Koppers Holdings Inc. (NYSE:KOP) Q4 2017 Earnings Conference Call - Final Transcript

Feb 27, 2018 • 11:00 am ET

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Koppers Holdings Inc. (NYSE:KOP) Q4 2017 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

(Operator Instructions) Welles Fitzpatrick, SunTrust Robinson Humphrey.

Analyst
Welles Fitzpatrick

Just to jump back to the gas realizations, obviously, the guide of 55% to 60% is a little bit lower than what you guided towards in 2017. Am I hearing it right that that's entirely a function of the accounting between TG&P and realizations that Scott talked about, or is some of that a function of these newer processing facilities extracting a little bit more from that gas stream?

Executive
R. Scott Meyers

It's a mixture of two things, I would say. One is the new rev rec guidance which is moving about $15 million to $20 million, which we would have previously done in TGP, and it's moving it up to a reduction to our revenue stream. Also in that is the widening basin differentials where those have increased in our forecast going forward above from 40% with our first budget to now more like 65% to 75% depending on the differential that we're using.

Analyst
Welles Fitzpatrick

Okay. That's perfect. And then a quick one on the Saddle Butte pipeline. That $24 million, is that going to be a onetime cash payment to you all or does that come in via just savings on the per unit on the pipeline?

Executive
Lance Lauck

Yeah, Welles. This is Lance. It's a onetime cash payment.

Analyst
Welles Fitzpatrick

Okay. And then just one last one and this is probably for Scott or Lance. Can you give your broader thoughts on processing over the next several years? I mean, (inaudible), O'Connor, Lupton are all those combined going to be enough to move to 2019, 2020 in (inaudible) mind?

Executive
Scott Reasoner

This is Scott, Welles, and I -- really the way we see it right now the plant coming on in 2018, we see that obviously drop in line pressure significantly over that -- over where we sit today particularly, and then we're really needing that plan in 2019. We think we're going to start to see some pressure increases in early 2019. We're not sure it will get as high as it is today. But then that Plant 12 negotiations that we're involved with is something that we see as another important step in DCP helping to alleviate the line pressures that we've seen over the last several years in increments, obviously, not consistently. And it's something that we're really excited about where that takes us from a less frequent installation of these plants to a much more calculated and timed system. We feel like we really got it well in hand at this point.

Analyst
Welles Fitzpatrick

Okay. And then on the non-DCP plant, should we think of those as helping alleviate pressures for you all such as the Lupton or the Latham and what have you? Should we really just be focused on the DCP ones?

Executive
Scott Reasoner

Much more so on the DCP, although we do have a fairly significant portion of our gas going to Aka, which offloads on to the Anadarko system, a portion of their gas. And with that comes some flexibility around where that gas goes. And our