily glued to the screen time. I think that is really bringing some kind of emotions of the people and also the hidden talents because of these people, a lot of people are staying at home. They are coming up with their hidden talent. So I think that is really working out. Going on in the obstacles -- sorry.

Let's do quickly because we need to wrap this up quickly.

Okay.

Go ahead, please. Swamy, go ahead, please.

Yes. So I think the obstacles are, again, this perception we have to work out. We really want to do many things even in the COVID, but again, budget is one of the biggest constraints. We always say, if the Board is giving something, they immediately need some ROI. We don't have -- take some $10 million now and then show them the results after 2 years, they don't believe in that. So we have to do something. So the quick outcomes, they are also expecting the outcome to be in agile fashion, not only implementation of agile as that outcome to be. In terms of the revenue, okay, when can I see some big returns? But I understand, I think we are running out of time. So thank you, again, everyone.

Again, a wonderful panel. I think so many years of combined experience in here. Doug, Patrick and Swamy, thank you so much. I hope our participants have been able to learn a lot from all your experience. Thank you so much.

Yes. Thank you, Shoukat, and thank you Hunter, and HMG. I appreciate it.

Thanks, everyone.

Thanks, Shoukat. Great job. Swamy, Doug. Great to see you. Patrick, great to see you. Thanks so much.

Okay. Thank you, guys.

Excellent.