Tronox Holdings plc (TROX) Q4 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Tronox Limited Fourth Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Brennen Arndt, Vice President, Investor Relations. Sir, you may begin.

Thank you, Chelsea, and welcome everyone. As you saw in the press release we issued this morning, we’re very pleased to announce that Tronox has signed a definitive agreement to acquire Cristal’s TiO2 business. We also announced very strong fourth quarter 2016 results. Tom Casey, Chairman and CEO, will review both with you this morning. Joining us for the Q&A session will be Willem Van Niekerk, our Senior Vice President of Business Development and Strategic Planning; Chuck Mancini, Senior Vice President and Chief Integration Officer; Richard Muglia, our Senior Vice President and General Counsel; Tim Carlson, Senior Vice President and Chief Financial Officer; Jean-François Turgeon, President of Tronox TiO2; and Ed Flynn, President of Tronox Alkali. We’ll be using slides this morning as we move through the conference call. Those of you listening by the Internet broadcast through our website should already have them, and for those of you listening by telephone, if you haven’t already done so, you can access them on our website at tronox.com. Slide two, I will not read the forward-looking statement on this slide, but instead say that the statement applies in full to our remarks this morning.

Thanks, Brennen. Those of you who know me will know that I don’t normally speak and I whisper when I’m talking to you, or actually when I’m talking to anybody, but I seem to have lost my voice at a very opportune time. So please excuse me. I’ll try to be clear, and if not, please follow-up in the questions. Thanks. Let me say that we are very pleased to make two significant announcements today. First, we are announcing very strong fourth quarter results. Specifically, we reported revenue of $548 million, adjusted EBITDA of $105 million, which is an increase over what is typically a seasonally stronger third quarter. Cash from operations was $88 million and EPS of $1 which reflects a major accrual reversed, which will be discussed later. For now, I just want to say that the global pigment selling prices continue to rise in the fourth quarter. Sales volumes were stronger than any fourth quarter since 2007. Our production plants continue to run at near maximum utilization rates and inventories up and down the supply chain remain tight as far as we can see. We are already seeing pigment selling prices increase in the first quarter, and we believe these results establish that the recovery in TiO2 is strong and durable, but we also want to announce what we believe is an even more important development in the creation of increased shareholder value for Tronox investors, and that is, the signing of a definitive agreement to acquire Cristal’s TiO2 business. Together, we will form the world’s largest TiO2 producer and we’ll be the most highly integrated pigment and mineral sands producer in the world. This is a highly strategic and synergistic combination that will bring significant value to our shareholders, our customers, and our employees. The acquisition is expected to be both substantially accretive and deleveraging upon closing. Let me be more specific. We expect to realize pre-tax run-rate synergies of over $100 million by year one and over $200 million by year three. We expect EPS accretion of more than 100% versus Tronox standalone in year one. And in the first three years, we expect EPS pro forma growth of 70%, compounded. We expect it will increase our EBITDA by 60% in the year one versus Tronox standalone, with pro forma growth of 30% in the first three years and free cash flow to increase by 90% versus standalone Tronox in year one, with pro forma growth of 60% in the first three years. The transaction will enable rapid deleveraging with no additional permanent debt being taken on. [indiscernible] (05:36) leverage ratio by more than 50%. The combination will significantly increase our growth rates by creating faster-growing EBITDA, free cash flow, and earnings streams. It expands our global footprint and increases our participation in faster-growing emerging markets. This is an opportune time for this combination as it allows both companies to broaden the customer bases and geographic presence while expanding the degree of vertical integration that will enable lower cost production for the benefit of all customers. The terms of the deal are fairly straightforward. Cristal shareholders will receive $1.673 billion of cash and Class A ordinary shares representing 24% ownership in pro forma Tronox. Concurrently with this announcement, we have announced our intent to begin a process to sell our Alkali business. The cash portion of the purchase consideration will be funded through the proceeds from the sale of assets including Alkali. If required, the purchase consideration will be supported by temporary bridge financing. As a result of this acquisition, Tronox will have extensive titanium feedstock reserves and the ilmenite inventory. We’ll use these reserves to supply our slag furnaces and we can monetize the balance. As we have said in previous calls, the ilmenite market is recovering and selling this surplus supply is looking increasingly attractive. On slide four, we talk about the strategic rationale. We are very excited to have signed this agreement with Cristal. They have world-class TiO2 operations that are highly complementary with Tronox’s asset base. We have followed Cristal closely over the years and have been in discussions with them on and off about a possible combination for almost 18 months. So we are very excited now to have the opportunity to finally combine our businesses. Our transaction will create substantial new shareholder value such that we’ll deleverage the new company’s balance sheet by 50%. In my view, the substantial accretion and deleveraging we expect to occur upon closing is one of the most powerful aspects of our combination. New Tronox will have the largest scale of any TiO2 producer with 1.3 million metric tons of TiO2 pigment production capacity produced from 11 pigment plants and 1.5 million metric tons of feedstock capacity, six ilmenite mining locations, two slag productions plants, and one synthetic rutile production plant. We will be approximately 85% vertically integrated on a net TiO2 basis. The benefits of our scale and level of integration are substantial, as they allow us to run our mining and feedstock assets at full utilization which will minimize our cost per ton and maximize our margins, because we know we have a guaranteed customer for all mineral sands product that we produce. Mineral sands asset returns will increase as a result of our reduced exposure to the volatility in the high grade feedstock merchant market. As I said, 100% of our high grade feedstock will be consumed internally. This increased vertical integration will also enable enhanced margin capture throughout future cycles. Moving to slide five for a summary of the transaction. 76% of the new pro forma Tronox will be held by Tronox shareholders and 24% will be held by Cristal shareholders. There is a three year lock-up that permits Cristal or its shareholders to sell a maximum of 4% in aggregate of the total shares during that period and prohibits them from acquiring more than 24% of total shares for three years after closing. The size of the company’s board of directors will remain unchanged to nine members. Cristal’s owners will receive two of the nine existing seats. Exxaro Mineral Resources will remain on the board with its three seats. I will remain Chairman and CEO and our corporate offices will remain in Stamford, Connecticut. We will continue as a public company listed on the New York Stock Exchange and remain incorporated in the State of Western Australia, Australia, as we are today. The acquisition has received the unanimous approval of the Tronox, Cristal, and Tasnee board of directors. The transaction is subject to the approval of Tronox shareholders for Class A and Class B voting together as well as regulatory approval and customary closing conditions. Closing is expected to occur in late 2017. Tronox anticipates completing the sale process of its Alkali business in the third quarter of 2017. For those of you that may not be familiar with the breadth and depth of Cristal’s operations, here is a snapshot. Cristal is the world’s second TiO2 pigment producer with 858,000 metric tons of TiO2 production capacity. 84% of their production uses the chloride technology. Their financial performance across the cycle has been strong with average EBITDA of $385 million over the 2011-2016 period. Their operations are high-quality with well-invested assets and highly automated manufacturing processes. They are highly integrated into mining, chlorine, air separation, energy facilities, and they have a 500,000 metric ton slag production complex currently under commissioning. They are the largest producer of merchant high-quality titanium tetrachloride known as TiCl and the global leader in specialty, catalyst grade TiO2. They also operate mineral sands operations in Australia with 258 million tons of reserves. Moving to slide seven, we’ll look at the scale of the combined enterprise. The new Tronox will form the largest TiO2 producer with 11 pigment plants in eight countries, with more than 1.3 million tons of production capacity representing 15% of the world’s TiO2 capacity. On slide eight, we discuss that we will also become the world’s second largest mineral sands producer and be approximately 85% vertically integrated on a net TiO2 basis. As I mentioned earlier, one of the most significant and powerful benefits of our combination lies in the effects of our greater integration. It will allow the guaranteed sale of 100% of our feedstock production. While those facilities, the feedstock production facilities are themselves operating at a 100% of capacity along with normal efficiency improvements, we continually make, this will enable our Mineral Sands business to operate at as low a cost structure as is possible. Mineral sands asset returns will increase as a result of our reduced exposure to the volatility in high-grade feedstock merchant market. And so 100% of our high-grade feedstock will be consumed internally. This increased vertical integration will also enable enhanced margin capture throughout the cycle. Turning to slide 9, here’s a look at the expanded and balanced global footprint of new Tronox. With 11 pigment plants in eight countries, and six mines and mineral separation plants in three countries and two smelters, and one synthetic rutile plant, our global expanse will enable us to better serve our customers worldwide by reducing the average distance to their facilities and enabling a more diverse suite of products for their specific needs. Slide 10, the balanced geographical sales mix is shown across the five major markets with 28% of sales in Asia-Pacific, 27% in North America, 20% in Europe, 14% in the Middle East and Africa, and 11% in Latin America. We will benefit from significantly greater participation in the higher growth emerging markets, and we will now participate in the specialty anatase and ultrafine markets. On slide 11, we again discuss shareholder value creation. We think this transaction will result in significant shareholder creation. We had average EBITDA performance over the period 2011 to 2016, Tronox and Cristal have combined to deliver an average $813 million EBITDA rate annually. The increased margin, when we become 85% self supplied with feedstock will combine with synergies, that we have already said, we estimate will be over $100 million in year one, rising to over $200 million in year three. Based on this historical performance and the identified signatories, we should exceed $1 billion of annual EBITDA by year three. In fact, we believe that the strength and durability of the recovery in the TiO2 market and the resulting increase in sales of our products could enable us to achieve this milestone even sooner. Slide 12 discusses in more detail, the components of the expected synergies, the growth over the next four years, and the associated cost to achieve them. We anticipate closing late this year. In year one, we expect to generate pre-tax run rate synergies of over a $100 million, growing to over $200 million by year three, and $230 million by year four. These synergies will be derived from a number of areas: logistics, feedstock, operations, SG&A and supply chain. Within these areas, major sources include: running our mineral sands assets at full utilization, which will thus lower our cost per ton, optimizing the value and use of our feedstock, sharing of best practices across complementary technologies, production facilities and production geographies, leveraging the successful operational excellence program in our current TiO2 business, eliminating significant supplier redundancies, reducing average distances to our customers through enhanced global footprint, consolidating third-party spending and redundant functions along with the elimination of redundant corporate costs. Our fourth quarter performance provided a strong finish to 2016, as our TiO2 and Alkali business combined to deliver $126 million of adjusted EBITDA and a $100 million of free cash flow. Driving the performance in TiO2 were a number of factors are our highest fourth quarter and month of December pigment sales volumes, higher pigment selling prices, which increased 1% sequentially and 7% above the prior year, higher feedstock and co-products sales volumes, and continued cost reductions resulting from the success of our Operational Excellence program. As we have said, 2016 marked the recovery in global TiO2 markets. We expect the momentum generated last year to continue in 2017 based on our view that pigment inventories in the aggregate are at or below normal levels at both customer and producer locations across the globe, resulting in continued supply-demand tightness. As a result, we expect another sequential improvement in pigment selling prices in the first quarter. Alkali’s performance was driven by higher production volumes, lower operating costs, and increased production efficiencies. Our cash generation in the quarter reflected the strong performance by both our businesses. We closed the quarter with cash of $248 million, and liquidity of $533 million, up from cash of $202 million and liquidity of $470 million, respectively, as of September 30. And our board declared a quarterly dividend of $0.045 per share. We would normally review our progress in our Operational Excellence program with you in specific detail in this call. But in the appendix of your slides, you’ll find those specifics, such as our cost reduction and working capital reduction performance as well as the EBITDA bridge, showing the sources of our cost reductions and tying the bridge to our reported financial statements so that you can reconcile our performance. But I will say that we are ahead of schedule in meeting our targets. Cumulative cash generated from annual cost reductions totaled $246 million through the end of 2016. Cumulative cash generated from working capital reduction totaled $240 million through the end of 2016. Therefore, total aggregate cash generated from our Operational Excellence program in its first two years is $486 million. I’ll close my remarks by sharing our perspective on 2017. We will work diligently towards closing the acquisition of the Cristal assets by the fourth quarter of this year, and at the same time, continue our laser-like focus on generating high performance on our current portfolio. Tronox as a standalone will continue to perform very well. As you’ve seen, our TiO2 business generated significant momentum in 2016. The momentum comes from higher pigment sales volumes and higher selling prices coupled with a continued strong operating cost performance. We expect that momentum to continue in 2017 because all of the conditions in the market favor remaining tightness in the supply-demand balance. And this include taking into account Chinese pigment producers. We will continue to match our pigment production to meet demand while keeping inventory at or below normal levels. Once again, we are selling all the pigment we make and we are running our pigment production plants at practical full capacity. In December, we announced the pigment price increase, our fourth announcement in the last 12 months. The last three quarters we have raised pigment selling prices by 12% above their first quarter 2016 trough level. And as I said earlier, we expect another sequential increase in selling prices in the first quarter. With respect to the titanium feedstock market, prices for ilmenite, which is the first level titanium feedstock, have more than doubled in the last three months in China. Because this is the input into of higher grade feedstock production, they will add cost pressure to producers of those high-grade feedstocks. This should provide further support for rising higher grade feedstock selling prices. If this occurs, they will provide cost pressure on non-integrated pigment producers, providing further motivation for pigment selling prices in 2017. Under that scenario, we, of course, will benefit from rising margins at both the mineral sands level and the pigment level with respect to our own CP slag inventory and production levels. We signed 100,000 metric ton supply contract for delivery of slag in 2017. This will allow us to further reduce our inventories and to restart furnaces that have been shutdown and to use that additional production to serve our own needs without affecting the market supply-demand balance. In Alkali, 2016 performance included a number of one-off items that impacted results. Those items are now behind us and fourth quarter EBITDA of $46 million confirm them. In 2017, we expect Alkali to return to adjusted EBITDA and free cash flow levels that overcome and exceed the one-off items of last year, and deliver another year of solid adjusted EBITDA and free cash flow. With that, I thank you. Again, I apologize for my voice and we’ll open the call for questions.

[Operator Instructions] And our first question comes from the line Hassan Ahmed with Alembic Global Advisors. Your line is now open.

Good morning, Tom.

Good morning.

Well, first of all, we are not in conversations with anybody. With the announcement that we made this morning, we will initiate a process, and we’ll go through a process where bankers will assist us. Credit Suisse is working with us on this. We’ll issue a information memorandum. The last process that we participated in was very robust, and had multiple bidders, and we expect that it will be robust again. So, we’re not talking to anybody now. And so, I want to clarify that. But we expect that this will be a very robust process. And we have every expectation that we’re going to get satisfactory bids for that business. It’s in very good shape. The market is clearing, we think, and so we’re optimistic about it.

Understood. Now, again, deal related sort of two parts. One is a relatively simple one which is, any commentary about any breakup fees? So that’s part one. Part two is, you guys did a very good job at laying out the sort of medium turn EPS, EBITDA and free cash flow sort of accretion numbers. If you could just give us some sort of guidance around what sort of titanium dioxide and ore pricing assumptions you have behind those numbers? Again, not looking for absolute pricing, but just some sort of commentary about -are those numbers being backed by significant improvements, moderate improvements, any sort of directional guide would be appreciated?

With respect to the accretion and the growth rates, again, it’s important that when we talked about the growth rates of EPS accretion of over 100% for example or EBITDA by over 60%, those were not mid-term or long-term forecasts. Those were year one forecasts. That’s basically 2018 forecasts for us. So, short-term accretion, short-term increases in growth. And the prices we assumed to get to those numbers are very similar to the major consulting firm’s middle range price, not their high price, not their optimistic price, not their peak price, but sort of their middle of the road price, which we believe, at least for the short term, it’s very close to what we are forecasting for our own internal purposes.

Very helpful, Tom. Thank you so much.

Okay.

Thank you. And our next question comes from the line of Roger Spitz with Bank of America Merrill Lynch. Your line is now open.

Yeah. Thank you, and good morning.

Good morning.

Just to be clear, sorry about my voice as well. Are you purchasing all of Cristal including the Australian Mineral Sands business, but excluding the Jazan, Saudi slag facility?

Yes, that’s exactly right. All of the pigment plants, all of the mineral separations, all of the mineral sands.

Yes.

And when is Jazan slag plant expected to be online?

It’s not clear. They are commissioning that facility and we are in negotiations with them to purchase it. But until we see what happens with respect to the commissioning process. Of course, we don’t have to make a decision on that, and we won’t. but you are right about the Australian mineral sands assets and all the other TiO2 assets of Cristal, we are buying.

What is Cristal’s 2016 EBITDA? You’ve given the five-year average. Is it possible to provide us with the 2016 EBITDA?

Yes, it’s still active. It will run for another 18 months or two years or so, and then there is some surplus inventory that will continue to supply that plant. After that for probably about four years. And then, as I said in the main presentation, we have a very substantial mineral sands reserve that if we want to we can easily fund to supply that. So, that’s yes, that’s the answer to that question.

Thank you very much.

You’re welcome.

Thank you. And our next question comes from the line of James Finnerty with Citi. Your line is now open.

Hi. Good morning, Tom.

Good morning, James.

It assumes at closing that no synergies have been captured. And it assumes that we did not need to incorporate a bridge financing on any of the asset sales that we anticipate for funding the cash component.

Okay. So you can do the math after that.

So then you can do the math after that.

It was both. There were some strategics and there were some sponsor bidders and there were multiple items. I don’t obviously know the exact number, but it was a very robust process.

And if for any reason you’re unable to sell the soda ash business, you still intend to go ahead with the acquisition of Cristal and get bridge financing, et cetera?

Okay. Thank you. And I hope you feel better.

Thank you very much.

Thank you. And our next question comes from the line of Brian Morgan with Morgan Stanley. Your line is now open.

Hi, Tom. Thanks for taking the call even with your voice as it is. Could you just give us an idea of where these plants that you’re buying sits in the cost curve currently and where you think they’ll end up once you’ve got all the synergies in place?

I think there is room for improvement on their performance, just as there’s room for improvement on our performance. And we’ll be going in that way. One of the plants that we are particularly optimistic about improving is the Yanbu Plant in Saudi Arabia. Because the assets in Yanbu are basically obtained under license from our predecessor company. And in essence, are the same assets that we have in Hamilton, Mississippi, except the production of Yanbu is not the same as the production out of Hamilton. So we believe that the team that runs Hamilton will be able to help the team members in Yanbu to very quickly improve the performance of that plant.

Thanks, Tom. So was Cristal’s EBITDA margin, let’s say, in 2016, higher or lower than Tronox’s Titanium Dioxide?

Lower.

Lower. Okay, cool. Thanks. Thanks very much.

Yeah.

Thank you. And our next question comes from the line of Tarek Hamid with JPMorgan. Your line is now open.

Yes.

Care to elaborate on that at all?

All right, great. Thank you. And then, can you just go over why the decision not to secure bridge financing?

I’m sorry, not to what?

Secure bridge financing?

Why did we decide not to do share [ph] but (43:02) bridge financing?

Great.

Our strategy is to replace lower growing assets with higher growing assets.

Great. Thank you.

Thank you. And our next question comes from the line of James Oberholzer with Macquarie. Your line is now open.

Thank you for struggling through Tom, and I hope your voice [indiscernible] (44:11).

Thank you, James.

And two questions from my side. The first is just on the proposed share issue. So will this be a new issue or could this potentially offer a mechanism for existing shareholders to dilute and has Exxaro intimated any intentions to that effect?

Thank you. And then could you also just remind me how the transaction may facilitate the usage of your existing tax attributes and how those are ring-fenced?

Great. Thank you.

Richard O’Reilly: Okay. Thank you. Good morning. I have several questions. And, Tom, if you want to let others answer to save your voice, that’s fine. It looks like on the first year’s savings, about half of that is from SG&A. And is Cristal’s headquarter still located in the Baltimore area?

It’s Willem van Niekerk. Their U.S. head office is still in the Baltimore area. I believe they have sold their [ph] Kingdom (47:26) office, head office is still in Jeddah and they also have an office in Amsterdam in the Netherlands. Richard O’Reilly: Okay. So that would account for a large part of the SG&A savings the first year, the corporate stuff?

Yeah. There is a lot of corporate savings that we need to look at including offices as well as R&D, et cetera. So we think there’s a number of potential SG&A savings. Richard O’Reilly:

Richard O’Reilly:

Well I mean, I think fundamentally the folks in Alkali understand that they have a strategic competitive advantage against 75% of the synthetic production in the world. And so they understand it’s a good business. They like working for Mr. Casey, but they’ve been through this movie before and they saw how it turned out. So I think folks in Alkali will be fine. Richard O’Reilly: Okay. Good Okay. Thanks a lot, guys.

Thank you. And we have a follow-up question from the line of James Finnerty with Citi. Your line is now open.

Hi. Just a follow-up on the tax attributes. Just to be clear, all the tax attributes will stay with Tronox. The plan is not to take any attributes and send them off with the soda ash business?

That’s right.

Okay. Just wanted to be clear on that. Thank you.

Yeah. Thanks, Tom. During 2016, we initiated a corporate restructuring program to simplify our corporate, our finance, and our legal structure which allowed us to streamline operational, administrative and commercial activities. As part of the restructuring program, we also revised our intercompany financing structure to better align our cash flow needs. These changes eliminated withholding tax obligations that are under company debt, which resulted in $139 million tax benefit plus $2 million FX loss on the transaction.

Okay. Thank you.

Thank you. And our next question comes from the line of Duffy Fischer with Barclays. Your line is now open.

Hey guys, this is Mike Leithead on for Duffy. I guess, Tom, just wanted to check on your level of comfort, I guess, around the regulatory approval process. I know a peer transaction in the industry a few years ago took a bit longer than initially thought. Can you just talk about your level of comfort there?

Sure. We have done an extensive, an analysis of all of the regulatory requirements obviously and we’re very comfortable that we’ll get through that process. Well, I mean, we know from competing every day that this is a global market. We see product from all over the world in every market that we do business in. Our total combined production share is probably 15% of the global market. It’s about comparable to the other largest producer in the United States. We’re second combined on a pro forma basis. We will have the second largest volume. So we don’t think we’re dominating any market. We don’t think that given the dynamics of global markets and the various products that we compete in, there will be any market power that we accumulate through this combination.

Great. And then just a follow-up, I guess, going from the number six producer in the industry to number one in terms of capacity. Does that change at all how you think about kind of operating in the industry either in terms of supply discipline or your pricing initiatives?

Well, look I think we have tried to be economically rational over these last several years. If there was surplus supply in the market, we slowed down our production, and we did that with respect to pigment. We also did it with respect to mineral sands. You remember over the last couple of years that we shut down about 75,000 tons of pigment production when we felt that all we were doing was adding supply to inventory levels. And we shut down two of our four slag furnaces. I believe, in running the business to produce returns for the owners and one of the benefits of this structure is that at the size that we are at now within this new Tronox combination that we will be able to run our assets more fully, more of the time, and still balance our supply with demand. So you can assume that we will try to run the business for returns to the shareholders whatever that is at any given moment.

Great. Thanks, Tom. Feel better.

Thank you very much.

Thank you. And our next question comes from the line of Rich Bourke with Bloomberg Intelligence. Your line is now open.

Yeah. So, along the regulatory approval that you’ve talked about in addition to Europe and U.S., is there any other jurisdictions, and also, what about customer overlap?

I think, if we have the number correct, there’re nine countries where we file regulatory applications of different kinds, the United States, China, Australia, Europe and then a variety of others. So that’s the answer to that question. There is some customer overlap. We think that we will be able to provide better service, more responsive service and preferably more attractive service to all customers everywhere in the world. So there may be some customer shifting, but we’re confident that that won’t net diminish our sales. If we lose customers in one place, we’re confident that we can pick up customers in another. So we looked at it, but we don’t feel it as a big threat or big negative.

How about that as an opportunity to maybe shift on production and cost cutting along those lines?

As I said in the answer to the prior question, if we’re going to run the entire portfolio in order to enhance returns, given the conditions in the marketplace but we will have hundreds of millions of dollars of synergies that we have already identified and which by the way have been validated by one of the big four auditing firms who do this kind of work. They came in with us, looked at the synergy numbers that we have given you and have validated those numbers. So we’re very confident that we will have a good cost position and that we’ll be able to share our benefits with the market, but we’ll always run further to produce returns for the shareholders, whatever that is, given market conditions at the time.

Thank you.

Thank you. And our next question comes from the line of Brian Lalli with Barclays. Your line is now open.

Great. That’s really helpful. And one more if I may and I apologize if I missed this before. As you look to sell the Alkali business, there’s obviously a large amount of corporate costs at Tronox. Have you thought about or could you give any guidance around sort of what maybe is stranded, again as we sort of think around what that last piece is of the consolidated amount of EBITDA, as we get towards, again closing and the Alkali business being theoretically gone.

Yeah. Let me say that and I’ll let Tim answer this, with respect to the aggregate level of corporate costs, but when we purchased the Alkali, we essentially ran that business as an independent standalone entity. And Ed Flynn and his team basically continued to run it. So we didn’t have a huge amount of corporate costs just for that purpose. I don’t know, Tim, would there be...

That’s exactly right, Tom. There’s a couple of million dollars that’ll be stranded, but that’ll be taken care of easily with the synergies we’ll generate.

That’s great. Thanks for the time, guys. Appreciate it. Feel better, Tom.

Thank you very much.

Thank you. And I’m not showing any further questions at this time. I would now like to turn the call back to Mr. Tom Casey, Chairman and CEO for closing remarks.

Thank you very much. And for those of you who are still on the line after an hour-and-a-half, I appreciate you listening to me whisper to you for this period. I hope I was able to make myself clear, and I can tell you that we are very excited about the creation of value for shareholders and the deleveraging and de-risking of the new business that this creates for all participants, lenders, customers, employees. We think this is a great transaction. We think that 2016 ended on a very powerful note and the combination of the two developments means that our future is looking very, very bright. We’re going to go back now. We’re going to work hard on the integrating, developing an integration plan. We’re going to work on getting through all the regulatory environment. We’ll keep you posted on progress as we move forward. I appreciate your support. Thank you very much. Goodbye.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.