Koppers Holdings, Inc. (NYSE:KOP) Q4 2021 Earnings Conference Call February 23, 2022 11:00 AM ET Company Participants Leroy Ball – President and Chief Executive Officer Jimmi Sue Smith – Chief Financial Officer Quynh McGuire – Vice President of Investor Relations Conference Call Participants Mike Harrison – Seaport Global Chris Howe – Barrington Research Liam Burke – B Riley Chris Shaw – Monness Crespi Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers, Fourth Quarter ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (412) 227-2001 (Address of principal executive offices) (Reg ...

PART I—FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's financial statements for Q3 2021 show decreased net sales and net income, while nine-month sales were flat with lower net income [Condensed Consolidated Statement of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) Q3 2021 net sales and operating profit declined significantly, with net income dropping to $10.2 million, while nine-month net income also decreased Statement of Operations Highlights (Q3 & Nine Months) | Metric (in millions) | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $424.8 | $437.5 | $1,273.3 | $1,276.0 | | **Operating Profit** | $24.6 | $58.6 | $112.8 | $121.9 | | **Net Income Attributable to Koppers** | $10.2 | $75.6 | $63.0 | $103.4 | | **Diluted EPS** | $0.47 | $3.53 | $2.87 | $4.88 | [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of September 30, 2021, total assets and Koppers shareholders' equity increased, while total liabilities remained relatively flat Balance Sheet Summary | Metric (in millions) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $614.2 | $564.5 | | **Total Assets** | $1,652.2 | $1,598.6 | | **Total Current Liabilities** | $266.8 | $292.1 | | **Long-Term Debt** | $802.6 | $765.8 | | **Total Liabilities** | $1,251.7 | $1,252.6 | | **Total Koppers Shareholders' Equity** | $396.4 | $341.7 | [Condensed Consolidated Statement of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Nine-month operating cash flow decreased, investing activities shifted to a significant net cash outflow, and financing activities provided cash Cash Flow Summary (Nine Months Ended Sep 30) | Activity (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $59.6 | $65.5 | | **Net Cash (Used in) from Investing Activities** | $(78.7) | $35.0 | | **Net Cash from (Used in) Financing Activities** | $28.3 | $(93.7) | | **Net Increase in Cash** | $6.4 | $7.2 | [Notes to Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail financial statement basis, plant divestitures, segment performance, debt structure, derivative instruments, and significant legal and environmental contingencies - The company sold its Denver, Colorado crosstie treating plant in October 2021 and expects to recognize a gain of approximately **$23 million** in Q4 2021[14](index=14&type=chunk) - The sale of Koppers (Jiangsu) Carbon Chemical Company Limited (KJCC) in 2020 was classified as a discontinued operation, representing a strategic shift for the company[15](index=15&type=chunk)[16](index=16&type=chunk) - The company utilizes copper swap contracts to hedge commodity price risk, with a net fair value asset of **$62.1 million** as of September 30, 2021, and also uses foreign currency forward contracts[71](index=71&type=chunk)[73](index=73&type=chunk) - Koppers is involved in **32 lawsuits** related to coal tar pitch exposure and is a potentially responsible party (PRP) at the Portland Harbor and Newark Bay CERCLA sites, with an accrued liability of **$3.4 million** for these sites[78](index=78&type=chunk)[93](index=93&type=chunk) [Management's Discussion and Analysis (MD&A)](index=23&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses segment performance, Q3 sales decline driven by RUPS and PC, profitability impacts from LIFO and copper hedges, segment-specific outlooks, and strong liquidity with debt covenant compliance [Business Outlook](index=24&type=section&id=Outlook) Segment outlooks vary, with RUPS facing supply constraints, PC benefiting from strong housing, and CMC impacted by coal tar raw material availability - **RUPS:** Crosstie demand is expected to grow **4.7%** in 2021, but supply is constrained by sawmills prioritizing construction lumber and facing labor/freight issues; the company is transitioning utility pole treatment from penta to alternatives like creosote and CCA[109](index=109&type=chunk)[115](index=115&type=chunk) - **PC:** The outlook is positive, supported by strong housing market trends and projected **9.0%** annual growth in home renovation spending into 2022; the company hedges the majority of its copper needs for up to **36 months**[121](index=121&type=chunk)[123](index=123&type=chunk) - **CMC:** The business has realigned capacity to meet North American creosote demand, but the availability of its primary raw material, coal tar, is linked to metallurgical coke production, which remains constrained[127](index=127&type=chunk)[128](index=128&type=chunk) [Results of Operations – Q3 2021 vs. Q3 2020](index=27&type=section&id=Results%20of%20Operations%20%E2%80%93%20Comparison%20of%20Three%20Months%20Ended%20September%2030%2C%202021%20and%202020) Q3 2021 consolidated net sales decreased 3%, driven by lower RUPS and PC sales, while operating profit plummeted 58% due to LIFO expense and copper hedge losses Net Sales by Segment (Q3) | Segment (in millions) | Q3 2021 | Q3 2020 | Net Change | | :--- | :--- | :--- | :--- | | RUPS | $186.9 | $191.0 | -2% | | Performance Chemicals | $115.2 | $147.9 | -22% | | Carbon Materials & Chemicals | $122.7 | $98.6 | 24% | | **Total** | **$424.8** | **$437.5** | **-3%** | Operating Profit (Loss) by Segment (Q3) | Segment (in millions) | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | RUPS | $(0.7) | $15.0 | -105% | | Performance Chemicals | $11.6 | $30.4 | -62% | | Carbon Materials & Chemicals | $14.9 | $13.7 | 9% | | **Total** | **$24.6** | **$58.6** | **-58%** | - RUPS operating profit was negatively impacted by a **$7.5 million** LIFO expense in Q3 2021, compared to a **$2.9 million** LIFO benefit in Q3 2020[136](index=136&type=chunk)[144](index=144&type=chunk) - PC operating profit was hurt by a **$4.4 million** unrealized loss from copper swap contracts, versus a **$3.9 million** unrealized gain in the prior-year quarter[136](index=136&type=chunk)[145](index=145&type=chunk) [Results of Operations – YTD 2021 vs. YTD 2020](index=29&type=section&id=Results%20of%20Operations%20%E2%80%93%20Comparison%20of%20Nine%20Months%20Ended%20September%2030%2C%202021%20and%202020) Nine-month consolidated net sales were flat, with RUPS and PC sales down, while CMC sales and profitability increased significantly, offsetting RUPS's LIFO-impacted decline Net Sales by Segment (Nine Months) | Segment (in millions) | YTD 2021 | YTD 2020 | Net Change | | :--- | :--- | :--- | :--- | | RUPS | $574.3 | $590.9 | -3% | | Performance Chemicals | $384.4 | $396.4 | -3% | | Carbon Materials & Chemicals | $314.6 | $288.7 | 9% | | **Total** | **$1,273.3** | **$1,276.0** | **0%** | Operating Profit by Segment (Nine Months) | Segment (in millions) | YTD 2021 | YTD 2020 | % Change | | :--- | :--- | :--- | :--- | | RUPS | $12.3 | $40.4 | -70% | | Performance Chemicals | $65.1 | $67.1 | -3% | | Carbon Materials & Chemicals | $39.1 | $15.9 | 146% | | **Total** | **$112.8** | **$121.9** | **-7%** | - RUPS operating profit for the nine-month period was unfavorably impacted by a **$10.3 million** LIFO expense, compared to a **$5.2 million** LIFO benefit in the prior year[151](index=151&type=chunk)[159](index=159&type=chunk) - CMC operating profit was favorably impacted by higher sales prices, a **$2.9 million** insurance recovery, and reduced restructuring charges[161](index=161&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity of **$326.0 million** as of September 30, 2021, projects **$115-120 million** in 2021 capital expenditures, and remains in compliance with all debt covenants Estimated Liquidity as of Sep 30, 2021 | Component (in millions) | Amount | | :--- | :--- | | Cash and cash equivalents | $42.6 | | Amount available under Credit Facility | $283.4 | | **Total estimated liquidity** | **$326.0** | - Projected capital expenditures for 2021 are expected to be approximately **$115 to $120 million**, funded by cash from operations[170](index=170&type=chunk) - The company is in compliance with all debt covenants, with a total leverage ratio of **3.51**, below the maximum permitted of **5.00**[172](index=172&type=chunk)[177](index=177&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like adjusted EBITDA, which decreased in Q3 but increased for the nine-month period, leading to an improved net leverage ratio Adjusted EBITDA (Consolidated) | Period (in millions) | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Adjusted EBITDA** | $53.9 | $66.7 | $174.7 | $163.9 | Net Leverage Ratio | Date | Ratio | | :--- | :--- | | Sep 30, 2021 | 3.4x | | Dec 31, 2020 | 3.5x | | Sep 30, 2020 | 3.8x | - The decrease in Q3 adjusted EBITDA was primarily due to lower profitability in the RUPS and PC segments[178](index=178&type=chunk) - The increase in nine-month adjusted EBITDA was driven by strong performance in the CMC segment, offsetting declines in RUPS[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes to the company's market risk disclosures were reported since the prior annual report - There have been no material changes to the company's market risk profile since the last annual report[190](index=190&type=chunk) [Controls and Procedures](index=37&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[191](index=191&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[191](index=191&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is incorporated by reference from Note 18 of the Condensed Consolidated Financial Statements - Details on legal proceedings are located in Note 18 of the financial statements[193](index=193&type=chunk) [Risk Factors](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the previously disclosed Risk Factors were reported since the last annual filing - No material changes to risk factors were reported since the last annual filing[194](index=194&type=chunk) [Share Repurchases](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q3 2021, the company repurchased **45,000 shares** for **$1.4 million**, and a new **$100 million** share repurchase program was approved with **$98.6 million** remaining Share Repurchases (Q3 2021) | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | July 2021 | 0 | $0.00 | | August 2021 | 39,000 | $31.45 | | September 2021 | 6,000 | $33.50 | | **Total** | **45,000** | **$31.72** | - A new **$100 million** share repurchase program was approved on August 6, 2021, replacing the prior program; as of September 30, 2021, **$98.6 million** was available under this new program[195](index=195&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (Address of principal executive offices) (412) 227-2001 ...

Financial Data and Key Metrics Changes - Consolidated sales reached $408 million, a record for the first quarter, up from $402 million in the prior year [33] - Adjusted EBITDA for the quarter was $55 million or 13.5%, up from $38 million or 9.4% in the prior year [34] - Net debt at the end of March was $766 million with $326 million in available liquidity, projecting $30 million of debt reduction for 2021 [42] Business Line Data and Key Metrics Changes - RUPS sales were $192 million, slightly up from $190 million, driven by Class I volume increases and higher demand in railroad services [35] - Performance Chemicals (PC) sales rose to $124 million from $111 million, attributed to high demand for copper-based preservatives and home repair projects [37] - CMC sales decreased to $92 million from $101 million, primarily due to lower volumes of phthalic anhydride and carbon pitch [39] Market Data and Key Metrics Changes - The average pricing of major products increased by 15% compared to the fourth quarter, while coal tar costs rose by 11% [41] - Existing home sales rose 12.3% year-over-year in March 2021, indicating a strong housing market [57] - The Railway Tie Association forecasts 2.7% growth in 2021 for crossties, driven by the commercial market [73] Company Strategy and Development Direction - The company plans to host an Investor Day on September 13, 2021, to discuss future strategies and growth opportunities [9] - There is a focus on increasing market share in the crosstie market and renewing key Class I contracts by the end of 2021 [72] - The company is exploring new product introductions and acquisitions to bolster its aging product portfolio [62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the demand for Performance Chemicals, expecting EBITDA to meet or exceed prior year levels [49] - Concerns were raised about potential inflationary pressures impacting the housing market and home equity borrowing [98] - The company remains focused on optimizing operations and driving down costs while exploring growth opportunities [101] Other Important Information - The company has implemented a $250 incentive for employees to get vaccinated against COVID-19 [16] - The Follansbee facility sale is expected to save considerable ongoing costs and refocus cash towards growth opportunities [89] - The company is committed to sustainability and community engagement, as demonstrated by various initiatives [31] Q&A Session Summary Question: Outlook on the housing market and its impact on Performance Chemicals - Management noted a solid foundation in the housing market but highlighted inflation as a potential risk factor [98][100] Question: Class I volumes and commercial crosstie business outlook - Management indicated that untreated crosstie availability is crucial for maintaining supply and pricing dynamics [116] Question: Margin dynamics in the CMC business - Management expects positive trends in North America due to improved supply-demand dynamics and higher pricing [125]

FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the quarterly period ended March 31, 2021 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (Address of principal executive offices) (412) 227-2001 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (412) 227-2001 (Address of principal executive offices) (Reg ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (Address of principal executive offices) (412) 227- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (Address of principal executive offices) (412) 227-2001 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) (IRS Employer Identification No.) 436 Seventh Avenue Pittsburgh, Pennsylvania 15219 (Address of principal executive offices) (412) 227-2001 ...