Ivan Marcuse, Vice President and Equity Research Analyst at KeyBanc Capital Markets Inc., Interviews with The Wall Street Transcript: Better Outlook for Specialty Chemicals Exposed to U.S. Residential Construction

Wall Street Transcript

67 WALL STREET, New York - July 22, 2013 - The Wall Street Transcript has just published its Agricultural & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Crop Yield Management - U.S. Corn Crop - Chemicals Companies Pricing Power - Fertilizers, Paints and Coatings, and Petrochemicals - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power

Companies include: PPG Industries Inc. (PPG), RPM International Inc. (RPM), Valspar Corp. (VAL), Sherwin-Williams Co. (SHW), Compass Minerals International (CMP), Cabot Corp. (CBT), NewMarket Corp. (NEU), Innospec Inc. (IOSP), OM Group Inc. (OMG), Huntsman Corp. (HUN), Carlisle Companies Inc. (CSL), Intrepid Potash, Inc. (IPI), Koppers Holdings Inc. (KOP), Polyone Corp. (POL), Cytec Industries Inc. (CYT) and many more.

In the following excerpt from the Agricultural & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: The chemicals sector has seen some consolidation recently. What is your outlook for continued M&A?

Mr. Marcuse: That's been a big headline, M&A in the specialty chemical space or chemicals in general. Over the past 18 to 24 months, you've seen some significant deals being announced across the board in all the different markets. Those have been for the most part positive events for a lot of the companies that are either acquiring, as long as the acquisition makes sense in their core business, or obviously being acquired.

Examples recently are companies like PPG, Sherwin-Williams, PolyOne (POL), Cytec (CYT) - they've all been active on the M&A front, and the events have been generally well-received by investors, and you've seen stocks react positively.

I think people in 2013 are still looking for M&A to be a catalyst for one way or another for a majority of the stocks. One company in my space, Chemtura, CHMT, investors have fairly high expectations that they will continue to manage their portfolio, meaning maybe carve off another business or two while also looking to grow their core industrial businesses.

TWST: What is a nuance or complexity about the chemicals sector that you find new or generalist investors don't fully comprehend?

Mr. Marcuse: I think what investors that are new to the industry, what maybe catches them off-guard is a couple of things. One, how large of an impact materials and the price/cost relationship can have on profitability, and secondly, especially in the specialty chemicals, although they're all grouped within one sort of subsector, they're very different and are driven by very different markets. So it's hard to sort of group in one basket. For example, you have Sherwin-Williams, which is going to be driven by the North American residential or North American construction, versus a Chemtura, which is more of a global industrial, which...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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