雅保公司 (ALB) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2009 Albemarle Corporation earnings conference call. (Operator Instructions).

I would now like to turn the call over to Sandra Rodriguez, Director of Investor Relations. Please proceed, ma'am.

Thanks Antoine.

Good morning, everyone. And thank you for joining us today for a review of Albemarle's fourth quarter and full-year results, which were released after the market close yesterday.

Our press release contains preliminary results for the quarter, which as you know is subject to further review by the Company and our auditors as part of our year-end audit process. Please note that we have posted supplemental sales information as well as reconciliations for net debt and EBITDA on our Web site under the Investor Information section at Albermarle.com. I would also like to caution that remarks today contain forward-looking statements. Factors that could cause results to differ from expectations are listed in on our annual report on form 10-K.

Participating with me on the call this morning are Mark Rohr, Chairman and Chief Executive Officer; Luke Kissam, Executive Vice President; John Steitz, Chief Operating Officer; and Rich Diemer, Chief Financial Officer.

Before I turn the call over to Mark, I would like to ask everyone to save the date for Albemarle's 2010 analyst and investor conference which will be held in New York City on May 13. Registration and event details will be sent out in the coming weeks.

At this time, I will turn the call over to Mark.

Thanks, Sandra, and good morning, everyone. We appreciate you joining us today as we report fourth quarter earnings.

I would like to begin with highlights of some of our strategic initiatives before commenting on the Company's results and our view of current market trends impacting our business. Luke Kissam will follow with a brief update on the productivity and cost reduction efforts, John Steitz will then cover business segment performance and some specifics about new product introductions, and Rich Diemer will wrap up with the financial highlights.

With our asset base in Jordan, Arkansas and China, our bromine business has tremendous global reach. We have the commercial viability and know-how from which to produce unique bromine derivatives that go into many end-use markets, including pharmaceuticals, fire safety, energy recovery, food applications and emissions reductions, just to name a few. We continue to invest in resources to develop new solutions for our customers, strengthening this bromine franchise, and I would like to mention two such initiatives we have underway.

First is the recent launch of the Earthwise family of eco-friendly products. Over the last several years our scientists have invented what we think is unique breakthrough technology that meets the needs of our customers, provides a better performance and has an outstanding environmental profile. Our first product launched under the Earthwise brand is a fire safety solution we call Green Armor, and we're getting good feedback from our customers that are now testing this polymeric solution. We hope for our commercial sales by the end of this year.

These new products, specifically designed to improve efficacy and promote recycling, while also eliminating concerns over toxicity issues, provides a new direction for bromine chemistry. Through this year, you will hear more about this eco-friendly brand and new products that fit this profile.

You may have also seen our press release last week announcing Albemarle's long-term strategic supply agreement. Luke will tell you more about the agreement shortly, but I will say we are pleased with the outcome and believe both companies will benefit.

Albemarle has positioned itself as a leading bromine supplier with low cost supply options, and this deal with Chemtura further strengthens this position. We have sufficient bromine capacity to immediate demand for the foreseeable future and to run our assets at higher rates as we do so.

Mow let me shift to our release. Our fourth quarter results cap a year where execution agility and perseverance carried the day. The demand picture in the quarter reflected strengthening across many of the markets we serve. This progress was reflected in reported net income of $62.3 million, or $0.68 per share. Excluding restructuring charges and tax benefits, earnings from operations were $0.64 per share for the quarter, compared to $0.41 per share at a much lower tax rate in the prior year.

The restructuring charges relate to planned workforce reductions at a number of our sites, in connection with Project One Albemarle and assistant write-offs in Arkansas, as a result of the Chemtura agreements. The one-time tax benefit is from prior settlement of the prior year tax audits. Together those items benefited fourth quarter earnings about $0.04 per share.

Net sales revenue for the fourth quarter totaled $558 million, and that's up 8% from last year, and 8% sequentially.

All in all, our business delivered solid top-line growth and strong earnings in the fourth quarter. Excluding special items and tax benefits, full-year 2009 earnings were $1.86 per share, compared to $2.39 per share in 2008. Over one-third of our 2009 earnings were achieved in the last quarter of the year. On a full-year basis, net sales totaled $2 billion, down 19% compared to $2.5 billion in 2008.

Through 2009, we overcame weak markets and substantial unallocated fixed costs at many of our facilities. We set our focus on cash generation, and took very aggressive steps to pull back capacity and eliminate cash costs. You've seen the past three quarters, with production assets running at reduced rates, our fixed costs were spread over lower volumes and it hurt profitability. Painful as it was, we dramatically improved liquidity and strengthened our balance sheet and ended the year with over $300 million in cash.

During the year we repaid over $120 million in debt, funded capital expenditures of over $100 million, and paid dividends to shareholders of $44 million. In the fourth quarter, we also made a $25 million contribution -- voluntary contribution to our defined benefit plans, and repurchased approximately 175,000 shares of common stock for $5.8 million.

Good business execution, coupled with our continued productivity efforts, led all three segments to year-over-year and sequential margin improvement. Segment margins increased 600 basis points year-over-yea,r from 10.5% in the fourth quarter 2008 to 16.7% in Q4 2009.

Our Polymer Solutions business recorded its highest quarterly segment income since 2007. Realizing segment income margins were approximately 16%. Demand was strongly anticipated. And we did not see the normal levels of seasonal decline typical at year-end.

That said, the sequential volume recovery slowed in the fourth quarter, compared to the previous three quarters, and we think signaling stabilization of manufactures' inventories. While Polymer's first quarter is off to a good start, we expect volume to be weaker through Chinese New Year. Moving beyond the first quarter,the continued demand growth in electronics, our portfolio of new products, and our low cost base should drive strong year-over-year segment earnings growth in 2010.

While our Fine Chemical segment net sales were down 10% compared to the fourth quarter of last year, improved demand in our performance chemicals and better cost absorption drove this segment to its highest revenue and profit level since the start of the recession.

In 2010, we expect solid top and bottom line improvement in this segment, with stronger second half performance when demand of and industrial bromides is expected to return. Also some of the New Custom Manufacturing businesses in our Fine Chemicals service sector will kick in and John will talk more about these in a moment.

Finally our Catalyst business close of the year was segment income margins of 20% in the fourth quarter, a 500 basis points improvement over fourth quarter 2008. These results demonstrate the balanced nature of our portfolio, which stands on three strong legs, all of which contribute and draw profitability for this business and help moderate risk involved on market conditions, like those we faced this past year. While combating significant (inaudible) volatility in difficult market conditions, this segment improved its annual margins compared to 2008 by 80 basis points. We look for strong top and bottom line improvement in the Catalyst in 2010, and we expect fairly balanced results throughout this year and across the segment portfolio.

Wrapping all of this together, our business model, driven by the hard work of our employees, was a differentiating factor through the tough times we faced in 2009, and I expect will continue to favorably differentiate us going forward. Our fixed costs and productivity efforts are on on track, and we working hard to overcome headwinds, while completing remaining initiatives. Our global teams are geared up to promote strong business growth, and our balance sheet is stronger than ever and very capable of supporting new strategic growth opportunities for our shareholders. And with that let me ask Luke to comment on our progress with productivity issues and Chemtura.

Thanks, Mark, and good morning, everyone.

All of are you aware of the restructuring efforts that we have embarked upon to reduce our operating costs by $160 million versus 2008 costs. We're still in the midst of implementing the plan that we laid out early in 2009, but I would like to give you an update of where we are through the end of 2009 on these efforts.

Our 2009 costs were over $100 million lower than the 2008 costs on an apples-to-apples basis. That is excluding favorable currency and one-time items. Rich will talk you to in a minute about the financial headwinds we will have in 2010 that we didn't have in 2009. So it is critical that we keep that $100 million out of the system, and continue to optimize our business model and asset base in order to achieve this objective.

In the fourth quarter we achieved some critical milestones for our restructuring. As you know, in September, we initiated the consultation processes required by local laws with our employees at our European headquarters in Brussels, and the Respective Works Councils at our mineral flame retardant plant in Germany and our Refinery Catalyst center Amsterdam. In the fourth quarter we reached agreements with our employees at our Brussels headquarters and with the works council and union in Amsterdam, which allow us to move forward with our restructuring efforts at those two locations. Those restructurings will take place in stages over the course of 2010, and we have taken a one-time charge in the fourth quarter of 2009 with a cost associated with those locations.

At this time, we're still in the negotiations with our Germans works council, but those discussions to date have been productive. While it is never easy to predict timing on negotiations such as these, I would hope we would be able to reach agreement later in the first quarter, or early second quarter of this year. At that time, we would incur an additional charge related to that restructuring.

Additionally, in the fourth quarter, we established an entity in Hungary, which will operate a global center for transactional processes for Albemarle. This center, which is a key part of our restructuring in Europe, will consolidate certain activities across Europe and in some instances across the globe. We're almost complete with our office buildout and expect to begin our first wave of operations late in the first quarter of 2010. The goal of this Budapest Service Center, and these related restructuring is to have the right processes, procedures and controls in place to achieve operational efficiencies and create a more flexible and cost-effective operating structure. We are reducing costs today and building the transactional model that should allow us to keep costs down as our businesses grow.

We recently announced that we had entered into a serious of agreements with Chemtura. I am pleased to report that on January 21, 2010, the court presiding over Chemtura's Chapter 11 bankruptcy proceedings approved those agreements and we are currently supplying certain quantities under the supply agreement today.

These agreements allow us to resolve various pieces of litigation which have been ongoing for years at significant cost to both parties, and provides Albemarle with significant additional production volumes. As past of the transaction, we assigned certain brine interests in Chemtura' s west bromine unit to Chemtura, and wrote-off our smallest bromine plant which was located in that unit. That bromine plant produced our highest cost bromine and had not been operated since the end of 2008. We believe these agreements are good for Albemarle and the bromine industry overall.

Finally, as demand and production rates have increased throughout the year, we have kept our inventory levels at historically low levels while still meeting the demands of our customers. We have worked hard to improve the way we forecast, produce and deliver products, so that we can keep inventory levels down, and our hard work seems to be paying off. Rich will provide more details on our accomplishments.

In closing, we continue on track with regards to our cost reduction initiatives. There remains a lot of work that remains to to do reach our $160 million goal, but we have plans in place to make us comfortable our target is achievable and we remain resolute. With that, I will turn it over to John Steitz.

Thanks, Luke. And good morning.

I will start with our Polymer Solutions business. Volumes continue to improve in Polymers in the fourth quarter, closing the year out strong after three consecutive quarters of sequential growth. Driving quarterly net sales to $205 million, up 38%, over the fourth quarter 2008, and the best top-line results this segment has seen in the past five quarters. Polymer segment income rose to $32.4 million in the fourth quarter, a 24% sequential increase and is greater than the first three quarters' segment income combined.

Higher sales and production rates coupled with outstanding cost controls, enabled us to achieve Polymer segment income margin in the range of 16% for the quarter. Our Brominated Flame Retardants portfolio delivered exceptional results in quarter. Fourth quarter results were the highest of the year, and most notably the highest fourth quarter volume since 2006. Some of the increase is due to customer restocking after inventories were depleted during the downturn.

The Electronics market remains strong thus far in the first quarter. And our current full-year view of 2010 is showing positive signals. Driven by improved volumes in pricing, our Mineral Flame Retardant business also contributed to Polymer earnings in the fourth quarter, with solid year-over-year and sequential sales and profit improvement.

Our teams are doing a fine job of managing working capital as well. Polymer inventories were reduced by $75 million for the year.

Our Fine Chemicals segment reported net sales of $146 million in the fourth quarter. Strong sales and better cost absorption drove a 33% sequential improvement in quarterly segment income to $19 million. Segment margins came in at 13%, up 200 basis points compared to the fourth quarter of last year. Fine Chemicals sales and profitability steadily increased over the past three quarters. The strong fourth quarter results were achieved with relatively little sequential improvements in our clear brine business, where we are seeing stronger indications for an improved 2010.

Rig counts remain below year ago levels. However, recent increases this year in rig count and improved crude oil pricing should result in a larger number of completions in the coming year.

Our Sorbic Mercury Control business is gaining traction. New business drove increased top- and bottom-line performance in the second half of the year. We expect growth in this business to be driven by more energy providers seeking cost-effective solutions to reduce mercury emissions in their coal-fired power plants.

Companies working with Albemarle, using our bromine-based sorbent technology, are seeing significant reductions in mercury emissions.

Looking ahead, we're excited about the future growth potential of our Food Safety product line, and also some of the custom services projects taking hold. One of these projects is with ExxonMobil, whereby Albemarle is manufacturing commercial quantities of a high viscosity lubricant. Another is our work with SIGA, on their smallpox antiviral drug ST-246. Interestingly, just last week, SIGA reported that they participated in a simulation with the state -- country of Israel, where by the Israeli government officials arranged an emergency mock acquisition of SIGA's ST-246.

Moving on to Catalysts, Catalyst net sales for the quarter were $208 million, flat compared to prior year, and up 10% from the third quarter. Segment income for the quarter of $42 million is up 33% from the prior year, and up 25% sequentially, driving segment income margins to a robust 20%. Our Polyolefin Catalyst business delivered solid results for the quarter. FCC finished strong as miles-driven statistics continued to improve.

We believe our HPC business is back on track after a tumultuous year in dealing with volatile metals cost. We are also expecting meaningful earnings contribution in 2010 from our Alternative Fuels Technology business, where we are focusing on breakthrough and step-out applications for our technologies.

We're seeing keen interest in our diverse portfolio of products that help customers differentiate themselves, and we have a host of new product offerings on the market that will improve efficiency for our customers. The opportunities on the horizon in new markets and new applications, we look forward to a strong year for our Catalyst business.

With that, I will turn it over to Rich.

Thank you, John, and good morning to all.

I plan to cover our restructuring and other one-time items, taxes, corporate expense, capex, our year-end financial position, as well as a report on progress we have made on working capital. As we traditionally do during this call, I will also provide a forward-looking outlook on a number of these items for the 2010 year.

In the fourth quarter, we incurred pre-tax charges of $11.6 million, $7.6 million after tax, in connection with the ongoing corporate restructuring program, which we have dubbed Plan C, and, as just discussed by Luke, is designed to reduce our 2008 cost footprint by $160 million.

These charges are principally related to severance and related costs at our Belgian and Dutch operations, where we received advice from our respective works councils that enables us to move forward with our cost savings plans, and charges in the US, principally related to the various agreements with Chemtura We are still in the consultation process with our German works council as it relates to our Martin works site.

Our Q4 reported income tax benefit includes a net benefit of one-time items of $11.3 million, or $0.12 per share, mainly due to the reversal of reserves, as a result of the finalization of the IRS review of our 2005 to 2007 US tax returns. Excluding these and other discrete out-of-period tax items, our operational effective tax rate for the quarter was approximately 15%, and for the year, 13%, slightly higher than our 12% guidance and rate through the nine-month period. This was due to higher income levels and the geographic mix of Q4 results.

Our go-forward guidance for the 2010 effective tax rate is a range of 18% to 20%.

Unallocated corporate expense in Q4 was $16.7 million, higher than forecasted, principally due to certain European product registration costs, and benefit-related expense. 2010 corporate expense guidance is $65 million to $70 million, or $16 million to $17 million per quarter, and includes pension and OPEBs which will be up $15 million year-over-year, other salary and benefit cost headwinds.

Our EBITDA in the quarter, excluding special items, was $101 million, up 48% from last year, and up 14% sequentially. The last time we generated EBITDA over $100 million was in the third quarter of 2008 on a revenue base that was $100 million higher than this quarter. I believe that is a testament to the effectiveness of our Plan C, and exemplifies the earnings leverage we will enjoy as volumes rebound.

Capex for the quarter was $17 million, full-year capex was $101 million, and our view of 2010 capex spending is $100 million, also. Depreciation and amortization in Q4 was $26 million. Full-year depreciation and amortization was $101 million. And our estimated depreciation and amortization for 2010 is a range of $100 million to $105 million.

Including $44 million of debt at JBC, our Jordanian venture, our year-end consolidated debt was $813 million, down $8 million from the end of Q3, and $120 million decrease from last year-end. $439 million of our debt is floating rate and $374 million is fixed rate, a 55/45 split. Our floating rate interest rate was 0.83% at year-end. Our weighted average interest rate for Q4 was 2.8%.

Net of $309 million of cash on hand, and excluding $25 million of unguaranteed yet consolidated JBC debt, our net debt decreased $54 million in the quarter, to $478 million. It is down $171 million for the year. Our debt cap ratio is 40%. Our net debt to cap ratio is 28%. And our debt to EBITDA ratio is approximately 2.7 times.

Although our final cash flow statement of full balance sheet will not be published until we file our 10-K, cash flow from operations was approximately $100 million in the quarter, and $360 million for the year. We reduced networking capital by $136 million this year. Inventories are down $191 million since last year ends, and we made additional progress in Q4 despite the 8% uptick in revenue.

We reactivated our buy-back program during the quarter, repurchasing just shy of 175,000 shares for $5.8 million, an average of $33.25 per share. We will continue to be opportunistic with our stock buybacks, and have approximately 4.25 million shares authorized for repurchase under our current program.

Speaking for all of us at Albemarle, we are excited by the prospects of generating double-digit top-line growth in 2010. With the continuing execution of Plan C, focus on cost control, and cash generation in the context of a return to global growth, we are confident we can deliver significantly improved profitability year-over-year.

We enter the year knowing that we will need to deal with the headwinds of higher raw material and energy costs. We also have factored in anticipated headwinds from a 50% higher tax rate year-over-year, and higher pension and other people costs. As it is only fair to reward those that have delivered the fine results that we report today and have been under our recent austerity program. We feel very strongly that we emerged from 2009 a Company with improved prospects and earnings potential of $4 plus per share in 2012. You'll hear a lot more about that in the coming months, and on May 13 at our Investor Day in New York City.

And with that, let me turn it back to Sandra.

Thanks, Rich. Okay we'd like to open it up for your questions.

(Operator Instructions). Your first question comes from the line of PJ Juvekar. Please proceed with your question.

Yes, good morning.

Good morning, PJ.

I'm looking at the Catalyst segment, and what kind of growth do you expect in 2010? Is it going to be gradual growth? Or do you expect a snap back in volumes after refineries pushed out the catalyst change-outs last year?

Thanks, P. J. This is John Steitz.

P. J., I think we're -- as you look forward to 2010, I think we can see a more gradual rebound quarter to quarter in Catalysts. Now, I'm assuming there that metals volatility will be minimal. And generally, we start out with stronger HPC volumes in the first quarter and first half, as they prepare for the bigger drive season, but offset by that are weaker FCC volumes in the first quarter as they go through those turnarounds. They're not consuming that ratable product.

So overall we're looking forward to sequential growth and trying to build momentum through the course of the year.

And your polyolefin business has been strong, you're building that new plant in Saudi Arabia. Could you just talk about how big that business could be, relative to others?

Yes, it has been a very solid business for us -- built on two platforms. The new catalyst piece, which primarily, that manufacturing base right now is US-based, but that year-over-year improvement, despite the downturn, has been really strong, and our plant here in Baton Rouge is sold out, so we need to do some de-bottlenecking and expansion in that business.

And our organometallics business, which you're referring to in Saudi, that business, volume declines were minimal in the fourth quarter as our customers watched inventory. But next year, 2010, can be again continued growth.

So I really believe that business can double over the next five years. And we're very excited about that, and we're going to continue to work to supply what we see is some very highly value-added products in the marketplace.

And just the last question, for Rich, on the tax rate, quickly, are you seeing that tax rate creep up as your earnings go up? And where does that rate max out? Does it go back to high 20s or is it a level in your mind where it is going to max us out?

Well, P J, I think what I would say is next year, you're going to get back to kind of the 20%-ish type rate that we had a couple of years ago when we were making more money.

I think when you're talking maxing out you're introducing the government in the equation, so that's why we feel good about what we see for the upcoming year, but what the government does or doesn't do as it relates to all corporate America will impact us, and so far, no real news there, there has been a lot of threats and a lot of supposition, but we can't really build that into our rate until we know exactly what the legislation is.

I'm sorry, I'm not talking about new legislation. Just existing legislation. If you have --

What it would be P J, its in the 20s, because I think as our business expands, the current footprint would expand with it, which means we would expand at JVC, which as you know has got a zero tax rate on it in terms of our Polymer business. So I think 20-ish is kind of where it wants to be at somewhat higher levels of business.

Thank you.

You're welcome.

Thanks, PJ.

The next question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question.

Good morning.

Good morning, Laurence.

I guess first question, just on the new class of brominated products that you've launched, over the next three to five years, what percentage of your products mix do you think you can replace, and is there any margin benefit from the substitution?

Yes, I'm not sure I can answer with the tremendous specificity, but as we look at it, we think it is, over the next three years or so, maybe a 10% chance of penetration in our product mix. There are ways we can push that higher perhaps, as we look to add additional derivatives of this product out there, that some look very promising for the new TV applications that are coming in, but I would say, in our early stages, I would say 10%.

What is so breakthrough about this, is it a unique way of combining these molecules that makes a polymer that has an unbelievably great environmental footprint, Laurence. The offset to that is, is that folks who are less concerned about it can continue to buy some pretty cheap and efficacious products out there that are not so environmentally sensitive.

So we are going to put it out there and drive it hard, and we think over the next five years or so will get tremendous acceptance, but it will be a little bit slow in the uptick, at the start. And we do expect to make comparable margins for this product.

So longer term, does that mean you're shifting into polymer manufacturing expressly as opposed to polymer additives?

Yes, directionally. What we can do with this is, largely, we can actually build the molecule specifically for the application. And we experiment some with that in some other areas and we've had great success with that. So imagine the ability to go in for a specific application, a TV or a color or a gloss or something and actually tailor make it to get it to work for this individual. It doesn't have any, again, the watchouts for small organic molecules, and phenomenal recyclability, low greenhouse gas emissions, so it's really a great thing. So we think we can build this molecular footprint for our business and shift our business over time to a polymeric business.

And Laurence -- this is John Steitz. I would just like to add, I think with its great safety efficacy and environmental profile, it really shifts the debate to greater fire safety globally, and that is really longer term where we want to go with this product line, obviously.

And just lastly, right at the end, I think, Rich, you gave a list of things that were you were factoring in as areas of being cautious on 2010 of raw material, energy costs, higher labor costs, pension. Could you just update our thinking on how -- what size each of those buckets might be?

Well, I try to do that in terms of what corporate is. I guess in some of the larger buckets, you know, pensions and OPEBs, which I look at together, would be up $15 million or so this year. That's our best estimate.

Part of that had to do with where the discount rate landed at the end of this year. Part of it had to do with the fact that we actually will be pulling in our assumed rate of return on assets in terms of pension assets. I've taken that down 50 basis points to 8 1/4. So when I applied it to my assets, it is somewhat lower.

So some of that was done to me and some of that I did to myself, sort of, say. But that's is a $15 million bucket.

I think there is a bucket in there that would look for the corporation to kind of go back to a more normal approach to bonuses, and there is a couple different pieces of that. So -- I say that is probably $10 million to $15 million incremental. And then in terms of salaries, that is another $10 million, so you start pulling that all together, and that is really some of the headwinds that we're dealing with.

But even with --

I will just comment on raws and energy. The current view is that that would be a headwind for us 2010, somewhere between $50 million and $60 million. With about half of that right now in metals and the other half petroleum-based derivatives, some of which would be contractually passed through and some we would have to work to get passed through, but that's the current view.

And even with those items, margins should be up year-over-year?

That's correct.

Yes.

Thank you.

Your next question comes from the line of Bob Koort with Goldman Sachs. Please proceed with your question.

Mr. Koort, your line is open.

Your next question comes from the line of Kevin McCarthy with Banc of America. Please proceed with your question.

Yes, good morning. Thank you.

Your net debt balance appears to be the lowest it's been since 2004. And I was wondering if you could comment on whether or not we should expect your deployment of cash and excess cash flow to change in 2010 as the upcycle progresses here?

Kevin, this is Rich. Let me take a stab at that.

What I would tell you is I think we were very prudent with cash, through all of last year. And it was all about managing to maintain our current cost of borrowing, which I think is world class, for any company in any industry. And we were able to do that.

I think going forward, you will see a more return to normal. The new normal, which for us I think will be the old normal. Which would be -- we're probably going to reemphasize our pipeline in the M&A area and look for opportunities there. Look harder for opportunities there.

I think you will see absolutely -- we're not going to lower the bar on capex but we're able to fund our current capex very comfortably. Remember, a portion of last year's capex, probably 30%, was in one project, and that kind of went to build what we did for the Exxon project that John mentioned, so we will have kind of a redistribution of the capex. We're not going to lower the bar, but we feel very comfortable with that.

We will be looking at the dividends before our upcoming board meeting, coming up. And in the past, we've distributed more money to shareholders opportunistically through buybacks, and I think that is another thing that will be we will be looking a lot more closely at, given the situation that we have in terms of net debt and cash and financial flexibility.

Okay. And then shifting gears, now that the court has approved your various agreements with Chemtura, I'd welcome any additional color that you might be able to provide on the anticipated sales and earnings impact there in 1Q and beyond for polymer solutions and Fine Chemicals, if any.

Kevin, this is Rich.

We cannot comment on the revenue impact there, based on the agreements, but as I discussed with many of you, when we put out the press release recently, this agreement is $7 million to $10 million for us year-over-year, in goodness. And I break that down into two components, because I know people model Plan C, the restructuring program that we have, $3 million to $4 million of that is cost-out, related to the support and related to those assets out, related to those assets that we wrote-off, you know; the legal expense, the assets and the asset support, and we internally here would put that into the Plan C cost bucket.

In terms of quarter over quarter benefit to both our Fine Chemicals and our Polymers business, which both benefit from this agreement, we've said $4 million to $6 million a year, so a penny to a penny, and a quarter, a penny and a half, a quarter, and that's about two-thirds Polymers and one-thirds to Fine Chemicals, so adding those two pieces together is $7 million to $10 million.

Got it. Thank you very much.

You're welcome.

Your next question comes from the line of Steve Schwartz with First Analysis. Please proceed with your question.

Good morning, everyone.

Good morning, Steve.

John, can you add some color to the mix effect that is going on in polymer additives?

You bet, Steve. I think that is a good point, a good observation. And basically what we saw in the fourth quarter of '09 was within the brominated flame retardant mix, we sold more tetrabrom as a percent of the total volume, so that defacto really drives down the average price per ton in that business.

The Mineral Flame Retardant business, as we spoke about, in the business itself, there was improved pricing aided by some year-over-year FX issues, but that business is holding out pretty well and those volumes improved as well. But that puts pressure on the mix portion of the pricing equation there.

So those two are detractors, in terms of pricing and mix and polymers. Hopefully that helps.

Well, but John, correct me if I'm wrong, when you calculate mix, you're saying that in the prior year quarter, you sold a like product that carried a higher revenue. And then presumably in this most recent quarter, you would have sold a like product that again has a lower level of revenue. And that's what would have caused mix at the revenue level to decline. Is that in fact what happened?

Actually, if you look, year-over-year, there was a bit of positive actual price improvement. Sequentially, that was a little bit less.

But if you look at within the quarter itself, you're exactly right. Selling more of the higher volume tetrabrom, is lower average price, and that pressures that mix portion of pricing.

Okay. And then, just with respect to the polymer additives again, what was the boost with respect to auto versus electronics?

I know the majority of that business is electronics, but I'm wondering how much auto helped out, with wire and cable? And then what do you think -- right now, the forecast for electronics is for production to taper off in the second half of the year. Do you foresee a downturn in the second half for your flame-retardant PA business?

Thanks, Steve. John, again.

The great thing about the -- our Polymer solutions business is that it is a very diversified portfolio of businesses. And what we saw through the course of 2010 was the business improved really in almost waves.

It started early in the supply chain with print circuit boards which, is tetrabrom and related products, it went from there to enclosure volume, because TV sales were stronger at the back half of the year, and then it went to connectors that covers a wide range of markets, both electronic and automotive.

We're still seeing that strength continue. And I think a portion of that is related to an improving automobile sector. Minerals is part automotive, but also there is some interesting aspects there of improving fire safety regulations. For example, in mining belts, there is some higher regulations now about adding flame retardants in mining belts for mines, and that's giving us a bit of a boost in really a nice new application for our our Mineral Product line.

So going forward, I think, as Mark mentioned in his opening comments, yes, we're a little bit concerned about the Chinese New Year and getting past that, but on the whole, volumes appear to be robust sequentially, and I think hopefully, if there is no economic derailment, we will continue to show good sequential improvement in our volume portfolio in Polymers.

Okay great, thanks, John.

Thank you.

Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Thank you, good morning.

Good morning, David.

John and Mark, can you discuss margins and bromate FR in terms of the Chemtura agreement. How much -- what is the long-term potential of margins? Can we get back to the potentially even high teens in this business going forward?

David, I think, really we're talking about Chemtura, I think in the fundamental sense, what we have, we believe very strong, we have a low-cost position in bromine, I think on average around the world, and we have a very unique reach that nobody else has. That brings a lot of value to our business. And you combine that with the technology that we bring, which is again second to none, and we think that lets us carve out incrementally higher margins than the average person out in this business.

So we've always said that we expect these margins to be in the high teens and run in the high teens and I don't see any reason why we shouldn't continue to be focused on replicating that situation.

The only take-away from that, well, there are two take-aways from that, on a watchout side, and one is phosphorous and the organization is doing a lot to reposition our Phosphorous business to improve incrementally year-over-year and get those margins which are very low, to respectable levels.

And Minerals has been a challenge, and with some of the efforts that are underway that Luke talked about, and as well as some new technology, we're going to get those margins moving back towards, not at, but towards the level that we enjoyed a few years ago when we had such great ATH positions. I think the net of all of those things is we should be able to press the high teens in that. And maybe occasionally touch 20.

Very good.

And just, I know, John, you announced some price increases for the first of the year and I know it is early. How are they progressing in bromine FR?

David, you know, we have led that price increase. There is always a little bit of a lag there. But we seem to have a little bit of momentum now. And that's a good sign.

And I think an important inflection point for the entire bromine business is the bromine supply and demand picture in China. As China tightens up from the supply and demand perspective, I think it could be some significant opportunities going forward in bromine. So we're continuing to study that, and make sure we're making good decisions going forward there. But we're just continuing to study that situation. I think it could be a nice tailwind for us over the next 18 months.

The last question, just on FCC's, John and Mark, where are FCC prices today and what do you expect -- do you expect price increases in FCC's in 2010?

Yes, David, this is John again.

We saw year-over-year pretty significant pricing improvement in FCC, in the range of 10%. It was less than that sequentially, but it was pretty healthy.

Our customer base is going through an extremely difficult time. Probably the worst ever. And I find it a pretty difficult scenario in that to drive forward any significant price increases in 2010. We are going to keep our eye on raw materials, natural gas is going up sequentially, and that puts additional pressure on it and it could be an opportunity to pass those kind of costs through. But we're just going to continue to study that right now.

Thank you very much.

Thank you.

Your next question comes from the line of Mike Sison with Key Banc. Please proceed with your question.

Hi, guys. Nice end to the year.

Thanks, Mike.

In terms of elemental bromine pricing at the end of the year and opportunities, where did you sort of end up or where did the industry end up? When you think about sort of the longer term supply/demand dynamics, is there a good upside potential in pricing for bromine over time?

Yes, thanks, Mike, this is John again.

The last time we saw significant opportunities to raise prices were when the supply and demand portfolio in China really became challenged. And I think we're beginning to see that again today.

We saw improvement sequentially in bromine prices outside of China. And within China, prices are up from six months ago in the range of 50%. And there is a lot of environmental pressure on bromine supply right now, within China, and this affects the downstream consumers of those products which is primarily in the flame retardant arena.

So that is why I mentioned in the previous question of David's that we're going to continue to study that, but I think in the coming months could be a very solid opportunity for the bromine-based business, and its derivative products.

Right and, then Mark, fundamentally, when you think about the JV with Chemtura -- or the agreement with Chemtura, do you think the industry in total, there's just really you and the Israelis, do you think they feel pretty good about that? Is this something that benefits the industry in total?

Well, yes, I guess I would say it really does benefit the industry in total. Chemtura is working with a great partner in Albemarle, and they're going to be out there selling and growing their business and they will be investing in research and doing their thing.

And the Israelis are -- have a good position with the vast reserve they have in Israel across the Peace Canal from our facility in Jordan, so I think structurally, it is good.

So we expect the industry to continue to grow and do well, and we think some of the new products that we are introducing out there and some of the new opportunities especially as we push these new bromine derivatives -- now we're getting more and more of these derivatives out there from things like the biocide applications that John has talked about and sorbent which you know a lot about. And there are new things with -- that started in the gas to liquid technology area and sort of morphed into the petrochemical refineries that uses bromine to upgrade products.

And it looks really encouraging, so we're pretty bullish that this business that has had for years a tremendous dependency on some legacy products that go into flame retardants is slowly moving beyond that. And I think -- I think the industry is going to benefit from that and Albemarle is going to benefit a lot more than the industry.

Great. And Rich, when you talked about double-digit growth top-line for your businesses, if I sort of did the mass for polymer additives, it is sort of not unreasonable to sort of sit you around that $800 million range in 2010, for $200 million a quarter that did you in the fourth. And any reason why your operating margins wouldn't be able sustain in sort of the fourth quarter levels on that number? Like, you know, 16, 17 level?

Well, we would hope so, Mike. I think part of the equation there would be that there would be a little margin pressure in polymers from the Chemtura arrangement. Because we're selling some of the lower margin products, but we're making money on each of those products and we think it is right thing to do.

So all of the things that you heard John and Mark talk about, in terms of new applications, and bromine getting tighter, we would think we would counter-balance that and certainly drive -- I mean you heard our aspirational goal for the high teens, pushing 20. So certainly we should be able to keep that 16% margin.

Mike, I think just be mindful as we start this year, Rich talked about some of these headwinds, we're factoring those in, those get distributed all out to the businesses, and each of these businesses has incrementally more water to carry in the first quarter than the fourth. And we're taking steps to offset those as best we can and stuff. But where I will strongly endorse what Rich has said, I think we're setting a foundation there.

Don't be at all shocked if we start a little bit weak from that and we build it as we go through the second and third quarter and fourth quarters of the year.

Gotcha. And John, just real quick on backlogs for HPC, are they pretty good here, heading into the first half?

Yes, they look reasonably strong, Mike. And hopefully we're through the worst in that business.

Obviously, especially in 2009, with all of the metals issues that we had to deal with, and at a point, our customers just have to get these reactors changed out. So -- but on that note, we're hoping for a bit more ratable volumes in the first half.

Great, thank you.

Thank you.

Thanks, Mike.

Your next question comes from the line of Dmitry Silversteyn with Longbow Research. Please proceed with your question.

Good morning, gentlemen. Congratulations on a nice finish to the year.

Great, thank you.

A couple of questions. One, on the price/mix components across your business, from the conversations that took place here earlier, my understanding is it was mostly mixed. Did pricing in fact go down in any of businesses, and if so was it just a pass-through or was it a competitive pressure, or why did pricing come down, if it did, on a year-over-year basis?

Thanks, Dmitry, this is John.

Without doubt, the majority of the pricing pressure was mixed-based. Okay? And the majority, I would say, of that would relate to the metals pass through. I mean in HPC, in the quarter itself, that was about a $40 million impact in the fourth quarter.

So you can anticipate -- judge how big of an issue that was, and I'm talking year-over-year there, not sequentially.

But I think broadly, across the businesses, there has been very little true price erosion. In the fourth quarter, there was some formulaic-based petrochemical based passthroughs as some of those raw materials declined in the fourth quarter but those same raw materials that declined in the fourth quarter, we're seeing produce a bit of a headwind in the first quarter, particularly related to Benzene and Fennel and some of those feedstocks.

Gotcha. When you look at the Catalysts business, you show that the volumes are up about 12% year-over-year, can you talk about specifically the HPC, the FCC, and the polymerization catalyst and give us an idea how those businesses performed in terms of volumes in the quarter, and what your expectation is for 2010?

You bet. First, on FCC, Dmitry, it was down a bit year-over-year, 4Q to 4Q '08, and I think that was -- in the fourth quarter of '08, there was still, for part of that quarter, pretty good economic activity, and higher employment levels and that kind of thing, and people didn't have the car in the garage, if you will.

With that said, so we had a decline year-over-year, where we saw a bit of an increase sequentially, which I think is a good reflection of the miles-driven statistics, as they improved through the back half of 2009. And so going forward, I think we can anticipate continued volume growth for the year in 2010, though we will have a sequential decline in FCC volumes in the first quarter, because we generally see that.

Right.

Because of those shutdowns.

HPC, we saw double-digit increases in volumes in the fourth quarter. I would hope -- I think we can hold on to that kind of volume level in the first quarter and second quarter, and we're looking forward to turning a big corner here for us, for the year, and having, what I would say, is double-digit volume increases year-over-year in HPC.

And then the new Polyolefin Catalyst business also I think we will see volume continue to grow in that business year-over-year and we're seeing positive signs there for catalyst.

And then lastly, I will mention what we've talked about in the past, the AFT volumes kicking in, we will have some of that for Neste in the second quarter. And there is an order in the fourth quarter that right now could go in the fourth, could go in the first, we're not quite sure, those schedules do tend to change.

Gotcha. Now is the -- you're kind of confident in the HPC performance in the first half of the year, obviously it comes from the order book that you currently have and have some visibility on. Can you give us an idea if this is kind of the replacement cycle beginning to kick in, or are these brand new applications and brand new refineries in other parts of the world and not so much tied to the replacement cycle?

I think directionally it is probably 60% to 70% of the fine we're seeing is a normal-- well, after a prolonged period of not having those change-outs, we're seeing more change-outs occur. We saw more in the back half of the fourth quarter. We're seeing more in the first half. And then that is added to by some of the new refining operations coming onstream, in the Middle East and India. I would say it is probably 60/40.

So 60%-plus is from your replacement business, and that gives you confidence that we finally, after maybe two years or so of delays, that we are kind of finally there in terms of getting the cycle underway.

Right, Dimitry.

Very good.

And I want to make sure I understand correctly that the $160 million in cost savings that the Plan C is supposed to generate, you generated about $100 million or so, you said in 2009, so for 2010 we should expect about a $60 million delta or is it going to get to the run rate by the end of 2010 so it wouldn't be quite be $60 million?

Yes, hi Dimitry, this is Luke Kissam.

It will get to that run rate by the end of the year.

And we're probably looking at incremental more like $20 million to $30 million or so.

Yes, this think that is probably right. Dimitry, it is a little back-end loaded for us, because we have all of these structural moves that we've talked about in Europe.

Gotcha. I was a little surprised that you expect FCC volumes to be lower in the first half of the year and year-over-year basis in 2010, and as you mentioned we're coming up against fairly weak comps, where part of the fourth quarter was really okay in terms of miles-driven but really kind of fell off the table in the March and June quarters. Why would you expect the FCC volume to still be down on a year-over-year basis?

Dmitry, if I said that, I misspoke. What I intended to say was that FCC volumes in the first quarter will be down sequentially. A bit. Not a lot. But a bit. And growing through the back half of the year, still growing year-over-year. I would say, in the low single-digit volume range.

Okay, so kind of a normal growth rate you would expect for FCC?

We normally see it slower in the frist quarter because of all of the turnarounds, and the FCC is consumed on a ratable basis, so if they're not running that refinery and they're doing a tur-around, say, that volume will decline.

Okay. But in terms of year-over-year, you're not expecting a slow start to the year?

Year-over-year, we're seeing growth for the year, with a slower start in the first quarter.

Okay. And then final question, you mentioned it is kind of -- as a top priority for you, for your growing cash position, as you use it for acquisitions, something that you haven't done in the last 12 months-plus, historically in the past, you've run a couple hundred million dollars a year or so, every other year, is that kind of the rate that you're looking to, or is that kind of the size of the acquisitions that you're looking at? And in what areas are we likely to see that? What are going to be some of your focus areas in terms of making acquisitions?

Well, we have the history of being a bit cyclical with this, but I would say your range is right, for what we call bolt-ons ,and there are a number of bolt-ons that we are looking at primarily in the bio-chemical area that are out there that are pretty attractive to us that would sort of continue our growth in that arena.

On a larger basis, we have a pretty -- we have a huge appetite, we're pretty purposeful on how we think about these things, but the areas that are attractive to us, obviously, are steps out in catalysis , and, I think, when you look at that, that can even be some secondary kind of businesses that deal with highly complex inorganic and metallic and organic-metallic kind of combinations that are out there. In the area of polymers, we're looking more towards polymeric and material science kind of applications. There is some new technology there that is kind of appealing to us.

And lastly, we talked about fine chemicals and we continue to debate whether we slide further down the chain there in some areas like bromine.

So there is a pretty broad field for us, Dmitry, but you should expect that if we do these things, they are going to be accretive. We have no intention of moving off our investment grade rating that we have out there. And lastly, for us, perhaps most important, it will make great sense for those who know us and follow us, and we are not out to invest money to buy something and get bigger. We want to grow these business foundations we have

Gotcha. Thank you very much.

Thanks, Dmitry.

Your next question comes from the line of Todd Vencil with Davenport & Company. Please proceed with your question.

Hey, Todd.

A lot of it has been answered. I just want to dig in and think of things in a little bit of a different way.

I mean obviously volumes are coming up across a lot of products. Can you kind of just take a minute and step back and step back and talk about where you guys are in the various sort of major business units of capacity utilization relative to where you've been, say, in the last year or two.

Well, I mean the capacity utilization, the last year, taught us -- you couldn't even talk about it because we were basically shutting down so many things in the first part of the year. Largely the business has been operating in the -- if you look back beyond that, in the 80% to 90% kind of range, and for especially a business like ours, that tends to use the same asset for different things, that's about -- that is pretty high capacity utilization.

We're starting to see some of that return in some areas now for us where we run into pretty high capacity, and I think John mentioned some -- de-bottlenecking that is looking to occur in the catalyst area in particular. We have some in the polymeric areas as well, where you're really pushing the edge of that capacity, so you should look at it as being -- I wouldn't say we're not out of capacity, we're pretty tight in some of the bromine change, we're going to be pretty tight and we're pretty tight in some of the catalyst change that is out there.

And having said that with the SIGA and things like that, we're going to get pretty tight in the chemicals change.

So we're moving up into -- from a capacity utilization point of view in the 90% kind of range as we go through this year.

And you mentioned even given some of the cost headwinds you're looking at, a lot of which are obviously are contractually offset with pass-through and some of which are you going to try to get, you mentioned even with those headwinds, you mentioned margins are going to be up.

I mean do you think the price cost element of margin remains higher? I mean -- so what I'm asking, is are going to be able to make up all of this cost on price or some of it is getting made up through capacity absorption?

I think the biggest change year-over-year in our business was volume metric growth absorption, because we were just not running. And so that volume component is still going to play -- the absorption component is still going to play a big part of our gain as we go through this year.

There are some areas where John has been driving price, and I think we will have some success. There are other areas where it is going to be really difficult given the tentative nature of the customers that are out there. A lot of folks are still just barely hanging on through this recession.

So you should look at it to be predominantly on the volume side is where we're going to drive most of our margin improvement. And it is out there for us this coming year.

Hopefully not a lot of loss though, on the price/cost side, the way to think about that?

We don't give anything away. I mean we expect to -- our products make a lot of money for our customers, and we work hard to make sure that they make a lot of money for our customers. And so we expect to be compensated for that. But in fairness, when you look at some of the businesses that are out there, I mean, you know, the US economy is still struggling, and some parts of Europe are still struggling dramatically, and we've got to do our part to help customers in some areas. So we're going to work hard not to give up too much, but I'm sure we will have to give up some in some areas.

Okay. And, I guess final question on that, just around this area, is -- based on what you said about the fact that some of your passes are getting tight, and I guess I could derive this from your comments on the margins, but is it fair to say that we've kind of now taken back most of the volume metric margin that we're going to get, maybe not all of it, but the lion share?

I think by the end of 2010 that will probably be the case.

Okay. That's it. Thanks a lot.

Great, thanks.

Your next question comes from the line of Robert Koort with Goldman Sachs. Please proceed with your question.

Good morning, guys.

Hey, Robert, how are you doing?

Good. Sorry about the telecom limbo I went into earlier.

A few questions. One maybe for Luke. When you think about operating rates in your bromine wells in Arkansas, can you give us some sense of where those might be by the ends of this year, relative to maybe where they were in the '06-'07 timeframe?

I think that, Bob, it is hard to tell what the demand is going to be by year-end, but if you assume that the rates are going to be consistent with what we've done with our planning for the year, we're going to be close back up to those kind of '07 rates, I think.

Okay. And then can you talk a little bit, maybe John, on fine chemicals, the sales were off 10%, and I think you picked on oil field chemicals in particular as a weak area. Was the rest of the portfolio in positive territory in terms of year-on-year volume?

Yes, Bob, it was -- clear brines was a piece of it. The sales decline year-over-year, you can call about half of it clear brines, and the other half was some AG intermediates that we supply and a customer just cut back on their order patterns at the end of the year.

So what we saw in Fine Chemicals is all of the new products, both on the bromine side and the fine chemistry side, really kicked in to offset those two headwinds.

Okay. And then can you just remind me again, when I look at moly prices and volatility in moly, how that affects, one, how it gets passed through, and then how it affects the buying behavior? I mean obviously we've seen moly some days was in the 30s the last couple of years,and then it sort of troughed out last year in the $12 or $13 range and we have seen some increases up here to the mid teens. How is that going to change behavior? How does it get through to your product pricing?

So the product is priced in the contracts, that is based on the index, the two published index, usually one or the other and an average of both, Bob. And then year-over-year, what you saw moly do was probably, it was cut in half. So it was in the range of $27 a pound, down to, in the fourth quarter, something in the range of $13 a pound.

Now we're seeing a little bit of pressure on that now. They've been going up through the course of the first quarter here.

But generally, there are some customers who believe that it could go back up. And they want us to procure the metal for them. And thus have a base load of metals priced in their catalyst. There are some who it doesn't appear to be that important to, or they're not willing to bet either way.

But generally, in the fourth quarter, that was a big reduction in revenues, because the moly portion of the catalyst pricing was way down. As I mentioned earlier in the call, that was about $40 million year-over-year.

But anyway, that's the scenario. Hopefully it answers your question.

Just to clarify, John, does that mean you take the credit risk of taking that metal for your customer, but don't actually get to book your revenue because you haven't delivered the product?

Well, this was -- I mean to a degree, that's true, okay? So that's why we had such a big metals issue in 2009, because we had such -- we had too high of inventories, frankly. And what we're doing now, Bob, is really trying to manage those inventory levels extremely tight.

As a matter of fact, our teams are working with a third party to really help us break out of the box in terms of how we handle planning and forecasting for our HPC business, because that is such a big issue. And it was a big issue for us in 2009 as I think you're aware.

Got it.

An one last one, if I might, for Mark. You, I thought, floated out a target of $4 a share of earnings in 2012. I guess I don't have that clarity and confidence to forecast that far out. Some who have taken a stab at it aren't anywhere close to that number, in terms of street estimates. At your conference, are you going to give aus pretty robust analysis so we can see what the waterfall is from here to $4, or is it a long-range target that is a little less granular?

When we came out in 2008 and did that, we provided a lot of specificity on our plans on how it is going to happen and we will be doing the same thing this coming May. And that's the target we have internally.

And of course, we are expecting a lot of that out of organic growth activity, but there will be some -- a little bit of support from acquisitions to help us get to that level, but it is still our expectation to get this machine to $4 by 2012.

Terrific. Thanks.

Your next question comes from the line of Edward Yang with Oppenheimer. Please proceed with your question.

Hi, good morning. And congrats on the quarter. Clarification on the earlier question from P J on Catalysts, are you expecting Catalysts to show sequential operating income growth 4Q to 1Q? You had a pretty strong fourth quarter, and I think you had some additional royalty income this quarter as well.

Yes, this is John.

We are -- well, let me put it this way. I would be extremely disappointed if we didn't have sequential profit growth in our Catalyst business in the first quarter.

Okay. And thinking more longer term on Catalysts, a big growth driver, again longer term, was going to be oil sands or the crude slate getting progressively heavy. What kind of oil price do you think it would take to get those projects back online and what do you think the long-term growth rate for Catalysts, at this point, normalizing for year-over-year changes in refuel cycles and so on?

I think what is different between today and say in the 2005-'06 kind of timeframe, is that there is a lot of pressure. These refineries that are under their margins are really stressed, and it doesn't look to me like the US and European refiners are going to be out of that situation any time soon. In fact, some folks predict maybe five years or six years or seven years in that kind of trough.

I think really it is the margin these guys are making on the recovery materials that are really driving these investments, so it is going to be hard to, in my opinion, to go up and invest the kind of extraordinary capital it takes to recover incrementally new material from the oil sands. So we don't really see that growth profile as being as dramatic as everyone thought it was going to be a few years ago.

But clearly as oil prices go up, part of their contribution is the margin, just the recovery of crude. That number as you know used to be 50, it's migrated north of 50 now, and last time I saw was in the 80 range, which is close to where we are. But you're going to need to see some stability of crude and the crude markets before that investment takes place.

Beyond that, what we see for the business, though, is we do see continued growth. Now, I want to be really clear in saying that what Albemarle is able to do is bring new technologies to the marketplace, and in spite of what has been an absolutely horrible marketplace, we have added a lot of value to our customers by bringing in new FCC technologies, and by bringing in new HPC technologies. I don't think that is going to change.

So we're expecting to get into a -- what I call more normal growth cycle of 5%, 6% kind of levels in HPC, and so we think that is going to be carrying us going forward. And FCC is going to be hard to get big volume growth here, because that business is on the base level and gasoline is flat to declining, but we think we can hold volumes here and by introducing the new products slowly push those up. So a few percentage points there is what I would expect.

Polyolefin, as John talked about, doubling kind of, so that is a double digit kind of year-over-year growth for a couple of years and that's what we think is going to be happening there. The last thing I will comment on is that we're pretty myopic in our approach to Catalysis and that we satisfy our current customers and there are actually now teams of people that are looking at how we push out into other areas, like the solar film area and things like that, using some of these technologies, so I think we will be bringing additional businesses to play here in Catalysts to maintain growth. So it is a long-winded way of saying

we expect good growth in this business, and if if there was ever a more normal cycle, I would say back to stronger more normal areas that we anticipated in the 2006-'07 timeframe.

Okay, and thank you for the insight, Mark.

My final question is on polymer additives and the improvement has been very, very impressive, especially starting from the first quarter to the fourth quarter of 2009, When I look at this historically, it's had big cyclical dips an conversely we've had big spikes upwards as well. But when I average it out over the past five years, you earn about $106 million in income in polymer additives, including good times and bad. And when you look at the fourth quarter that you just reported, the run rate is a bit higher than that, it is closer to $128 million.

Does this mean that we're kind of at the lower beginnings of recovery -- later beginnings of recovering this business? It doesn't sound like you believe that.

And what kind of structural or secular drivers are helping you have some additional confidence in driving incremental polymer additives growth? Some people are talking about a new PC replacement cycle, for example. Are you customers talking about that?

Yes, Ed, this is John.

That is a big question. That was a very broad question you just asked so let me try to comment on it.

Fire safety is kind of the pillar there. And then you build on that with electronics growth. And then you have -- I mentioned this wave effect of print circuit boards to enclosures, meaning TVs to auto and construction and things like that. A very broad-based business.

So with that, if we don't see any kind of significant economic derailment, I think we can continue to grow this business and have a very solid 2010.

What we've tried to do through the course of, especially the first half of 2009, is determine our own destiny. By driving out costs, and doing that in a very structural, permanent way. And if you look at the incremental margins in this business, we're very proud of that. And hopefully that will really be a pillar, if you will, that we can build on in the coming year.

So we think at this Chinese New Year, we will have a much better reflection of realtime demand. We've got our inventory structure right. And we feel we're staying very close to our customer base to meet their needs. So you know, I think 2010 can be a solid year for us.

Okay. Thank you very much.

Thanks, Ed.

Your next question comes from the line of Robert Wright. Please proceed with your question. Mr. Wright, your line is open.

And there are no further questions at this time.

Thank you.

I would like to thank everyone for participating on the call today. If there are any further questions, you can contact me at the number indicated on our press release.

Have a great day.

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.