Welcome to the Koppers Holdings, Inc. Third Quarter 2012 Earnings Conference in 8th of November 2012. [Operator Instructions] After the presentation there’ll be an opportunity to ask questions. [Operator Instructions] I will now hand the conference over to Michael Snyder. Please go ahead, sir.

Thanks, Kev, and good morning, everyone. Welcome to our Third 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 Salinsky 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 a 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 the 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 call by Walt Turner, President and CEO of Koppers and Leroy Ball our Chief Financial Officer who are calling in from Denmark today. At this time I’d like to turn the call over to Walt Turner. Walt?

Thank you, Mike, and good morning and welcome, everyone, to our 2012 Third Quarter Conference Call and I trust that you can hear us well. As Mike said, Leroy and I are sitting here in Denmark this evening. So hope things go well with the call. I’d like to start off by talking about our lower-than-expected performance for the quarter. The performance from our Carbon Materials and Chemical business overshadowed what was one of our best quarters for our Railroads and Utilities Products business. There were several reasons for the Carbon Materials and Chemicals lower-than-expected business performance that I will explain in more detail shortly. I will give you a fairly detailed account of how we ended up with the $0.82 of adjusted EPS for the quarter. After that I will give you several reasons why I believe that in the fourth quarter we will record the highest adjusted earnings per share that we have ever recorded in any fourth quarter of Kopper’s history as a public company. The end results should translate into a 10% to 15% full year increase in adjusted EPS over 2011 which is below our previously communicated expectations due to some of the items that affected our third quarter which I will talk about in a moment. In addition to reviewing the third quarter results and our fourth quarter expectation I also plan to update you on some of the growth projects including the recently announced agreement to acquire an Australian utility pole business, the progress we are making on our margin improvement initiatives and some early thoughts on what we are seeing for Koppers as we get close to the beginning of a new year. Now beginning with the third quarter. We entered the quarter knowing that our expectations were going to be lower…

Thanks, Walt. On a consolidated basis sales for the third quarter increased by 2% or $6.7 million to $387.9 million compared to the prior-year quarter as higher railroad utility product sales driven by price increases more than offset lower sales for carbon materials and chemicals driven by lower sales volumes for pitch and creosote, lower naphthalene prices and a negative effect in foreign currency translation which more than offset higher selling prices for pitch and carbon black feed stock. Third quarter adjusted EBITDA was $40 million or $6.9 million lower than 2011 third quarter adjusted EBITDA of $46.9 million and adjusted EBITDA margins of 10.3% for the third quarter of 2012, trailed adjusted EBITDA margins of 12.3% for the third quarter of 2011 after restating for discontinued operations for both periods. The lower margins were driven by $1.9 million of charges from the plant outage in the Netherlands, $1.2 million of cost net of insurance recoveries for the pitch tank leak in Australia, higher raw material cost driven in part by tar imported into North America, lower sales volumes for pitch and creosote, and lower selling prices for naphthalene. Adjusted net income and adjusted earnings per share for the third quarter of 2012 were $17.2 million and $0.82 per share compared to $22.2 million and $1.07 per share for the third quarter of 2011. The impact on adjusted earnings per share for the third quarter of 2012 from the pitch tank leak and plant outage amounted to about $0.09 per share. Our tax expense as a percent of pre-tax earnings for the quarter was approximately 34% compared to 33% in the prior-year quarter with the increase due mainly to the mix impact of lower earnings in Europe. As mentioned in our last call, we continue to benefit from our European…

Thanks, Leroy. Moving now to the subject of growth issues. You may have seen our press release earlier this week announcing an agreement to acquire a utility pole business in Western Australia which will complement our existing utility pole business there. This business accounts for 3% of our consolidated sales but it has generated about 7% of our consolidated operating income through September of this year and generates the highest EBITDA margins in the company. This agreement to enter this acquisition is expected to generate over $10 million of annual revenue. We also recently attended a signing ceremony in China related to our new 300,000 ton tar installation plant in Jiangsu Province which represented another milestone to advance this project. The plant is expected to be fully operational by middle of 2014 and it is expected to generate $150 million to $200 million of sales on an annualized basis. The joint venture will be a net contributor in earnings in 2014 and will generate above average segment margins beginning in 2015. In addition to the positive sales and profit this project represents what we hope is just a first step in an effort to penetrate a new end market that has the potential to achieve significant growth rates as China continues to generate large quantities of scrap steel as a result of the economy’s growth over this last decade. Adding another end market for our pitch will further enhance the diversity in our business that has served us well over the past 24 years. And one of our largest end markets, the global aluminum industry, recent projections indicate a 4% increase in consumption for 2012. And an additional increase of 7% in consumption for 2013 which are positive indications for our global Carbon Pitch business moving forward. Do we continue…

[Operator Instructions] The first question comes from Ian Zaffino from Oppenheimer & Co.

Question would be on the earnings that you had put out before and the move related to how you get there. What types of steps are in place already? Would this structure be capable [indiscernible]?

On the Carbon Materials and Chemicals side in talking about the cold tar costs we’ve been telling you about lately, yes. We’re taking; I would say a stronger approach. We have contract formulas; we’re also negotiating different ways of buying the cold tar, which for a time there, there were some tars that were being priced off of oil related indices which just is not working in today’s world. So we’re doing on both sides, Ian, both on the raw material purchasing as well as moving closer to having a more success with the negotiations on the fixed pricing as well as the contract terms and conditions.

And are you also [indiscernible] lag time?

As much as we possibly can and in Europe it’s taken us a while but we have gotten that to a quarterly basis which has certainly helped out when you compare to where we were two years ago, three years ago. And yes, around the world I think it’s becoming more and more of a quarterly, not price negotiation but quarterly evaluating the tar cost and the different components which make up the cost.

Okay. And the other question would be on the other dynamics. What have you seen with one of your competitors [indiscernible]. How do you look at it?

Ian, are you referring to the recent acquisition of the Ruckers business or?

Yes. Yes.

Right. It was just announced about maybe 10 days ago or so. An Indian company by the name of Rain Commodities who primarily owns the former Calciner Industries business which is calcine petroleum cokes producer in the U.S. primarily. So Rain has purchased the Ruckers business so it has been taken off the market, it has been sold. Not quite sure what to expect just yet but from what we’re read the purchase price included a fairly high multiple and just based on that alone I think we’ll have maybe even a more disciplined competitor out there because of the higher price that was paid for the business. So this company, Rain Commodities, knows the aluminum industry very well because as you may recall, the anodes that they’re producing and consuming consists of about 85% petroleum coke and 15% pitch. So he does know the aluminum industry based on the coke-supply side. Now as a cold tar distillation business that we’ll be supplying pitch but I really don’t see much of a change in the marketplace just because of a new owner. It doesn’t happen that simply but I think I do see a more disciplined competitor coming down from it.

The next question comes from Laurence Alexander from Jefferies.

This is Rob Walker out for Laurence. I guess first question would be what’s your thought [indiscernible] demand in margin trends for phthalic anhydride and the other co-products [indiscernible] softening oil prices in the quarter?

As we just said the average price [indiscernible] in the third quarter was $0.65. It increased to $0.67 in October and we’re not quite sure what’s going to settle out yet for November but that’s why we’re sort of forecasting a range of $0.60 through $0.65. I really haven’t seen what happened yesterday or today on crude oil pricing but I think it has started to decline a little bit and as you might recall orthoxylene does track that fairly closely with the mixed xylene pricing product. Phthalic has been a very good business for us. As you know we have a little bit of a competitive edge in that we’re using naphthalene from cold tar as a mixture of our feed stock and less orthoxylene which does help our cost structure but we’ve seen ortho fairly strong the last two years. We also see our phthalic demand up this year primarily in the plasticizes areas which a lot of it goes into housing and automotive. We’ll just have to see where it goes but as I mentioned having naphthalene from cold tar is our sort of our majority of our feed stock that goes a long way versus competitors using 100% orthoxylene.

Can you update what are your utilizations right now for carbon pitch?

It varies a little bit around the globe. For instance we’re probably -- the three plants we operated the year were probably in the mid 70s range and the U.S. we’re in the high 70s range. Australia with the one plant there we’re again probably mid to high 70s. China is well over its capacity with our two plants there. We’ll be operating at 110% or so. Then basically if you add those all up we’re probably mid 70s.

Okay. [indiscernible] clarification of the kind of puts and takes for the FX this year were helpful. I don’t know if I missed it or if it was just too small to quantify or the headwind from the higher coal tar costs this year if they normalize what that benefit could be next year for you guys?

Could you please repeat that again? We’ve just got a little bit of static going on this end. You were talking about FX?

Oh no, sorry. Curious what you quantify the headwinds from higher coal tar costs this year?

I think we feel a little bit better going into 2013 specifically in North America where there will be additional coal tar available to us because of the U.S. steel coke and new battery coming on stream. Again Europe is a tough one because when you look at the steel industry operating in at least Western Europe I think you’re talking mid to low 60s. But we are reaching further into Russia, Ukraine where we do have a very good supply network set up. But again you’re paying a little additional freight costs there. The headwinds I think are going to be there but on the flip side there’s less demand for pitch with the aluminum industry, with the exception of China and the exception of the Middle East. We’re still seeing the aluminum industry probably operating in the 16% range capacity when you exclude those two parts of the world. But as far as headwinds go, they continue to be there, Leroy?

I agree. And it does vary based upon the region. We talked about some of the things that we think will lead to a stabilization of pricing in North America. China as we’ve seen over the past couple of years can be volatile. We’ve seen the reduction in coal tar costs this year compared to last. When we go back to 2010 when we were seeing coal tar costs in China at the highest in the world. I think our view for next year on China is that coal tar costs will probably trend upwards. I think that we would expect that in Europe that we would see higher coal tar costs as well. In Australia maybe flat while in North America I think we mentioned it would probably stabilize based upon the additional capacity coming on line. So how that all pulls together in terms of numbers, we haven’t quantified it to communicate it on the call but all in all we think that we’ll be in a good enough position to be able to offset that with any additional cost increases with price increases.

Our next question comes from Steve Schwartz from First Analysis.

Just to switch gears and talk about railroad a little bit if you could.

Sure.

What is your typical volume of exported ties these days and I guess on a quarterly or annual basis? I’m just trying to get a feel for how that plays out over the next several quarters and I do acknowledge you guys stated a 300,000 tie inventory for export if I’m correct?

Not for export. I mean that was a commercial total but export is a part of that commercial. I guess I’d like not to get too detailed on the volumes, Steve, but I guess as we’ve mentioned before we’re probably going to be in the $11 million to $13 million range this year and expect that to increase next year. I can’t believe very much at this particular point but in terms of dollars, probably $11 million to $13 million this year.

Okay. For 2012 and even up next year?

Yes.

And it’s just plus or minus in the low hundreds of thousands of ties, right, that you’re exporting or is it a high five digit number? Can you, Walt, at least get us on that ball park?

A lot of these ties, a majority of them are going into South America, specifically into Brazil and because of the moisture and wet lands area and so forth then they’re getting tie life of anywhere from -- I’ve heard anywhere from five to ten years. So I can tell you. In fact we actually have one of our guys there this week on a quarterly -- visit quarterly. If not, maybe more often but there is a major need for a much better quality treated hardwood tie and each year that’s going to continue to increase. I just wish I could tell you how much whether it’s 10% or 15% or whatever it is. It’s just difficult at this point. It really depends upon how quickly as the railroads want to increase their ties and improve their railroad [indiscernible] away.

Okay. And then just as a follow-up between railroad again, I think based on comments from some of your competitors in the North American market it sounds like you guys are definitely taking share with your creosote treated tie. And I’m just wondering how long those share gains continue?

Well I mean I hope they continue for a long time. I will say this we have the best process out there to ensure that the bore rates are contained within the ties with the creosote overlay treatment. And we’ve been working on this for a long time. We’ve got four plants that we can use and [indiscernible] service and we’re looking at increasing that. So as we go forward, we’ll have more facilities that have that process capability. It really depends on the railroads and how many ties they want to insert. And we’ve got all the class ones looking at them. Four of them are actually taking borate ties. I think that the process and the quality that we have that goes with that process to ensure that the material stays in there. I think that we’ve got a great shot at maintaining our markets here and growing them as we go forward.

The next question comes from Liam Burke from Janney Capital Markets.

Can I just go back to the Rail Tie business? You’ve mentioned that pricing was more favorable in the quarter. You mentioned though that corporate business was up. Are you seeing favorable pricing in the Class One segment of the business as well?

No, we’re seeing -- compare third quarter compared to last year’s third quarter, yes. We’ve definitely seen pricing improvements as you heard us talk in the past. Every time we -- typically these contracts are anywhere from three to five years. Some are actually longer than five years. But each time you negotiate a contract you’ve got to realign the pricing that goes with those specific railroads. So we have. Last year I think we completed two of those contracts and completing one shortly this year. And, yes, the pricing is with the Class Ones. But also the demand for the commercial ties continue to be very strong and with the strong market, basically the pricing has been good for us.

And on the rail acquisition front you did mention the bonded insulated joint business. Do you see any more opportunity there to pick up some of those types of rail infrastructure products?

Well, I tell you what. We’re looking everywhere we can. I think the world knows that we’re very much interested in acquiring businesses that could be complementary to what we’re wanting to do. We have nine wood treating plants out there. We’ve got the joint bar business we acquired two years ago from the Foster deal. We’ve shown the railroad industry that when we buy something, like the joint bars we do a great job at it and we’d love to look for some more, and we’re turning over a lot of stones looking for them, Liam.

The next question comes from Andrew Dunn from KeyBanc Capital Markets.

I apologize in advance. Some of the calls have been fuzzy so if I missed anything and I ask it again, I apologize. Anyway, I was hoping you guys could maybe just explain a little bit more why you didn’t take out those charges associated with Netherlands facility, either that or the pitch tank leak. It looked like you only took out $1.2 million after tax charges associated with the plant closure in the quarter. Could you maybe explain that a little bit more?

Yes, well I’ll explain that. I guess certainly we called it out and, quite frankly, we’ll leave that up to you and your colleagues as to whether that’s something that you would adjust for. I mean we incurred the cost during the quarter. That’s one of the things that certainly has resulted in us moving our expectations down for the year a little bit. Obviously if you add those back, that gets us back to where we thought we were going to be coming into the year. So certainly, they affected the numbers, but quite frankly, we’d rather you decide whether that should be added back or not. We just want to draw it out so that you understand what it is.

Okay, and then moving on. It looks like that U.S. Steel Coke Battery is ramping up through 4Q into 1Q. Do you guys benefit from that at all in fourth quarter, or is that really only starting in the first quarter of 2013?

No, no. We’ll definitely, we will gain a fair amount of that tar. They actually applied heat on those ovens about six weeks ago. In fact, they might be charging coal here within the next few weeks, but we will definitely start getting coal tar perhaps maybe even in December starting up. And I can’t tell you how long it takes to ramp up all of the coke ovens, but I think they’ll be pretty impressively charging the ovens as quickly as they can. So we will benefit from that increased tar.

Great. And last question. You mentioned the impact of Hurricane Sandy might benefit your utility business. Just kind of... under your current arrangement with your supplier of wood and products for that business, would you be able to meet a significant volume increase currently? Or do you think it won’t be that significant of an increase perhaps?

We’re doing everything we can. We’re a major supplier of utility poles to FirstEnergy, PHI, Con Ed, and I can tell you those three as well as probably three other utilities are calling us and asking us for assistance, and we’re doing everything we can. In addition to newly treated poles coming out of our Florence, South Carolina plant, we’re working with our customers, pulling poles out of distribution yards, out of inventory, wherever we’ve got it. In fact it looks like we’ve got requests in excess of 10,000 poles that are headed to New Jersey, New York area. And as far as working with it, it’s primarily inventory right now, but we’re producing as much as we can. For the white poles that we procure are readily available and so we’re helping out these utility companies as much as we possibly can.

The next question comes from Chris Shaw from Monness, Crespi, Hardt & Co.

I have one question on the Monesdon ethylene plant. That’s the one you sold, right?

Yes. Back in 2008.

And when did it stop producing?

It was towards the end of 2008. So that’s been sitting idle for gosh, unfortunately four years.

I’m curious, would you, if you still owned it would you be running it at this point? Would you have shut it down as well.

That’s tough. When we owned the plant, we were selling coke into the merchant market, the buyer is an internal user, so had we kept it we'd be selling 100% of it into the merchant market, but it has been closed. And based on the announcement that has come out, they have to I think to run $50 million of capital expenditure that they have to meet. I think it’s primarily in the Lifeswap area, but I’m not sure where all. And last I heard if the game plan continues onward as they announced, that it could start up as early as fourth quarter 2013.

Okay. And then about Rain, the company that, are they integrated to tar at all in either -- I know Rucker into that -- in India? Do they have any facilities in India that do cold tar?

No. They do not have cold tar at all. This is a very new business for them. As I mentioned, they’re supplying calcine petroleum cokes around to the aluminum industry globally. I believe they have a small calcine in India, but most of their calcine assets are sitting in the U.S.

Right. Right. And then final one, I just wanted to clarify; you said that the Australian utility coal business was your highest EBITDA margin. Was that for the company or for the segment?

No, that’s the highest in our company.

Oh, okay. That’s very interesting. You guys produce, I think it’s mostly seasonal, but don’t you guys produce [indiscernible] tar at some point.

No. No, we do not. Years ago, we used to, Chris.

The next question comes from Bill Hoffmann from RBC Capital Markets.

Just a quick question about capital expenditures for 2013 and other sort of cash uses, i.e., the JV investment et cetera, if you could help us get a sense of that?

Net of the Australian potential acquisition as well as putting money into our China project and that amounts to...

About $25 million that we’re expecting in the fourth quarter related to those two items. The expectation next year for the JV is that we will be, that we’ll be spending about I think $32 million or so for the JV. Again, our share being 75%. Part of -- most of that will be in the form of borrowings and then we’ll have another equity contribution that will be made at some point next year. It won’t be large. I’m not sure at this point exactly where it will end up, if it will be in the $5 million to $6 million range, but from that standpoint, it won’t be that big. From an overall CapEx standpoint, we’re probably looking in the $32 million to $35 million range. Right now we’re actually going through looking at what discretionary projects that we have that have returns associated with them that we want to put in our programs. So depending upon ultimately what we have there, we’ll ultimately get to the number -- to the range I just gave you; $32 million to $35 million.

Okay. And the Grenada spending is all done at this point?

Grenada spending is not all done, but we have some -- we do have some additional -- we have some offset there that we would expect that would ultimately come close to netting out whatever additional costs that we have remaining.

There seem to be no further questions.

Well, thank you and obviously thank all of you for participating in today’s call, and appreciate very much your continued interest in the company. We will continue to do the right thing for our businesses by pursuing prudent growth opportunities and looking for ways to enhance profitability within our existing businesses. We believe the diversity of our business along with our margin improvement initiatives will continue to provide us with a very stable company with strong and -- during strong and also during weak economic climates. And finally, we do remain firmly committed to enhancing shareholder value by maintaining our strategy of providing our customers with the highest quality products and services, all while we continue to focus on our Safety, Health and Environmental initiatives. Thank you.

Thank you. This concludes the Koppers Holdings, Inc. Third Quarter 2012 Conference Call. Thank you for participating. You may now disconnect.