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A. Schulman, Inc. (NASDAQ:SHLM)

Q3 2014 Earnings Conference Call

July 02, 2014 10:00 AM ET

Executives

Jennifer K. Beeman - Director of Corporate Communications & Investor Relations

Joseph M. Gingo - Chairman, President and Chief Executive Officer

Bernard Rzepka - Chief Operating Officer

Joseph J. Levanduski - Chief Financial Officer

Analysts

Mike Sison - KeyBanc Capital Markets

Rosemarie Morbelli - Gabelli & Company

Kevin Hocevar - Northcoast Research

Dmitry Silversteyn - Longbow Research

Christopher Butler - Sidoti & Company

Matthew Dodson - JWest, LLC

Operator

Good day, ladies and gentlemen. And welcome to the A. Schulman Fiscal 2014 Third Quarter Conference Call. [Operator Instructions].

I would now like to turn the conference over to Ms. Jennifer Beeman. Please proceed.

Jennifer K. Beeman

Thank you, [Gwen]. Good morning, and welcome to A. Schulman's Third Quarter 2014 Conference Call. I'm Jennifer Beeman, Director of Corporate Communications and Investor Relations for A. Schulman.

By now, you all should have received a copy of our press release, which was issued last night. Joining me today is Joe Gingo, Chairman, President and Chief Executive Officer; Bernard Rzepka, Chief Operating Officer; and Joe Levanduski, Chief Financial Officer of A. Schulman. Before we begin, I'd like to remind you that statements made during this conference call, which are not historical facts, may be considered forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied. In addition, this conference call contains time-sensitive information that reflects management's best analysis only as of the date of this live call. A. Schulman does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this call.

For further information concerning issues that can materially affect financial performance related to forward-looking statements, please refer to A. Schulman's quarterly earnings releases and periodic filings with the Securities and Exchange Commission. I'd also like to remind you that for purposes of this phone call, we use non-GAAP measures of net income excluding certain items or adjusted net income, as well as net income per diluted share excluding certain items. These financial measures are used by management to monitor and evaluate the ongoing performance of the company and to allocate resources. You can find a reconciliation of these non-GAAP measures to the nearest comparable GAAP results as an attachment to our third quarter earnings release.

Now we will begin with our prepared remarks on the quarter, and then we'll open up the call over for questions. Now I’d like to turn the call over to Joe Gingo. Joe?

Joseph M. Gingo

Thank you, Jennifer, and thank you all for joining us this morning. I am very pleased that our growth trend has continued into our fiscal third quarter and the demand in our key markets has remained steady. The quarter benefited from growth or acquisitions which have performed as expected and our several organic growth initiatives. And as you know, it is in our DNA to constantly seek out additional operational efficiencies to drive profitable growth. Unlike last year’s unusual third quarter, I believe that through these three efforts, we have returned to our typical historic pattern where our third quarter is the strongest. As you may have seen, we announced that we have closed on our recent acquisition of the Specialty Plastics business segment from Ferro Corporation for $91 million in cash.

The Specialty Plastics segment is a global supplier of custom engineered plastic compounds, colorants, and liquid coatings.

As a reminder, the acquisition is expected to be accretive to adjusted earnings, and we anticipate achieving approximately $5.5 million in synergies within 12 months to 18 months, driven from purchasing activities and operational efficiency actions. These assets achieved sales of $154 million in 2013 with approximately two thirds of these revenues generated in the United States. We will gain important geographic diversification in the U.S. as well as Spain.

This is the ninth acquisition we have successfully completed over the past four years, in addition to three joint ventures. As we stated at our recent Investor Day, our goal is to realize $100 million of additional sales annually through acquisitions. This latest acquisition exceeds that target, and more importantly, is an excellent fit with our strategy. You can be assured that we will continue to pursue other opportunities as our pipeline remains active.

Through our successful execution of our dual approach growth strategy, we are improving our position in target markets, diversifying our product mix, and increasing our prospects for sustainable and profitable growth.

Now I’d like to turn the call over to Joe Levanduski for more details on the third quarter results. Joe?

Joseph J. Levanduski

Thanks and good morning everyone. I’ll begin with a discussion of our third quarter results on a consolidated basis. For the three months ended May 31, 2014, net sales increased $97.1 million or 17.7% to $645.7 million. Incremental net sales from acquisitions contributed $55.7 million during the quarter. Volume increased 11.1%. Excluding the impact of acquisitions, net sales were positively impacted by a 4% increase in price per pound and a 3.4% increase in organic volume.

Foreign currency translation favorably impacted net sales by $16 million. Gross profit excluding certain items for the company was $92.1 million for the quarter, up from $74.4 million for the third quarter of fiscal 2013. Excluding the foreign currency impact, growth profit increased by $15.5 million compared with the year ago, which reflects the benefits of recent acquisitions, improved mix, and increased organic volume in nearly all product families.

SG&A expenses, excluding certain items, was $63.7 million, which represents 9.9% of net sales compared with $52.3 million or 9.5% of net sales in the same period last year. The increase was primarily due to incremental SG&A expense from recent acquisitions along with higher variable incentive compensation expense compared with the fiscal 2013 quarter.

Operating income excluding certain items was $28.4 million, an increase of $6.3 million or 28.5% from the prior-year period. Net income, on a GAAP basis attributable to the company's shareholders, was $19.1 million for the fiscal third quarter compared with $5.2 million for the prior year period.

Foreign currency translation had a positive impact of $2.1 million on net income for the current year quarter. On a non-GAAP basis, net income from continuing operations was $21.8 million or $0.74 per diluted share, which represents a 48% increase compared with $14.8 million or $0.50 per diluted share for the prior year period.

Now let’s turn to our business segments, in EMEA, net sales were $413.8 million for the quarter, an increase of $50.9 million or 14% compared with the prior year quarter. Of that increase, $22.2 million was due to the Perrite acquisition. Organic volume increased in all product families, driven especially from greater demand in the automotive market.

EMEA gross profit increased $8.1 million to $56.8 million, mainly due to the incremental contribution of the Perrite acquisition, improved product mix, and higher volume in all product families. Foreign currency translation positively impacted EMEA’s gross profit by $2.9 million.

In the Americas, net sales for the third quarter increased $28.9 million or 18.9% to $181.4 million. The Network Polymers and Prime Colorants acquisitions increased sales by a total of $20 million, while foreign currency translation negatively impacted net sales by $5.1 million. In the Americas segment, we continue to execute our strategy to increase specialty product sales and reduce less profitable commodity sales.

Gross profit for the Americas was $28.3 million for the quarter, an increase of $8.3 million from the prior year. The benefits of recent acquisitions in group mix and prior restructuring initiatives were partially offset by increased incentive compensation expense as well as the $600,000 negative impact of foreign currency translation.

Net sales in APAC were $50.5 million for the quarter, an increase of $17.3 million or 52.2% from the prior year quarter. The contribution from the Perrite acquisition accounted for $13.5 million of that increase. Excluding the Perrite acquisition, organic volume increased by 22.5% in APAC, and we saw increases across all product families. The increase in volume was partially offset by the decrease in price per pound driven by competitive pricing pressures, primarily in the masterbatch solutions product family.

Gross profit for APAC was $7.1 million for the quarter, an increase of 24% from a year ago, primarily due to the positive contribution from Perrite as well as the increase in organic volume. As expected, the gross profit percentage declined primarily as a result of the competitive pricing pressures and the broadening of our product portfolio in the region.

Looking now at our balance sheet, we continue to operate from a strong financial position to support our strategy of organic growth and bolt-on acquisitions. As of May 31, 2014, the company was in a net acquisition of [$230.9] million compared with $81.18 million at the end of fiscal 2013. We increased leverage to fund recent acquisitions, dividend payments, working capital needs and capital expenditures. Net leverage is approximately 1.5 times providing room for continued execution of our gross strategy.

Working capital, excluding cash, was $303.9 million as of May 31, 2014, an increase of $52.3 million from the fiscal 2013 year-end. The translation effect of foreign currencies, primarily the euro, increased working capital by $6.5 million.

Fiscal 2014 acquisitions contributed $27.1 million of working capital. The working capital base stood at 50 as of May 31, 2014 compared with 58 days at the end of fiscal 2013. And that -- availability under our credit lines which includes our recently expanded credit facility was $311.3 million at the end of the third quarter compared with just $198.3 million at the end of fiscal 2013.

With that, I’ll conclude my prepared remarks and turn the call over to Bernard.

Bernard Rzepka

Thank you. And as Joe Gingo said at the beginning of this call, we were able to successfully capture organic growth as well as growth from our recent exhibitions during the quarter. We continue to push for organic growth through added value product and solutions and our focus on smart sales activities is unwavering. These activities are beginning to show the desired results.

In May we hosted our third global Growth Summit where 100 of our commercial marketing and technical leaders met again to further [accelerate] possible growth across all regions and businesses. During the week, we shared success stories and put them into actionable and accountable plans that are being leveraged globally and will provide future growth.

Our purchasing and supply chain functions are focused on supporting the dividend by continuing to develop strategic global suppliers. And our regional global supplier day in New York which was attended by over 60 suppliers, we stressed that we want to engage with suppliers who wish to be our strategic partners in order to gain hugely beneficial growth opportunities. It was an education day for them, but more importantly, it was an opportunity for us to build value relationships and share our growth trends with our trusted suppliers.

We remain keenly focused on regional and global customers and infact we have recently reassessed how we manage strategic global accounts more effectively. Our goal is to be the material supplier of choice and the co-developer and innovator of product with a specific group of key global customers. Additionally, we continued to strengthen our sales force capabilities with focused training such as value base sharing as well as lead generation for high end target markets. Thus far, we have received very good feedback from our teams as we continued to provide them with the training and force that they need to accelerate profitable organic growth.

Turning to Europe. We experienced very good growth in our color as well as our engineered plastics businesses, driven by our focused executions in an improving market. The Perrite acquisition also supported the growth in the [key] business significantly. Our other businesses are growing as well, our markets remain very competitive, thus we are continuing to focus on added value activities and look for ways to improve profitability by smart savings as well.

As Joe mentioned, the Ferro spend acquisition sees a regional gap which we have hedged for long time. Additionally, it strengthens our masterbatch entire portfolio in the region. Looking ahead, we continued to see modest growth for us despite weak GDP growth in many parts of Europe.

In the Americas, we saw great progress in all product categories. The recent investments in our color capabilities are evident in our results and we will as we did in Europe grow the business significantly. Given our relatively small presence the U.S. has great potential for organic and accelerated growth. The Ferro acquisition will have jump start our engineered plastics masterbatch and color businesses because it provides us new customers, products and capacity as well as a great team. Our extended customer base will also benefit from a broader product portfolio and global footprint. We are excited about our future opportunities together.

Our Specialty powders business continues to develop and they have been very successful in our niche product such as oilfield services, 3D printing, specialty coatings and colored water compounds. In Latin America, our plant consolidation effort in Brazil continues to make progress despite being challenged by the economic environment there.

Including Brazil, many markets are performing well in Latin America and our teams are working hard to drive positive growth. Our APAC region experienced good growth from our engineered plastics masterbatch and color businesses. The Perrite acquisition, a growth of business in Asia and China contributed to our positive results. However, despite having good business in niche product, we still have a very low market share in APAC and we are continuing to look into many options to grow our offerings in the top growing market. With the Ferro acquisition, A. Schulman now consists of 3,800 associates located in 43 plants around the world serving local, regional and global customers.

Now I would like to turn the call back over to Joe Gingo.

Joseph M. Gingo

Thanks, Bernard. And as you know on June 19, we made an announcement of my succession plan. I am pleased that the board has named Bernard, President and CEO as of January 1, 2015. Throughout Bernard’s 22-year career with A. Schulman, he has shown outstanding leadership and dedication to customer relationships. His operational expertise and strong commitment has created significant value for our customers, share holders and associates.

Through the ongoing execution of his 3S program of safety, smart sales and smart savings, Bernard and his team will continue to drive profitable and sustainable growth for our company. I am confident Bernard is the right person to follow me as CEO. With his extensive knowledge of all aspects of our business, he is uniquely positioned to execute on our company’s second phase of our growth strategy. Over the next six months, I will be working with Bernard and the team to complete an orderly transition to his new role.

I am honored that our board has nominated me to continue to serve as Chairman of the board when I step down as President and CEO on December 31, 2014. This nomination will be subject to my re-election as Director, I wish shareholders at the company’s annual meeting this December. It has been my privilege to serve as Chairman, President and CEO of this great company for almost seven years. And I am excited about the long-term prospects for the company and look forward to the continued success of the A. Schulman team with Bernard.

With that, let’s turn to our revise guidance, our acquisitions combined with a benefits of high restructuring in our organic growth initiative are putting us on a page to deliver a record year for A. Schulman. Accordingly, we are raising our expectations for fiscal 2014 adjusted net income to be in a range of $2.31 to $2.36 per diluted share, which would represent an approximate 25% increase over the prior-year results using the high end of this range.

This equates to a fourth quarter adjusted net income expectations of between $0.61 and $0.66 per diluted share. This resumes a more historical trend of quarterly earnings given the normal holiday cycle in the U.S. and Europe in the July and August time period.

With that, let’s open up the call for your questions.

Jennifer Beeman

Thank you, Joe and Gwen, I think we are ready for Q&A

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Mike Sison with KeyBanc. Please proceed.

Mike Sison - KeyBanc

Hey, good morning, guys. Joe, congratulations on getting Schulman on the right track here over the last seven years, and congratulations to you, Bernard.

Joseph Gingo

Thank you.

Bernard Rzepka

Thank you, Mike. Thank you very much.

Mike Sison – KeyBanc

Couple of questions, really nice quarter here, and the growth was pretty impressive. Just curious -- in EMEA, I would’ve been -- I was a little surprised that operating margins didn’t improve a little bit given that operating rates now have moved up. And I know operating margin isn’t your ideal way for us to measure profitability, but do you think there was enough profitability improvement given the growth that you showed in the quarter?

Bernard Rzepka

I’m going to let Joe address it, because there is financial implications to that.

Joseph J. Levanduski

Yeah, I think, one we’re always looking for better profitability everywhere including EMEA, so we continue to look for ways to drive operational efficiencies within the region. One of the things that did impact our numbers during the quarter was the higher variable incentive expense, which impacted EMEA as well as the Americas due to their performance and some of which is a true-up of the prior quarter, so as the year-to-date true-up, which burdened more the quarter, but on an annual basis, we’ll double itself up.

Mike Sison – KeyBanc

Okay, got it. And then when you think about where EMEA is at in terms of capacity utilization, it’s at a pretty good level of 87%. How much higher can that go if the recovery there continues, and how would that leverage into either profitability or earnings growth?

Bernard Rzepka

Obviously, Mike what we’re trying to achieve is optimize everything, so once we believe 87 is the right number, we drive to it, and the next number will be 90. So, we will try to improve that and make sure that we use our capacity as much as we can, and that’s our discussions which are ongoing as part of our DNA.

Joseph J. Levanduski

And with the Ferro Spain acquisition that we’ve now taken up on board, it gives us more opportunities to look at how to improve our operational efficiencies from that perspective.

Bernard Rzepka

In other, we still have room. I mean it won’t be big now, but we still have room for improvements and that’s discussion internally which we’re having. How to do that is always a balance between keeping our customers with the product at the timing they want, and of course have the operational efficiencies improved as much as we should.

Joseph M. Gingo

And it’s a real balance Mike, between the types of plants we have. Because if you look at our larger plants where we run our masterbatches and where we run our EP, I think Bernard we expect capacities above 90.

Bernard Rzepka

Yeah.

Joseph M. Gingo

But our colored plants, which are really quick for short runs and fast turns, and cleanliness is a critical element of it. If we get into the 75% to 80% range, we’ll be probably in a good range. So, it’s a balance between those two factors when we get the overall number.

Mike Sison – KeyBanc

Got it. And then, one quick one on Ferro, certainly now that you own it, it seems like there’s a lot of potential growth opportunities for that business, maybe can you talk about areas you want to invest in, maybe some capital you will deploy to that business, and what the potential for growth is for that business maybe in the next couple of years?

Bernard Rzepka

If you see generally at Ferro, I would like to answer your question in two ways. In U.S., it’s very, very critical for us to have this investment, because as I’ve said, there is a jumpstart. We change the business when Joe Gingo was running it here from, as you know, losing a lot of money into now making money, but we are still very, very small in U.S. and this U.S. market is quite exciting for plastics, it’s growing nicely.

So, we certainly are very, very happy to pick up more customers, more products, a good team there, and more plants to cover just the U.S. better. So, I think some of you remember, we always say that the U.S. is despite being a U.S. company still the biggest growth opportunity for this company, so that’s Ferro up in the U.S. here.

In Spain, we have tried. When I ran Spain a couple of years ago, to -- Joe knows this -- we were trying to get into Spain and more Southern Europe because that was a weak spot of Schulman for a long time. With this acquisition what we have is a good manufacturing plant with some modern equipment, because there were some investments just done in Spain. But out of Spain, there the macro-country, North Africa. And this is one of our regions in EMEA, I think are leading it now. We’re focusing now, too, to have more business, because we still have a very modest outlook on the European growth. So we start to go there into the Middle East. We try to get out of Europe into Africa, and this plant is already supplying product into North Africa.

So, it’s not only just Spanish market, which we until now just had one sales office with the couple sales people. Now we have a manufacturing plant, can give local service. It is as well moving out of Spain into North Africa to find new growth opportunities, follow Europe EP.

Joseph M. Gingo

One other thing, Mike, we do feel that we’re going to have to put some investments into the Ferro plants in the United States. We’re going to do some upgrading of their equipment. They’ve done a great job and continue to do that, but I think we can actually help them to be more operationally efficient.

Mike Sison - KeyBanc

Great, Thank you.

Operator

Our next question comes from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed.

Rosemarie Morbelli - Gabelli & Company

Thank you, and congratulations to both Bernard and Joe.

Bernard Rzepka

Thank you, Rosemarie.

Joseph Gingo

Thank you very much.

Rosemarie Morbelli - Gabelli & Company

Looking at -- following up on the Ferro – on the Ferro question, do you need four facilities in the U.S., Ferro’s facilities, I mean more efficient than US, you just said, you have to make some investment, but that’s still doesn’t mean that they are not -- or one of them is not as, if not more profitable than Schulman’s plant. Could you give us a feel as to what kind of consolidation we can see there?

Joseph M. Gingo

Rosemarie, I think if you look over my career, footprint consolidation is something, and downsizing, that I always take into consideration. I think it’s too early to determine exactly what we need to do in US. As Bernard explained our portion in the US. is so small that the growth opportunities for us are great. But we will continue to look at our footprint not only the Ferro footprint, but the entire Schulman footprint in the USA and in Europe, and see where we can take the best advantage of opportunities. But we’re not in the position now to say what specific plans we have in mind. Joe?

Joseph J. Levanduski

I think when we talk about some of our synergies and we talk about operating efficiencies, some of the things that we currently do today because of our limited footprint in the US is we do rely on certain tollers for some of our production. And that’s going to give us the capacity that we’re getting with Ferro acquisitions. It’s going to allow us to move some of that in-house and that’s a savings right of the bat as we eliminate, just holding markup right off the bat.

Rosemarie Morbelli - Gabelli & Company

How much tolling are you doing at this particular point?

Bernard Rzepka

Rosemarie, its Bernard speaking, I cannot give you now the number in terms of $100 million or so. But it’s a significant portion of the engineered plastics business. So, we -- that’s part of our synergies through this deal. And regarding your first question from my point of view is we have now manufacturing and manufacturing director here in the U.S. and his team and the business teams are -- were currently looking in the last month and are re-looking again after the exhibition we just did about our entire footprint here in the U.S. So, as Joe said, we will look at all the plants and we will drive efficiency in all the plants, and if we see that we need to act, we will do.

But the first step will be is moving into the integration now which we’re doing now. We did a lot of planning in the last months and ensuring that we capture these synergies, and we keep the customers and develop them further and we make sure that the sales teams from Ferro’s and other teams work very, very closely to capture the synergies from cross-selling and getting more products into than our customers. And that will be the drivers of the next three to six months. But behind it, we will look and we are looking already at our plant footprint in the U.S.

Rosemarie Morbelli - Gabelli & Company

Okay. Thanks, that is helpful. And could you talk about what is behind the -- if we exclude Perrite or Perrites however you pronounce it. What is behind the 22% volume growth in APAC? That is very large number I know it is a small area, but nevertheless it is much larger than before?

Bernard Rzepka

I say its good and bad, you know, you basically answered your question is APAC and that’s why I said in my script we have to have far more focus on APAC, because APAC was I think Joe, 20 million turnover.

Joseph J. Levanduski

Yes.

Bernard Rzepka

It’s still a very small region than the opportunities and I will there in July as one of the reason with the APAC team. The opportunities are I would say endless. You have to be of course very, very picky in Asia Pacific to pick up the right businesses. But this is something which I believe we can triple this business and we should in the next five years in APAC.

Joseph M. Gingo

Rosemarie, the reason we even acquired Perrite, the primary reason was the Malaysian facility.

Bernard Rzepka

Yeah.

Joseph M. Gingo

We think that facility in the U.K. doing very well. We think that facility in France, we’re actually, we’re feeling that facility with tolling volumes outside that we were tolling outside in Europe. So, overall three plants are doing well for it. But the real reason for the acquisition to focus for us was a large footprint it had in Asia. And I think if you go back to our original press releases, you will see that we anticipated at least 25% to 33% increase once we acquired Perrite. So, not surprise at that number, it was anticipated.

At the same time, you might remember, we mentioned that margins would go down somewhat, because we now are offering a wider product portfolio. In the past in Asia because our plants were so small they were in the niche of the niche and now we’re broadening that portfolio. We’re staying in niche, but we’re getting into a broad based view in Asia.

Bernard Rzepka

It was a question, too, Rosemarie about having a critical mass there. We picked up very important customers as you probably remember, Dyson there. But however we – so the 22% that was your question is really coming from the Perrite exhibition and so significant simple because the region was so small. But we’re seeing as well in our masterbatch business, I talked about China. I talked about India. That is moving nicely ahead. It’s quite competitive there, but its moving and its generating good income. Again, we need to grow this region significantly.

Joseph M. Gingo

We just put in – we’ll be putting in our, what is it, our second?

Bernard Rzepka

Our second line.

Joseph M. Gingo

Second line in EP and we’ve ordered a line for masterbatch.

Bernard Rzepka

Yes.

Joseph M. Gingo

In China.

Rosemarie Morbelli - Gabelli & Company

Okay. And if I may ask one last question, when you acquired the Ferro operations, you acquired about $14 million of EBITDA, could you talk about the D&A and how we back –well, first of all the overall DNA companywide that Ferro is adding and then that particular piece itself, so we have a feel for the EBIT margin for the Ferro business?

Joseph J. Levanduski

Yeah. D&A and I’ll just go through our year-to-date numbers. Our D&A year-to-date through nine months last year was just shy of $30 million was about $21 million of that in D and the balance D&A. Going forward to this year nine-month numbers, we’re up to about $35 million, which is about a $5 million increase mainly due to the Perrite acquisition, although Network and Prime Colorants are other two acquisitions will have a slight impact on that, but its primarily Perrite with about $25 million of that in depreciation and about 10 of that in amortization of intangibles. So that’s where we’re at on a consolidated basis, on a year-to-date basis, obviously when we look at the acquisition of Ferro we’ll have to revise that going forward into next fiscal year. We’re working through all the purchase price accounting which has an impact on the intangibles that will be amortizing.

Rosemarie Morbelli - Gabelli & Company

Do you have a guesstimate estimate as to how much Ferro is adding and what the EBIT is for them?

Joseph J. Levanduski

Not at the movement because we are working through our appraisals of the intangibles, so that has a bit driver behind the amortization side. And obviously we’re going also through appraisals of all hard assets to reset to fair market value all the historical basis. So we have some estimates internally, but I’m not comfortable on sharing that until we’re ready to talk in tandem with our full year fiscal ’15 results.

Rosemarie Morbelli - Gabelli & Company

Okay.

Joseph J. Levanduski

We’ll do that at the end of October.

Rosemarie Morbelli - Gabelli & Company

All right. Thank you.

Joseph M. Gingo

Thank you, Rosemarie.

Operator

Our next question comes from Kevin Hocevar, Northcoast Research. Please proceed.

Kevin Hocevar - Northcoast Research

Hey, good morning everybody and congrats to Joe and to Bernard as well on the CEO transition?

Joseph M. Gingo

Thank you.

Kevin Hocevar - Northcoast Research

I just wondering if you could update us on how the search for transformative acquisitions going. I think you narrowed it down to like eight or nine kind of categories you were looking at. Wondered if you narrowed that down any further or just kind of how that’s progressing?

Joseph M. Gingo

Well, at this point in time, I mean those are the categories and those are the categories we’re exploring. And since we’ve announced that we are now getting a lot of interest from investment bankers which we -- as we wouldn’t have announced that we wouldn’t gotten in these areas. So we’re sorting through all of these information, James Irwin as you recall we hired January 1st is going through that. We really are not at a point right now that I would say we target one of those eight areas or we targeted one company. There is a lot of opportunities since we opened our door to these eight markets. So we’re in sorting period right now.

Kevin Hocevar - Northcoast Research

Okay. And in terms of the synergies for the Ferro acquisition, looking for net synergies of $5.5 million over 12 to 18 months, how -- because it does sounds like you have to do some upfront investments in some of these plants. How should we expect that to ramp up over that 12 to 18 months period?

Joseph J. Levanduski

Well, I think in the first, say fiscal ’15 obviously the, call it, dis-synergies will probably hold as we invest in maintenance of equipment and installing some of the operational efficiencies and just the, call it, more administrative mundane tasks of changing letterheads and all of the other stuff to incorporate the A. Schulman name into the organization.

But in terms of the synergies, obviously sourcing will take time to negotiate, but not as long as some of the more operational efficiencies as we look to re-qualify and move product back in-house from the tollers, so I would probably say that out of 5.5 net synergies probably about half the three quarters will be in the fiscal ’15 numbers and the kind of staged in towards more of the middle of the year.

Kevin Hocevar - Northcoast Research

Okay. And then I was wondering if you can comment to on Europe a little bit. EMEA volumes continue to grow on that 2% to 4% range, which is where it been the last couple of quarters. So it seems like we’ve seeing some stable growth there. Are you seeing any -- based on what you seeing, do you expect this type of growth to continue kind of that low single-digit type growth? And also just curious if you have a sense for if you growing in line with the market, if you’re growing above the market, just wondering if you can comment on that?

Bernard Rzepka

What we expect is that the markets continue to grow at the very moderate pace, because we believe, when you compare our numbers with the GDP growth in Europe that we are gaining market share and continue to gain market share. So the team is doing a good job. But we are not really expecting like you read now in some newspapers that this market will turn to wonderful, and all the issues are over-infected.

I think it was in my script that we say, that the GDP is very uneven in Europe. There are countries which is still contracting or at the borderline of contracting or not growing like France or Italy at all. In the past, I looked up the data with the team in EMEA is really Germany and is the U.K. now in terms of manufacturing, but a lot of others countries are – in Spain now which is picking up, but from a very, very low level. But we don’t expect because the basic issues, no population growth, shaky banks, big competition from Asia, therefore lot of products is still there. So, we think there will be moderate growth in the region as we stated.

Kevin Hocevar - Northcoast Research

Okay. And then just final question, you call out competitive pricing pressure in Asia particular masterbatch. And when I look at the data that you provided, it looks like the price per pound of masterbatch was down about 11% during the quarter, which is relatively stable to where it’s been. So have things stabilized there? Is pricing getting any worse or is it largely kind of stabilized at the level it’s at? And do you expect that to continue?

Bernard Rzepka

No. It is stabilizing, but at the same time I think we explain that last time it’s in a particular market in a packaging BOPP market where we have strong and there’s a lot of forward capacity currently in Asia Pacific. It will finally soft – I have found you know when it does, but we are not waiting for that. So our teams are very, very keen on moving with alternative product ranges into this region and finding new customer and that’s what we are doing. So, I think we have seen the worst, but the competitive pressure -- once you go into the broad market there and that’s what we are doing and try to get more volumes -- will be assisting them.

Kevin Hocevar - Northcoast Research

Okay. Great thank you very much.

Bernard Rzepka

Thanks Kevin.

Jennifer Beeman

Thanks Kevin.

Operator

Our next question comes from Dmitry Silversteyn with Longbow Research. Please proceed.

Dmitry Silversteyn - Longbow Research

Good morning, Guys and Jennifer and let me add my congratulations to Bernard and Joe. Well deserved and hopefully that the transition will just accelerate which you guys are already been doing.

Bernard Rzepka

Thank you.

Joseph M. Gingo

Yeah, thank you very much.

Dmitry Silversteyn - Longbow Research

Question if I may just touch base on Ferro one more time and I apologize for beating the dead horse, so to speak. If you look at how you’re going to be integrating the businesses into European and US up or North American -- I’m sorry, Americas operations -- beside the revenue split which I think you can get to sort of what how should we think about the gross margin and the operating margin impact in these two regions as Ferro gets integrated into operations to the restructuring?

Joseph J. Levanduski

Yeah. I think prior to some of synergies coming on board and I think historically and what attracted us to Ferro to begin with was obviously the geographic balancing. And from a market perspective as we’ve come to learned they have done very well in the environment they are where they were not really as global as we are. So they been doing very well in their local markets providing margins that and in some cases were better than ours. So, we’re pleased with that and we see that as a great opportunity for us and as we put more volume into their productions sites we’ll able to leverage that even further.

Dmitry Silversteyn - Longbow Research

And so, the initial impact would be for gross margins to move up a few basis points as you fold this business in?

Joseph J. Levanduski

That’s correct.

Dmitry Silversteyn - Longbow Research

And just sort of close the loop on Ferro’s business, we know that automotive and packaging in Europe are sort of the main drivers and you are a little more diverse in your end market exposure in Americas and really nichey in Asia. As you look at Ferro’s business that you’re acquiring sort of what are the one or two or three main end markets that we should be paying attention to drivers?

Bernard Rzepka

So, it’s a household industry here in the US which attract us too because they are very strong in the household industry here. And they are in certain segments of color masterbatches and blank masterbatches in Europe. We didn’t speak lot of on color today. We are really driving very, very hard and that the other success story of the good results here of this company, that we have now over 10% market share in Europe and here in U.S. is very, very small, but its growing.

I think I said it in this script -- well with our integration and that’s where Ferro had plus with too. And then they have some specific engineered plastics products, a certain elastomer, which we were attracted to which will open us a new doors and market. So I think it will be tough to follow that, but I would say in the US its more household industry and in Europe its more the color and the masterbatch industry which you should probably have eye on.

Dmitry Silversteyn - Longbow Research

Got it, got it. Thank you. Just to follow up on the acquisition target that you have about $100 million a year or so, I think Joe said, I don’t want to say it’s limited by, but is there $100 million based on ability to sort of integrate and the bandwidth you have in bringing these businesses and executing a solid integration plan or is it based on or is it limited by just the availability and the types of properties on there, sort of what was the reason behind the 100 million?

Joseph M. Gingo

Dmitry I think it’s the latter half performance. I mean, occasionally you have given is an opportunity like Ferro to be 150 Perrite close to 100 for us. But then, you know and that would include 60 some [indiscernible] was in the 15 range. So -- we look at Joe and I when we looked at that Bernard, we felt 100 was a reasonable average per year. Now, you know Ferro gives a jump start, okay. I mean the next acquisition we’ll be in the 10 to 25, particularly for this color, because those are just so small. So really it was more looking at not our ability to integrate, we’ve been very successful in our integration thankfully and I think a lot of that comes from the fact that as Bernard pointed out we are growing. So normally, when we require people there’s not a job threat or a customer threat, if it’s all plus. So the integration has not been my view of what profits, its availability of products and property availability of property and size. The size range is so much you just never know which one you are going to get.

Dmitry Silversteyn - Longbow Research

Got it. And final two questions. On the Asia-Pacific, I just want to make sure I understand. There's two separate drivers there of lower margin, I think. One is your initiative to broaden beyond the niche of the niche and get into attractive but lower-margin, higher-volume products. So that's one. And then is there a separate driver as far as more competition in the markets that you are already in? Or are you finding more competition in the markets that you're entering?

Joseph M. Gingo

No its really broadening a bit our portfolio what we call in the broad market, so it’s not commodities but broadening because with this we have access you know to more customers and then we can sell some of the niche to the niche products to particularly a color and either one I just said is process that was the pricing pressure in the BOPP market because there is a lot of forward capacity. And that’s what we are seeing there.

Bernard Rzepka

Then I think that’s more normal. That’s like a specific thing. The real factor was the broadening of the Perrite acquisition of the [new] three. We are gaining the pressure in the one area of masterbatch, but we are not seeing that pressure in the other areas of EP, other areas of masterbatch is it’s pretty solid. So it’s much more it’s a broadening approach.

Dmitry Silversteyn - Longbow Research

Got it. So you've been talking about this pressure in masterbatch for at least a couple of quarters. Is it the one step-down and that you are getting ready to anniversary? Or are you still seeing incremental sequential pressures? How should we think about when this headwind is going to abate?

Bernard Rzepka

Now I think that we have been seeing that for a couple of months now and as I said as well we know how to deal with it and we introduced new products into the region to offset this. So I would be saying flat.

Dmitry Silversteyn - Longbow Research

Okay, flat sequentially. Okay. And then finally, on Latin America, given that -- your exposure to Brazil, and the initiatives you have there to streamline your manufacturing footprint, overall conditions as far as macroeconomics in Brazil, and your exposure to that market, is it getting incrementally better or worse for you? There seemed to be sort of a tale of two cities, depending on which market you look at in Brazil. So I'm just wondering, with your exposure to that country, what do you see there?

Bernard Rzepka

We see in the last weeks improvements of business, our businesses in Brazil which is encouraging and its hard for us really to say is it because we’ve put a lot of extra work into this and did somethings better and learned some things from the prior experiences or is it that the market is getting better. I read some reports and contacted from one of our customers there which told me that automotive which was you know very -- almost [crushing] is peaking up at a low level again there, but our prospects for Brazil I think what we look forward in the future we say, lets keep this as best flat, we still have so much of opportunities in Brazil because it’s such a big country, was it in the volume which we sell now that we after we straighten everything out and we will need a couple of more weeks for that, we would be on the growth pass in Brazil in my view.

Dmitry Silversteyn - Longbow Research

Thank you, Bernard.

Bernard Rzepka

Welcome.

Operator

Our next question comes from the line of Christopher Butler with Sidoti & Company. Please proceed.

Christopher Butler - Sidoti & Company

Hi, good morning everyone.

Jennifer K. Beeman

Good morning.

Joseph M. Gingo

Hi Chris

Joseph J. Levanduski

Morning.

Christopher Butler - Sidoti & Company

Looking at Europe, I think you had said that each of the different product lines had organic growth year-on-year in the quarter, did you have the organic growth rates through the different product lines for us?

Bernard Rzepka

We don’t have the organic growth rate by you BU in the back of the earnings releases the growth rate by BU for each region on a quarterly basis and year-to-date basis. So that falls to about, that does include the impact of the acquisition the recent impact that we set our acquisitions and EMEA will be primarily the Perrite acquisition.

Joseph M. Gingo

Which would be relatively small Chris from the standpoint of you know the total amount of shares we have in Europe versus what Perrite Europe added.

Christopher Butler - Sidoti & Company

Okay. And it sounds as if you know you have a small number of countries in Europe that are driving much of the growth as you look at your end markets you had mentioned auto and packaging, is it similar that you have a small number of end markets that are driving the growth or is it more broad based?

Bernard Rzepka

I think it’s more broad based and I may comment about the countries in euro world that its just a few countries really show manufacturing growth which are significant. But, you know I would say is more broad based from as you know Europe came from a very low level, so in the last couple of quarters business is picking up you know step by step sequentially and we expect that this will continue driven by very few strong countries which as you know take Czech Republic, Poland and countries like the manufacturing base tool, because European economy is that pretty integrated when you talk, when you work with the major producers that are in this country.

Joseph M. Gingo

I think you know if you look at this a fair sense, Italy a very big market and as of anything they are probably doing the most driving down right now. I mean, like very sustained low but it’s coming up, Poland’s been doing well for us all along really. Germany has done well, and U.K. is come back, but really you have two very big markets, -- for plastics, Bernard where would France and Italy be?

Bernard Rzepka

France and Italy were strategically number two and number three.

Joseph M. Gingo

So in total we see a turnaround in those two markets and now I don’t think you are going to see great growth. But you would see those two markets turn around and that Europe is really turn it around. But, I don’t see I mean if you read anything you don’t see anything that’s predicts a big turnaround there. Although you don’t need a lot of things to say that its’ going to go down further even.

Christopher Butler - Sidoti & Company

Got it. And shifting gears in the quarter you had a fairly high increase to incentive compensation as we look to the fourth quarter with the new acquisition, could you give us a sense on what you’re expecting for SG&A that’s implied in your guidance?

Joseph M. Gingo

Yeah, I think as I mentioned on our previous answer the third quarter was impacted more so because of a true up both in terms of short term and long term, very long term for the plans. And I’m pleased to report that because obviously you know we are trying our methods to performance and as our company is performing at record levels, we anticipate the incentives to be higher. And so both in terms of our short terms incentives which are tied to operating income net income which are performing very well against our expectations and as you know by doing our approximate our long term incentives are tied to ROIC and CSR. And ROIC on a trailing 12-month basis as we have measured it is fractionally about 250 basis points better than where we were at this time last year.

So you know and at the same time our cost of capital is actually decreasing. So I think our returns to our shareholders are driving a lot of this incentive variable expense. And so as we look to the fourth quarter, we do anticipate the incentive, incentive compensation to be higher than the prior year because of the accountability. Last year’s incentive plans were below our expectations, given some of the events that took place in Latin America last year, so this year we do anticipate what you could call the negative variance but I would call it a positive variance dealing with the incentive compensation expense being slightly higher, but it won’t be as significant as the third quarter so there won’t be a significant true off effect.

Bernard Rzepka

So I think as Joe mentioned, I think one of the things that you have to look at is, is the comparison. We really, the third quarter last year was totally unusual. I mean go back to our record and you’ll see the third quarter historically has really been our strongest quarter. And we had a very weak quarter and, of course, at that point in time, because of accounting – were such; we decreased incentive compensation significantly and did that again in the fourth quarter. So if you look at the comparison to last year these are much more significant that you normally experience. And I think going forward, Joe is probably right, we are going to be back on our normal pace.

Christopher Butler - Sidoti & Company

So if we think about compared to the third quarter you are going to move back towards the normal pace but you do have overhead from the Ferro acquisition, so does that put us back at $63 million, $64 million? Or is it something lower than that?

Joseph J. Levanduski

We haven’t really given guidance in terms of what Ferro will be adding in terms of SG&A but you are absolutely right. Yeah, I think you know forgetting about Ferro for a second, our SG&A expense will start the pendulum on a quarter-by-quarter sequential basis should be lower in the fourth quarter than the third quarter and get back to more of a historical kind of run rate. The Ferro acquisition will obviously add SG&A as we bring the organization into our organizational structure, so again, we absolutely provided specific data and that we will provide on guidance in the future.

Christopher Butler - Sidoti & Company

I appreciate your time.

Joseph M. Gingo

Thank you, Chris.

Operator

[Operator Instructions] Our next question comes from Matthew Dodson with JWest, LLC, please proceed.

Matthew Dodson - JWest, LLC

Was that $2.7 million long term incentive comp, was that due to the CEO succession?

Bernard Rzepka

No. No that was due to our two long term metrics are ROIC and TSR. And it looks -- we do grants annually that vest -- absolute investing in three years, so our expectation is counting treatment of that is though grant by grant and look at expectation that they out race overtime. So with the changing performance of the company, we had to reevaluate all three access grants at this point of time. But they had nothing to do with the succession plan.

Matthew Dodson - JWest, LLC

And can you kind of help me understand you know usually third quarter is your highest revenue of the year, but will this be kind of a typical year because Europe is coming off such a low base, could we see that seasonality kind of stop maybe you guys are flat sequentially – revenue? Can you help me just frame that up?

Bernard Rzepka

I don’t think so. I mean here its about continuing. The reason why I say that is, actually recovery in Europe – started in the third quarter of last year. So, we are seeing bigger benefits of it this year, and I think we are really are on the historical pattern. I anticipate it will come back to the normal pattern which is there are you got to go through our three quarters but we’ll use our typical quarters. Our third is the strongest, our first and our fourth are about the same and our second is the weakest because our second runs through December and January.

Joseph M. Gingo

And then the fourth quarter tends to somewhat soften up in the third quarter recently so we do into the summer holiday cycle both in Europe and the Americas.

Matthew Dodson - JWest, LLC

And can you help me….

Joseph M. Gingo

Sorry. I think just as when we look at the numbers, all the regions contributed to the growth. And most of our businesses contributed to the growth and then if you do the analysis the three in acquisition organic and I think you have got some stuff out of it, but we are very happy about it that we have organic growth as well in all the regions. And in most of the regions if not all about the GDP significantly above the GP.

Matthew Dodson - JWest, LLC

Got you. Got you. Can you help me understand? In the Americas now you still have the strategic process going around of cutting out the low commodity business, and then you're adding the Ferro acquisition. Over time, where can your gross margins get to in the Americas?

Joseph J. Levanduski

You know they obviously been trending upwards. You know we haven’t provided specific guidance in terms of our margins in the region or specifically to the Americas and the U.S. which would be driving a significant amount of that. But obviously what we are looking at in terms of our organic growth strategy, our growth framework that we talked about in our Investor Day is all aimed at improving the margins. You know I think if you look at our adjusted EBITDA going from where at just for 14 say in the 140, 150 range to the end of 18 be it in the 270 and 284 range, I think that’s pretty indicative of the trend that we anticipate seeing in our market growth.

Matthew Dodson - JWest, LLC

Let me ask that a little different. So you did 14 -- excuse me, you did 15.6% in gross margin this quarter against 13.1% last year. How much of a headwind did the lower commodity business have on that 15.6%?

Joseph J. Levanduski

It’s difficult to say because we don’t break our sales out between commodity end. If you have technical sales, but obviously as we transition and go more towards the technical side and so dropping off a commodity portion of our business that would obviously have the favorable impact on that margin.

Matthew Dodson - JWest, LLC

Got you. And then Ferro’s gross margins in operating margins are higher than Schulman in America right now, correct?

Joseph M. Gingo

Yes, historically yes.

Matthew Dodson - JWest, LLC

Historically, perfect. Thank you very much.

Joseph M. Gingo

Thank you.

Operator

We do have a follow up question from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed.

Rosemarie Morbelli - Gabelli & Company

Just quickly on the tax rate, if I look at the numbers I was expecting, you are already more or less on track with my expectations through the operating -- through the pre-tax, actually. But the tax rate was something -- the adjusted tax rate was 18.6% or so versus expectations of 26%. So you had a huge benefit from that lower rate. Could you give us an idea as to what kind of a tax rate you expect for the fourth quarter? And was the third quarter so low because of the improvement in Europe, or because of Perrite, or both of them?

Joseph J. Levanduski

You know actually neither. And here’s the reason is there are certain jurisdictions where in the prior year especially in the third quarter of last year in Brazil when we had our challenges and Latin America as a whole we are facing losses without the corresponding cash benefit going along with that.

And then in the U.S. we had our corporate over aheads that burdens our pre-tax income in the region but as our financial performance as a group we are now seeing this year profits driven without our corresponding tax expense. So the difference is a mathematical calculation of higher effective tax rate in the prior year and a lower rate this year because of the improved performance of profitability and places that we have historically seen losses more offers from a pre-tax standpoint.

But so the effected tax rate on a non-GAAP basis this year and I believe more on a year-to-date basis and versus quarter-to-quarter because of the abnormal third quarter, the unusual third quarter that we had last year. On an annualized basis our effected tax rate on a non-GAAP basis was about 23% on a year-to-date basis last year versus 22% this year and on a quarterly basis that has gone from roughly26% last year to 19%, so you could see the impact that the third quarter had on that calculation because of the challenges we have in Latin America last year. Point four, I think in mid 20s is a good rate still to be at.

Rosemarie Morbelli - Gabelli & Company

Mid-20s you said, Joe.

Joseph J. Levanduski

Yes.

Rosemarie Morbelli - Gabelli & Company

Okay. And that is good for – okay, the full year 2014 and same thing for 2015 more or less?

Joseph J. Levanduski

We’re still working to our budgeting process but at this point I don’t see anything on the horizon that would change that.

Rosemarie Morbelli - Gabelli & Company

Okay. And if I may ask, yes, go ahead.

Joseph J. Levanduski

Yeah, as we report our guidance for next year I’ll make sure that I discuss the effect of tax rate is in our model for due course, Marie.

Rosemarie Morbelli - Gabelli & Company

Thank you. Appreciate it. If I may ask one last question, Joe when we look at all of the M&A activity you were obviously and still I’m guessing until January very much involved in the process, could you and Bernard talked about Bernard’s involvement and therefore whether he is looking at the same kind of things, whether he was really very involved, did he bring any acquisition to the table or was it solely a Joe’s project?

Joseph J. Levanduski

Well, Bernard brought a lot of acquisitions to the table, that was not an issue or in fact [LEN] was totally idea and plan and execution. I think, what I would say is I developed a very specific strategy regarding how we had turnaround the USA because if you really looked overseas, we had good operations. We did think overseas in terms of putting in processes and improving operational results and things like that, but we didn’t change our strategy overseas. We really just – we had a very good strategy in Europe which was focused on masterbatch and focused on niche engineered plastics, all we need was Rosemarie, my strategy was to bring that to the USA.

Doing that, we had to have acquisitions where we had to close the operations and we had to require operations so that we can look more and more like Europe, we’re not wholly there yet but we surely are on the path of being there and Bernard was very instrumental not only in bringing acquisitions in but helping me access the value of the various acquisitions, because as I said to everyone from the start, my best friend is in not in the plastics industry. So even if I looked in the acquisitions in the USA I would even have involved Bernard in coming over and looking at them and getting an assessment would they fit our global strategy.

Now with regard to the transformational, I’m going to turn that over to Bernard totally because Bernard lead the entire effort on looking at where we would we go transformationally. I was the one that initiated the Ferro one, but I said to people that was much more opportunistic than it was a strategy as was developed by a Bernard in conjunction with Roland Berger, so Bernard you might talk about your involvement there.

Bernard Rzepka

Rosemarie, maybe you just sort of first one or two -- Joe is a key player, so that’s his strength. So he used Lee and a lot of other people to work on the growth strategy, executive strategy and we did a lot of projects together and I was blessed and serve with a good team in Europe too so when I run that, I always use my team so I can say to all the guys thank you for all the support and we’ll be continuing this journey, and to add value, compounding and value plastics materials to our company. At the same time about what we did is looking out of the box I call it now that we said we are really more focused on the markets, or more focused on solutions what we can bring to the table and when you look into nowadays product, it’s not only about the plastics, its really complex solutions, you have glass, you have coatings, you have other metals and materials or [blues] and what our customers really request from us is more solutions.

So we are looking out of the box left and right and say, how can we go into the packaging market and maybe not only with plastics but a kind of coating brings the better solution a very specific solutions with the high value to the customer where we can give them already too, or how could be in the automotive industry where we are very strong in Europe now as well here in U.S. getting traction in the interior part of a car because that’s value of Schulman. We are very good in colors and we get better in colors, we understand all the plastics, however their coating, they have glass, aluminum there, a lot of other material and lot of other materials in a car and frankly our customers, they want solutions, they are not just consisting on a material, they want solutions. So that’s our thinking out of the box, so you put together with Roland Berger, a [penetrative] team tool like we did in all other work Joe and if we work in three months with the team of 12 people at Roland Berger, we went through what I showed in the Investor Day in New York.

And that’s something which we will be moving forward looking more at there, but we will as well keep our executive roles in transition as long as the strategy, it fits into the strategy and then you target which we are having any experience for the company and improves the margin.

Joseph M. Gingo

But think in summary, Rosemarie, I think that our emphasis on continuing our two growth paths and you could almost say three, two of them are growth and one is to control the cost. We are always focused on cost, but as you saw Ferro had its three Ss, safety, smart sales and smart savings. So that cover has got to be there. But the two growth drillers for us and I think it’s going to be part of the [new]. If I am selected to be Chairman, I’ll be around a little while that’s sort of from a governing standpoint taking look at that, we are going to continue to grow it through acquisitions and organic growth. We have -- that’s our focus, I think that will be the focus for Schulman for the long term actually the only difference for that is what Bernard said about transformation. We might begin to look at new material and the area you identified.

Rosemarie Morbelli - Gabelli & Company

Okay that is great. That is very helpful. Thank you.

Operator

Thank you.

Joseph M. Gingo

Thank you.

Operator

At this time there are no other questions. I’d like to turn it over back to management for closing remarks.

Jennifer K. Beeman

Thank you, Gwen and that concludes our call today. So thank you all for dialing in, have a safe and enjoyable holiday.

Operator

Ladies and gentlemen, thank you for your participation. You may now disconnect. Have a wonderful day.

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Source: A. Schulman (SHLM) CEO Joseph Gingo on Q3 2014 Results - Earnings Call Transcript
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