Good day and welcome to the Koppers Holdings, Inc. Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Quynh McGuire. Please go ahead.

Thanks, and good morning. I'm Quynh McGuire, Director of Investor Relations and Corporate Communications. Welcome to our fourth quarter earnings conference call. We issued our quarterly earnings press release earlier today. You may access this announcement via our website at www.koppers.com. As indicated in our earnings release this morning, we have also posted materials to the Investor Relations page of our Web-site that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, this is being broadcast live on our Web-site and a recording of this call will be available on our site for replay through March 27, 2018. Before we get started, I would like to direct your attention to our forward-looking disclosure statement. Certain comments made during this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, 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, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. The Company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The Company has provided with its press release, which is available on our Web-site, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for today’s call are Leroy Ball, President and CEO of Koppers, and Mike Zugay, Chief Financial Officer. I will now turn the call over to Leroy.

Thank you, Quynh. Welcome everyone to our fourth quarter 2017 earnings call. Before getting into the details of our financial results, I’d like to recap our key accomplishments in 2017. Now at Koppers' everything begins with safety, so let’s start with the Zero Harm update. After visiting 19 different Koppers' locations throughout this past year I can say with confidence that our safety-first culture continues to be embraced by our employees across the globe. At each of these locations, I always do my best to engage our safety committees, management teams and individual employees that are important to them. And we continue to build on momentum that followed our second annual Kopper Zero Harm Zero Waste Leadership Forum held in September in Pittsburg. And during the past year, every one of our operating locations completed training on the first three modules of safety leadership training designed to incorporate our Zero Harm values and all that we do. Our all operational and executive leadership including myself participated in leadership diagnostic survey meant to provide constructive feedback as to how each of us can become better safety leaders. In addition, we significantly advanced the development of our life saving rules, which will go into effect in January 2019 and those rules will provide our people who are performing the most inherently dangerous work even more peace of mind that their safety always comes first. In 2017, 13 of our 31 operate facilities work accident free and a number of our full year - recorded incidents with slightly below our 2016 results. Additionally, our serious incident precursors dropped significantly year-over-year which is a positive sign of our efforts prioritize training and education around identifying and mitigating the most potentially dangerous exposures are showing results. On a daily basis, we’re practicing empathetic leadership and…

Thanks, Leroy. Let's begin by referring to the slide presentation provided on our web-site. Starting with slide four, sales were $366 million for the quarter, which was an increase of $53 million or 17% from $313 in the prior year. Our CM&C business reported higher prices and higher volumes for carbon pitch in Australasia and Europe and higher demand for phthalic anhydride in North America. The PC business experienced higher North American sales volumes for copper-based wood preservatives and additives due to favorable trends in the repair and remodeling markets. The RUPS was negatively affected by weakness in demand for crossties and railroad bridge services partially offset by higher sales of rail joints in the U.S. and utility products in Australia. On slide five, consolidated revenues for 2017 were $1.5 billion, reflecting an increase of approximately $60 million or 4% from the prior year. Moving to slide six, adjusted EBITDA was $42 million compared with $38 million in the prior year due primarily to higher profitability from PC and CM&C partially offset by lower profitability for RUPS. CM&C profitability improved significantly from the prior year driven by a combination of higher pricing and volumes for its carbon-based products as well as cost savings from its restructuring initiatives. PC's profit margins benefited from strong customer demand as well as capacity and productivity improvements, RUPS was negatively affected by lower spending across both the Class 1 and commercial markets, combined with ongoing pricing pressures on commercial crossties. Moving to slide seven, this shows our EBITDA bridge of $200 million in 2017 compared with only $174 million in the prior year. The strong profitability from our CM&C and PC segments more than offset the decrease in RUPS. Now I'd like to discuss several items that are not referenced in the slide presentation. Adjusted…

Thank you, Mike. Regarding the outlook for each of our business segment, let's start with our Railroad Utility Products and Services business. According to the Association of American Railroads or AAR, rail traffic finished 2017 on a positive note, in December 14 of the 20 car load categories saw year-over-year gains and intermodal volumes was higher for the 11th consecutive month setting a new annual record. For 2017, the total U.S. railcar load traffic was up 2.9% year-over-year, and intermodal unit were 3.9% higher than prior year. The total combined U.S. traffic in 2017 increased 3.4% compared to last year which is consistent with industry forecast. The AAR reports that the decline in coal transportation due to low natural gas price and environmental concerns regarding the burning of coal has been more than offset by other major categories of freight, However, the lower volumes in coal being transported has resulted in a decrease in heavy haul traffic. Consequently, the Class 1 railroad have been deferring some of the maintenance and repair activities and right-size the inventory levels as they look to conserve cash. We expect that demand for crossties replacement will only be marginally better in 2018, due to lower spending trends. As a result, we expect to see improvement in our treating business serving the North America rail industry, but it will likely be smaller than originally thought and begin late in the third quarter early in the fourth quarter of 2018. On the plus side, we are starting to see a tick-up in commercial pricing after dealing with 12 to 18 months of a difficult pricing environment. The orders that we are getting today won't be reflected in our results until the second and third quarter and some of that pricing will cover the increase cost of untreated…

[Operator Instructions] We’ll go first to Lawrence, Lawrence Alexander of Jefferies.

Good morning could you help with a couple of IHMs can you give your thoughts on working capital use in 2018 compared to 2017 like any gives and takes how you think about D&A and CapEx over say the next three, four years?

Sure Lawrence, this is Mike Zugay calling. The working capital is going to increase because our sales are going from $1.5 million to $1.7 million so we’re going to see a little bit of money put into additional receivables and inventories although we’re going to continue to manage those as appropriately as we can. From a standpoint of other items to be used we at this point in time still do not see at least the current portion in 2018 of using any funds for dividends or share buybacks. As you know and as Leroy has mentioned our next avenue is growth on the top line and we will be looking at mergers and acquisitions, so we see cash flow contributing to that as we go forward in 2018.

Okay. And then your perspective on CapEx and D&A?

Yeah CapEx as Leroy mentioned we’re going to be somewhere between $55 million and $65 million for 2018 about $7.5 million of that amount is the carryover from 2017.

Hey Lawrence, I think our expectation is that the CapEx for us will be around that probably at $55 million mark over the next couple of years based upon some projects that we see in the pipeline. From a D&A standpoint I think this year we’re expecting that will probably be just slightly under $50 million.

Right about $49 million a drop from $53 million Lawrence from 2017.

Okay perfect. Thank you.

You’re welcome.

And we’ll go next to Roger Smith of Bank of America Merrill Lynch.

Thank you and good morning. In RUPS can you stay down some of your capacity to right size that business I mean you did such a good job in CM&C maybe this business costs for the same kind of activity?

Yeah so RUPS is it’s a different animal than CM&C from that perspective so think about our facilities in that segment of the business we essentially are online with all of the class ones which is the predominant amount of our business and we actually took a plant down a few years ago our Green Spring West Virginia plant which is a plant that serve the CSX and at that time we were taking the CSX plant from three that we had operated down to two. Today essentially, we have two plants online for CSX with the DNSF, two with the UP, two with DNS so and then we have the one in Canada that’s online with the CP. So, from the standpoint of serving these Class I, I believe that there would be a high level of discomfort in putting such a large amount of business, placing a large amount of business with a supplier like us that they’re reliant upon for product coming out of only one facility. So, I don’t really see an opportunity to take capacity out from that standpoint. I think the footprint is what the footprint is. We just need to reconsider how we operate, the technology that we use in those facilities, which in most cases is pretty old technology. And I think just look at ways that we can take cost out of business. But it's not going to come through a consolidation, it will come through different efforts.

Okay. It should like you expanded your revolver, I heard correctly to $600 million from $400 million since December 31 if I heard that correctly. And if I did, was there any change in the 2.75 secured leverage rate maintenance covenants recognizing if you do an acquisition it changes a bit.

I think it built into the credit agreement is a bump up in that covenant after we do an acquisition. So, from that standpoint, there is that relief. I think what we're looking at and maybe to clarify is our current agreement before we amended it was a $400 million revolver with the $100 million accordion. So, in total, it was having the availability of $500 million. And all we've done is with our amendment is to increase that to $400 million in the revolver and $200 million in the accordion for a total of $600 million. So, when you look at the difference between the old agreement and the first amendment, it's actually only $100 million more in availability. And we're looking at that for just additional flexibility as we move into 2018.

Just to make I understood. You act I don't know if the right pact or award is, but you action both the $100 million accordion. And then you also have the actual 100. So, you have no accordion left, you right now have the full $600 million currently is that correct?

That is correct.

And the 2.75 secured leverage ratio maintenance covenants, that hasn't changed.

That will not change unless we do a major acquisition when as -- this rate.

Got it. And lastly, has higher copper prices also pressured your PC business, or is I recognize copper has been the main pressure? Just want to know about --?

Yeah, I mean we're seeing pressure there too. But it is copper the main driver of our cost increase in that business.

Thank you very much.

You're welcome.

We'll go next to Liam Burke of B. Riley FBR.

Thank you. Good morning, Leroy. Good morning, Mike.

Hi Liam.

Leroy you mentioned in your prepared comments that you had an increase in demand in bonded insulated joints. But the rail CapEx spend all delay the pickup in the crossties business. Generally, I would think there will be correlation there between maintenance CapEx above bonded insulated joints and ties. Why the disconnect?

Yeah, that's good question Liam. I don't really have a good answer for you. I mean we actually saw the pretty good year all the way around on the rail joint side. I think some of that was market share additional market share that we were able to take. So, I think that from that standpoint that has helped volumes in that particular business segment for the rail. While we haven’t seen it in the other parts. And in addition, we've been able, that’s a part of the business that we actually are able to international and export. It will be certainly a lot easier than we can on the crossties side. So, we saw a pickup on some sales -from that standpoint as well.

Is there big, business big enough to move the needle on the RUPS side of the revenue?

Not really. I mean crossties drive that business. The two maintenances away businesses that we have today are nice additions. But in any given year they're going to impact the EBITDA by maybe $2 million to $3 million plus or minus.

Okay. And on Stickney, do you have a sense as to when that consolidation will be completed?

About midyear.

Okay. So, it hasn't changed. You're pretty much on track for midyear completion?

Yeah, we think so. I mean the cold weather, the cold weather snap that occurred at the end of the last year early into this year, lost the little bit of time for us. But we still feel pretty good about more or less being online with that right around midyear. So, nothing next material enough of change to where, we’re concerned at this point.

Great, thank you Leroy.

Thank you.

We have no further questions. I'd like to turn the call back over to our CEO Leroy Ball, for any addition of closing comments.

Well, thank to everyone, who took the time to participate on today’s call, we remain energize to deliver another great year performance and thank you for your interest in our company and the support you provide, as we continue to make positive change, have a great day everyone.

Thank you.

That does conclude our conference for today, we thank you for your participation. You may now disconnect.