Cytec Industries Earnings Call Nuggets: Aerospace Materials and Industrial Materials Outlook
David Begleiter – Deutsche Bank: Shane, just on Aerospace Materials, can you discuss how are you thinking about 2014 in terms of the growth year-over-year in that business, perhaps little bit slower given the lack of any A350 exposure?
Shane D. Fleming – Chairman, President and CEO: Dave, I’m not going to be able to give you a number at this point in time, we are still developing our forecast for 2014, but we are clearly in a transition period where over the last couple of years, the bulk of our growth has been driven from ramp-up in legacy programs and as those ramp-ups start to slow now, we are going to see growth transition to new programs. And as I believe, we got a number of new programs out there, so our growth in 2014 to some degree has been dictated by the speed at which those new programs do come forward. We got Business Jet opportunities with Honda, HondaJet, Learjet 85 we expect some ramp up on the Joint Strike Fighter. So, there are some programs out there that will drive growth but the balance now with legacy dropping off is not determined, but it is something that we are obviously paying close attention to.
David Begleiter – Deutsche Bank: And just last thing on Industrial Materials. I know it is early for 2014, but absent improvement in Europe any recent large business which shows market improvement in earnings 2014 versus ’13?
Shane D. Fleming – Chairman, President and CEO: Yeah, I think the actions we are taking now to drive productivity and cost reduction will have some impact on the business performance and the earnings performance. We would certainly benefit more from improved revenue and we do expect to see some come – even if we don’t see some of the market demand drivers pick up, some of the new program delays were less related to the market and more related to just some technical issues. So, we do expect to see some recovery in Europe even without a strong push from the market itself.
Industrial Materials Outlook
Michael Sison – KeyBanc: In terms of Industrial Materials heading into the second half of the year the outlook would suggest operating income is going to be near that breakeven area. Is there anything that could cause that to get significantly worse? Is this a forecast? Maybe give us an idea what the volumes declines are going to underpin the weaker second half and sort of frame up where you think you are is this kind of trough-ish outlook, could it get better?
Shane D. Fleming – Chairman, President and CEO: Mike, I will try and give you a little color there. I would say we’ve really kind of done bottoms-up look at this business in the second half and what we put forth as an estimate is, what we consider to be our best guess. But also I think a relatively conservative view. I would be surprised, if we see things deteriorate much from where we are right now, because as I said we’ve been quite conservative. And you’re right. We’re not expecting a lot of income in the second half of the year, as a result of that conservative view on the top line.
Michael Sison – KeyBanc: Then for Aerospace Materials, how much – what percent of that business is represented by these the ramp up of the newer programs as you had into ’14 and then when you think about the second half of the year basically your sales growth outlook it’s kind of sluggish, I get that to some degree. How much is the turnaround going to hit you in terms of sales growth in the fourth quarter and maybe give us a feel for income per quarter given that hit?
Shane D. Fleming – Chairman, President and CEO: I don’t think I’ve got income by quarter in front of me. The turnaround though that you referenced is primarily going to be a fourth quarter impact and that’s not going to have a significant impact on our volume, that’s going to be more of a cost related issue. We build inventories. So, we’re not assuring customers. So, the turnaround is really more of a cost, no revenue issue. But as we move out of ’13 into ’14, as I mentioned when I responded to David’s question a second ago, we’re going to see this transition from the bulk of the growth coming from the legacy programs, two growth coming from new programs. Today, we’ve enjoyed growth from ramp ups pretty much across the board, by Boeing and Airbus. We’re still seeing some of that that’s not going to entirely go away. We’ll still see some single-aisle growth as those programs reach full production – projected production, but there is not a lot beyond that legacy single-aisle growth. As you look out into ’14 and beyond, it’s going to be hopefully some modest growth still on the 787 as the supply chain gets fully set up to supply at the higher rates and then those business jet programs I talked about LearJet85 and the HondaJet. I didn’t mention that the C-Series program for Bombardier, but that and the Joint Strike Fighter I would say would be the primary program to drive growth in ’14.
Michael Sison – KeyBanc: All this is a third of the business, maybe bigger lower?
Shane D. Fleming – Chairman, President and CEO: You mean in terms of revenue today or…
Michael Sison – KeyBanc: Yeah for Aerospace Materials, through this newer area.
Shane D. Fleming – Chairman, President and CEO: So the new programs that I just talked about with the exception of the 787 there is not a lot of volume there. JSF is running at a rate of say 35, 40 planes a year, but most of the business that I’m talking about from the new platforms is business to come, not existing based business with the exception of the 87.
A Closer Look: Cytec Industries Earnings Cheat Sheet>>