Celanese Corp CE
Q2 2013 Earnings Call Transcript
Transcript Call Date 07/19/2013

Operator: Good day, ladies and gentlemen, and welcome to the Celanese Corporation Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instruction will be given at that time. As a reminder, this conference is being recorded.

I would like to introduce our host for today, Mr. Jon Puckett. Sir, please go ahead.

Jon Puckett - VP of IR: Thank you, Karen. Welcome to the Celanese Corporation second quarter 2013 conference call. My name is Jon Puckett, Vice President of Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer and Steven Sterin, Senior Vice President and Chief Financial Officer.

The Celanese Corporation second quarter 2013 earnings release was distributed via Business Wire yesterday after market close. The slides for the call and our prepared comments for the quarter were also posted on our website www.celanese.com in the Investor Relations section. All of these items have been submitted to the SEC in a current report on Form 8-K.

As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation's future objectives and results. Please note the cautionary language contained in the posted slides.

Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included on our website www.celanese.com in the Investor Relations sections as applicable.

This morning we'll begin with introductory comments from Mark Rohr, and then field your questions.

I'd now like to turn the call over to Mark.

Mark C. Rohr - Chairman and CEO: Thanks Jon, and welcome everyone. Since our prepared remarks were released last night, I'll keep my comments brief and open the line for your questions. For the quarter, we reported adjusted earnings of $1.12 per share, which is consistent with expectations of muted seasonality in our end markets and relatively consistent performance.

Coming into the quarter we didn't anticipate favorable tailwinds from the global economy which is why we focused on Celanese specific initiatives to drive growth and I believe our results demonstrate the success we're having with these initiatives. Second quarter segment income margin expanded sequentially to 22.3% for Advanced Engineered Materials, Industrial Specialties and Consumer Specialties. We are very pleased with these results which showcase our success in delivering value to through innovation and marketing.

Segment income margin in Acetyl Intermediates was lower in Q2 than Q1 due to Celanese and customer turnarounds challenges as well as raw material supply issues at one of plants. These items alone reduced Acetyl Intermediates earnings by about $15 million in the second quarter. We generated very healthy operating cash flow of $229 million and adjusted free cash flow of $154 million positioned us well to pursue our growth initiatives and our balanced capital deployment strategy.

Given the economic headwinds we faced this quarter, I am really proud of our team’s ability to deliver the results we did the old fashion way by (earning this). Our growth objectives this year are being achieved by collaboration with customers and commercializing unique applications that align with their needs. We also need to deliver on (indiscernible) Celanese-specific items like productivity and the ramp-up of ethanol production facility in Nanjing. We have lot of sites and a lot of work in front of us to achieve our earnings objectives of 12% growth in 2013 and barring further deterioration in our end markets, we should be able to so.

With that, I'll now turn it over to John for Q&A.

Jon Puckett - VP of IR: Thanks Mark. We have a lot of people on the line. We want to get to as many questions as possible. So please limit yourself to one question and one follow-up. Karen, let’s go ahead with Q&A.

Transcript Call Date 07/19/2013

Operator: David Begleiter, Deutsche Bank.

David Begleiter - Deutsche Bank: Mark, just on the $15 million impact in AI, what was the impact versus Q1 and year-over-year? Was it up or down in terms of this turnaround within supply disruption costs?

Mark C. Rohr - Chairman and CEO: Well, it was the $450 million or so Q1 to Q2 on the surface. I can’t recall anything in Q2 last year.

Steven Sterin - SVP and CFO: Yeah, I think it's about the same.

Mark C. Rohr - Chairman and CEO: About the same, yes. So the team says here it’s the same either way.

David Begleiter - Deutsche Bank: And just on TCX, what's your expectation for TCX EBIT contribution or EPS contribution for the back half of the year?

Mark C. Rohr - Chairman and CEO: Yeah, really not very much David. We're starting a plan of slow – the ethanol market, like all industrial markets in China, is really sloppy today, so we're just taking our time to bring it up upside. We're not – in our sort of projections for the year we're not counting really for any contributions from ethanol as material.

David Begleiter - Deutsche Bank: For breakeven basically.

Mark C. Rohr - Chairman and CEO: Basically.

Operator: Duffy Fischer, Barclays.

Duffy Fischer - Barclays Capital: Just a question on the issue of supply. Did that affect North America or Asia, and then was it more of just for gone sales or did you have to go out and purchase product to – then resell it at a loss to your customers?

Mark C. Rohr - Chairman and CEO: Yeah, both. I mean, we supply from other's locations. We have a global system out there which can negatively impact you and then we actually buy and resell them.

Duffy Fischer - Barclays Capital: Then what was the operating rate for Singapore in the second quarter?

Mark C. Rohr - Chairman and CEO: Well, Duffy, I'm not going to get into that kind of clarity where you all running up facility. We have been running it all year and we try to run it in a way that maximizes profitability for overall business.

Operator: Laurence Alexander, Jefferies & Company.

Laurence Alexander - Jefferies & Company: Could you elaborate on, I mean, given the sort of softer environment the degree to which you can pull forward productivity initiatives and maybe sort of bucket for the kind of markets or sales that you might be walking away from (or be to) bottom slice?

Mark C. Rohr - Chairman and CEO: Well, on the first side, the answer to your question is, we are working hard to pull forward productivity initiatives, Lawrence, and that's what I'm trying to say in our comments is that we had – we had not anticipated business to slide as much as it's done in this year and so, we've already started pulling those things forward. I hesitate to give you a specific number. What I will say is that the productivity things we are working on are pretty evenly spread across the businesses. So, it's not more in one business initially than in other business. And so, I don't know that you're really going to see them as any kind of (indiscernible) as they go through.

Laurence Alexander - Jefferies & Company: Then as you look at the opportunity for AEM to – or Ticona to take share in the automotive markets with the new product launches. How lumpy should we expect that to be? That is, are we going to see a strong year and then a slow year? Is it going to take a couple of more years to really sort of show up or how do you see the cadence of that?

Mark C. Rohr - Chairman and CEO: I think it's going to be very consistent. And to modify that and just to say that our base business is going to be very consistent. We think our penetration is up 5% to 6% quarter-over-quarter. It's a hard example of that. At the same time, you're seeing European auto builds at the lowest level in last two decades. So, we are able to – through this increased penetration and applications we're able to grow in what is even a declining market in the case of Europe and of course, we're growing positively with the positive market in the U.S. When you look at AEM as a total, you have affiliate earnings in there. And so, as you look at the back half of this year, we have major outages scheduled at (indiscernible). We also have impacted lower MTBE pricing rolling through that. So there’s going to be a pretty good pressure on AEM as it get towards the back of this year. Some of this next quarter and some next year, so you’ll see the quarter core earnings move around as affiliate earnings move around in there. But I think you’ll get year-over-year, it should be pretty steady.

Steven Sterin - SVP and CFO: As you look at the margins of AEM excluding the affiliate, we saw very strong performance in the first quarter, even better than the second and we expect those margins, they need to hold up within that range. So, the underlying business as Mark referred to it was really our direct business, everything except the affiliates, then a little bit of volatility in affiliates this year because of turnarounds, but overall, the base margins were strong.

Operator: Frank Mitsch, Wells Fargo Securities.

Frank Mitsch - Wells Fargo Securities: On the Consumer Specialties business, (indiscernible) business, you cited the higher wood pulp cost having a negative impact on margins. What’s the potential there to turn that around or it’s pretty much 2013? We’re going to leave with the lower margins in that business because of the high raws?

Steven Sterin - SVP and CFO: From here forward to the rest of the year, it should be relatively flat, maybe a little bit lower on average, but no major changes from here. Part of the Q1 is a little bit lower than Q2. It’s just the timing of using last year’s inventory versus this year’s, but it should be pretty quiet.

Frank Mitsch - Wells Fargo Securities: Steve, you spent $6 million on share buyback obviously at a slow pace. What should be thinking about in terms of Celanese and share buyback through the balance of the year?

Steven Sterin - SVP and CFO: We think – especially at this price we should be doing buying back more shares as we move forward. Cash generation has been strong. We're over $1.1 billion, which is the lowest since the first reporting period of our IPO. So we feel really good about where we are with cash to fund the business where the cash is. The $6 million really just keep us off sending dilution. But we'll be more opportunistic as we move forward using cash to buy back shares.

Operator: Kevin McCarthy, Bank of Merrill Lynch.

Kevin McCarthy - Bank of America-Merrill Lynch: Mark, would you provide an update on your long-term ethanol plans in China beyond the recent brownfield start up at Nanjing. I think thinking back to your technology day. You are in discussions with the state-owned enterprise. So I wonder if you could let us know is that still active and are you thinking more about being a principle versus licensing in that market at this juncture?

Mark C. Rohr - Chairman and CEO: Yeah, Kevin, it's still active. We're still working our tails off over there. I think we had a lot of difficulty to be honest getting the state-owned enterprises really to engage for their own reasons and we're taking a slightly different tack now. Now that we have a plant that's starting to operate and the key word on starting, we just started up. We're going to go ahead and dewater some of that material and test it and we just start working with other groups, other interested potential buyers in China and we'll start working to the regulatory process ourselves. It's going to be a long slug to get fuel ethanol in the Chinese market though.

Kevin McCarthy - Bank of America-Merrill Lynch: Then second question on AEM. Your year-over-year volume growth there of 7% was quite good. I was wondering if you provide a little bit more color as to how much of that is being driven by autos versus the other end used markets you're serving there and what the back half of the year might look like?

Mark C. Rohr - Chairman and CEO: It's about half. In the other areas we're doing more healthcare, we're doing more in consumer electronics, we have a number of niche operations that are starting to work well for us as well – I don't want to elaborate on it too much, but we've managed to offset the weakness in European auto, in particular, and we've managed to grow materially in those areas our niche and in new markets. So, it's a very healthy portfolio and what we're seeing is that the skill sets we bring in chemistry and applications we can imply into other markets that are very, very well received beyond automotive and that's really what's happening for us.

Operator: Robert Koort, Goldman Sachs.

Robert Koort - Goldman Sachs & Co.: Mark, when you start up your Clear Lake methanol plant, what will that do to your cost structure across your acetic business?

Mark C. Rohr - Chairman and CEO: Well, I think I answered that question. I think in the fundamental sense you're replacing two-thirds of the Southern contract volume. So, actually costs will go up a bit when that happens. We have opportunities to buy that other third and that market did bounce. To how much, Bob, I am not sure. So, you should view that our costs will go up a little bit at that time.

Robert Koort - Goldman Sachs & Co.: And then as we go through back half of the year and you start ramping your TCX plant would you expect your acetic production in Nanjing or in Asia broadly will go down or we still sell about the same amount in the second half?

Mark C. Rohr - Chairman and CEO: No. I mean, it’ll go down as we push more into – we have some capacity available to us. So, we can make up some of that, but largely speaking, it will go down as we move material into ethanol.

Steven Sterin - SVP and CFO: Just one more comment on ethanol too. As we look towards our (indiscernible) deal that we announced a couple of years ago. In roughly 2016 timeframe, when that unit starts up, we are interested and that ventures steps up in 25 into the low mid-30s which gives us effectively more cost-based methanol. So that will be out there as well, Bob.

Operator: Vincent Andrews, Morgan Stanley.

Vincent Andrews - Morgan Stanley: I think in the last fall, talking about the Nanjing startup, one of the things that was discussed was you are trying to find sort of the pricing of contract structure sort of right out of the gate. So could you just give us a little bit of an update on that?

Mark C. Rohr - Chairman and CEO: Yeah, it’s one of the reasons we are taking our time. The market is used to be served by a bunch of small producers, but to be very honest, they don’t produce our quality. So we are going in very slowly and trying to structure the relationships in contracts in a way that we can maximize our netback. So that process is underway and we’re having success with it, but I want to be very clear we’re going very slowly with it. We are not trying to go in and jam the stuff in the market overnight. I do want to mention Vincent too that so much industrial chemical market in China is just in turmoil now, because demand is just not growing, and that’s certainly is (indiscernible). In ethanol where we’ve seen those prices move down a bit and we’re just trying to be thoughtful on how we’re getting into the market.

Vincent Andrews - Morgan Stanley: Just as a follow-up. You in your prepared remarks, there was a reference to the liquidity issues in China, which has been in the news recently. Is there anything specific to what you are seeing and hearing from customer's that that's different than what you would suspect?

Mark C. Rohr - Chairman and CEO: Well, I think you probably are putting your hands on it, but there's – generally speaking there's a lot of concerns over liquidity as a minimum and so you're seeing inventories just – nobody is building any inventories everything is rock-bottom, everything is transaction and transaction is coming to you. People trying to push out times that's just unbelievable periods of time. So we see that rolling to business and you should have a view that demand has dropped off precipitously because of it, but there's an element of caution that's been put in the commerce there that caused everyone to pause in the moves forward.

Operator: Jeff Zekauskas, J.P. Morgan.

Jeffrey Zekauskas - J.P. Morgan: I guess I was wondering why you guys maintained your earnings guidance in that. Normally in the fourth quarter there is seasonal weakness in AEMs and Industrial Specialties and you've got various price pressures in ethanol. So you are not really going to have contribution there. How do you get a fourth quarter that will more or less earned what you earned in the third quarter or the second given the seasonal factors and the general weak economic climate.

Mark C. Rohr - Chairman and CEO: So, Jeff, you are right it's a weak quarter. I mean, the fourth quarter has been historically a weak quarter for Celanese. We have made structural changes to the business that aren't in prior numbers like the Spondon shutdown like the Acetate dividend normalization. We've taken steps to reduce BU other spend and we add those things with incremental sales of Qorus, a little bit stronger auto build sales. We can work up to that number. But you're right in saying there is some risk with that. What I'm trying to convey to investors is that we're aware of that. We're working our tail off to try to offset those and generate that number, but there is risk.

Operator: Chris Nocella, RBC Capital Markets.

Chris Nocella - RBC Capital Markets: Congrats on the (acetyl) Nanjing ethanol plant. Just a quick question. Do you have a sense of what the cost curve for industrial ethanol is in China?

Mark C. Rohr - Chairman and CEO: No, I don't. No, I am sorry, I don't. As we look at that we feel pretty confident that there is – given our low cost acid position, there is good margin in that business. But what is going on right now, to be very honest is, China slowing on ethanol, prices are pretty weak and so we're just being – we're being slower in that.

Chris Nocella - RBC Capital Markets: Then just taking a quick look at 2014, this year in 2013 you had some company-specific things that help earnings growth like the Acetate asset shutdowns and stuff like that. I mean are there any Company-specific measures that you'd like to highlight for 2014?

Mark C. Rohr - Chairman and CEO: There are, but I'd rather start highlighting those next quarter if I can. We're working on a lot of things. I think you're wise, Chris, in outlining that generally speaking that there is not going to be a lot of strong inherent chemical demand growth in the world. So you got to go out and make your own way and we have a number of things we're working and we'll be happy to share those in the quarters ahead.

Operator: Hassan Ahmed, Alembic Global.

Hassan Ahmed - Alembic Global: Just wanted some clarification around the supply issue you talked about, raw material supply issue you talked about within AI. Was this at one of your facilities or was it also a third-party, one of your suppliers for, call it, methanol experiencing some curtailments or the like. And only reason I asked this is because we've been hearing a fair bit about natural gas curtailments in Trinidad and associated lower operating rates from ethanol.

Mark C. Rohr - Chairman and CEO: I don't want to tell just exactly who it was, but it was one of our raw materials provided third-party providers. We've not had problems getting methanol.

Hassan Ahmed - Alembic Global: But it's again just reading some of the journals and the like, it seems that these gas curtailments are going to get more severe. For some reasons September seems to be mentioned again and again. So are you expecting any sort of reductions in supply?

Mark C. Rohr - Chairman and CEO: No. We're talking to those guys routinely and it's not – we are certainly not expecting that or anticipating it.

Hassan Ahmed - Alembic Global: Now, a follow-up on the methanol side of things. Obviously, your plant is in the works as far as methanol goes. You've talked about roughly $615 a ton replacement value and there have been a couple of new – well, I shouldn't say new – some brownfield plants that have been announced, and the range is anywhere between $400 to $600 a ton in terms of replacement value, yet it seems that some of the newer greenfield facilities would be anywhere between $800 to $1,000 a ton. So, are you still comfortable with the capital outlay guidance that you’ve given?

Steven Sterin - SVP and CFO: Yeah. We're very comfortable with the capital outlays we've given on that. We've made substantial progress on bidding out a lot of the large equipment purchases and are well on our way to get that thing up and running in 24 months. Some of the ones that you've seen that have been lower are ones that's integrated in refineries existing refineries, so that helps their capital economics, you’ve got existing gasification hydrogen and that type of thing. You are right, the greenfield has been a lot higher, but one of the reasons ours is lower and closer to your brownfields, we use to operate the methanol unit in clearly we can be able to take advantage of some infrastructure that was already in place.

Operator: Andy Cash, Suntrust Robinson Humphrey.

Andy Cash - Suntrust Robinson Humphrey: Just a couple of quick ones. Citygas had – could you give me some directional, was the second quarter margins less than the first quarter margins and how are they trending into the third quarter?

Steven Sterin - SVP and CFO: Andy, I'll give you a high-level overview. Utilization rates were about the same Q1 to Q2 in the mid-70s and we're on a pretty flat and long part of the cost curve as we've shown before. So we don't expect more of even seeing very much movement in margins on the whole. China, if anything moves up a little bit, you start some price movement there. But rest of all was relatively flat and that's what we'd expect.

Andy Cash - Suntrust Robinson Humphrey: And just a question on Slide 11, Industrial Specialties. In the quarter you did $18 million EBIT, which is about 50% lower than the year ago. I was just curious on the Slide 11 you got a sideways movement. Is that sideways movement compared to last year's $86 million which should imply that you are going to have to average about $26 million for the remaining third and fourth quarter this year, just curious if that's possible?

Steven Sterin - SVP and CFO: What's behind that is, we saw strong sort of (prosaic) demand, particularly in Asia and strong Asian demand at the end of 2011 and then to the first half of 2012. That dropped off substantially as the TV market got really long in inventory. So our EVA is down. However, on the other hand, our Emulsions business actually had a record quarter this quarter. So we're doing really good there with our expansion in VAE in Asia, getting out there, as well as some of the remodeling that's taking place with existing home sales. We tend to have a better participation in existing home sales and we're doing new home starts as we tend to go through the retailers versus contractors. So, Emulsions is doing well and just carries forward.

Mark C. Rohr - Chairman and CEO: I think, Andy, there is some – it's going to have a good fourth quarter, love your point, in Emulsions to carry with that.

Operator: Mike Ritzenthaler, Piper Jaffray.

Michael Ritzenthaler - Piper Jaffray: So, just a follow-up on Andy's question there. Is it going to take some bold like the 10 gigawatt initiative per year in China to return the Industrial Specialties to prior profitability or there other Celanese specific drivers that could do that?

Steven Sterin - SVP and CFO: So, I think about it first by business. Emulsions, there's continued opportunity in China and in Asia to grow our low-VOC paints coating and the use of binder systems, that's a very encouraging market. We've had experience there. We've already built two reactors and ramped those up pretty quickly. And that's really been in one small part of China in around Nanjing. We see other opportunities in China for that. We see growth coming from that. EVAs, we haven't made a call yet. The market is fairly long in photovoltaic. There are challenges in that market. There are price initiatives going on in Europe and China with import duties. So, we are not counting on that any time soon. So we're really trying to drive in the other markets. There are other specialty markets for EVAs, like medical, controlled-release applications where we can make headwinds and offset some of those photovoltaic, but it's not going to come from TV anytime soon in our opinion.

Michael Ritzenthaler - Piper Jaffray: We had the opportunity to taste the Qorus products at IFT this past week, and we were pretty impressed with it. And I was just curious about how long it takes to commercialize a new sweetener like that given your previous experience and the level of competition in sweeteners? And is there any sort of profit impact that you could provide to put Qorus in context within the larger company, and then – including the cannibalizing effects with the current products?

Mark C. Rohr - Chairman and CEO: Mark, were you at the cocktail hour?

Michael Ritzenthaler - Piper Jaffray: No, just at the trade show.

Mark C. Rohr - Chairman and CEO: I was just checking. Certainly, that was a big event. Yeah, Mike, it takes longer than you'd like to think to do this. I think we have 50 projects we're working now. We have a host of trials. We have some commercialization started and the response is really good. But it takes a while. So, I (indiscernible) say other than that. Depending on how we range it, it can be anything from making these really good contributions, but $5 million to $10 million is still much, much, much, much larger number. So what we are trying to do is to really measure the effectiveness of our rollout techniques with each customer and get feedback on that to try to do a better job projecting and if you'll be a little bit patient with us, we'll start to forecast kind of what that means as we end this year and we start looking at next year.

Steven Sterin - SVP and CFO: You heard talks about cannibalization. We're working really hard not to do that, and particularly these products go into (sugar) replacement type applications either a complete sugar replacement or partial, so we see this is a new market space for our products.

Operator: John Roberts, UBS.

John Roberts - UBS: Sequential comparisons are usually for companies that don't have seasonal issues in their businesses. Last quarter I thought it was maybe you are making the switch because of the JVs changing in terms of how you are recognizing that and it sounds like it's deeper than that, but it sounds like it's deeper than that. It sounds like you think that with the auto seasonality or (coding) seasonality that you can actually smooth this out?

Mark C. Rohr - Chairman and CEO: So it's the plan.

John Roberts - UBS: Then maybe a more detailed question. You said it specifically North America and auto in the engineering plastics business we had the penetration. Are there any model lines of cars or specific applications across the series of model lines that kind of stand out there that we can pay attention to?

Mark C. Rohr - Chairman and CEO: General statement, you tend to see us more in the sophisticated vehicles. So more likely vehicles where they are trying to drive MPG, where in the U.S. GMC and Ford do a lot in that area. In Europe the leaders in the state has been for a long time continuously Volkswagen. We work closely with folks like that. But you always see that across the board these German producers and the European producers tend to be ahead in terms of how much pounds per vehicle. But North America is a growth opportunity for us particularly in (indiscernible).

Mark C. Rohr - Chairman and CEO: Yeah. If you look at GMC's new light truck – I think it's K2XX platform. It's completely redesigned, brand new platform that rolls out in the 2014 model. That thing sample of the model that we're heavily involved in.

John Roberts - UBS: And you're shipping into that now and it was in effect in the quarter, because you singled out in the quarter the North American auto penetration?

Mark C. Rohr - Chairman and CEO: Yeah, it's starting to ramp up.

Operator: Nils Wallin, CLSA.

Nils Wallin - CLSA: I was just wondering if you would provide us with an update as to the timing of the EPA and TCEQ approvals for your methanol plants and then how such timing may affect the goal of bringing on that plant online on time in 2015.

Mark C. Rohr - Chairman and CEO: Yeah, we're in the final stages of approval. We're going through public comment periods and there's three permits that are involved. It involves stage agencies and the core of engineers. All of them are proceeding very well. We certainly think by the end of September we'll have those permits wrapped up and that's the time we're on. It could probably sweep a little bit, and it would be a problem. But if they sweep more than a month or two it will start to impact the schedule. But right now, we're meeting with these folks daily and everything is on track.

Nils Wallin - CLSA: And just a housekeeping question. What was the year-on-year change in volumes for Consumer Specialties given the Spondon shutdown?

Steven Sterin - SVP and CFO: In terms of total volumes for the consumer specialty space, there's two things I want to point out. You got to remember last year in the first quarter we had an outage at one of our facilities that pushed tremendous amount of volume into the second quarter. So, I probably want to talk about this on a first half versus first half basis. Consumer Specialties volumes in the first half were 101 (indiscernible) and they are 97 in the first half of this year. So minimal impact; but you're seeing now much higher dividend come through from our joint ventures.

Operator: PJ Juvekar, Citigroup.

PJ Juvekar - Citigroup: Mark, you talked about a long slog with the SOEs in China to get them on ethanol. Do you think that China goes more with methanol in the gasoline, especially with states having like M5 or M10 mandates, any thoughts on that?

Mark C. Rohr - Chairman and CEO: Well, I think methanol is used in gasoline today. It's used at the provincial level, and it has to be in the provinces that have lot of coal and lot of methanol produced, right, as an outlet. It is not endorsed by the state and it's not endorsed by the large refining and blending industry because of the hazards associated with it. So, we don't methanol increasing in China. In fact, it even seems to be decreasing a little bit right now. So, no, I don't think that's the issue. I think the issue really gets down to what's the preferred oxygenate is and without getting in too much detail, some prefer other oxygenates and want to continue to promote us. So, it's just a – it's complicated, and I would say, it's a complicated arena for us to deal in. What we're encouraged by though is that the social pressure being put on the government to clean up the air quality is getting very intense. So, those men and women that feel that social pressure sort of demanding that the fuel standards within China be upgraded to international standards, and that's going to be good for oxygenates like ethanol and it's going to be good for other businesses and folks who take out sulfur and things like that.

PJ Juvekar - Citigroup: Yeah. The environmental point is a good one. Then, on just ethanol, this Nanjing startup, you had talked about $0.05 to $0.10 contribution per quarter from that. Did I hear that maybe it's pushed out more into 2014 than 2013?

Mark C. Rohr - Chairman and CEO: Yeah. I think we said $0.05 to $0.10 for that business this year, and that's where we ended last year. We are starting year just what we had looked at. The contribution this year is going to be de minims from that business. The ethanol market is always sloppy there and we just taking our time with it, and it's really too early to forecast what the number would be for next year.

Jon Puckett - VP of IR: Thanks PJ, and thanks everybody for your time this morning. We'll be around for calls later today.

Operator: Ladies and gentlemen, thank you for participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.