Westlake Corp (WLK) 2011 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation fourth quarter 2011 earnings conference call. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you'll be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, February 21, 2012. I would now like to turn the call over to today's host, Dave Hansen, Westlake's Senior Vice President of Administration.

Thank you very much and good morning, everyone, and thank you for joining us for the Westlake Chemical Corporation fourth quarter conference call. I am joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer, and other members of our Management team. The agenda for today will be as follows. Albert will first make a few comments regarding Westlake's performance and the strategic initiatives we have underway. Steve will then provide you with a more detailed look at our financial and operating results. Albert will have a few concluding comments, and then we will open up the call for questions.

Today, Management is going to discuss certain topics that will contain forward-looking information that is based on Management's belief, as well as assumptions made by and information currently available to Management. These forward-looking statements suggest predictions or expectations and thus, are subject to risks or uncertainties. Actual results could differ materially based upon factors including -- the cyclical nature of the chemical industry, availability, cost and volatility of raw materials, energy and utilities; governmental regulatory actions and political unrest; global economic conditions; industry operating rates; the supply/demand balance for Westlake's products, competitive products and pricing pressures; access to capital markets; technological developments and other risk factors.

As you are probably aware, we have submitted a proposal to Georgia Gulf Corp. to acquire all of its outstanding shares for $35 per share. During our prepared remarks, we will briefly comment on the Georgia Gulf proposal. During this conference call, we will not respond to any callers' questions regarding Georgia Gulf. Please note that our communication today does not constitute an offer to sell, or the solicitation of an offer to buy any securities. No tender offer for the shares of Georgia Gulf has been made at this time. If and when a tender offer is made, we will file relevant materials with the SEC.

Westlake issued earlier this morning a press release with details of our quarterly financial and operating results. This document is available in the Press Release section of our webpage at Westlake.com. A replay of today's call will be available beginning two hours after completion of this call until 1 PM Eastern Time on February 28, 2012. The replay may be accessed by dialing the following numbers. Domestic callers should dial 1-888-286-8010. International callers may access the replay at 617-801-6888. The access code for both numbers is 75680375.

Please note that information reported on this call speaks only as of today, February 21, 2012, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed at our webpage at Westlake.com. Now, I 'd like to turn the call over Albert Chao.

Good morning, ladies and gentlemen, and thank you for joining us. The year 2011 and has proved to be another successful and strategically important year for Westlake. We celebrated our 25th anniversary in 2011 by achieving record earnings. Our record earnings of $259 million, or $3.87 per share, in 2011 grew by 17% year-over-year, driven by improved Vinyls margins and the continued strong performance from our Olefins segment. The fourth quarter presented the industry with a challenging environment. As ethane feedstock prices increased compared to the previous quarter and seasonal destocking across the supply chain caused derivative prices to fall early in the quarter.

During the year, Westlake embarked on a series of capital expenditures that will expand our integration, reduce our production costs, and boost earnings into the future. These back-end integration projects will expand the Company's capacity in ethane-based ethylene and in chlorine and caustic, which will complete upstream integration in our vinyls chain. The significant investments we are making using our existing cash resources demonstrate our confidence and optimism about the future of our Olefins and Vinyl businesses.

Our ethane-based ethylene plant will benefit from the expanding supply of ethane from shale gas production in North America and the development of the infrastructure necessary to deliver this lower-cost feedstock to our plants. In 2012, we will complete one of two expansion programs to increase the ethane-base capacity of our ethylene crackers in Lake Charles, Louisiana, with a second expansion planned for completion in 2014. We will be fully integrated in chlorine feedstock with the completion of our chlor-alkali facility in 2013, and we are continuing our engineering study to convert our propane-based ethylene cracker in Calvert City, Kentucky, by 2014 to take advantage of the larger volume of ethane coming from the Marcellus and Utica shale plays. These projects will take advantage of the ethane pipeline infrastructure that will bring ethane from the Marcellus and other shale areas to Lake Charles and Calvert City, thus I'm confident in our ability to achieve earnings growth as we remain focused on executing our strategic plans toward integration with advantaged feedstock.

Now let me turn it over to Steve for a more detailed look at our financial and operating results.

Good morning everyone. I'll begin with a discussion of the consolidated financial results, followed by a more detailed discussion of our Olefins and Vinyl segment results. Let me start with our consolidated results. Westlake reported fourth quarter net income of $26.4 million, or $0.40 per share, compared to a net income of $84.1 million, or $1.26 per share, in the fourth quarter of 2010. Sales for the fourth quarter 2011 of $859 million were $64 million higher than sales of $795 million reported in the fourth quarter of 2010 as a result of higher sales prices for caustic, styrene, and building products, and higher sales volumes from polyethylene offset by lower building products sales volumes.

Westlake's operating income for the fourth quarter of 2011 was $50 million, a decrease of $87 million compared to the operating income of $137 million in the fourth quarter of 2010. The decrease in operating income was the result of lower Olefins margins and lower domestic and export PVC resin margins, as feedstock remained elevated and product prices did not keep pace with feedstock prices. As Albert noted, the fourth quarter experienced a destocking in both polyethylene and PVC due to seasonal issues and a slower economic outlook. Seasonally weaker domestic demand prompted Westlake and the industry to increase PVC resin export volume in the fourth quarter, although these export sales were at lower prices than we experienced earlier in the year.

Sales in the fourth quarter of 2011 were $859 million. The decrease in sales revenues compared to the third quarter was the result of lower olefins sales volumes in the fourth quarter, as well is a decline in polyethylene, PVC resin, and ethylene co-product prices offset by an increase in PVC resin volume. Operating income of $50 million in the fourth quarter of 2011 was $67 million less than the $117 million reported in the third quarter of 2011. The decrease in operating income was the result of reduced Olefins margins and reduced margins in PVC resin sales that resulted from an increase in the feedstock cost and price declines for both PVC resin and polyethylene. Full-year 2011 earnings of $259 million were 17% higher than earnings of $221 million in 2010. Sales for the full year 2011 of $3.6 billion increased 14%, or $448 million over 2010 sales, primarily as a result of higher prices for all of our major Olefins and Vinyls products.

Operating income were 2011 was $447 million, compared to the $378 million for 2010, an increase of $69 million, or 18%. The increase in operating income was primarily the result of higher margins on PVC resin sales and higher caustic prices. PVC resin sales volumes and margins increased during 2011 compared to 2010, as both domestic and export PVC resins saw higher sales volumes and higher margins. Industry exports of PVC resin grew in 2011 to approximately 39% of industry sales compared to 35% in 2010. Lower-cost ethane-based ethylene production in the US continues to give the US an export advantage for PVC resin. Caustic prices also continue to rise in 2011 due to industry supply disruptions and increasing demand.

Now let's review the performance of our two segments. Starting with the Olefins segment. The Olefins segment reported operating income of $76 million on sales of $622 million during the fourth quarter of 2011, compared to an operating income of $155 million on sales of $564 million in the fourth quarter 2010. These lower operating income results were caused by significant increases in feedstock cost in the fourth quarter as the industry experienced seasonally slower sales and customer destocking, resulting in downward pressure on Olefins margins.

While our Olefins segment benefited from higher sales volumes in the fourth quarter of 2011 than in the same period in 2010, margins were lower as a result of higher ethane and propane feedstock cost. As a result of higher ethane feedstock cost, elevated ethylene prices and improved demand near the end of the fourth quarter, polyethylene producers implemented a $0.05 per pound increase in December. For the year 2011, the performance of our Olefins segment remained very solid and comparable to 2010 results, with operating earnings for the year 2011 of $459 million. Olefins 2011 sales volumes were only slightly lower than in 2010, but Olefins margins were stronger in 2011.

Looking forward into 2012, ethane feedstock prices have decreased significantly due to improved availability of ethane feedstock coupled with an extended industry ethylene cracker turnaround schedule. The busy industry turnaround season will impact approximately 11% of North American production during March, April, and May. Due to sustained polyethylene demand and persistently elevated prices for ethylene, polyethylene producers announced a $0.06 per pound price increase for February, and a $0.07 per pound price increase for March.

Let's discuss the Vinyls segment. The Vinyls segment reported an operating loss of $19.6 million in the fourth quarter 2011, compared to an operating loss of $12.4 million in the fourth quarter 2010, largely the result of a significant increase in the ethylene feedstock cost, a drop in ethylene co-products margins at our Calvert City plant, and a decrease in export PVC resin margins. PVC industry exports in the fourth quarter 2011 represented approximately 45% of sales, as export sales offset the lower domestic sales volumes, resulting from seasonal reductions and the continued weakness in the construction markets. The decrease in PVC resin margins were partially offset by an increase in PVC resin sales volume and higher sales prices for caustic.

Vinyls segment sales increased $6 million, primarily as a result of higher caustic and building product prices and higher PVC resin sales volumes, offset by lower building products sales volumes. For the year 2011, the Vinyls segment reported an operating income of $4 million, a marked improvement compared to an operating loss of $62 million in 2010. Vinyl sales in 2011 were $1.1 billion, compared to $911 million in 2010. The increase in operating income for the year 2011 was the result of higher caustic prices, higher domestic and export PVC resin margins, higher building product margins, and higher PVC resin sales volumes offset by lower building product volumes. Operating income, which improved to $66 million over 2010, was negatively impacted by $18 million due to a major turnaround at our Calvert City facility and the closure of a pipe manufacturing facility.

Looking forward to the first quarter, the industry has implemented a $0.03 per pound price increase for PVC resin in January, and has announced an additional $0.02 per pound price increase to be implemented in February. Caustic demand remained strong in the fourth quarter and the industry was able to implement price increases totaling $45 per ton compared to the third quarter. Currently, several additional price increases have been announced by producers for the first quarter.

Turning to the balance sheet and the statement of cash flow, we generated $362 million in cash from operating activities during 2011 and spent $177 million on capital expenditures. Our cash balance, including restricted cash, was $922 million and our total debt was $765 million at the end of the year. For 2011, we acquired $2.5 million of stock under our share buyback program and we will continue to pursue purchases on an opportunistic basis in the future.

Now for 2012 modeling purposes, here are a few items to consider. 2012 will include significant capital expenditures for our integration projects that Albert mentioned, and our guidance for 2012 capital expenditures is between $400 million and $450 million. These expenditures will be funded from cash on hand. One of our Lake Charles, Louisiana ethylene crackers will undergo both a turnaround and an expansion in the fourth quarter of 2012. There no other planned outages. Our capital expansion program will span the next three years in order to expand our production base and lower our cost. We will also continue to pursue investment opportunities that bring value to our shareholders. We will maintain our financial strength and flexibility and we have sufficient resources at our disposal to fund our capital programs and fund future growth opportunities.

Now I'd like to turn the call back over to Albert to make some closing comments.

I am pleased with Westlake's financial performance during 2011 as we achieved record earnings in the year with significant economic uncertainty. 2011 also saw the start of work on our chlor-alkali project that in 2013 will complete our chlorine integration. We are on track to execute our ethylene expansions, one in 2012 and the other in 2014. We continue to evaluate conversion of our Calvert City ethylene unit to ethane, which could be completed by 2014. Westlake is highly levered to US ethane, and our ethylene integration projects are designed to capitalize on the structural changes in the US natural gas liquids market and deliver meaningful future earnings growth.

Looking forward in 2012 and 2013, we see fractionation and pipeline infrastructure construction accelerating that will deliver increasing supplies of ethane to the petrochemical industry. We are already seeing a remarkable drop in the price of ethane feedstock beginning January of this year. Since the end of December 2011 through mid-February of this year, ethane prices have fallen approximately $0.30 a gallon, which has resulted in a decrease of approximately $0.15 per pound in the cash cost to produce ethylene. Increasing supply of ethane and additional ethylene cracking capacity from our debottleneck project this year will meaningfully improve our cost position in ethylene, polyethylene, and PVC. The growing improvements in our cost position will continue to sustain our global competitive position of PVC exports as we see domestic markets gradually recover. In summary, our earnings power has grown and will continue to grow because of the fundamental structural shift in cost curves. Therefore we will continue to focus on opportunities to deliver value while maintaining the Company's financial strength to pursue future growth opportunities.

Now I'd like to say a few words about our proposal to acquire Georgia Gulf. In our view, a combination of Georgia Gulf with Westlake on the terms we have proposed would provide significant benefits to both companies' shareholders. Georgia Gulf Shareholders would receive an immediate and substantial premium. The combined Company would have additional scale and improved cost structure and additional growth opportunities. Together, I believe we will be well-positioned to meet industry and economic challenges that will face us over the coming years. We continue to be interested in good faith negotiations with the Georgia Gulf Board and its Management, and we are willing to explore where opportunities exist that would justify by increasing our proposed price.

That said, I want to emphasize that we are a disciplined acquirer with extensive industry knowledge, and we know what Georgia Gulf is worth. We continue to believe our proposal is a good one and represents superior value compared to where Georgia Gulf will be trading absent a transaction on a stand-alone basis. We have not withdrawn our proposal so far. However, at some point, if we do not see a real change in approach from Georgia Gulf's Board and Management, we likely will. Thank you very much. Now let me turn the call over to Dave Hansen.

Before we begin taking questions, I would like to remind you that a replay of this teleconference will be available starting two hours after we conclude the call. We will provide that number again at the end of the call. Operator, we're now prepared to take calls regarding our earnings release.

(Operator Instructions) Kevin McCarthy with Bank of America.

Albert, you referenced the significant volatility in ethane feedstock costs with the feed down nearly 40% on a year-to-date basis, notwithstanding a small bounce in recent sessions. What is your outlook for ethane for the remainder of 2012? Perhaps you can talk a little bit about why it has declined so rapidly, and where you think it might go in coming quarters. And also, is there anything that Westlake can do to lock in low levels for any period of time?

Ethane prices were quite elevated in the last quarter of 2011, and there is reasons, partly because of the supply logistics of getting wide-grade fractionators, as well as some of the operations of the fractionators. We believe that things stand a lot more -- logistics problems were solved, and also second half of last year, a number of expansions in the fractionation capacities along the Gulf Coast came onstream. And as we speak, this year and next year, there will be an additional 700,000 barrels of new fractionation capacity coming onstream.

We believe there will be a lot more supply of ethane, and the ethane-based, the US ethylene industry will benefit from the decrease in ethylene price. Certainly there is views on the future ethylene price -- CMI gave some guidance for ethane for 2012 to be in the $0.60-odd range, and dropping down to $0.50-odd range later on this year. Then there's some future, as you mentioned, indices and our future price, which is more like $0.50-ish for this year. Time will tell what those prices will be, but we believe that it will be substantially lower this year than last year.

Okay, very good. A couple of financial questions for Steve, if I may. First, would you comment on the impact of FIFO inventory accounting may have had on profit in the quarter? And then second, Steve, looks like your CapEx is set to more than double. Perhaps you could provide some color on how much is earmarked for ethylene expansion versus chlorine integration and some of your other key projects.

Kevin, our FIFO versus LIFO impact in the quarter was just $1 million on an after-tax basis this quarter. In terms of the capital expenditures, while we don't bring it out by segment, you would imagine that a meaningful portion of the number I guided to $400 million to $450 million, is really destined for the two projects -- the chlor-alkali project, which won't be completed until 2013, but we will complete the debottleneck and expansion this year in Lake Charles. So those are the two big drivers.

Okay, thank you.

Brian Maguire, Goldman Sachs.

I was hoping you could give some update on the Calvert City feedstock flexibility study, and maybe when we might get the timing on an announcement there? And whether or not the Enterprise announcement that they're going ahead with their Marcellus pipeline will have a big impact on that project going forward now?

Certainly. Yes, the pipeline that will bring ethane for Marcellus down to the Gulf Coast will pass by our ethylene plant, and we are studying the conversion from a propane cracker to ethane cracker. And we expect sometime this year to announce what the conversion will be.

Okay, great. And then on the outage at Geismar, can you size the impact there on the fourth quarter operating rate and on EBITDA?

It was very small. It was just part of our normal annual maintenance there. It was very small.

Okay, got it. And then in the first quarter, I know one of your competitors in LDP had a pretty significant outage. Are you expecting a big impact to volumes and margins to make up for some of the lost production of that competitor?

As Steve mentioned, we have a $0.06 per pound increase for February, and a further $0.07 a pound price increase for March.

Got it. One last one, if I could sneak it in. The drop in natural gas prices here in the first quarter has been pretty significant. You benefit a little bit more indirectly from that, but are you anticipating a big benefit on your core alkali electricity costs as a result of that?

Yes, we believe -- most of our costs on the Gulf Coast are based on natural gas power costs, so we'll get a benefit from that.

Okay, I will get back in the queue. Thank you.

Jeff Zekauskas, JPMorgan.

I was wondering, Albert, if you could reflect a little bit more on the high price of ethane in the fourth quarter of 2011, in that, gas plant production I think was something like 975,000 barrels per day, and it looked as though industry operated at such a level that supply and demand were more evenly matched. And then there have obviously been turnarounds, and there has been a surplus of ethane. But do you think that the high price of ethane in the fourth quarter was due to various logistical bottlenecks or different operating problems? Or do you think it was a period of time when just supply and demand were well matched?

I think all of the above. And I think also that this year, especially in the first half, as Steve mentioned, there are substantial number of turnarounds in the ethylene industry that also reduce ethane requirements for the first half of this year.

So, I understood the drift of your comments before to be that you thought that ethane would be relatively low this year. Why is it that in the second half, why shouldn't ethane rise as capacity comes back on?

I think you're right. The ethane demand will increase, but also there are additional fractionation capacity come onstream as well. And also some of the logistics of supplying the gas plants or fractionators also will be improved. And additional pipelines, which bringing ethane from -- in the past stranded ethane to bring down to the Mont Belvieu area. There is more supply, and also you're right when all the ethylene plants come onstream in the second half of this year, they are still in the turnaround second half of this year, including our plants, but the supply and demand will be somewhat different.

So, you think that ethane supply by midyear of 2012 will be very different from what ethane supply was like in the fourth quarter of 2011?

We believe so, yes.

Thank you very much.

Don Carson, Susquehanna.

You talked about destocking in the fourth quarter in both olefins and vinyls. Can you talk a bit about what trends you have seen thus far in Q1 in both segments, as well as in export versus the offshore markets? And then on vinyls, what was your fourth quarter operating rate, and have you moved up with the industry? And just wondering about your outlook for caustic pricing, given that supplies seem to be increasing here, and prices stagnating somewhat.

Certainly. Let's start with the questions about Vinyls. I think we operate close to industry operating rates, and as Steve mentioned, the export market was very strong fourth quarter. It's also lack of domestic demand. In terms of export-wise, we feel that both exports in polyethylene and PVC can be strong. Prices in Asia for both polyethylene and PVC are going up. Ethane price going up in Asia as well, with still stronger demand for oil products in Asia.

As far as caustic is concerned, as more production for chlorine for the vinyl business, there's more production caustic. As Steve mentioned also, there are a number of caustic price increases announced for the first quarter, and time will tell whether those increases will be able to be implemented.

Just want to follow up on your Asian comments. Are you seeing increased evidence that there is restocking of both polyethylene and PVC by Asian distributors? Or is it too early to tell yet?

I think it's too early to tell. We had an early Chinese new year in January this year rather than February, and we do not see the Chinese new year being a material impact on the demand for commodity polymers.

Thank you.

Frank Mitsch, Wells Fargo Securities.

If I could follow on in terms of the trends here in the first quarter. So, we've seen some pick-up sequentially on the volume side of things. How would you compare, if you look year-over-year, the margins that you are booking right now, let's say January 2012 to January 2011?

Yes, certainly we have price increases, as we announced for both polyethylene and PVC. And with the drop in ethane price, our margins both in the Olefins and Vinyls side would improve. Last year, remember, there was in March or April there was tsunami in Japan, which caused disruption in the vinyl business. We hope there won't be anything like this, this year. But as we speak now, the margins should improve.

Terrific. In the fourth quarter, obviously your Vinyls business was a disappointing loss, and you talked about some of the PVC resin margins as being a part of that. Could you expand upon the building products business? How is the building products business faring, and what is your expectation for that unit in 2012?

As Steve mentioned in his section, that our building products in 2011 improved in margins compared with 2010. And we foresee that as the construction market improves, albeit very gradually, that it should also improve. As far as last quarter in Vinyls, certainly the demand for both PVC and building products domestically were quite weak. But also we were impacted in our Vinyls business by the high propane price, which feeds into our Calvert City ethylene plant, and the low byproduct credits, again, what Steve mentioned, which is propane -- propylene and mixed C4, those prices were down in the fourth quarter. So, it will impact us by that high-cost propane ethylene cracking costs, which is reverting now; propane has come down a lot as we speak in the first quarter. And most propylene price and mixed C4s have increased.

Okay, great. And then lastly, you did talk a little bit about share buyback that you have done. At this point, it hasn't been a very large part of what Westlake does. What would have to happen for Westlake to be a more active participant in the share buyback market?

Frank, as I said in my comments, we will continue to be looking at the markets on an opportunistic basis, and obviously we will report those on a trailing basis, but we certainly will continue to be opportunistically in this market.

Great, thank you.

Gregg Goodnight, UBS.

It sounds like your Calvert City study is moving along at a good clip. At this point, are there any details you can fill us in on? For instance, capital costs or maybe in a range turnaround timing, what length of time your cracker would be out? And then finally, would this be a capacity expansion or a breakeven on the capacity?

Gregg, as we do our analysis now, I don't want to give any capital costs yet from a guidance point of view, because we obviously haven't finished that analysis. But as part of that analysis, we will be assessing what size that cracker could be expanded to in a cost-effective basis. So, those are questions that we hope to be able to respond to and disclose once we complete our study later this year.

Okay. In terms of the ethane, you mentioned it would be Marcellus ethane. How should we think about the cost for that ethane? A Mont Belvieu equivalent, plus or minus? Conceptually you probably haven't finished all your negotiations in that area, but conceptually how should we think about it?

Certainly as we assess the feedstock there, we are not going to get in and talk about our particular pricing that we see in the marketplace, but this will certainly be a market-based-oriented price for feed.

So, it will be competitive?

It will be competitive.

Okay. Finally, you mentioned the exports in the fourth quarter. Would you characterize that level of exports as continuing here in the first quarter, or has domestic demand picked up sufficiently where the exports have gone down as a percentage of total?

Yes, I think that demand is still strong, but we have to look at our feedstock costs. As you know, the ethylene price has moved up a lot during the first quarter, and that will impact people buying ethylene in the market. We are a bio-ethylene market shortfall right now.

Okay, so you're exporting on the margin, obviously. I appreciate the comments, gentlemen.

Bill Cavalier, Oscar Gruss.

You've basically threatened to -- or explicitly threatened to withdraw your offer for Georgia Gulf. Unfortunately there really isn't an offer. There's a couple of letters back and forth to the Board. You decided not to run a [set erectors], you've got no hostile exchange offer, so there's really no way for shareholders to really express their dissatisfaction with the Georgia Gulf Board, if they have any. Can you tell us whether you plan to launch a hostile exchange offer, or why you will not?

As we said earlier, we will not make any more comments other than what we have said so far on the conference call.

Okay, thank you.

Brian Maguire, Goldman Sachs.

Hi, just a follow-up question or two. By my math, once you are done with all of your expansion projects and your vertical integration projects, so that should be a bit little bit long chlorine and ethylene. Do you guys have an opportunity to debottleneck some of your downstream facilities to be able to consume that, or do you think that the merchant market is big enough that it could absorb it?

All of the above.

Okay. And then just one last one. Most of your competitors in the commodity chemical space are paying a pretty hefty dividend these days, pretty high dividend yield. And you guys are still down closer to 0.5% on your yield. Any thoughts on capital allocation as it pertains to the dividend, and maybe raising that closer to where the peer group is?

Brain, our Board assesses that on a very regular basis, and certainly as you would imagine, this will be a topic they will continue to assess on a regular basis. I can't make any further comment of what the Board's action might be.

Thank you very much.

We have time for one more question. Jeff Zekauskas, JPMorgan.

In Calvert City, you want to convert your propane cracker into an ethane cracker. Why is it over a longer period of time that you have a preference for ethane versus propane, and is it a strong preference?

Yes, from what we've experienced in the last several years is that propane price tends to fluctuate more with oil. As you know, there are propane terminals that export propane to overseas. So, with the abundance of ethane supply coming on from the various shales across the US, we believe that ethane price would be more attractive from an ethylene feedstock point of view than propane.

And this is a strong preference you have?

Yes, we believe.

Thank you very much.

At this time, the Q&A session has now ended. Are there any closing remarks?

We would like to thank you for participating in today's call. We hope you'll join us again for our next conference call to discuss our first-quarter 2012 results. Have a wonderful day.

Thank you for your participation in today's Westlake Chemical Corporation fourth quarter earnings conference call. As a reminder, this call will be available for replay beginning two hours after the call has ended. You may access until 1 PM Eastern Time on Tuesday, February 28, 2012. The replay can be accessed by calling the following numbers. Domestic callers should dial 1-888-286-8010. International callers may access the replay at 617-801-6888. The access code at both numbers is 75680375.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.