M&A Announcement

Jun 21, 2021

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Bureau North America Propulsion Conference Call. During the presentation, all participants will be in a listen only mode. After the speakers' remarks, you will be invited to participate in a question and answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, June 21, 2021. I would now like to turn the call over to Today's host, Jeff Holly, Westlake's Vice President and Treasurer. Sir, you may begin. Thank you, Justin. Good morning, everyone, and welcome to the Westlake Chemical Corporation, Boral North America Proposed Acquisition Conference Call. I'm joined today by Albert Chao, our President and CEO Steve Bender, our Executive Vice President and Chief Financial Officer and other members of our management team. During this call, we refer to ourselves as Westlake Chemical. Any reference to Boral North America is to Boral North America Building Products. Today, management is going to discuss Certain topics that will contain forward looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. Actual results could differ materially based upon many factors, including the timing to consummate the proposed transaction, The conditions to closing of the proposed transaction may not be satisfied or the closing of the proposed transaction otherwise does not occur The diversion of management time on transaction related issues, ultimate timing, outcome and results of integrating Borrell's operations and the ultimate outcome of Westlake's operating efficiencies applied to Borrell's products and services The effects of the proposed transaction, including the combined company's future financial condition, results of operations, strategy and plans expected synergies and other benefits from the proposed transaction and the ability of Westlake to realize such synergies and other benefits, results of litigation, settlements and investigations and other risk factors as discussed in our SEC filings. Yesterday, Westlake issued a press release announcing the proposed acquisition. This document is available in the press release section of our webpage at westlake.com. We have also posted a presentation on our website that will provide further details. A replay of today's call will be available beginning today, 2 hours following the conclusion of this call. This replay may be accessed by dialing the following numbers. Domestic callers should dial 855-859-2056. International callers may access the replay at 404-537-3406. The access code for both numbers is 296,369. Please note that information recorded on this call speaks only as of today, June 21, 2021, and therefore, you are advised that time sensitive information I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at westlake.com. Now I would like to turn the call over to Albert Chao. Albert? Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our proposed acquisition of Boro North America's Building Products business. I would also like to extend a special welcome to our soon to be colleagues At Boro North America, today is an exciting day. Westlake has entered into agreement with Boro Industries Inc, a wholly owned subsidiary of Boro Limited to acquire Boro's North American Building Products Businesses, which includes their leading positions in concrete and clay roofing, premium siding, trim and shutters, Decorative stone and windows. These products improve the energy efficiency, durability and conference to residential housing, schools and hospitals, providing affordable value and desirable enhancements to the everyday lives of countless individuals. This is part of our commitment to building a more sustainable future. This transaction is expected to be completed in the second half of twenty twenty one. As we combine with Westlake's leading building products in PVC Siding, Treatment Molding, Pipes and Fiddings, Specialty BDC Compounds and Composite Roofing Businesses, We expect Boral's North American Building Products business to bring us significant strategic value. We believe in the growing secular strength of the housing and repair and remodeling markets and see the strategic acquisition of this business, providing new product platforms and long term growth opportunities for Westlake. This transaction also complements the growth initiatives we have undertaken for many years in our building products business, including organic expansion of our Pipe and Fittings business and siding, trim and molding products. In addition to the 2019 acquisition of La Con, the specialty PVC compounding business and Da Vinci, the premium composite roofing business. In addition to the new and attractive growth avenues for Westlake, This transaction furthers our integration strategy, while the growing structural demand for housing along with Ongoing repair and remodeling activity to existing homes enhances our margin stability. The acquisition of Boro North America increases our breadth in the building products markets with well established and high quality architectural solutions and premium products brands in roofing, siding, trimming and shutter, decking and stone and windows, which complements our existing products. Through this complementary transaction, Westlake adds significant scale, Expanded geographic delivery capability and product diversifications to create a leading building products business. The combined revenues of our newly expanded building products business and our North American PVC Residence will now represent approximately 53% of our total sales. Therefore, Westlake is well positioned to continue to benefit from housing, repair and remodeling and infrastructure spending. We believe that this combination will create a building product segment of Westlake that's comparable in size and scale to many of the large standalone public peers. Boral North America currently operates 29 facilities across the United States and Mexico and with sales force in Canada and the United Kingdom. We look forward to welcoming Boro's 4,600 employees into the Westlake family. I would now like to turn our call over to Steve to provide more detail on the financial aspects of this transaction. Thank you, Albert, and good morning, everyone. As Albert stated, we are excited about the acquisition of Borrell North America's Building Products business, which will enhance our position as a leading provider of building products to the growing housing and repair and remodeling markets. We expect to fund this $2,150,000,000 transaction with at least $1,000,000,000 of cash on hand and fund the remaining balance by accessing the Debt Capital Markets, while maintaining a strong investment grade credit metrics post acquisition. Subject to regulatory approvals, we We expect to close this transaction in the second half of this year. The financial drivers for this acquisition are compelling. As of the year ended June 30, 2020, Boyle North American Building Products Businesses had revenues of $1,100,000,000 with operations across North America. The leading market position of many of their products along with the size, Scale and scope of their operations when combined with Westlake's existing building products businesses will drive expected annual cost synergies of approximately 35,000,000 1st per year. We also foresee the existing distribution channels of the combined business is adding additional value to meet growth opportunities across all product lines. We expect this transaction to be accretive in the 1st full year of operations. Through the addition of Boral North America's Building Products Businesses, we significantly increased the portion of Westlake's earnings and cash flows attributable to this higher value building products business. These businesses provide material to the housing construction and infrastructure markets and consistently trade at premium multiples relative to chemical companies because of the enhanced margin stability. We believe this transaction will create a value uplift for Westlake Shareholders? Thank you for taking time to join us today and we look forward to providing you updates on the transaction in our quarterly Call. With that, I'll now turn the call back over to Jeff. Jeff? Thank you, Steve. Before we begin taking questions, I would like to remind you that a replay of this teleconference Please stand by. We'll compile the Q and A roster. And our first question comes from Kevin McCarthy from Vertical Research. Your line is now open. Good morning and congratulations on the transaction. Will you comment on the amount of PVC resin that is consumed by the various businesses that you intend to acquire? Yes. This business has requirements for PVC as well as requirements for other raw materials mentioned from concrete and clay. So we'll be providing some PVC in the future, but there's other materials That's also being used. Okay. And just to follow-up on that, Albert, I think today you're about 50% integrated downstream, which is to say that roughly half of your PVC resin goes into fabricated products. How will that number change post deal? And can you comment on Any existing business relationship with Boral through supply of PVC resin and the contracts that are in place? Yes. We don't have much business relationship with Boro today, but we intend to have more integration going forward. And our integration downstream, we are also expanding our downstream building product capacity. So we'll be using more of that in the future in generally. Okay. Thank you. You're welcome. Thank you. And our next question comes from Frank Mitsch from Premium Research. Your line is now open. Thank you. And also let me offer my Congratulations on the transaction. I was wondering if we could delve a little bit deeper into the synergy side of things. You said on the cost synergy side, you anticipate reaching an annual average Of $35,000,000 when do you anticipate that to be realized? And how should we think about the pace of the synergies over the 1st couple of years? So Frank, when you think about the synergies at the $35,000,000 we certainly expect to begin to work on those as soon as we close the transaction. And as I said, we'll start Seeing the benefit of those in the 1st full year of the business combined operations. So obviously, there'll be a ramp up, but I expect that we'll be again to get A significant portion of that in the 1st full year, it will be accretive in the 1st full year. So these will be activities that we think will put Tremendous amount of focus on and I'm very optimistic in terms of our view to get those early on. I see. Okay. So you expect a significant portion in year 1. And if I could ask about the sales You are getting into products that you're not currently in today. And so I guess this is providing more of a one stop shop and also geographic Manchin, for you, how should we think about sales synergies coming from this transaction? So frankly, we quantify those that are cost related and we haven't quantified those that are revenue because we know that there will be opportunities for cross selling. From a geographic perspective, it's a very nice mix between their geography and their footprint and Westlake's footprint. So we're very excited about the opportunity for the cross selling opportunities that we see for that revenue growth. But You're right. We haven't talked about that and we'll talk more about that once we get post close. Got you. Thanks so much. You're welcome. Thank you. And our next question comes from Angel Castillo from Morgan Stanley. Your line is now open. Thank you for taking my question, and again, congratulations on the deal. I just was wondering, Albert, if you could give us a little bit more detail on the margins And the EBITDA, absolute EBITDA of the existing building product portfolio and what that will be kind of pro form a as you bring the 2 businesses together, again from an absolute EBITDA and margin perspective? Yes, I was saying that when you think about that from a multiple perspective, That's between 10 and 11 times on a multiple basis. And so when you think about the EBITDA margins, it's mid to high teens. And so we've been very pleased with The portfolio and how it is historically performed and we expect to continue to see continued improvement because of the opportunities to put these two Theirs and ours together to really offer a much broader portfolio offering to the customer base out there. So we're very excited about the opportunities to see And more broader base of offerings to the entire customer base. Got it. That's helpful. And any sense for, I The legacy business and how that compares. And I think in the past, you've talked about potential to break that business out into its own and get more clarity on a standalone. Just curious, is that where we might head in the future? And any potential for splitting out this This is a standalone company, as you mentioned, it's gained scale compared to competitors and the ability to get the right valuation Yes. Certainly appreciate the question. Certainly with the significant Expansion of the overall building products businesses of Westlake. We certainly believe this transparency in this business really merits much more visibility As we think of the significant higher value that this provides, so you can expect that we'll give a lot more transparency over time. Got it. Thank you. Thank you. And our next question comes from Mike Leithead from Barclays. First question on the acquired stone business. It's a bit outside of what Westlake has historically operated. And it's an area of the BMA portfolio that Boral had to struggle with share loss and other issues. So can you just talk about your confidence in Improving this business? Or is this something that perhaps you may not want to keep long term? Yes. Certainly, The Boral North America has a long history of decades of experience in this area, and we are welcoming many of the talented management There's long experience coming with it. But we also see a lot of commonalities, common markets, common sales channels and complementary in distribution areas. So we believe that we have today, we have about $2,000,000,000 of Building product revenues already in these areas. So we have a lot of expertise, and our people also have a lot of expertise in these areas, including for North America's businesses. So we're looking forward to welcoming the new management team from Boro as well as integrating into Westlake team and to add value from the combined efforts. Great. Thank you. And then Steve, maybe just a housekeeping. As we layer this acquisition into our models, should we anticipate any material step up in amortization, Tax or any other impact just as we're trying to walk from EBITDA to EPS or free cash flow? Yes, certainly, obviously, we'll have an Increase in depreciation as we bring the PPE onto the balance sheet and as we get into our purchase price adjustment of allocating some of that purchase Price to the legacy depreciation, there will be a step up. We'll give more transparency. I've got to get to a close, but we'll give you some better sense of that as we go forward. But there if you take a look at Boral North America's Thank you. And our next question comes from P. J. Juvekar from Citi. Your line is now open. Yes. Hi, good morning. Albert, is this sort of a new direction for you because Some of these products like concrete and clay roofing or decorative stone, they don't necessarily represent going downstream. So are you trying to become in the future more of a housing products company that's less cyclical? Is that sort of the goal that you're working towards now? I think it's a combination. Housing, as you know, is one of the largest locomotive engine that drives the U. S. Economy. And we've been participating through our PVC business and through our downstream building business for decades. And recent acquisitions that we mentioned, That's how specialty PVC compound and da Vinci is basically moving. And back in 2013, we bought a CertainT specialty PVC pipe. All that goes a lot a part into housing market and infrastructure building as well. So this is the area that we want to grow as well as in our chemical Scientific Chemical business, they're doing very well. And as I mentioned that we are looking at debottlenecking opportunities all across our businesses. Great. Thank you. You're welcome. Thank you. And our next question comes from David Begleiter from Deutsche Bank. Your line is now open. Thank you. Good morning and congrats on the acquisition. Going back to a prior question, Albert and Steve, just on the valuation gap between chemical companies and those cost I mean, absent building out this new entity completely, how do you help to close that valuation gap with investors forward. Yes, David. So as I said earlier, we see the building products businesses and you pointed out Some of the valuation differentials between chemicals and building products. And I do agree that we need to give more transparency so that you can see this a combination of Boral and Westlake's Building Products businesses. And so to give that more transparency, I think is important So that the right kind of valuation can be assigned. As Albert noted, there is if we look at our 2020 full year sales for our building products Since we had over $2,000,000,000 of revenue in 2020. So as we think about combining that with Borrell's numbers, as you can see, We expect to be well over $3,000,000,000 in sales, a significant component of Westlake's consolidated numbers. So certainly as we think about giving more clarity that will certainly be our focus to make sure that you and others can get real good Visibility on the contribution to the bottom line of this business. Very good. And just to confirm, Steve, this is the entirety of The Borrell North American business reported in Borrell's income releases and income statements? No, David. There is a piece of that that is attributable to their Yash business, which is not part of this transaction. They also had a brick business, which is not part of this transaction. And the residual is the building products Business that we are acquiring as part of this transaction, that's the larger share of their North American business. Thank you very much. Thank you. And our next question comes from Hassan Ahmed Albaq Global. Good morning, everyone. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, guys. Good morning, Dolly. Good morning, Dolly. Good morning, Dolly. Good morning, Dolly. Good morning, Dolly. Good morning, Dolly. Good morning, Dolly. Dolly. Dolly. Question, revisiting the EBITDA sort of point If I heard it correctly, you talked about the acquired business having EBITDA in the mid to high teens. And alongside that in the presentation, you talked about reducing cyclicality in your overall portfolio. So the question really is that How has that EBITDA margin looked for the acquired business across a cycle? Part 1. And part 2 of that question is how does Borrell's acquired EBITDA or EBITDA margin compare to Your existing building products business. So Hassan, this is Steve. So when you think about the Cycle, there are 2 major components in these businesses, what I would call a new construction and repair and remodel. Repair and remodel has been very stable in terms of long term demand and growth in this market. We all know that new construction does have its ups and downs, But the stability of repair in the model is very clear and tends to have a very nice margin associated with it. And so when you think about the business that we have in our Legacy Westlake Building Products Businesses, it had pipe fittings, moldings and trim, And we have some premium products that Boral brings to the portfolio, which will, I think, meaningfully improve the consolidated margins that you see here that Albert Mentioned of mid to high teens EBITDA margin in this business. Understood. Understood. Now On the synergy side, it seems the cost synergies you guys are guiding to Around sort of 3% of acquired sales, which if I take a look at some of the recent and not so recent transactions, Seems to be on the lower side. And as I sort of sit there and think about maybe some benefit from integration, the fact that Boral has 29 facilities, so maybe there's some inefficiencies over there. And the fact that you're talking about being able to sort of quite easily capture those synergies in the 1st year. I mean, am I on the right track in thinking that maybe you guys are being a little conservative with that number? I think Hassan, when you look at the way in which we described synergies, we always speak in terms of cost synergies and have not, whether it's been this transaction or historic transactions, gotten into the Quantification of revenue synergies, so I think we'll give you more clarity as we move forward of the opportunities that we see there. But we think that we'll achieve these synergies that I've outlined and you can bet that we'll drive to achieve even more. We had good successes with our prior Transactions and synergy achievements and certainly you can imagine that if once we achieve that $35,000,000 we will not stop. So we'll look to make sure that we achieve all the opportunities that we see in the combined businesses. Very helpful. Thanks so much guys. You're welcome. Thank you. And our next question comes from Roger Spitz from Bank of America. Your line is now open. Thank you very much. Are you able to provide for all North American building products LCM March 2021 or any other that you should like to provide 1,000 EBITDA other than the 2020, roughly 1100 So Roger, at this stage, I don't have the ability to provide that breakout publicly. It's The transaction is not closed and Boral has not disclosed that themselves. So until we get to a point where We own the business. I can't get into disclosing their results beyond what they choose to disclose. Gotcha. Can you say that 10x to 11x EBITDA multiple, does that exclude nor including the $35,000,000 synergies? That excludes that number. Got it. Thank you very much. Appreciate it. You're welcome. Thank you. And our next question comes from Jeff Zukauskas from JPMorgan. Your line is now open. Thanks very much. Is there does Burrell install any of the materials that it sells or it simply Sells all of the materials. It sells it to the same distribution channels and market channels, Jeff, that we sell our products Correct. How many people work in Westlake's Building Products division? A couple of 1,000. A couple of 1,000. Okay. And how much PVC does around buy annually, roughly. They're not a large PVC consumer. They consume some, but not a large consumer. Great. Thank you very much. You're welcome. Thank you. And our next question comes from John McNulty from BMO Capital. Your line is now open. Yes. Thanks for taking my question and congratulations again. Can you give us a little bit of color as to how to think about How much of this business is currently tied to the remodel side and how much of this is tied to the new home side percentage wise or Fortunately? Yes, possibly fifty-fifty. Okay. Fifty-fifty. Got it. And then when I think about the CapEx, it looks like the numbers have kind of Moved around a lot for this business over the years and not surprisingly were really low last year. I guess what is the normalized CapEx level for Like how should we be thinking about that? Yes. This is a small CapEx number that you would expect to see. And so When you think of this business, it's not capital intensive. It's obviously more people intensive than it is capital intensive. But think in terms of less well less than $100,000,000 Got it. Okay. Thanks very much for the time. You're welcome, John. Thank you. And our next question comes from John Roberts from UBS. Your line is now open. Thank you and congratulations on the deal. Thank you. You're including the specialty PVC business in building products. How much of specialty PVC actually goes into building products? Especially PVC Compound Business. And we provide we are the merchant supplier compound to building products business and as well as to wire and cable, which goes to the building constructions. Okay. So you consider all of Your specialty PVC compounds to be building products related? Yes, we are. It's part of our building products group. Great. All right. Thank you. You're welcome. Thank you. And our next question comes from Matthew Blair from Tudor, Pickering and Holt. Your line is now open. Great. Thanks. Good morning, Albert and Steve. I was Okay. So on the financing side, it looks like you'll be kicking out about an incremental $1,000,000,000 of debt this year. Would you look to pay that down in the coming years? Or is this going to be essentially the permanent debt going forward? Matthew, as we think about the Strong cash generation capability of Westlake that we've been able to demonstrate over the years. We'll look across the maturity spectrum. And so you'd imagine some would be given the very low interest rate environment we are fortunate to see today. We could put some part around on that maturity Spectrum, but also given the strong cash flow generation, we could expect to retire excuse me, pay some of that down and not put that all out on the far end of the maturity So that we can retire some of that debt in the revenue more near term period. So we look across the spectrum to see where the best and most attractive opportunities are. But given the strong cash flow generation of this business plus the rest of Westlake's business that there could be some opportunities to retire some of that in the relative near term. Great. And then Slide 8 shows B and A revenue in 2020 at $1,000,000,000 Could you share that same figure for 2019 or at least comment on how much COVID might have impacted this business last year? Yes. Let me do this. I need to obviously talk to Boral to make sure that they're comfortable in disclosing those kinds of numbers. I'm Not privy to be able to give their earnings if they haven't disclosed those themselves. Okay. And then one last one. So your building products capacity is listed at £3,500,000,000 If you look in the K, your actual sales For building products is around 1.3. Could you talk about what's driving the delta there between sales and capacity? And so I think Matthew, when you look at the numbers, you need to be focused on the sales. That number is only inclusive of our pipes, Fittings and Exteriors business and not, as we noted, the compounds businesses. And so the specialty PVC compounds business is Part of our business segment, but not reported specifically in the Q or the K. So this guidance that you see here that includes the Specialty PVC Compounds of about $2,000,000,000 is the right kind of number to think for 2020 sales revenue. Okay, thanks. You're welcome. Thank you. And our next question comes from Arun Mr. Swanton from RBC Capital Markets, your line is now open. Great. Thanks. Good morning and Congratulations on the transaction. Well, I just think back about some of the larger acquisitions you guys have completed in the 10 years or so, starting with Royal Group several in the last decade and then, Axial as well. Initially, the multiple may seem a little bit high, but it does appear that there is quite a bit of value there. So I just want to go back, I guess, to understand the synergy side here. So I guess you guys have identified $35,000,000 of cost synergies. This acquisition really does take you into some different areas, though. And so could you explain a little bit more on the sales side, How you expect to achieve some synergies and what that would take a look at? Like would it be kind of Salespeople from there who could potentially cross sell some of their products into your existing customer base and vice versa? Or is it something more about going into different markets, whether it be international or extending Boral's reach into commercial construction And the life of large diameter or anything like that leveraging the existing positions? Maybe you can just describe a little bit more on the sales synergy side. So Arun, when you think of the opportunity set that we see, we've got with Boral concentrations kind of in the West and South, Southern regions of the United States and we have Our business is more concentrated in the Central and Northeast United States and Southeast United States. And so the Geographies are very complementary to each other and the distribution channels are also very complementary to each other. And so we think that the ability for cross sales are important in the overall synergies and those are not part of the cost related $35,000,000 synergies that I mentioned earlier. So we think the ability to have a broader geographical fit to be able to move more products through those same distribution channels is important. And those combined values, we think, will make this a nicely accretive transaction as we go forward. I don't know, Albert, if you'd like to add some additional to that. Yes. We definitely utilized, as I said earlier, all the talent from BORL North America combined with the existing Westlake's business. I just want to add also, I mentioned earlier that part of the Ekso acquisition was the Royal business, which is a very large Building product business that we acquired both in the siding, trim and molding as well as pipe and fittings. So that was partially the interest that we were acquiring Axo. So we've been looking at building, expanding our building product business for quite a while now. Okay. That's helpful. And is it a similar cadence as far as you noted that most The cost synergies would be could be realized sooner rather than later. Would the sales synergies take longer? Or would those also be more readily Available in, say, year 1 or so. So, good question and the answer really is that we Once we close on this transaction that the ability to really pull the sales force together on an integrated basis and have our dialogue with our distribution channel partners Happened really on day 1, if you want to call it that, after we closed. We think that opportunity for revenue cross selling is clearly there on, let's call it, day 1, because we already know these parties that we're selling our products through. It's the same market channels that Boral is selling their products through. So we think those sale opportunities exist on day 1. Great. Thanks a lot. You're welcome. Thank you. And our next question comes from Bob Koort from Goldman Sachs. Your line is now open. Thank you very much. Good morning. Steve, I think you mentioned that the margin stability in building products may be a reason that they're more highly valued companies generally. But on your slide, It appears there's a peer group that isn't that highly valued and a peer group that's substantially higher valued. So can you give us some sense of What differentiates along that spectrum and leads to better valuations for the billing products peers? Yes. And Bob, it's a good question. And the answer really is When you look at really those products that differentiate themselves that are really what I would call in the premium positions of their marketplace really is the way to When you think of the premium products and the leading positions of Westlake and Boral is really The product name or the brand name that you see here and the ability to really have deep market penetration from good, better, best Range of product offerings is really critical to be able to not just offer one set of products to a customer set, but to have a good, better, best range of product offerings. And having that range of product offerings and a geographical footprint that covers really the entire marketplace from East Coast to West Coast is really important. And so when you look at the offerings of some of those at Tradewell as well, it's a function of really having a more commoditized Set of offerings versus that what I would call good, better, best range and the ability to have a geographical footprint to sell that Good, better, best through combined with what we believe to be leading positions in both Boral and Westlake's positionings in the products that we do sell. And I know you're not in a position yet to provide a lot of detail on profitability and trends, and you're Going to be isolating your own building products group, I suppose, to expose the quality there. How do you measure margin stability? Do you look at it in terms of volatility within the margin, consistency in that margin? Can you just give us some sense What the history looked like at your own business over time that might lead to a revaluation of that asset base? Yes, it is that consistency of margin and the ability to generate much higher free cash flow in this business. As I mentioned earlier, it's a smaller Capital business and so the free cash flow generation as well as the more margin stability are all attributes to why these businesses trade at better values. At our chemicals businesses, they're much more capital intensive. And so therefore, in a dollar of revenue Free cash flow there, it's obviously percentage wise smaller, whereas when you've got a smaller capital business like the Building Products business, The free cash flow generation is significant relative to those that are more capital intensive. So it's not only margin stability, but free cash flow generation are important elements in valuations. And my last one real quickly. I know that Borale was having some issues with bids from its shareholder leading Shareholder and other stuff there. If this deal didn't go through for any reason, is there a breakup fee payable to Westlake? Bob, we will file the purchase agreement in our Q, but I can't speak to the document until we file it. Got you. Okay. Thanks. Thank you. And our next question comes from Dan Lungo from Bank of America. Just a quick 1 on the balance sheet, this is going to take you up into the 2.5x net leverage range. What Is the range you you might talk about wanting to pay down some debt after this transaction, but what is the leverage target that you guys would aim for, is it sub 2 times, is it 1 to 2, just any type of commentary? If it's debt cap, that also works. No. When we think of this and we certainly have had dialogue with the rating agencies very recently and certainly very consistently and we've told them and we've run a very And so the way we think about targets is not get fixated on a number because as you can see over time, the agencies change the goalpost in terms of what is investment grade, solidly investment grade. And so we've communicated to the public and communicated to the agencies consistently that Whatever set of parameters are going to set for solid investment grade metrics are the metrics that Westlake is going to set its targets for. We've got a commitment by management and the Board. We've communicated that to the public and to the agencies. And so when you look at our credit You can see they are actually well exceeding even the ratings we have today. And as we went through a period during the pandemic, I think you can see some of the agencies A few of them were more proactive than others and some are more, I think, pragmatic than others. And so as you look at the credit metrics as we sit today, I think You can see that we've got a solid balance sheet and we continue to maintain that solid balance sheet. Thank you. You're welcome. Thank you. And our next question comes from Keith Chow from MST Marquis. Your line is now open. Good morning, Albert and Steve. And I'll share the reflections of the other analysts. Congratulations I've just got a quick follow-up question for Steve. Your 10 to 11 times EBITDA multiple that you've disclosed, I'm just trying to understand the basis on which that multiple is provided. Seems unlikely that it is the FY 'twenty year given the COVID issues that Ball So just wondering what the basis for that ended 11 times multiple is, whether that's And FY 2019 number, your assumption of what normalized earnings are and bearing in mind, obviously, The sensitivity around Borrell's numbers for this financial period as well. Yes, that's a current multiple at this stage. And so we think that as I mentioned earlier with the synergies that we see Both on a cost basis and revenue basis, we think that multiple comes down meaningful, but that's a current multiple. Thank you. Appreciate it. You're welcome. Thank And we have a follow-up question from Jeff Dukauchitz from JPMorgan. Your line is now open. Thanks very much. What's the cost of achieving the synergies that you aim to work? Jeff, these are going to Cost related synergies, and so I don't see these costs as being overly significant. Certainly, there are some transaction costs, legal and financing costs that will be necessary here. So we think that we'll flush those through in 2021 and that's why I believe in the 1st full year combined operations that it will be But we've not given a specific cost for legal cost and financial financing cost, But these are not overly significant relative to the size of the transaction. We used a single financial advisor, a single legal firm. And the cost to achieve that $35,000,000 are not significant relative to the size of the business or the synergies that we think will deliver. What do you think the ultimate synergies of the transaction are over a multiyear Well, Jeff, as I mentioned earlier, when you think of transactions we've accomplished in the past, we set the focus on achieving cost Driven synergies and of course we're only looking we're not only looking at those looking at revenues, but as I mentioned we're not going to stop at the 35 number that we voiced today. We certainly believe there could be synergies above those and certainly we'll work very hard to achieve those $35,000,000 plus any of those that we see beyond that. We won't Stop at $35,000,000 But if you look at our history, we've certainly been able to achieve synergies above those that we've talked about after the day of the announcement. And then finally, can you talk a little bit about the geographic overlay of the business that you're acquiring with Building products that you have, where are the geographic strengths of both businesses? Where are they a little bit different in terms of where they sell? Yes. So Jeff, Boral North America is Concentrated really in some of the higher growth markets such as in the South and the West. Westlake's concentration is more in the center of the country and Southeast and Northeast. So the geographies nicely overlap and complement each other in terms of our ability to reach all market channels and all of our distribution channels nicely. Without the addition of Boral, we had clear opportunities to grow further in the kind of West And South and with this combination we're filling those gaps in our market footprint. So this provides us an ability to really cover the markets from East Coast to West Coast. Okay, great. Thank you so much. You're welcome. Thank you. And I am showing no further questions. I would now like to turn the call back Over to Jeff Pollack for closing remarks. Thank you again for participating in today's call. We look forward to speaking with you again on our 2nd quarter earnings call. Thank you for participating in today's Westlake Chemical Corporation conference call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and may be accessed until 11:59 p. M. Eastern Time on Monday, June 28, 2021. The replay can be accessed by calling the following numbers. Domestic callers should dial 855-859-2056. International callers may access the replay at 4045373406. The access code for both numbers is 29633 69. This concludes today's conference call. Thank you for participating. You may now disconnect.