Ecovyst Inc. (ECVT) Q4 2017 Earnings Report, Transcript and Summary

Good morning. And welcome to the PQ Group Fourth Quarter and Year End 2017 Conference Call. All participants will be in listen mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nahla Azmy, Vice President, Investor Relations. Please go ahead.

Thank you, Gerry. Good morning and welcome to everyone joining us for our fourth quarter and year 2017 earnings results call. We will start today with formal remarks from Jim Gentilcore, Chairman and Chief Executive Officer and Mike Cruz, Executive Vice President and Chief Financial Officer. Then we will follow with a Q&A session. Please note that some of the forward-looking statements that we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the Company's plans to vary materially. These risks are discussed in the company's filings with the SEC. Reconciliations of non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures can be found in an earnings release and presentation material posted on the investor section of our Web site at www.pqcorp.com. Now with that, I'm pleased to turn the call over to Jim.

Thank you, Nahla. And let me first say how delighted we are to have you as a new member of the PQ team. We're pleased to have all of you join us today. It's a very exciting time for us at PQ. We finished 2017 on a high note, exceeding our financial, operational and strategic objectives and setting up well for another strong year in 2018. I plan to cover some PQ investments and financial highlights and our 2018 goals, after which I'll turn the call to Mike for a more detailed financial review of our results and the 2018 outlook. Please turn to Slide 3 to review why we believe PQ is well positioned to continue to deliver the healthy performance you saw in 2017. First and foremost is our leading position in our core end markets. We expect to grow faster than GDP, given the secular demand trends in the high-growth environmentally friendly markets we serve. Through close collaboration with our customers, we are continually innovating to provide solutions which add value well in excess of their input costs. This ultimately drives our ability to generate high margins and strong cash flow. It is our expectation that our margins will continue to expand the mix shift that favors our environmental catalyst and services segment with its inherently higher margins and growth rate. This is also a company you can feel good about from a social responsibility viewpoint as each of our product groups contribute to a cleaner more safer planet. Please turn to Slide 4 to cover some of the 2017 highlights. As late as it is in the earnings season, our Q4 performance was just too good to not get honorable mention. We posted sales growth of almost 11% and adjusted EBITDA growth of over 10%. And even with the lingering effect from Hurricane Harvey, our margins benefited from the blending of our higher margin products. And I thank our entire team for this very strong finish to the year. 2017 was a record year on multiple fronts. Financially, we delivered record revenue, adjusted EBITDA and margin. We paid down or successfully refinanced nearly $2 billion of debt, reducing our leverage ratio by a full turn and reducing our cash interest costs by nearly $90 million from pre-IPO levels. Strategically, we integrated and captured all the synergies of our tuck-in acquisition of Sovitec completed in June 2017, strengthening our ability to grow our highway safety business in Europe and Latin America. Sovitec is a great example of how well suited PQ is to make tuck-in accretive acquisitions to complement our existing business lines. We continue to build our team, adding the right diversity of experience, skills and thought that will ensure we continue delivering strong results and shareholder value well into the future. Now, if you’ll please turn to Slide 5. So if you look to 2018, our team at all levels is focused and aligned on key goals to deliver on our commitments. We expect 2018 to be another great year for PQ. With our strategic positions in key secular growth markets, we will continue to drive sales and adjusted EBITDA growth in the middle single digits and outgrow GDP by almost 2 times. And we expect to sustain our adjusted EBITDA margin performance, which is at the high end of our specialty chemical peers. But the most noteworthy change would be to our balance sheet, with a significant improvement in our free cash flow profile. Our 2018 free cash flow target is $120 million to $140 million of which nearly half comes from reduced cash interest, which is already locked-in. This reduction in interest cost combined with our organic growth expectations and the new tax law enables us to generate sustainable strong cash flow and rapidly increase earnings per share in 2018. This should move our free cash flow yield into good company near the top of our peer group. As we communicated on our last call, our priority for free cash flow is a combination of disciplined debt repayment to reach our target leverage range of 3 to 3.5 turns, and a balanced approach to investing in organic high growth projects and opportunistic accretive tuck-in acquisitions. One area that continues to excite me personally is our innovation pipeline. In close collaboration with our customers, we are bringing better solutions to market at a faster pace. We measure our innovation success by our vitality index that is looking at sales from new products that are less than five years old, as a percentage of our overall sales. In 2017, our vitality index and performance materials and chemicals increased by 30% over prior year. And in our catalyst products we continuously achieve the vitality index of greater than 30%. Two quick examples from 2017 with many to choose from would be our next generation methyl methacrylate catalyst, focused on extending the technology lead of the industry’s leader and our great customer. And our ThermoDrop product, focused on highway safety, which is opening up $0.5 billion market for us. Our key focus on tightly targeted R&D where we have a strong presence and on higher growth and high margin end markets is accelerating our vitality index heading into 2018. This is what gives me the confidence that we can continue growing faster than GDP. I can think of no better way to create incremental shareholder value than to efficiently harvest our innovation pipeline. With that, I will turn it over to Mike to go through a more detailed review of our financial performance and our outlook. Mike?

Thank you, Jim and good morning. I would be primarily focused on reviewing our results for the year and will provide our outlook for 2018 that builds on our 2017 achievements. Turning to Slide 6. Please note that my comments will compare 2017 results to pro forma 2016, which gives us back to our full year of the combination with Eco Services. As Jim highlighted we are very pleased to have finished the year with a strong fourth quarter that led to the best sales and adjusted EBITDA year ever. This performance was driven largely by solid organic growth in both operating segments and the Sovitec acquisition, which led the higher adjusted EBITDA margins. Let me provide you more color on this segment. Starting with the environmental catalyst and services segment on Slide 7. This slide had some visual that show you all three product groups, our specialty catalyst whereas octane levels and gasoline, help improve diesel emissions and create high performance plastics for products we all use every day. EC&S delivered outstanding financial performance in 2017, in spite of these residual impacts from Hurricane Harvey. Sales for the year grew nearly 4% to approximately $474 million, driven primarily by improved pricing from contract renewals and refining services. Hurricane Harvey negatively impacted sales by nearly $8 million or 1.7% due to temporary shutdowns of customer facilities in both businesses. Our share of the Zeolyst joint venture sales increased by nearly 10% to $144 million, primarily from higher volumes of specialty catalyst and emission control catalyst. Adjusted EBITDA for 2017 rose nearly 10% to $244 million. This robust increase was primarily attributed to higher pricing and regeneration services, continued growth of emission control and specialty catalyst sales from the Zeolyst joint venture and lower fixed manufacturing cost. The adjusted EBITDA impact of Harvey was nearly $7 million most of which we expect to recoup in 2018. Adjusted EBITDA margins for the segment rose 180 basis points to over 39% on the benefits of higher pricing and pass through provisions for increased raw material cost. These margins clearly demonstrate the value-add of our products to our customers. Moving to the performance materials and chemical segment on Slide 8. Now before we start, take a look at the picture on the lower right that shows reflective strengthening that makes global highways safer. Two big things happened in the materials group in 2017. To pick-up on Jim's point earlier, we introduced the new product called ThermoDrop to make the highway striping applications safer, less costly and more time efficient. Customer feedback has been very positive and this product will benefit our segment growth for years to come. Second was the Sovitec acquisition, which now gives us a stronger position in Europe and Latin America. And then finally also picture here is our product that goes in the consumer goods one of them being toothpaste. PM&C sales rose nearly 6% to over $1 billion, driven by organic growth from increased volumes and improved pricing to recover higher supply cost. Performance materials grew over 11% due primarily to the Sovitec acquisition, which contributed $26 million. Performance chemicals grew nearly 4%, largely from higher sodium silicate sales from industrial uses and precipitated silicates for personal care and green tire application. Adjusted EBITDA grew over 3.5% to $240 million due to volume and price increases combined with the benefits from the Sovitec acquisition. This was offset by higher costs associated with raw material inflation and ThermoDrop start up cost. I would note that we do capture most of the raw material cost increases when pricing our products, but there can be a one quarter lag. While we posted a solid 24% of adjusted EBITDA margin, it contracted by 50 basis points from last year due to the ThermoDrop start up cost and expected lower Sovitec margins that will rise in 2018 as synergies are realized. Turning to Slide 9, as I highlighted in the segment slides, we have leadership positions in each of our five major product groups. In 2018, we expect to grow at a multiple of GDP due to underlying growth in these markets and our strong customer positions. And finally, on Slide 10, as with 2017 healthy trends in our end markets and our key positions with customers lead us to expect top-line growth of 5% to 7% in 2018. Please note this excludes the ZI joint venture sales. The adjusted EBITDA growth forecast of 4% to 8% includes our share of the ZI joint venture's adjusted EBITDA. Capital expenditures and D&A are expected to be at similar level to last year. Our effective tax rate is anticipated to be in the mid 20% range, which reflects the benefit of the U.S. Tax Cuts and Jobs Act. I would note that in the fourth quarter of 2017, we recorded a provisional tax benefit of $90 million for revaluating deferred tax items offset by the estimated expense for the mandatory repatriation toll tax. Free cash flow is anticipated to range between $120 million and $140 million, significantly up from last year by approximately $145 million to $165 million. This was largely driven by adjusted EBITDA growth and approximately $55 million of lower interest cost, and will drive greatly improved free cash flow yields in 2018 and beyond. And finally, while we're only providing guidance for the full year, I would note that there is seasonality to our business which you can see for 2017 on slide 13 in the appendix. But the first quarter is traditionally the lowest quarter of the year given that highway striping and the summer driving seasons are concentrated in the second and the third quarters. Also as noted by some of our customers and peers, weather has been a factor in the first quarter across the northern hemisphere. Despite of these issues, we expect our results for the first quarter of 2018 to be a solid start toward our full year guidance. With that overview of our 2017 results and 2018 outlook, operator, please open the line for questions.

We will now begin the question-and-answer session [Operator Instructions]. The first question comes from Bob Koort with Goldman Sachs. Please go ahead.

Jim, I'm wondering if you could help dimensionalize ThermoDrop a little bit, maybe quantify some of the growth numbers and the spending levels, and then how that cadence should change as we go through this year and the next year.

First of all, we had -- as we’ve talked about before, the plant is up and running very well, some of the startup gremlins that we had in 2017 are clearly behind us now. So in this period, especially as I am looking out the window to press note following in Pennsylvania at least, the striking season is not fully underway. So we’re building inventory, ready to deliver in the second and third quarter. And the demand is there, the order book looks very strong for the product. I am confident that we’re going to be able to sell out that plant this year. So as we look further into the future, these are plants that we can build for $10 million-ish and that we can build in 10 to 12 months. So as we continue to hit the proof points in 2018 and that will be critical, second and third quarter especially, we’re optimistic that we’ll be in a good position to continue to go after that $0.5 million served market that I talked about.

And my follow-up if I could on the regeneration services business. Obviously, there’s good pricing there. Can you give us some sense if there’s any meaningful change in the contract expirations that might come up for renewal in 2018 versus what you had in the last year?

Bob, I think last year or last quarter that was when we had the bulk of our contract renewals in place, so that will carry through. And there’s still some contracts are being renewed this year. But I think that we won’t see the same level of price change in ’18 that we saw in ’17, it’ll carry through once it’s in the contracts, but we won’t see that kind of step change that we saw towards the end of 2017.

Your next question comes from Christopher Parkinson with Credit Suisse. Please go ahead.

This is [Kevin] on for Chris. I was wondering if you can just in a little bit more depth walk us through the key drivers of free cash flow growth between ’17 and ’18. And maybe if there’re any additional levers or areas where you believe you can drive growth towards the higher end of the guidance range? Thank you.

So as we look at the meaningful improvement we’ll have in free cash flow, as we mentioned one of the largest items is really the fact that we’re going to have lower cash interest. We started a process even before the IPO with refinancing we had de-leveraging from the IPO we’ve continued to refinance that where we could. So as you think about our guidance for interest, at the midpoint, cash interest is about $55 million improvement and that’s really locked in due to the actions that we’ve taken. The 2017 results had a fair amount of refinancing costs as we bought out some of that debt, in 2017 that won’t recur. We’ll have -- we have projected EBITDA growth of about $30 million at the midpoint. And then we do expect some working capital improvement of $20 million or so as you look at where we were in 2017 I believe as we discussed previously. We have built up some of the inventory fulfillment drop, which was a working capital usage over the year.

And then just a quick follow-up on EC&F. Can you talk a little bit more about the MMA opportunity and how we should think about any contributions or growth throughout 2018 as well? Thank you.

The best way to think about the MMA opportunity and as far as specifics in ’18, Mike, might want to add some color to this. But this is -- we are the exclusive supplier of the catalyst to the industry leader by a long shot, 2 to 3 times larger than the second and third player there. We've introduced a new catalyst as I mentioned in my prepared remarks in 2017 that’s being incorporated now. So as we see top offs for the MMA plant that are already in place that will contribute to the M&A performance in '18 and beyond. And we’re expecting very shortly to hear the announcement of a new major plant site and the beginning of building of the next large plants in using this technology, which will give our customer, we’re the sole supplier and even stronger position in that market.

The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

Just a follow-up on your free cash flow guidance. What is your assumption for dividends from affiliate companies, I think you've provided $44 million of cash flow benefit in 2017?

We think that based on where we came out in 2017 and 2018 we’ll at similar levels. The JV continues to perform very well. It does sell some but we continue to have the ability to fund our growth capital inside the joint venture and still pay a healthy dividend. So we should be at similar levels for 2018.

And then I was wondering if you could touch upon decline in 4Q sales for the Zeolyst JV. Was it driven more by 4Q being a touch comp and then what is your outlook for the business in 2018?

And I think it may be helpful if you look at slide 13 in the appendix, because you can see some of the variability because a lot of whether it’s specialty catalyst or hydro cracking catalyst can be in fact driven. So it can move around a fair amount from quarter-to-quarter. And it was the tough comp in 2016 as you mentioned. So it’s largely in line with our expectations, but then it was down on a year-over-year basis. As we look at -- having said that if you look at the full year, we were up nearly 10% in sales on that business. So good growth there and it's been very consistent growth and emission control has been a larger and larger component of that business. We continue to expand incrementally that has provided that steady increase in results. So as we look forward for the JV specifically, we would expect sales growth in a similar range to what we had for 2017. However, it's a large for hydro cracking catalyst as part of the mix of their product portfolio where the margins are at a lower relative position to the product portfolio. So that will have a little bit of an impact on mix but still expect sales growth.

And I would just add to that that the most important way that we look at the ZI joint venture is that the drivers for lower sulphur fuels and emissions in trucks, rail, ship and even air transport, the lower sulphur fuels that are moving through the global transportation will continue to be strong tailwinds for us in that business.

The next question comes from Jeff Zekauskus with JP Morgan. Please go ahead.

Good morning, it's [Zoka Cook] for Jeff. When I look at your full-year performance, I think there was $40 million in volumes that was achieved in performance materials and probably in addition to ThermoDrop and $23 million in price and environmental catalysts services. So if you had to rank where the growth comes from in '18, do you think ThermoDrop grows first and then MMA second or do have just like a rank order as to what you think may do best and like in second best next year?

So as you look at 2017, there was a lot of price impact in those contract renewals, that's locked in that continues. Really 2018 is all about volume and it’s about volume in refining services. We’ve had customers with Harvey that would have been down that have accelerated plant maintenance. So everybody is putting themselves in a position, because their demand is still strong to perform at a high level in 2018 and we'll be serving that. So we expect more volume growth in refining services than price benefits in 2018. And then as you look at PM&C segment, we expect that to grow in the high single digits with chemicals running pretty much at where do the performance chemicals business runs at GDP and a little more, but double digit growth in performance material sales led by full year of Sovitec and led by the ramp up of ThermoDrop.

And secondly, will your cash tax rates be very different than your book tax rate next year?

We prefer to think about it just in terms of dollars and we're projecting cash taxes in the $25 million range next year.

The next question comes from David Begleiter with Deutsche Bank. Please go ahead.

Jim, just looking at raw materials, how much inflation did you incur in 2017, how much you are expecting to incur in 2018? And when do you expect to fully catch up on the, mentioned the lag, but when do you fully expect to catch up on that inflation in 2018?

When you look at page 12 that shows the major change factors that would run through the variable cost line. So we have seen increase in the cost for sulfur and the refining services businesses for plastic, a little bit higher shipping cost for -- with higher oil prices and then a little bit of natural gas. So in most cases, we are recovering that either through the pass-throughs that we have in our contracts. So in performance chemicals, for example, nearly half of the contracts in North America have pass through provisions for raw material inflation like this. And we have over 90% of our contracts and refining services have pass through. But there can be a one quarter lag on some of this. So when you look at our price versus where the variable costs are coming out, largely it’s being covered in the case of performance materials and chemicals, we did have some ThermoDrop start up costs that created a bit of a difference there, but that's behind us. So I think the key here when you think about raw material inflation and whether we have the ability to capture either through pass through or just go out and get price increases to cover that is evidenced in the margins, which were very stable and actually grew year-over-year.

Dave, I would just add, we talked about that. And if you go back a few years even, you'll see that we always do better in an inflationary environment and we expect that to continue with the raw increases that we've already seen in '17 has been capture, our margins as Mike just said, are continuing to blend up. So we're confident that we don't have the classical raw material inflation function that you might see in other companies in our space.

And Jim just on -- and Mike just on cash flow, how should we think about CapEx beyond 2018, maybe in ’19, ’20? And Jim how is the M&A pipeline looking for bolt-ons going forward?

So CapEx in ’18 and beyond, we still see similar levels of CapEx. Although, our growth CapEx, the big investments Dave that we do in the catalyst businesses, will start to fall off a little bit. We’ll capacity in place to keep up with the demand. But we should see a little pull back there in the organic growth CapEx in that area, but there’re some other exciting projects in the pipeline that might keep it at that level. And as far as the M&A pipeline, we’re small. As we have said and I just want to repeat, our priority here is going to be a disciplined debt pay down. We still think that there’re few Sovitec’s out there, that size that we could get at a good value, capture the synergies, add to our existing businesses without getting out of the guard rails of that disciplined capital allocation strategy that we’ve talked about in the last few calls, this call and the last call.

The next question comes from Aleksey Yefremov with Nomura Instinet. Please go ahead.

On ThermoDrop, what is the opportunity here, assuming everything goes well this year. What would be the plan to build one of the new plans per year or could you build, I don’t know, two to three per year going forward?

I think, Aleksey, we would model it out as plants per year to capture that in recent year-over-years, where we’ve got -- our strategy teams are looking at different ways to configure that going forward. When do we move from Europe to Asia? So there’s still some work going on there. But if I were -- I would frame it out in the long term modeling as about a plant a year, our plans from how we get a little bit bigger because we typically learned a lot from the first one, but a plant a year is a good way to think about that.

In silica catalyst, you had a strong 2016, 2017 was down. What’s the normal here? Is 2018 somewhere in between? And then I guess if we look even further in 2019, is that up-trend, down-trend, what does that look like?

So 2016 was a big year because of the record year for the MMA sales. So that we were expected to be down in 2017, so those results were in line. We did have some on the methyl methacrylate sides of sales we were projecting for the first quarter that came in to the end of the year. So we think we’ll be probably flat on the methyl methacrylate side, ’18 versus ’17 but the real driver in silica catalyst next year will be the high density poly ethylene market.

I would add to that that not just next year but as most of you know, there’s big capacity coming on because of our -- in the U.S. especially, because of our energy cost advantage. So we’re going to see HDPE capacity coming on for several years here, and we’re well positioned to participate in that growth.

Just to follow-up maybe on that. Are you already on some of these HDPE plants that are about to start up on the Gulf or is this business -- you have to wait? Thank you.

Yes.

The next question comes from Roger Spitz with Bank of America Merrill Lynch. Please go ahead.

EC&S variable process was up strongly in 2017. And I think you touched a little bit on this. But how much of that was in region and what was the drivers, was that the contract we renegotiations in 2017 and any other driver for the EC&S gross profit variable, I guess variable profit growth? Thank you.

The biggest driver was the contract renewals that we did in the fourth quarter of 2016 to set ourselves up for 2017. So we systematically have that revenue benefit dropping through on a quarter-to-quarter basis, so that was really the biggest driver of the performance.

And this quarter ZI volumes were down. What was the principle driver for that?

It was really just timing. If you look at the way the quarters fell in 2016, the fourth quarter of 2016 was the biggest of the year. You have the emission control products that are sold on a more ratable basis that are specially catalyst and hydro cracking catalyst sales are more event driven. So it's just the function of where they fall in any given quarter.

And lastly sodium silicate volumes were up. What was the main driver for you, is that the green tires or catalyst or something else?

They were really three drivers there the green tires certainly a big part of that. Our personal care products with toothpaste and makes-up and other places we participate there also had a strong '17. And then lastly just what we call industrial chemicals where one of the feedstock for further down into the streams that we would call generally industrial chemicals that also had a very strong '17.

Yes, I think it's a function of we were starting to see the macroeconomic climate in Peru, not in the U.S. but in Europe and other places as well. So we saw that carry through on chemicals, which is a good story that and see that trend continuing into 2018.

Yes, there is just one other dimension of that's that’s worth mentioning in China. Because of the regulatory changes the climate, the regulatory climate and the changes environmental changes that are happening in a lot of the chemical assets in China that we saw demand pick-up in that general industrial area as they took some of their biggest polluters offline. So it's hard to tell at this point how long that will carry forward, but certainly had a little bit of an impact for us in ’17, not substantial but I think it's showing an important trend that's happening in Chinese chemical plants.

When you say that China, are you saying that China is taking off sodium silicate capacity and therefore you’re getting that capacity -- you are getting those volumes or do you mean that China is shutting down processes that use sodium silicate capacity and then you are showing more sodium silicate to westerners who are using that and displacing with their products, the Chinese products that are not getting made or both.

What I am saying is that the Chinese at least in the short-term are shutting down their sodium silicate plants to meet the new regulatory requirements that's giving us opportunities spot opportunities to capture share that they were exporting before, mostly in Asia about, not the rest of Asia.

[Operator Instructions] The next question comes from Mike Sison with KeyBanc. Please go ahead.

In silica catalysts, Grace just recently bought out Albemarle's polyolefin business, which I think is a pretty good comp for your business. Can you maybe talk about how your business compares to that and whether you think the competitive environment improves, changes because of that combination?

Mike, we're pretty well positioned across the four or five big HDPE players in this market. As I said, the underlying demand is very strong. Clearly, Grace is the leader in some of those areas but we're a strong second there. We don't see at this point that the combination of those two will have any short to mid-term impact on us. We have some interesting things in the organic pipeline that will help -- continue to have -- to position us well in that business. And as we’ve talked about in the past, Mike, we play in that market through the end catalysts itself but also the catalyst support. And both equally profitable and we have a stronger position in the catalyst support today, but well positioned in both of them to take part in the expansions that we're all hearing about over the next two to three years.

And then in terms of free cash flow for 2018, is there any seasonality to your business that generated fairly evenly throughout the year, are there certain quarters that you consume and then generate a lot more?

With the seasonality of our business, the cash flow that’s going to get generated will likely be in the third and fourth quarter, because you do have the summer driving season and the striping season more in the second and third.

And then just a quick follow up on Zeolyst, I think you had a lot of capacity driving some of the growth in '18 versus '17. Is that capacity online now and is the growth pretty strong in '18 versus '17?

We're still bringing capacity online. We have two big plants that both have both CapEx projects underway, some of it comes on late in '18, some of it early '19. So we're well positioned to stay in front of this demand, which is as I said earlier, we believe fundamentally will stay strong for several years out. So we're in good shape and most of that will come on stream late '18 and '19, early '19.

The next question comes from Laurence Alexander with Jefferies. Please go ahead.

Two quick ones, first on the variable cost swing that you identified in the appendix. Is any of that due to factors that were not raw material swings, and how you think about that in 2018? And secondly, can you update us on your thinking about the average return on capital embedded in your growth investments?

As you think about variable cost movements other than raws, probably the only one that come to mind would be in the quarter on environmental catalysts and services as part of that not only do we have the sulfur and the caustic but we also had some product mix. So on occasion we'll have some additional variable costs as required. But generally speaking, it's really been driven by the raw material inflation. As you think about return on capital, we tend to look at this as a return on tangible assets. We target projects, which are really in the upper 20s, which does even though it’s after tax, takes into account the lower cash tax rate we’re going to have in the U.S. So we’re looking at projects that have robust returns that have shorter paybacks that are in the areas where we see the greatest demand growth.

This concludes the question-and-answer session. I would like to turn the conference back over to Jim Gentilcore for any closing remarks.

Thank you operator. Let me leave you with these key closing points; 2017 was the strong year for earnings and margins, and we expect to drive similar performance in 2018; 2018 will show PQ’s strong free cash flow profile; and we’ll be focused on paying down debt and accretive tuck-in acquisitions to continue to drive shareholder value. Thank you for being with us this morning and we look forward to our next call.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.