Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Steve Denault – Northland Securities.
Steve Denault – Northland Securities
First question, did I hear you correct, you said residential geothermal revenues were 19% of the fourth quarter climate control?
Tony M. Shelby
No we said they were 19% for the full year of the climate control business, that’s the residential geothermal only. That does not include the commercial geothermal part.
Steve Denault – Northland Securities
Which is another what?
Tony M. Shelby
I don’t have that number exactly in front of me but it’s probably about another 5% to 7%.
Jack E. Golsen
Two thirds, one third usually.
Steve Denault – Northland Securities
The comments about Pryor, are you incurring expenses in the first quarter as a result of the start up or planned start up?
Jack E. Golsen
Yes we are.
Steve Denault – Northland Securities
What did you say? Was it a couple million dollars that you’ll spend?
Jack E. Golsen
For the fourth quarter?
Steve Denault – Northland Securities
For the first quarter.
Steve Denault – Northland Securities
Did you say what the expenses would be?
Jack E. Golsen
We didn’t but we’re probably running $400,000 or $500,000 a month.
Steve Denault – Northland Securities
From a hedging standpoint both natural gas and copper, being that we’re almost finished with the first quarter, what do you think the net impact will be there?
Jack E. Golsen
For the first quarter?
Steve Denault – Northland Securities
Yes.
Jack E. Golsen
We can’t really comment on that, Steve as far as the hedging. As Barry indicated we have a natural hedge on 63% of our chemical business and copper prices have moderated but we can’t really comment on what our first quarter numbers look like.
Steve Denault – Northland Securities
How well hedged are you on natural gas or are you just?
Barry H. Golsen
We’re not hedged on natural gas.
Jack E. Golsen
We have a natural hedge because we have 60 odd percent of our product passes through the price of gas then that’s a hedge that we don’t have to put on. So, we are only concerned about the balance which is say 35% and to that extent right now we’re not hedged.
Tony M. Shelby
Now, on the ag side as I mentioned we’ve got derivatives that we hold that we took a $3.6 million write down adjustment mark-to-market but those are primarily for customers that we have locked in margins based on those hedges. Primarily utility companies that because of regulatory issues don’t do their own hedges so we do it on this end but they are done as we indicated to lock in margins on subsequent orders to be shipped.
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