Question-and-Answer Session
Operator: Thank you. [Operator Instructions]. And your first question comes from the line of Laurence Alexander with Jefferies. Please proceed.
Laurence Alexander - Jefferies & Company
Good morning.
Eric N. Boni - Director, Investor Relations
Good morning.
Laurence Alexander - Jefferies & Company
I guess first of all on the Performance Material segment, do you feel you have the right mix in that segment? I don't mean in terms of bolt-ons, but in terms of... are any of the assets there look weak... structurally weaker than they were last cycle?
James J. O'Brien - Chairman of the Board and Chief Executive Officer
When we take a look at the Performance Materials side of our business, as we mentioned in the prepared remarks, our commodity piece is less than it was for the last cycle. So we still have a big impact with commodities, both our specialty side through DERAKANE and also looking at more worldwide markets has improved dramatically. So as we look at our sell-through this cycle, we are going to be impacted by the boat business, we are going to be impacted by the transportation business, but there are new environmental businesses which did not exist through the life cycle that we are participating in, such as windmill blades and inserts for few liners [ph] for coal burning power plants. Businesses like this are starting to take off in much greater quantities and we have expectations that they will help dampen the effects as we go in through this next cycle.
Laurence Alexander - Jefferies & Company
And with respect to raw materials, if you look back over the last 12, 18 months what is roughly the cumulative gap between the rise in raw materials and your pricing, or to put it another way, how much do you expect to recoup over the next 12 to 18 months if raw materials stabilize?
James J. O'Brien - Chairman of the Board and Chief Executive Officer
One of the issues that we tried to demonstrate in the slides was if you just look at strictly raw material costs, we for the most part have recovered those as just a total cost of raw materials, but as we all know, you have to capture more than the actual raw material to maintain your margin. So, the real impact here has been our ability to maintain gross profit percentages, which would imply that we have to continue to increase pricing and particularly look at the segments that we compete in and to assure ourselves that we are getting the full value of the service that we are providing to several customers. So, as we look at our challenge this quarter, our managers are significantly paying attention to the segmentation of their markets with the real raw material cost are in this particular segments and re-evaluating their pricing strategies and models to assure that we can get the maximum price that the market will avail in those segments. So, we are not satisfied yet with our recovery of that and we are pushing very hard and trying to get pricing up. Marvin?
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