Westlake Corporation (WLK) Q4 2014 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation's Fourth Quarter and Full Year 2014 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, February 24, 2015. I would now like to turn the call over to today's host, Dave Hansen, Westlake Chemical Corporation's Senior Vice President of Administration. Sir, you may now begin. David R. Hansen - Senior VP-Administration & Head-Media Relations: Thank you very much. Good morning, everyone, and welcome to the Westlake Chemical Corporation's fourth quarter and full year 2014 conference call. I am joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer; and other members of our management team. The conference call agenda will begin with Albert, who will open with a few comments regarding Westlake's performance in the fourth quarter and full year 2014, followed by a current perspective on the industry. Steve will then provide a more detailed look at our financial and operating results. Finally, Albert will add a few comments regarding – Albert will add a few concluding comments, and then we'll open up the call for discussion questions. At times we may refer to ourselves as Westlake Chemical, reference to Westlake Partners refers to the master limited partnership Westlake Chemical Partners LP. References to OpCo refer to Westlake Chemical OpCo LP, whose assets consist of two ethylene production facilities located in Lake Charles, Louisiana and ethylene production facility located in Calvert City, Kentucky and an ethylene pipeline that runs from Mont Belvieu, Texas to Longview, Texas chemical sites. Today management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs, as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and, thus, are subject to risks or uncertainties. Actual results could differ materially based upon factors including the cyclical nature of the chemical industry; availability, cost and volatility of raw materials, energy and utilities; governmental regulatory actions and political unrest; global economic conditions; industry operating rates; the supply-demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; and other risk factors. This morning, Westlake issued a press release with details of our fourth quarter and full year 2014 financial and operating results. This document is available in the Press Release section of our webpage at westlake.com. A replay of today's call will be available beginning four hours after completion of this call until 11:59 PM Eastern Time on March 3, 2015. The replay may be accessed by dialing the following numbers: domestic callers should dial 1-866-286-8010, international callers may access the replay at 617-801-6888. The access code for both numbers is 85785227. Please note that information reported on this call speaks only as of today, February 24, 2015, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed at our webpage at westlake.com. Now, I'd like to turn the call over to Albert Chao. Albert? Albert Yuan Chao - President, Chief Executive Officer & Director: Thank you, Dave. Good morning, ladies and gentlemen, and thank you for joining us on our earnings call to discuss our fourth quarter and full year results. In this morning's press release, we reported record quarterly net income of $183 million, or $1.37 per diluted share, on sales of $1.1 billion for the fourth quarter of 2014. Our record fourth quarter results concluded a record year for Westlake with earnings of $679 million or $5.07 per diluted share, on sales of $4.4 billion. The improvement in results year-over-year was driven by our expanded ethylene capacity and lower feedstock costs resulting from the conversion of our Calvert City ethylene plant from propane to ethane. These results demonstrate the benefits of our further integration in ethylene and chlorine, access to low-cost feedstocks and our position as one of the most integrated vinyls producer in North America. In 2014, we achieved several important accomplishments as we continued to integrate our vinyls chain and broaden our products to include specialty PVC resin. The first major accomplishment in 2014 was the expansion of our ethylene cracker at our Calvert City site along with its conversion to allow flexibility of its feedstock to create ethane, adding approximately 180 million pounds of ethylene capacity per annum. Another important accomplishment was expansion of our Calvert City PVC capacity, which added approximately 200 million pounds annually. These investments enhance our vinyls chain integration and leverage our access to low-cost feedstock. In the third quarter, we completed the initial public offering of Westlake Chemical Partners; a master limited partnership, which highlights the value stream of our ethylene assets. We also completed the strategic acquisition of Vinnolit, our specialty PVC resin business in Europe. This acquisition makes Westlake the global leader in specialty PVC resin, expands our technology and product development capacity, and grows our global presence. Also, 2014 marked our first full year of operations from our investments in the new world-scale chlor-alkali facility in Geismar, Louisiana, which started up at the end of fourth quarter in 2013, and which improves our vinyls chain cost position and strengthens our integrated position as a low-cost vinyls producer. We have invest over $1.5 billion since 2013 to integrate our business and expand our specialty products that will bring enhanced margins. 2014 and the fourth quarter were record periods and although the lower oil price environment may cause margins to ease. Our strong cost and market position remains advantaged. I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the fourth quarter and full year 2014.

Thank you, Albert, and good morning everyone. I will begin with our consolidated financial results, followed by a detailed review of our Olefins and Vinyls segment results. In this morning's press release, Westlake reported net income for the fourth quarter of 2014 of $183 million, or $1.37 per diluted share, compared to a $171 million, or $1.27 per diluted share, reported in the fourth quarter of 2013. Net income in the fourth quarter of 2014 was negatively impacted by $4.4 million or $0.03 per diluted share as a result of an impairment of an equity investment in China. Net sales for the fourth quarter of 2014 of $1.1 billion increased $184 million compared to the same period of 2013, primarily due to sales attributable to the acquisition of Vinnolit, partially offset by lower styrene and ethylene co-products sales volumes. Income from operations was $302 million in the fourth quarter of 2014, an increase of $44 million over the fourth quarter of 2013, which was primarily the result of higher integrated Vinyls' margins, largely due to lower feedstock cost resulting from the ethylene expansion and feedstock conversion of our Calvert City ethylene unit. Westlake's net sales for the fourth quarter of 2014 of $1.1 billion decreased $117 million from net sales in the third quarter, primarily due to lower sales prices for most of our major products and lower sales volumes for polyethylene, PVC resin and building products, partially offset by incremental sales attributable to the acquisition of Vinnolit, which closed in the third quarter of 2014. Fourth quarter income from operations of $302 million decreased by $5 million, as compared to the third quarter, which was primarily the result of lower sales prices for most of our major products and the impact of a planned maintenance turnaround at our Gendorf, Germany site in the fourth quarter. For the full year 2014, sales revenues was $4.4 billion, an increase over net sales of $3.8 billion for the full year 2013, primarily due to sales contributed by our specialty businesses including Vinnolit and North American specialty products, our specially PVC pipe business, which we acquired in July 2014 and May 2013 respectively. Our results also benefited from higher sales prices for most of our major products and higher ethylene, caustic and polyethylene sales volumes, partially offset by lower ethylene co-products and styrene sales volumes. Operating income for the full year 2014 was $1.1 billion, an increase of $171 million over the full year 2013. This improvement was mainly driven by improved olefins integrated product margins, primarily as a result of higher polyethylene sales prices and the increased ethylene production at our Lake Charles site after their first quarter 2013 completion of the Petro 2 ethylene unit expansion. The increase in income from operations was partially offset by a lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with several planned and unplanned outages. Our utilization of the FIFO method of accounting resulted in an unfavorable impact of $17 million pre-tax or approximately $0.09 per share in the fourth quarter, as compared to what earnings would've been reported on the LIFO method. Please bear in mind that this calculation is only an estimate and has not been audited. Let's move on to review the performance of our two segments, starting with our Olefins segment. The Olefins segment reported income from operations of $244 million, on sales of $599 million during the fourth quarter of 2014, compared to operating income of $247 million, on sales of $668 million in the fourth quarter of 2013. Olefins segment sales and operating income were lower mainly due to lower sales volumes. Fourth quarter Olefins segment operating income of $244 million decreased by $15 million over the third quarter of 2014, while sales of $599 million decreased by $104 million over the same period. The lower results were primarily due to lower sales volumes for polyethylene and styrene and lower polyethylene sales prices. Full-year 2014 income from operations for the Olefins segment was approximately $1 billion in 2014, and increased by approximately $181 million over full year 2013. This increase was predominantly driven by improved olefins integrated product margins that were the result of the increased ethylene production at our Lake Charles site after the first quarter 2013 completion of the Petro 2 ethylene unit expansion and its conversion to 100% ethane feedstock capability. In addition, olefins integrated product margins benefited from an increase in sales prices that outpaced increases in feedstock and energy cost. Now moving onto the Vinyls segment, the Vinyls segment reported operating income of $66 million in the fourth quarter of 2014, on sales of $537 million as compared to operating income of $19 million, on sales of $283 million in the fourth quarter of 2013. The increase in sales was driven primarily by incremental sales from our acquisition of Vinnolit. The increase in operating income was primarily due to the utilization of lower-cost ethane feedstock following our conversion from propane feedstock at our Calvert City facility, which was completed in early 2014. Fourth quarter 2013 was negatively impacted by higher cost propane feedstock that was utilized at our Calvert City facility prior to its conversion to ethane feedstock, while the fourth quarter of 2014 was negatively impacted by approximately $7 million, as a result of the planned turnaround at our Gendorf site. The Vinyls segment operating income of $66 million in the fourth quarter of 2014 increased by $7 million compared to the third quarter of 2014, while sales of $537 million decreased by $13 million. Sales declined due to lower sales volumes and prices for PVC and building products, while the increase in operating income in the fourth quarter was primarily the result of improved chlor-alkali and ethylene operating rates and lower feedstock costs. For the full year 2014, sales revenue of $1.7 billion for the Vinyls segment increased by $486 million from full year 2013, while operating income of $143 million was lower by $12 million for the same period. The increase in sales was attributable to sales contributed by Vinnolit and North American specialty products, higher caustic sales volumes and higher PVC resin sales prices, partially offset by lower ethylene co-products sales volumes. The decrease in operating income was mainly caused by lost sales, over production rates and the expensing of $27 million related to unabsorbed fixed manufacturing costs and other costs associated with maintenance turnaround at our Gendorf and Calvert City sites, and Calvert City's ethylene plant feedstock conversion and expansion project. In addition income from operations for 2014 was negatively impacted by a valuation adjustment of approximately $17 million to reflect Vinnolit's inventory at fair value at closing. The severe winter weather experienced in early 2014 and prior to the conversion of the Calvert City ethylene plant feedstock conversion or vinyls integrated product margins attributable to significantly higher propane costs. Next, let's turn our attention to the balance sheet and the statement of cash flow. During 2014, we generated over $1 billion in cash from operating activities. Our liquidity position remains strong with a cash balance of $881 million while total debt was unchanged at $764 million at the end of December. In 2014, our capital expenditures were $431 million and we spent $611 million on our acquisition of Vinnolit. Additionally, we raised $286 million in proceeds on the initial public offering of Westlake Partners. Since this is the beginning of the year, I expect some of you will have some modeling questions. As a result of our detailed planning for our Petro 1 turnaround and expansion, we are now expecting this project to occur in the first half of 2016 and therefore, our 2015 capital spending has been adjusted down as expected to be in the range of $400 million to $450 million, which we will fund from our cash balances. We expect interest expense to be in the range of $36 million to $40 million, and we expect an effective tax rate of approximately 35%. Cost management is always a part of our everyday operations, and we will continue to focus on improving our cost structure in this lower oil price environment. Likewise, we'll be closely managing capital expenditures, to assure they meet our risk-adjusted return hurdles. Now, I'd like to turn the call back over to Albert to make some closing comments. Albert? Albert Yuan Chao - President, Chief Executive Officer & Director: Thank you, Steve. Westlake had record earnings in 2014, driven by the benefits of our investments to integrate our business by expanding our production and capacities in chlor-alkali and ethylene, while gaining access to lower cost ethane feedstock in Calvert City and acquiring Vinnolit, the global leader in specialty PVC resin. Looking forward to 2015, we believe that U.S. industry conditions remain favorable as feedstock costs continue to remain low, benefiting from abundant supplies of natural gas and natural gas liquids. But we believe our investments in ethylene, chlor-alkali and specialty PVC products will continue to sustain the global competitive position of our business. We expect to see the full benefit from the 180 million pounds ethylene expansion and our conversion to low cost ethylene feedstock in Calvert City and improved operating rates from the Geismar chlor-alkali unit, as U.S. building and construction activities continue to improve. In Europe, business conditions remain challenged due to the slow growth of the European economy and devaluing currencies. However, the lower value euro and feedstock costs, due to lower oil prices are pointing toward improved exports from Europe into global markets. Our focus remains on opportunities that bring value and allow us to expand our integration, improve our cost position, and enhance margins, while working towards the expansion of Petro 1 ethylene unit at our Lake Charles facility in the first half of 2016, which will increase our vertical integration by adding approximately 250 million pounds of annual ethylene capacity. We continue to look for investment opportunities that provide returns higher than our cost of capital that will drive earnings growth and bring value to our shareholders. Thank you very much for listening to our earnings call this morning. Now, I'll turn the call back over to Dave Hansen. David R. Hansen - Senior VP-Administration & Head-Media Relations: Thank you, Albert. Ladies and gentlemen, before we begin taking questions, I would like to remind you that a replay of this teleconference will be available starting four hours after we conclude the call. We will provide that number again at the end of the call. Operator, we're now prepared to take questions.

Please stand by for your first question, which comes from the line of Arun Viswanathan of RBC Capital Markets. Please proceed.

Hi. Thanks. Yes, so I just wanted to understand the expansion project, was there something that happened that had you guys push it out a little bit? And I guess beyond this, are there any further projects that you are contemplating to increase your capacity? Thanks.

Good morning, Arun. It's Steve. The timing for this expansion has always been, as we've guided, to be late 2015 or early 2016 as we've said in our detailed planning, our thinking now still has remained just as we said, would be in that first half of 2016, so nothing more than the detailed planning. And as we look at and assess projects, we'll talk about those, but we have nothing new to announce at this stage.

Okay, great. And maybe just help me understand what you're seeing in both Olefins and Vinyls. Currently, have you noticed any increased customer de-stocking in polyethylene? And then has there been a flattening of the cost curve in PVC, making North American exports less viable? And then also, maybe if you can just talk about recent conditions in caustic? There's been some price increases. Are you seeing any traction in those markets? Thanks. Albert Yuan Chao - President, Chief Executive Officer & Director: Sure. As you know, the recent past few weeks, oil price has stabilized and has come up a little bit. As a result, the Asian market price of both polyethylene and PVC is trending up, especially now that this week the Chinese New Year holidays will be over. People will get back to business and we believe that the demand will improve. So even though some industry consultants are forecasting prices to drop further, it's yet to be seen, because the consultants are looking at the oil price to be lower in second quarter with the future markets for oil price actually trending upwards. So we don't know yet until we see how the oil price behaves. The fundamental demand for petrochemical products are quite good as we hear that economies in Europe tend to be improving and the economies in Europe also forecast that this year will be better than last year; economic growth. So we see the fundamental demand with oil prices in the world will be better and we expect the business to improve further. From the competitive position for PVC from the U.S., as you may know that China is the largest PVC market, about 80% of that production is from coal-based and because of dropping oil prices and without beginning to drop (23:55) coal prices, the Chinese coal-based PVC manufacturing become less competitive. So actually the potential for U.S. to export in the global market has actually improved with lower oil prices. Coming to the caustic market, there has been announced price increases in the caustic market for this year. There has been some give and take. On the other hand, the demand for chlorine, as we're coming into the building season in the spring, would increase. And with increased production of chlorine, there will be increased production in caustic as well. So depending how the U.S. economy goes, whether the caustic price increases can be pushed through or not, are yet to be seen.

I'm sorry. Thanks for that detail. And then just one last follow-up, given that your CapEx now is $400 million to $450 million, would you be deploying cash towards your newly announced buyback program? Or where do you see increased cash being used? Thanks.

Certainly, the program that we've had authorized by the board is an opportunistic program and certainly we'll continue to look for ways to deploy capital as we see opportunities. And as you know we've looked at deploying it on projects, but also returning it to investors. So that's certainly one of the opportunities.

Great. Thanks a lot. David R. Hansen - Senior VP-Administration & Head-Media Relations: You're welcome.

Your next question comes from the line of Edlain Rodriguez of UBS. Please go ahead.

Thank you. Good morning, guys.

Good morning.

Albert, quick question, I mean one of your competitors was trying to see if they can MLP, it's chlor-alkali business. Would your assets be eligible for that? And also, is this something you would contemplate doing, especially given your experience in the ethylene MLP world?

Edlain, it's Steve. I guess, what I would say is, we always look for opportunities to grow Westlake Partners and things that qualify, we'll continue to assess.

Okay. And the other question is like in terms of your cash, you have a lot of cash on the balance sheet. You're going to generate a lot of cash. There are many assets probably would be available in the Chemical sector, I mean would Westlake be interested in further consolidation in the space or in opportunistic assets?

Well, as we've consistently said, we assess opportunities that are in our space or those that we think we can bring value to and that's continuing – and we continue to look at those opportunities that we think we can bring value to.

Okay. Thank you. David R. Hansen - Senior VP-Administration & Head-Media Relations: You're welcome.

The next question comes from the line of Brian Maguire of Goldman Sachs. Please go ahead. Brian P. Maguire - Goldman Sachs & Co.: Hey, good morning, guys.

Good morning, Brian. Albert Yuan Chao - President, Chief Executive Officer & Director: Good morning. Brian P. Maguire - Goldman Sachs & Co.: It seems like the industry built a lot of inventory for polyethylene in the fourth quarter and into January, looks some consultants reporting, it's in the 40-day, 45-day range versus 30-day, 35-day historically. Can you just comment on your own sort of inventory levels versus normal for this time of year? And how you'd assess the inventory build that you saw the experience in the fourth quarter? Albert Yuan Chao - President, Chief Executive Officer & Director: Yes. With the falling oil prices and the falling polyethylene price as announced by industry consultants, suddenly our customers are trying to buy as little as possible, they speak, what they need. And eventually polyethylene during the last quarter has built up somewhat, one the other hand there are certain grades, certain polymers in polyethylene still quite short. Now the inventory levels in customer side are quite low. So I think on balance the inventory is quite normal, if you balance between customers and producers. So as oil prices, if it cease falling, and actually reversing, there could be a reversal of the inventory build rather than inventory destocking. Brian P. Maguire - Goldman Sachs & Co.: Great. Thanks. That's helpful. And one of the phenomena we saw in 2014 for ethylene was, a lot of industry outages drove spot prices materially higher than where contract prices were even relative to where polyethylene was, pricing was almost at parity with polyethylene at some point. Looking ahead to 2015 we're now in a different environment, it looks like spot price is at or below, where contract was, just if you could help us frame, what kind of impact that might have on 2015 versus 2014, trying to get a sense of how much spot might have benefited you in 2014; and with something like the one we have in 2015, what kind of impact that might have? Albert Yuan Chao - President, Chief Executive Officer & Director: Certainly. Since we are more or less fully integrated and actually we're net buyers of ethylene. The price of ethylene does not have that much impact on our business. And as we finished our next expansion by the first half of 2016 then we'll be more or less fully integrated. So we totally insulated from the swings in ethylene price. So what's important is really polyethylene price and PVC price and the feedstock, which is I think rather than ethylene price. Brian P. Maguire - Goldman Sachs & Co.: Okay. Great. One last one if I could Steve, any guidance on the FIFO impact for the first quarter? Or is it still too early to tell?

Well, it's still early, but certainly we've continued to see feedstocks remain lower if you were going back from December and so certainly we could continue to see some impact on that, but as we get further into the year you'll be able to see whether we're seeing prices improve or decreasing to get a good sense of that. Brian P. Maguire - Goldman Sachs & Co.: Great. Thanks very much.

You're welcome.

Next question comes from the line of Frank Mitsch of Wells Fargo Securities. Please go ahead.

Good morning, gentlemen. I've got a couple of follow-ups here. Steve, you mentioned you'd be interested in MLP, things into Westlake Partners for assets that qualify, what's your take? Does chlor-alkali qualify for MLP status?

Well, I think we're going to have to assess the opportunities as we see them, Frank. And as AKSA (30:42) goes through their PLR [private letter ruling] process, we'll just have to see what the service rules.

All right. And just as a reminder, how long did it take when you guys applied for your PLR to actually receive it?

It was three months to five months.

All right. Great. And Albert you mentioned that there are certain grades of polyethylene that are sure. How does the overall low density market look? Albert Yuan Chao - President, Chief Executive Officer & Director: Our low density as you know it has a premium value and price to the other polyethylene. And they have some inventory build over the year-end, but I think as the economy improves and the holidays are over in Asia, I think the demand should come back or the demand from the price swing should come back.

Okay, great. And I guess it's been about nine months, since you acquired Vinnolit, what are your thoughts this far into the deal, and I believe there was an expectation of it being about $0.20 accretive on an annual basis. How would you say it's tracking relative to that metric? Albert Yuan Chao - President, Chief Executive Officer & Director: From the business side, it's tracking pretty much as we've expected. From the financial side, as Steve mentioned earlier, because of inventory adjustments and acquisition costs, it has a negative impact for a while. But we believe as the euro has devalued with the ethylene price much lower in Europe than it was before, the industry should be much more competitive.

And then, post the initial expenses of the start-up cost and so forth, we get back to that $0.20 run rate you believe.

Yeah, Frank, as I said those expenses that we had were fully expected as well as the turnaround that we had in Gendorf, Germany was also expected. So you know as I say, none of these were unexpected items in our understanding of the Vinnolit business plan.

All right. Thank you so much. David R. Hansen - Senior VP-Administration & Head-Media Relations: You're welcome.

The next question comes from the line of James Sheehan of SunTrust Robinson Humphrey. Please go ahead.

Good morning, Albert. Albert Yuan Chao - President, Chief Executive Officer & Director: Good morning.

I was wondering if you could just comment on your impression of how ethylene operating rates will trend over the next couple of years. Do you see them moving higher as global demand grows and tightens the supply-demand balance further? Albert Yuan Chao - President, Chief Executive Officer & Director: Yes, ethylene business in the U.S. which is primarily ethane based. It still is on the lowest cost producer in the world, and has still very good margin. And until the first wave of new expansion comes along, which probably is 2017, 2018, I think the U.S. ethylene business will be doing quite well.

How were your ethylene margins tracking so far in the first quarter relative to the fourth quarter? Albert Yuan Chao - President, Chief Executive Officer & Director: Well, as I said earlier, we are integrated to our downstream products, polyethylene and PVC. And actually we are a net ethylene buyer, so as an earlier speaker/questioner has said, suddenly the spot ethylene price has come down, and so it has made U.S. polymer producers more competitive, especially on the vinyls side.

Thank you. And could you comment on your building products volumes during the quarter and what your outlook is for the first quarter? Albert Yuan Chao - President, Chief Executive Officer & Director: Yes, the fourth quarter generally is a slow quarter, seasonally, for building products. And so far, especially last couple of weeks, the weather has been quite bad in the Northeast/Midwest area. But we hope that the warm weather will come back soon and I think with the U.S. economy growing faster than last year, it should be good for the building business this year.

You've listed your vinyls volumes as up 87% for the fourth quarter, could you just give us some color on what that was excluding the Vinnolit acquisition?

Well, the great majority of that was the Vinnolit acquisition. Remember we only had a portion of that in Q3 when we closed Vinnolit, so the great majority of that was Vinnolit volume. As Albert noted, fourth quarter is a seasonally soft period in the North American building markets and so the majority of that was Vinnolit.

Thank you very much. David R. Hansen - Senior VP-Administration & Head-Media Relations: You're welcome.

Your next question comes from the line of Hassan Ahmed of Alembic Global. Please go ahead.

Morning, Albert and Steve.

Good morning. Albert Yuan Chao - President, Chief Executive Officer & Director: Good morning, Hassan.

Quick question around – I know you've touched on this and talked about the nearer term volume side of things. But just wanted a follow-up, obviously volumes weak in Q4, I guess, oil prices all over the place, destocking and the like. Just directionally, just what are you seeing in Q1? And I obviously know Chinese New Year and the like, but sequentially are you seeing volumes up, flat, down? Any directional guidance would be appreciated? Albert Yuan Chao - President, Chief Executive Officer & Director: We see that volume in general is as expected and the first few months, when the industry consultants are forecasting monthly price drops, suddenly the customers are very cautious and they only buy what they need. But I think as soon as they see that the prices bottomed and they will get back to normal and, I said earlier, most of the customers' inventory are quite low.

Fair enough. Now the other question on feedstock flexibility: obviously we've seen ethane versus propane-based margins competing with each other, where propane-based margins for several months were superior to ethane-based ones. So what's your thought process in terms of toggling between the two feedstocks? And how quickly – a) what's the maximum amount of propane you could potentially use? And how quickly could you toggle back and forth? Albert Yuan Chao - President, Chief Executive Officer & Director: Certainly. As you know that, our Lake Charles ethylene plants, one is purely ethane and the other one was a 50/50 E/P [ethane/propane] that we convert to a 100% capability for ethane. And certainly we can add the propane back, as matter of days. We can go back and forth. Our Calvert City was a propane cracker that we converted to ethane. And because of that we also add 180 million pounds additional ethylene capacity. Certainly we can go back to propane, but that will reduce our ethylene production, and we calculated based on the benefits of propane, which today propane, according to IHS, is still higher in cost than ethane. So it's better for us to run ethane and also have 180 million pounds of increased capacity with its margin along with it.

Super. And one final one if I may; obviously there was a lot of chatter around ethane exports and how supply/demand fundamentals may tighten for ethane going forward on the back of these exports. What's your thought process now? Albert Yuan Chao - President, Chief Executive Officer & Director: Yes, that's a good question. Certainly with today's view that ethane exports, with all the extra costs and compared with a naphtha or LPG cracker in Europe or Asia, the ethane exports will be not economical. I guess in the people's view is, in the future, what future naphtha and ethane export will be, but even with naphtha prices very high, it's very expensive to export ethane, especially if you're (38:43) to convert a naphtha cracker to an ethane cracker and put in all the infrastructure to receive ethane.

Very helpful. Thanks so much, Albert. Albert Yuan Chao - President, Chief Executive Officer & Director: You're welcome.

Your next question comes from the line of John Roberts of UBS. Please go ahead. I think that call has dropped out. The next question comes from the line of Brian Maguire, Goldman Sachs. Please go ahead. Brian P. Maguire - Goldman Sachs & Co.: Yeah, just some housekeeping follow-ups. Steve, the $4.4 million equity impairment, was that in corporate or the Vinyls segment and then on the consolidated statement, was that in SG&A or other just where that would be located?

Ladies and gentlemen, I'm afraid, it appears that the speakers' line has disconnected. We will try and get them rejoin as soon as we can. In the meantime, we will re-put the music. (40:05 – 40:59)

Hello sir, you're back in the main call now.

All right. Thank you. Are we live on the call?

You are currently live.

Thank you very much. Ladies and gentlemen, we apologize for the technical interruption for just a moment. And we return back to the questions-and-answers. I believe Mr. Maguire was asking a question and that we can resume that now. Brian P. Maguire - Goldman Sachs & Co.: Can you guys hear me? Albert Yuan Chao - President, Chief Executive Officer & Director: Yes. We can. Brian P. Maguire - Goldman Sachs & Co.: Okay. Yeah. My question was just a housekeeping one on the equity income impairment, the $4.4 million just where to find that on the income statement and then, also between the segments where that got allocated?

It's in the corporate piece, and it hasn't allocated, remains in the corporate piece, Brian. Brian P. Maguire - Goldman Sachs & Co.: Okay. And then just on the income statement would it be SG&A or kind of the other buckets?

It's in – you'll see it in other income and expense. Brian P. Maguire - Goldman Sachs & Co.: Okay. And then, any guidance on turnaround activity in 2015. How it would shake out between the quarters, any planned turnarounds?

There are none planned at this stage. Brian P. Maguire - Goldman Sachs & Co.: Okay. Thanks very much. Albert Yuan Chao - President, Chief Executive Officer & Director: You're welcome. David R. Hansen - Senior VP-Administration & Head-Media Relations: Operator, we're going to have time for just one more call. We apologize for the audio disruption, but one more call please?

One more question and that comes from the line of James Sheehan of SunTrust Robinson Humphrey. Please go ahead.

Thank you. There has been some price increases in the market for chlorine that have been nominated. I was just wondering, if you could comment on the outcome of those, if you think that those will be accepted in the market? Thank you. Albert Yuan Chao - President, Chief Executive Officer & Director: Yes, there's been announcement of chlorine increase by the merchant chlorine producers. And as I said earlier, this spring time is the season when the demand for choline increases and it's time that will tell whether that chlorine increase will be pushed through or not?

Thanks a lot. Albert Yuan Chao - President, Chief Executive Officer & Director: You're welcome. David R. Hansen - Senior VP-Administration & Head-Media Relations: Operator?

The time to Q&A session is now ended. Are there any closing remarks? David R. Hansen - Senior VP-Administration & Head-Media Relations: Thank you very much. We appreciate your participation in today's call. We look forward to you joining us again for our next conference call to discuss our first quarter 2015 results. Thank you very much and have a wonderful day.