Erica McLaughlin - VP Investor Relations Patrick Prevost - President and CEO Eddie Cordeiro - EVP and Chief Financial Officer.

Jeff Zekauskas - JPMorgan James Sheehan - SunTrust Kevin Hocevar - Northcoast Research Ivan Marcuse - KeyBanc Laurence Alexander - Jefferies Christopher Butler - Sidoti & Company Jay Harris - Goldsmith Harris.

Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 Cabot Earnings Conference Call. My name is Erica and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions).

I would now like to turn the call over to Erica McLaughlin, Vice President Investor Relations. Please, proceed..

Thank you, Erica. Good afternoon. I would like to welcome you to the Cabot Corporation earnings teleconference. Last night, we released results for our second quarter of 2014, copies of which are posted in the Investor Relations section of our website. For those on our mailing list, you received the press release either by email or fax.

If you are not on our mailing list and are interested in receiving this information in the future, please contact Investor Relations. The slide deck that accompanies this call is also available in the Investor Relations portion of our website and will be available in conjunction with the replay of the call.

I remind you that our conversation today will include forward-looking statements, which are subject to risks and uncertainties and Cabot's actual results may differ materially from those expressed in the forward-looking statements.

A list of factors that could affect Cabot's actual results can be found in the press release we issued last night and are discussed more fully in the reports we file with the [Security] and Exchange Commission particularly in our last annual report on Form 10-K. These filings can be found in the Investor Relations portion of our website.

I will now turn the call over to Patrick Prevost, who will discuss the key highlights of the company's performance. Eddie Cordeiro will review the business segment and corporate financial results. Following this, Patrick will provide closing comments and open the floor to questions.

Patrick?.

Thank you, Erica, and good afternoon, ladies and gentlemen. We achieved another strong quarter of business performance and delivered a record added in our Performance Materials segment this quarter.

Volumes increased as compared to the prior year in both the Performance Materials and the Reinforcement Materials segment, as we saw the demand in our key markets improved and we also commercialized new products and new capacity. Purification Solutions EBIT improved sequentially as a result of revenue growth and lower picked cost.

We've been very focused on improving the profitability of the business and are seeing the results of our work. We have been growing revenue through price increases and improved product mix and we've also been addressing operational issues that have impacted us over the recent quarters.

And I'm pleased to say that the results have been achieved in this area. At the corporate level, we experienced slightly higher unallocated cost associated with increased project activity and an increased tax rate. One of the project that I’d like to highlight is our commercial excellence initiative.

It is a corporate project and it’s about augmenting our commercial processes and tools across the company.

With this asset we see that we can gain a deeper understanding of the overall market environment and of our customers need and the ultimate goal is to achieve even better quality service and reliability which would and will lead to an improved value proposition for our customers.

On the strategic front we announced our plans to divest our Security Materials business for approximately $20 million to SICPA. SICPA is the leading global provider of security [inks], authentication and traceability solutions and services for banknotes, security documents and consumer products.

We’re pleased to have reached an agreement with SICPA and we believe that they will be able to expand and accelerate the growth of this business. The sale is expected to close by the end of fiscal year 2014, pending regulatory approvals.

In addition, our new product introductions continue to accelerate and we launched a new line of carbon black products for tire applications called PROPEL and this was done during the quarter. Tire technology continues to evolve rapidly and we recognized that tire manufacturers need new reinforcing materials.

Cabot’s new products provide tire manufacturers the materials they need to design high performance tires with lower rolling resistance and increased durability.

This is an example of how our deeper understanding of our customer’s need combined with our unique R&D and manufacturing capabilities enables us to create and deliver differentiated solutions.

During the quarter we also announced new contract for activated carbon supply and equipment, of these contracts win demonstrate that our preparations for the mass implementation are progressing well. And that we are ready to enable the industry to meet the new regulatory environment. Actually the recent U.S.

court ruling that upheld the mass regulation, which is in effect in April 2015, supports our expectation for growth in the North American activated carbon market. I will now turn it over to Eddy to discussion the financial results in more detail.

Eddy?.

Okay. Thank you Patrick. Total segment EBIT from continuing operations for the $115 million, which was 29 million higher than last year’s second quarter. The increase compared to the prior year was driven by higher volumes and improved margins across many of our segments.

Sequentially total segment EBIT increase $2 million driven by improved EBIT in performance material and purification solutions. As Patrick mentioned, we have reach an agreement to sell our security materials business, as such we have recast current and prior period results to report the financial impact of this business as discontinued operations.

I will now discuss the details of the segment level beginning with reinforcement material. During the second quarter of 2014, EBIT for reinforcement materials increased by $19 million or 45%, as compared to the second quarter of 2013, the increase was due to 15% higher volume as compared to the prior year.

Volumes improved due to the commercialization of our new China capacity, the addition of our Mexican carbon black plant, and recovery in global demand. Raw material purchasing savings and benefits from energy efficiency investments also contributed to the improvement in earnings.

Sequentially, EBIT decreased by $3 million due to 2% lower volumes driven by the impact of Chinese New Year holiday during the quarter and the challenging South American economic environment. We also experienced $3 million of one time benefits for insurance proceeds and tax refunds during the quarter.

This amount is comparable to similar benefits reported in the first quarter. We would not expect this to repeat again in the third quarter. As we look ahead we believe that volume comparisons to last year will continue to improve.

Our second half of the year typically has higher maintenance spending, due to our turnaround schedule and we would expect this trend to continue this year starting in our third quarter. Longer-term we continue to be optimistic about the industry trends inn our global leadership position carbon black industry.

In performance materials EBIT increased by $10 million as compared to the second quarter of 2013, due to an improved product mix and higher volume. Volumes in Specialty Carbons and Compounds increased 3% in Volumes in Fumed Metal Oxides increased 4% as demand improve in our key end markets.

Sequentially performance materials EBIT increased by $13 million, primarily due to higher volumes, volumes increased 15% sequentially in Specialty Carbons and Compounds and increased 5% sequentially in Fumed Metal Oxides due to seasonal improvements in demand.

Going forward, we expect to see continued recovery in the automotive sector in 2014 and we expect construction and infrastructure related spending to increase as well.

Similar to Reinforcement Materials our second half of the year typically has higher maintenance spending in relation to our turnaround schedule and we would expect this trend to continue this year. We are well positioned with our recent capacity expansion in new product introductions to capture growth.

Advanced Technologies' EBIT increased by $4 million from the second quarter of fiscal 2013. The EBIT increase was driven primarily by higher royalties in Elastomer Composites business.

Sequentially, Advanced Technologies' EBIT decreased $13 million as compared to the first quarter of fiscal 2014, due to a technology milestone payment received in the first quarter in Elastomer Composites, that did not reoccur in the second quarter and lower volumes across the segment.

Specialty Fluids activity levels were lower than the first quarter as expected, which results in business EBIT of $9 million. In addition we experienced lower seasonal volumes in Inkjet and lower aerogel volumes. CEC volumes also decreased as we transitioned away from supplying material and into our royalty based agreement.

As we look ahead, we expect to see a lower level of activity next quarter in Specialty Fluids based on the timing of project. Adjusted EBITDA in Purification Solutions for the second quarter of 2014 was $9 million, which compares to $13 million for the same period last year.

the decrease of $4 million year-over-year was driven by lower volumes and $2 million of higher cost associated with a higher allocation of functional and indirect costs. Overall volumes declined in the air and gas sector, which more than offset a 5% increase in other sectors. These impacts were partially offset by higher prices.

Sequentially, Purification Solutions EBITDA increased by $4 million driven by higher prices and lower fixed costs. Overall volumes remain relatively flat sequentially, as higher air and gas volumes were offset by seasonally lower volumes in other end markets, particularly in the North American water sector.

As we look ahead, we expect our quarterly performance to improve. The improvement should come from higher volumes and improved operational performance that will allow us to rebuild safety stock inventory. I will now turn to corporate items.

We ended the quarter with a cash balance of $89 million and our liquidity position remains strong at $487 million. During the second quarter, we generated a $150 million of adjusted EBITDA.

We used $47 million of cash to reduce debt, $28 million for capital expenditures and net working capital increased by $27 million driven by increases in accounts receivable and inventory. During the first week of April the company received cash proceeds of $215 million for the final payment related to the sale of the sale of the Supermetals business.

We expect to use the cash from the sale to reduce debt level which will reduce our debt to EBITDA from 2.6 times to 2.1. We recorded a net tax provision of $7 million for the second quarter, which included $17 million of benefits for tax-related certain items.

Excluding the benefit from certain items our operating tax rate on continuing operations for the second quarter was 28%, which was slightly higher than expected. This was due to the exploration of the research and development tax credit in the U.S. and the geographic mix of earnings.

We now anticipate our operating tax rate for fiscal 2014 will be approximately 28%. We expect capital expenditures to be at the lower end of our previously forecasted range of $200 million to $250 million for fiscal 2014. I will now turn the call back over to Patrick..

Thank you Eddie. We continue to be optimistic about fiscal 2014 after seeing the positive demand trends this quarter both in our Reinforcement Materials and Performance Materials segment. Tire and automotive industry demand is expected to improve 3% to 4% in 2014 along with construction and infrastructure related spending.

Overall most geographies are showing signs of economic improvement perhaps with the exception of South America. We however believe that beyond Venezuela the economic issues in South America should be of a short term nature.

Also we're maintaining our focus on innovation where activity developing new products so many market and we continue to invest in process and energy efficiency technologies, it’s a key for a long term global competitiveness. And then finally our strategy remains to deliver earnings growth for our shareholders and we continue to be on track with that.

So with that I’d like to thank you for joining us today and I’ll now turn the call back over for our Q&A session..

(Operator Instructions). Your first question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed..

Hi good afternoon..

Good afternoon Jeff..

I thinking in the commentary Ed said, that you plan to take the proceeds from Supermetals and repay that, is that correct?.

That is correct. Yes..

So I was puzzled as to why that was a better use of capital than repurchasing your shares and then you have a very high sustainable free cash flow yield, why would the returns be better in repurchasing your debt?.

So we have a strategy with regard to our capital allocation and we are looking at first and foremost at investing into our current business.

So we have got some high return projects and that’s certainly that area that it will attract capital first then and of course we have the interest of our shareholders of heightened dividend and importance as well, but as you know we have seen our debt to EBITDA metrics weakened in the last year or year and a half and we were concentrated on getting that metric back into the space that we had in the past.

Now on the share repurchasing side we have and continue to think about it as more of an opportunistic effort on our part.

We believe that offsetting dilution is our main objective and we are also be looking at chances to do that but right now in terms of the priority, the debt to EBITDA metrics has been prioritized with the cash coming for us through metals..

It seems a puzzling decision.

Did your carbon block prices on average increased sequentially or did they decreased or stay the same?.

I think I would stay in general and of course considering the many countries and we do business, in and I can only say at the general level I would say the carbon black prices and Rubber Black prices for the repair industry have been fairly stable..

Fairly stable. And then lastly your performance materials margins were really lovely. Your profits grew at a much faster rate than your sales did.

What exactly was behind that? Was there some pricing or was there some significant drop in raw materials or was there -- what accounted for the very, very sharp profit increase year-over-year?.

I would say that -- this is a business that has been doing a lot of things in multiple areas to improve its profitability and we're able to leverage a lot of work that has been done over the last few years. We're also pleased with the fact that we've been pushing off our product mix to the higher margin segments of the industry and applications.

And also this is the result of a few years of work, we're launching new products that are helping us in terms of achieving higher margins. And then lastly, we're focused on pricing.

Now I do want to remind you that the second quarter, so our second fiscal quarter tends to be a seasonally stronger quarter than usual, but I do agree that we are seeing better and improved performance in that segment and we're very pleased with that..

Okay. Thank you very much..

Thank you..

Your Our next question comes from the line of James Sheehan, SunTrust Robinson. Please proceed..

Good afternoon.

I was wondering, Patrick, if you could comment on what your reinforcement materials volume growth was excluding the China the new China plant?.

Okay. Hi James, I'm not sure we provide that data, I think we're slightly sensitive in terms of the competitive situation in China. So, what I can tell you is that we're pleased with the sales coming out of that plant in China. China we’re on track with the commercialization plan.

I think beyond that we’ve indicated that our sales have grown approximately 6%, at our NHUMO Mexican acquisition..

Very good, okay. And then on your carbon black utilization rate they had ticked a little bit higher last quarter.

I was just wondering if you could comment on where utilization rates are now and what is your outlook for the rest of 2014?.

Yes. So I think we’re pleased with the performance of the business. However, I think it’s important to note that we’re still in terms of the Rubber Blacks our Reinforcement Materials business running the business in the lower 80% utilization rate.

So, we in a way have not achieved or haven’t yet gone back to what I would call more mid-cycle type of business conditions.

We’re coming out of couple of years of pretty weak to flat business activity in Rubber Blacks and we’re happy about the development but we’re still not where we think the business should be considering the long-term trend in terms of demand to tires and demand to carbon black products.

So still at a fairly low level we believe that the rest of the year, the year should show promise in terms of continuing to see actually seeing the industry recovering to better demand levels overall. And this is a global picture. .

Okay.

And lastly in Purification Solutions how much of the improvement in this current quarter was due to price increases?.

I would say it’s about half prices increases, if you look at the improvement picture..

All right. Thank you very much..

Thank you, Jim..

Your next question comes from the line of Kevin Hocevar with Northcoast Research. Please proceed..

Hey good afternoon everybody..

Good afternoon..

I was wondering if you could run through the regions in, for reinforcement materials. It seemed like North America and Europe were kind of as expected pretty strong and then big accelerations in Southeast Asia and Japan, but softer in South America and I guess probably softer in China than I would have expected given the new plant.

So with that ramping up so I was wondering if you could give a little color by region..

Yes, I’d be happy to do so, I think you described some of the high level picture, Europe is and we are very pleased with that, recovering. I would say its still a low pace of recovery, but it is the showing signs of a certain robustness which is really good and you can see that when you look at the reports from the tire producers.

North America, I would say we are, we’ve seen replacement tire demand picking up, as well as miles driven and in addition to that the auto production levels are solid. So that is positive on the perhaps concerning side is the pressure from import competition, where we're seeing more tires coming in from China and from Southeast Asia.

So that will perhaps dampen the uptick here.

If I go to Asia, I would say in a way the impacts or the demand we recover we are seeing in Europe and North America is actually providing beyond the local demand growth boost for the local producers, so South East Asia, Indonesia in particular is doing very well, and even though we had a bit of a weak recovery coming out of the Chinese New Year.

The last few weeks I would say month or month and a half have been actually quite strong in China and to certain degree supported by somewhere around 8%, 9% auto production growth that people forecast for China, and also as I mentioned earlier the growth in export.

So I would say the only area that has been weekend and its reflected in our numbers of South America and as you know Venezuela, Argentina, Brazil and Columbia, and Venezuela and Argentina have been the areas where we seen the most pressure and have experienced also evaluation effect.

And I would say and finalizing perhaps on the Japan side, I would say not much to report a fairly flat to stable environment there..

Okay. Thanks for the color. And I guess, when you look at the pickup, it sounds like you had a sequential pickup in the air and gas applications in Norit.

Could you -- was any of that of benefit from the higher natural gas prices and utilities switching to coal from natural gas? Or do you see this more -- are there any early adopters of MATS kind of ramping up maybe earlier than expected as providing that pickup? I was wondering if you could give a little color on that on the pickup on the air and gas side..

Yes, I would say there is nothing unusual here in terms of people having applied or trying to be early in terms of the MATS regulation.

So, what you are seeing is perhaps some seasonality effect, so cold weather has had an impact, it's had an impact on us as well in terms of the business environment, both in terms of having had an impact on our sales somewhat, it's been minor, but it has been.

And we've also had and that's been more of an issue, had also impact on our operations in manufacturing, where we've had to do to turn down plants. But I would say back to the sales in air and gas, I would say a more of a seasonal effect. And again the MATS regulation is of you coming strong but it will be felt more strongly in the beginning of 2015..

Okay, great. And final question, you mentioned entering contracts for shipment of Mercury activated carbon in 2015. I was wondering if you could describe the pricing environment on those contracts.

I mean, given the expectation that supply is going to tighten as we approach MATS, are you getting benefits in pricing kind of compared to what current levels of pricing are on shipments you're making today on these contracts? And knowing you can't get into very much in terms of specifics, can you give us an idea of those pricing, that pricing environments better than it is today.

.

Well as you can understand because of the competitive nature of this information I cannot give you any specifics here.

But what I can say is that we’re engaging with the industry, we’re getting more and more active as we see most of the if not all of the utilities engaging on this topic and we’re pleased with the progress we’re making in terms of finding contractual arrangement that are attractive and interesting for our customers, but also providing us the right type of return.

So, we’re certainly seeing the market improving over the coming years and we’ll reflect that in the pricing as the year goes on..

Okay. Thank you very much..

Thank you..

Your next question comes from the line of Ivan Marcuse with KeyBanc. Please proceed..

Hi. Thanks for taking my questions. Real quick on the maintenance you expressed that maintenance was going to be higher in the second half versus this first half.

How much would you say on a sequential basis I guess looking into the second quarter or third quarter would your maintenance expense rise?.

All right. So, yes we mentioned that because we do have the seasonal effect every year and it is third and fourth quarter that are being affected. These are not large numbers, but I would say somewhere in the vicinity of $5 million to $10 million for the third and fourth quarter for both Performance Materials and Reinforcement Materials..

Great.

And then do feel like you're volumes for the materials business and would you -- would you expect that to sort of rise, even though we're going to a little bit of a slower seasonally weak quarter in the third quarter for Europe, do expect to see a seasonal increase or was your comments more on year-over-year basis looking at the third and fourth quarter?.

I’m sorry, Ivan I’m not sure understand the question, do you mind repeating..

For your volumes are you looking for a sequential low single digit increase, or you talked about the outlook continuing to improve and demand getting better, so that’s on a sequential basis or just more or less on a year-over-year?.

I’m sorry Ivan, can you just clarify, what business you are asking for?.

Material, your performance materials. .

So in the performance materials business, okay..

Yes, so as I mentioned I mean the second quarter is high seasonally. So we would say that’s the highest point, we still, but if we look on a year-over-year basis we expect some improvement..

Okay. Great.

And then, real quick on the costs, you mentioned in the projects, are those costs going to -- is this a one and done type of expense, or would you expect your unallocated corporate costs to remain sort of at this level looking out into 2014?.

Yes, so we as we look at the next few quarters, I would say we're this quarter was slightly higher than usual and I would say we may see slightly that same level for couple of more quarters ahead..

Okay. Great thanks for taking my questions..

Thank you..

Your next question comes from the line of Laurence Alexander with Jefferies. Please proceed..

Good afternoon..

Good afternoon..

I guess first question just on Advanced Technologies, can you give a bit more detail on what drove the lower margins and how we should think about that business going forward.

I mean is this sort of a more sustainable level or you think that the prior margin levels are really something you can return to?.

Laurence, I am sorry, which…..?.

Sorry, Advanced Technology, so the…?.

Yes. We had a bit of the weak quarter as you can see, I mean there are various pieces to that, the season formats, our specialty foods business as we have mentioned was weaker due to the number of project we could foresee working on this quarter. We have the, the second item was the non recurrence of the (inaudible) compounds onetime payment.

And then we had weaker volumes in both Aerogel and Inkjet this quarter. I would say these are not issues that I would say are concerned to be, these are seasonal effect and we were confident that those businesses will get back to the previous levels..

And then in reinforcement materials, can you give a update on how far long you are in your various productivity and energy efficiency initiatives, you had very strong margins for a couple of quarters and is this a sustainable level or can you even take them higher?.

Well, we are at a point where a lot of projects have been implemented, we however some are more recent in nature. So for example our Xingtai investments in China, we have settled up the plant without an energy recovery center and this center has been sold up last month.

So we had a bit of a lag, so this will continue to improve our opportunities in terms of value creation from these energy center activities. In the area of yield improvement, we have research work and pilot work going on, that has fairly advanced and over the coming years, we're going to be implementing some of this throughout the Cabot system.

So, there is still value creation up ahead of us in this phase..

And then just lastly with respect to the decision to pay down debt, is there something that the credit agencies are factoring-in in terms of potential unquantified environmental risk or something like that, that is part of the consideration to keep trying to take the debt level down, or?.

No, I wouldn't say that Laurence. We were operating at a debt level below 2.0 prior to taking on debt about two years ago and it's always been our target to return back to the roughly 2.0 or just below level. So, we have the ability to repay debt on the short term very quickly. And so that's really been the decision, we've taken..

Okay. Thank you..

Your next question comes from the line of Christopher Butler with Sidoti & Company. Please proceed..

Hi, good afternoon everyone..

Hi Chris..

Looking at the Specialty Fluids business, you had talked about continuing softness here into the third quarter.

Could you give us a sense on how long you expect the softness to last and any re-precautions from the difficulties with Russia or the trade thoughts as we respond to their action?.

Now let’s say the political risks around Ukraine and Russia have no impact on the business.

As usual I think what we’re seeing is the project nature of our Specialty Fluids business so we have visibility on a lot of the project and we get some forecasting from our customers in terms of when the product needs to go into the well and for both completion of drilling. The issue is that these forecasts change on a regular basis.

But in this case we have visibility through the next quarter that the number of project will be at the level of this past quarter. And beyond that we see potentially some improvement towards the end of the calendar year..

And circling back to the cash questions, as we apply your decision to reduce debt to possible acquisition pipeline.

Can we take that to mean that there is not anything immediate that you’re looking at and could you talk to a longer-term pipeline?.

Well Chris you know that I wouldn’t be able to comment on that. I think what I could say is that we continue to look at opportunities in this area. We would be looking at opportunities that are close to our existing businesses and preferably, of the size of the recent NHUMO acquisition, but that’s all I can say at the stage..

Thank you for your time..

Thank you..

Your next question comes from the line of Jay Harris with Goldsmith Harris. Please proceed..

My questions have been answered, thank you..

Thank you, Jay..

And your next question is a follow-up question from the line of Ivan Marcuse with KeyBanc. Please proceed..

Hi. Thanks for taking my questions. I misspoke on my last question.

In reinforcement materials how do you see on a sequential basis obviously near-term overall demand even with a lower, typically it's a seasonally lower European quarter?.

Yes, so we're, we continue to see a positive and where we are optimistic about the rest of the year. I would say we should see year-over-year growth. But it will be at lower level, right now I think there is still mix economic environment that we're dealing with, but it feels certainly much, much better than it did, just a year ago..

Okay. Great. And then you may have commented on this, and I may have missed it, but in your purification segment, I think last quarter you mentioned your expectations sort of get back to the breakeven type of level for the year on this business.

So do you anticipate, I guess to get to that level you'd have to show the next couple of quarters of profitability, do see sort of a slower ramp up, or would you expect going into third quarter that purifications becomes profitable? Or get back into the black?.

We are certainly working actively at getting the purifications solution back to the levels, we know we can operate so that’s the objective for the rest of this year.

And then longer term as you know with the mass implementation that is getting certain, more certain and certain as the days go by, we are looking at a business that could achieve somewhere in the vicinity of $150 plus million of EBITDA in 2017..

Great.

So do you expect the purifications to be breakeven by the end of the year for the full year?.

I would say, I am not -- I think we have indicated that we are looking at this year being in line with 2012 levels, 13 levels sorry..

In terms of the EBITDA right?.

EBITDA yes correct..

Okay, great, thanks..

Your next question is a follow up question which comes from the line of Kevin Hocevar with Northcoast Research. Please proceed..

Hey, I just wanted to clarify the -- on an earlier question when you talked about pricing sequentially in the reinforcement materials business. You mentioned that it was flat.

Was that in reference to just the base price or the contract pricing, or does that include the raw material fluctuations as well?.

This is base pricing that was on there..

Okay. And then just another quick one. NHUMO looks like it's adding 9% to your volumes in reinforcement materials.

My understanding was this was adds about 7% or so to your global capacity so is this operating at a much higher utilization than say the average for the segment?.

I would say it's in the average of the business. I don't think there is anything special in terms of utilization rates in Mexico. I mean we're pleased with the business, we're running it well. So, but I would say nothing unusual there..

Okay, great. Thank you..

Our next question is another follow up question from the line of Jeff Zekauskas with JPMorgan. Please proceed..

Thanks very much. In your key highlights, you highlight PROPEL as a key new carbon black product.

Can you talk about why it's important? Does it increase your sales growth rate or your margin, or is it a higher-margin product? What's the analytical significance of PROPEL?.

So, I think what is very interesting is that, over the last, I would say 5 to 10 years, we've seen the tire industry renewing it's interest in tire technology and have realized that materials science is a big component of achieving differentiation in the industry sector they are in.

And we are seeing and discussing with multiple tire manufacturers about their needs and how they can achieve better performance with their tires. And as a result of that, we have been putting quite a bit of work and these are, this launch is actually the result of several years of development that have led to these new products.

Now the effect of these new products on our sales are still I would say perhaps a year or two year out, they are products that have significantly higher margin.

There is sophisticated materials that allow our customers to improve the rolling resistance of their tires and also durability and in a way these products are there to do something to perhaps improve our competitiveness against some of the silicon materials that have been coming into the market in the rolling resistance area.

But in addition what we can do with carbon black is not only do that, but we’ve also been able to improve durability at the same time. So, it’s quite an interesting combination of features that these new PROPEL materials can provide to our customer..

Is it a global roll out or is it domestic or European? And five years from now how many pounds or tons or revenues might PROPEL account for?.

I would love to be able to answer that. We believe it has real potential. I think it is a global roll out. So we see that as meeting needs around the world that we’re seeing from our tire customers. And we’re quite hopeful to see very nice growth from this new product line..

Okay. Thank you very much..

Thank you..

Your next question is a follow-up question which comes from the line of James Sheehan with SunTrust. Please proceed..

Yes. On your comment earlier about purification solutions being able to do $150 million in EBITDA in 2017.

Has the court ruling on the MATS standard changed your view on how quickly or the ramp to $150 million in 2015 and 2016?.

No I would say that the court ruling is just reinforce the fact that it will happen on April 2015, and our current modeling is that we see approximately half of the utilities needing activated carbon needing it in 2015 and the other half basically starting to buy and utilized products in 2016..

Thank you very much..

Thank you..

And we don’t have further questions. I will now turn the call back over to Patrick Prevost for any closing remarks..

Well, thank you very much for joining us today, and I’m looking forward to speaking with you again next quarter..

Thank you for your participation in today’s conference. This concludes the presentation. Everyone may now disconnect and have a great day..