Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David McGregor - Longbow Research.
David McGregor – Longbow Research
The new Oro Grande plant, you mentioned that you are running a little behind the $60 million EBIT target. What is the current run rate?
Kenneth R. Allen
With energy being so volatile and the market being weaker out in California, it is difficult to try to estimate a run rate for profitability in a short run here. What we do know is over time, as Mel said, as California begins to recover and margins begin to get back to normalized levels, we would expect to approach that $60 million number again. But it’s hard to put a time frame on at this point.
Melvin G. Brekhus
David, it’s extremely important that everyone understands that the key is that we have the equipment in place now that makes us the efficient operator and puts us in a position where we can capitalize on those efficiencies and get to the incremental EBIT when market conditions allow.
David McGregor – Longbow Research
I’m just trying to get a sense of are we closer to $30 million, is it $50 million? Can you at least give us some sense of order magnitude or at least address the, you talked so much in your communications with the investment community about the $60 million EBIT, $75 million EBITDA. Now you’re saying you are shy of that. I think a little update would be helpful.
Melvin G. Brekhus
We are going to get there, David. It’s a matter of time.
David McGregor – Longbow Research
Can you give us a sense of when you expect that might occur? Obviously that’s a harder question to answer. I thought I was making it easier for you.
Melvin G. Brekhus
You’re not making it easier because what we said was that when market conditions would allow us, we would get to that level. The equipment has the capacity to give us the efficiencies that will get us there. All we have to do is have market conditions that allow us to get there. And we aren’t going to be able to, and won’t, to forecast that in these volatile times.
David McGregor – Longbow Research
So under these current market conditions, what would that represent?
Kenneth R. Allen
David, it’s difficult with energy bouncing around and this softness in California to really know how to judge that over the next year.
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