Koppers Holdings Inc. · NYSE:KOP
Koppers — Q2 2021 Earnings Presentation
52 slides from Koppers's earnings presentation, Aug 7, 2021
Slide 1: Q2 2021 Results
Q2 2021 Results August 6, 2021
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, profitability and anticip
Slide 3: Save The Date
Save The Date Please save the date for Koppers (NYSE: KOP) Investor Day 2021, to be held in Pittsburgh, Pennsylvania*, on September 13, 2021, at 9 a.m. Eastern Time. Also, a live webcast, including video, audio and presentation slides, will be accessible on www.koppers.com. An archived copy of the w
Slide 4: Our Place in the 'Essential' Business Landscape
Our Place in the ‘Essential’ Business Landscape
Slide 5: Essential to Our World
ESSENTIAL TO OUR WORLD RAILROAD Keep railroads safe and operational to deliver ESSENTIAL goods: PRODUCTS & SERVICES Rail Ties, Joints, Retail products from Chemicals required for Chlorine-based Maintenance fruits to toilet paper medical supplies disinfectants for treating water Provide families and
Slide 6: Zero Harm Update
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Slide 7: Guidelines & Requirements
Guidelines & Requirements New CDC Guidelines • Centers for Disease Control (CDC) updated its guidance on prevention measures • Occupational Safety and Health Administration (OSHA) directed all employers to follow CDC guidance • If county’s disease transmission rate is “high” (red) or “significant” C
Slide 8: Operations & Offices
Operations & Offices • COVID Life Saving Rule updated to reflect new requirements of Operations masking of employees in counties of “high” (red) or “significant” (orange) transmission rates • Facility leaders tracking CDC transmission rate status and will communicate masking requirements to employee
Slide 9: Zero Harm Updates
Zero Harm Updates Watch Now: Ask the Doctors – COVID-19 Vaccine Q&A Koppers Begins Zero Harm Training for Frontline Ashcroft Receives a Life Saving Helping Hand from WildCat Fire Employees Services 9
Slide 10: Notable Mentions
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Slide 11: Employee Engagement
Employee Engagement Leroy’s Bi-Weekly Update Koppers Welcomes Enerco Employees to the Team Video Message from the CEO iShare Winners Capture Koppers Through Their Own Lenses ICYMI – Check out the LINKwomen Q2 Newsletter 11
Slide 12: Community Involvement
Community Involvement With Koppers, Every Strikeout Brings Finance & Purchasing Teams Pack Charities Closer to Home Run Activity Kits for the United Way L’Anse Team Donates Zero Harm Inclusion & Diversity Committee Award Money to a Good Cause Launches Returning Home Project Koppers Supports March Fo
Slide 13: Educational Partnerships
Educational Partnerships Koppers Helps Provide STEM Opportunities for Minority Youth Koppers Employees Inspire Pittsburgh Students at Crossroads Career Day 13
Slide 14: Employee Honors & Recognitions
Employee Honors & Recognitions Congratulations to Melissa Hadley for being a STEP Ahead Honoree! Stickney Employee Takes on Public Role Lance Hyde Delivers Commencement Address & CIO of the Year Finalist Receives Service Leadership Award 14
Slide 15: Leadership Development
Leadership Development Apply for Koppers Business Degree Congratulations to Koppers Leadership Pittsburgh Graduates Leadership Forum Graduates! 15
Slide 16: Q2 2021 Results
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Slide 17: Q2: Sales by Segment (Unaudited)
Q2: Sales by Segment (Unaudited) Q2 2021 Sales vs. Prior Year $ in Millions $450 +1% $441 $437 $400 $350 $300 $250 -7% $200 $210 $196 +6% $150 $146 $137 +12% $100 $100 $90 $50 $0 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 RUPS RUPS PC PC CMC CMC* TOTAL * Excluding KJCC 17
Slide 18: Q2: Adjusted EBITDA by Segment (Unaudited)
Q2: Adjusted EBITDA by Segment (Unaudited) Q2 2021 Adj EBITDA vs Prior Year $ in Millions $70 14.9% $66 13.7% $60 $60 $50 $40 23.7% $35 21.3% $30 11.1% $29 $23 18.6% $20 $19 6.1% $10 $12 7.9% $7 $0 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 RUPS RUPS PC PC CMC CMC* TOTAL * Exclu
Slide 19: RUPS Sales (Unaudited)
RUPS Sales (Unaudited) RAILROAD AND UTILITY PRODUCTS AND SERVICES $ in Millions $225 Q2 Highlights $200 $210 • Sales decreased from prior year primarily due $196 $175 to the following: ✓ Lower crosstie treating volumes $150 ✓ Railroad customers deferred purchases $125 due to price increases driven b
Slide 20: Adjusted RUPS EBITDA (Unaudited)
Adjusted RUPS EBITDA (Unaudited) RAILROAD AND UTILITY PRODUCTS AND SERVICES $ in Millions $25 Q2 Highlights $23 • Year-over-year decrease in profitability from $20 prior year was primarily driven by: ✓ Lower treating volumes which resulted $15 in reduced absorption of fixed costs ✓ Lower volumes in
Slide 21: PC Sales (Unaudited)
PC Sales (Unaudited) PERFORMANCE CHEMICALS $ in Millions $150 $146 Q2 Highlights $125 $137 • Continued trend of achieving year-over-year sales growth, which reflects: $100 ✓ Strong demand from international markets $75 ✓ Certain pricing increases for copper- based preservatives in the Americas $50 ✓
Slide 22: Adjusted PC EBITDA (Unaudited)
Adjusted PC EBITDA (Unaudited) PERFORMANCE CHEMICALS $ in Millions $40 Q2 Highlights $35 $35 • Higher year-over-year profitability due to: $30 ✓ Higher sales volumes $29 $25 ✓ Lower realized raw material costs associated with copper hedging $20 program $15 • Serving continued overall growth in home
Slide 23: CMC Sales (Unaudited)
CMC Sales (Unaudited) CARBON MATERIALS AND CHEMICALS $ in Millions $110 Q2 Highlights $100 $100 • Increase in year-over-year sales primarily $90 $90 consisted of: $80 ✓ Higher pricing for carbon black $70 feedstock in Europe $60 ✓ Higher pricing for phthalic anhydride in $50 North America $40 ✓ Part
Slide 24: Adjusted CMC EBITDA (Unaudited)
Adjusted CMC EBITDA (Unaudited) CARBON MATERIALS AND CHEMICALS $ in Millions $20 Q2 Highlights $19 • Increase in profitability due to: ✓ Higher product demand $15 ✓ Favorable pricing in certain markets ✓ Operational efficiencies ✓ Insurance proceeds in Q2 $10 • Benefited from efficient cost structur
Slide 25: Debt & Liquidity
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Slide 26: Ample Liquidity; Debt Reduction Focus
Ample Liquidity; Debt Reduction Focus Net Leverage Ratio* 6 5.1 5 4.7 4.5 4.5 4.5 4.3 3.8 4 3.5 3.4 3.2 3.1-3.2 3 2 1 0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q4 2021E * Excluding KJCC • Proven track record of disciplined debt reduction • Plan to further redu
Slide 27: Business Sentiment: Customers & Suppliers
Business Sentiment: Customers & Suppliers
Slide 28: Customers & Suppliers: Performance Chemicals
Customers & Suppliers PERFORMANCE CHEMICALS Overall Business • Historically high U.S. lumber market has declined significantly, prompting treating customers to reduce operations until market stabilizes; at/near bottom according to industry consensus; treaters expected to slowly begin to increase tre
Slide 29: Customers & Suppliers: Performance Chemicals
Customers & Suppliers PERFORMANCE CHEMICALS International • Actively in discussions with customers in overseas markets (Chile, Brazil, etc.) to evaluate opportunities to gain share • Europe continues to experience challenges amidst regulatory changes as well as supply chain issues due to Brexit and
Slide 30: Customers & Suppliers: Utility and Industrial Products
Customers & Suppliers UTILITY AND INDUSTRIAL PRODUCTS Overall Business • Demand expected to remain strong in 2021 in U.S. and Australia; some sales decline but expect EBITDA improvement as production shifts in Texas from Jasper to Somerville • Utilities need to maintain their infrastructure to avoid
Slide 31: Customers & Suppliers: Railroad Products and Services
Customers & Suppliers RAILROAD PRODUCTS AND SERVICES Overall Business • Customer sentiment indicates lower year-over-year demand for crosstie business • Seeing higher pricing for green ties as supplies becomes more limited; railroad customers deferring purchases; expect demand to be pushed out to mi
Slide 32: Customers & Suppliers: Railroad Products and Services
Customers & Suppliers RAILROAD PRODUCTS AND SERVICES Maintenance-of-Way • In 2021, 50% higher backlog of projects in Railroad Structures vs. prior year provides further improvement to profitability; pipeline of opportunities remains strong ✓ Some headwinds from crew productivity due to lack of perso
Slide 33: Customers & Suppliers: Carbon Materials and Chemicals
Customers & Suppliers CARBON MATERIALS AND CHEMICALS Overall Business • 2021 outlook favorable due to expected growth in manufacturing, including higher auto production globally and increased output in steel, aluminum and carbon black industries ✓ Global light vehicle production expected to grow 50%
Slide 34: Customers & Suppliers: Carbon Materials and Chemicals
Customers & Suppliers CARBON MATERIALS AND CHEMICALS Europe • Higher tar prices due to higher oil pricing as well as competition from carbon black industry • Pitch demand decreased in central and southern Europe • Naphthalene and CBF demand and prices are high Australia • Tar and pitch supplies and
Slide 35: 2021 Guidance
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Slide 36: 2021 Sales Forecast: $1.7B-$1.8B
2021 Sales Forecast: $1.7B-$1.8B Sales ($ in millions) $30M - $1.7B- $60M $1.8B ($15M) - ($10M) - $15M $10M $1.67B 36
Slide 37: 2021 Adjusted EBITDA Forecast: $220M-$230M
2021 Adjusted EBITDA Forecast: $220M-$230M Adjusted EBITDA* ($ in millions) $220M- $14M-$17M $230M ($2M) - $2M ($3M)-$0M $211M * Excluding special charges 37
Slide 38: 2021 Adjusted EPS Forecast: $4.35-$4.60
2021 Adjusted EPS Forecast: $4.35-$4.60 Adjusted EPS* $0.97- $0.37 $1.22 $4.35- $4.60 ($0.24) $4.12 ($0.47) ($0.40) * Excluding special charges 38
Slide 39: 2021 Capital Expenditures: $80M-$90M (Net)
2021 Capital Expenditures: $80M-$90M (Net) 2021 Projected CapEx by Category 1H 2021 Low High Maintenance $27.7M $40M $45M Zero Harm 8.2M 30M 30M Growth & Productivity 25.0M 40M 45M Total $60.9M $110M $120M Less: Cash Proceeds ($5.1M) ($30M) ($30M) Capital Expenditures, Net $55.8M $80M $90M 2022 EBIT
Slide 40: Q&A Session
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Slide 41: Appendix
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Slide 42: Non-GAAP Measures and Guidance
Non-GAAP Measures and 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 net income, adjusted earnings per share, net debt and net leverage ratio
Slide 43: Unaudited Segment Information
Unaudited Segment Information Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 (Dollars in millions) Net sales: Railroad and Utility Products and Services $ 195.5 $ 209.9 $ 387.4 $ 399.9 Performance Chemicals 145.6 137.1 269.2 248.5 Carbon Materials and Chemicals(1) 99.9 89.
Slide 44: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA (In millions) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $ 26.9 $ 29.4 $ 52.7 $ 26.9 Interest expense 10.1 12.8 20.3 26.8 Depreciation and amortization 13.9 13.3 30.0 26.8 Depreciation in i
Slide 45: Reconciliation of EBITDA to Adjusted EBITDA by Segment
Unaudited Reconciliation of EBITDA to Adjusted EBITDA by Segment (In millions) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 EBITDA with noncontrolling interests: Railroad and Utility Products and Services $ 8.6 $ 21.3 $ 23.5 $ 35.2 Performance Chemicals 33.5 37.4 64.0 46
Slide 46: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Unaudited Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA* (In millions) Three Months Ended June 30, 2021 Corporate RUPS PC CMC Unallocated Consolidated Operating profit (loss) $ 4.3 $ 28.7 $ 13.4 $ (2.1 ) $ 44.3 Other income (loss) (1.0 ) 0.1 (0.9 ) 2.6 0.8 Depreciation and amortiz
Slide 47: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Unaudited Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA* (In millions) Three Months Ended June 30, 2020 Corporate RUPS PC CMC Unallocated Consolidated Operating profit (loss) $ 16.2 $ 32.6 $ 1.5 $ (0.6 ) $ 49.7 Other income (loss) (0.6 ) 0.4 0.0 0.7 0.5 Depreciation and amortizati
Slide 48: Reconciliation of Total Debt to Net Debt and Net Leverage Ratio
Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio (In millions) Twelve Months Ended June 30, December 31, June 30, 2021 2020 2020 Total Debt $ 806.2 $ 775.9 $ 907.1 Less: Cash 46.5 38.5 33.0 Net Debt $ 759.7 $ 737.4 $ 874.1 Adjusted EBITDA $ 234.5 $ 211.0 $ 194.2 Net Leverage
Slide 49: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA (In millions) Twelve Months Ended June 30, December 31, June 30, 2021 2020 2020 Net income $ 146.7 $ 121.0 $ 67.4 Interest expense 42.5 48.9 56.6 Depreciation and amortization 58.0 56.1 54.9 Income tax provision (benefit) 33.4 21.0
Slide 50: Reconciliation of Total Debt to Net Debt and Net Leverage Ratio
Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio 50
Slide 51: Koppers Holdings Inc. Pittsburgh, PA
Koppers Holdings Inc. 436 Seventh Avenue Pittsburgh, PA 15219-1800 Koppers is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds for the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and constructio
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