Ladies and gentlemen, welcome to the Koppers Holdings first quarter 2010 earnings call on the 6th of May, 2010. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator instructions) I will now hand the conference over to Michael Snyder. Please go ahead, sir.

Good morning, everyone. Welcome to our first quarter conference call. My name is Mike Snyder and I am 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 else you can call Rose Salinsky at 412-227-2444 and we can either fax or e-mail you a copy. Before we get started, I’d like to remind all of you that certain comments made during this conference call maybe characterized as forward-looking under the Private Securities Litigation Reform Act of 1995. These forward-looking statements maybe affected by certain risks and uncertainties, including risks described in the company’s filings with the SEC. 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. I am joined on this morning’s call by Walt Turner, President and CEO of Koppers and Brian McCurrie, Vice President Global Carbon Materials & Chemicals and until replacement, he is named acting CFO. At this time, I’d like to turn the call over to Walt Turner. Walt?

Thank you, Mike. Welcome, everyone to our 2010 first quarter conference call. I was pleased to see that our revenues for our global Carbon Materials and Chemicals business increased by 19% over the pervious quarter. Outside North America end markets for Carbon Materials and Chemicals and the Europe showed improved stability, and our Asian and Middle Eastern markets continued to show growth in our carbon pitch, carbon black feedstock and naphthalene products. Steel production increased about 30% globally and about 60% in the U.S. for the first quarter of 2010. That will provide relief on the raw material side. Tar supplies in the most areas around the world are currently in excess of demand. Related increases and electric arc steel production should also help our carbon pitch and petroleum pitch volumes as both products are used in the manufacturing of the electrodes, which are consumed in the electric arc furnaces. Our carbon pitch volumes were up 9% over the previous quarter despite a small decline in global aluminum production. We have gained market share in the pitch market as a result of our acquisition in the Europe and our new pitch volumes we are supplying in the Middle East. We continue to be encouraged with the recent economic news and are hopeful that this may ultimately lead to the restarting of some previously idled smelting capacity later this year. Recent projections continue to forecast average annual growth rates for global aluminum demand of around 10% and global aluminum production of 7% through 2013. The projected increases in production through 2013 amount to about 10 million to 12 million tons, of which about 3 million tons is expected to be supplied by the smelters in the Middle East. Our expectation is that a substantial portion of this new production will come…

Thanks Walt. On a consolidated basis, sales for the first quarter increased 1% compared to the prior year quarter as higher sales for Carbon Materials and Chemicals were nearly offset by lower sales for Railroad and Utility Products as the railroad business declined as expected over the prior quarter, with the reduction being exaggerated by difficult weather conditions. Carbon Materials and Chemicals sales were driven higher by increases in volumes per carbon pitch and carbon black and higher prices for products linked to oil. First quarter sales increased 19% to a $173.3 million in Carbon Materials and Chemicals compared to the prior year quarter due to higher volumes per carbon pitch and carbon black and higher prices for carbon black feedstock and phthalic anhydride as well as the Cindu acquisition and the strength of the Australian dollar. In the first quarter, we had a 1% or $1.5 million decrease in sales of carbon materials as higher volumes and higher foreign exchange translation rates were more than offset by lower carbon pitch prices, 2% or $2.9 million increase in sales of distillates due to higher benchmark pricing for carbon black feedstock and 8% or $11.7 million increase in sales of coal tar chemical as naphthalene and phthalic volumes and prices improved and 10% or $14.7 million increase in sales of other products, which include carbon black, petroleum pitch, fuels, freight, and other products. Sales of distillates, which include third-party creosote sales and carbon black feedstock were positively impacted by higher prices amounting to $5.1 million, reflecting higher oil prices which were partially offset by lower volumes amounting to $2.8 million, so lower volumes were driven by 37% reduction in third-party creosote volumes. North American sales of phthalic anhydride experienced a 12% increase in first quarter volumes, reflecting improved end market demand…

Thanks, Brian. For the year 2009, our two business segments, Carbon Materials and Chemicals and Railroad and Utility Products were 58% and 42% respectively of our total revenues. The Carbon Materials and Chemicals segment is closely tied to the production of steel and aluminum. As you may recall, we use a byproduct of metallurgical coke making process, coal tar, as our raw material to produce carbon pitch for the aluminum industry; carbon black feedstock for the rubber market; and naphthalene as feedstocks for concrete additives and also, for further processing in the phthalic anhydride for the plastics and resins market. Beginning in late 2009 and continuing into 2010, we have seen significant increases in global steel and coke production that have lead to increases in coal tar supply in certain geographic regions where we operate, we believe we will be able to achieve modest raw material reductions in 2010 that will ultimately will be passed along to our customers in those regions. As mentioned earlier, the electric arc steel furnaces are increasing production, which not only helps our carbon pitch and petroleum pitch businesses but also we will ultimately absorb some of the excess capacity from Asia and hopefully restore product pricing to more normalized levels in those areas. Middle-east aluminum production continues to come online as scheduled, currently the Sohar smelter in Oman is at full capacity and the EMAL's smelter in Abu Dhabi and the Qatalum smelter in Qatar have announced that they expect to be at full capacity by the end of this year. As mentioned on our last call, during 2009 we took advantage of market conditions, and expanded our market shares for carbon pitch in the Middle-East and in the Europe, as well with petroleum pitch and phthalic anhydride in North America. We continue to…

(Operations Instructions) The first question comes from Kristen McDuffy from Goldman Sachs.

Do you view plastic or composite ties as a potential threat to the traditional wood crossties?

Not really. There have been over the last several years' alternative ties that have been talked about plastic ties, which we referred to as well as pressed one and other types of alternative applications, but really that’s not been very successful in the past. I think that we have stated many times before, the wood tie with the huge natural resources that we have here in the hardwood industry, I think the traditional wood tie treated with creosote will continue to be the most economical durable tie for the North American railroad industry.

Okay, great. I know in the past you have mentioned possibly being a consolidated here in the European coal tar distillation areas and maybe increasing your product offerings in your rail business. Do you have any updates on where you might be on the M&A front in either of those regards?

Well, I obviously can't comment on the consolidation of the Europe. We are looking at opportunities everyday just like we have looked at another parts of the world, the Cindu acquisition that we completed back on March 1st, I think is a good indicator of where we'd like to be, and I think everyone in the tar distillation business globally understands that we would like to continue to grow and like to consolidate where it make sense, and really consolidation more so for efficiencies and assisting our customers and looking at their requirements going forward.

Just one last question, when you look at the aluminum end market, do you think there is risk that we might see some production curtailments just because of the high inventory levels, or do you think that will aluminum producers will continue to produce?

I'm not sure I can answer that question, but the projections that we're seeing out there on the consumption side of aluminum as well as the production side must follow, eventually depending on how quickly inventories are depleted, but on the consumption side, primarily automotive and trucking as well as packaging and maybe even somewhat on aerospace, but all indications are as we said that consumption should go up globally about 10% this year and continuing forward so the indications are good.

The next question comes from Laurence Alexander from Jefferies.

This is Lucy on Laurence today. You mentioned that the commercial crossties backlog was up about 25% year-over-year, do you have a figure for what the sequential improvement might have been?

Obviously, last year, 2009, the entire year was a very depressed area for us on the commercial side with lot of contractors, really I think very frightened us to what was going to happen with the economy, so last year was a very low year. In fact, I think when you look at 2009 versus 2008, we were off at least 40% or so on our revenues, but looking at the specific answer I think Brian was looking for a number.

Yeah, I think Lucy, I am not sure that you are seeing much sequential improvement in the first quarter of 2010 compared to the first quarter of 2009. I think what we are really seeing in the commercial business is that’s going to provide some growth here into the second and third quarter.

Based on what happened last year and some stimulus money now becoming available that the indications are that it should by continuing to be an improvement based on what we saw in the first quarter.

Right. If you look at the actual commercial tie sales in the first quarter of 2010 compared to the first quarter of 2009, it was actually down about $5 million.

Would you be able to possibly quantify the weather impact on Railroad and Utility Products in Q1? Then as a follow-up to that, if we exclude the weather impact from Q1, I know you are expecting further pressure in Q2 in that segment, do you expect sales and profits to be up sequentially in Q2?

The first one, on the procurement side; it's not very fair to compare first quarter this year to first quarter last year only because it was just abnormally much higher last year with the large demand for crossties and so forth, but when you look at it, we were probably off a good 20% or so just because of the sawmills not being able to receive the logs out of the woods, if you will with the snow and what have you.

From a profit point of view, I think Lucy maybe a way to look at that, if you look at the overall profit decline in that business from $12 million and $4.7 million or $6.7 million, I would say, the lion share of it is not really being driven by the weather. I mean there was obviously a weather impact in the first quarter but I don’t think that’s really driving the fundamental change in the business. I think as far as your question in the second quarter, we would expect to see sequential improvement in the business. I think Walt mentioned that actual procurement volumes are moving up through the month of March and April and into May and we also have the seasonal aspects of that business. So, we would expect that the second quarter would be better than the first quarter.

Then another situation that did happen in the first quarter which is fading away rather quickly, so we had some very high competition with the hard ones from the pulp demand on their raw material side. Well they were also having issues and offering very, very, high prices for certain pieces that we would have actually would have gotten. So, I think that has now disappeared. So things are improving each week as Brian says.

Thank you and just one last one would you be able to any comments on the outlook for any more JVs in China?

As we have been saying for, many long months and maybe over the last couple of years, China is a very important resource for us for the coal tar and as we see these projections of carbon pitch demand going forward associated with these smelter projections on consumption and production, obviously we continue to look very hard at potential joint ventures and acquisitions in China. Again it's not just a pitch, it's also the demand for carbon black feedstock as well as naphthalene, which makes it much easier to look at when you are looking at it a JV or any other type of project we have there.

Thank you, the next question comes from Steve Schwartz from First Analysis.

You guys noted that wide ties would probably down 20% in 2010 but insertions likely flat, did I get that right?

Exactly, I think even looking at last year and even the year before in 2008, the tie insertions by the railroads continue to be in that 20 million perhaps even 20.5 million range and we continue to see that the happening this year.

Actually I think that reductions probably going to be more heavily weighted in to the first of the year. It's probably going to trend backup to more normalized patterns as we get in to the second, third and fourth quarters.

Okay. So, do you guys have an internal estimate for which your wide tie inventories might be by the end of 2010, I think there were at 7.2 mill at the end of '09?

They were at 7.2 you are saying and I think at the end of March we were at 6.9. So we did see all that a decline there as far as ties being in respect in our plants, which sort of fits what we experienced in the first quarter. But beyond that we do not want to comment.

Okay.

The important part of the comment of those are the tie insertion rates that the railroads are maintaining at with levels that were pretty much in the prior years. So in fact that the wide tie procurement is down, it's an inventory reduction restocking issue for them. So I mean they are going to have to increase their purchases if they're going to meet those insertion rates in the second half of the year.

Okay. Then just as my follow up Walter, it was interesting you commented that the Middle East shipments have pretty much made up for volume loss in North America and Europe in 2009. How much perfect were ramp-up affected there as they built their inventories of anodes for those facilities?

They really don’t build anode inventories. I mean each especially for the EMAL plant and the Qatalum operation. They're right now ramping up to full capacity, which will take them into the fourth quarter timeframe. So, what they are doing is that they are producing more anodes each week, each month as more parts come online for operation. So that’s where the increases come from. It’s not building inventories; it's really manufacturing more anodes if parts come online to get to their full capacity.

We might see some small sort of (inaudible) ways as they build pitch inventory to produce the anodes, but I don’t think it’s terribly dramatic when you look at quarter-on-quarter performance from a 2010 perspective?

Okay, that’s helpful. Somebody please send me a picture of Brian and I will pitch (inaudible).

He only has [three of such stains] so.

The next question comes from Saul Ludwig from Northcoast Research. Please go ahead.

Brian, could you repeat just focusing on pitch volume what happened in the first quarter to volume and prices?

Sure, I think maybe as a backdrop just to underline, if you go back to the first quarter of last year smelters in North America were actually idling in the first and second quarter of last year. So, there is still a bit of volume reduction compared to the first quarter of last year and sequentially the volumes had stayed pretty stable in the markets, but if you look at carbon pitch volumes quarter-on-quarter regionally you can see the volumes in China were up about 37% over the first quarter of the prior year. If you take the U.S. and Australia and our European operations and exclude the Netherlands, because the Netherlands had about less than 5,000 ton of extra volume for us, overall volume was pretty flat.

So, your total volume was actually up a little bit?

Our total volume was up 9% year-over-year, and that's actually with a pretty tough comp in the first quarter with U.S. volumes.

Your pricing was down how much?

Pricing was down about 17%.

Okay. And your profits would have been down because of that?

It's a combination. I think in China, certainly the profits were down because of the price pressure. In other parts of the world, the prices were actually following the raw material cost.

Then you also have the carbon black feedstocks in that.

That was good. I was just focusing on the pitch business. What are your some financial numbers? What do you think cap spending tax rate is going to be year D&A?

Tax rate roughly say 38%, so a little lower in the first quarter just because of some of the mix in earnings between foreign and domestic, but it continues 38%. For CapEx, I think maybe probably a little higher, we under spent CapEx last year, so I think that $26 million, $27 million number. It's probably reasonable.

You think you'll be a cash generator, I mean ex what you spend for the acquisition. You'll have free cash flow after dividends every time?

Yes, absolutely.

(Operator Instructions) We have a question from Chris Shaw from (inaudible).

I was just curious in the margins in the carbon business sequentially. Wasn’t there a LIFO impact in the fourth quarter? So I thought that would be up a little bit more. I guess they are basically flat, I thought they would be up sequentially.

I don’t have the margins sequentially but I think certainly the margins in China are probably having an impact on that. They are low, but I think you are right. I think if you look elsewhere and our business is particularly competitive to the prior year first quarter, margins in Europe and Australia where we had a lot of LCM write down impact in early part of '09 have moved up.

Most of the negative impact was probably China, but did you make profit in the China JVs in the first quarter?

A slight profit. Yes.

(Operator Instructions) We have a follow-up question from Saul Ludwig.

Yes. I have to ask about this problem you are having in Australia that obviously wasn’t considered a special item which shouldn’t be. Could you just elaborate a little more on what's going on there and how long it might take to get it resolved and it still sounds like a big deal when you are talking millions of dollars.

I guess this goes back to 2006-2007 where we expanded the facility increasing our production buildup 57,000 tons and at that time there was a little boiler installed by a very reputable boiler manufacturer and we have some issues with that which needed some repairs completed here in the next couple of months, but its basically operational from a boiler point of view. I mean it’s a replacement of a part that’s got a couple of months lead time to it and I think the issue with the plant is really it's not running at full capacity utilization.

It's going to cost you $2 million; they are about in the second quarter and then should be nothing in the third quarter?

Exactly. Hopefully, it gets resolved sooner in the second quarter, but it could still have a $1 million to $2 million impact.

The next question comes from [Rick Meena from Jacob Consultancy].

Do you see by any chance copper is growing in India, either physically by a JV as we see steel production growing as well as aluminum in the foreseeable future?

Absolutely and for the reasons you just mentioned four to five years, I don’t remember the exact numbers, but both steel and aluminum production are going to be increasing substantially. I want to say double but for those reasons, we currently are participating in the aluminum carbon pitch demand there and we will continue to look at opportunities to grow that through importing into India and or looking at some type of JV or other facilities.

(Operator Instructions) There appears to be no further questions at this time, sir. I will now hand the call back over to Mr. Walt Turner. Please continue.

Thank you, Debby. We thank you for your participation in today’s call and I appreciate your continued interest in our company. In 2010, our expectation is that our Carbon Materials and Chemicals business will improve over 2009 while our railroad business will likely be down a bit due to weather and lumber availability issues that we have been experiencing in the first half of 2010. Although some of our markets remain impacted, we do continue to see signs of stability and growth in our aluminum and steel markets, as well as growth and demand for our downstream products in China and the Middle East. We see continued strong demand in our end markets in the long-term particularly based on the committed aluminum capacity additions coming on line in Middle East in 2010 and beyond. We are very well positioned given capacity additions in China. Our balance sheet strength continues to provide potential opportunities, to stimulate growth as well as create shareholder value. We will continue to operate the business and manage our capital structure in a prudent manner and we do believe strongly in the long-term strength of our end markets and our position as a market leader in our businesses. Finally, we remain firmly committed to enhancing shareholder value by executing our strategy of providing our customers with the highest quality products and services while continuing to focus on our safety, health and environment initiatives. Thank you very much.

This concludes today’s Koppers Holding conference cal. Thank you for participating. You may now disconnect.