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Rockwood Holdings Inc. (NYSE:ROC)

Q1 2008 Earnings Call

April 30, 2008, 11:00 am ET

Executives

Seifi Ghasemi - Chairman and Chief Executive Officer

Timothy McKenna - Vice President of Investor Relations

Robert Zatta - Chief Financial Officer

Analysts

David Begleiter - Deutsche Bank

Silke Kueck-Valdes - J.P. Morgan

Robert Koort - Goldman Sachs

Mike Judd - Greenwich Consultant

Mike Harrison - First Analysis

Chris Shaw - UBS

John Mcnulty - Credit Suisse

Operator

Ladies and gentlemen thank you for standing by, and welcome to the Rockwood Holdings First Quarter 2008 Results Teleconference. At this time all lines are in a listen-only mode. Later there will be an opportunity for questions and instructions will be given at that time. (Operator Instructions). And as reminder this conference is being recorded.

I will now turn the conference over to Vice President Investor Relation Tim McKenna. Please go ahead sir.

Timothy McKenna - Vice President of Investor Relation

Thank you, good morning. Welcome to Rockwood’s first quarter results conference call. With us on the call are Seifi Ghasemi, our chairman and CEO and Bob Zatta, our Chief Financial Officer who will present the results. You can follow the presentation with the slides available on our website, www.rocksp.com, and then we’ll have a question and answer period following the former presentation.

Before we begin the call I need to read the following statement. This conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the business operations and financial conditions of Rockwood Holdings Inc. and its subsidiaries. Although Rockwood believes the expectations reflected in such statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. Forward-looking statements consist of all non-historical information including statements referring to the prospects and future performance of Rockwood. Actual results could differ materially from those projected in Rockwood's forward-looking statements due to numerous unknown and known risks and uncertainties including among other things risk factors described in Rockwood's 2007 10-K on filed with the SEC. We do not undertake any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events. With that I’ll turn it over to Seifi and he can begin the call.

Seifi Ghasemi - Chairman and Chief Executive Officer

Thank you, Tim. Good morning. This is Seifi Ghasemi and I would like to welcome you to Rockwood's 11th quarterly conference call as a public company. Thank you for taking time from your busy schedule to listen to our presentation.

For the discussion today I will use the slides that we have posted on our website. I am very pleased to report that Rockwood had a strong performance in the first quarter of 2008. These positive developments in the current environment are the results of the diversity of our end markets. A balance exposure to different geographies and our constant attention to innovation and productivity. These features are the core strengths of Rockwood as we they have talked about you before. At this point would you please turn to page 6 of our presentation material. As you can see, we achieved net sales growth of 14.2% including a 2.5% price increase. Our adjusted EBITDA was 168.4 million which is up 14.6% versus first quarter of '07.

Even on a constant currency base net sales was up 5.5% and adjusted EBITDA was 4.6% ahead of 2007. Our EBITDA increase was primarily driven by strong performance in our specialty chemicals and advanced ceramics inline with what we have been presenting to you in the last two and a half years.

We did see a significant slowdown in construction related businesses in the United States which obviously have impacted the results in our performance additives business.

Price increases and continued improvement in productivity helped us to achieve 19.7% EBITDA margin in the first quarter which is in line with what we had achieved last year in terms of margins.

Our net debt ratio which is our leverage ratio which is the net debt divided by EBITDA is at around 3.6% which is inline with what we have guided you before.

If you now go to page 7 please which summarizes the first quarter. I have already talked about sales and EBITDA, you'll see that net income as reported at 27.7 was 10.8% ahead of last year and earnings per share on a fully diluted basis as reported is $0.36 versus $0.33 last year up 9%. But net income on an adjusted basis, and Mr. Zatta will go through the adjustments, is 44.4 which is 60% better than last year and our earning per share on an adjusted basis at $0.58 a share is 58% better than last year and that improvement is driven mostly by improved earnings and obviously lower taxes than last year.

On page 8 of our presentation, we always breakdown the details of our sales increase for you and you'll see that the 14.2% increase in sales, 2.5% is pricing, 8.7% is currency, and 3% is volume and mix.

If you go on page 9, we have the details of the performance of each one of the sectors that we report to you. I'm not going to read this page to you because I'm going to take the time and go through each on the sectors and make specific comments. So, please turn to page 10.

Our specialty chemical business once again performed very well. Very good performance increase in sales of 16%, and increase in EBITDA of 17.9% was primarily driven by strong result in our Lithium business. We had increased volumes and increased pricing in that sector.

In addition, our surface treatment business was favorably impacted by increased volumes, higher selling prices, and a small bolt-on acquisition that we did for this business in the last quarter of 2007; overall, very good performance in our specialty chemical business in line with our expectations.

On page 11, in performance additives as I've previously mentioned, we saw significant decrease in volumes because of its significant slow down in construction activity in the United States. Our sales are up 14.5% but that is mainly due to the acquisitions. On an organic basis we saw almost a 25% drop in sales in this sector, which obviously has affected their profitability. Specifically color big pigment and timber business were negatively impacted because they are directly related to the housing market in United States. We were able to increase prices to compensate for additional raw material cost. So we didn’t get impacted from that point of view. The primarily impact is as I mentioned, significantly lower volumes, which we expect that we would continue for the balance of the year.

On page twelve, our Titanium dioxide business continues to be negatively impacted because of the exchange rate. The weak dollar is making it easier for competitors from the United States to sell in Europe at very aggressive pricing which has put pressure on the pricing in this sector. We have mentioned this thing to you before, but at the same time I would like to give a lot of credit to our management in this sector because despite all of the negative pressure they still are maintaining an EBITDA margin of 19% in this business which is one of the highest in the industry and it is still not very much different than last year. So they are doing a very good job in controlling their cost.

On page 13, our advanced ceramic business performed very well and I have to say better than our expectations. Sales were up 26% and EBITDA was up 33%. A good performance is driven by continued increase in the volumes in our medical and cutting tool businesses. And in addition, our management in this sector continues to do a very good job in improving productivity. And as a result you will see a significant improvement in margins for this business. We are very satisfied with the performance of this business and we expect that we would continue to do well for the balance of the year.

On page 14, our specialty compound business, we have seen decreases in sales due to lower volumes for demand for wire and cable and medical applications but again the management in this business have done wonderful job in proactive restructuring measures and closure of fascinating UK which has helped us be profitability and actually improving our margins despite of lower sales in this quarter and we expect this performance to continue for the balance of the year.

So in summery, we had another good quarter where the increase sales kept our margins stable with the significant increase in our earnings per share. These results highlight the fundamental strengths of Rockwood which are the diversity of the end markets we served, our good geographic balance, and the diligent execution of our strategies for our people that are on the globe. At this point, I would like to turn that presentation over to Mr. Bob Zatta, our Chief Financial Officer to go over the financial summary. Bob?

Robert Zatta – Chief Financial Officer

Thank you, Seifi. And good morning everyone. I am on page 16th of presentation. As Seifi has mentioned already we did have a solid quarter. We had 14.2% sales growth and 14.6% adjusted EBITDA growth, and on the constant exchange rate basis sales growth was up 5.5% and EBITDA growth was 4.6%. The bottom half of page 16 provides the first quarter net income and EPS on a reported and as adjusted basis and I would get into that in a lot more detail a couple of charts. I would like you turn to turn page 17 very quickly this provides results by segment for the quarter as Seifi has already covered this in detail, please turn to page 18 in the presentation. Page 18 provides Rockwood’s first quarter income statement. You can see operating income of a 103.9 million or 12.2% of sales versus last year of 97.7 million or 13.1%. The change in operating income margin this year versus last year is due primarily to higher depreciation on CapEx. Directly below operating income are the line items composing interest expense. The 40.7 million of net interest includes cash interest expense of 40.6 million, non-cash deferred financing cost of 2.3 million and cash interest earned of 2.2 million. The decrease in interest expense versus ’07 - the reduction in interest expenses versus ’07 is due to the interest cost savings as a result of the pay down of debt we did last year.

The next line item is the non-cash mark to market adjustment on our interest rate swaps which convert variable rate to fixed rate debt. The mark to market adjustment reflects the change in the fair market value of these swaps based on interest rate expectations at the end of March 31st ’08 versus December 31st '07. Since these swaps remain in place there is no economic effect on the company as a result of this accounting treatment. The next line item is the foreign exchange gain of 15.1 million. This results primarily from the impact on financing related inter-company receivables and debt of the FX rate change from the beginning of the quarter versus the quarter end of '07. Again this is a non-cash non-economic accounting treatment. This brings us to our reported income tax provision of 19.6 million or 41.7% versus 20.8 million or 44.3% last year. The reduction in the reported tax rate is primarily driven by better than year ago operating results in the US and statutory rate changes in Europe especially in Germany.

Following this we have minority interest on our Viance joint venture bringing us to reported net income from continuing operations of 27.7 million versus 25 million last year.

Of note last year we also recorded an income of a 120 million in the first quarter from discontinued operations. This was the gain we received last year in the first quarter on the sale of Novasep as well as the income reported by the electronics business which is you know we sold in the fourth quarter of ’07.

Turning to page 19. Page 19 provides the reconciliation of net income to adjusted EBIDTA. In getting this net income of 27.7 million we add back the income tax provision, minority interest, net interest expense and depreciation and amortization. We have then adjusted for the non-cash foreign exchange gain as well as several minor one time items bringing us to an adjusted EBIDTA for the quarter of a 168.4 million.

Page 20 is the EPS for the quarter and bridges the as reported net income and EPS the adjusted net income and EPS. The main adjustments in the quarter are the mark to market of interest rate swaps and the foreign exchange gains. Please keep in mind that since these two items are US gains and losses they provide no tax benefit to Rockwood. Therefore the pre-tax and post-tax impacts are the same. Making these adjustments our adjusted EPS is $0.58 for the quarter.

Page 21 provides our consolidated net debt at the end of the quarter. As you can see our net debt was $2,346,100,000 at the end of March with a ratio of latest 12 months adjusted EBIDTA of 3.63 times. This is up slightly versus year end and is due to the euro dollar FX movement in the quarter.

Page 23 provides our long term trend of improving our leverage ratio we have seen how that has improved steadily over the last several years. On page 24 we show the quarter’s free cash flow. The free cash flow for the quarter reflects normal inventory build in the first quarter and some timing related items. They are in line with our expectations and expect to achieve our full year free cash flow target. And with that Seifi, I would like to turn it back to you.

Seifi Ghasemi – Chairman and Chief Executive Officer

Thank you very much Bob. Been a presentation our work we have accomplished in the last quarter. Before we open this call to questions, I would like to say few words about our goals for 2008.

In March when we announced our 2007 results we said that our goals for 2008 were to increase sales by 8%, keep our margin at around 19.5% and increase our earning per share by double digits. We will continue to work hard to achieve these goals. The diversity of the end markets we serve, our balance exposure to the economies of North America, Europe and Asia Pacific, the strength of our technologies, introduction of innovative products and the diligent pursued of productivity gives us confidence to pursue our goals up 8% increase in sales, stable margins at double digit growth and earnings per share. So we are basically optimistic for the balance of the year that we can elaborate the goals that the have state.

At this time we obviously look forward to answering any questions that you might have, Carrey?

Question-And-Answer Session

Operator

Thank you. (Operator Instruction). Our first question is from, David Begleiter with Deutsche Bank. Please go ahead.

David Begleiter

Thank you, good morning

Seifi Ghasemi

Good morning David, how are you?

David Begleiter

Good, thank you. Seifi, could you give us a little more detail on lithium business terms of volume and pricing trends and what you’re seeing going forward from a pricing perspective and any sings of other material from China coming to market?

Seifi Ghasemi

David, we continue to see growth in our lithium business, in lithium carbonate as we have said that he growth in that sector is driven right now by the conversion of the hand tools to lithium ion batteries but – in addition to that, we see there very good growth in our specialty applications for pharmaceutical which was a program that being initiate four years ago and that is producing results.

And in addition we are seeing increase volumes to lithium. So overall – and growth in that business. In addition the pricing is stable, and the you know that we don’t talk about lot about pricing, we shouldn’t, but the trend is positive, and we are not seeing any significant effect one way or another from anything in chat.

David Begleiter

And just on advanced ceramics, keep it held the utilization of your two plants and how much additional capacity have to grow business?

Seifi Ghasemi

The new plants that build in Germany three years ago, the utilization of that plant is still well below 100%. So we have plenty of capacity to grow our ceramic business before we get into requirement for any significant additional capital investment. We do have lot of capacity. I think it gives comfort to our customer and that's why they feel very confident in growing their business. We have seen good growth in our medical business.

David Begleiter

Thank you very much.

Seifi Ghasemi

Thank you very much David.

Operator

Thank you. We'll go next to Silke Kueck-Valdes with J.P. Morgan.

Silke Kueck-Valdes

Good morning.

Seifi Ghasemi

Good morning, Silke.

Silke Kueck-Valdes

I must have a couple of questions. Do you think that you will recover some of the margin deterioration in the performance materials business this year given that – you could probably integrate the Elementis business little tighter and probably try to pass on some prices because of higher raw material cost inflation. So are there some opportunities to recover the margin or is the current run rate this quarter sort of like what we will see for the year?

Seifi Ghasemi

Yeah I think the current run rate is what you will see for the balance of this year. But coming next year we fully expect that we would recover the margins for sure. We have increased our prices in order to recover any kind of raw material price increases we’ve had, and we will continue to do that but right now, Silke as you know, we are being –the reason the margins are under pressure is because the volumes are significantly down. We obviously expect that to come back in 2009, middle of 2009. So, I think we'll recover those for sure.

Silke Kueck-Valdes

So it must really mean given that – you expect it like to meet almost sounds that the expectations on the performance materials area are lower, but you are still optimistic for the guidance of the company as a whole which must mean that all of the other businesses are just doing incrementally better?

Seifi Ghasemi

They are. Our businesses that are seeing pressure are color pigments, timber business, and our TiO2 because of exchanging. The rest of our businesses are doing well.

Silke Kueck-Valdes

Secondly, the lower tax rate reported this quarter; is that just like a one-quarter phenomenon or is that just like sustainable lower rate?

Seifi Ghasemi

I would like Mr. Zatta to kind of address that in detail for you Silke. So I will turn it over to Bob. Bob?

Robert Zatta

Thanks Seifi. Good morning Silke, Seifi and I guess everyone, when we discussed with you our '08 outlook in February we indicated that there were variable changes in salutatory rates in Europe which would positively affect our tax rates going forward. Also, we did expect at that time that the first quarter tax rate would be below the full year average and we're pleased that it has come out that way. And it was really due to the geographic mix of our business – the lower salutatory rates in Europe especially Germany and also good operating results in the US which helped us.

Going forward, the tax rate is very-very sensitive to where we have our earnings, as you can imagine, and we do want to remain cautious about the results in the US from a tax planning standpoint. So we are using about a 37% tax rate for the balance of the year.

Seifi Ghasemi

Okay Silke?

Silke Kueck-Valdes

That's helpful and maybe if I can ask one more question. So there is like – like $300 million in cash available in your balance sheet, can you just like to comment what – how you plan to use the cash?

Seifi Ghasemi

We plan to use the cash for bolt-on acquisitions. That has been the target that we've had. We see quite a number of opportunities considering the circumstances right now. We see asset prices coming down, and it is a good time to have cash that is why we collectively saved our cash, so we're in a good position to do some both on acquisitions and that would be our primary target for the use of that cash certainly.

Silke Kueck-Valdes

Okay, thanks very much. I'll get back in the queue.

Seifi Ghasemi

Thank you very much.

Operator

Thank you. Our next question is from Bob Koort with Goldman Sachs. Please go ahead.

Robert Koort

Thanks good morning guys.

Seifi Ghasemi

Good morning Bob. How are you?

Robert Koort

Good; a couple of questions, Seifi. First, you gave a volume mix of 3% for the company overall which I believe included the acquisitions. What will be stripping out acquisitions?

Seifi Ghasemi

If you are to strip on our acquisitions, it would be -- sales on a constant basis will be down about 2%, which means that it reflects the lower volumes in our color pigment, in our timber business, and in our TiO2 business.

Robert Koort

In those businesses, Seifi, have you seen a lot of dichotomy between North American and European trends and what would give you the sign posts that maybe we're going to see bottoming on the North American side?

Seifi Ghasemi

Bob, I would not like to suggest that we've seen – our volumes, I'll give you the numbers, our volumes in housing-related businesses in the US was down about 30% versus last year, now whether that is the volume or not, we will find out. It seems significant it might go lower or it might not. As far as Europe, we had mentioned it before that we've seen significant slowdown in construction activity in Spain and to some extent in Italy. That trend seems to be continuing and when we talked about the balance of the year, we take that into consideration.

Kostas Karithanos

Actually, his Seifi this is Kostas, if I can followup on that real quick, can you just go (inaudible) less counter about the, I mean, you’re catching a cold basin n the news that we are reading about Germany and what's happening with sentiment over there?

Seifi Ghasemi

In Germany we have not seen any significant slowdown. Our businesses are doing fine there. At from the exposure that Rockwood has to the businesses that we have. We also export a lot from Germany to other parts of the world those are strong. So we do not expect any significant slowdown in Germany.

Kostas Karithanos

Okay, and finally one more if I can on the peak means any news I mean, are you still looking into that plant next door to yours or any additional color you can give us?

Seifi Ghasemi

We continued to be interested in the plant next door to us, but as you know, it takes two, two tango. So, we are waiting for the other side deceive they want to doing it. But we continue to be interested in that asset.

Kostas Karithanos

I appreciate thanks all of you.

Seifi Ghasemi

Thank you. Bob are you – Mr. Koort, are you finished with your question?

Robert Koort

Yes little bit.

Seifi Ghasemi

Okay, thanks. Okay Katie go to the next question.

Operator

Thank you that will come from Mike Judd, with Greenwich Consultant. Go ahead please.

Mike Judd

Oh yes. Good morning and congratulation on another good quarter.

Seifi Ghasemi

Thank you very much Mike, that you appreciate that.

Mike Judd

Two questions, you mentioned there was a seasonal built in working down, but that's not surprising. How do you think working capital is going to look like on a full year basis? That's the first question. And then the second question was in advanced ceramics, you had a comment that it was obviously performing well and its doing perhaps little better than you might have anticipated before. And I was just wondering if you could provide some more details on the volumes and the acquisition to another areas related to that that and how the results basically outpace your expectations? Thank you.

Seifi Ghasemi

Very good Mike. Obviously we will be delighted to answer that. On working capital Mike, I would like to go through that in detail. As you know, we a get a significant supply of our iron oxide pigments from China. We all know that there is going to be Olympics there, we have been concerned about possible disruption of supplies during the Olympics. So we have increased our inventory of that product to make sure we don’t run out in supplying our customers. So that is one of the reasons that you see for the increase in working capital. The other ones are seasonally related and obviously with some of our businesses when sales go down significantly and obviously you have working capital that you have made product and inventory on your hand. So those are the predominant results on the working capital.

With respect of to our ceramic business, the parts of the business which are doing very well is one is or medical results. We had a significant increase in demand for our hit lines in this quarter. We don’t disperse due to rebuild our inventories at some of our customers and so, we are very pleased with that. I don’t want to take the first quarter and kind of state that that is going to be strain for the balance of the year, but it was very good demand for the medical part.

Then in addition to that we had taken steps to improve our cutting tool business and we have been very successful, we have very good management there now and they have been doing a very good job in improving our technology on marketing, we have gain market share and that cutting tool business is also doing very well. It’s a very high margin business so as a result of that you see that reflected in our bottom lines. So those are the item which is driving that business Mike.

Mike Judd

Okay, great. And then on the iron oxide shall I could certainly understand the logic then implemented at the company's especially chemical space as some where issues with different raw materials associated making sure you have to Olympics. But just the another question about iron oxide, so we are seeing from China. Is that good portion of it comes from NFO is that store la real ost supply origin for that raw material?

Seifi Ghasemi

Well we as of our total requirements if you take all of our requirements we get about 50% of our raw material out of China. Obviously, the price for that product has gone up because China eliminated the VAT tax on the product, if you want to go as I am sure you know. In addition to that scrap prices or prices have gone up. But we – on that front we are very quick to immediately increase our prices in order to recover that. So the raw material costs have gone up, but it hasn’t impacted our results, because we have got an equivalent price increases to compensate for that.

Mike Judd

Yeah, I was just wondering whether you might be able to get terrific expenses on an oxide raw materials from North America these days?

Robert Zatta

The good thing is that we do have two plants now in the North America that produce that. You can be sure that we are running those plants at 100% capacity.

Mike Judd

Thanks to Bob.

Robert Zatta

Yeah sure thank you very much.

Operator

Thank you. And next we have Mike Harrison with First Analysis. Please go ahead.

Mike Harrison

Hi good morning.

Robert Zatta

Hey, Mike how are you?

Mike Harrison

Doing well thank you. Couple of questions on the performance additives business. Do you have exact numbers for how much the timber treatment and color pigment volumes were down in the quarter versus last year? And if you don’t want to talk about specific numbers maybe if you could talk about how they compare to your expectations going into this quarter?

Robert Zatta

Mike, order of magnitude they are down about 30% in both businesses.

Mike Harrison

And roughly, how much did the Elementis business contribute to sales in the quarter? Is $40 million a good number to assume or was it a little bit lower than that?

Robert Zatta

Now I am getting nervous. That is that exact number. You’re right on that. That’s exactly $40 million.

Mike Harrison

Okay. And then, looking at the timber treatment business as well as color pigments I guess both of which have exposure to construction. Presumably Q1 is a time when you start to see some of our customers building inventory for the season. As you move through the rest of the year those volumes declines to maybe firm – improve a little bit or do you think maybe if the construction season ends being weaker than your customers expect, could they actually even get worse?

Robert Zatta

Mike on those businesses the strongest quarter that we have is the second quarter not the first quarter. We usually have the weak first quarter and the second quarter is when construction activities start off obliviously because of the weather and so on. So we have to see how the trends will be for the second quarter. We do not see any signs that it would be worse than 30% drop but we will have wait and see.

Mike Harrison

Do you have any sense for how those look so far in late March into April?

Robert Zatta

In line with the expectations.

Mike Harrison

Okay. And then on the surface treatment side. Can you talk about how you’re viewing the US market and maybe how the GE acquisition positions you to be able to grow that business on the US side and also what end markets you’re planning to focus on in the United States?

Robert Zatta

We view our surface treatment business in the US very positively. We have a very strong management team and that is why we feel very confident about acquisitions and growing that business. The acquisitions that you mentioned has given us a very good entree into treatment of coal steel coils. And our intention in that business is fundamentally if I describe the strategy we have cutting metals, forming metals and cleaning. We say cutting it forming it and cleaning it. And we are trying to fill up our portfolio in such a way that we can provide services in all of those three sectors to our customers. And the GE acquisition was a very good one in filling the gaps that we have in there. We are very positive about our surface treatment business in the US.

Mike Harrison

And then is the GE business exclusively US or is there some other geographies where that acquisition is going to be – have operations I guess?

Robert Zatta

Most of the business is in the US but they do have global acquisitions that they have integrated into the less of our business.

Mike Harrison

Okay and then last I had was on the lithium business. I saw that a soda ash supplier declared force majeur back in February. I was wondering if that lead to any increase in our cost at all for your lithium operations during the first quarter and if that’s impacting with you in the second quarter as well?

Seifi Ghasemi

No it is not.

Mike Harrison

Al right thanks very much Seifi.

Seifi Ghasemi

Thank you very much Mike

Operator

Thank you and next we have Chris Shaw with UBS. Please go ahead.

Chris Shaw

Hi good morning.

Seifi Ghasemi

He Chris how are you doing

Chris Shaw

Good. Taking it about iron oxide and wood preservatives what would they – are they are down similar levels year-over-year in the fourth quarter or is this sort of notionally worse?

Seifi Ghasemi

No, it’s about the same

Chris Shaw

Okay so..

Seifi Ghasemi

The trend hasn’t gotten any worse, but it is730%.

Chris Shaw

Right. And so, it’s been actually couple of quarters. And the ceramics, we don’t anticipate any sort of the good growth. And then that was sort of lumpiness you would think is that it?

Seifi Ghasemi

I am sorry Chris I didn’t understand you question. It got disconnected a little bit.

Chris Shaw

In ceramics sort of strength we saw this quarter, you don’t anticipate it as a lumpy number and you know there was one not one timing but the recent may be order patters or any thing like that?

Seifi Ghasemi

Not significantly, I don’t think the rest of the quarters will be as a strong as a first quarter but I think ceramics will do well for 2008.

Chris Shaw

Okay. And just anecdotally, a friend of mine I think just got one of your ceramic hips?

Seifi Ghasemi

Oh, he did, I hope he is pleased with it.

Chris Shaw

Yeah, he is still recovering by – a crash in his bike and he needed it.

Seifi Ghasemi

I hope it recovers very quickly..

Chris Shaw

Yeah he is jumping in now so surprisingly. One more what I have, in TIO2, is that that is the dollars and euro stays where they are, that’s not a permanently impaired kind of business, its just – its really just affecting growth at this point, right?

Seifi Ghasemi

Yeah. Chris the business has it 19% EBITDA margin.

Chris Shaw

Alright

Seifi Ghasemi

I mean it’s a great business, it generates lot of cash, the business is good business, we liked the business and I just wanted to be very transparent and saying that business is under pressure. If the dollar exchange range is not there we will see even better results, but they are doing it very good job, we like the business I mean, we like 19% businesses or anything.

Chris Shaw

And I know you kind of addresses before but given that the business is weaker over there in fact you could – the competitor gives any lower than price at there looking again you said no inside there?

Seifi Ghasemi

Alright you are talking about the plants that we are looking at?

Chris Shaw

Yeah.

Seifi Ghasemi

Well I don’t know – I do not want to comment in that I don’t thinks it’s appropriate for me to say anything on that Chris.

Chris Shaw

I will call them and ask (Inaudible),

Seifi Ghasemi

See that would be the best thing

Chris Shaw

Al right thanks a lot.

Seifi Ghasemi

Thank you very much Chris.

Operator

Thank you, we will go to John Mcnulty with Credit Suisse. Please go ahead.

John Mcnulty

Well this is on behalf of John, how are you?

Robert Zatta

Hi how are you?

John Mcnulty

I am doing well. Most of my questions have been answered by – can you give us an update on the Copper free treatment product , I know that last week in the earnings call so that there might have been delayed a launch because of timing of SGA approval?

Robert Zatta

No at we have got an approval from EPA in terms of the new product that we have in our joint venture with (Inaudible) and our people are stating the marketing effort to introduce -- that introduce that product. We have always said that product well be fully introduced in the market in 2009 there is no delay and we are happy because it’s going there. And in terms of copper, copper is not an issue for us, because we bought copper ahead of time shows copper prices can do whatever they want in 2008 its not going to effect us very much?.

John Mcnulty

Okay. With regard to acquisition I know you said that environment seem to be much more much more favorable now. Are you looking at any particular business segments where you might be adding on Bolton and should we expect to hear anything?

Seifi Ghasemi

The sectors that you are looking for acquisitions are surface treatment business, pigment and additives, and ceramics. We obviously work on these acquisitions and that it would be in an appropriate for me to speculate. But as I have always said there are opportunities.

John Mcnulty

Great. Thank you

Seifi Ghasemi

Thank you very much

Operator

Thank you, and (Operators Instructions) and we do our follow up from David Begleiter. Please go ahead.

David Begleiter

Thank you, my question was answered.

Seifi Ghasemi

Thank you very much David

Operator

And thank you then Mr. Ghasemi, we have no further question.

Seifi Ghasemi

Well In that case I would like to thank everybody for taking the time to be on our call, and we look forward to talking to you next quarter. Thank you very much.

Operator

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Source: Rockwood Holdings Inc. Q1 2008 Earnings Call Transcript
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