Koppers Holdings Inc (KOP) 2017 Q4 法說會逐字稿

Good day, and welcome to the Koppers Holdings Inc. Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Quynh McGuire. Please go ahead.

Thanks, and good morning. I'm Quynh McGuire, Director of Investor Relations and Corporate Communications. Welcome to our fourth quarter earnings conference call. We issued our quarterly earnings press release earlier today. You may access this announcement via our website at www.koppers.com.

As indicated in our earnings release this morning, we've also posted materials to the Investor Relations page of our website that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, this is being broadcast live on our website and a recording of this call will be available on our site for replay through March 27, 2018.

Before we get started, I would like to direct your attention to our forward-looking disclosure statement. Certain comments made during this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, risks and uncertainties, including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission.

In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans and projected results will be achieved. The company's actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements.

The company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The company has provided with its press release, which is available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Joining me for today's call are Leroy Ball, President and CEO of Koppers; and Mike Zugay, Chief Financial Officer.

I will now turn the call over to Leroy.

Thank you, Quynh. Welcome, everyone, to our fourth quarter 2017 earnings call. Before getting into the details of our financial results, I'd like to recap our key accomplishments in 2017. Now at Koppers everything begins with safety, so let's start with the Zero Harm update.

After visiting 19 different Koppers' locations throughout this past year, I can say with confidence that our safety-first culture continues to be embraced by our employees across the globe. At each of these locations, I always do my best to engage our safety committees, management teams and individual employees on issues that are important to them. And we continue to build on the momentum that followed our second annual Koppers Zero Harm, Zero Waste leadership forum held in September in Pittsburgh.

During the past year, every one of our operating locations completed training on the first 3 modules of safety leadership training designed to incorporate our Zero Harm values in all that we do. All operational and executive leadership, including myself, participated in leadership diagnostic surveys meant to provide constructive feedback as to how each of us can become better safety leaders.

In addition, we significantly advanced the development of our lifesaving roles, which will go into effect in January 2019, and those roles will provide our people, who are performing the most inherently dangerous work, even more peace of mind that their safety always comes first.

In 2017, 13 of our 31 operating facilities worked accident-free, and the number of our full year OSHA recordable incidents was slightly below our 2016 results. Additionally, our serious incident precursors drop significantly year-over-year, which is a positive sign that our efforts to prioritize training and education around identifying and mitigating the most potentially dangerous exposures are showing results.

On a daily basis, we're practicing empathetic leadership and demonstrating real concern for our peoples' health and welfare. I'm inspired by what's been done to make our company a better, stronger, safer place to work. And certainly, we still have a lot to do to get to 0, but I'm pleased with our progress so far.

Since we started this journey a little more than 2 years ago, it's been our team's core belief that if we put the health and well-being of our people first, success will follow. Our progress today shows it's working, and I believe that we're on the right path to a stronger future.

Now I'd like to summarize other key accomplishments of this past year that reinforce our strategy to improve profitability and continue our focus on wood treatment technologies. In early 2017, we successfully executed on our bond refinancing, lowered our overall cost of borrowing and extended our long-term debt payment date to 2025 with a new notes offering compared with 2019 previously. Also we entered into a new 5-year credit agreement with our lending group providing for a $400 million revolving credit facility maturing in February 2022. As a result of these financing transactions, we have greater flexibility to pursue opportunities to invest in our business.

Now as part of the strategy to streamline our Carbon Materials and Chemicals business, or CM&C, we entered into long-term coal tar supply agreements with certain key suppliers in early 2017 to satisfy a significant portion of our raw material needs in a cost-efficient manner. Also we received the final payments of our loan associated with the sale of our minority interest in our TKK joint venture in China, and we exited that joint venture as part of our plan to reduce our footprint in China.

In our Railroad and Utility Products and Services business, or RUPS, we extended or amended supply contracts with several of our Class 1 railroad customers and increased our long-term market share with several of those customers. While we are not able to disclose the specifics due to contractual reasons, we're very pleased in our customers' continued confidence in Koppers as a key crossties supplier.

In our Performance Chemicals business, or PC, we completed several capacity expansion projects at our facilities in Hubbell, Michigan; Rock Hill, South Carolina; and Millington, Tennessee. Also MicroPro, a micronized copper wood preservative technology developed by our PC business, just celebrated 10 years of commercial production. Now since its introduction in 2007, more than 20 billion board feet have been treated with the micronized copper preservative. PC holds the #1 spot in market share globally for wood treating chemicals and MicroPro is a key contributor to our company's success.

From a financial perspective, 2017 was a record-setting year with record adjusted EBITDA of $200.4 million and adjusted earnings per share of $3.68. Our balance sheet has also continued to improve as evidenced by our net leverage ratio of 3.1 at year-end 2017 compared with a ratio of 3.7 at prior year-end.

Now these are just a few highlights and are great examples of the leadership and hard work being demonstrated by the Koppers' team. I'd like to thank my senior management team and the employees, who are all involved in getting all this great work done.

Now let's talk about our December quarter financial performance. The tough decisions that we made to shutter or sell unused capacity in our CM&C business in 2015 and 2016 are beginning to reap benefits at levels higher than even we thought possible and certainly at a pace that is faster than we anticipated.

As market conditions for most of our CM&C products began turning in our favor around midyear 2017, it has magnified the cost benefits we've created through our many restructuring initiatives. Now for our RUPS business, the results continue to be disappointing due to the ongoing demand weakness for treated crossties and pricing pressures related to an inventory oversupply in the market that has persisted for much of the year.

Now on the other hand, the PC business saw strong sales volumes in North America for copper-based wood preservatives and additives due to healthy market trends in the repair and remodeling markets driven by existing home sales. Although 2017 was one of the best years in Koppers' history, I believe there is more to come as we continue to grow our presence in the higher value wood treatment technologies marketplace.

Now let's get into some specifics about each of our business segments. As I mentioned, our RUPS business was, again, negatively affected by the continued demand weakness from Class I customers, primarily related to lower volumes of untreated and treated crossties.

In the commercial market, we continue to deal with a depressed pricing environment, although things may be beginning to improve which I'll talk about a little bit later. Our rail structures business, which typically does project work related to bridge repair services, has also seen a slowdown as railroads have delayed projects to conserve cash.

These negative factors were partially offset by higher volumes related to our rail joints in the U.S. and our utility products in Australia. Now on a year-over-year basis, segment sales for the third quarter declined by 12.4% and adjusted EBITDA was lower by 89%, reflecting a decline in sales and unfavorable mix and an under absorption of fixed costs. Now we knew that 2017 was going to present a challenge for this segment of our business, but unfortunately it was an even greater challenge than I had anticipated and the results surely reflect that.

The current RUPS business model is being reevaluated in 2018, and we'll share our plans for needed changes when appropriate.

For our Performance Chemicals segment, sales increased 4% due to higher demand in North America for copper-based wood preservatives and additives. Customer demand was strong due to favorable market trends in the repair and remodeling markets driven by existing home sales. Adjusted EBITDA was 19.9% for the fourth quarter, which is 350 basis points higher than the prior year quarter. The improved profitability also reflects investments that were made to expand capacity and productivity for certain processes and some raw material hedging gains partially offset by higher raw material costs.

Our Carbon Materials and Chemicals, or CM&C, business reported its fifth consecutive quarter of margin growth, driven by a sales increase of $64.8 million or 65.6% higher than the prior year quarter. The sales increase was primarily driven by a combination of higher pricing and volumes for carbon pitch in Australasia and Europe due to increased demand in those regions.

For CM&C, market tailwinds combined with restructuring benefits generated higher profitability in the fourth quarter than in all of the prior year. Adjusted EBITDA margin was 14.5% in the fourth quarter and $12.9 million higher than the prior year quarter.

I'll now turn it over to Mike to discuss some key highlights from the fourth quarter and 2017 results.

Thanks, Leroy. Let's begin by referring to the slide presentation provided on our website. Starting with Slide 4, sales were $366 million for the quarter, which was an increase of $53 million or 17% from $313 million in the prior year. Our CM&C business reported higher prices and higher volumes for carbon pitch in Australasia and Europe and higher demand for phthalic anhydride in North America. The PC business experienced higher North American sales volumes for copper-based wood preservatives and additives due to favorable trends in the repair and remodeling markets.

The RUPS business was negatively affected by weakness in demand for crossties and railroad bridge services, partially offset by higher sales of rail joints in the U.S. and utility products in Australia.

On Slide 5, consolidated revenues for 2017 were $1.5 billion, reflecting an increase of approximately $60 million or 4% from the prior year.

Moving to Slide 6. Adjusted EBITDA was $42 million compared with $38 million in the prior year, due primarily to higher profitability from PC and CM&C, partially offset by lower profitability for RUPS. CM&C profitability improved significantly from the prior year, driven by a combination of higher pricing and volumes for its carbon-based products as well as cost savings from its restructuring initiatives. PC's profit margins benefited from strong customer demand as well as capacity and productivity improvements. RUPS was negatively affected by lower spending across both the Class 1 and commercial markets combined with ongoing pricing pressures on commercial crossties.

Moving to Slide 7. This shows our EBITDA bridge of $200 million in 2017 compared with only $174 million in the prior year. The strong profitability from our CM&C and PC segments more than offset the decrease in RUPS.

Now I'd like to discuss several items that are not referenced in the slide presentation. Adjusted net income was $9 million for the quarter compared with $8.5 million in the prior quarter. Adjustments to pre-tax income totaled $18.1 million for the quarter and $7.1 million for the prior year, and this primarily consisted of restructuring expenses for both periods. Adjusted earnings per share were $0.40 for the quarter compared with $0.40 per share in the prior year. The effects of U.S. tax reform had a significant impact on our fourth quarter and full year results. Tax reform moves the U.S. to a territorial tax system, which will benefit Koppers longer-term due to our foreign operations that had significant cash generation potential. In order to convert to a territorial system, tax reform introduced a one-time transition tax on untaxed foreign earnings that resulted in an income tax charge for us of $13 million. Combined with a reduction in the value of our deferred tax assets, from the rate reduction to 21%, our total tax reform charges totaled $20.5 million in the fourth quarter or $0.92 of GAAP EPS.

Looking forward to 2018, we expect our effective tax rate to be in the 25% range. While we will enjoy the benefit of a lower U.S. corporate tax rate, some of this benefit may be offset by other aspects of tax reform, such as limitations on interest expense deductions and the minimum tax on foreign earnings. We're still analyzing the impact of tax reform on our business, and we'll continue to evaluate additional guidance issued by the applicable tax authorities.

For the year, cash provided from operating activities was $102 million compared to $120 million in the prior year. This slight reduction was primarily due to a voluntary cash payment of $7 million into our U.S. defined benefit pension plan and increases in working capital, primarily in receivables and inventory.

2017 CapEx was $68 million compared with $50 million for the prior year. The current year amount consists of spending on a new naphthalene unit construction at our CM&C facility in Stickney, Illinois, and expanding production capacity at our PC facilities in the U.S.

At the end of last year, we began using a net leverage ratio to monitor our debt status. Due to a combination of higher profitability, as well as lower net debt, our net leverage ratio, as seen on Slide 8 in the presentation, improved to 3.1 at year-end, which shows a significant improvement compared with 3.7 for the prior year and which was as high as 5.1 on a pro forma basis at the end of 2014. Also in February 2018, we amended our $400 million revolving credit facility to increase its capacity to $600 million in order to provide us with additional financial flexibility. Terms under the amended facility are relatively consistent with the original agreement.

Now with that, I'd like to turn the discussion back over to Leroy.

Thank you, Mike. Regarding the outlook for each of our business segments, let's start with our Railroad and Utility Products and Services business. Now according to the Association of American Railroads, or AAR, rail traffic finished 2017 on a positive note. In December, 14 of the 20 carload categories saw year-over-year gains and intermodal volume was higher for the 11th consecutive month, setting a new annual record. For 2017, the total U.S. rail carload traffic was up 2.9% year-over-year and intermodal units were 3.9% higher than prior year. The total combined U.S. traffic in 2017 increased 3.4% compared to last year, which is consistent with industry forecast. The AAR reports that the decline in coal transportation due to low natural gas prices and environmental concerns regarding the burning of coal has been more than offset by other major categories of freight. However, the lower volumes in coal being transported has resulted in a decrease in heavy haul traffic.

Consequently, the Class 1 railroads have been deferring some of the maintenance and repair activities and rightsizing inventory levels as they look to conserve cash. We expect that demand for crosstie replacements will be only marginally better in 2018 due to the lower spending trends.

Now as a result, we expect to see improvement in our treating business serving the North American rail industry, but it will likely be smaller than originally thought and begin late in the third quarter or early in the fourth quarter of 2018.

On the plus side, we're starting to see a tick up in commercial pricing after dealing with 12 to 18 months of a difficult pricing environment. The orders that we are getting today won't be reflected in our results until the second and third quarter, and some of that pricing will cover the increased costs of untreated material that we're beginning to see, but we should still see some pricing drop to our bottom line as the year progresses. And while our commercial volumes only approximate about 1/4 of our overall volumes in this segment, they're still a critical determinant of the health of our business, and the good news is that things are beginning to look up.

Now as reflected on Slide 10, we're providing 2018 adjusted EBITDA guidance for our RUPS segment of approximately $43 million, which is a modest $4 million increase from prior year and takes into account all the factors that I've just spoken about.

Now in our Performance Chemicals business, the market for existing homes continues to show mixed signals as affordability pressures persisted and interested buyers significantly outweighed housing inventory. The National Association of REALTORS reported the total existing home sales subsided for the month of December, but on an annual basis, 2017 was higher than the prior year by 1.1% and was the best sales year in 11 years.

In January, existing home sales slumped for the second consecutive month and experienced largest the decline on an annual basis in over 3 years, with all major regions experiencing monthly and annual sales declines.

Total housing inventory has been declining and the lack of available housing has resulted in an upward pressure on prices. At the same time, 2018 is expected to be another strong year for residential renovations and repairs with growth accelerating as the year progresses according to the Leading Indicator of Remodeling Activity, or LIRA, reported by the Joint Center for Housing Studies of Harvard University.

Now due to study gains in the broader economy as well as ongoing restoration efforts related to recent natural disasters in the U.S., the LIRA estimates that homeowner spending on improvements and repairs will approach $340 billion in 2018, an increase of 7.5% from estimated 2017 spending. Additionally, the Consumer Confidence Index as reported by the Conference Board continues to show improvement. In January, the index was reported at 125.4, up from 123.1 in December 2017 and 113.7 in December 2016, which should provide a positive backdrop for housing-related demand. In general, consumer expectations remain at historically strong levels, which suggests continued economic growth.

From a cost perspective, our raw material costs have been increasing primarily due to copper pricing, which trended higher for 2017 and continues into 2018. We continue to hedge a majority of our requirements over a 1- to 3-year time frame in order to provide short-term certainty of our cost structure by lessening the impact that may arise in rapidly fluctuating commodity markets. Of course, our hedging program doesn't enable us to avoid cost increases, merely delay them. In 2018, we will experience approximately $14 million of increased costs as a result of higher average raw material costs.

As you can see on Page 11 of our slide presentation, we're expecting to generate 2018 adjusted EBITDA of approximately $82 million for PC, which is $6 million lower than prior year. The year-over-year decline represents our ability to mitigate approximately $10 million of the $14 million related to our expected higher raw material costs through a combination of higher volumes, some price adjustments and bringing more copper processing in-house through our capacity expansions over the past year.

Now also we expect to have an unfavorable impact on our year-over-year profitability of approximately $2 million, primarily related to an extended plant outage at one of our international operating locations.

So moving now to the outlook regarding our CM&C business, where we are achieving a significant rebound in profitability driven by a stronger overall pricing environment, particularly in China. In 2017, there was an overall tightened market supply of coal tar and carbon pitch in China, and this put upward pressure on both raw materials and finished product pricing. This is due to an ongoing initiative by the Chinese government to reduce pollution and improve air quality. Now the impact has been the shutdown of older steel and coking capacity that does not meet environmental and emission standards and has driven increased demand for products requiring coal tar pitch.

The pricing for coal tar products in the region has increased significantly. And as a result, our recently constructed coal tar distillation facility serving those markets has benefited from these changes in regulations. In China alone, we're expecting a significant increase in EBITDA in 2018 versus 2017 based upon current market dynamics. A good portion of that increase is expected to be realized in the first quarter based upon current agreed upon finished goods pricing with our main customer that serves the electrode market. Now further upside remains if current first quarter pricing holds for the second quarter and beyond. Now we continue to believe that the current pricing environment for our products in China is not sustainable long term and will revert to more normalized levels at some point. It's just a question of when, so we continue to be very cautious about setting expectations that could reverse themselves as suddenly as they appeared.

In Australia, the market has also been favorable since pricing is correlated to the trends seen in China. However, we expect the raw material pricing that lag the price increases we saw in 2017 will catch up in 2018 and pull our Australian region back from their very successful 2017 performance. The shortfall that we expect in Australia should be mostly offset by improvements in our combined North America and European regions, where demand dynamics are expected to be strong and additional cost savings should be realized from the mid-year completion of our new naphthalene facility at our Stickney, Illinois plant.

Therefore, as shown on Slide 12, our anticipated 2018 adjusted EBITDA guidance for CM&C is approximately $87 million, which represents a $12 million improvement over prior year.

On Slide 13, you can see the various drivers in our sales guidance for 2018. We're projecting that CM&C will benefit from both higher pricing and higher volumes, with China providing most of the benefit, and PC demand is expected to stay strong also.

Therefore, these positive factors will more than offset some lingering sales weakness in our RUPS business. And as a result of a generally positive economic environment, as well as market share growth, we anticipate our 2018 consolidated sales will approximate $1.7 billion.

Now turning to Slide 14, our guidance for 2018 consolidated EBITDA on an adjusted basis is approximately $210 million, a 5% increase compared to the prior year adjusted EBITDA of $200 million. Accordingly, our 2018 adjusted EPS guidance is projected to be between $3.90 and $4.10 per share compared with $3.68 per share in 2017, which would represent a new record-high adjusted EPS for the company and a 9% increase using the midpoint of that range.

Capital expenditures for 2018 are expected to be approximately $55 million to $65 million, and that includes approximately $7.5 million of carryover from 2017 and several attractive capacity expansion projects as well as improvements in the safety and reliability of our existing infrastructure.

Now from my standpoint, 2017 represents the best year in Koppers' history as we touched the $200 million mark in adjusted EBITDA for the first time; reached another all-time best of adjusted EPS of $3.68; increased our share price for the year by 26% and finished above $50 a share for the first time in our history; brought our net leverage down to 1 point just above our average target level of 3; and most importantly, continued to improve the safety of our operating locations around the world.

Our 1,800-plus global employees deserve all the credit for that success for they are the ones that have sacrificed and done all the difficult work in the trenches that made it happen. Now after all that success, I worry how we could follow that up with an even better year in 2018, knowing that we're winding down on our restructuring savings, knowing that we're facing significant raw material headwinds and knowing that we're likely to not see much organic growth in markets where we already hold significant market share.

But lo and behold, demand for our products tightened significantly in China, and the sales contract that we renegotiated in 2015 with our main customer in that region, all the sudden, begins returning profits at levels that I don't think anyone could have imagined at that point in time.

But now as we being 2018, I'm confident that we will again reach new highs in adjusted EBITDA and adjusted EPS, while also beginning to see our restructuring charges abate as we get near the end of the final resolution for the few remaining facilities that have a limited remaining life for Koppers.

Now as we're doing that, we've begun to turn our focus to the opportunities to grow our wood treatment-based business through selective acquisitions, which would present another new and exciting chapter for our company. The last 3 years have been a whirlwind of activity culminating in a great 2017. I continue to believe that we have a long runway ahead us, and we'll continue to outperform. It's what drives our people every day.

I'd now like to open it up for questions.

(Operator Instructions) We'll go first to Laurence Alexander of Jefferies.

Could you help with a couple of items? Can you give your thoughts on working capital use in 2018 compared to 2017, like any gives and takes? How you think about D&A and CapEx over, say, the next 3, 4 years?

Sure. Laurence, this is Mike Zugay calling. The working capital is going to increase because our sales are going from $1.5 million to $1.7 million. So we're going to see a little bit of money put into additional receivables and inventories, although we're continuing to manage those as appropriately as we can. From a standpoint of other items to be used, we, at this point in time, still do not see at least the current portion in 2018 of using any funds for dividends or share buybacks. As you know, and as Leroy has mentioned, our next avenue is growth on the top line, and we will be looking at mergers and acquisitions. So we see cash flow contributing to that as we go forward in 2018.

Okay. And then your perspective on CapEx and D&A?

Yes. CapEx, as Leroy mentioned, we're somewhere -- we're going to be somewhere between $55 million and $65 million for 2018, about $7.5 million of that amount is a carryover from 2017.

And Laurence, I think our expectation is that the CapEx for us will be around probably that $55 million mark over the next couple of years based upon some projects that we see in the pipeline. From a D&A standpoint, I think this year we're expecting that we'll probably be just slightly under $50 million or so.

Yes, right about $49 million, a drop from $53 million, Laurence, from 2017.

We'll go next to Rogers Spitz of Bank of America Merrill Lynch.

In RUPS, can you skinny down some of your capacity to rightsize that business? I mean you did such a good job in CMC, maybe this business calls for the same kind of activity.

Yes. So RUPS is -- it's a different animal than CM&C from that perspective. So you think about our facilities in that segment of the business, we essentially are online with all of the Class 1s, which is the predominant amount of our business. And we actually took a plant down a few years ago, our Green Spring, West Virginia plant, which is a plant that served the CSX. And at that time, we were taking the CSX plants from 3, that we had operated, down to 2. Today, essentially, we have 2 plants online with the CSX, 2 with the BNSF, 2 with UP, 2 with the NS, so -- and then we have the 1 in Canada that's online with the CP. So from the standpoint of serving these Class Is, I believe that there would be a high level of discomfort in putting such a large amount of business -- placing a large amount of business with a supplier like us that they're reliant upon for product coming out of only 1 facility. So I don't really see an opportunity to take capacity out from that standpoint. I think the footprint is what the footprint is. We just need to -- we need to reconsider how we operate the technology that we use in those facilities, which in most cases is pretty old technology. And I think just look at ways that we can take costs out of the business, but it's not going to come through a consolidation, it will come through different efforts.

Okay. It sounded like you expanded your revolver, if I heard correctly, to $600 million from $400 million since December 31, if I heard that correctly? And if I did, was there any change in the 2 3/4 secured leverage ratio maintenance covenants, recognizing if you do an acquisition, it changes for a bit?

I think built into the credit agreement is a bump up in that covenant after we do an acquisition. So from that standpoint, there is that relief. I think what we are looking at, and maybe to clarify, is our current agreement before we amended it was a $400 million revolver with $100 million accordion. So in total, it was -- it had the availability of $500 million. And all we've done is -- with our amendment is to increase that to $400 million in the revolver and $200 million in the accordion for a total of $600 million. So when you look at the difference between the old agreement and the first amendment, it's actually only $100 million more in availability, and we're looking at that for just additional flexibility as we move into 2018.

Just to make sure I understood, you -- I don't if the right technical word is, but you actioned both the $100 million accordion and then you also have the extra $100 million. So you have no accordion left, you right now have the full $600 million currently, is that correct?

That is correct.

And the 2.75 secured leverage ratio maintenance covenants, that hasn't changed?

That will not change unless we do a major acquisition when it bumps up to 3.

Got it. And lastly, has higher chrome prices also pressured your PC business? Or is -- I recognize copper has been the main pressure, just want to know about chromic?

Yes. I mean, we're seeing pressure there too, but it is -- copper is the main driver of our cost increase in that business.

We will go next to Liam Burke of B. Riley FBR.

Leroy, you mentioned in your prepared comments that you had an increase in demand in bonded insulated joints, but the rail CapEx spend will delay the pickup in the crosstie business. Generally, I would think there will be a correlation there between maintenance CapEx in both bonded insulated joints and ties, why the disconnect?

Yes. That's a good question, Liam, and I don't really have a good answer for you. I mean, we actually saw a pretty good year all the way around on the rail joint side. I think some of that was market share -- additional market share that we were able to take. So I think that from that standpoint, that has helped volumes in that particular business segment for the rail, while we haven't seen it in the other parts. In addition, we've been able -- that's a part of the business that we actually are able to take international and export. It'll -- certainly a lot easier than we can on a crosstie side. So we saw pickup on some sales from that standpoint as well.

Is that business big enough to move the needle on the RUP side of the revenue?

Not really. I mean crossties drive that. Crossties drive that business. The 2 maintenance-of-way businesses that we have today are nice additions. But in any given year, they're going to impact the EBITDA by maybe $2 million to $3 million plus or minus.

Okay. And on Stickney, do you have a sense as to when that consolidation will be completed?

About midyear.

Okay. So it hasn't changed. You're pretty much on track for a mid-year completion?

Yes, we think so. I mean, the cold weather snap that occurred at the end of the last year, early into this year, lost a little bit of time for us. But we still feel pretty good about more or less being online with that right around midyear. So nothing that's material enough of a change to where we're concerned at this point.

We have no further questions. I would like to turn the call back over to our CEO, Leroy Ball, for any additional or closing comments.

Well, thank you to everyone that took the time to participate on today's call. We remain energized to deliver another great year of performance. And thank you for your interest in our company and the support you provide as we continue to make positive change. Have a great day, everyone.

Thank you.

That does conclude our conference for today. We thank you for your participation. You may now disconnect.