Good day, ladies and gentlemen, thank you for standing by. Welcome to the Koppers Holdings Inc. First Quarter 2014 Conference Call. During today’s presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Monday, May 5, 2014. And I would like to turn the conference over to Michael Snyder. Please go ahead, sir.

Thanks, Cadia, and good morning, everyone. Welcome to our first quarter earnings conference call. My name is Mike Snyder and I’m the Director of Investor Relations for Koppers. At this time, each of you should have received a copy of our press release. If you haven’t, one is available on our website or you can call Rose Helenski at 412-227-2444 and we can either fax or email you a copy. Before we get started, I’d like to remind all of you that certain comments made during this conference call may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be affected by certain risks and uncertainties, including risks described in the cautionary statement included in our press release and in the company’s filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company’s comments, you should not regard the inclusion of such information as a representation that its objectives, plans and projected results will be achieved. The company’s actual results could differ materially from such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The company has provided with its press release, which is available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. I’m joined on this morning’s call by Walt Turner, President and CEO of Koppers; and Leroy Ball, our new Chief Operating Officer and CFO. At this time, I’d like to turn over the call to Walt Turner. Walt?

Thank you, Mike, and welcome everyone to our 2014 first quarter conference call. As Mike indicated in the introductions, I’m very pleased to announce that Leroy has been elected by the Board of Directors as our Chief Operating Officer, a new position here at Koppers. In addition to his new role, Leroy will continue his CFO responsibility on an interim basis until a replacement is made. Leroy will be responsible for global operations and the financial reporting of the company and report to me. Congratulations are in order for Leroy and I’m looking forward to his continued contributions as we go forward with the growth of this company. On our financial results for the quarter, we were lower than expected as the availability of hardware lumber for the railroad crossties, which we knew would be a headwind as a result of increased competition from other markets, was made worse by difficult weather conditions in certain regions. Additionally, our Carbon Materials and Chemicals business was negatively impacted by lower sales prices for phthalic anhydride driven by lower orthoxylene price, combined with lower sales volumes and prices for carbon pitch in North America and the Middle East as market conditions continue to be very challenging. Our domestic operations were negatively impacted by weather conditions with an estimated impact of about $3 million that includes increased plant costs related to energy usage and plant outages combined with reduced crosstie procurement. We also incurred about $3.5 million of incremental overhead costs for consulting services related to the Osmose acquisition costs, operations improvement projects and the KJCC China plant start-up costs. Our sales for the quarter were $331 million, down $39 million or 11% from the $370 million in last year’s first quarter and adjusted operating profit was $17.7 million, down $7.6 million or 30%…

Thanks, Walt. On a consolidated basis, sales for the first quarter decreased by 11% or $39 million to $331.4 million, compared to the prior-year quarter, driven mainly by lower sales prices for phthalic anhydride due to lower orthoxylene prices and lower sales for carbon pitch as aluminum production in the mature geographies has been reduced due to lower global aluminum pricing combined with an unfavorable pricing environment in the Middle East. Additionally, difficulty in procuring crossties due to competing markets of hardwood lumber reduced untreated crosstie sales volumes in the quarter compared to the prior-year quarter. First quarter adjusted EBITDA was $25.4 million or $7.7 million lower than 2013’s first quarter adjusted EBITDA of $33.1 million with adjusted EBITDA margins of 7.7% compared to adjusted EBITDA margins of 8.9% for the first quarter of 2013. The reduced margins were due mainly to the difficult weather conditions and increased plant costs and reduced revenues, lower sales prices for phthalic anhydride, the dilutive effect of adding $5.1 million in sales from the Ashcroft acquisition with breakeven income and higher overhead related to consulting costs for acquisitions, operations improvement projects and KJCC start-up costs. Adjusted net income and adjusted earnings per share for the first quarter of 2014 were $6.6 million and $0.32 per share compared to $11.2 million and $0.54 per share for the first quarter of 2013. Items that we excluded from our adjusted results for the quarter included $17.2 million of pre-tax charges related to impairment and plant closure costs. The $17.2 million is comprised of $12 million relating to the ceasing of distillation at our tar plant in the Netherlands and $5.2 million related to impairment charges and accelerated depreciation at our KCCC facility in Tangshan, China. Our plant in China is expected to cease operations in the third…

Thanks, Leroy. I’d like to give you an update on the status of our key end markets and how we see these markets impacting our results for 2014. First, I’d like to talk about the Railroad and Utility Products business. Our first quarter sales volumes for crossties were down compared to the first quarter of last year and sales volumes for untreated ties were substantially lower due to a difficult lumber market that was made even more difficult by the winter weather. As we mentioned in previous calls, we expected the headwind that started in the second half of 2013 to continue into 2014 due to increased competition for hardwood lumber from the flooring and crane mat markets. What was somewhat unexpected and made the situation even more difficult was the severity of winter weather in many of the regions where we obtain crossties. As a result of these conditions, untreated crosstie prices have increased more than 10% over the last 12 months. As a result, we’ve had to draw down our untreated tie inventories this year for both Koppers-owned and Railroad-owned ties to be able to meet our customer commitments. After drawing down our untreated tie inventories by 1 million ties in 2013, our tie inventories were further reduced another 600,000 ties at the end of the first quarter down to 4.6 million ties. We do see the situation as temporary. Our Class I customers have had to increase the price they’re willing to pay for crossties to induce the saw millers to produce crossties as opposed to competing product markets. While our customers are understandably reluctant to pay increased prices, they understood the importance and the necessity of maintaining their track and we believe they will do what is necessary to insert the level of ties that are…

(Operator instructions) Our first question comes from the line of Laurence Alexander with Jefferies LLC. Please go ahead.

Couple of questions. First, on the productivity, can you give us a sense for how much of the productivity falls into the back half compared to the first half?

The first half is basically the cost incurrence of implementing the project. So we’re going to have this cost running through in a similar level in the second quarter at which point we’ll start to realize the benefits. We’ll actually for the year be in a net benefit position, so the back half we would expect to realize approximately $1 million more than the cost that we would have incurred during the first two quarters of this year which is probably in the -- it would probably in, call it, $2.5 million range.

And just to add on to that, Laurence, as we said in the call, we ceased distillation activities at the Uithoorn facility mid-April and so by the time we get benefits of the added capacity that we have in new (indiscernible) most of it will be in the last (indiscernible).

And then, just secondly, with the Point Henry smelter shutdown, is that having any impact on your operations this year or is that more of an issue for 2015?

We will, from the announcements that we’ve seen from Alcoa, Point Henry will cease smelting operations at the end of August. We will cease pitch shipments probably sometime end of June, early July, and on an annualized basis that equates to about 10,000 tons of pitch. And our expectations are that we will be replacing most of that volume both at the other smelter that Alcoa operates in Portland as well as another smelter in Australia, so we’re hoping our expectations are that we can replace a majority of that lost pitch production.

Then just lastly, a quick one on the crosstie business, the lower inventory levels that you have now, how does that impact your incremental margins going forward?

Using the vulcanizing process, first of all, we’ve not lost -- we’ve committed for all of our customer requirements, so that’s the good news. Vulcanizing obviously takes longer cycle time, almost twice as long, but there are costs built into pricing when we do vulcanize so pretty much we would let’s say breakeven with the vulcanizing process with the additional cost that we charge for that process.

Our next question comes from the line of Liam Burke with Janney Capital Markets. Please go ahead.

Leroy, you talked about -- you talked about higher prices for crossties. With a lot of the growth in the crosstie business this year coming from corporate customers, where you actually take inventory of the ties, do you anticipate any kind of negative margin effect with that part of the business contributing a fair amount this year?

With where we’ve been out right now, it sort of works a little bit both ways. I mean we had, as a result of the lower purchases of the crossties and that being a kind of lower margin part of that business, we have had a little bit more of a positive mix effect. But on the other hand we’ve been hurt due to the lower throughput as a result of having less crossties come through to the plant. I would say, yes, as in general -- the point that you bring out with prices moving higher on those untreated crossties, we’ll maintain our margin on that, but the fact that those prices will be going would have a little bit of a dilutive effect on our overall railroad margins. I don’t expect it to be significant and I do expect us to be able to more than offset that with some of the other things that we are doing in that part of the business.

And then, Walt, and I apologize for asking this, but you talked about the China joint venture being on time, on budget. The Nippon Steel, half of the project, are they in line to allow you to begin to show some profit potential in 2015?

Nippon Steel Sumikin Chemical they are about six months late in completing the construction of both their carbon black plant and the needle coke plant, so that’s why I mentioned that we are starting up in June to operate the plant at capacity which will be selling products into the Chinese domestic markets. You may recall that on the carbon black plant that they are building, those sales will start immediately once they complete their project on that plant. And the needle coke plant the ramping up process, which will start December, January time frame so it’s going to take the six months that was lost for them to ramp up and get the product approval that sort of thing. So that’s why we are taking advantage of operating our plants and until such time that they are ready to receive product from us for the needle coke production.

Our next question comes from the line of Ivan Marcuse with KeyBanc.

This is (indiscernible) sitting in for Ivan. I just want to follow up on your guidance and make sure I understand that correct. The second quarter improvements - you are expecting quarter-over-quarter improvements versus year-over-year? For you, year-over-year is also going to be still weaker, is that the correct way to think about?

Well, our guidance really has this -- with sales improving by 5% over last year sales, so sales will be just that, we’re projecting 5% higher than last year.

In terms of profitability, I think you’re right in the context that what we were referring to I think in our scripted comments were that the second quarter would be sequentially better than the first quarter. I think as it relates to the prior-year second quarter, we really didn’t address it specifically within the call and really aren’t prepared to address it at this point.

And just to follow up on profitability in CMC segment, most of the year-over-year decline in margins was driven by lower phthalic anhydride prices. Is that correct?

That was a major part for sure and also lower pitch volumes with a more challenging pricing environment in most of the geographies that we are supplying. So it’s a combination of those two primarily.

Could you provide a little bit more color on your expectations for phthalic anhydride prices going forward? Are you expecting them to stay at around $0.47, I think you said --?

Orthoxylene pricing is currently at $0.57 versus like an average of about that for the quarter compared to $0.71 prior quarter. So phthalic pricing is really based off of Ortho pricing, and so it’s difficult to say what’s going to happen. As far as pricing goes, however, we are pretty optimistic about phthalic volume demand here for ourselves where we’re producing phthalic, but also hopeful in China with our naphthalene sales because of the phthalic demand growing over there.

If pricing remains in the same general area as it is right now, at least we will be heading for better comparisons in the second, third and fourth quarter when ortho prices average more on the low to mid-$0.60 range. So the costs will be getting better.

Our next question comes from the line of David Wodiak with Healy Asset Management. Please go ahead.

In the second paragraph of the press release, it refers to the impairment and plant charges -- plant closure charges of $17.2 million pre-tax. Later in the paragraph it seems to say that the after-tax charge was $4.4 million. Could you go over why there is such a large difference between pretax and after-tax?

There is a large piece of that that is non-deductible. So we don’t get a tax benefit for a big piece of the charge out of Europe.

Our next question comes from the line of Chris Shaw with Monness, Crespi. Please go ahead.

Has your ultimate earnings outlook for the -- or potential for the KJCC joint venture changed at all? I guess, over the short-term, maybe you would be less profitable if you are just -- because of delays from Nippon and because you are selling to the Chinese market. But, ultimately it still has the potential that I think you once talked about in the past?

Ultimately, yes. And if you recall we have a very long-term contract with a specific pricing that will offer us higher margins beyond the normal margins that you’ll see on the China, and so to answer your question, the profitability based on start-up costs improve and we’ll not see much benefit in ‘14 and by the time we get to 2015 we should be getting into what we talked about as far as the kind of margins that we’re expecting there especially once Nippon gets their needle coke plant up and running.

Because of the delay from Nippon, would you still have been able to achieve the 12% EBITDA margins for ‘15, if you had not been acquiring Osmose?

On average, our 12% EBITDA margin target?

I'm just wondering if the delay would have been -- provide Nippon with a net impact relative to that goal.

No, I would say part of that would, Leroy I can’t --.

I still think that we communicated here within again our comments that with all the restructuring and improvement activities that we have going on and there are many in 2014 which is making things little bit complicated, I think we’re still expecting to be able to get to the 12% overall EBITDA margins in 2015 even with the delay in the KJCC, I mean that again is a headwind, but the in the grand big scheme of things, it’s not going to have that big of an overall impact on us being able to get to the 12% EBITDA margins.

Then, still looking at crossties, I can't remember, historically. When green crossties -- the prices go up and when prices go up, historically have your customers -- I mean, do they sort of budget a number of rail ties, a number for insertions? Or do they budget a dollar amount every year for insertions? And then so I'm just trying to figure out, is there -- do you think -- I mean, you talked about it a little bit, but will there be much of a volume impact do you think, because of the higher prices that they have to pay?

Really, the railroads for the most part at least the major Class Is really look at their high insertion numbers more so than they do ex-dollars for tie insertions. And so they cost them a little bit more obviously this year for the tie insertions, but based on construction activities, based on making sure that the rails are up to speed, I don’t think we’ll see any reductions in plant insertion programs so it’s based on numbers versus cost.

Thank you. I would like to turn the conference back over to Mr. Turner for any closing remarks. Please go ahead, sir.

Thank you, Cadia, and again we thank all of you for participating in today’s call and appreciate your continued interest in Koppers. We will continue to do the right things by pursuing growth opportunities that make sense for us as well as looking for ways to improve profitability within our existing businesses. Despite facing challenges that we have in 2014 due to weather conditions, low aluminum and phthalic prices and crosstie availability issues, we do believe the diversity of our business along with our margin improvement and growth initiatives will continue to provide us with a relative stability in both strong and weak economic climates. And finally, we remain firmly committed to enhancing shareholder value by maintaining our strategy, providing our customers with the highest quality products and services while continuing to focus on safety, health and the environmental issues with the initiatives that we have. And thank you for being with us today.