KOP - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers' Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] And please note that this event is being recorded. like the now Quynh over would McGuire. I to conference turn to And go Please ahead.

Quynh McGuire

morning. McGuire, quarter I'm Relations good quarterly and Thanks Quynh earlier release Communications. call. issued today. to earnings conference press and Director Welcome our earnings fourth XXXX We our Corporate Investor of

access this www.koppers.com. our website via may You at announcement

with Investor our referenced earnings our for website of this replay quarterly through our in we've on in indicated available this broadcast page call. this morning, is our XX, and recording will also call live website will Relations be our posted conference calls, As on site be release of materials prior and today's Consistent to practice the being that a March our XXXX.

has with is financial made and to comparable GAAP this statement. also may our plans These Reform attention Securities assumes performance its like involve measures. its Before statements. or statements Act direct regard press will as during The directly your in our as results, Certain a Private may XXXX. number such made call conference most to the no measures. forward-looking we defined forward-looking information get inclusion the measures uncertainties, The reconciliations uncertainties statements available the with statements those included and filings be these actual company's this and website, characterized risks as cautionary Litigation of during obligation in on be Commission. forward-looking update forward-looking which may achievements or The projected of significant to the today light results objectives, differ I such forward-looking in by non-GAAP representation the comments in to to statements that started, a under achieved. you comments, any inherent financial company's not References our of company's materially release, implied certain forward-looking expressed non-GAAP of would provided press statement, the in in In the our the company of and included release risks should financial company be Exchange Securities from assumptions, call. described including

Joining Financial Mike Treasurer. are turn to call and President I'll Koppers; Chief the me Zugay, our Leroy Leroy. and CEO Officer and discussion now of today for over Ball,

Leroy Ball

ever Thank our you, our everyone, Quynh. a call. EBITDA strong that to to ever, had highest adjusted I'm quarter second-best fourth of our to sales Welcome, Koppers, EPS year, safety rate earnings a XXXX finished commitment XXXX an lead in as successful we ever, and our company. happy to more adjusted we we investment believe our the our and highest finish our with report we At best our will remain ever. stronger, to for unwavering welfare safety our future people, that

our protect the success in if we believe will to continue and well-being do. We else all follow that employees, of health what we

injuries just our out history Now, I'm XX I operating year that indeed recordable XXXX. over in had locations we our recordable to proud of announce the company, X% XXXX, mentioned, Moreover XX is in the lowest improvement proving X of as a total no possible. rate finished with

also has precursor to continued identification. hazard incident decline year-over-year, serious training prioritize Our reaffirming around our efforts to

plans past year, people. is company training executive that performance of the our worldwide leadership date safety For towards showed beginning Zero with frontline scope expand XXXX, history. include our gear best and our in Harm training and results the our piloted globally in modules has of our Australia we'll deploy team to safety during were in much achieved successfully in To efforts Zero the to operational for to XXXX. all employees continue Harm

Koppers as and sustainability responsibility very seriously. also don't at at we Now environmental safety our efforts stop take

our will long-term evolve, to continues sustainability As strategy too, so our company's efforts.

other Koppers from requirements, industries forefront a also with As generated been of sustainability we've company raw renewable model key of portion for at and operate. waste Recovery production They're of bring Koppers management M.A. continues sustainability Both our Sources cycle to Energy business we it and acquisitions foundation significant our capabilities further feedstocks, Koppers Harm our utilizing even how before renamed of before Cox material Resources, Industrial another the while the Industries fashionable. examples XXXX, our recycles In existed extended the at resources and that streams became Utility be that culture way a to our in renamed life for product Zero we Products. businesses company. hasn't shining

slide today's of call on with X, our goal as I'd primary hope that financial is Now Our one: are performance, state details year XXXX. three time before we're everyone to this there the to to finished. I by into beat like shown that Number going the from takeaways leave

that EBITDA this better we're a XXXX XXXX you $XXX want the working just all-time of make set we and year. adjusted to our achieved high guidance million Now $XXX fact to the million relentlessly year for about of expectations. EBITDA to past where is that's But make mistake million $XXX than no adjusted your

reduced balance is happens one always of now It our X: at years our From get leverage. four intensely also for X. bar are to to of competencies Our it end straight turns XXXX, of the XXXX back X.X sheet. that XXXX. Koppers of the two to that to December least at goal we and down We're X times core push to full on Number by get focused by done goal times. managing we've just focused leverage January is on to our It's higher making and the

has $XX million was pulled our which means of debt of action capital net minimum million in by have us been we allow into to destruction will our journey believe to that this shareholder XXXX/XXXX investment begin not spending year's the we'll offset that XXXX. million to $XXX I And spending, levers capital $XX a our by that XXXX. This reduced reduce spending two-year commitment in within that of achieve a value. of will involve number to Now

at today's our you to from continue deck away to we shuffling the like asset master The call base. take existing of third as will we managers, to is, of thing look portfolio play strengths, as our continue I'd to

what evaluate will financial the of transforming our shut we've subtracted added In also way wood positive we've we've six and into in five past drastically and reducing should built in ourselves five enhance sold risk. or years, We five, facilities, value our new the while down businesses, a overall brand. acquired to protection, profile while leader the world plant changing a be

of also industrial that's company can will sustainability. only same not on refine focus committed as to the kind expect You be but of more we wood, the our heavily

the discuss results. So financial let's now

sales, Koppers in year ever For and $X.X our XXXX. highest billion over sales XX% a delivered improvement XXXX,

Excluding still from our the X%. acquired nearly impact companies, of sales by the sales increased

a to EBITDA. year which In $XXX.X achieved upon to were or finish line record-high our guidance. For at the straight second million improve XXXX, prior million, year was record the able revised $XX.X year, XX.X% adjusted we our with high we in by

Our greater. a adjusted EBITDA only margin XXXX that second has The other of public year achieved XX% our been level the also or straight company. and time we XX% as history in represents XXXX

EBITDA company's and XXXX, last three three XX In XXXX, adjusted highest fact, our the levels the margin represent XXXX in years years. last

into had that that through for an to fourth EBITDA in would history. the we stepped averaging our the XXXX XX% cycle. XX.X% mind profitable been company's growth essentially role, to XX% sustainable be economic our Keep a achieve over contrast, prior margin CEO our the EBITDA streak XXXX margin at six years, time goal in the and also between that when Now I I seen of made commitment such year margins in span. longest high adjusted had In flat-to-declining represents straight improvement adjusted

top we operate. do a as a ahead, That by said, in straight of we it's bottom cautious have upon number looking us and how Now out, again deliver they of to we year in appropriate that improvement challenged believe XXXX. line have can line be play opportunities profitability we'll depending which markets to fifth available low-growth we potentially the each approach once and

Before our highlighted quarter do a of like recent X. review page year, I'd quick to covering for expectations fourth our as on this

quarter untreated our year-over-year more had business volume we improvement in for into if getting since first RUPS the results, notably, would mid-XXXX. have the fourth we during ties absorption. Results even due most to in lower were PC with line greater were for segment expectations. time And cost that weather conditions our So higher been quarter our even fixed favorable, saw would compared of to profitability production greater have was prior and year, but

as healthy its year. margin, which maintained is CMC prior Finally, a profitability similar relatively at the level

XX% million by quarter. increased business, Now or million million $XXX.X to $XX.X prior in year in our sales compared the of of sales $XXX.X RUPS

prior impact over Excluding year acquisitions, the X% in up sales fourth RUPS were sales the quarter. from

lower by Australia. and its partially from volumes In favorable products addition utility railroad for bridge to to higher demand pricing crossties services, offset acquisitions, benefited for related sales in trends

The or commodity the compared by of compared year million gains year compared or quarter. for $X.X with increased the raw adjusted due X.X% sales margin costs favorable For $XX the our $XX.X with million XX.X% driven to driven demand a was increase the prior prior in X.X% hedge abnormally XX% improved to $XX.X current driven The was in million $X.X quarter. as EBITDA in the with in of the utilization $X.X and million year acquisitions, X.X% segment, improved of the lower volumes was primarily more North or quarter, recent prior by slightly cost Adjusted average quarter. PC's lower RUPS to production year-over-year even contributed $XX.X compared contribution year million Chemicals in the year-over-year well savings. year was Performance pricing higher improvement fourth in or as the for mix In acceleration actually by but due sales quarter. higher that from the was million quarter EBITDA more included or to by America. million material quarter prior

in Our prior X% which of by sales quarter. business $XXX.X decreased year million $X.X sales to of million, million compared $XXX.X CMC the reported or

or lower and improved the of Australia, year the prior phthalic demand unfavorable million sales was pitch quarter. was North and $X.X $XX.X quarter. CMC's prior the higher $XX.X EBITDA the in profitability million by XX.X% anhydride an America. from currency or China in Excluding pitch XX.X% million, million translation from in by fourth North from in compared America offset slightly the with sales actually year prior offset This quarter month or due Adjusted X.X% our And quarter full first impact partially now year in online one special At in operations carbon purchase a $X.X to is partially foreign increase for lower cost prior under increased new realized approximately Illinois some level. and outpacing our completed profitability than and handling restructuring an for lower our contractual to pricing in production. was pricing. quarter Stickney, due naphthalene operating savings facility the raw to safely material reflecting plant successfully all by naphthalene increases order permanent only facility margin from at due initiatives, and Stickney attractive China

cost beginning benefits to both expected, efficiencies. from realize we're As process the and

I full year to provide outlook before highlights will XXXX, So discuss and from it quarter the the our Mike over fourth key some other to for turn I XXXX.

Mike Zugay

Leroy. Thanks,

referring as increase The of XX% $XX by driven well was begin $XXX increase X, in that Let's growth million website. slide year On presentation $XXX which our our million provided in million on were or for treatment prior segments. quarter. the to an the slide quarter, the from acquisitions business the by in as revenues was again wood was

for On all increase slide business services. in to of RUPS products $XXX improvements compared or were as X, well $X.X the XXXX in railroad-related billion, as benefited an million of prior acquisitions XX% sales year. categories billion $X.X Our and sales from consolidated of

still acquired revenues consolidated to sales Excluding year-over-year related X%. increased our $XX the or million by businesses,

profitability prior raw X, higher year our XX% from reported result million with costs to reduced fourth slide primarily $XX commodity RUPS despite CM&C on the material to or hedging Performance than due was to China. as higher in prior from in quarter a the year XX% million was subsidiary slightly quarter quarter. challenges delivered lower segment. year EBITDA Moving to gain. nearly or prior adjusted compared the $XX This profitability due its the benefited Chemicals the year profitability in related prior than

This on million shows profitability XXXX in our driven compared year. Moving can this strong as to prior business. by of CM&C X, our EBITDA you with in see slide $XXX was bridge the million $XXX the increase in primarily

quarter. in like this totaled Adjusted Now Adjustments income income the million to per approximately $XX in net was share share million was the year both in year. referenced to earnings not items to the prior $X.XX are quarter. per compared million I'd year that several prior for and for share the Adjusted year slide with $X.XX compared $X current $XX presentation. per quarter discuss pretax prior

to deferred fourth had for our in the tax a were tax primarily that as write-down stock Our on result a XXXX. performance a per related forfeiting high share of awarded asset $X.XX negative quarter the of of of expense units effect majority GAAP was approximately book This a basis. the

adjusted excluded calculation. EPS However, it from our was

adjusted for Our $X.XX EPS share. XXXX per was

we're anticipating a expense costs. year-over-year depreciation and well XXXX, For as interest as higher amortization

and spending in adjusted from expect to And the in made I'm to depreciation XXXX around a as amortization expenses to are a borrowings. as XXXX. in to XXXX. We XXXX. million to in of will higher XXXX primarily sorry for projected million approximately interest is Also EPS $XX of million $XX data that variable increase well $X.XX and that on from will as acquisitions -- expense we million two our depreciation This additional are due high due as increase projecting With in XXXX related our CapEx full in high borrowings $XX related to the amortization to of our acquisitions to that be this the XXXX interest $X.XX. $XX well of $X.XX rates our range year level is in

to have expense to due effective as Looking reform foreign GAAP of XXXX rate limitations interest tax deductions the effect the tax. as earnings on on our GILTI to effects on continue as the known U.S. the forward will well tax also minimum tax the an

rate the from extent at in adjusted will effective approximately XX% EPS effective projected We XX% in a lesser to And XXXX XX% negative XXXX. expect approximately drop remain tax impact in tax this XXXX. The GAAP will will rate be for slightly for XXXX. however at calculation

from capital provided XXXX, decrease activities $XXX material This of cash, In untreated the consists prior new on PC the million working the due by capital a the result million year compared year well higher unit compared usage to crossties net amount $XX costs at our increased CM&C primarily was year as additional to year. in as at operating end. holding expenditures in the we Also inventories prior the our was production For raw as million rising facility U.S. facilities Stickney. $XX spending expanded million capacities in $XXX at The current with within naphthalene were of construction year.

the of Mayfield, We our Australia. global we also overall also operations. efficiency our safety made in and And of maintained improvements facility all

will For $XX fund be XXXX, we this expected we million to estimate through that and capital operations. expenditures from approximately cash are

on presentation net returning back and Now, shown Industries. to as as our slide ratio our December our basis leverage and and on our XXst from Page of earnings forma times Cox was acquisitions pro included pro forma MAER of a X.X XX, this

this be end that will between XXXX. Now, of the we're of to at times somewhere projecting the X.X ratio range December times of X.X in

As year. to expect minimum Leroy current debt our a mentioned earlier, the we during by $XX reduce million of

approximately on including Our million. our liquidity was hand the $XXX cash under end at agreements quarter fourth of bank the our

back Now, Leroy. I'd like to to over turn the discussion

Leroy Ball

Mike. you, Thank

XXXX increased rail fracking Overall, coal the historical intermodal amount declined increased levels. units X.X% the for combined traffic with to heavy significantly business, loads our environment sands prior Now, each although U.S. a year. X.X% American Railroad indicate positive Services up reported outlook traffic was for In U.S. that demand of macro Also to past like year. have of increased of AAR haul legacy I'd Products as and months X.X%. steadily regarding year-over-year year-over-year our total XX segment. total The prior of or RUPS several And overall. and by the carload Railroads trends for start from and traffic such Utility businesses, our XXXX years, Association during compared has the modestly from

lighter-weight translates less tracks a this result, loads and ties. As having on wear into

to to In addition has the capital. Class pressure ratios spending continued has on flow I improve the way railroads operating and cash which put every finding pressure reduce

forecast last replacements during XXXX year. RTA than replacement $XX while approximately we million more the numbers. slightly of railroads for to building own improve, back inventory an in to this and to the As to part our of I couple for railcars North the being And treated crossties early plagued to Tie has XX issue see while $XX been time demand is in the crosstie some transport availability of accept certain to to keep million XXXX XXXX period, a Railway and as challenge result have it up crosstie XXXX higher there XX due a industry delays to million has market are result, peaked industry of restructuring Class to continues of crossties. service demand annually dry been demand years. the which calls having of reverted Weather the or Association treat. American Meanwhile, be historic issues have levels the range crossties According in in million able forestry And the actions. to with delivery issues and their

whole, the will that by for demand the service not performance business in summary, improve. and challenges the issue eventually will we are On In an XXXX. addressed railroads being these anticipate rail end-market be

to with a old. If installed grow half get their the as programs believe which territories. nearly we XX-plus basis, amount within cooperates, utilities will Untreated the rate continue industry-wide and and pole the to ties be. to will purchase to they XXXX-XXXX XXXX of get than need cylinder years depend getting purchases in On In lower begin into were an cars approximately utility least where that getting drying more improve replacement highs at back market, we need so in by upon they XX% weather problem. up our can success continue the the shouldn't at be service Our to yards, XXXX to air poles that treatment. utility tie for a they to half is put that inventories base

that will Given anticipate demand that a year we be backdrop a solid XXXX standpoint. from

acquisition. results now fast-growing due have to we'll and offer utilities railroads for and utility environmental addition if year's from Cox our concern of we exposure disposal a full Also poles potential services help the In crossties to done used to a solve worth for liabilities improperly.

Our ever-increasing program ties been to include long-term and of either in to of service provides or have industries. to can recycling environmental savings lead out Along industry that access rail with Current landfills. management utility the also considerable disposal potential disposing taken railroad some concerns. benefits that and in practices cost cost risk tracks alongside and landfills

of reusing as footprint of are improve ties and further using that recycling ties source recovery approach tie including Our poles. sustainable fuel the environment. the more to contributing copper environmental Customers a and can are end-of-life a scrap services

should of production by integration we've biggest opportunities or targeted. facilities far which to by the We're solved path year-over-year that as Now, as treating segment now anticipating utilization since and volume are improved we're facilities XXXX, than actions Also our annualized only within demand existing the actions the towards of These at additional XX problem we and environment of initiative million acquisition operating with through of of the lead finally on benefits to million pullback full ends And both an increased opportunities. many $XX more less facilities. volumes Cox should constitute generated significantly in in strategic on less pursuing and cost operating In $XX XXXX. consolidation a have them and well synergies the commercial the putting gaining us improvement through various in our the industry, integration share rail first the set and process realization this exploring strategic utilization that higher that's initiatives so. rates. market

XX.X% to million margin EBITDA Studies our to to in to business, revised on equate segment rate, million increase growth improvement for LIRA decreased Harvard Joint In for to is more downward concern X% The reported estimates by previous consecutive RUPS And expected adjusted $XX months Remodeling total declined December that homes home from in of the reflected XXX.X nationally. X.X% to existing the or the from and estimated in $XXX two in of compared economic at an areas decreased National Confidence $XX Housing home moderating a lower the Consumer $XX The sales increasing year. Association market NAR guidance providing the consumers to economic due on of $XX X.X% annual are As still down the become November. Chemicals is of an than XXXX. The million. EBITDA with will of billion or that begin December conditions REALTORS to repair NAR, the XXX.X X% X.X%. of after existing in Board of Even a our University by adjusted the a XX, and an and pace November Conference increase million year be growth from reported more trends ago. spending Leading The of range have has According sales that little to of now would down Slide in Performance with assessment Center we're first prior declined increases. Index these Indicator Activity half muted. forecast current national from of growth of LIRA projected for that that

costs higher average will pricing than this hedge prior step implemented related increase costs, side costs as XXXX our actions input certain in headwind to areas. the our to partially prices we've Now to related copper offset the prices higher necessary are year. take our raw primarily another business material To on

Chemicals. Performance related and I feedstock news regarding offset savings the expected items completion -- our side able date in higher on that we'll the of completing Now sales capacity we're costs. and be good quarter to several equation expansion process in realize our final have feedstock in-house an the with second the cost to report at feedstocks of stages time fully to for

and effect that our implement continued material where headwinds. took price increases we should offset in did First, some to help certain raw that of possible QX

the player new become fire new introduced products the six In field. retardant months on Second, has it which strong we we've product a in and strong number we into our of industry. things our share the a within side approximately quickly XXXX, the market in is FlamePRO standing and both our the product launched two U.S., in a to product position development testament late since moved

Now to in for demonstrated has business, investment in our our we've continued Chemicals third In facilities valued R&D, sizable that commitment and of people three It's serve market time our the customers base. that that of the customer recently our firm our our our accounts increased the U.S. owned through news. the because that and piece new have good won leading Koppers Performance commitment share. we further industry

Now more Chemicals, the XXXX for our through and we new to Pricing awash known X% product. real key expected a our achieved to demand environment. fire normalized achieving increases expectations be share Performance to market cost wins growth hinges in retardant are upon have X% mostly

we be do thus early far track. X% on of through to for organic in required growth X% good this the year to that volume of need be is targets part will to overall seem to we get news to The X% However, X% meet our the another that growth to Chemicals Performance XXXX.

moved can represents ourselves tight, normalized past. into XX% compared page to $XX where our a estimating raw return for and board XX In And range products profitability at would under material In way ahead of in in in million range pressure as coal see strong fixed to back have our As as got to out-earned than certain were across margin. an enter EBITDA adjusted increase XXXX we has the lower get competitors in pretty prior a we're XXXX margin market was our regions moved in more of prices million prices pricing That environment presentation against the in tar clearly business, to share. us was $XX expectations segment. we much for CM&C market good by up a pitch with already are coming this is and of $X as and an carbon end to XXXX take value wide in more trying to year. million of million. years Chemicals XXXX adjusted -- that approximately XX% Performance a demand you situation able we to on $XX equate of EBITDA while our slide

In our cost has behind a off oil historically unit savings naphthalene they new remaining it's and prices were feedstock pricing gains the results. than from chemical hurts served margins. Collectively where impact Stickney addition, early stages lesser of is in started our to and and with XXXX while disguise that year that the in carbon XXXX black our that has the in

The that important XXXX at this CMC results completed our could are point expected still the segment away end be, to thought of take where restructuring. is higher we once our of range the

massive So success. undertaking I huge consider that a

limited Now the last this significantly piece very our CM&C in dispute. to customer China how in to results XXXX post our is projecting lower I puzzle, can to our subsidiary I'm ongoing KJCC due comment on subject.

the from our In through cost offset customer contribution materials second towards In a we're coming on new cost resolution in and of naphthalene raw higher year. this from XX, the this March XXXX. XXXX, quarter supplying So a temporary special assumptions I'll our primarily purchase to joint facility. under of to partially savings the our just Chinese in venture, runs say by include that that reduction business work some significant continue we order meantime,

As shown million can our EBITDA full to to for year. growing you in on XX% an consolidated patterns growth for XX, of contribution our adjusted EBITDA XX% production, product equates PC billion the $X.X new is to $XX of $XX introductions. in in margin to and for slide of XXXX, crosstie compared see market $XX to anticipated $X.X improved addressable organic of XX from year guidance the between we prior and acquisitions, billion. drivers anticipate be $XX with range slide million various more a and which assumes the in sales a The business normalized On and CM&C million approximately decrease adjusted that million forecast

XX, adjusted strength in relative to our The with of slide normalized served meaningful XXXX offset on profitability. basis from more settles those million. CM&C to And a ultimately the to markets whether wood-based back an our shift our million guidance earnings to contribution the consolidated have expect improvement businesses mix EBITDA in in Turning for primary we determine is a of improvements generate $XXX $XXX will significant lower generating businesses enough as range. it profit into can end range

focused of reducing our will two, we're wood our close in as up possible, you the questions, to the three three more XXXX; asset opening on than much making this extract base that for global as one, looking number it we technologies. as as we to at guidance limits our I on before call: three, number leverage number XXXX the is focused the front of and So to takeaways profitable while aspiring are mentioned outside and the I XXXX; leader at are value lower end times end highly cautious, by in everything while I remind push treatment and or of it

Now I'd like to for questions. up open it

Operator

ahead. And questioner will the Instructions] Research. first be Howe Chris today go with [Operator Please Barrington

Chris Howe

Good morning everyone.

Leroy Ball

Chris. Hi

Mike Zugay

Chris. Hi

Chris Howe

Had few questions, a Hi. listed here. off

regard in how briefly capacity stabilization Just within to the mentioned segment, the your continues. PC about you

of margins? second complete see to Assuming on the half quarter what in impact expect we this type is second

Leroy Ball

I not correctly. Mike, sure, me be have think this, you help with I'm with that to I number can I because want just you, make honest sure To so year-over-year, the

to it focus us numbers on the is wild going to want get comment didn't in we the really That hurting some can The volume materialize. year had year-over-year we was or this for getting increases think year offset of that had you that basically that cost Chemicals get place ultimately I on would make our last and that up squarely that improvement of card because flat that thing us we you terms only expectations Performance is area in the standpoint. point We I from rely just had before organic year-over-year volumes. the whether in So real improvement. of be into to ended

am And do most And is -- piece that that I'll that the we that so, in to some personally probably with cost organic But about worried it on year. little thing the Mike turn growth need it. a over this I'd say -- of segment. would I

Mike Zugay

it copper. And that's $X raw a you the and higher headwind -- about one our Yes, Chris material that pages go specifically of if in presentation we million back addition in have headwind. look was of an at costs to

our So outside raw were able back in where we in where buy parties. third produce in within through own group to -- and to XXX% oxide were material cupric not quarter second going are these improvements internally feedstocks, to we XXXX some and through capacity be our two to from BCC production we the have back

raw material a there half is But offset in year of it's So of tick-up bit going being by again, to second cost. the there little a -- the be margin. the

say improvement your would to of I X% X% in gross or answer probably margin question, the at the we're looking So half second year.

Chris Howe

line. perfect. one the then product next my is fire retardant Okay, just on And

initially in two number total market. your You you're press the the release, in had market there mentioned available out that's

And is how the you the perspective, realistic versus you to the one runway market For we of total aspirational? you contribution -- its position? available in number leader that where should would there? in what And mentioned market taking are characterize how that XXXX

Leroy Ball

player -- is But say be the contribution in product in because a their business this And nature for the model its outcome. field number terms the going I'd to of for would that say make solid that number And say still of inroads. of in certainly us some good There's retain being near-term, it's to us. is a particular the opportunity still continue of they're us meaningful uniquely bit So I segment. I to realistic to probably that's year, positioned one ahead certainly two would that lead. most

opportunities think I cost next couple the improve of that some opportunities over equation to move we driving continue of we the on as profitability years. to side work to out have

that volumes bring to online, market we'll we're beyond at, penetration we margins profit the currently I think those expand couple share as over necessarily able years in be where the at real any moment. next even maybe business without sitting So the significant of

Chris Howe

its That's as helpful. just you to the delay And sensitive then is my I as information know can regard in last regard China. production possible in question as in -- share much

moves that into orders forward to supplement? and would expected special not Assuming more in second it's quarter is completed and that it flow it QX the purchase QX through

Leroy Ball

Yes.

partner trying work this situation. -- to continued with manage we're So I mean throughout we've through on to our

in was first. the in then late order purchase and of special the the fourth the fourth result the -- so quarter And we special did order did purchase we the quarter that in ultimately

discussions helpful about that this a through we So is we'll we're to -- continuing way have managed our partner in continue parties and how with that, again situation to both do to that.

where up least So at ends we're don't ultimately talking. that know but

Chris Howe

my questions. taking I for Thanks queue. back hop in will

Operator

go Please will questioner Harrison next our with Securities. Seaport be Global today ahead. Mike And

Mike Harrison

morning. Hi good

Leroy Ball

Hi, Mike.

Mike Harrison

that, growth. earnings levers organic In goal which to drive have relative to more XXXX PC the the terms little is exceed But volume put what card guidance you've to out wild you a your other that in mentioned little than are the higher? is You conservative what in bit around wildcards earnings perhaps segments? do two the your a of

Leroy Ball

you yes, So absolutely got it right.

be And side able get get the there if from bottleneck and again the that able In has the dried we impacts that's through we're of side of compounding usage. key and the there. more be our terms things, weather the also volume -- the its it to can because this more more cooperation we're facilities to to In into able year PC effect railroad get to volumes. push going look to creosote a in the ties

And And that's I of the as then business. material the really So we front again some that. can, were the be the the pricing and the like saw half out in raw forecasting it. XXXX on for end-market we different that year of on raw enjoyed piece about would in -- in best that we dynamic. fact manage just material key last really of CM&C areas of that side cutting costs the In were pricing we since of some end it's had trying to then we've said, the pressure We into benefits future last good probably the market.

ultimately all but overlaying equation, in how then out we'll the whole that things. So of cost determine CM&C end out, falls where upon all depending flushes of that the is

as costs We're on arm we're operating there so, keeping long of cost as really in in different of meaningful hit that time of that development are discretionary projects impact. minimum. hard could equation. at different any terms list my the to stages and focusing going that any a and the take focused on point have in And time given side is we And have on a

sure play that to So there to a little us past But be the cautious had back the out put we've that think tries while put make that and meet to things trying to ourselves different to do. position our there a may from closer to whole that able in overly and of years what exciting is may host standpoint taken into the -- while expectations and in to guidance be we necessarily little we've get we not a bit approach what be really, beat it. I best of trying we're

Mike Harrison

All that. RUPS the little right. if a give there. I you more margin And the on side, can performance appreciate wondering color just then bit on

Or just were that there? more played color I factors really give utilization it be us some a to higher. Was can please? it think we expecting little in bit you

Mike Zugay

treat. plant in crossties right. It that crossties getting the dry right? utilization, was No, basically you're Again, to -- it's and exactly getting

we margin if the But There have fairly higher shown we would even numbers significant we So working certainly plants and bar better that had have low as the volume into been year-over-year profile against. was saw well. a coming improvement. would were more the

Mike Harrison

of on I to then, wanted a And right. CM&C. All couple questions ask

fourth joint assume the what of China does And your from contribution was what guidance the for that XXXX? contribution all, EBITDA JV First venture in the quarter? in EBITDA from

Leroy Ball

again, fourth level XXXX, be it it don't say year, let's in we page Well, is this we quarter. expecting show this say, without down front give down, million as contribution would to it's I we still year. going million But to that just $XXX that the China's And what relates to or past better think be -- from but of have I'd been don't -- $XX me, detail, I we're that of Mike. $XX at we have to million project in the

Mike Zugay

Yes.

we're That's between projecting the contribution. over $XX XXXX is and Somewhere Mike. million million $XX where XXXX

Mike Harrison

of in then like profitability? look also orders comment And right. All can terms what you those on purchase

Leroy Ball

I I've already can't do do Mike, I said that. I should that. more can't probably about China. really -- say can't I I mean, than talk

Mike Harrison

turn it Thanks I'll back Understood. very much. then.

Leroy Ball

you. Yeah, sorry. Thank

Mike Harrison

Thanks, Mike.

Operator

And ahead. questioner Burke will FBR. with B. our Liam Riley today Please next go be

Liam Burke

Leroy good you. Mike. morning, and Thank morning, Good

Leroy Ball

Hi, Liam.

Mike Harrison

Hi, Liam.

Liam Burke

Have you of anticipate change purchases in investment with do that you've step-up completed on your Leroy, the you that had in the more just business of to step-up in inventory Is. XXXX? relationships Class model the or inventory

Leroy Ball

going and we're due capital. we're there the will try black-tie So, working -- into tie step-up there more an to But we in have ties to right? our drying, naturally for essentially terms inventory air untreated conversion, bringing untreated a so inventory, of yes. so And be facility be -- building in that's looking impact to if would

in to We are working throughout our overall businesses on plans to essentially mitigate all the reduce that. try hopes and inventory

increase the up programs and Just right? happen, working from have able push what offset set to cycle cylinders. to place in capital needs management have tie are inventory be we to enough the I to think, a, be to naturally would So try through to that builds untreated inventory that

Liam Burke

disposal a Okay. made of look any acquisition And for cycle customers? step-up you advantage sticking complete traction your life does And -- it service the that with for the rolling the the particular as Have like to RUPS in gotten any as competitive out you you client. business, competitors? at management tie a any could

Leroy Ball

it's things industry us that for Class a at Well, in large. of the key certainly rail main really I business, that because and the it's one service interested the

that part solution be for environmentally as to service model of for wanted selling we're to our end-of-life them. an to the responsible that products in helping have into we So find able

it sense. services. our looking customers interest in at We've standpoint expressed had that that all think from at have different So conversations looking multitude and with perfect we makes a this of

of advantage the one bought we're meaningful that. discuss we'll as But end that business or use that So that becomes of and to we And we do at do announce that was appropriate using where things if hard. time. working try and it hopes to that with the continue to there's a anything competitive

Liam Burke

again. guidance touching on just Okay. just lastly, And then

I at how caution and of be what's the mean, should caution overall in around much Is uncertainty how your raw caution driving materials, Your availability the for China that looking pretty -- inventory. -- XXXX?

Leroy Ball

of numbers. China on out with able pricing of on end-market would then on going But guidance it, the relative reiterate we're say business, pretty this year? I'll ultimately it that it's plant, throughout it's side see because to because comments. get the the China-related, not okay? them hit about we tried in the I ties less I going we did So to the it's in the can we're if prepared and in It's dynamic that deal to material, really enough we're is little into Yes. at I And of -- Liam, RUPS conservative that. -- above two, stage that of to and and do -- sort see growth see PC our where just real over we shakes regular fairly do year, -- organic time. as more organic raw And Number impact anything are we in sort our you this meaningful. of and a are -- for of CM&C, on think we but last which that think, business, terms sort us,

get So the business to not. we to that think, to three or pieces be businesses drive at it of those each better needs ultimately in three look particular the that, are or I will where each

Liam Burke

Leroy. you, Michael. Thanks, Thank Great.

Leroy Ball

you. Thank

Okay, Liam.

Operator

ahead. will And Please our Emerald with Scott next Blumenthal Advisers. go questioner be today

Scott Blumenthal

How Good you and importantly and today? Mike Quynh. morning Leroy most are guys doing

Leroy Ball

good. okay. Very Doing

Scott Blumenthal

and Great. guess Hey, them in accounts PC Leroy, as you mentioned you some new described I sizable.

might by comparison to maybe those was You wondering to announced and announced? you able press if release via where already be up to press and what you've size lumber I be

Leroy Ball

in I in I guess, -- of we well. my comments guidance mentioned it Well, have as sort it's so -- our

growth year achieved wrapped it up revenue additional and we plus these said picked in we up, our our up. But this -- have think to we may, retardant business. share X% picked again, X% these three expected have about market growth, for not been accounts through that I -- these gains fire have accounts of

revenue will growth A support half that's million. EBITDA is get around our to Mike year - that numbers improvement Zugay So, annual overall we about the estimated the projected. Scott what to needing talked And we've of $XXX for that that

can So on do $XXX the million. I you - math Leroy A that. Ball think

been a - answer recently, all really the on Mike, for got Therefore, you a past That's $XXX and we will working to numbers over the sales essentially I it. we a to CapEx light. you the we - a bit A million million. had say on? maintenance from we it in I $XXX Is million our ruling helpful. don't way. we now but could I about in number just the that the $XXX we've base this fixed move have have point you Well, or can't that's, asking that. spent on your want that that little the XXXX question improvement we've Yeah. Okay, do But at I you did asset Q with trying that $XX things out? side That's the the shouldn't question. $XX think the right. work seeing were into try now -- -- an Leroy is a -- basis just an the in where a we difference numbers But have finished I because in And speed XXXX it's there would the appreciate What of from spending question. is Scott A XXXX. normalized year some position - things this that a to million. ability the absolutely your $XX you're some Benjamin side. had really about And on Ball ask and where know of up million customer to something talk passed China Leroy, is obviously, something any lot Benjamin Q we what to -- lower expectation it two-year and expect was period Ball arbitration have situation than happened CapEx -- we Scott in I for or program to is something of - what Okay. Leroy of Scott million. we

$XX question, is operate just Mike - number north facilities I say I to on it worldwide. million that. higher on your light average we I That to $XX side. a say So million. Zugay on would little would answer A probably the maintenance somewhere XX specifically of now And over a of Scott say be than end it's things, even I'd is mean, conservative

this can't long do and company to we're too starved that. You itself going starve in for has not -- capital

of not any forward. that we It appropriately. our get a a we ensure ourselves not viewed as out the moving So be -- capital to should and XXXX don't is indication is ahead manage reset in trend

in Benjamin a in Free into other through the more. if we're either back way cash. is going of of I maybe to A have looks down extent our is. Leroy you're Scott reset to it that but growth that? to for Can and end Ball sources a the indicate something XXXX. it's we the this guide If facilities. vicinity going we needs of envelope cash anticipating, sort maybe million year you there's money capital three going XX% it a put below even around. nice be to at/or maybe I - that a have Yeah. try So That's Thank bit the to go-forward just to the And here, comment to the flow looks to somewhere years, be you're on that, have one, levered on really would less some couple of is get mean, will of that pay facilities next to you. a you Duly less go on the - do noted. over Q basis. $XXX of times And just or to like it little can like theoretical the which need of XXXX by you bar Leroy some

I all are those in all absolutely play. and those, Scott -- think So

What EBITDA, of to our And we we on increased the three-year happening sense our turns And reduced here debt. of as be combination leverage equation well the right? some well. asset to So refer comes of some we as were that in to by our through down happened out We when evaluate the same is in into or that I of the fact what bring be move XXXX fit. able of. and base fits, some doesn't will that there XXXX there cash sort expectation two both to sides continue makes thing period see may from areas what other

we you number we and - Okay. - things in can't in Q at Scott it's - from mentioning so again the the Yes Dan of really how facilities a those Dan. all saw specific ago? Scott stuff - And CM&C I Thank sir. will similar have, are Dan. Alexander contracts restructuring in That's Leroy guys. Daniel Q With you. what Ball our for expect program ahead. Ball be on But years Q that. in expect. than RUPS it. you? Laurence given Hi, - - CM&C the little Yes. get management Benjamin questioner Jefferies. Leroy you'd are - that. Leroy it's play. more Rizzo welcome. can Benjamin with Good, Hi, A Rizzo Ball of Mike and a Operator - today like A How - portfolio is aspect A Q A Daniel to Ball So And Zugay Dan a Please Appreciate certain Leroy to go couple This Laurence different You're tied facilities Rizzo terms A

was comparison. that the we back an face problem, a then. running had we apples-to-apples running plants it's were less full theoretically faced we the that lot right, issue not necessarily much So than utilization. it's it's same same But at The of issues

lot of So a costs. we had fixed

may to And remarks or said was side look available CM&C other same willing and part exact we were to go we really the just -- sacrifice And to in the at was to didn't trying it straightforward bottom the CM&C out here successful, I It's there's of top to But like best into as mentioned over way to play shown be there's I itself here, process that. so figure what overall side. it to on as end the this. have prepared highly that at we solution on line opportunity which which to us whole be what think the was improvement. drive on as going the is equation, two about it's necessarily my over has RUPS not come line

look more. You to facilities, down, your get we right can either remains your at what doing or focused go through put can we're facilities is look you improve to more at more Well, through utilization, improving market on bringing and strategically facilities trying how so share. intently our your at

on we're that So consolidation. end aggressive actions little focused we're then might of more successful see other side need that not on And but And we're might if end if you a there the things. less too. for on then be -- bit of it

to each Thank there's Daniel quarter All that. that right. very forward. if as you. regarding that worth mentioning Rizzo so out And just Q we up And play we'll everybody helpful. And - come actually move That's things will one update that continue question. more are certainly

at I to that rates. structure. different just full from it purchase is again does the partial -- Zugay no March and was any there of rates special running it a Mike then that like what mean the is XXst take with -- at it's With -- spill? JV, is full Or agreement less JV But Yeah. in A kind operating just -- it's there? dynamic It's there? more pricing the or wondering -

- questioner FTN Q Jeff Financial. And I with go our be Okay, Please today So… it. Daniel got Thank Operator will Menapace Rizzo next you. ahead.

Jeff Menapace

Good morning, guys.

to about understand XQ, structures orders you talk XQ. customer. just to in you've XQ want don't the with detail understanding different I pricing these My Just want been contract know purchase I the timing. now is on operating China -- But XQ

quarter should last when accurate? this So, -- rate, you're tough be that in terms the of operating whenever when it's current first contractual quarter comparison -- resolved is

Leroy Ball

to first So, is clarify.

fourth of we've for orders quarter have year. only special been the the So that first last then of of half purchase back the under the operating been this and quarter year

Jeff Menapace

Okay.

Leroy Ball

last not contract in So, that just year. second any product. It's quarter they take we a did and were under third

Okay.

… So

Jeff Menapace

better That's of even in terms than comparison.

Leroy Ball

in correct the money that first out so made Yeah, business -- our the okay? last year, of we look you're that all quarter of basically

Jeff Menapace

Okay.

Leroy Ball

move the year, So, once favor. quarter yes, you're we in past our get much comparisons right, first more this

Jeff Menapace

Okay.

So, for there's really but except nothing, upside purchase these going orders forward?

Leroy Ball

Correct.

Jeff Menapace

you, increased capital then Okay. inventory requirements. about that to the And guys pushing working talked with untreated you've railroad the respect to

know industry -- asked third terms in point, additional for the about on working wouldn't think that they previously change and in you've ending talked that model, why does I everybody like at in XX-Q -- quarter this the Assuming what Q of I capital. potential $XX don't you ROE business million

Leroy Ball

correct. That’s

Jeff Menapace

number? kind this industry of like Is that good still a conversion? again, are of we kind And where in

Leroy Ball

Class is Xs a that still that are -- more really is point in number. And this so essentially or but good less there time. Yeah, all, two at

of -- those So model. and one runs at little a bit different

really lend to this doesn't itself So, black-tie. it

we we happened there time of we at think and that's that point say out pointed that's noted one potential million there's build. if -- as more capital sort you I'd So, in practically working that out $XX the some

Jeff Menapace

some there did the is the Class railroad's smaller Xs could for And those? potential -- -- beyond

Leroy Ball

the that's them, So, model essentially for already right?

Jeff Menapace

I see.

Leroy Ball

good That's business. all

worry you of risk balance taking need what all Q in to that related about -- further terms if you on referenced that about. our we've So risk sheet to put ties worry is you in

Jeff Menapace

just Terrific. ones. then Okay. quick two really And

you've XX context? back industry old. life utility the XX-plus to gotten half for What's the those the business is put mentioned an and that in year poles pole expected You into the

Leroy Ball

so less right? But it's more in XX wide -- XX-year it's is on to It where it things at or and that. depends, depends it's I range. mean, Well, again like a the so, timeframe where

have different with different to things treatment do like they've up try last in-place and ways And that. come -- and and some

varies. you the So once beyond starts if it get time But the XX, will. you ticking,

Jeff Menapace

an you then Trump for understanding significantly. trade seen -- lastly, Like said of my are being thank masked is to that. dynamic And And China is Sure. that weather? how weather. availability with that much, hardwood versus lastly cross-tie dispute that? down I -- just Or go kind you any helping issue it is Is during Have China, by you China the this still exports exports -- think ahead.

Leroy Ball

would I -- no, yeah. Yeah, say

if would didn't it more think have we be helpful, So right, I the weather.

So, market. on offset serving additional any But get really is it's we to product great weather door. the can to pressure not China have that and try the the in

Jeff Menapace

Thank Okay. Terrific. you very much guys.

Leroy Ball

You’re very welcome.

Operator

And be questioner go will with Please ahead. Seaport Harrison Securities. today Mike our next Global

Leroy Ball

Hey Mike.

Mike Harrison

to price up. couple call the the you a you have declines. on some Chemicals some quarter destocking those seen had inventory lumber customers of mentioned pick It third like follow-ups. your Just looks related on started prices Performance maybe from business, One of that to

can whether seen just of customers about so in some So you've are either QX, or those of I was talk signs wondering you far QX restocking? in

Leroy Ball

pretty early indicators certainly say the positive that Yes first I'd volume of two for I've seen. data months are actually the

So again, it far good so a I looking comments, the things -- volume in think pretty my prepared I from standpoint. the for months year, are mentioned of two first

happy through sit two months the year. least at things the we're first with yes, of where So

Mike Harrison

the on you've the Follansbee the if a wondering ramped? for new plan I business, if facility? Stickney then plant was And And fully solidified CM&C

Leroy Ball

testing product the ramped. doing at new So We're plant Follansbee. Stickney fully some is

going actually could CM&C nice to out get through to get that through for turns meaningful and that's forward. from it a successfully moving we're have able So if some it there there's upside some it if could standpoint profitability work that on

or down, And some we're that when less to to or take I'd through we So utilizing we're probably, say targeting what testing. is the facility do to be we of that more get before this year so it part process. mid

Mike Harrison

very All right. Thanks much.

Leroy Ball

very welcome. You’re

Operator

today And Please Jim go our with be ahead. Vontobel. last questioner will Stahl

Jim Stahl

thanks taking question. hi, for Yes my

it if weather get your getting RUPS know of opportunities? matter I you you railroads there? it's the cooperates that the can of saying are times. just the said a to the untreated working you clarify, get and inventory business, But that deliver sales can Just number So ties that the on you different from that you and ties have

Leroy Ball

Yes.

Jim Stahl

Okay.

limited what that's so And year. you last

So it's it's railroad the not thing function replacement want new ties, inability a I untreated ties? get your of just ties -- or to to the

Leroy Ball

not At issue. a this it's No. demand point

Jim Stahl

ask. just much. so I Thank Okay. all was to That you wanted

Leroy Ball

Thank you.

Mike Zugay

you. Thank

Operator

conclude will our for now I to this President Ball over like turn conference would to closing And remarks. CEO, session. question-and-answer back the any Leroy and

Leroy Ball

in call. for for and Thank on time taking today's Koppers you And to your support. everyone interest the participate continued you thank

Operator

now you today's The conference presentation. for concluded. has attending Thank

disconnect You may your now lines.

Koppers (KOP) 1 Mar 192018 Q4 Earnings call transcript