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Koppers Holdings Shows Market Resilience with a Strong Q1 Despite Challenges

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Robert Tavares

May 3, 2024 - 11:55 am

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Koppers Holdings Announces Strong Quarterly Performance Despite Market Challenges

PITTSBURGH, May 3, 2024 /PRNewswire/ -- Koppers Holdings Inc. (NYSE: KOP), a global leader in integrated wood treatment products, chemicals, and carbon compounds, has reported a robust financial performance for the first quarter of 2024. The company's recent completion of Brown Wood Preserving Company’s acquisition and its innovative strategies have bolstered its market position, albeit amidst some challenges in certain segments.

First Quarter Financial Highlights

Koppers disclosed first-quarter net earnings attributable to the company, recording $13.0 million, or $0.59 per diluted share. This figure is a decline from the previous year’s $25.5 million or $1.19 per diluted share. Adjusted net income attributable to Koppers, when excluding particular non-recurring expenses, came to $13.6 million, or $0.62 per share, compared to the prior year's $24.0 million or $1.12 per share.

The quarter's consolidated net sales plummeted to $497.6 million, a 3.1 percent decrease from the $513.4 million seen in the same period last year. Excluding the $2.5 million adverse impact from foreign currency fluctuations, sales dropped by 2.6 percent.

Strategic Focus on Cost Control

Leroy Ball, Koppers' Chief Executive Officer, remarked on the results, highlighting that despite some segments' profitability improvement year over year, market downturns in Carbon Materials and Chemicals (CMC) and unexpected costs in rail maintenance-of-way businesses impacted earnings. The company remains cautious due to the mixed market outlook and specific customer challenges anticipated for the rest of 2024.

Record Performance in RUPS and PC Segments

The Railroad and Utility Products and Services (RUPS) segment delivered record-breaking first-quarter sales, driven by heightened crosstie volumes, rate hikes, and more efficient plant utilization. Similarly, the Performance Chemicals (PC) segment produced strong sales and profitability, primarily thanks to increased volume in copper-based preservatives in the Americas.

CMC Segment Faces Headwinds

Conversely, the CMC segment experienced declining market demand, with sales affected by price and volume reductions and decreased plant usage in North America due to an outage in January. Despite these challenges, the company managed to mitigate some negative impacts through a significant decrease in raw material costs, particularly in Europe and North America.

Investment and Operational Outlook

The company's strategy revolves around business expansion and optimization to reach its long-term financial objectives. With a projected sales figure of $2.25 billion for 2024, Koppers aims to outpace the $2.15 billion recorded in 2023. Furthermore, adjusted EBITDA is anticipated to fall between $265 million and $280 million, including the impact of the recent acquisition of Brown Wood Preserving which closed on April 1, 2024. This is a noticeable improvement from $256.4 million in 2023.

Capital Expenditures and Cash Flow Projections

The company predicts capital expenditures for 2024 in the range of $80 million to $90 million, allocating a substantial amount toward discretionary projects. Operating cash flows are expected to reach roughly $150 million, exclusive of any impacts from a potential pension termination targeted for completion in the first quarter of 2025. This anticipated action could require an estimated $25 million of funding, affecting operating cash flow in 2025.

Shareholder Communication and Investor Relations

To foster transparency and consistency in communication with shareholders, Koppers has invited interested parties to access the live audio broadcast of their investor conference call or visit their website at www.koppers.com. An audio replay will be available for stakeholders through August 3, 2024.

Commitment to Sustainability and Innovation

Koppers remains dedicated to providing sustainable solutions that support critical global infrastructure, from rail transportation to power delivery and recreational spaces. The company's strategic acquisitions, combined with their focus on cost control and operational efficiency, resonate with their mission to protect what matters and preserve the future.

Media Inquiries and Investor Relations Contacts

For media inquiries, please reach out to Jessica Franklin Black at [email protected] or call 412-227-2025. Financial analysts and investors can direct their inquiries to Quynh McGuire at [email protected] or contact her at 412-227-2049.

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that Koppers believes provide investors a more comprehensive understanding of the company's operational results. These measures should be considered as supplementary to, and not as a substitute for, GAAP financial measures. A full reconciliation of non-GAAP financial measures to GAAP ones is included in the attached tables.

Safe Harbor Statement

Koppers has made forward-looking statements in this release regarding future events such as sales levels, profitability, and anticipated expenses. While the company believes these to be reliable, they are, nevertheless, subject to certain risks and uncertainties that may cause actual results to differ from projections. Koppers is dedicated to regular and transparent disclosures in compliance with SEC regulations.

Final Thoughts

Despite fluctuating market conditions and specific segmental challenges, Koppers Holdings Inc. has demonstrated resilience and strategic agility in the first quarter of 2024. The Brown Wood Preserving acquisition is expected to contribute significantly to Koppers' long-term financial health, reinforcing the company's commitment to sustainable growth and shareholder value.

With numerous initiatives underway aimed at refining operations and boosting profitability, Koppers stands on solid ground as they navigate the uncertainties of the global market. Stakeholders may look forward to continued innovation and a steadfast adherence to the company’s growth objectives in the remaining quarters of 2024 and beyond.

For more information and detailed financial data, please refer to the complete financial tables and reconciliations included with this press release or visit Koppers' official website.

[Please note, adjustments were made to reconcile the financial figures according to Koppers' non-GAAP financial measures, ensuring a more precise reflection of the company's economic performance and allowing a clearer comparison with industry peers.]

[Legal Disclaimer: This news article contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks that could significantly impact the company's financial results. Koppers does not claim any obligation to update any forward-looking statements.]

The data and information provided are as of the publication date and are subject to change without notice. This news article is for informational purposes only and is not an offer to sell or a solicitation of an offer to buy Koppers securities.

Contact Information

Media inquiries can be addressed to Ms. Jessica Franklin Black via email at [email protected] or by calling 412-227-2025. Investment community inquiries should be directed to Ms. Quynh McGuire at [email protected] or 412-227-2049.

About Koppers

Koppers (NYSE: KOP) represents an integrated global force in treated wood products, wood preservation technologies, and carbon compounds, committed to preserving the future while protecting what matters through safe and sustainable solutions. More information is available at Koppers.com.

This comprehensive financial analysis reflects the company's dedication to its shareholders and its role in the global economy, striving to enhance infrastructure and living spaces while upholding environmental stewardship.

Visit the Koppers Holdings Inc. website to explore the investor conference call recording, financial statements, and more details about the company’s operations and projections for the future.