Eric Swanson - Director of IR Bob Patterson - President & CEO Brad Richardson - EVP & CFO.

Frank Mitsch - Wells Fargo Securities, LLC Bob Koort - Goldman Sachs Mike Sison - KeyBanc Capital Markets Dmitry Silversteyn - Longbow Research Kevin Hocevar - Northcoast Research Laurence Alexander - Jefferies & Company Ben Kallo - Robert W. Baird & Co. Mike Harrison - First Analysis Securities.

Good morning, ladies and gentlemen, and welcome to the PolyOne Corporation fourth-quarter 2014 conference call. My name is Kate, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

At this time, I would like to turn the call over to Eric Swanson, Director of Investor Relations. Please proceed..

Thank you, Kate. Good morning, and welcome to everyone joining us on the call today. Before beginning, we would like to remind you that statements made during this conference call may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements will give current expectations or forecasts of future events, and are not guarantees of future performance.

They are based on management's expectation, and involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statement.

Some of these risks and uncertainties can be found in the Company's filings with the Securities and Exchange Commission, as well as in yesterday's press release. During the discussion today, the Company will use both GAAP and non-GAAP financial measures.

Please refer to the earnings release posted on the PolyOne website where the Company describes the non-GAAP measures, and provides a reconciliation of them to the most comparable GAAP financial measures.

Joining me today on the call is our President and Chief Executive Officer, Bob Patterson, and Executive Vice President and Chief Financial Officer, Brad Richardson. Now, I will turn the call over to Bob Patterson..

Thanks, Eric, and good morning to those of you joining us on the call today. I'm pleased to report that we achieved another strong and record performance, having now delivered our 21st consecutive quarter of double-digit, year-over-year adjusted EPS growth. At $0.36, adjusted earnings per share increased 38% versus the prior year.

Global color, additives and inks, and global specialty engineered materials, led the way, achieving record fourth-quarter OI and return on sales. In fact, our color business has already reached the midpoint of its 2015 margin target. This performance in the fourth quarter caps off another great year in our Company's transformation.

For the full year, adjusted EPS was $1.80 per share, a 37% increase from last year. Perhaps even more impressive is that in the last 3 years we have more than doubled our earnings. And since our transformation began, adjusted EPS is growing at an annualized rate of 40%.

These strong results were delivered this year despite continuing difficult economic conditions in Europe. In my first 8 months as CEO, I've reinforced our commitment to our four-pillar strategy, putting customers first in everything that we do. We emphasize excellence and execution as a hallmark of our success, and we love to win.

For those of you who have followed us during our specialty transformation, you know that we truly have moved from volume to value. 2 weeks ago, I visited with our local teams in Shanghai, where we took time to reflect on our recent success there. In 2011, our collective return on sales in Asia was 4%.

In just 3 short years that has more than tripled to 12.7% in 2014. In Asia, as we have everywhere else around the world, we've improved our mix with a focus on specialty applications. Our team is energized and excited about our future with a growing suite of new and innovative solutions that help our customers.

And that's what I'm talking about when I say volume to value. Last week, I observed this transformation in action again while visiting with customers in the shooting sports industry. 5 years ago, we had little to no presence in this industry. And today, we have nearly $20 million in sales, with the biggest names in shooting sports and accessories.

This is a market in our sweet spot of formulating high-performance, light-weight solutions where failure is not an option. Our customers don't take this responsibility lightly, and neither do we. We are not just another compounder. We are a specialty materials formulator, and it shows. As we have transformed, we have shed volume intentionally.

We've done this to create a more profitable and sustainable specialty enterprise in higher-margin end markets. Just look at our fourth-quarter results; we reported fourth-quarter revenue of $869 million versus $924 million last year.

As expected, the revenue decline resulted from ongoing mix improvement, including the exit of unprofitable products associated with the Spartech acquisition, as well as certain operations in Brazil. Of course, we also experienced weaker business conditions in Europe, and unfavorable foreign exchange.

At a high level, let me walk you through the key drivers of our year-over-year changes in fourth-quarter revenues. Our proactive decisions to exit certain product lines in Brazil and associated with Spartech led to a 6.6% decline.

Weaker conditions in Europe and unfavorable foreign exchange resulted in a 1.2% decline, which leaves us with a positive revenue growth rate of 2.1% for the quarter; directly related to our efforts to expand in targeted markets such as healthcare and consumer. And for those of you who know us, you understand that this is a big deal.

We will not expand revenue without profit leverage and earnings growth. Mix improvement has always been at the heart of our specialty story since our transformation began. We continue to upgrade the portfolio of solutions we provide our customers, even if it means displacing potentially higher-volume business.

We do this to improve the overall health and vitality of the Company, as well as the sustainability of our results. It is our chosen path to prosperity, and we will not deviate from it. In the fourth quarter, operating income grew 17%, and adjusted EPS increased 38%, and that's the bottom line.

As evidence of our strategy in action, I'd like to take a closer look at our European results. Last quarter, we cautioned of heightened concerns about demand conditions in Europe, as well as a weaker euro.

We also highlighted that earlier in the year we had taken proactive actions to reduce cost, and improve mix that we believed would help us to offset lower revenues in the region. And we delivered. In the fourth quarter, sales in Europe declined 12%; however, operating income expanded 53%.

This is directly tied to our operational excellence initiatives and ongoing mix improvement. If we had not been proactive in taking action in Europe, we would now be playing catch-up like some other companies. The results from our designed structures and solutions business were the lone disappointment for the quarter.

And these results remind us that, as with any turnaround or transformation, progress may not always be linear, and we have to make decisions that impact us in the short term, but help us in the long term. As our investors know, when we acquired Spartech, it was a business that had struggled for years.

In 2014, we made bold moves that previous managers had been unwilling to take, and executed a strategy to consolidate operations, all while improving safety, quality, and on-time delivery to our customers.

During the year, we completed the closure of plant facilities, but much work remains to improve quality and operational efficiencies at our remaining plants. Our results for the fourth quarter were impacted by our efforts to do just that.

And I have every confidence that we will get the former Spartech operations up to PolyOne standards in very short order. Our customers come first, and we are committed to them and to providing exemplary service, just as we do in any of our businesses.

In this regard, we remain vigilant in focusing on and training our new sellers; we have hired much-needed resources in marketing and technology; and we have over 70 Lean Six Sigma projects under way, focusing on value that will benefit our customers. DSS is now a PolyOne business. And at PolyOne, we always find a way to win – always.

We certainly did that in the fourth quarter, with record operating income and earnings per share. And now to tell us more about these results, I'll hand the call over to Brad.

Brad?.

a mark-to-market pension adjustment of $57 million. PolyOne's pension obligation, like many corporations, was negatively affected by the lower discount rate environment, combined with the adoption of new mortality tables, which reflect improved life expectancy.

These items more than offset our strong asset performance, and resulted in a $57-million increase in our pension obligation, which is reflected in the mark-to-market adjustments. Consistent with what we have done in prior years, in January we made a voluntary cash contribution to our plan, which helps restore our plan to nearly fully funded status.

Further special items include restructuring charges, principally related to the realignment of the former Spartech business. That concludes my remarks. I will now hand the call back to Bob..

Metal replacement technologies are a rapidly growing part of our solutions portfolio, meeting strict performance requirements, and removing barriers to replacing metal with polymers. We can reduce weight, streamline production, and generate cost efficiencies for our customers.

These are just a few examples of our innovation and R&D at work, and what our team is capable of. There is much more to come, as our innovation ideas graduate through our pipeline to eventual commercialization to generate growth in 2015 and beyond.

Our pipeline is just one of the many reasons I am highly confident we will deliver another year of strong double-digit adjusted EPS growth in 2015. We will continue to focus on profitable growth and innovation, while putting our customers first in everything we do.

Our future success will be underpinned by the ongoing execution of our four-pillar strategy, led by an outstanding management team. With a $40-billion market, and trends that favor our light-weight, high-performance materials, we see tremendous growth opportunities to pursue and capture, regardless of economic conditions.

Our 2015 goals remain unchanged. And as you have come to expect from PolyOne, we are already planning and acting on the future. We look forward to sharing our first-quarter results with you in early May.

And on May 18, we have planned and scheduled an Investor Day in New York, where we will expand on our platinum vision for the year 2020, and unveil new goals as we continue our remarkable specialty journey.

This concludes my formal remarks, but before I open the line for questions, I would like to address one that I'm guessing everyone will have, and that relates to raw material costs. As everyone is aware, oil prices have fallen substantially in the last few months.

And on balance, we view lower oil prices as a positive in terms of lowering the cost of energy needed to run our plants, lower gasoline prices for consumers, and lower raw material costs. This could very well provide a much-needed backdrop for positive consumer stimulus, leading to greater spending in 2015. And that is all good.

As you know, at PolyOne, we have long been undergoing a transformation away from volume and toward value, and away from commodity products and to specialty solutions. And this means that we sell on value, not on cost.

As we looked at 2015, for our specialty businesses, lower base resin prices should provide a benefit in the context of greater demand for specialty applications, but also from a material content perspective.

But for our PPS businesses, my sense is that in the short term, while you mathematically expect some benefit from index contracts where prices reset on a lag, my sense is, is that in the first quarter we will see customers who delay some purchases as they move into a wait-and-see mode, hopefully for raw material costs to decline further.

And finally, in our distribution business, suppliers largely control pricing. As raw materials decline, this gets passed through to customers, adjusted for the timing of our purchases and on-hand inventory commodities. Historically, this can result in a short-term negative for a quarter; but once prices stabilize, margin dollars should be unaffected.

So, in summary, I view the lower cost of oil as a net positive for the economy and for PolyOne. Unfortunately, in the short term, I think we have a headwind with respect to raw material costs, and how that impacts purchasing in the first quarter in our distribution business and in PP&S of approximately $5 million to $6 million.

In the long run, and over the course of the year, I believe that we have upside in our specialty businesses that will more than offset this, and we'll start to see those benefits as early as the second quarter. So, with that, I'll open the call for any questions..

[Operator Instructions] Our first question comes from the line of Frank Mitsch with Wells Fargo..

Good morning and congrats on the quarter. And I guess, Bob, more importantly, congrats on Mr. Harbaugh..

Thanks, Frank. Pretty excited about both..

Just to follow up on this raw material situation. Obviously oil peaked in June and has been dropping ever since. So that's half of a year. What did you see in Q4 in terms of customers expecting lower pricing and so on? One would have thought that POD might have been impacted there, but apparently not based on those results.

So why haven't we seen it yet, and here we are what January 28, are you seeing it – are you now starting to see it here in January and that's why the cautionary comments with respect to Q1?.

What I'd say – answer the first part of your question, I do think we saw some of that impact at the end of the year in POD. However, the positive actions that we've taken in that business allowed us to overcome that and deliver year-over-year operating income growth. We also saw some delayed purchasing activity by our customers.

I've learned to not draw any conclusions from what happens in December, simply as a result of what happens with customer buying behavior. As it's not unusual for them to lower purchases in December waiting for something they hope is better in January.

My comments today do reflect what we're already seeing in the month of January, and they are cautionary, as you said, just based on what we're seeing with customers. And again this really relates to PP&S and POD and some of those customers that are delaying purchases. Now this can't go on forever.

We're being very clear with our customers that, ultimately, this has to pick back up and my sense is is that it does. But right now in January, we're seeing delayed purchasing activity..

All right, that's helpful. And I'd like to drill down a little bit more to Europe. If I'm not mistaking I think in Q1 you had volumes down in Europe – I'm sorry, volumes up in Europe in Q1 about 5%, same thing in Q2. And then in Q3 you saw them down 5%. Now you mentioned sales were down 12% in Q4.

Can you break that out in terms of what was volume, what was price, what was currency? And then also can you talk about what's going on sequentially in that part of the world?.

So I think you're spot on with how that played out over the course of 2014. Just a reminder, in the first half of the year sales were up more than 5%, third quarter down 5%. And then we saw a sales decline in the fourth quarter of 11%. The preponderance of that was foreign exchange related.

So we are seeing a little bit of a good guy from a volume standpoint year over year, sequentially it was down Q4 versus Q3 however, which is normal for this seasonality of the business..

All right so volumes were up year over year in Q4.

And your expectations in 2015, how do you – what should we be thinking about in terms of European on a volume growth basis?.

Well, I'm not seeing anything coming out at the end of the year that leads me to believe that there's an immediate improvement in the economy or demand outside of what will happen as a result of lower raw material costs. So I'd say that I think lower cost benefit the economy and I think that could help Europe as well.

But at this point it's too early to say what the impact will be from a volume standpoint. Look, outside of the business that we're going to win on our own, regardless of what happens to the economy..

All right, terrific.

And then lastly, Seahawks or Patriots?.

Next question..

All right, thanks so much..

Our next question comes from the line of Bob Koort with Goldman Sachs..

Bob, I was wondering if you guys started to see any inter product substitution as maybe the styrenics or propylene prices have come down after several years of higher inflation in the ethylene derivatives.

Are your customers doing new formulations or pursuing that and giving you some innovation opportunity or has that not really started to gain any traction?.

I don't have any real – I don't have anything to share with you about material substitution within the polymer families themselves. I think that kind of stuff is going on. Look, for us our primary focus is on replacing metal, wood and glass, when I think about material substitution opportunities and they're huge..

And on DSS I think you talked about a little growing pain as you incorporate that business into your portfolio.

Were those period costs? Was there something more systematic that's going to take a little while longer to correct? Can you let us know or characterize what those fourth quarter hits were about and the duration you might sustain those hits?.

Yes, I think we're going to see some of that carry over into the first part of 2015. So it's not one and done in the fourth quarter. We've got a lot of work under way right now to improve the plants and their efficiencies. And I would just say that I think that's going to be ongoing into the first half of 2015..

And my last one, seems like as you guys have transformed and particularly post- integration at Spartech, a big feature has been to high grade the portfolio. And clearly the revenue growth has not been exciting but the margin growth has.

As we look forward and maybe you start to pick up a little more revenue growth, how do you think about fixed cost leverage in your model? Is that something that can provide a lot of expansion or are you going to have a similar level of expense growth so you really don't have a fixed cost leverage business here? How should we think about that?.

Well look, I think that in our Specialty businesses we have less fixed cost leverage than we do in some of our other businesses.

But that being said in terms of where we've gotten this business to from an efficiency standpoint, I had every expectation that as sales grow, our contribution margins exceed that of our existing gross margins easily by 10 basis points, excuse me, 10% if not higher.

And so I think that's a reasonable way to think about near-term growth from sales expansion in that business..

Very good. Thanks for the help..

Our next question comes from the line of Mike Sison with KeyBanc..

Nice end of the year. Bob, you gave us this bad guy $5 million to $6 million in the first quarter.

Does that come back in the second quarter as an incremental plus? And then what's the good guy from the Specialty businesses in the first quarter, is it enough to overcome this $5 million to $6 million?.

The $5 million to $6 million that we see in PP&S and POD, if we assume that prices decline to where they are today and remain flat for the balance of the year, that's not something that we recover within those segments.

My comments really were around that I believe the upside opportunity in Specialty exceeds that, but I don't think we start to see those benefits materially until the second quarter, or anyway, meaningfully until the second quarter. So standing here today I don't see a direct offset in the first quarter from Specialty..

Got it. And then when you think about 2015, you've suggested strong double-digit EPS growth.

Can you walk us through maybe some of the segments what you need to see in each of the areas to hit that double-digit growth?.

Yes. Well look, I think from Color and EM, we had said on our last call that we had taken actions in Europe and we did so proactively ahead of what we saw as demanding or lower conditions from a revenue standpoint. I think that helps us going into 2015.

As I mentioned to Frank, I'm not sure what's going to happen from the economy standpoint there I'm not trying to predict that. But as I've always said, any kind of recovery or up-tick in Europe is a big tailwind for us. Unfortunately, we're facing a headwind with respect to FX.

And as we've always said, a 10% decline in the euro is about $0.04 to us for the full year. So I see those as headwinds. But we know what they are. I have every confident that our Specialty businesses can deliver double-digit growth.

And that's going to come from ongoing mix improvement and sales growth in our targeted markets of consumer and healthcare and packaging, to name a few. That's where you're going to see it. On the PP&S side, my sense is is that we should see a little bit better numbers in construction, hopefully, this year than we did last.

I'd like to say it'll be a milder winter, I guess that remains to be seen and people in the Northeast are certainly not feeling that right now. But I'd like to see uptick there.

And then Distribution is just getting back to basics in terms of spending more time prospecting, doing a better job on managing the logistical cost of the business, the business of pennies and fractions of pennies, and they're doing a great job on all that.

So my expectation is that we'll see growth in every one of our segments to help us deliver strong double-digit adjusted EPS expansion..

Great and then last question in terms of acquisitions. Certainly has been a great use of your cash over the last couple of years and boosting your growth rate a little bit. We've heard some companies talk about multiples still being very high, hard to find stuff.

Can you maybe talk about plastics, the areas you're looking at and your confidence in maybe finding a couple things for use of cash?.

Well our efforts around M&A haven't changed at all and we're still, I'd say, spending a significant amount of time on it exploring opportunities, keeping some things, I'd say, warm from relationship standpoint but maybe just now isn't the right time.

I think what you're hearing on the multiple side is probably a pretty fair representation of what's going on in the marketplace. I don't have a different view than that. And I think that there's some opportunities out there that could happen sooner on the smaller bolt-on side then on the larger side.

And look, I look back on 2014 and our use of cash and in terms of what the opportunities were in front of us, we did complete the deal Accella in December, which I'm very pleased with. That's a great deal for us. But we also bought back 6.3 million of our shares.

And given where our share price traded last year I think that was the best thing we could have done with our cash..

Great, thank you..

Our next question comes from the line of Dmitry Silversteyn with Longbow Research..

Good morning, guys, and congratulations on a strong finish..

Thanks, Dmitry..

Couple of questions. First of all, you outlined the raw material outlook for the businesses, but the one business you didn't talk about was the DSS business which is, I would say is more like a PP&S business than a Specialty business right now.

Do you expect to see any raw material relief in that division that's going to help you with margin?.

I guess I would challenge the statement about putting it in PP&S versus Specialty, but certainly with respect to where margins are today, it hasn't gotten to where our Specialty businesses are, but it can.

And look my sense is is that as we move that business from volume to value, we have the same opportunities that we do in Color and EM, it's just going to take some time to get there.

So as I stand here today, I'd say I agree with your comments that we don't have the same level of upside opportunity there that we would in Color and EM but we will shortly..

Right but as I look at 2015 and the business, the way the business is structured for 2015 and some of the raw material as a percentage of cost of goods sold and so on and so forth, it does seem that lower resin cost can be a real tailwind to margins.

Is that not the case?.

Well, mathematically, yes it should be for all of our Specialty businesses. And so I view DSS the same as I do Color and EM..

Fair enough. Your results in EMEA certainly were not as scary as you intimated on the first quarter conference call and worrying about Ukraine and Russia and key bottle market.

Was that – is that the perception correct? In other words, it wasn't as bad as you feared or were you executing better internally to overcome that with new business? Or are the facts being delayed and diffused over 2 or 3 quarters rather than happening all in the fourth quarter?.

Well, I think our statements at the end of the third quarter weren't just specific to Q4 but seeing, perhaps, some longer term headwinds going into 2015. Look, I view an 11% decline in sales there as reasonably scary in the fourth quarter and I'm just pleased that we took the actions that we did to overcome that.

You don't have perfect visibility into how a quarter is going to play out with respect to revenue. So I'd say I think we said all of the right things at the end of the third quarter, mostly, probably hanging on the expectations that revenue would go down. And we did a great job of executing and that may have come out a little better than we expected..

Got it. With respect to share repurchases, you mentioned that you pretty much completed and actually overdone a little bit on the share repurchases versus the shares that were let out with the Spartech acquisition.

What's your appetite for share repurchases for 2015? How should we think about share count? You mentioned optimistic buying but is there a certain dollar amount or share count coin that you're trying to get to by the end of the year?.

Our intention really is on an ongoing basis to buy back the number of shares really to offset equity dilution associated with our grants. And then 1 million to 2 million shares per year thereafter. As we demonstrated in 2014, we can go beyond that.

And that may or may not be the case this year depending on what happens with M&A opportunities and the share price..

Got you. So as a false assumption we can look for 1 million to 2 million share shrink over the course of the year..

For a modeling standpoint, that's fine..

Okay, thank you..

Our next question comes from the line of Kevin Hocevar with Northcoast Research..

Good morning, everybody, and congrats on a great finish to the year..

Thanks, Kevin..

I was wondering if you could update us where do we sit in terms of shedding a business in Spartech business? Is that with sales what they did in the fourth quarter, is that largely done at this point? And given, I think you mentioned some – the margins being a little softer, you mentioned some inefficiencies or something, was there any loss business, one-time loss business during the quarter that you'd expect to recoup going forward? Or was this just simply a large shedding of business during the quarter?.

On balance, what I'd say is that as the – so we closed 7 plants during the year. And all of that production moved into receiving facilities, that's a huge effort. And when we acquired Spartech, already had quality and manufacturing issues. So we've been working on those simultaneous with the consolidation of our facilities.

We had not made the progress on quality and manufacturing efficiencies at those receiving plants that we want to yet. And I'd say generally, Kevin, what you're seeing on gross margin side is an influence of the cost side versus the top line side. Of course, we know we've shed businesses and we've right-sized the assets to be aligned with that.

So you can't have one without the other, but largely what I would point out in Q4 is really the cost side of the equation versus the top line..

Okay and then I believe your – the restructuring you were doing was – is expected to save about $25 million in 2015.

Is that still the expectation? And also I think you mentioned Spartech was accretive $0.38, the expectation was $0.50 in 2015, is that also still expected?.

The way to think about that EPS accretion, Kevin, is that with the level of earnings that we delivered in 2015 we're effectively – that translates to $0.38 per share compared to what our results were before the acquisition. We're really already at the $0.50 run rate.

The delta between $0.38 and $0.50 really just being the timing of the share repurchases this year. If you recall, that the $0.50 assumed that we bought back all 10 million shares associated with the deal. As that was happening over time in 2014, you didn't get full benefit of the share repurchases. We will in 2015.

So we're really already there at the $0.50 level..

Got you and then a final question.

How do you feel about the margin targets in 2015 now that we're basically in 2015? For each of the segments, do you – could you give us a sense for where you think they'll ultimately fall ballpark it for each of the segments? And probably impossible to do, but any idea how much the price raw benefit could potentially be in the Specialty segments that you mentioned maybe later in the year?.

First of all, look our Color and EM business and POD are already there. I think they've got, certainly, a lot of opportunity from upside from where they were in 2014 into 2015 without providing specific commentary on exactly where they'll land in them. And then PP&S and DSS got confidence of them getting inside the ranges in 2015.

What I'd like to do really is wait until the first quarter is behind us, get to our investor day in May and at that time I think provide a little bit more detail on where we see margins shaking out this year and any benefits from raw material costs..

Okay, great. Thanks, guys..

Our next question comes from the line of Laurence Alexander with Jefferies..

It's 2 questions.

First, do you see price mix being roughly balanced with the likely FX and raw material pass through effects on the sales line?.

Is that a question about the fourth quarter or a question about going forward into 2015?.

That's a question about 2015..

Yes, so it's really very heavily by segment and that's what I was trying to get at. But I'm expecting that we have improving margins in 2015 across all of our businesses. How that shakes out vis a vis just declining raw material costs varies considerably by segment. But I certainly think that price mix is a positive for us on the Specialty side..

I just mean as an aggregate on the sales line, do you see price mix being ahead of FX and raws or is it going to be slightly offset but then you just get the margin expansion to offset it?.

I see what you're saying. Well actually really on the top line perspective, the biggest challenge associated with lower raw material costs is simply pricing within the Distribution business. And as I said, that pricing is largely a pass through to our customers.

So standing here today, that's an $85 million type number where costs are, but it doesn't impact the profitability of that business. So my sense is standing here today that with deflation and FX, that price and mix don't offset those..

And then secondly, can you help us with the bridge to free cash flow in 2015? Roughly, how much might be a bogey for working capital release, incremental restructuring charges and any possible further pension contributions?.

Yes, good morning, Laurence. Certainly, as we think about the conversion, I think you can really look at our overall growth in earnings being the growth in the free cash flow of the Corporation, meaning our earnings, adjusted earnings should approximate roughly the free cash flow generation of the Corporation.

So we do expect positive growth from earnings. Certainly, to your point on working capital, there should also be a relief of working capital as we go throughout the year simply reflecting the impact of the lower raw materials.

I think as it relates to the pension side of the business, we've been contributing voluntarily $15 million to $20 million the last couple of years. And I see that, as I mentioned in my prepared remarks, that we've made a similar contribution here in January. Which again, on positive side keeps our qualified pension plan roughly fully funded..

Okay. Thank you..

Our next question comes from line of Ben Kallo with Robert W. Baird..

One quick one, putting all the pieces together on commodity prices and FX on the top line, can you give us a gauge of how we should be thinking about growth or if there is growth on a year-over-year basis? I know you're probably still stripping out some stuff from Spartech too, so how do we think about that?.

Well I guess, I'd say at a high level, maybe as I was trying to answer Laurence's question as well, I think that with FX as a headwind, with lower raw materials impacting the sales number in POD, those are challenges to overcome from a top line standpoint.

So standing here today, I'd say that's something we don't get to simply through price and mix and growth. When I look at the underlying growth of the business though, I've got every expectation that we can deliver single digits next year in those targeted end markets.

My preference really at this point, Ben, as I said before, is let's get through the first quarter, see how raw materials are coming through and then I think we'll be able to provide more granularity on that for 2015..

Okay sound good.

And then maybe a quick preview on the Analyst Day, your 2020 outlook, can you walk us through how you come up with that and the process behind that? And then if your history and the 2015 outlook and how that matches up? Should we expect the same type of metrics there?.

Well what I'd say is that you're absolutely going to hear continued emphasis on our Specialty transformation, improving mix of all of our businesses, but certainly the contribution coming from Specialty.

We continue to believe that the margin targets we set for our businesses are really the best way to evaluate and measure the health and vitality of the products and services that we sell. And so I'd expect that to be a highlight of our platinum vision.

What we will also attempt to do is to try to articulate how that translates into earnings growth and expansion. What we see coming from an organic perspective versus M&A and uses of cash going forward. So at this point, that's what I would say about that and look forward to seeing you on the 18th..

Okay, great. Thanks, Bob. Thanks, Brad..

At this time we got time for one more question, if we can..

Our final question comes from the line of Mike Harrison with First Analysis..

Looking for a little bit of help in quantifying the benefit from falling resin costs in your Specialty businesses. My guess is that your raw material purchases, not insignificant in those businesses and the benefit of lower raws if you can hold on to the pricing, probably exceeds the headwinds that you referred to in PP&S and POD.

Can you just help us maybe puts a metrics around that or help us think about that?.

I mean, directionally, I think you're spot on. That the upside from the Specialty businesses more than offsets the headwind we see in Q1 coming from POD and PP&S. I think we see that starting to come in here sometime towards the end of Q1 going into Q2. But at this point, I think it's a little premature to actually put a specific number on that.

So when we get out of the first quarter and report our numbers, hopefully got some more granularity on that..

All right and then on the PP&S business, it seems like gross margin there is not improving to the degree that you need in order to hit your targets.

Is that a utilization issue? Is it a mix issue? Is it a price versus raws issue? And then maybe if you could comment also on how producers services fits into your margin improvement plans there?.

Well I guess the first thing I'd say is that just remind you and everyone that one of the largest pieces of business we acquired from Spartech did go into the PP&S platform and specifically into producer services. That was lower gross margin business. We knew that going into it. Fits very well into that platform.

But it does weigh on gross margins and you certainly saw that effect in 2014. So while we had underlying organic expansion of margin improvement, that was offset effectively by the acquisition effect from Spartech. So I wouldn't spend too much time dwelling on 2014 because I really believe we've got opportunity to expand that going forward in 2015.

Just as we've stated in the past and to get ourselves inside those margin targets next year..

And then a quick last one on the Accella acquisition.

Any guidance on what the EPS accretion could be in 2015 from them?.

Yes, we said when we did the deal is about $0.01 or $0.02, I think that's still the right way to think about that..

All right. Thanks very much..

All right, thanks, Mike. And thanks, everybody, again for joining us on the call today. We look forward to sharing our results with you for the first quarter in May. And hopefully seeing all of you at our Investor Day on May 18 when we expand on our platinum vision for 2020. Thanks again..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a good day..