Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Koppers business update in Q1 2020 preliminary results. Please note that the event is being recorded. Now I'll turn the call over to Quynh McGuire. Please go ahead.

Thanks, and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our conference call where we will provide a business update in light of the COVID-19 environment as well as highlight our Q1 2020 preliminary results. We issued our preliminary first quarter 2020 results earlier today. You may access this announcement via our website at www.koppers.com. As indicated in our preliminary earnings release, we've also posted materials to the Investor Relations page of our website that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, this is being broadcast live on our website, and a recording of this call will be available on our website for replay through May 29, 2020. Before we get started, I would like to direct your attention to our forward-looking disclosure statement. Certain comments made on this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, risks, and uncertainties including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans, and projected results will be achieved. The company's actual results, performance, or achievements may differ materially from those expressed in or implied by such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The company has provided with its press release, which is available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, President and CEO of Koppers; and Mike Zugay, Chief Financial Officer. I will now turn the call over to Leroy.

Thank you, Quynh. Welcome, everyone, to a call that will be different from our usual format due to the course of events related to the COVID-19 situation. Let me start by saying that I hope all of you and your families are healthy and doing as well as can be expected under these extraordinary circumstances. Also, I'd like to take a moment to offer our thanks to frontline healthcare professionals, first responders, food service workers, delivery service employees and drivers, and everyone who is so selflessly and tirelessly giving so much to keep our society moving under circumstances none of us could have imagined only a few short weeks ago. That includes our employees, most of whom continue to clock in and report to a work site every day playing their role in helping our customers continue their important work. I'll begin this call by talking about Koppers' mission-critical role as an essential business, and then I'll discuss our key priorities that help to guide us in all the decisions as we manage through this unique situation. The term, essential, and everything it implies has become the basis for our current state and provides the foundation for our ongoing operational presence in a post-COVID world. According to guidelines set forth by U.S. Cybersecurity and Infrastructure Security Agency, or CISA, an agency of the Department of Homeland Security, Koppers is authorized to continue operations under the guidance of the essential critical infrastructure workforce issued on March 19, 2020. CISA's transportation and critical manufacturing categories are both applicable to Koppers as the work performed by our employees is essential to maintaining the nation's railroad utility infrastructure, which supports public health, safety, and security. In addition, the Association of American Railroads issued guidance on March 16 related to our customers' essential role in providing critical infrastructure protection and resilience as endorsed by DHS, FEMA, and other federal agencies. CISA guidance also makes the operations of our supply network, trucking companies, and third-party terminal operations necessary to maintain the supply chain of these critical sectors. We are proud to do our part to keep rail transportation running safely to deliver critical shipments of food and other supplies. Our products also keep homes and businesses powered to provide light, heat, and digital connectivity. And we serve construction markets with products to maintain critical infrastructure. We often talk with the investment community about the fact that the products and services we provide are critical to the markets we serve, and that, in many cases, we are one of a few that can provide them. It is truly unfortunate that we have had to endure a global pandemic to prove those claims. But the major point I want to make sure everyone takes away from today is that what we produce is indeed essential to our world. Now, as we navigate through this unprecedented period, it's important to focus and align our business with these key priorities. First and foremost, protecting the health and safety of employees, customers, and supply chain partners; providing critical products and ongoing support to our essential customer base; maintaining adequate liquidity and financial flexibility; providing frequent and accurate communication to key stakeholders; and finally, advancing key initiatives in order to emerge stronger from the crisis. But looking beyond COVID-19 and over the long term, our industry-leading position, end markets served, and proven business strategy will continue to position Koppers for success. Our company's purpose of protecting what matters and preserving the future is more meaningful now than ever. By protecting our employees, responsibly managing our operations, and aligning our cost structure in support of our business priorities, we'll be well prepared to emerge even stronger. As stated in our press release, we have withdrawn our previously communicated 2020 financial guidance due to the evolving nature of the pandemic and uncertainty about its scope, duration, and impact. It is difficult to reasonably and accurately forecast our results. Given that we're in a time of elevated uncertainty, communication becomes even more important to inform decision-making. As such, we plan to provide publicly available monthly business updates until we are comfortable that events surrounding us have begun to normalize. I realize this is unusual; unprecedented times call for unprecedented measures. This change in communication frequency is not to be considered permanent, but I hope this level of greater transparency provides current and prospective shareholders better, more timely information for their decision-making process. For now, let's move on to Slides 5 through 7 to review how Koppers has responded to this crisis so far and our long-range plans regarding the COVID-19 situation. Even before the full extent of the pandemic became apparent, we formed a real-time crisis communications team to develop plans and take specific actions to protect our people, operate our facilities safely and reliably and ensure ongoing service to customers. We issued guidelines based on CDC recommendations and our own Zero Harm principles regarding hygiene, social distancing, limiting access, disinfection, face masks, and working from home. Our self-imposed health and safety guidelines will remain in place, and we will monitor the situation closely as various regions begin to consider relaxing certain guidelines. Our information technology team continues to safeguard our network against crisis-related stresses, coordinate connections with employees working remotely and troubleshoot as needed. By utilizing technology wherever possible, we've been able to stay connected and proactively manage our business. Our communications strategy includes the new One Koppers dedicated employee app for smartphones to receive and share immediate news and updates from employees worldwide. I communicate with our employees by sending written updates on a weekly basis at minimum as well as regularly distributed video messages, which are also posted on our Koppers Facebook page and our corporate website. As one might expect, my interaction with our Board of Directors has also ramped up with weekly written updates and ad hoc verbal updates to discuss status and contingency plans. We also have been in heavy communication with our customers, suppliers, regulatory authorities, and industry associations, coordinating our response to various governmental orders to ensure supply chains remain essential and to identify any issues that need to be resolved to help us operate as efficiently as possible during this time. Continuing to Slides 8 through 10 to provide a high-level perspective on our employees and their health and well-being. To date, around 6% of our employees around the world have either been tested or self-quarantined. Only one employee has tested positive, and that individual has now recovered and cleared to return to work. The virus for that one employee was contracted outside of the workplace and had no contact with fellow employees at work. Currently, about 1% of our employees remain in self-quarantine at home. Approximately 1% of our employees have been furloughed or laid off and are still receiving compensation while off work. Roughly 75% of our employees are working on-site with the remaining 25% working from home. Of those able to work from home, about 83% have chosen to do so. We continue to take extreme measures to safeguard our employees while continuing to operate effectively. Anyone exhibiting symptoms of COVID-19 are sent home to self-quarantine and not permitted back to work until they complete a 14-day self-quarantine or produce test results that show them clear of the virus. Those who show symptoms or who have been exposed to those showing symptoms and are off work are still being paid by Koppers or through applicable government wage replacement programs. In terms of operational continuity, as shown on Slide 11 through 13, staffing and materials planning remains challenging but manageable. We're focused on our key integrated supply chains by monitoring essential businesses, plant staffing, and material movements. We've activated plans for sheltering in plants and implemented CDC safety guidelines at all locations. So far, every Koppers facility remains in operation except one in Auckland, New Zealand, and that facility is slated to come back online April 28, which, for those in Auckland, is already here. So we're pleased to say that due to the hard work and extensive planning by our people, our customers have not experienced any material shortages. Since most of our raw materials are multisourced, we enjoy an important strategic advantage in this area. Also, we've identified and separated key personnel and related backup team members to ensure coverage at all times. This flexibility, we believe, will become an important component in our plans to balance the safety of our people with operating as cost-efficiently as possible. The bigger challenge we now face is how to manage facilities around the world that will each be facing different timing and variations of loosened restrictions. We plan to focus on what we can control, which is within our fence lines, immediate proximity of our field crews in our office environment. As social restrictions begin to lighten, the risk of an employee contracting the virus and bringing it to work will go up. We plan to continue practicing all CDC-prescribed hygiene and social distancing practices while we assess the timing and feasibility of adding testing and contact tracing to our sites so that we can limit those affected whenever an employee inevitably contracts COVID-19. For the safety of our employees and the reliability of our operations, we need to continue limiting close social contact within our facilities and plan to do so. Moving on to the business landscape with the backdrop of COVID-19, as shown on Slides 14 through 22, I'd like to discuss each of our businesses at the time we entered into the COVID-19 environment, how we think we are currently positioned, and how things might look coming out the other side. We've gained a greater appreciation for what a differentiator the diversification of our business model creates in diffusing our risk. During the past 5 years, each of our 3 business segments has had a turn at being the largest generator of EBITDA for Koppers and each also reached an all-time high EBITDA. RUPS in 2015, Performance Chemicals in 2017, and CMC in 2018. As I review each business, I'll start with the businesses that I think will feel the least impact to those that will likely feel the greatest impact. At the top of the list for the businesses that we believe will feel the least amount of impact is our Utility and Industrial Products business for UIP. As a whole, utilities need to maintain their infrastructure to avoid interruptions in service and our customers have confirmed that it becomes even more important now that many people are homebound. We continue to see a steady order flow as the industry continues with planned maintenance to support infrastructure reliability. Major projects have been pushed back until later in 2020, but that should only serve to provide demand for a strong back half of this year. Also, with the tornado season just starting, our UIP team has been busy responding to tornado damage since the first deadly cluster emerged on Easter Sunday. Storm response is an area where our team shines, helping communities prepare and respond to the inevitable damage, especially now at a time when the utilities can least afford to deal with days-long outages. Our UIP business has seen some pullback in marine piling since much of the work driven by commercial building on the East Coast has slowed or stopped due to government restrictions. We anticipate that the current low interest rate environment and stimulus funding will spark strong construction activity as the various states begin reopening their economies. Our next best-positioned business to weather the current situation is Railroad Products and Services, where we have many long-term relationships and hold strong market positions with most of the Class I railroads. We've been in daily communication with our customers to understand the changes impacting their business and how we can help them work through their day-to-day challenges. In addition, we've been actively working on a couple of opportunities to add market share that are beginning to get finalized at just the right time. Typically, capital spending for the railroads is in line with revenues generated per track mile. With traffic decreasing, spending may be adjusted accordingly at some point, depending on the railroad. Thus far, crosstie demand has been largely unaffected as our trading volumes have tracked slightly ahead of last year through the first quarter. One of our major customers has indicated plans to reduce capital spending by 10% for the remainder of 2020, but collectively, our remaining Class I customers are keeping with their programs, which are expected to track on or ahead of 2019. On the commercial side of our business, we saw strong demand and healthy comparative pricing reflected in our first quarter numbers as it has been the case now for the past few years. Moving forward, we expect to see some softening in demand as short line railroads assess their cash and capital needs leading to pricing pressure. While maintenance of way has been our Achilles heel over the past 3 quarters, we still anticipate improved sequential performance reflected in our numbers as early as the second quarter of this year. Our rail joint business had a strong first quarter and has been the most consistent performer of the 3 maintenance of way businesses, and we expect that to continue. At the end of February, we came online at our Somerville facility taking back used crossties and started to see the benefits of that new business reflected in March results. We expect that to carry through the remainder of the year, along with some other growth opportunities that could also be additive to our numbers. Railroad structures had a robust backlog of business heading into 2019, as well as some emergency projects pop up early last year that contributed to a strong first half of last year. This year, we carried a smaller backlog into the year with several of our projects in more severe weather in Northern States, as well as a few in parts of the country harder hit by the coronavirus. These factors created additional complexity, added costs and impacted productivity. As the weather warms up and as restrictions begin to ease, we expect to see improvement in our structures business. Our maintenance of way business has consistently added $2 million to $3 million of EBITDA quarterly to our profitability. For a variety of reasons, however, it has not done so for the past 3 quarters, with the March quarter being a low point. We expect meaningful improvement in Q2 before returning to more typical results in the third and fourth quarters of this year. On the supply side, while forestry has been deemed essential, new construction has not been considered essential in many places. This has impacted sawmillers who have seen a drop in demand, leading some to idle or close shop. Thankfully, we have not experienced a noticeable impact as some mills are continuing to produce poles and crossties to maintain their operations and cash flow. Industry experts are forecasting that the current 6 to 12 month outlook for logs is in the ideal range. We believe the supply chain for untreated wood remains robust and we'll continue to monitor the procurement trend. Next is our Performance Chemicals business, or PC. Globally, the first quarter represented our sixth consecutive record quarter in sales. Since the PC business was acquired in August 2014, there has been only 1 quarter that was not a new quarterly high for that segment. In the U.S., there's been much chatter about lumber treaters shipping record volumes in Q1, and big box stores reported record or near record highs. With new builds deemed nonessential in certain states, sales of certain products have been curtailed. Our flagship products like MicroPro and CCA are used in repair and remodeling, which have remained strong markets thus far. We likely will see some pullback in volume as discretionary income is affected by rising economic uncertainty and unemployment, but our cost levers can mitigate a good portion of the possible softening. The Joint Center for Housing Studies of Harvard University and their latest report commented that they expect quarterly spending for improvements in repairs to turn negative by the third quarter with the potential for even more severe declines to follow. Juxtapose those comments against the weekly U.S. lumber report that stated bustling demand from home centers continued to spearhead a brisk pace in Southern Pine treated lumber sales and that some treaters in the southeast increased sales to box stores sharply. That demand from contractor yards picked up moderately, matching many treaters' pre-virus projections and that some ramped up replenishment purchases in response to indications that many states along the Eastern Seaboard have either lifted stay-at-home restrictions or will do so by early May. Internationally, many of the industries we serve in the U.K., Spain, and France have been negatively affected, while the Nordic region and Portugal remain steady. As countries begin to reopen their economies, we expect to see our business gradually improve. Our PC business in Australia has remained operational, and we've generally experienced a robust market for our products in that region. Australia overall has done a fairly good job of containing the spread of the virus compared with Europe. New Zealand has been in a Level 4 lockdown effective as of March 26, which required closing all but the most essential industries. Our New Zealand business primarily serves the new construction market, which is not considered essential under Level 4. As a result, our Auckland facility has been shut down since that time. Earlier this year, our Christchurch facility ceased preservative production and converted to a distribution facility as part of optimizing our operations footprint. New Zealand is moving to a Level 3 status effective April 28. We have begun restarting our Auckland facility and expect it to be online today, where it is already April 28. To put our New Zealand business in perspective, the month that our business was shut down will cost us approximately $0.5 million in EBITDA versus our original expectations. Our Central and South American business has been a challenge as certain countries have been under extended lockdowns, and treatment plants in those countries are not operating. As a reminder, we do not have any owned operating facilities in Central or South America but run our production through toll manufacturers, so we do not bear the cost of that overhead directly. While volumes have been negatively affected, the biggest impact has come from the significant depreciation of the Brazilian real, which finished the first quarter 22% weaker than year-end 2019, effectively wiping out all of the EBITDA generated from the other portions of that region's business. Looking at the supply side of our PC business, we're seeing a benefit as scrap copper prices have dropped significantly, but that benefit is largely muted by the hedges that we have in place for most of our expected 2020 requirements. Scrap yards in certain areas have been closed as nonessential, limiting supply and adding pressure on spot pricing of scrap for those yards still in operation. We have adequate inventories on hand to carry us through the next month or so and do not anticipate a disruption in our supply chain for scrap copper. The drop in copper has provided an opportunity to lock in lower hedge prices for portions of our 2021 and 2022 requirements, and we will realize the benefit of that in those outer years. The vast amount of our other raw materials, like arsenic trioxide and various biocides, are sourced out of China, and we've experienced no disruptions in our supply chain for these materials throughout the global pandemic. We have normal levels of inventory on hand and don't expect any issues based upon our current experience. This brings us to our CM&C business, which will experience the most severe impact of the crisis. It has started with the first quarter seeing reduced aluminum demand, lower overall average pricing brought on by lower benchmark pricing out of China, and cratering oil prices. The good news is this is not the same CM&C business as 6 years ago when markets were softening and oil fell from $100 to as low as $27. The structural and contractual changes we put into effect should allow us to weather this current storm in much better shape. Despite cutbacks in steel production, reducing the demand for coke, which creates the by-product coal tar that we use to produce our products, we remain in good shape due to the flexibility of our supply chain. Any shortfall in the U.S., our most supply-constrained region, should be backfilled by the more abundant European supply. This is even more true in a low oil environment as carbon black producers resort to their lower-cost petroleum feedstock, freeing up more coal tar to the market. Low aluminum pricing and low demand related to auto and aerospace production cuts have already impacted first quarter results and will continue. Nonetheless, we are in a good place with many customers at the lower end of the cost curve, which will enable them to outlast competitors during this tougher period. In general, the price of oil impacts the pricing of certain products like carbon black feedstock and phthalic anhydride and, to a lesser extent, naphthalene. We felt that most acutely in the 2014 to early 2016 time period when oil dropped through the floor. The same dynamic exists today, except with one big difference. Today, we have a significant portion of our raw material under contract to move in tandem with the direction of our end markets. In North America alone, we lost $28 million of adjusted EBITDA in 2015 and '16, partly due to oil, partly due to running 3 underutilized facilities, partly due to an operating footprint that had key parts of our operations segregated at different facilities. That has all changed now. And even with the current challenges, we expect that North America will be a valuable contributor to CM&C results. The most important point to make about the correlation to oil is that with much of our raw material supply synced to oil or our end markets, our raw material costs are typically lagging price by approximately 1 quarter. We bear the negative impact in a falling oil environment, but we get the positive impact as oil prices rise. In 2018, we saw that dynamic clearly as oil was moving up and CM&C posted record results. As costs started to catch up and oil started moving in the other direction in 2019, CM&C results reflected that pullback. We originally expected that trend to continue moderately in 2020 with lower oil and a continuation of cost chasing price. That will now be somewhat intensified in the short-term current environment, impacting both the top line and price and EBITDA and reduced profitability. But once oil stabilizes and begins to move up, we should be recapturing some of that benefit. The key takeaway with CM&C is that even with the doom and gloom around steel, aluminum, auto, aerospace, and oil and gas, we believe this business will deliver 2020 EBITDA margins within our stated 9% to 15% range through an economic cycle. Now as highlighted on Slide 23 and 24, the available relief program such as the CARES Act and other options will help offset and absorb some of the additional costs incurred in dealing with COVID-19. Programs and benefits include the deferral of employee payroll taxes, which will represent approximately $7 million in 2020 cash savings deferred to 2021; the employee retention credit, which will provide up to a $5,000 per employee payroll tax credit for those affected by the virus; the deferral of defined benefit plan contributions, which offers $3 million in payments that we can defer to the end of this year; interest expense limitation relief, which will represent a cash tax savings of about $1 million in 2020 by amending interest expense limitations to 50%; wage subsidy programs that we're monitoring various government programs in the United States, the U.K., Canada, Australia, and New Zealand; and relief for defined contribution plan participants to assist the eligible COVID-19 impacted employees. As always, Koppers' employees have stepped up to volunteer, donate, and offer support in a variety of ways to help those suffering job loss or in need of face masks and other protective equipment. We launched a community fund to provide essential household supplies to underserved communities in Pittsburgh, raising more than $50,000 from Pittsburgh-based corporations and the public at large so far. Employees from our Stickney facility near Chicago donated personal protective equipment to an area hospital in dire need while also expanding its support of a local homeless shelter experiencing strains on its services. One employee in our Nyborg, Denmark facility used her technical know-how to procure ingredients and produce hand sanitizer for all of her coworkers. Other Koppers volunteers have sewn homemade masks for their colleagues and for healthcare workers on the front lines of this battle. Our UIP teams quickly and safely shipped more than 100 loads of replacement utility poles following tornadoes in April, helping to restore power to nearly 4,000 residents. Peer-to-community involvement has been a hallmark of our employee base for years, and this crisis has brought it to the fore even more impressively. I'm immensely proud to lead the people of Koppers. Now, before I provide closing comments on actions and opportunities related to mitigating the impact of COVID-19, I want to turn it over to Mike to discuss our debt and liquidity scenarios as well as key highlights on the first quarter of 2020. Mike?

Thanks, Leroy. Looking at Slide 30. At the end of March, we had net debt of $899 million, with $185 million in available liquidity. We were also in compliance with all our debt covenants. Looking at the maturities, we do not have any significant debt maturities until 2024 when our revolver matures and a final balloon payment on our term loan is also due. In 2025, our $500 million in bonds will mature as well. In 2020, we plan to reduce debt by a minimum of $120 million, contingent upon the successful closing of the KJCC divestiture, as well as additional sources of cash from working capital reductions, lower cash taxes, lower interest payments, lower than originally projected capital expenditures, and deferred payroll taxes, as Leroy mentioned, courtesy of the CARES Act. As shown on Slide 31, we evaluated various scenarios to stress our bank covenants, and Koppers expects to be in compliance with our covenants even at a potential 30% reduction in 2020 EBITDA. As shown on Slide 32, we also evaluated our liquidity at various levels of EBITDA, and Koppers expects to have ample liquidity, even with a 25% potential EBITDA reduction in 2020. In our press release this morning, we provided preliminary results for the first quarter of 2020, and our financial discussion now is based on these preliminary results. Please also note that beginning in 2020, we are reporting results from the pending divestiture of KJCC as discontinued operations for the current year as well as the comparable prior year. Moving on to Slide 34. Revenues were $402 million for the quarter, which was an increase of $25 million or 7% from $377 million in the prior year. Excluding a negative impact from foreign currency translation of $6 million, sales were higher by $31 million or 8%. The increase was due to increased volumes and favorable pricing in our wood preservation businesses, partially offset by weaker demand in our CM&C segment. On Slide 35, adjusted EBITDA was $38 million or 9% compared with $41 million or 11% in the prior year quarter. RUPS reflected a general favorable demand environment with increased crosstie volumes and favorable pricing in its commercial crosstie business as well as higher volumes of utility poles, partially offset by continued weak demand and maintenance of way businesses. PC reported higher sales and profitability, driven by organic growth as well as market share gains in North America and lower raw material costs partially offset by lower demand in Europe. CM&C was negatively affected by softening demand in the global aluminum markets and lower pricing as well as inventory write-downs due to the steep decline in oil prices. Now I'd like to discuss several items that are not referenced in our slide presentation. Adjusted net income was $10 million compared with $11 million in the prior year quarter. Adjusted EPS was $0.47 compared with $0.54 for the prior year period. Both adjusted net income and adjusted earnings per share reflected weaker demand for our carbon-related products as well as decreased profitability in our railroad maintenance of way business, partially offset by higher profitability from our PC segments. Through March 2020, cash used by operating activities was $17 million compared to $14 million in the prior year. Capital expenditures were $11 million, also $11 million in the prior year. Before I turn the discussion back over to Leroy, I want to mention that we expect to issue our final Q1 earnings press release and also file Form 10-Q on Thursday, May 7. We will not have an earnings conference call on that day given that, as we announced this morning, we will have our next scheduled monthly business update to the investment community on Wednesday, May 20.

Thank you, Mike. Like any company facing financial challenges, we've pinpointed areas where we can reduce spending to counteract potential declines in our markets. We hold weekly cost meetings led by our Chief Accounting Officer and Treasurer to update the leadership council on our cost reduction opportunities and progress, which you can see on Slide 37. In SG&A, we've identified $15 million to $20 million in possible savings based on 2019 figures. We captured $3 million of those savings and included them in our Q1 numbers. The main areas for savings include compensation and benefits, travel and entertainment, legal fees, consulting expenses, and office-related costs. Additionally, the team is examining potential opportunities for reducing operating expenses at the plant level, but we're proceeding carefully, as our priorities remain employee safety, environmental responsibility, and customer reliability. Finally, as we look forward to how we maintain as much of the foundation of our earnings as possible and come out the other side even stronger, we've continued to advance some very important initiatives even in the challenging work environment we find ourselves in. You can see that reflected on Slide 38. In just about every business we operate, we've been enacting programs that utilize our vertical integration advantages to increase market share. We began realizing the fruits of our labor last year with several of the large PC account wins, and that has led its way into this year where we have added an important customer to the KRR base and have multiple irons in the fire in our RPS and UIP businesses that could become reality in the back half of this year. On the new product front, we announced last quarter that we plan to enter the copper naphthenate market as pentachlorophenol begins to sunset for utility pole treatment. While we have continued our work down that path, we have also had many meaningful conversations with customers about our current proven portfolio of creosote and CCA as viable alternatives, and there seems to be an openness to test products and continue the dialogue. Meanwhile, we continue to work on other formulations in order to provide the industry with the best product for their particular needs. I know we've talked about network optimization for some time now, with only a few moves made to date. The lack of movement is not an indication of the tremendous amount of work that has been done behind the scenes and the conversations that have occurred at the customer level to ensure that whatever changes we make will allow us to continue to provide the same quality products and services that our customer base has become accustomed to. We are getting closer to some changes that I expect will begin to get enacted later this year. Before I get into some of the other cash opportunities, I want to make a note that on April 16, the antitrust ruling was filed for the sale of our KJCC facility, which starts the 2-month clock on the approval process for that. So that was the next big milestone that we were waiting to occur that keeps us well on track to look forward to an August closing of the sale of that business. And looking at other cash opportunities, we still do have a few other noncore businesses that we would monetize if the price was right. We also have several closed properties and associated assets that we are actively marketing that could bring in additional cash. Finally, this year should represent the completion of the heavier spending on closing facilities that have averaged close to $9 million a year over the past 6 years. In closing, I'm confident that we are positioned strongly to not only make it through this current crisis but to come out the other side in a real position of strength. At this point in time, I'd like to open it up for any questions.

First question comes from Mike Harrison, Seaport Global Securities.

Good to hear from you guys. Hope you're all well and appreciate the level of details here. I think it's really good. I wanted to ask about the decremental margins, the way you kind of went through the segments, you kind of ranked them in order of where you're going to see the most impact or least impact to most impact. I took that to mean more of kind of a demand impact or volume impact. But as we think about decremental margins, can you maybe talk about each of the businesses and where you would expect to see the most severe impact from lower demand? Generally, I would think of RUPS and CMC as maybe having higher fixed costs and therefore, higher decremental margins, and maybe the fall-through is less severe in PC? But anything you can help to frame that up would be appreciated.

Okay, Mike, I'll start and then Mike can add anything I miss. UIP had one of its strongest quarters in terms of sales and profitability since we acquired the business. While it isn't as seasonal as some of our other businesses, the first and fourth quarters usually see weaker performance for UIP. So having one of its best quarters in the first quarter gives me confidence, along with what we've observed so far in the early part of the second quarter, that they will have a solid year and potentially improve their margins a bit this year compared to last. For RPS, we might experience some margin erosion, but overall demand looks good, and we don't believe we'll face significant challenges in that business. I think we can maintain our overall margins. The impact really depends on how much the commercial market softens; significant price declines could affect margins. However, other positive dynamics in that business are emerging as the year progresses, and I expect them to perform well. We also have cost reduction initiatives in place to offset any erosion from the base business. For PC, we are covered with our copper pricing this year due to hedges, so we aren't facing immediate impacts from the recent drop in copper prices. If volumes decrease, there are fewer fixed costs in that business, but we could still see some margin erosion if we can't offset it with other cost reductions. CM&C will likely be the most affected in terms of margin, but I still believe we can remain at the lower end of the 9% to 15% range we've discussed, which is impressive considering the current supply and demand challenges and the effects of lower oil prices on our pricing. There's no doubt that margins will be most constrained there, but I think we will still land at least at the bottom of our projected range through an economic cycle. That's my summary, and Mike, feel free to add anything.

Yes, from my perspective, I mean, the rule of thumb that we have on all these segments holds, I think, through an economic cycle. And of course, we're in an economic cycle now that's on the downward trend. But from a RUPS perspective, we have always stated that we should be in that 9% to 12% range throughout any economic cycle. Performance Chemicals, 12% to 18%. And as Leroy just reiterated again, Carbon Materials, 9% to 15%. So I don't see anything that over the long term is going to change our view of those businesses through an economic cycle. It's just a matter of, in the current environment that we're working under with the pandemic, how can we impact that as positively as we can.

Okay. To follow up on those margin ranges you provided, should I consider those as annual margin numbers? If Q2 is experiencing the most significant impact from this crisis, does that mean we might drop to the lower end of those ranges in Q2, but for the entire year, there’s an expectation of better performance?

I would say, yes.

Yes. The answer to that is yes because those ranges are annual ranges. Yes. And keep in mind that our business is seasonal; our best quarters are historically Q2 and Q3. And the slowest quarters for us are always Q4 and Q1.

Got it. Okay. And then last question for now is just on the Class I railroads, you mentioned that one had announced a 10% pullback in CapEx spending. None of the others have formally announced anything, but is it your view from your conversations with them that others will kind of follow that type of plan and maybe pull back by 10% or so?

That is not our view. Our view is that, for the most part, we expect them to pretty much maintain the program that they had coming into the year, preparing to bolster their network for some recovery. And so that's where we're at based on the conversations we've had. Now that could change, but that's what we shared.

Next question comes from Laurence Alexander of Jefferies.

It's actually Dan Rizzo speaking for Laurence. If we reflect on the rate after we emerged from the recession of 2008 and 2009, two things occurred that may be relevant. First, the Class I railroads took advantage of the lower traffic periods to replace tracks. Could that happen again? Second, when the recession ended and the economy began to recover, we faced a lumber shortage as housing demand increased. Am I remembering this accurately, and could a similar scenario occur again?

You are remembering correctly. That was around the time I joined the company about 10 years ago when things were starting to improve. Could that happen again? Yes, it could. It’s difficult to predict since there are many scenarios to consider. There were lessons learned from the great recession, and I'm sure people have updated their business continuity plans accordingly. The specific changes that will be made compared to how people responded after that crisis are still uncertain. But yes, you are correct, and it is possible that it could happen again.

Okay. And then a shorter question. Can you just remind us what percentage of sales is from the Class I versus the shorter line railroads?

For us, it's about 80% Class I typically is what we do.

Okay. And finally, you mentioned the savings you've identified in SG&A; I have to look back a few months because I think it was around $15 million.

$15 million. $15 million to $20 million. Yes.

Next question is from Chris Howe, Barrington Research.

My question just if you could perhaps give us some idea of assuming this environment continues on for longer than we expect, just perhaps clarify or add some color more than you already have as far as the different cash preservation levers that are available to the company. And how we should think about this preservation in regards to working capital improvements, controlled spending, and more or less kind of what you're seeing as far as maintenance CapEx for the ongoing business this year and into next?

That's a lot to digest. To start with capital expenditures, our initial expectation for the year was between $60 million and $70 million. We believe we can reduce that by about $10 million given the current situation, as we want to remain fiscally responsible. At the same time, we need to ensure we're not under-investing in critical areas that require upgrades. Last year, we significantly reduced our capital spending to $37 million, which was partially offset by a $3 million insurance recovery related to rebuilding our arsenic acid facility in New Zealand. Considering we have over 33 operating facilities, that spending was quite low for a chemical business. This year's capital spending was set at a level that includes some productivity projects, which we believe aligns more closely with a normal operational budget moving forward. We are not in a position to cut more than the $10 million we are aiming for, as it's crucial to maintain a reliable infrastructure. Regarding controlled spending, we are focusing on maintaining our workforce and services as we navigate this prolonged downturn, which is lasting longer and is deeper than we anticipated. While there is a possibility of adjusting our staffing levels, the potential for significant reductions is limited, as our organization is already lean. However, should the situation require it, there are some opportunities to make adjustments.

One of the things we are currently working on is an inventory reduction program. At the end of December, our balance sheet showed that our worldwide inventory was approximately $300 million. We had already established a plan before the coronavirus pandemic hit to reduce that figure by $50 million throughout 2020, which equates to about a 16% to 17% reduction in inventories. We initiated this plan in early January and achieved some success in the first quarter, with our balance sheet reflecting a $20 million reduction in inventories quarter-over-quarter. This provides another opportunity for us to generate working capital, which we can use to pay down debt.

Next question from Liam Burke, B. Riley FBR.

Leroy, I apologize, you did mention optimization initiatives that you're going through now and I just wanted to get a little clarification. The extraordinary events that are going on right now that you're facing, has that changed the trajectory of the optimization plans? Or how has that worked through?

Actually, it hasn't really changed anything regarding that, Liam. We've been able to advance the work, the upfront work that needs to be done on the opportunities that we have there. So the fact that we haven't been able to be in the office or on sites on any of the particular sites has not slowed us down in terms of being able to develop the plans and also get the buy-in from the other third parties that we need buy-in from. So I'd say that we continue to make good progress. Like many initiatives, it takes more time than we typically like from the birth of the idea to the beginning of the execution. And if you look at the whole KJCC sale, there's a perfect example of it. I mean, we've been literally working on that for several years now before we got to a point where we came to an agreement that we could move forward with. So these things, they take time because you want to get them right. You got to make sure that whatever you're doing is not going to affect the way that we can serve our markets. And so we're continuing to progress those plans. And I'd say, I've been pleased with the fact that they have not slowed down the meetings, the conversations, and the work that has been done behind the scenes has not slowed down since this has begun.

Great. And this is independent of the external environment?

It is.

But you mentioned market share gains in PC. Is there any potential addition there? Or have the markets sort of pretty much locked into the various technologies?

Yes. I'd say there's still some opportunity. There's still some opportunity there within the MicroPro product category. There's certainly opportunity there within our industrial treating preservative CCA, right? I mean, with the utility, with pentachlorophenol sunsetting in terms of its usage as a viable preservative in the utility market, there's absolutely opportunity to gain some market share to move some of that business in the Southeast or, I'd say, in the Eastern parts of the U.S. to CCA. And there are even some markets that could possibly move to creosote. So there's still some nice opportunities out there.

Our next question is from Chris Shaw, Monness, Crespi.

Great. You mentioned on the rail side, there was market share opportunities and even in this environment that you're sort of closing in on. Was there any color there? Is that on Class I?

Yes. I can't provide any color on that right now. Be happy to provide it when we get to the point where we can talk about it. But I'd just say there's opportunity there.

Great. I want to follow up on the Class I guidance going forward. You mentioned that everything looks stable for most companies and the budget appears to be the same this year. In the past, there were cutbacks related to a decrease in oil shipments. I recall that at one point, they were performing very well with a high volume of oil shipments, which put a heavy load on them, but then that declined. Could we see a similar situation arise again, potentially leading to a significant reduction in investment in rail lines next year due to a downturn in oil?

A lot of it had to do with their move towards the precision railroading model. As they're running longer trains, heavier loads, really trying to skinny down their network infrastructure and also cut down their costs. That's when we really, I think, saw the more significant pullback in tie replacements. So they're well into that program at this point. Again, if they're running less traffic, if there's less wear on the lines, yes, I'd say that would be more of a short-term potential cut back than anything longer-term or systemic.

Got it. Regarding CM&C, looking ahead to the second quarter, is the lag in your raw material costs something that's expected to change quickly? Have prices decreased so rapidly that this segment might experience a loss in the second quarter?

We don't expect that to be the case.

Next question from Austin Nelson, AIG.

I wanted to get a better understanding of the current situation in the RUPS business. Should we consider that the long lead time from order placement to actual tie installation is a factor? You have orders from last year that are now dried out and ready for treatment, and there’s not much that the rails can do to hold those up. Additionally, do you see some customers potentially pulling back now that things are reopening, possibly because they want to avoid missing the lowest wood prices? Are you receiving inquiries about placing orders for next year?

Yes. So again, we've only really experienced one customer that's indicated desire to pull back, and there was no discussion around that being centered on speculation on wood. It had, I think, more to do with just trying to use that as one of their cost levers to be cautious about spending in the current environment. In terms of the demand from the railroads at this point in time, I'd say it has more to do with, again, just trying to maintain the safety and reliability of their lines. We all know we're coming out of this, right, at some point in time. No one knows what the recovery will look like, and there's been plenty of speculation around what shape that will take. But I'd say the railroads overall know that they have a base level of maintenance that they need to do to make sure that they can operate safely and reliably. And especially if they figure that it is coming back, and they don't know or are not quite sure how it's going to come back and how robust and when it's going to be, it would make sense that they would continue to maintain their maintenance programs during this period of time to give themselves the best opportunity to, if and when things really start to come back in any meaningful way, that they're prepared for that. And they're not having to work around. Now all of a sudden, all this additional traffic that has come back online. So that's my best speculation as to why the majority of them have decided to maintain the programs today.

Yes. Austin, we've been in this business quite a while. And when you go back and look at it historically, in the ups and downs, the railroads historically tend to do more maintenance when the volume on the freight on their lines is not as busy. Now, obviously, the reason for that is when they're busy and they're moving everything across their rail lines, the last thing in the world they want to do is stop that and do some maintenance on some crossties. So historically, again, we have seen that when their freight volumes slow down a little bit, that their maintenance spend under normal circumstances sometimes goes up because they want that all repaired, like Leroy just said, prior to their volumes picking up because when that happens, then they're disrupting their lines.

That's helpful. And then just one more on the PC business. So you mentioned you hedged copper out partially out to '21 and '22 on the drop we've seen here. If you can give us any more color on what percentage of expected business we should think about and the potential margin lift, if we assume a more normal environment like I don't know if your customers know about it or listening to this call and would kind of expect to share in the savings or how we should think about or could '21, '22 actually be much better than we would normally expect?

Yes, I can't go into a lot of detail on that. Generally speaking, as our hedges have evolved over time, when our average hedge price decreases, you will see gains reflected in our margins. We have experienced this before, particularly around 2016 and 2017. When copper prices increased and we were hedging at higher levels, we noticed a decline in our margins, which was evident in 2018 and 2019. Now that the average hedged price is beginning to decrease again, this year is an example of our average hedge price being lower than in 2019 for the first time in a couple of years, and currently, our average for 2021 is lower than for 2020. Therefore, we anticipate some improvement in our margins as a result.

Our final question comes from Mike Harrison, Seaport Global Securities.

I know we're past the top of the hour. So maybe just one more related to the CMC segment. I believe you mentioned that you had an inventory write-down during the first quarter. I don't believe that you're excluding that as a special item. So can you help us quantify how much that impacted EBITDA in the quarter? And then on a go-forward basis, does that mean that we get, I guess, the benefit of that written down lower cost inventory?

It was a little over $1 million for the write-down. You are correct that there will be some benefit from this, and that benefit will be reflected in the following quarters. However, we've seen a continued decline in oil prices, which means we are at risk of further write-downs in the short term until prices stabilize, at which point we can start to recover those gains.

This concludes our question-and-answer session. I'd like to turn the conference back over to President and CEO, Leroy Ball, for any closing remarks. Please go ahead.

Thank you. I would just like to thank everybody for taking the time to tune in today. I know it was last minute and late notice, but I really appreciate your interest in the company and your support for all we're doing to work our way through this crisis. And we'd hope that everybody on the line and those that are close to you stay safe and well as we continue to deal with this unprecedented crisis. So we'll look forward to reengaging with you about a month from now. So thank you, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.