Texas Petrochemicals Inc. F3Q10 (Qtr End 03/31/10) Earnings Call Transcript

Texas Petrochemicals Inc. F3Q10 (Qtr End 03/31/10) Earnings Call Transcript
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Texas Petrochemicals Inc. (TXPI)

F3Q10 (Qtr End 03/31/10) Earnings Call

May 14, 2010 10:00 am ET

Executives

Bob Whitlow – VP, Finance and Treasury

Charlie Shaver – President and CEO

Ruth Dreessen – EVP and CFO

Analysts

Edward Yang – Oppenheimer

Presentation

Operator

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Previous Statements by TXPI
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Good day, ladies and gentlemen, thank you for standing by. Welcome to the TPC Group third quarter earnings conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Friday, May 14, 2010. I would now like to turn the conference over to Vice President of Finance, Mr. Bob Whitlow. Please go ahead, sir.

Bob

Whitlow

Thank you, operator.

And welcome to TPC Group’s fiscal 2010 third quarter conference call. My name is Bob Whitlow, Vice President of Finance. With me today are Charlie Shaver, President and Chief Executive Officer, and Ruth Dreessen, Executive Vice President and Chief Financial Officer. As usual, we’re making this call available to investors and media via webcast. An archive of the webcast will be available for replay on our website shortly after the call. At 5 AM this morning, May14th, our earnings release went out and has been posted on the Internet on TPC’s website www.tpcgrp.com.

As you know, some of the comments today may include forward-looking statements about our expectations for the future. Those expectations involve risks and uncertainties. We can’t guarantee the accuracy of any forecast or estimates and we don’t plan to update any forward-looking statements during the quarter. Please note that the information reported on this call speaks only as of today, May 14, 2010 and therefore you are advised that the forward-looking information may no longer be accurate as of any time of replay.

In addition, some of our comments may reference non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures and other associated disclosure are contained in our earnings release on our website. Our earnings release and our SEC filings are available on the Internet on the Investors page on our website at www.tpcgrp.com.

I’d now like to introduce Charlie Shaver.

Charlie

Shaver

Yes. Thanks, Bob, and good morning to everyone on the call. I would like to welcome to our third quarter investor call. As reported in this morning’s press release, our performance in the quarter, both from an operational as well as financial perspective, was very favorable. Our adjusted EBITDA was just over $19 million.

As we discussed on our last call, this quarter was impacted by a relatively large plant turnaround in our Houston facility. I’m pleased to report that turnaround work was completed on time, on budget, and the plant has returned to normal operations. Our third quarter volumes were up in our C4 Processing business as a result of that turnaround and several outages of some of our customer facilities. However, total sales revenue held up pretty well due to improved pricing throughout the quarter.

Compared to our second quarter and the comparable quarter last year, the company experienced higher total operating margins principally as a result of significant improvement in our Performance Products business. Furthermore, those improved business conditions in both of our operating units in several of the last quarters have continued to be on a positive track. Adjusting for the business interruption recovery that we received in the second quarter and the maintenance activity, we are seeing favorable improvement in earnings over our second quarter.

Execution of our 2010 operating plan is ahead of schedule, and we continue to operate in a safe environmentally sound manner. In fact, in our quarter, we have successfully completed the quarter with no personnel safety incidence and no major environmental releases. As you may have noted from some of our earlier press releases during the quarter, we have continued to work on several different strategic initiatives.

Before turning to a discussion of the business operations, I would like to talk about a couple of these noteworthy accomplishments. First of all, we launched our new corporate name, the TPC Group. This highlights the growing diversity of our operations and product lines that we pursued over the last couple of years. In addition, we have worked to improve our website to improve our communications with customers, suppliers, investors and other key stakeholders.

We also amended our revolving credit facility on favorable terms and expanded our existing bank group, and we are pleased to add three new institutions to that group. This amendment extended the maturity of the facility and that does give us flexibility in several key areas. We also increased the size of the facility to 175 million to handle potential liquidity needs in the future.

Lastly, we received a $39.8 million refund of income taxes associated with the change in the tax laws relating to tax law’s carry-backs. This has not only helped to strengthen our balance sheet, but it accelerated our overall review of strategic projects and alternatives for the company. Our registration under the Securities Exchange Act became effective, and as a result, we are now a reporting company.

Most recently, we completed our listing process with NASDAQ, and our common stock now trades on NASDAQ under the symbol TPCG. These accomplishments represent significant milestones that we have been diligently driving towards over the past several years, complementing our strategic objective of maximizing shareholder value.

Turning now to our business performance, I would like to make a few comments on our third quarter business activities. As I mentioned in my opening remarks, our markets continue to show substantial improvement over last year as well as quarter-to-quarter. Our C4 Processing business, which includes butadiene, butene-1, raffinates and MTBE, performed consistent with the expectations in the quarter. And although as a result of our plant maintenance outage, this segment did experience lower volumes and revenues compared with the previous quarter.

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