Ladies and gentlemen, thank you for standing by. Welcome to the Koppers Holdings Inc. First Quarter 2013 Conference Call on Friday, the 3rd of May, 2013. Throughout today's recorded presentation all participants will be in a listen only mode. After the conference there will be an opportunity to ask questions. (Operator Instructions). I will now hand the conference over to Mr. Michael Snyder, Director, Investor Relations. Please go ahead, sir.

Thanks, Alix and good morning everyone. Welcome to our first quarter earnings conference call. My name's 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 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 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 or 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 financials measures. I'm joined on this morning's call by Walt Turner, President and CEO of Koppers and Leroy Ball, our Chief Financial Officer. At this time, I'd like to turn over the call to Walt Turner. Walt?

Thank you, Mike. And good morning and welcome, everyone to our 2013 first quarter conference call. I'd like to spend a few minutes providing a recap of our first quarter results before I turn the call over to Leroy, who will provide additional financial details for the quarter. The theme that you're going to hear quite frequently during our call today is that our European business continues to struggle and we will likely do so for at least the remainder of this year. The positive news is that we continue to execute our business strategy, and have been successful in many areas that I will highlight throughout this call. I want to make sure that the progress that we are making towards realizing sustainable earnings and larger improvements going forward is not overshadowed by the difficult economic environment that we and many others continue to face in Europe. I believe that when the European economy does stabilize and perhaps begins to grow again, the positive impact from the steps we have already taken and continue to take, will trigger an acceleration in our earnings that will move us quickly towards our long-term goals. In regard to the first quarter results, I mentioned in the last call that our expectations at that time were that we would be significantly below our prior year -- first year quarter adjusted EPS of $0.74. We finished the quarter with an adjusted EPS of $0.54, which was at the low end of the range, we had communicated to you. To begin with we had a tough year-over-year, comparison as last year's first quarter was our highest first quarter since going public back in 2006. If you remember several of the smelter closures and production cutbacks that occurred last year in Europe and in Australia did…

Thanks, Walt. Starting with the consolidated results, sales for the first quarter decreased by 3%, or $10.5 million to $370.4 million compared to the prior year quarter, as higher sales volumes for the railroad crossties and utility poles was more than offset by lower sales volumes for all Carbon materials and chemical products in the US and Europe and lower pricing for pitch and distillates materials. First quarter adjusted EBITDA was $33.1 million or $3.6 million lower than 2012 first quarter adjusted EBITDA, or $36.7 million. And adjusted EBITDA margins of 8.9% for the first quarter of 2013 were below adjusted EBITDA margins of 9.6% for the first quarter of 2012. Our margins were primarily driven by lower profitability from our European Carbon Materials and Chemicals business due to lower sales volumes and pricing more than offset higher margin for Railroad and Utility Products driven by higher sales volumes for railroad crossties and utility poles. Our tax expense as a percent of pretax earnings for the quarter was 38% compared to 31% in the prior year quarter. With the increase due to the unfavorable mix impact of significantly lower European operating results in the first quarter of 2013. Higher effective tax rate for the quarter had an approximate impact of $0.07 on the quarter's results compared to 2012. On the positive side of things, we do expect some discrete tax benefits to occur in each of the next three quarters, which could reduce our full year, effective tax rates to approximately 36%. Adjusted net income and adjusted earnings per share for the first quarter of 2013 were $11.2 million, and $0.54 per share compared to $15.5 million and $0.74 per share for the first quarter of 2012. When comparing our results for the first quarter to what we had expected,…

Thanks, Leroy. Now 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 the rest of the year. First, I'd like to talk about our railroad utility products business. Our first quarter volumes for crossties were up from the first quarter of last year led by higher sales volumes for commercial crossties and higher sales volumes for untreated crossties for our Class I customers. We also continue to see a higher portion of our crossties being treated with borates and we expect this trend to continue. The commercial crossties business should be strong again this year as the short line railroads continues to upgrade the rail lines to take advantage of the benefits of the Section 45 tax credits to accommodate the heavier car roads that the Class I railroads are running. We also expect to see higher volumes of crossties going into South America as railroads there are looking to replace ties produced from Eucalyptus species with a more durable creosote treated hardwoods that we produce here in North America. Our rail joint bar business also continues to perform well. And in addition to having a strong U.S. presence, we have been expanding our international presence as we increase our exports sales for these products around the world. On the utility side, our Australian utility pole business should show improvement over strong 2012 results due to the acquisition of the utility pole business that was completed in last year's fourth quarter. Additionally, we have a full year's benefit of $4 million to $5 million from a closure of the Grenada, Mississippi plant, which should improve results for our North American utility whole business. Now, I'd like to talk about the outlook for our Global…

(Operator Instructions). The first question comes from Laurence Alexander from Jeffries. Please proceed with your question.

Good morning.

Good morning. How are you doing?

Very well. Just a couple of questions. First, on the European side. Can you give us a sense to roughly of what you see is the range of outcomes, because obviously if you do see more of a downturn in Europe you’d be able to sort of pull back and cut cost a little bit to offset those, can you give us a sense for what you see is this lack that you could see in the business model?

Well. As we mentioned on the call, the two areas of concerns that we have are the carbon pitch demand with the aluminum industry in Western Europe as well as carbon black feedstocks that are also being depressed with the indirect cause of the automotive industry there. And as you probably heard in the previous calls, we attempting and somewhat successful with shifting some of our products to other customers around the world such as South America and South Africa and so forth. To what degree we see this impacting us has been a tough one because as we said early in the call, we really didn't fully anticipate the real negative impact, we're seeing here, but in terms of a financial outlook or how it differs, Leroy, you may have a closer handle on the percentages that we're looking at.

Laurence, maybe the best way I can describe it is as we're looking out over the rest of this year, we see Europe when you take into account the effect it will have on our effective tax rate as well, that Europe will have almost $0.50 impact on our results, our expected results for the year. And we have several items that -- that are serving to offset that when you consider the contribution from the Western Pole acquisition, the pension expense reductions, the stronger business in China in the railroad business, it will serve to more than offset that, but that's the sort of headwind that we're looking at for the remainder of this year.

And, secondly as you think about the different cost cutting measures that you're putting into this year, you mentioned the $7 million figure. What do you see is the run-rate tailwind for next year from the cost control measures and efficiency programs this year and also the growth projects that you're doing?

As I mentioned we've identified about $7 million of cost savings that will take us through the year 2014. As far as tailwinds associated with it, it's really difficult to comment at this particular time with the implementation that we are doing. And that's tough one, Alex -- Laurence, to really comment on but as I mentioned, I think the second - the next call that we have coming up I guess in August we will have a lot more information.

Yeah.

But Leroy, anything you'd --

Yeah. Well, just to I guess confirm what you had said there, right, we've already identified $7 million on the CMC side that we believe we'll be having at tailwind going into 2014. And there's some other significant items that I think Walt mentioned in his prepared comments that we're just not quite ready to get into details about that we should we able to speak about on the second quarter call that will give you a much better sense for the cost savings that we think that we'll be seeing in 2014.

And then just lastly I guess just very quickly it sounds as if just parsing between the cadence in the back half loaded that your Q4 results could be pretty close to the Q2 given how soft the current environment is and then the pickup in the back half, is that fair?

Well the fourth quarter will certainly be as good as or stronger than the fourth quarter of last year. And again it depends upon a couple of things here but that's currently that's not we're looking at.

Yes, I don't know it will be quite as strong as the second quarter, Laurence, but I think we did see some (inaudible).

Okay, perfect. Thank you.

Thank you. The next question comes from Ivan Marcuse from KeyBanc Capital Markets. Please proceed with your questions.

Hi, thanks. I only have a couple. You gave a lot of good detail. Are you still profitable in Europe?

Yes, we are for sure. It's just, it's not as much we'd liked to be nor as much we were last year.

Okay. And then you mentioned -- and so if you look at you still the Europe headwind - the $0.50 headwind that you mentioned and then Alcoa, the big customer’s out earlier this week announcing that they kick out another slug of capacity. So does that add to any sort of uncertainty about your earnings for the full year or do you have an idea that even where Europe is and what –Alcoa is doing you should still be able to drive higher earnings?

Yes, I think it's going to take a little time for Alcoa to review where this 460,000 tons of potential cutbacks will take place, I mean they mentioned Europe as well as the U.S. and Australia. So we really are not sure that could be down the road but that could have a negative effect on our overall business, but again I think one of our strategies here is to really focus on other markets that we can divert the potential pitch production into other markets as well. But the impact on that would be almost impossible to comment on at this particular time. But we are looking at that, Ivan, for sure.

Great. And then you mentioned share buybacks. You haven’t been all that aggressive in share buybacks at least in the last couple of years. How much do you have available now, I don't know if you may have mentioned this, but how much is available on your authorization and when will that authorization expire?

The current authorization essentially has about I think $25 million in place for us to be able to repurchase, we repurchased about 6.4 million last year. There is no end date for that and obviously we can go and get that increased at any point we wanted. I think the share repurchases that Walt was referencing that we would expect to do this year would be kind of in line with what we've been talking about in terms of buying back shares to offset dilution. And I think that's essentially the approach we took last year.

Okay. And if interest rates were sort of the - according to the Fed it looks like the interest rates are going anywhere anytime soon. So if there is this time next year be where they're at this level, what kind of savings in your interest expense do you think you will be able to get if you're able to sort of refinance in today's environment?

Good question. I would put that somewhere in the neighborhood of 175 to 200 basis points.

Okay. And that's not included in the $7 million in the cost savings that you identified for 2014, correct?

That's correct.

Great. Thanks for taking my questions.

Thank you, Ivan.

Thank you. The next question comes from Liam Burke from Janney Capital Markets. Please proceed with your question.

Thank you. Good morning, Walt. Good morning, Leroy.

Good morning.

Good morning, Liam.

Walt, you mentioned that you are going to step up borate production or borate crossties and you are going to probably expand the two plants, understand that borate creates a longer live tie how do you anticipate the borate ties effecting the crossties business long terms?

There has been a lot of excitement over the last two years from the railroads and wanting to use more of a creosote borate treatment. Basically because of what you just said it does have longer life to the tie. And as we go forward talking with our customers there's more and more interest to do more ties from a creosote borate if it's good for the areas in the South where you've (Inaudible) because of the wet swampy zones and so forth if there is a thought process I want to be good for other location regions around the U.S. So that's the primary focus and as we forward do we are going to have more facilities to meet our customers' demands. In regard to expanding our treating and it doesn't take much for us to increase our treating capacity by adding another (inaudible) or two and what we're seeing with a couple of specific customers, we do see tie demand actually increasing a little bit, which would require us to add additional treating capacity. So again customers are our driver and we've have got great relationships with our customers and we want to continue to do what they would like us to do with the treating service company.

Longer terms though Walt, wouldn't that mean a longer life tie would create lower volumes in long-term wouldn't it?

Well it's normally I am there high replacements or high insertions are probably addressing no more than 2.5% increase, so something that total pie is that are already in services and there is a lot more work to do and then I can tell you there is more and more focus on maintenance. The car weights turn all up to 286,000 pounds and that's why we see the short-lines with some pretty aggressive projects and the same thing with the Class-1 they also have lot of work to do. These ties it's going to be replacing 3% per year still lot of concerns a lot of ties to be replaced out there that would help with this better creosote borate treatment.

And Lee need to be talking about at least 10 to 15 years before you would ever see any sort of impact from the borate treatment I think.

Okay. And then, Walt on the export business on the crossties it looks like you are growing. Do you see any opportunities to add any more customers either in Brazil or go into other countries in South America?

Absolutely as I mentioned we are going to actually put more man power and more support behind us and we do see based on what we have learned last two years or so there is an opportunities for using I would say a more like the North America railroad type products. I know we've noticed a lot of companies from Brazil, from Chile and other countries, Latin America as well that want to really do some serious upgrading of their railroads there. And so these railroads throughout South America and other places are saying, you know what -- what can we do to be just like a Class-1 railroad in North America. So we are seeing opportunities there.

Great. Thank you, Walt. Thank you, Leroy.

You're welcome.

Thank you. The next question comes from Steve Schwartz with First Analysis. Please proceed with your question.

Hey, good morning guys.

Hey good morning Steve. How are you?

Hey, good thanks. If we can just stand on railroad and talk little bit about the commercial business, the short-line business. How significantly did your mix change towards that business in the first quarter and then how do you expect the year to play out with respect to the 45G tax credit?

First part of your question I don't have the number in front of me, Steve, but second part yeah the 45G tax credits are helping the short-lines but it's probably a lesser degree than the short-line having to seriously upgrade their [track-age]. I just mentioned the heavier loads and a lot of increased freight traffic coming out of the mid-west especially North South Dakota with the Duncan Gas industry and oil industry and so forth. So it's probably even more so on just upgrading and to make sure that they don't have any -- elements so what have you to keep for revenues going from the Class-1. As far as the mix quarter-over-quarter I would have to get back to you Steve and give you more specific number on that.

Okay you know in that business as said was there any benefit from Hurricane Sandy?

For the railroad side?

No, not well I guess that in the utility poles, I mean on the call you pretty much mention the utility pole strength, is Australia but.

We did have a nice uptick back in the fourth quarter on the utility sales, but not lower side if there was anything it was minor as far as repairing railroad tracks.

Okay. And then just my follow up question it relates to the carbon material business. Walt, it’s been a over 20 years since I took class in distillation, but when you talk about shifting more of your products to carbon black feedstock. Is it that you are changing the type of tar you running through the facility are you changing getting your customers to change their specs for carbon black seed to open for the range that you supply are you blending different products? How exactly are you pulling that off?

Well, I pull out a secret process and I will share little bit with you. It continues to be distillation buyback and when you are going through distillation process you have always heard us talking about three primary distillation streams coming up the process the first is the light oil stream which we further distillate to naphthalene and other correct materials and second products the primary distillates but we either correct – for – wood preservation chemicals or we do some other correct oils for carbon black feedstock markets. And when it comes to producing pitches we continue to further distillation process with higher temperatures and going through our pitch column to obtain a specific softening point for a customer’s carbon classification. But in between the distillates stream coming off and the final pitch product coming off we can do certain things there that we feel can offer the carbon black manufactures a better quality material which include little more carbon content and would help them with being more on a quality side improving their carbon black for the tire manufacturers and other rubber applications.

So, it sounds like through perhaps an R&D effort on your part. You have gotten your customers to consider a wider spec range of raw material that allow you to sell more volume. Is that a good way to summarize it?

Well some of that is true, but more specifically it continue to have to deal with the raw material quality but more importantly through the distillation process and coming up with increased carbon content. So it doesn’t increase the range of the specification it would more so narrow the range where we are providing a consistent quality which is what the carbon black manufacture is what the carbon pitch customers really want.

Okay. Good luck and continuing to develop that initiative. Thanks for the color.

Sure.

Thank you. The next question comes from (Inaudible) from [Keeley] Asset Management. Please proceed with your question.

Yeah my question has been answered.

Thanks David. Good to hear from you.

Yeah good to hear you.

Thank you. The next question comes from (Inaudible). Please proceed with your question.

Good morning, Walt, Leroy and Mike.

Hi, Scott.

Leroy just a couple of housekeeping things here. Was there any foreign country impact during the quarter?

Very low.

Okay. Did you give a percentage decrease Walt carbon pitch volumes year-over-year or the pitch price. I probable missed them.

We did I think the volumes were up was it 9% or 13%, I think it was 13%, let me verify it a little quick.

Okay. And pricing for a pitch?

9% on the [buy].

Okay. And was pricing, I'm sorry?

The pricing was down about 4% but we'll reconfirm that to you, Scott.

Okay, thank you. Leroy are the borate treated ties that you're selling to your Brazilian customer, are those treated as a sale in the U.S.?

They're not borate treated ties, they're export ties -- or export ties are not borate treated, they're different.

Okay, sorry about that. The export ties are treated as a sale in the U.S. though?

Yes.

Okay. For tax purposes, correct?

Yes.

Okay. I guess those are all my questions. Thank you.

Thank you, [Scott].

Thank you. The next question comes from Chris Shaw from Monness Crespi. Please proceed with your question.

Good morning, guys. How are you doing?

Good Chris. How are you?

If I could ask again on the --, I know you obviously don't know there was any detail as the company -- doesn't but if you assume some sort of pro-rata amount of capacity curtailment as bounce us to how you supply them prorata share of your I guess carbon pitch sales to them, I mean was that impact you I mean was that the volume you could just to make up and send somewhere else in the world or do you think is that being made up for the Middle East the modern projects or something like that or would you be natural sort of net loss do you think?

It's really difficult to answer that question Chris because it really depends upon where they would chose to cut back or – hot lines in the U.S. I mean we do see aluminum consumption increasing about 2% again this year primarily because automotive and packaging but it's Australia was another location I can look at, but I think probably what they're looking at here is there are high up synergy cost operations and I think Europe would put into that as well. It's just it's impossible to really understand what they will be looking and obviously with the modern smelter in Saudi Arabia cranking up and being at full production sometime mid late next year and appraising for aluminum – doesn't get over the 2,000 plus ton mark it's just difficult to understand what they might do. It's very expensive to shut down a pipeline or two, it's very expensive to bring them on. So I am sure we will have a lot of serious discussions before they make the decisions.

Okay. And then if you look at rail, I know in sometimes there is I guess was there any pull forward into the first quarter from I think sometime I don't know the weather is good or when people buy the treated ties earlier, was there any sort of real seasonality there in the first quarter or pull forward?

No, I think it's in the past years we would typically say that first quarter tail end of the fourth quarter are very, very slow for cost and the construction work is replacing ties, but I think with all the work that we're seeing with the short lines and so forth it's not been quite a seasonal as we have seen in past years.

And there was some of weird wet and cold weather in the country in the spring is that going to impact 2Q at all or?

I don't know, we normally don't see that I think that's just a normal situation for us there as far as the North-West because authentically they will not do much for 3 or 4 or 5 months depending on the weather, but that's not something that we really monitor or would impact us.

Alright. Got it. And then if I can just ask on CapEx, I think last you are sort this thing you say $32 million to $35 million for this is that changed I am just trying to get an idea of what then ultimately 2014 might be with the amount you have to fund the Chinese JV.

Yeah, excluding the Chinese JV we're still looking at the $32 million to $34 million mark on our CapEx this year and really truly putting more and more of that into productivity projects, which will obviously have some pretty good pay backs going forward.

But, with the Chinese JV it's going to be above that above 40 probably.

Yeah, the Chinese JV itself we will probably spend close to $40 million this year.

This year. And how much next year another 20 or maybe.

Yeah, there will be probably another 20 or so next year.

Okay. I forget what's your percentage – 75.

Yeah, that will be between 65% and 75%. 65%.

Okay. Great, thank you.

Thank you. We have a follow-up question from Ivan Marcus from Keybanc Capital Markets. Please proceed with your question.

Great. Just a real question, you may have said this your coal fired cost, I know you went through each of the regions, we feel if it's a total global basket would it be up on a year-over-year basis for 2013 or would it be basically flat with 2012?

Total at various regions but it's pretty much flat for year-over-year or maybe a slight decrease.

Great. Thank you.

Thank you. I will now hand back to Mr. Turner for closing remarks.

Thank you, Alix. And again we thank you as always for your participation in today's call and appreciate your continued interest in our company for sure. But we will continue to do the right things for our business by pursuing prudent growth opportunities and looking for ways to enhance our profitability within our existing businesses and despite some of the current challenges due to the European economy, we believe that the diversity of our business is along with our margin improvement sand growth initiatives will continue to provide us with the stability in both strong and weak economic climates. And finally we remain firmly committed to enhancing shareholder value by maintaining our strategy of providing our customers with the highest quality products and services while continuing to focus on our safety health and environmental initiatives. Thank you, again.

Thank you. This concludes the Koppers Holdings Inc. first quarter 2013 conference call. Thank you for participating, you may now disconnect.