GHM - Earnings call transcript Q4 2019

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Operator

Greetings, welcome to Graham Corporation Fourth Quarter and Full Fiscal Year 2019 Financial Results Conference Call. At this time all participants’ in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Karen Howard, Investor Relations for Graham Corporation. Mr. begin. may you Howard,

Karen Howard

and to everyone. fourth discuss results. full Omar, joining quarter appreciate us year today Graham's good you, We morning, you and Thank fiscal XXXX

was copy news You this of have the wires a release should that distributed across morning. the

associated slides commentary the have here that also providing today. with We we're

release the website at you don't find can you If or them have www.graham-mfg.com. the slides, on company's the

Officer. President with Glajch, as and today period Lines, and Financial Chief our Officer; call are the me the review our On our will Jeff Executive and Chief for the Jim Jeff Jim outlook. results well as

We Q&A. will lines then open the for

call. are are aware, uncertainties as to as you the stated statements as materially risks other some forward-looking well earnings and during documents on cause is are could what factors, the or uncertainties These These with website differ during other with and this Q&A. and filed on in and to can These As to actual be as documents subject as Commission. may our at factors as from deck Securities the apply results well we and discussion and slide release statements company which www.sec.gov. make other risks events future well the the Exchange by in found provided the

which, also believe, are that point will evaluating during measures, performance. out non-GAAP want financial we to discuss useful I today's call, some we our in

this consider additional for or of in GAAP. the prepared a not with results presentation You accordance should substitute information as in isolation

release. measures today's comparable reconciliations the provided non-GAAP tables earnings of have We in to accompanying GAAP

to turn the begin. pleasure with And Jeff? over call to my to is that, Jeff it

Jeff Glajch

are net X? $XX.X in If good morning related I initiated we our to we've serious you – due primarily had and to loss the quarter, X% potential a million. to divest. the of Thank $X.X a which grew turned decided sales utility We've million, to million could with commercial impairment $X.X which buyer. of you, Karen, QX nuclear have process an to In is everyone. and charge business, negotiations Slide

Excluding of income net the or share. impairment charge, $X.XX we per had $XXX,XXX,

quarter yielding million year-end just backlog. backlog a in a was record Orders $XXX.X backlog, $XX.X year-end for easily which QX the the million below while were

For $XX when revenue was impairment $XXX,XXX, a net grew aforementioned XX% of year, the Full excluding million but year the income full loss million. a to small $X charge. income was of

the similar quarter Orders higher year for at to just above points margins, million, last XXX the same the basis by at million. $XXX QX. Slide lower year's year below last to with end the and year a the about were gross earnings were QX again, $XXX offset On X% of backlog X. sales

XX% utility lower XX% the was nuclear to EBITDA The XX% were margins and similar EPS primarily well and domestic Sales as due domestic, commercial business to quarter compares are project. in the charge. China impairment one The adjusted international for which international, XX% as the year. numbers last

X. Slide to On

year. million. For the XX% million domestic, increased last XX% sales with Sales international, XX% $XX.X were and to from full year, $XX.X compared respectively, domestic XX%

to note, nuclear above as fiscal which sales. side planning commercial our XXXX represented mentioned, a we're As year business, of sell, I X%

year points million, up from Gross future to our investing million, well million in $XX.X $XX as growth. margin the business due higher from was are was higher profit SG&A volume XXX primarily up for we XX.X%. year million, as for as at basis $XX.X $XX.X last gross

EPS diluted share up The net or income last was was adjusted the year. from and with million, $X.X year, $X.XX EBITDA last compared $X.XX per $X.X million adjusted margin

If we could X. move to Slide

good the per and operating $XX.X in paid to million in spent capital share. had increased fiscal position in cash million dividends in We $X.X $X.X $X.X spending million $X.XX Our flow, XXXX cash year or year. million

in to be In $X.X $X.X fiscal range. year million million the XXXX, capital to we spending expect

as management identify continue our to Board we and to development and to Finally, our on both acquisitions, our focus team, our have look and and at benefits close have business position, sheet that sheet team opportunistically balance cash near which balance strong our on long-term our we shareholders. the utilizing

to continue in be about We acquisition our the pipeline. we're excited that opportunities seeing

you. Jim presentation will now outlook now Jim fiscal will fiscal year and XXXX. our our for comment complete XXXX on on Thank

Jim Lines

Thank up our joining you call. where you, picking Jeff. Jeff for Slide Good morning left I'll at quarter everyone X. conference and fourth off thank

showed markets was to full and end comparison. petrochemical quarter and a stronger year due This to domestic in markets. improvement principally Refinery activity compared our

independent and a the there and to mix integrative or fuels. where conversion improve oils to bottlenecking throughput either good domestic sales most refinery were sales to In these of refiners projects For refiners. was cases, of crude sales, revamp for invested

note for XXXX. one and market in sales $X.X Sands year replacement up year to fiscal sales, to operations base our and were metallurgical Quarter-over-quarter, our than larger Oil more I full was that million because order from and the revenue in highlight Canadian of repeatable. and doubled not installed Important necessarily refining was full compared region. the those rather

petrochemical Low-cost for or North bottlenecking up is the which a America, in to gas our ongoing principal feedstock natural has spurred installed U.S. base. revamping end-market investment due new industry, capacity in sales what the in Likewise, chemical and is for strength are and domestic chemical markets.

especially are orders that push programs. XXXX in vessel if enabled scheduled and year back, primary are basis. of XXXX, impacted doubled defense new also certain couple a a line quarters including full backlog. is XX% top other this, and address This a quarter-over-quarter of Sales did and industry for cause for we sales have impact down which work markets, orders year-on-year. through quarter-over-quarter will Chemical on fabrication and occur are naval The

were sales XXXX year XX% and end similar overweight domestic the international. sales in extracted, XX% were XXXX for I'm XXXX the to total a were is – If domestic in are total XX% naval of sorry, domestic sales XXXX. sales XX% full which quarter, which market of XX% and with sales, with XXXX can

and trailing April had downward and attention your We due to turn Please month is orders quarter timing. May. XX, the in levels stronger customer and order to XX Slide expected also the trend fourth in

certain pushed customers order decisions. petrochemical and refining However,

large a refining plants. international and projected developed for that opportunity based quarters to was of coming petrochemical however have of close U.S. bids is a set opportunities for end there significant in markets the We set

light utility We end added U.S. commercial to up blue and It exclude XX XXXX. second about is ending graph the of light and watermark to the blue shows quarter it easily the orders from this of that trailing that shown trend the are to from end month low markets. trend line the This line. with XXX% traditional the would Navy understand nuclear difficult Graham's was orders markets

close While strong pipeline fiscal we that strong a levels as is have been projects that anticipated. not however, of with order anticipate we The backlog such plan orders expand to as for number across will XXXX in large XXXX. potential

$XXX had half commercial On level backlog is backlog Jeff backlog $X a is million utility that of March business are to Slide approximately as at and is Navy of nuclear the for of said, overall, great million. orders XX, held-for-sale. as of XX.

is planned backlog of fiscal fiscal to Year-on-year, nuclear for XX% to XXXX, backlog commercial X% fiscal that expanded of of is backlog into XX% XXXX the to XX% petrochemical for held-for-sale XX% XX% XXXX. to XX% sales planned XX% markets. utility business. convert and markets, with end in and to considerable beyond expansion backlog end is related that XX% chemical is power of Other for

is Revenue growth. million Slide held-for-sale top XX% and this utility million your for line Please XXXX, does to represent business. now to commercial turn XX. fiscal $XX attention excludes guidance between nuclear This XX% $XXX

structured for capability. top line greater are We

played hasn't today through January in timing order out. However,

just range. mentioned XX delays a I in placement others pushed top In previously the XXXX project judge to that placement a months million believe to couple $XX and in to be for cases, large customers these Nonetheless, couple order the order-to-shipment us certain quarters. we line $XXX months, XX order cause being is with decisions. orders push million to cycle

do provide why margin is at some XX% wish for I Gross to is context this set to XX%. margin level. gross modeling

for and on we that the additional and personnel capability for added market As will end refining top encouragement outlook the multi-year line naval our be pipeline and noted, I for structured offers. XXXX market end bid are plan greater our chemical based

year-on-year It now personnel corresponding year-end. will previously with additions now, backlog I spend pressure to to building SG&A a XXXX. that personnel margin align that million investing $XX million expansion in and Thus, perfectly are revenue. for necessary. possible am adds we I $XX always we're anticipating fiscal consequently bigger, noted for Projected Graham are isn't fiscal XXXX XXXX. better is

tax approximately XX%. will effective Our rate be

Thank you. Omar, line now please for open questions. the

Operator

question-and-answer we time, Please Litchfield. conducting comes will Our question question. proceed first this with a session. [Operator your from be O'Neill, Theodore At Instructions]

Theodore O'Neill

Thank you. morning. Good

Jeff Glajch

Good morning, Theo.

Theodore O'Neill

Energy you business. Steel Jeff, for a question the on

was C. Electric. it it million final $XX an you're power by the environment for in time Virgil nuclear at or Energy plant charge And fiscal that quarter that bankruptcy you stoppage Was it of nearly So recorded in sighting the impairment third Westinghouse at worsened? coffin nail against it. business Steel the the work is at XXXX, of the caused Summer because

Jeff Glajch

Theo, thanks for question. your

it to North of was you've As bills quarter with new – At the we had in third America occurring a the that write-down market fiscal occurring in be to and be going And the XXXX. last was some, going have promise, the with was we've the point us mentioned, Westinghouse, did in has fewer occurred, time, what further. that nuclear weakened over what seen, of us market. nuclear for industry months downward pressure the and they're apparent on there's in focus become suppliers weakened XX to going market as it's pricing that

well enough, enough that market we felt just we And were that integrated in well vertically successful. and integrated to be positioned not

and also was for not So in we've in a position the up continue market. ended that worsened has us market favorable to that

Theodore O'Neill

will be operations recorded forward, P&L? or discontinued be that a as is as going of part single going And to Okay. just whole line still the that

Jeff Glajch

immediate at asset as be for sheet, liability a sale not within when see and it in held sale the be considered one for discontinued from held you accounting line, term but the will will you it look an the the is a line another P&L, will standpoint. as operation P&L, In balance

completed this second quarter, completed not first is the but into having quarter. sale expectation we're this to have far of sale or by Our the hopefully ideally the possibly quarter the targeting end too

Theodore O'Neill

Okay.

if balance sheet, And can $XX the you inventories. normal? about On genesis And this than million of this? the had in where quarter new this a in fourth more you've row the is talk is

Jeff Glajch

Sure.

the also end a look amount the see lower as deposits. see amount and of last back inventory, of but at a go significantly you’d of you'd lower balance of fiscal customer If year, significantly sheet you'd

the of on the the One purchase net changes balance specifically were on the we that to revenue inventory out used which new occurred no sheet longer deposits, balance the itself. was customer could which with sheet recognition rules

out we customer against portion net a So be would of deposits used to inventory.

inventory net deposits. And then in to for you would longer look footnotes, those no the here's the customer the you that. allowed gross do here's netted see if inventory, We're

you somewhere in in So have million step that and quarter of and then both of a would similar deposits a seen the in step the up in inventory, a up in $XX subsequent quarters, customer neighborhood big amount. June ended

required standpoint, now changed it. has is nothing how to from So are account we for simply an operation

Theodore O'Neill

Okay. Thanks very much.

Jeff Glajch

Sure.

Operator

Mondillo, with Our comes question Please next question. Joe Sidoti your proceed & Company. from

Joe Mondillo

Hi, Jim, good Jeff, morning.

Jim Lines

Good morning, Joe.

Jeff Glajch

Good Joe. morning,

Joe Mondillo

you've ask just I to about chemical/petro that seen. wanted So the you was order trends

to of volatility the could what while of just and put in just or burner this to is these just that there regarding continue just And year And timing a back relative be sort – calendar wondering out? for economy the prices any or pushed back the projects has kind concern overall itself, oil be year, general transpired. worry

Jim Lines

Jim. have that overall decisions. pace it’s that economy, is, of push we this looking customers order we we seeing a have We down the had necessarily that impact decision with judge was order What slowing are at if if is our decisions the while can near-term right. it’s them will the the to and that concern to Joe, economic from causing contacts not don’t

where. that they forward Some move then of had was what capability plants. the M&A just behind by ahead. installed-based with went with won’t our that’s within some markets do very or waiting customers end projects. customers go projects expanding revamps, to on a that think nothing is that are assets idle couple We promising There plants should think those rationalizing decided it the their to them that, until enable of going of restarting now suggesting that and and are our We businesses existing

in or concern. the petrochemical in the not that capacity, would fiscal also work solid to We around feel other back-burner that across seems to XXXX the And expansion which very still new way. really order us, translate some backlog environment a meaningful shelved, space, will very susceptible being into optimistic be

Joe Mondillo

volatile I refining oil quarter, manage that pretty of of the going see being you companies that the them? second volatile knowing much integrated is how they oil things, take you which that sort market, quarter. the big know oil on more side that, within and Okay. effect you then are customers side fairly do – stable been prices of So the with of What and hearing a And on prices part orders out a the are have what large especially if certainly their business? your businesses in

Jim Lines

Refining the that in to elsewhere on front, And identified behavioral process, bidding. change the markets and on And new a China, hope there’s excited set Asia. will at front really of by participate amount a secure also work we in our and there. about very around And the see don’t close we bidding for projected we opportunities are that least large very domestic capacity, we’ve are in, then Asia, of that to are with that international XXXX. end we we India, the

more continue refiners, The fuels much there ways a And of out will invest of get the I oil. integrated barrel and independents see and try don’t improve to either. more throughput change and to find

stable America so us. seems North to And really

pet-chem. So with to it a in be appears stable up step

Joe Mondillo

sort And ship has about of the couple great. how us builds been build sort the or of on to couple the Okay, next side In work years? shipments give or progressing. of quarters, work of then update and you’re some due over timing of seems you sort your thinking have it quarters that? been trend out Can the of on an And without pushed like things. Navy several submarine past how

Jim Lines

about, quarters two With I the spoke adjustments it think, that was we ago. we made and

XXXX We And now looking convert. revenue having adjusted now XXXX. should are fairly how begin XX should across in quarter-to-quarter it to the at and backlog level, of then stable expand

of from Just and XXXX. twice should in be way comparable by will was XXXX, comparison that of naval perspective, revenue roughly FY – be to it rough a fiscal XXXX and XXXX what

Joe Mondillo

for Thanks Okay, now. me my for great. That does taking for it question.

Jim Lines

Very welcome. Thanks, Joe.

Operator

from your Our with Maxim Group. comes question. next question Sullivan, proceed Tate Please

Tate Sullivan

are stable are for Hi. it’s Navy variables it sounds Thanks progression. like you. detail for the please, And And happen timing again risks – what you’re delivery What that happened any that submarine for to and revenue similar the that equipment to Thanks before there XXXX. of on the the are versus making what orders? something current Navy aircraft can schedules? XXXX, for the in

Jim Lines

program. we bid that new orders Sure. half and commence anticipate regulatory our across the do fabrication, The our effort conversion look The execution primary in And business, show that which of maybe come more risk. stages at vessel risk design around of sizable to built-to-print conversion. orders on backlog vessel we approval of work, repeat round that or be predictable has could will that pipeline, program, for be next the through up And fiscal an numbers, the naval new are work the XXXX. represents, our into more we’re is process some going the around to backlog is can a backlog there beginning importantly, opportunities flow as backlog that then fabrication that

Tate Sullivan

Thank you.

I think saw it. I

margins work? I think Navy the it you given if wrong, context I the am your Columbia-class if for started their but potential Huntington recently – on steel you cannot. any doing me first versus was work submarine. I have cutting Correct for other your understand

Jim Lines

But however, for We the really as any the a gross we work and on out indicated to naval logical competitive margin will blend specifics quantitative reasons a higher that not level. giving directionally, reasons. haven’t at have satisfactorily. we’ve tends More carry margin; that

Tate Sullivan

one some you for the last retaining And of see business. power you. Separately, your I me. plant Thank Okay.

I in retain And plant, think please? you why XX% power types Or besides power of different of it’s remaining I of it projects different? that, did types How being for equipment to you retaining? mean your a are backlog. different plants? is type decide that of what is different

Jim Lines

Sure.

our market. nuclear to Our are of backlog the related commercial held-for-sale utility components

of serve segment different waste than power we market quality which programs in is the different geothermal, different cogeneration, has the a part nuclear are sales. sales energy; also that within power would that’s model, renewable We the execution, market, the renewable retaining,

Tate Sullivan

you a Thank much. day. very Okay. good Have

Jim Lines

You’re welcome.

Operator

Bill Please [Operator Anthony question. from Baldwin next comes with Instructions] Securities. question your Baldwin, Our proceed

Bill Baldwin

Good Jim morning, and Jeff.

Jeff Glajch

Bill. Good morning,

Jim Lines

morning, Good Bill.

Bill Baldwin

with we margin expectation? peak the gross XX% work still target area? still Can kind out looking Is of in the that reasonable to cycle a

Jim Lines

just margin accompanies We that stronger pricing What accompany reminder, footnote move expectation. then though a gross vision Bill, environment. or the enables as have off typically then of that is environment list out… not stronger to and And a a that moved order that that that has

Bill Baldwin

Right. XXXX/XX will for that pretty Jim? good the things unfolded be kind that commentary, your that to think kind sufficient environment order environment will new of growth, expected Right. on I you based of margins expecting, Well, support as do be gross your

Jim Lines

more pipeline, the We’re of win. of expect to too. certainly our to evasive. and about It’s don’t work our we encouraged down, perceived come going the that timing placement be quality of the want order bid size to I

talked work. we the past, a International margin profile in refining domestic has the has over installed-base than different work. capacity Pet-chem about refining lower profile a new different work than work. As profile margin than – refining margin has

are a qualitative expecting of But at XXXX. is through or directional variables we play. from get we margin after lot in that see improvement there perspective, So our should we gross

Bill Baldwin

good. Very

new what bin, the where the capacity. exactly M&A of work? indicated didn’t indicated as you from kind new of you understand On half vessels, about backlog was Navy your I half? other

Jim Lines

And set. vessels. vessel and a building speak are for vessel there the then The programs class new they’re didn’t where of vessel the given repeat already builds is programs, the program there very probably new design first naval I where clearly. is

new we the some that labored work time description, has and orderly execution for The flow. have a class, built-to-print, it first and a staged has more more of call So that engineering execution for vessel a a that’s more frame. we

Bill Baldwin

Right.

Okay.

you plus in that your repeatable when pick your to Or Now a new talk type meaningful of a XXXX, vessels? new up about is related business? Navy business potentially in combination

Jim Lines

That would That be front. just would – that and be… the on that, was to qualify order

Bill Baldwin

Right.

the front? So looking on I am order

Jim Lines

and for be surface surface both ships ship. would That principally submarines,

Bill Baldwin

on be would designs already But, box those or designs got there? you’ve new to

Jim Lines

have designs They be completed. we that already would

Bill Baldwin

So it’ll be business then. repeatable

Jim Lines

Right.

Bill Baldwin

previous that what one that examples are Is Very indicated conference Okay. the looking you exposure are at at know, of we Navy one to your broadening and Some point markets. potential in calls, good. I in potentially beyond? out XXXX of you that?

Jim Lines

we expand to then spend within that more we we we’re to also or can on our Well, that supply programs currently the of how in. vessel naval programs looking want organically. in the M&A at we’re structure related with are And the programs get

So, capabilities the then program strategic has actions multi-decade what doing one navy we the spend approach. organization, what vessel again, and in can we currently strength quality initiatives because to And is the secondarily, of can ordinarily of more additional and for build. the we compliment see the M&A gain do we of an through product perception with our with and our the

Bill Baldwin

of that in have expenses be XXXX looking additional there your in – or one the that personnel in have XXXX. will Well, though? all does included – final Sure SG&A success guess included we’re for do you personnel guidance Okay. does at, I best Jim just increased that and programs me, there those excuse coming with question, your

Jim Lines

in we’ve projected XXXX guidance model reflects for appetite that the the XXXX, that given this the the environment. Right. in adding and personnel we environment But have current that

that incorporated our we’ve guidance. So, into

Bill Baldwin

that personnel you far where well to as be as pretty there want you’re So, regard. in

Jeff Glajch

in our the is that have have is does guidance Bill, What does nuclear to our anything this guidance headcount Jim the to there. commercial business. mentioned related Jeff utility not interject. just

some company not will would there that year fiscal company So, impact has SG&A the in the in XXXX. impacted previous be which financials, year

Bill Baldwin

okay.

I SG&A understand So, not include Energy guidance, Steel. the if XXXX from does that

Jeff Glajch

correct.

Jim Lines

excludes The for the sale held element. to million Right. million $XX $XX

Bill Baldwin

Right.

excluded. revenues the like Just

Jim Lines

adding cost our of centers. it that incorporates vision And the go into personnel SG&A

It’s guidance. to us anticipate that ads to move the in shouldn’t with personnel above you I’ve million that million cited. spend already the the incorporated and $XX $XX So,

Bill Baldwin

Thank good. you very Very much.

Jim Lines

welcome. You’re

Operator

Mondillo, question. Our Company. Joe next Sidoti question proceed your from with & comes Please

Joe Mondillo

be accretive Hi, couple to guys, developed to to margin just about talk divestiture sticking and Energy to earnings if you a be Not our curious that, is curious gross know. the that questions. I’m want or this follow-up year. sure but would on Steel, I’d

Jeff Glajch

it XXXX. Accretive been to or not accretive XXXX had in

the what’s question? Sorry,

Joe Mondillo

either way, it. to way, however structure Either you want

Jeff Glajch

able we Should be it be accretive to will divest to our Steel, Energy of margins.

Joe Mondillo

Okay.

Jeff Glajch

And I’ll look back…

Joe Mondillo

in just years, your ask capital of to you’ve cash seems wanted on your of actually I your the last spending then cash – work with the and maybe also as the navy it – capital? like of may wondering are working sort you wanted I flow, you the question will seen anticipating even petrochem, any CapEx from then ramp year? cash this And have was up couple of sort working And budget be I in a source on cash also what

Jim Lines

Jim. would our is anticipate this strategies. consumption tied Joe, of growth to We cash not

has cash where we’re fund recall, as in typically might the had in we do helps you we which lead sheet we of procurement our comment even want side, while period a time, be might model materially structure payments As cash CapEx a you an on and changing continual would then that to Jeff, cash, extended a on growth grown, an over us operating have that? not But we it consume balance to we’ve grew. of but materials. progress odd try envisioning quarter long use And manner of

Jeff Glajch

a Joe, $X.X $X.X XXXX. Sure. CapEx million is in be fiscal between million to targeted and

you that Just would decade, over cash following our pretty if see position on back go wouldn’t most increased much Jim’s every the you year. last question,

called it utilized cash we and one to large a a year. there whether we’re a deposit were think be we flow continually had, where continue one as out is cash strong of the in than year little that, position better to and year part market. the to pretty continue would it good of in customer there we other our next increased market expect part into I in was market, the very and the we a cash coming or to a And position of of back increase. bit weaker the part But

Joe Mondillo

not actually I source see in capital, Yes. Right? working cash. so the of I on how was of years, specifically last concerned asking and a couple about actually too it’s capital. And I’m more and that. working been you the up asking, more is working as maybe you capital? just ramp work working little this – – do in a have a some Navy Navy petrochem to was you your little your and the that become capital, invest does more of

Jeff Glajch

A little over bit, you see to our so. you of period but any look payments would see that we significant doing are think our change fiscal also time. to not Jim but try over quarters Jim's point, years projects we working in And a we I we as work will if the tie capital to mentioned, move, where

Jim Lines

that past, working an phenomena In downturn phenomena of into Graham typical into if how a but a that we out the And as again. at you – material we not very expansion. and downturn you had would capital our the go again, saw comes anticipate then changes, look haven't and we

Joe Mondillo

know to provide of outside. on can of addressed briefly of in talked sounds the recently just sure And the you certain just Okay. sort not sure there commentary, sort been lastly, cash obviously position targets. seen if potential sort It advantage things you've a and take progress past like, just in you naval of and opportunities of build-out. then going from some But terms about any internally, is this acquisition more any it M&A haven't overall while But I'm it the targeting did where opportunity? the other has color sort on much we of I

Jeff Glajch

has the have can so active active to but occurred, or at looking particularly frustrating months in understand in outside and XX – the been the in aftermarket I naval both very be looking be naval opportunities the we also over past commercial some Joe, sector, the that sector. from but nothing it very continue

ultimately are are on. opportunities very and active. that we past we year out about or the in We've off two we peeled moving So talked

say of significantly our So Jim again, I is and Graham forward we needed business to has make back. sure years the that than forward. team until And But very today outside. to that find assure you myself we it fit are and a frustrating now, It's much right from be amount just closure, beyond spending for that. been active. that move personally and it's right could moves the that development But just something effort couple to of greater we're ultimately hard

Joe Mondillo

Okay. Understand. Appreciate Thanks it. lot. a

Operator

Our next Please from proceed N question. question Bill comes Circle from Nicklin Advisors. with your

Bill Nicklin

morning. Good

Jim Lines

Good morning, Bill.

Jeff Glajch

morning, Good Bill.

Bill Nicklin

just kind pet-chem and one and changes you're building If you trade the in? customers say, new refining, let's politics are I've got to look of we consider, at and configuration And of what where, question. might what and going expect? be when,

Jim Lines

Good complicated question. question and a

the Middle that's envision But on to – America that's in the will lowest East. and as the really now right is we in accrue there the don't around view investments in petchem, Our relate where where politics. much the investments is And change North cost great feedstock.

said don't local they as politics up in are China front, on see and they global economies. India for emerging their and capacity to growing not capacity sizable that international the some best markets, still will modifying that see earlier I consumption, I nations. materially. then new as petchem dynamic are trade very export changing to don't And adds. And refining oriented ramping add we Again, they satisfy or their are

The is of couple more will wave a export of Middle of think They next course their East years. in refining we investment begin oriented.

there don't long-winded is my change the foot of guess for feel much I responses, overall I on really us. So

Bill Nicklin

plants Okay. from sourced they’re be as or that much and are we roots about just say going That's hear to good. to seem some to therefore a be chatter would America. want It would be in might your buy a business have would place road. at else, asking material was to and may the the chemical negative be have where looking those where could I sourced all still But transportation petrochemicals impact the me China from to are U.S. the and companies may impact the raw are maybe North delivered ethylene down you that to time of but change, well, the out it regarding, particularly the some don’t any place where going pickup here, a some built positive be going

Jim Lines

there. – plants with all feedstock is we trying the That's a emerging with towards that's ago, economies possible. And we then new identifying race it’s What Sure. supply low-cost really local the moment and the demand capacity now deciding where’s to local said – the address as a there. are

Bill Nicklin

right, very you All good. Thank very much.

Jim Lines

Thank you, Bill.

Operator

I the now to And question-and-answer the back over closing We the session. of remarks. management have turn call will reached end for

Jim Lines

Thank everyone questions and morning you, we Thank through your questions depth Omar. then quarter will Steel. of I look We updating you. on for August. thank talked your the forward follow-up in our to you made your Energy questions. decision And this we fourth the and as appreciate you

Operator

concludes This today’s conference.

You you Thank time. this participation. may for disconnect your lines your at

Graham (GHM) 30 May 192019 Q4 Earnings call transcript