Koppers Holdings Inc. · NYSE:KOP
Koppers — Q3 2024 Earnings Presentation
42 slides from Koppers's earnings presentation, Nov 8, 2024
Slide 1: Q3 2024 Results
Q3 2024 Results KOPPER a)
Slide 2: Forward Looking Statement
Forward Looking Statement Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of
Slide 3: Q3 2024 Summary
KOPPERS = Q3 2024 Summary
Slide 4: Q3 2024 Summary of Key Metrics
Q3 2024 Summary of Key Metrics HIGHLIGHTS Consolidated Sales of $554.3M, record third quarter, vs. $550.4M in prior year quarter ❖ RUPS reported record third quarter sales ❖ PC sales slightly lower as sales to Brown Wood acquisition now intercompany sales ❖ CMC sales impacted by ongoing demand weakn
Slide 5: Zero Harm
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Slide 6: Zero Harm 2.0
Zero Harm 2.0 Annual Zero Harm Coordinators Conference • September 30-October 4 in Florence, SC • Zero Harm representatives from North American locations • Key topics included: ✓ Environmental Hazard leading indicator incorporated into Hazard Identification program ✓ Piping and instrumentation diagr
Slide 7: 2024 Truck Driving Champions
2024 Truck Driving Champions • Held in September 2024, our Zero Harm Truck Driving Championship Champions earned $2,500 and invited for a recognizes the safest drivers on the trip to Koppers Headquarters in Pittsburgh road representing Koppers. • Results were based on a variety of criteria including
Slide 8: Q3 2024 Financials
KOPPERS = Q3 2024 Financials
Slide 9: Q3: Sales by Segment
Q3: Sales by Segment (Unaudited) Q3 2024 Sales vs. Prior Year $ in Millions $600 +0.7% $500 $554 $550 $400 $300 +6.0% $200 $248 -1.5% $234 -5.5% $177 $179 $100 $130 $137 $0 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 RUPS PC CMC TOTAL Note: Segment amounts may not agree with cons
Slide 10: Q3: Adjusted EBITDA by Segment
Q3: Adjusted EBITDA by Segment (Unaudited) Q3 2024 Adjusted EBITDA $ and % vs. Prior Year $ in Millions $80 14.0% 12.8% $70 $77 $71 $60 $50 22.6% $40 19.6% $40 $30 $35 10.0% 10.7% $20 $25 $25 9.8% 7.6% $10 $13 $10 $0 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 RUPS PC CMC TOTAL N
Slide 11: Q3 2024 RUPS Segment
Q3 2024 RUPS Segment RAILROAD AND UTILITY PRODUCTS AND SERVICES Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions Highlights Highlights $250 $25 $248 • Record third-quarter sales $25 $25 • Profitability was flat vs. prior $234 primarily driven by: year: ✓ $10.0M of pricing in
Slide 12: Q3 2024 PC Segment
Q3 2024 PC Segment PERFORMANCE CHEMICALS Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions $200 Highlights Highlights $40 $177 $179 • Sales slightly lower due to: $40 • Profitability increased despite $150 net decrease in sales due to: ✓ Preservative sales to Brown $35 Wood n
Slide 13: Q3 2024 CMC Segment
Q3 2024 CMC Segment CARBON MATERIALS AND CHEMICALS Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions $140 $15 $137 Highlights Highlights $120 $130 • Decrease in sales primarily • Profitability increased due to: driven by: $13 ✓ $9.2M reduction in raw material costs, particula
Slide 14: Capital Allocation
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Slide 15: Uses of Cash: Balanced Approach
Uses of Cash: Balanced Approach • Investing in our business ✓ Net capital expenditures of $55.0M YTD 9/30/24 ✓ $80M total capex projected in 2024 (originally $100M), compared with $116M in 2023 • Returning capital to shareholders ✓ Share repurchases of $10.4M in Q3 ✓ Quarterly dividend of $0.07/shar
Slide 16: YTD 9/30/24 Capital Expenditures
YTD 9/30/24 Capital Expenditures Year-to-Date ($ in Millions) Growth & September CapEx by Business Unit Maintenance Zero Harm Productivity 2024 RUPS $14.3 $0.4 $12.8 $27.5 PC 6.2 1.8 1.4 9.4 CMC 15.8 1.7 1.9 19.4 Administration 1.8 -- 0.7 2.5 Total $38.1 $3.9 $16.8 $58.8 Less: Cash Proceeds 3.8 Capi
Slide 17: Dividend Declaration
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Slide 18: Declaring Quarterly Cash Dividend
Declaring Quarterly Cash Dividend November November December 11.7.24 11.29.24 12.16.24 Dividend Record Payment Declaration Date Date Board of Directors approved a quarterly dividend of $0.07 per share of Koppers common stock. 18
Slide 19: Notable Happenings
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Slide 20: UIP Team Steps Up During Major Storms
UIP Team Steps Up During Major Storms • Koppers Utility and Industrial Products (UIP) team members stepped up as communities in the southeastern U.S. are recovering from the devastation caused by Hurricanes Helene and Milton. • Affected 48 utilities across 8 states • Despite dealing with personal im
Slide 21: Commitment to Sustainability
Commitment to Sustainability Koppers is proud to see our climate action recognized in Newsweek’s list of America's Greenest Companies. 21 21
Slide 22: Business Sentiment
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Slide 23: State of the Business: PC
State of the Business PC: PERFORMANCE CHEMICALS Prior Market Outlook (August 2024): Current Market Outlook: • Legacy residential volumes finished Q2 flat • Q3 volumes continued to be solid as compared to 2023; still forecasting flat for MicroPro ground contact volumes slightly up the year from prior
Slide 24: State of the Business: RUPS Utility and Industrial
State of the Business RUPS: UTILITY AND INDUSTRIAL PRODUCTS Prior Market Outlook (August 2024): Current Market Outlook: • Closed on Brown Wood on 4/1; integration • Unprecedented storm response to proceeding as planned Hurricane’s Helene and Milton will support strong Q4 • Texas market penetration a
Slide 25: State of the Business: RUPS Railroad
State of the Business RUPS: RAILROAD PRODUCTS AND SERVICES Prior Market Outlook (August 2024): Current Market Outlook: • $17M of price recognized YTD June • $20M of price recognized YTD Sept • Q2 boultonizing dropped to lowest level since • Boultonizing continued to drop in Q3 to Q1 2022 boosting as
Slide 26: State of the Business: CMC
State of the Business CMC: CARBON MATERIALS AND CHEMICALS Prior Market Outlook (August 2024): Current Market Outlook: • Pitch markets continue to be at trough; $23M • Pitch markets reached or are close to bottom; lower pricing and $11M lower sales volumes $14M lower pricing in Q3 but higher volumes
Slide 27: 2024 Guidance
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Slide 28: 2024 Sales Forecast: ~$2.1B
2024 Sales Forecast: ~$2.1B Sales ($ in Millions) , $2.15B , ~$2.1B , , , U S M 28
Slide 29: 2024 Adjusted EBITDA Forecast: $270M-$275M
2024 Adjusted EBITDA Forecast: $270M-$275M Adjusted EBITDA* ($ in Millions) $300 $290 $16M-$18M $280 $270M-$275M $270 ($11M)-($9M) $9M-$10M $260 $256M $250 $240 $230 $220 2023 RUPS PC CMC 2024 * Excluding special charges 29
Slide 30: 2024 Adjusted EPS Forecast: $4.25 - $4.45
2024 Adjusted EPS Forecast: $4.25 - $4.45 Adjusted EPS* $6.00 $5.50 $0.62-$0.89 $5.00 $0.12- $0.05 $0.03 $4.25-$4.45 $4.50 ($0.57) $4.36 ($0.31) $4.00 $3.50 $3.00 2023 Operations D&A Interest Taxes Other 2024 * Excluding special charges 30
Slide 31: 2024 Capital Expenditures
2024 Capital Expenditures ($ in Millions) Growth & CapEx by Business Unit Maintenance Zero Harm Productivity 2024 RUPS $19.8 $0.9 $14.8 $35.5 PC 8.2 3.2 1.4 12.8 CMC 22.5 2.5 1.9 26.9 Administration 3.0 -- 1.8 4.8 Total $53.5 $6.6 $19.9 $80.0 Less: Cash Proceeds 7.0 Capital Expenditures, Net $73.0 3
Slide 32: Early Expectations for 2025
Early Expectations for 2025 PERFORMANCE CHEMICALS UTILITY AND INDUSTRIAL PRODUCTS • Expecting more competitive environment to result in net market • Expecting healthier utility market to support modestly higher share loss and margin erosion in residential market volumes • Expecting slightly healthie
Slide 33: Early Expectations for 2025
Early Expectations for 2025 Operating Costs, SG&A & Interest Capital Deployment • Termination of U.S. pension plan will result in $3M-$4M annual • Termination of U.S. pension plan will result in $25M final cost savings contribution • Resizing workforce to be responsive to competitive pressure; • Exp
Slide 34: Appendix
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Slide 35: Non-GAAP Measures & Guidance
Non-GAAP Measures & Guidance This presentation includes unaudited “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934, including adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, net debt and net leverage ratio. Koppers believes that the presentati
Slide 36: Unaudited Segment Information
Unaudited Segment Information Three Months Ended September 30, (Dollars in millions) 2024 2023 Net sales: Railroad and Utility Products and Services $ 248.1 $ 234.0 Performance Chemicals 176.7 179.4 Carbon Materials and Chemicals 129.5 137.0 Total $ 554.3 $ 550.4 Adjusted EBITDA(1): Railroad and Uti
Slide 37: Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
Unaudited Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin Three Months Ended Year Ended September 30, December 31, (Dollars in millions) 2024 2023 2023 2022 2021 2020 Net income $ 19.0 $ 26.2 $ 89.8 $ 63.2 $ 84.9 $ 121.0 Interest expense 20.2 19.0 71.0 44.8 40.5 48.9 Depre
Slide 38: Reconciliations to Adjusted Net Income, Diluted EPS and Adjusted EPS
Unaudited Reconciliations of Net Income Attributable to Koppers to Adjusted Net Income Attributable to Koppers and Diluted EPS and Adjusted EPS Three Months Ended September 30, (Dollars in millions, except share and per share amounts) 2024 2023 Net income attributable to Koppers $ 22.8 $ 26.3 Adjust
Slide 39: Reconciliation of Total Debt to Net Debt and Net Leverage Ratio
Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio Twelve Months Ended September 30, (Dollars in millions) 2024 Total Debt $ 980.9 Less: Cash 44.5 Net Debt $ 936.4 Adjusted EBITDA $ 260.3 Net Leverage Ratio 3.6 39
Slide 40: Reconciliation of Net Income to Adjusted EBITDA (LTM)
Unaudited Reconciliation of Net Income to Adjusted EBITDA (LTM) Twelve Months Ended September 30, (Dollars in millions) 2024 Net income $ 71.8 Interest expense 75.6 Depreciation and amortization 66.5 Income tax provision 31.9 Sub-total 245.8 Adjustments to arrive at adjusted EBITDA: LIFO expense(1)
Slide 41: Koppers World Headquarters
KOPPERS World Headquarters Pittsburgh, Pennsylvania, USA Koppers Holdings Inc. 436 Seventh Avenue Pittsburgh, PA 15219-1800 Koppers is an integrated global provider of essential treated wood products, wood preservation technologies and carbon compounds. Our team of 2,200 employees create, protect an
Slide 42: koppers.com
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