On Friday, Cytec Industries (NYSE:CYT) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Diverse Mix of Raw Materials
Bob Koort – Goldman Sachs: Umeco closed, can you give us some sense of how their 2012 is shaping up will it be sort of on trend with those 15% revenue growth they’ve shown in that sort of 9%, 10% margin range?
Shane D. Fleming – Chairman, President and CEO: Bob, I don’t think I can give you any kind of a look-forward right now. They’ve recently released their first quarter results, so they’re out there in the public domain, but at this point in time, I think it would be premature for me to give you any kind of an estimate for the full year.
Bob Koort – Goldman Sachs: If you take Coating Resins out and look at the go-forward Company, can you give us a sense of the raw material stack, maybe the most important raw materials, how big that might be on the operation, how less sensitive you might be or as sensitive as you might be going forward?
Shane D. Fleming – Chairman, President and CEO: Yeah, it’s going to be quite a different story than what we had with Coating Resins where we had so many of our key raw materials in Coating Resins being propylene derivatives. So could point to propylene and carry off a fairly large percentage of that by. It’s going to be quite a diverse number of products. I’m not sure I could point to any one large item. The materials that we purchase will continue to be propylene derivatives that would be the epoxies and some of the oxo-alcohols into mining, but a much smaller percentage of the total take. There would also be some ethylene derivatives, some inorganics, carbon fiber in the case of the Engineered Materials segment, both the Cytec business as well as Umeco. So, it’s pretty varied without much concentration in anything, so it’s going to be a little bit more complicated to explain that story going forward.
Bob Koort – Goldman Sachs: Maybe less complicated because you won’t have to explain things so much?
Shane D. Fleming – Chairman, President and CEO: Clearly one thing that we would expect to see is less volatility in raw materials because of that tremendous volatility that we have seen from propylene over the last couple of years.
Bob Koort – Goldman Sachs: Dave, if I might ask you a quick one, you mentioned there’s somewhere around a run rate of $70 million of stranded cost, of which two-thirds you can knock out pretty quickly after the Coating Resins separation. Am I thinking about it right in that somewhere around $0.60 of cost reduction that can happen annualized pretty quickly?
David M. Drillock – VP and CFO: Yeah, that’s correct, you got that right.
Engineered Materials Inventory
Laurence Alexander – Jefferies: I guess first, could you elaborate a little bit more on the Engineered Materials inventory swing in the back half? I mean, is that going to be mostly Q3 or is that going to be spread over Q3 and Q4?
Shane D. Fleming – Chairman, President and CEO: Obviously, we don’t know the exact science, but our expectation would be, it would probably be more near-term. We have specifically referenced the JSF issue, with that strike now being over, we should start to see that flush out over the next couple of months. So, that’s where most of the inventory build was, and as I said, that should flush out over the next few months.
Laurence Alexander – Jefferies: Can you elaborate a little bit more on North America additive, what you’re seeing in demand trends, any concern about destocking in Q3?
Shane D. Fleming – Chairman, President and CEO: I think we’re pretty bullish on North America in the second half of the year, there’s pretty wide variety of applications, things even like solar cells and areas where there has been some recent growth. So, I don’t really expect or want to be much of a drop-off as a result of maybe the inventory build, and secondly, I think it’s a pretty strong growth projection, given the fact that it is across multiple markets, multiple applications.