Diana Downey – Vice President-Finance and Investor Relations Jack Clem – Chief Executive Officer Charles Herlinger – Chief Financial Officer.

Kevin Cleary – North Coast Research Jeff Zekauskas – JPMorgan Mike Leithead – Barclays Mike Sison – KeyBanc Capital Markets John Roberts – UBS.

Greetings, and welcome to the Orion Engineered Carbons First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ms. Diana Downey, Vice President Finance and Investor Relations for Orion Engineered Carbons. Thank you, you may begin..

Thank you, operator. Good morning, everyone, and welcome to Orion Engineered Carbons conference call to discuss first quarter 2017 financial results. I’m Diana Downey, Vice President, Finance and Investor Relations. With us today are Jack Clem, Chief Executive Officer; and Charles Herlinger, Chief Financial Officer.

We issued our earnings press release after the market closed yesterday and have posted the slide presentation to the Investor Relations portion of our website. We will be referencing this presentation during this call.

Before we begin, I 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, May 5, 2017, 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..

Thank you, Diana. Good morning, and thank you for joining us today for our First Quarter 2017 Earnings Conference Call. Our agenda today is shown on Slide 3. I will provide highlights for the first quarter of this year and comments on the performance of our two Carbon Black business segments.

I will then turn the call over to Charles Herlinger, who’ll provide more detail on our financial results, discuss our outlook for 2017. After Charles has finished, I will review the progress we have made on major operational initiatives, our strategy going forward and some comments on key performance metrics today.

We will then open the lines to take your questions.

Starting with our first quarter highlights on Slide 4, I am pleased to report that we are off to a strong start in 2017, delivering a record quarterly adjusted EBITDA, double-digit net profit growth and most recently after the close of the first quarter, another repricing of our long-term debt to even further reduced interest costs.

Demand in our businesses was solid with another outstanding quarter of volume growth for our Specialty Carbon Black business, rising 13.3% above last year. Rubber demand during the quarter was good in all regions. We were especially pleased with the strong gains we saw in Qingdao, China.

While demand was good, overall, our rubber volumes declined, mostly due to the closure of the rubber black facility in Ambès, France, as we reduced sales of marginally profitable rubber grades and reduced the significant piece of manufacturing fixed costs.

Our adjusted EBITDA of €58.8 million increased 9% year-over-year on strong performance in specialties and a recovering rubber Carbon Black business. Net income in the first quarter increased 18.5% or €2.4 million to €15.8 million, pushing EPS up by almost 20% to €0.27 per share, and adjusted EPS up by nearly 30% to €0.36 per share.

Charles will speak further on the success we had in bringing our interest costs down last month, this is yet another step in improving our liquidity. Slide 5 provides details on the volume and adjusted EBITDA of each business, our regional production coverage and key profitability trendlines.

Our Specialty Carbon Black business accounted for 24% of total volume and continues to provide more than half of total adjusted EBITDA. The improvement in the percentage of technical rubber grade products saw continuos decline, reflecting our mix shift to higher-margin grades and the impact of the closure of the French facility.

As the trendlines at the bottom of the slide illustrate, we continued to experience recovery in our Rubber Black business due to operational improvements and some pricing release this year.

In specialty, we saw some margin compression as a result of the time lag associated with price adjustments to deal with higher feedstock and a surge in freight cost to Asia.

Also as mentioned before, we see some dilution of per ton margins as we expand our business in emerging markets such as South America and regionally produced product in China from our plant in Qingdao. Our global sales volume footprint remains reasonably stable relative to this quarter last year. Turning to Slide 6.

Our Specialty Carbon Black business had a great quarter of growth, with a 13.3% increase to 67,000 tons, again outstripping our view of market growth. The execution of our specialty strategy is going well, as we expand our sales footprint, product breadth and our capacity to meet demand.

Volume growth was seen in all regions, but it was especially strong in Asia Pacific. Due largely to volume gains with some help from the past due to of oil price, specialty revenue increased 12.3% to €109 million versus €97.1 million in the prior year’s quarter.

Gross profit was down €1.6 million to €43.6 million as a result of the issues I mentioned earlier, including the lag in the timing of processing to deal with the rising feedstock cost, some dilution of mix and increased freight costs. Gross profit per ton fell 14.9% to €651, and adjusted EBITDA was down €2.3 million to €32.1 million.

Turning to Slide 7. We are pleased that the recovery continues in our Rubber Carbon Black business. Overall, volumes were stable with the exception of the marginal business we rationalized from our European portfolio when we closed the French plant at the end of the year 2016. This led to an overall decline of 4.8% to 208,000 tons in the first quarter.

Partially offsetting this impact was a double-digit volume gain in China, where our competitive position continues to strengthen on the basis of improved sales coverage and upgrading of our mix.

We would also like to point out that we’re seeing a tightening of emission controls in China, which are pressuring the weaker suppliers and has led to reports of capacity declines in what has historically been an oversupply market.

The raw material pass-through effect of our mostly index business pushed first quarter revenue up 30.9% to €195.3 million from €149.2 million in last year’s first quarter. Gross profit increased 26.9% or €9.8 million to €46.1 million, while the gross profit per metric ton improved 33.3% to €221.5. Adjusted EBITDA increased 36.6% to €26.7 million.

I’ll now turn the call over to Charles for more details on our performance..

Thanks, Jack. Good morning, everyone. Turning to Slide 8 and our consolidated first quarter results.

Our volumes decreased slightly by 1% or 2,700 metric tons from the prior year to 275,100 tons due primarily to the pass through of higher feedstock costs, revenue growth far exceeded volume development with revenue increasing 23.6% to €304.3 million in the quarter compared to €246.3 million last year.

Our overall contribution margin improved 6.8% in the first quarter, rising to €122 million versus €114.2 million in the prior year’s period, driven by our Rubber Black business.

At the top waterfall chart on the right of on the slide shows, the improvement in contribution margin was primarily driven by our volume growth with some favorable foreign exchange effects, offset by price of mix effects, to which we have already referred. Referring to the second waterfall chart on the right-hand side.

The €7.8 million contribution margin improvement in the quarter was the main driver of adjusted EBITDA growth, partially offset by the fixed cost impact associated with the timing of repair and maintenance expenditure compared to the prior year quarter as well as an unfavorable foreign exchange impact on our fixed costs.

Adjusted EBITDA, as a result, grew by 9% to €58.8 million. Our adjusted EBITDA margin of 19.3% declined 260 basis points versus last year’s fourth quarter, primarily due to the impact of the pass through of higher oil costs on our revenues.

The last waterfall chart on the right-hand side of this slide analyzes net income development, which increased by €2.4 million, due to the adjusted EBITDA development quarter-over-quarter, offset partially by changes in depreciation, tax and other items.

Now turning to Slide 9, which shows our first quarter cash flow dynamics and our key balance sheet metrics as of March 31, 2017. In our first quarter of 2017, we generated €17.5 million from operations, net of an increase in the quarter of net working capital by €23 million, associated with rising oil prices and the timing of payments.

Our uses of cash over the same period, which include capital expenditures, interest payments, required debt repayments and dividends, totaled €26.5 million. As a result, cash decreased during the quarter by €8.5 million. With cash on hand, we nonetheless, voluntarily repaid a further €19.5 million of debt in the quarter.

Turning to our balance sheet as of March 31, 2017. The company had cash and cash equivalents of €45.4 million compared to €73.9 million on December 31, 2016. The company’s noncurrent indebtedness as of year-end was €589.5 million, with net debt at €560 million, which represents a leverage ratio of 2.46x LTM adjusted EBITDA.

Our goal remains to move towards low 2x levered over the next couple of years or so through a combination of adjusted EBITDA growth and deleveraging. As a reminder, the total debt chart on the bottom right-hand corner of this slide illustrates that some of our debt is denominated in U.S.

dollars, but reported in euros and that’s gets revalued every quarter as these currencies fluctuate. Moving to Slide 10, which presents our full year guidance and further cash flow detail regarding base business requirements and capital allocation.

At this point in the year, we’re maintaining full year guidance for financial year 2017 of adjusted EBITDA between €220 million and €240 million. This is based on the assumptions of volume growth will be in line with current GDP expectations, and that oil prices and exchange rates will be at the level seen during the first quarter of 2017.

From base capital expenditures, our guidance is consistent with the past of approximately €60 million, but with the total rising to over €80 million, due to the self-financing capital expenditures associated with the consolidation of our plants in Korea.

Please bear in mind, we expect that the cash proceeds derived from the sale of our plant site in Seoul will more than offset all capital expenditures and other costs associated with this consolidation project. We expect depreciation costs of €60 million and for amortization €20 million. Our tax rate expectation on pretax income is a rate of 35%.

Moving to the right-hand side of Slide 10, and our analysis of our annual cash requirements. You will see that our estimates now reflect a reduction in interest payments, as a result of a further repricing of our term loan debt, which we have just announced.

In summary, our lenders consented to reduce our debt service cost by some of €4.7 million on a current annualized basis, relating both to our euro and U.S. dollar-denominated outstanding term loans. The euro tranche of our loans will reflect a 25 basis point reduction in the margin to 2.75%, plus a reduction of the Euribor floor from 0.75% to 0%.

Whereas the margin on the dollar tranche of our loans will reflect a 50 basis point reduction to 2.5%. Other provisions of our term loan credit agreement remain unchanged.

This action, as well as the further voluntary repayment of some €19.5 million of our term loan debt in the quarter further underscores our confidence, in our ability to maintain our capital allocation priorities of supporting dividend payments, investing in optimization CapEx and continuing in due course to delever.

I will now turn the call back to Jack, who will comment on our operational priorities and other matters before we head to Q&A..

Thank you, Charles. Many of you have already seen the detailed outline on Slide 11. It restates our priorities, which directionally remain unchanged, but are adjusted for new challenges and opportunities as we move through the year.

We remain focused on driving the improvement in our product portfolio and matching our capacity footprint to this better mix. Improving efficiencies through actions such as implementing improved reactors and waste heat recapture, while looking for the best uses of our capital, including built-on acquisitions that closely match our competencies.

Our focus on managing the balance sheet for strong cash generation and our capital allocation approach remain unchanged. Finally, at the risk of stating while many of you already know, I’ll refer to the new slide, Slide 12.

It shows how Orion has consistently delivered growth, while judiciously using its high rate of cash conversion to pay a healthy dividend and significantly reduce leverage. It speaks well to the efforts of this team over the past few years in making Orion the successful business.

In closing, rising energy prices we experienced in the first quarter of this year demonstrated the complementary nature of Orion’s two businesses. In spite of the spike in energy cost, our performance improved, and we set another quarterly adjusted EBITDA record.

We believe this shows that our strategy is sound and our business model is resilient and positioned well to deal with our markets. We wish to thank our investors for their confidence in Orion, our customers for their business and our employees for all their hard work. With that, operator, please open the line up for questions..

Thank you. At this time, we will be conducting the question-and-answer session [Operator Instructions] Our first question comes from the line of Kevin Hocevar with North Coast Research. Please proceed with your question..

This is actually Kevin Cleary on for Kevin.

In the press release, you had mentioned industry being tight – or at least tightening, particularly in the Specialty grades and the chemical rubber grades, so wonder would your plans really address this tightness? And do you have any plans raising pricing given the tight environment? Or do you have any plans to add capacity to meet expected growth and demand?.

We typically don’t comment on pricing in these kinds of calls. With the tightness that we got right now, particularly, that we saw going into 2017 in Europe, as we commented before, we were able to see some pricing in some of these areas.

But for the most part, the rubber businesses, as you probably know, pricing is for the most part set for the year at this point in time and that’s specified all I would comment on that for the time being.

The tightness associated with the – some of the specialty grades that we’ve got right now and we’ve been in the process of debottlenecking and doing some movement of capacity from some of the facilities that we got into our specialty.

I think you probably are aware of the fact that we commented on the conversion of our rubber line in Korea last year and moving that capacity more into specialty.

And in the meantime, we continue to do a variety of different debottlenecks, including some that we made announcements on such as the one in Sweden, it’s been done recently or in the process of being done currently, started recently to debottleneck the specialty areas as well..

Okay. Good.

And separately from that, I was wondering if you guys felt there’s any pre-buying in the period, in any of the specialty grades, particularly in polymer end markets? And if so, what type of impact they have in the quarter and what type of destocking impacts that you may have looking forward?.

There is a little evidence out there that there was some pre-buy, not anything large from our customers. What pre-buy that we did, believe we saw or at least have some evidence of was the pre-buy by ultimately the customers of our third customers.

It seems like there was some prebuying by dealers as the third guys had announced price increases affecting the second quarter. So the first quarter was actually, I think a bit pushed up by the volumes associated with our customers’ customers.

But with respect to our specialty area, there might have been a bit of that going on, but typically, you don’t see a lot in these markets, especially not in the what we consider are more premium ends..

Great. Thank you for the detail..

Thank you. [Operator Instructions] Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question..

Thanks very much. Your working capital was up a lot in the first quarter.

And are you going to have a working capital deficit in 2017 or will things right themselves in the course of the year?.

Good morning, Jeff. It’s Charles. Yes, your right is up. It is up because oil is up, Jeff, effectively about $8 – on average about $8 a barrel.

And we’ve published this rule of thumb about our estimate of what change in oil price will do to our net working capital in the range of €19 million to €21 million of change in working capital depending – for a $10 per barrel change in the oil price. And effectively, we’ve seen about $8 working its way through working capital.

It is – the effect is a little bit higher than you would expect to your question i.e. receivables and inventory have gone up a little bit disproportionately more to payables. And that is just simply the timing of payables at the end of last year and now that will right itself certainly, expect that to happen in Q2.

Of course, if oil remains at this elevated level compared to the last quarter of last year then we would expect to see some consumption – overall consumption of working capital due to those changes – changes driven by oil..

So what happened is, yes, I guess, just to transition to a slightly different question. So oil has gone up, and now it’s come in – or it’s come in to a degree.

In your Specialty Black business, you are squeezed in terms of your margins, because you are capturing the raw material inflation and now you are trying to lift the prices, but now oil is coming back down.

Did – Does that create complications for you or do you think you can sort of get your margins moving in the right direction in the second quarter?.

Jeff, good morning, by the way. It’s always a bit of a balance when you have these sort of things going on or going one way or going the other way.

We – I mean, as soon as we saw the oil prices moving up in the first quarter and the end of fourth quarter last year and during the first quarter, we initiated a series of price movements in order to address that.

And some of what you see there is a bit of a margin compression that’s created by some of the quarterly adjustments that we have that were racked in sales just simply because of the quarterly adjustments. Others are – simply a price initiative that are underway right now. I mean, it remains to be seen.

I mean, and quite frankly, oil going up supports the argument for price increase. Oil going down actually kind of undermines that a bit, but also works its way into better margins.

So we’re fairly confident that we’re going to be able to get back to where we were before in some of these areas, particularly with the quarterly adjustments that we mentioned bit earlier. So I think it just gives the team time to work on this and see what they can accomplish out in the field..

Why was the margin capture so much better in Rubber Blacks than it was in Specialty Blacks?.

I mean, there is different factors of working there. On the first place, we actually will end the 2017 as we commented with some base price increases when we’re able to get some traction in various places around the world that we’ve spoken to in the past. And we’re able to push the base prices up a bit in those areas.

So I mean, that’s one of the big factors that’s playing there. And the other is, we’ve substantially improved the mix of our business with the movement away from some of the more commodity-type materials. And of course, you’ve got this additional onetime advantage of taking out those fixed costs associated with that French plant.

I’m going to tell different mechanisms of moving there. I would – just as long as I’m speaking to you, Jeff, I would like to point out on that first question on net working capital. While that’s risen, it’s really purely a factor of this movement in oil price and energy price.

The days of our working capital are actually running below the average of where we were last year. So the team continues to do a good job managing days at working capital price, so it’s just a price, cost effectives waving its way through..

What’s the overhead that came out from the closure of the Ambès plant in the first quarter? And are there larger effects later in the year or it’s the sort of the maximum quarterly amount?.

It’s about €5 million of overheard that came out, Jeff, on an annual basis. We’ve closed the plant, as you – I think may recall right at the end of last year, so we expect the €5 million, at least on the cost line boost to the rubber numbers. And to Jack’s earlier comment, in 2017 as a result of the closure.

We did – as we’ve talked about in previous calls, shed some product, some we’ve retained in different locations in Europe. Of the product we shed, some of it was marginally profitable at a contribution margin level and some of it wasn’t even that. So most of that €5 million drops through to the bottom line in 2017..

So on a – so how much would the first quarter amount be if it’s €5 million annually?.

It’s a quarter about €5 million..

It’s a quarter of that. Yes, okay. Great, thank you so much..

Thank you. [Operator Instructions] Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question..

Hey, guys. Good morning..

Good morning, Mike..

Just wanted to dig a bit into the rubber volumes for a second. If I’m reading your slides correctly, it looks like the business, excluding the France shutdown was relatively flat, is that correct? I guess, you guys called out China up double digits and there being some pre-buy activity.

So I guess, I’m just trying to triangulate all the moving pieces in the quarter here?.

Yes, I think you’re close. And for the most part, we did see a nice gain in the facility in China. As it’s a small part, it’s not as if it displaces a lot, just other places around the world.

But for the most part, I’d say, if you take away the loss of the French contribution in the first quarter, the remainder of the world really is about the best thing..

Got it. Okay. And then I guess, piggybacking on one of Jeff’s questions earlier, pretty sizable improvement in your rubber dollar per ton earnings this quarter.

And then look at that – if you look at that improvements, how much did you say is the trivial order, just a mix benefit from shutting down the lower-margin French stuff versus kind of benefits from your restructuring and efficiency efforts to the rest of your asset base?.

Yes, it’s a little difficult to slice. I mean, it’s – we hesitate to give that much detail. In terms of slicing, I would say, the larger contributions are the movements that we got and the relief that we got in some pricing.

I would say, and I failed to mention this to Jeff a little bit earlier, with the rise in the price of oil in the first quarter of 2017, we actually gained quite a bit more on our efficiency programs. I mean, quite frankly, when the oil goes up, we benefit from some of the efficiency programs that we put in place.

Well, and so we saw a nice boost to that as well. But you’re talking about this mix improvement things, somewhere kind of in the low single-digit numbers for quarter..

Thanks, guys. Appreciate it..

Thank you. [Operator Instructions] Our next question comes from the line of Mike Sison with KeyBanc Capital Markets. Please proceed with your question..

Hi, guys. Nice start to the year..

Mike, thank you..

In terms of, especially Carbon Black volumes, could you maybe talk about some of the areas that you’re seeing the strength by end markets, plastics are good for you last year, coatings? And then do you think it’s – that type of level of growth is sustainable as the year unfolds?.

We continue to kind of surprise ourselves with this double-digit growth. In the specialty area, we’ve got several quarters out of the last several quarters, which we’ve actually exceeded what we anticipated. So I’ve kind of given up a notion that this is going to relax back into the mid-single digits.

I think probably 13% quarter after quarter probably not, but probably something in the high-single digits is still where I stay with this notion. With respect to end markets, just looking at where we really exceeded, I mean, we had a very strong Asia Pacific performance.

But we had growth, actually either double-digit or high single-digit growth in practically all of our end regions. So we were quite pleased with it. And we have to remember that when we talk about volume in this particular market, it’s usually slanted toward polymer, because polymer is the high volume component of our specialty business.

Coatings, it’s a great business for us, as you know, but it’s a smaller volume. So our coatings business was good, we’re appreciative of that. Fact is though it’s not a huge contributor to the volumes wing as polymers are, bringing in sort of in between there and that was – those markets were all very strong in the first quarter..

Great.

And then if you think about the – you highlighted 3 sort of areas that depressed gross profit for Specialty Blacks in the quarter, are they all about equal? I know you did comment regarding oil going up and down, but there’s mix, there’s freight, did they all have about an equal impact and with the other two may be subside faster than the challenge we had with oil?.

No, given the oil issue was the heavy hitter there, and it would be the largest of those 3 areas..

Okay. Great.

And then when you think about your outlook for the year though, for EBITDA, in total do you see, especially Carbon Black’s growing EBITDA this year despite kind of a slower start?.

I think we don’t – as you know, we don’t guide on individual segments for the year as a whole.

We have our game plan in terms of what we are doing and obviously need to do as Jack’s outlined to Jeff’s question earlier, obviously, partially depends on what oil does? And so we were confident, it’s going to have a very – another very good year, that is clear to us.

But beyond that, we wouldn’t want to call an individual segment for the entire year..

Great, thank you..

Thank you. [Operator Instructions] Our next question comes from the line of John Roberts with UBS. Please proceed with your question..

Nice quarter. I apologize for the background noise. I will press here to ask my questions. I believe China has a major program to put black plastic drainage piping in, is that – I know you don’t have a big China business, but you maybe export into China for your other Asian operations.

Is that a significant factor in your comment you just made about Asia being especially strong in Specialty Black? And then secondly, I know you’re indemnified on the EPA discussions that you’re having in the U.S., but with the change in the administration in the U.S., should we expect that to say significantly longer period of time to work out?.

Good questions, John. I mean, Asia Pacific is a growth area for us. It’s certainly been a strong area for us in polymer. This black plastic type application you’re talking about has a lot of different stripes. We’re very strong in that in the Europe – European market, in the U.S. market, particularly, in the Chinese market, it’s an area for us.

It’s a focus, where we have seen significant growth in Asia Pacific in the polymer area is more in the synthetic fiber market, which is a higher quality – it’s a very special grade, whereas pipe, we love the pipe business and we participate in it strongly in our other two regions.

It’s not though really the big heavy hitter, although it will be one as we begin to convert the facility in Qingdao to upgrade its capabilities to attack this area versus the rubber area that it’s historically attacked in the past. So, yes, it’s a good business, we know it very well.

We know the customers, we know the applications so if we’re not already there, which we may be in some part, we’ll certainly be a big player in that area given our heft in the other regions that we serve. I mean, it’s a good question on the EPA. We are – as you say we’ve been in constructive negotiations with those guys for quite some time.

Washington in itself is probably, all people in line realize is in a bit of turmoil right now with the Trump administration. He has different ideas about what to do. He’s got – certainly he has different approaches with respect to different areas of the EPA.

Apparently, in his recent spending bill, the EPA didn’t see the cuts that was proposed originally.

So I think right now, we’re kind of in a holding period as the Trump administration point these to the EPA, get a grip on this how they want to approach, not only these big issues, like clean power plants and waterways of America, but also how they’re going to handle some of the issues like ours, which falls into some of the enforcement areas of EPA in the Climate of justice.

So long answer, John, but I think right now, we’re just sort of in a that continued dialogue to see where they wish to take these types of activities..

Great. Thank you..

[Operator Instructions] Thank you. Our next question comes from the line of Art [indiscernible] (37:59) with Freecorp. Please proceed with your question..

I wanted to ask a little bit about Korea and maybe you can just remind us the timing of when that project should be finished up?.

Yes, that’s a good question. This stays as a background. What we’re doing in Korea right now is we are in the process of closing the facility that’s in the suburb of Seoul, actually in Incheon, place in an area we call Bupyeong. This was smaller the two plants that we have in Korea.

And the facilities and the capabilities there are being migrated down to the southern tip of Korea in our facility called Yeosu.

The endpoint of this is going to be a reduction in the overall capacity that comes out of more the commodity state of – or the commodity grades of rubber that we produce there, will actually come out of it with a higher capacity in specialty capabilities, particularly, on the high end of materials that we produce there in Korea.

That’s already underway. We’ve already began to spin capital to do that with conversion of different facilities. I mean, this is well publicized. We’re in conversations currently with the local government and with our unions about the closure, about the severance, about the rezoning of the area.

Ultimately, because the notion is we would sell the real estate there and as Charles mentioned earlier, in a fashion that would be able to self finance the capital that we’re spending to make the move down there.

It’s underway currently right now with a target date to complete the conversion from a facility capability, the middle of 2018 has a target. We have frequent discussions on this, in fact, just this week. So – that’s the schedule that we outlined earlier. We continue to be on that schedule as we speak today.

The actual sell of the land probably will go a little bit longer than that, just simply because doing that sort of thing and the Korean government is a bit bureaucratic, it will take us a while to do it, but we’re confident, I mean, given the price of real estate in that area and the notions that we’ve gotten from real estate developers if this is something that can be done in that time period..

To that point, Art, we could speed up the sale and not wait for potential rezoning and sacrifice again on the sale of the property, which we don’t want to do. We obviously go to find the sweet spot between getting it done efficiently and maximizing the return for shareholders. So that’s simply what we’re trying to balance.

But in any case, I think this is worth emphasizing, this is a – it’s an unusual project because it is completely self-financing. In the sense, through enough balance sheet, it is on balance sheet, but undervalued asset, the land, it is valued obviously on a historical cost basis. And its current value is much higher.

So it’s an unusual project in the sense that the sale of land will finance the whole thing, capital and the cost that go with actually achieving the move..

And the – what are the expected or the operating cost savings from that, I guess change? And I think the French facility closure saving roughly €5 million a year, going forward, is this in the same magnitude, must be a little bit more or a little bit less?.

Yes, it’s at least in the magnitude of the French savings, probably in practice it should be more. So that is – it’s 5 plus. But our main focus right now, because this is such a – forgive the use of the term no brainer to do. Our main focus is in getting this done and then optimizing the production footprint in getting it done.

But it will be a significant drop to the bottom line improvement, to the drop bottom line because of the cost structure, obviously two plants into one.

But it also allows us as Jack mentioned earlier, to focus on in one world class size plant into the sweet spot of the products, we are as a company focused on, specialty and these technical rubber grades with better margins..

And, Art, I mean, without going into the detail, the southern facility, the Yeosu Facility is inherently a more efficient facility because of its capability to be in industrial complex with cogeneration and access to different variety of feedstocks and suction.

And as we are doing these conversions, of course, we’re not just going back with the same type of equipment, but equipment that’s more advanced, higher efficiency. So there’s some real gains, not only in just the reduction of fixed costs and the presence there Bupyeong, but also an uptick in our overall efficiencies as we make these conversions..

Got it.

And I guess, as I recall, I think you would – maybe said before that the CapEx associated – the cost associated with this is like €20 million to €30 million or €20 million to €25 million or something like that?.

Yes. High 20s..

Got it. So then the presumption would be this land when it sold would be something in excess of that in loan.

Probably you don’t want to put a number on it to limit when it could be sold for would be my guess?.

No, that’s exactly right..

Okay, we thank you very much. Thanks for all your hard work in all the great results..

Thank you, Art..

Thank you. Mr. Clem, there are no further questions. I’ll turn the floor back to you for final remarks..

Okay. Well, thanks for the good questions today. We appreciate your attendance, your good capabilities today. It was good talking to everybody. We hope you’ll agree that we’re off to a good start in 2017. We position ourselves pretty well with this first quarter. It’s always nice to have a successful quarter when you start a year like this.

We’ve got three more to go. It’s going to be kind of a challenge as everyone of these years have been, but we think we’re well positioned for. We got a good team in place, a good strategy that’s executing well at this point. The market’s overall seem to be in our favor at this time.

So we look forward to bringing you the information about second quarter in our next call. So with that, we’ll sign off and thank you very much..

Thank you..

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..