Jack Clem - Chief Executive Officer Charles Herlinger - Chief Financial Officer Diana Downey - Head of Investor Relations.

Ivan Marcuse - KeyBanc Capital Markets Jeff Zekauskas - JPMorgan Kevin Hocevar - Northcoast Research Paul Walsh - Morgan Stanley John Roberts - UBS.

Good morning and welcome to the Orion Engineered Carbons First Quarter 2015 Earnings Conference Call. Management will be utilizing a slide presentation for this call, which is available now for download on Orion Engineered Carbons Investor Relations page at www.orioncarbons.com.

Today’s call is bring recorded and we’ve allocated one hour for prepared remarks and question and answer session. All participants will be in a listen-only mode. At this time I would like to turn the conference call over to Diana Downey, Head of Investor Relations at Orion. Thank you, you may begin..

Thank you, operator. Good morning everyone. We issued our earnings press release after the market closed yesterday and have posted a slide presentation to the Investor Relations portion of our website at www.orioncarbons.com. We will be referencing the slides during this call.

Today’s speakers are Jack Clem, Chief Executive Officer; and Charles Herlinger, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today’s call, including our financial guidance are forward-looking statements.

These statements are subject to the risks and uncertainties as described in the company’s filings with the SEC. Actual results may differ materially from those described during the call.

In addition, all forward-looking statements are made as of today and the company does not undertake to update any forward-looking statements based on new circumstances or revised expectations.

Also, non-IFRS financial measures discussed during this call are reconciled to the most directly comparable IFRS measures in the table attached to our press release. I will now turn the call over to Jack Clem..

Good morning and thank you for joining us today for our first quarter 2015 earnings conference call. I’ll begin today’s call by providing highlights from the first quarter and will then turn the call over to our Chief Financial Officer, Charles Herlinger, who will provide more details on our quarterly results.

Finally, I will comment on the broader industry trends and our updated outlook for 2015 before opening up the lines to take your questions. Beginning on Slide 3, we are very pleased with our results for the first quarter of 2015.

We continue to successfully execute our strategy to grow our specialty carbon black business and both grow and improve the profitability of our rubber black business. During the first quarter of 2015, we grew adjusted EBITDA by 7.8% and contribution margin by 8.6%.

We also continue to generate strong cash flow with our cash balance increasing by €50.2 million in the quarter, driven by both strong operating performance and a positive working capital development.

There was a level [ph] of turbulent quarter in the energy markets but in spite of this, our raw material cost pass-through mechanisms proved effective again, sheltering our margins for downward price pressure. We were, in fact, able to increase these margins in some markets, notably in specialty blacks.

We expanded our adjusted EBITDA margins in both specialty and rubber black businesses due to improved contribution margins and the effect of lower feedstock costs on our revenue. I also want to remind you that when we discussed volume growth being in line with current GDP expectations, we were working about full year growth.

There will be fluctuations that increase volume higher or lower for any given quarter. Turning to Slide 4, our first quarter volumes were 253,000 metric tons, a slight increase from the prior year. While volume growth was limited in the first quarter, both segments saw increases.

Growth in rubber carbon blacks was driven primarily by Europe and US in spite of the slow start to the year attributed to a surge of company’s tire imports and particularly difficult weather in the Northeast. This was partially offset by weakness in Brazil.

We enjoyed strong specialty volume growth from your European business which was partially offset by weakness in the Americas and South Korea. We commented last quarter on the impact of Chinese tires on US auto [ph] production as well as producers’ race to fill the pipeline ahead of the US imposed tariffs.

The surge in Chinese imports has abated during the latter half of the first quarter and while partially being replaced with imports from other countries, total imports are falling thus far in 2015. We generated revenues of €290.4 million and more importantly, increased contribution margin by 8.6% or €8.7 million to €109.8 million.

Orion’s adjusted EBITDA increased 7.8% year over year to €53.9 million. The strong increase in contribution margin and adjusted EBITDA in spite of limited volume growth during the first quarter reflects successful management of our margin and mix, improvements in efficiency of our operations and favorable currency effects.

We experienced a €5 million foreign exchange benefit this quarter due to a strengthened US dollar. These gains were offset by unfavorable feedstock cost impacts of a similar amount. I will now turn the call over to Charles who will provide you more detail on our performance by segment. .

Thanks Jack and good morning everyone. Turning to Slide 5, our Specialty Black segment volume increased by 1000 metric tons or 0.4% to 51.1 kmt in the first quarter of 2015, from 51.9 kmt in the prior year. The slight increase in volume reflects increased demand in Europe offset by some weaker demand in Asia Pacific and in the Americas.

Adjusted EBITDA of the Specialty Carbon Black segment increased to €28.6 million in the first quarter 2015 compared to €25.7 million in the prior year. Adjusted EBITDA margin increased significantly to 29.1% from 25.2% in the prior year period.

The strength in our adjusted EBITDA margin was enhanced by the decline in feedstock prices of non-indexed customers and net favorable foreign exchange translation effects. Turning to Slide 6, our rubber carbon black segment volume increased by 3.4 kmt or 1.7% to 201.8 kmt in the first quarter 2015 from 198.4 kmt in the prior year.

The growth was due to increased demand in Europe and North America which was offset by weaker demand primarily in Brazil.

Adjusted EBITDA of the rubber carbon black segment increased by €1 million or 4.2% to €25.3 million in the first quarter 2015, from €24.3 million in the prior year, reflecting the benefits of gross profit development taking into account the elimination of changes in depreciation.

Adjusted EBITDA margin grew 260 basis points to 13.2% compared to 10.6% in the prior year period, reflecting the effect of lower feedstock costs on sales revenue as well as favorable net foreign exchange translation impacts and efficiency gains. Moving now to Slide 7, I will provide an update on our balance sheet and cash flows.

As of March 31, 2015, the company had cash and cash equivalents of €120.7 million which represents an increase of €50.2 million. This increase was driven by strong operational performance of the business and reduction in working capital of €28.9 million. The company’s non-current gross indebtedness as of March 31, 2015 was €706.3 million.

Net indebtedness was €594.5 million which represents a 2.87 times LTM EBITDA multiple.

Cash inflows from operating activities in the quarter amounted to €74.8 million, consisting of a consolidated profit for the period of €14.8 million, adjusted for depreciation and amortization of €16.6 million, exclusion of finance cost of €14 million impacting net income, and a cash contribution from decreased net working capital of €28.9 million primarily associated with a reduction in receivables and inventories due to feedstock cost declines.

Net working capital totaled €203.7 million at the end of the quarter, compared to €219.7 million at the end of 2014. Days of net working capital was 65 days, down one day from the prior quarter.

Cash outflows from investing activities in the first quarter of 2015 amounted to €13.8 million consisting of expenditures for improvements in the manufacturing network throughout the production system which is in line with our expectations for the full year.

We plan to continue financing future capital expenditures with cash generated by our operating activities. Cash outflows for financing activities in the first quarter amounted to €14.4 million, comprised primarily of our regular interest payments of €9.5 million and regular debt repayments of €3.2 million.

I will now turn the call back to Jack who will provide some additional comments on our key markets and geographies and then will finish up with the outlook..

Thank you, Charles. Now please turn to Slide 8. This year is developing much as we had expected. North America continues to be a strong market for Orion and we believe it will strengthen even more as we move through the year. There has been a reduction in imported Chinese tires by US tire manufacturers, after a bit of a slow start are running strongly.

The tire producers are moving ahead with their investments in new North American tire production capacity and even some new tire investment announcements have been made.

Our rubber black facilities in this region are running close to their capacity limits and we are making good progress in filling up specialty black capacity that we added last summer in Texas. In Europe, while it currently is not a strong as it is in the US, it has been improving and even performing a bit better than we had expected.

Global demand for our specialty products produced in Europe continues to grow and we continue to make progress of filling the capacity of after-treatment facility we recently added in Germany. Our Asian rubber black business, which is concentrated in Korea, performed very well this quarter.

We continue to improve operating efficiencies as we commission new equipment that delivers higher feedstock yield. The Asian specialty carbon black business remained strong and in Korean we saw a very high mix of premium products which positively impacted adjusted EBITDA.

Lastly, there is no material change in the outlook for South America and South Africa as demand in both regions remains weak. Our operating rates have fallen in Brail and our exposure here is very low, so it has not materially affected our business so far.

And while the South African economy remains weak, our performance there has improved over the prior year due to initiatives to increase productivity. Finally, as we consider the full year of 2015, please turn to Slide 9. As you have heard, we are pleased with our start to 2015.

We believe we had a good start to the year and continue to be in a position to deliver strong financial and operational performance while delivering our commitment to pay dividends to our shareholders. The regional economies continue to be in line with our expectations, perhaps even a bit more favorable.

Our pricing mechanism should continue to provide support for our margin and our initiatives to improve both top line and cost performance are running well. And finally, we hope to see current stability for the remainder of the year.

Consistent with this outlook, we reiterate our guidance for the full year adjusted EBITDA of €210 million to €225 million for 2015 and believe we’re driving towards the upper half of this range. With that operator, please open up the lines for questions..

[Operator Instructions] Our first question comes from the line of Ivan Marcuse with KeyBanc Capital Markets..

If you look at your specialty business, your gross profit dollars per ton really jumped up, and I don’t understand if there are some moving parts.

But how much of the segment benefit from a positive variable cost and would you expect sort of that level of gross profit per ton to maintain for the rest of the year? Variable costs defining by price versus raw materials?.

Morning, Ivan. It’s Charles here. You are right. Our gross profit per metric ton jumped up.

The big drivers that are in there, we talked about that in the release, the effect of depreciation, there was about nearly €2 million, €1.9 million positive impact from that and that is something in fact that will continue over the year, and we had some FX benefits of a similar amount as well.

And then of course we are having the benefit of the fact that on our non-indexed business some of the low costs are being maintained. So those are the three factors. In terms of depreciation, that is certainly an effect that will continue all year.

FX is – you know our assumptions on that in our outlook, and the same comment goes for the development of costs.

The key thing, I think, to note though on the cost side of things without raw materials, is the pass-through mechanism be it specialty or be it rubber carbon black division has proved to be effective and there is kind of rapidly – in this case, recent case, changing decreasing feedstock, that’s an important measure for us of the resilience of our pass-through mechanism.

But in summary, that’s how I would answer your question..

And in your press release you say something from the effect of – the negative feedstock cost developments.

What does that mean when you say it hurts your EBITDA?.

I mean the feedstock market varies, as you can imagine, around the world. There is a lot of moving parts and pieces to that. You have Gulf Coast, you have West Coast, you have coal tar and that’s the supply and demand – what’s happened there is – couple of different factors.

Sometimes the raw materials slate accounting – you’ve seen of the pretty substantial change in the slate of raw materials in the United States [indiscernible] with manufacturer, it costs us more in the US refinery, it could lighten up the feedstock and as a result of that lighter feedstock and some of these other supply shifts we are seeing, decreasing yields and a little bit more competitive feedstock market than we have in the past.

.

And then a quick question, I will jump back into the queue.

Your cash flow – your expectations, you’re going to pay $10 million a quarter in dividend but in the cash flow – until your dividend come out this quarter, is that more of a timing function or do you expect to see sort of $20 million number next quarter or how to think about from a cash flow perspective after the dividend coming out?.

The dividend for the first quarter came out after our shareholders meeting in the middle of April. So – and then the second quarter will be bigger – is aimed to be at the end of the second quarter.

So you are absolutely right, we will catch up from the cash flow point of view in the second quarter with too much of quarterly dividend and then thereafter for this year we will have our quarterly dividend in each of the quarter 3 and 4.

But the first dividend of the year is a function of needing to be paid essentially just after our annual meeting which takes place in the first week of April. .

Thank you. Our next question comes from the line of Jeff Zekauskas with JPMorgan..

Can you talk about your expectations for growth in global carbon black demand this year and your assessment of the amount of global capacity that’s being added? Is the industry getting tighter or looser and if the growth rate of carbon black accelerating or slowing down and why?.

Jeff, I think overall it’s based on the long term section of current – call it, 3% to 4% globally and as you know it varies dramatically by region. We established regions typically, it would take maybe 1% to 2%, maybe another higher in gross books like we have right now in the US, China of course, pretty much stronger.

And I don’t see really any variation of that. It seems to be continuing at that pace but I mean clearly it is probably slant of a little bit more towards the Asia Pacific region during this period of time.

Tar building, I would say maybe not as pronounced that direction but certainly the energy driven by the markets, are probably stronger now in Asia Pacific over the long term than they had been in the past. In terms of 2015, we see growth in the United States, we see growth actually in Europe albeit at a little bit more calmer.

You know what our visibility is in China right now but our Korean facilities are running much as we expected in 2014 and looking into 2015. In terms of capacity additions, there have been capacity additions but as you know most of those additions had occurred in China. Interestingly enough we think the Chinese market seems to be tightening a bit.

In the past we talked about Chinese capacity utilization anywhere from the high 60s to the low 70s.

That does seem to be climbing up right now, perhaps there could be some capacity closings that I think is largely a demand driven factor but in terms of the rest of the world, utilizations are tightening in the United States right now, at least we are running globally – the industry is running fairly slow right now.

And in growth, we are running quite high. I think I get – maybe the overall question is global demand versus global capacity. It does – that at least to be tightening and the overall slackening that we talked about in the past in China does seem to be coming from kind of getting softer at this point. .

So there has been some commentary that pricing has become more aggressive in China, or more price competitive.

Do you believe that, that’s the case and do you believe that, that would have any effect on any of the other global jurisdictions?.

There is an interesting dynamic in China right now. Again you have to realize that our presence there – it’s on a QECC facility which we talked about in the past, can comment on later in the discussion if needed.

So it’s a bit negative but you’ve got the situation in China where the import tariffs for tires into the US, we are encouraged, at about the same time that the dynamics between the petroleum based feedstocks and coal based feedstocks get into place, and I think that probably put the Chinese producers in a bit of frenzy because they had it – at the same time demand shrinking and their cost of supply rising, so I think these guys are pretty highly levered as we understand it.

I think it’s driven by cash, I think there was quite a bit of competitive activity going on during that period of time based on our observation. .

There has been some market share shifts over the past nine months in carbon black. There has been some winners and some losers.

Do you think that the losers want to get back their share, or because of the timing contract renewals, it’s not much about what happened this year or how do you see the general competitive dynamics in terms of the ebb and flow here?.

You have to be speaking the China –.

No, I am speaking on a more – I am speaking in North America and in Europe..

I think it’s pretty static right now. You know how contracts work in these places, particularly in the US and the Europe, the contracts are set pretty much for the year. So I would say currently whatever their share balancing is, we are spending on the fuel, the lion shares here and there that are typically marginal, pretty minimal.

I don’t see much change in 2015. .

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

I wondered if you could – back to Ivan’s question on the feedstock cost. It sounds like they largely offset the FX benefits you get.

Are those – do you expect those to continue through the balance of the year, kind of at similar level or would those dissipate at all, a bigger headwind, just comment on kind of where you expect that headwind to go going forward?.

Kevin, my sense – one danger thing is trying to predict what happens on the oil market. But my sense is that we probably will see to some degree some continuation of that. The feedstock slate that exists for the traditional OACC [ph] in the US right now, not likely to change. I mean the oil prices are moving up.

So some crude slates are probably changing but for the most part I would say this lighter crude slate is probably going to continue and that will have a negative effect on us. The dynamics between coal tar and petroleum based feedstock seem to be going back to more in the traditional way.

We have seen a rise as you know in the cost of oil, WTI is moving up, close to 60 right now, Brent is over 60. At the same time we are seeing a reversal in some of the coal tar materials as they had back then.

So that traditional differential between those two types of feedstocks seems to be re-establishing, so that’s something that could be advantageous to us. It’s our intentions both ways but it’s very difficult to call it right now..

And one other thing I didn’t hear you mention is either a negative or positive – your annual contract based price negotiations.

So were those largely neutral, whether some to be positive, some negative, but in the end, it’s relatively neutral or did those have any real impact on earnings either way during the quarter or really I guess for the balance of the year?.

We always hesitate to get too far into this to the notion or concept or the details rather of pricing.

We have been able to move up margin and mix based on just the different price of products that we sell and some of the efficiency gains, and there are some earnings [indiscernible] as you move from year to year but I don’t think I’d really want to get much far into that. .

And then just finally on the cash generation of the business was pretty strong.

So just wondering what we should think of for cash flow for this year and also how we should think of working capital as well moving forward?.

Well, well strong and a big piece of is, we mentioned in the release, is what you get capital related triggered through the fall in oil prices that we’ve had until recently. It’s a function of where you think oil is going to go.

I think most of that fall in oil prices, Kevin, has played out, not entirely all of it but you are getting to feel most of it now. And it’s a function of where we expect oil prices to go. We think that oil price can stay around where they are.

Then we are not going to have the working capital release that we experienced in the first quarter, to that extent at least for the rest of the year. But underpinning it is that we expect our EBITDA to have a strong conversion rate to cash anyway, with or without working capital, obviously while we disclose the two pieces.

So long story short, if you’ve seen where oil price is going to stay around where they are now, then we will have a bit more benefit from falling oil, that’s still got to work its way through our inventories or receivables particularly. And then that will start to dissipate but we will continue to have a very strong conversion of EBITDA to cash.

So today, if you like, about where we are, our goal is to keep them around about where they all are bit better. We will likely continue to see that..

Thank you. Our next question comes from the line of Paul Walsh with Morgan Stanley..

I had just one on the underlying business.

Perhaps I think not in the wrong way but if I look at the FX benefit that you guys had in the first quarter, specifically from what we are seeing across the board, right now, if I sort of strip that out, I know you had some of the raw material headwinds but did you see an acceleration in some of the underlying growth characteristics in your business as you move through this year, whether it’s volume or further delivery on some of the cost elements in the business? And that’s really the foundation of my sort of question for today..

Just to be clear, if we look at the adjusted EBITDA level, the FX benefits that we had in the first quarter were counter-balanced by these negative oil factors that Jack described just earlier on the call. We talked about the visibility, our judgement on how those two factors continue.

We still have our underlying efficiency gains that you talked about that on the rubber side, our goal regardless of what oil does to revenues and therefore to reported EBITDA margin, our goal is to move up EBITDA margin over the next three years, maybe a little bit longer by about 3%.

So that is intact and we expect to deliver that throughout the remainder of this year.

I mean we’ve started in this first quarter, that was a – if you net out the FX impacts and adjusted EBITDA beneficial 5 million and then the oil perhaps is going the other way, just put them to one side, then what a big driver, net, net of our overall EBITDA improvement in the quarter, that’s 4 million is a big chunk of that, not alone but a big chunk of that is efficiency gains but those we expect certainly to continue as the year moves on.

In terms of your question about volume, as Jack said in his introductory remarks, we still expect the sort of volume dynamic flows but we talked about a quarter ago, as this year unfolds, so those two factors are important factors for us to, if you like, the underlying targets that we put firmly out there..

And just to be on top of this, in terms of the raw material headwinds that offset the FX gains – just help my understanding, is that timing tissue given the pass-through contracts and that kind of stuff, or is it more a function of pricing power in rubber carbon black, for example, you have to give more in price than the raw material decline required?.

It’s not a sales price, as you call, it’s a purchase cost of the feedstock and the quality of the feedstock which is the offset. Not a lag. It doesn’t anything to lag factor. .

Exactly, it’s not. It isn’t a lag, the lag factors were pretty well balance actually in the quarter. .

Thank you. Our next question comes from the line of John Roberts with UBS..

I think last quarter we talked about the possibility of going to the US dollar as your functional currency even if you remain domicile in Europe and reported in euros.

Any updates on that and if you were able to do that, could you run your global business to a currency neutral dollar equivalent earnings guidance? You gave guidance today in euros but I don’t know how if you had to do it in dollars, could you run the business so that, that would be relatively insensitive to currency?.

To that very point, the conversion – and again emphasizing this is not a decision we’ve made and there are many schools of thought on this as you know. But we want to make sure that we really fully understand the currency effects of running this business of a functional US dollar.

Before we were to ever make that change, I mean the mechanics frankly with our systems are pretty straightforward as you would expect.

The issue is do we have an understanding of the dynamics of the business and our contracts that are associated with that, because one thing about our foreign currency profile is, this quarter the benefits we talked about are very heavily skewed towards translation, meaning, we got a US dollar P&L, we translated back into euros, and whatever, and very much not a function of transaction FX factors.

And that’s an important part of our business model. We work very hard to minimize those transaction related FX effects plus or minus. That’s a balanced business, in the sense of balance, it’s the equivalent of balancing the business in terms of our feedstock pass-through mechanism.

And that piece of work still has to be done, to your question, if we change our functional currency and that is something that we are – that is under consideration and will take us some time. .

Thank you. Our next question comes from the line of [Peter Labick with Post Strategic Capital]..

I want to talk a little bit about North America, it seems like investment on the OEM side is accelerating and I know Goodyear Tire on their conference call said growth in North America is an attractive investment.

Can you just talk a little bit about capacity utilization on the carbon side, where it is and can it accommodate this growth and how tight could this market get going forward?.

Peter, I think it’s already pretty tight right now and there has been additional expansion plans announced by the tire manufacturers.

I think we’ve talked at length about many of the expansions that were announced earlier, there’s many, the new ones are Goodyear announced one in Mexico, there is another one I think in plans right now by Trailerboard [ph], GK Tire has announced a new greenfield plant in South Carolina, all of these facilities are going to require carbon black.

Right now the yields are pretty tight. We don’t see a lot of slack capacity out there and when I talked about North America, that included Canadian plans and the two Mexican plants as well because they serve this entire North America.

So the question is how attractive can you get, it’s already pretty tight and we see demand rising, currently as we go the next few years. And as you know the CPA 114 issue has constrained expansion plans.

Now that might relax some after there is settlement in the industry but right now even absent that, I think it would take a while for some of those capacity expansions to come on. So I could answer the question, coming back to the regional, it’s tight now, it’s going to become tighter. .

Do you think you will see that impact to pricing going forward?.

I always hesitate to comment on pricing but typically in these markets when it’s tight pricing firms up..

Just one more question on cash flow. You talked about the positive cash flow for the rest of the year. You’re building cash on the balance sheet. Can you just talk about how you guys are thinking about using that cash? You already have a very nice dividend yield.

What your priorities are there?.

Given our flow from the fact that – we are not looking to buy back stock. So we can take that off the table, it comes down to dividends and obviously we talked before about the QECC acquisition, that’s something we are – we’ve got a comment on that in the Q&A, something that we are keen to close.

We think that’s on track to do that, in line with the original agreement from – that we have with Evonik. So those are the two main factors, Peter. And there is bigger question, given the cash development that may not fully answer your question. We will start giving that consideration as this year unfolds clearly..

And quite frankly a bit of delevering with –.

We’ve said, it’s a good point – we’ve said that, we started off with a bit over 3, as you know, when we did the IPO we said we wanted to move towards 2.5 or so. We’re certainly very comfortable, leverage ratio for us is actually comfortable now. Obviously that’s a function of growing EBITDA as well but that’s the other factor in the mix, yes..

[Operator Instructions] Our next question is a follow up from the line of Ivan Marcuse with KeyBanc Capital Markets..

A couple of quick questions on the specialty business again. I was a little bit surprised that Asia and North America was down for that business.

To what degree – was that a function of maybe some destocking in those regions and with oil going up, would you expect sort of a restock or how do you look at volumes for this business going through the year?.

We did see a bit of destocking in that business, probably that’s the largest part of it. Some of the other is just simply a function of mix, some of the business was, call it, maybe little bit on the lower end of the margin scale. And so we decided to divert the capacities to other products.

It’s not what I would consider a significant shift one way or the other. .

And what do you think of underlying carbon black demand growth for North America and Europe right now? Yes, rubber black, are you expecting Europe to be up 1% or you are hoping for flat or sounds like your commentary is kind of a little bit better..

Our growth in Europe is actually much stronger than that into ’15 – stronger than what we expected. We expected really a mild bump, something in a very low single percent, or even 1% or so, and it seems to be better than that, or even better, I would say, more like 2% to 3% right now. Hopefully that will continue, the US much the same thing.

Maybe a point or so higher. .

And in Europe what do you think is driving the growth, is it a function of easy comparisons or are you seeing sort of where you are selling to and replacement demand or improvement in I guess in general consumer spending?.

I think it’s a little bit of all of those actually. I think people can just go so well, the economy, while they are not all that great, has gone back away from the edge of doing, actually where a couple year ago, maybe pockets might have loosened up a little bit, perhaps fuel moderated a bit.

So I think all of these things working together and maybe people feel a little bit more comfortable about putting a new set of tires. Trucks are running a little bit more on the road than they used to. I think it’s just a little bit of all of that actually.

I wouldn’t want to paint a little bit bright picture in Europe, mind you, and it is very bifurcated between the north and the south, and the central and the south, that for the most part I think it’s a big better than it was but a bit better than what we thought it would be so far. .

And then the last question I have is, if you – with North America tightening and the plants in Canada and Mexico, do you ship down to Mexico from your plants and if not, is there an opportunity? And the on the flip end, with market tightening, would that -- could you see an acceleration or maybe an increase of import of carbon black coming in, or how – if you look out the next two or three or four, five years in this market, how do you sort of see that developing?.

There are cross-border shipments – from north cross-border shipments from the US and Canada than they are in Mexico to the US and vice versa.

There are some, but they are not – it’s not what you consider really significant, probably the greatest common pool will be Canada and the US, just simply because of the geographies and its complications of leaving across the Mexican border. But that could certainly change.

The problem is as you add capacity in Mexico, the Mexican facilities right now we think are running fairly tight like the US facility as well. So maybe around about answering your question is Canada is tight, Mexico is tight and the US is tight. You asked about imported materials, there will be imported materials.

I think the commentary we’ve made on that in the past, we will continue to reinforce that is there will be some materials to come in, but the logistics are daunting.

The material has to come in, and it has to be converted over to the typical type of delivery, new vehicles in the US which are usually for large volumes, railcars, which is not an easy process to do or bulk trucks which are equally difficult. And that’s a very, very long supply chain from any export source.

But the recent change in the yield dynamics between US energy costs and Asian energy costs which may be dependent more on coal materials, that’s a bit of a challenge to be competitive at this point. .

I have one more question. I think I read or saw somewhere – I am aware this is in my head, that there is some hurdles that have been resolved with the Chinese plant that you’ve been sort of negotiating for years and buying from Evonik.

If you did say something I missed, I apologize, sort of your expectation of getting that plant closure done or getting into that business within 2015 or how would you gauge at where we sit today knowing that things are going to change?.

We have been working very hard as you know, on closing, we still with Evonik. Without getting into the gritty details over some issues that excluding [ph] away, if I have been able to close on that, we believe at this point that the critical issues now are gone, or at least resolved or on the handy resolved, to put it that way.

And that we will lose the pace to close this deal. It’s clear to us that the facility can be easily integrated back into our network. We know the technology, it’s actually a licensed technology facility by us, so bringing it back would be very easy. We know most of the people there.

So we are working very diligently right now with Evonik and Evonik has an obligation under the agreement to transfer that facility to us and we certainly will hold them to those obligations. End of Q&A.

Thank you. Mr. Clem, there are no further questions at this time. I will turn the floor back to you for any final remarks..

Okay. Well thank you very much. Great questions, we appreciate that a lot. Let me just sum this up by saying it was a good start to the year. One quarter doesn’t make a year but it’s always nice to get off to a good start in the year.

We had some favorable trends working in our direction right now that we talked about, these trends associated with the volumes, some of the mix improvements that we’ve got. A lot of internal initiatives which are proving favorable right now and some what I would consider exogenous factors like currency and so forth that are working in our favour.

Also we had some negatives as we talked about with some of the feedstock materials. But all in all right now those seem to be netting in our favour as we move forward. It seems our strategy that we put in place when we established this business is working well and playing out the way we wanted to.

A lot of hard work, still in front of us, there is a lot of good things that we could do in this business and we’ve got a good team working on those now. But overall I’d say we are satisfied with where we are with the business. We appreciate your attention in our business and look forward to talking to you next quarter. .

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful afternoon..