Payoneer Global Inc. (PAYO) Q4 2023 Earnings Conference Call February 28, 2024 11:00 AM ET Company Participants Quynh McGuire - Vice President, Investor Relations Leroy Ball - President & Chief Executive Officer Jimmi Sue Smith - Chief Financial Officer Conference Call Participants Liam Burke - B. Riley FBR Gary Prestopino - Barrington Research Michael Matheson - Singular Research Jamie Weiland - Weiland Management Operator Good morning ladies and gentlemen, and thank you for standing by. Welcome to Koppers ...

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, 2023 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 ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Koppers reported record Q4 sales of **$513.2 million** and full-year sales of **$2.15 billion**, driven by strong RUPS and PC segment performance, with adjusted EBITDA near guidance top end [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Highlights) Koppers Holdings Inc. reported record fourth-quarter sales of $513.2 million, a 6.3% increase year-over-year. Adjusted EBITDA also saw an increase to $53.9 million. Performance was driven by strong results in the Railroad and Utility Products and Services (RUPS) and Performance Chemicals (PC) segments, which offset declines in Carbon Materials and Chemicals (CMC) Fourth Quarter 2023 Key Financials | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Consolidated Sales | $513.2 | $482.6 | 6.3% | | Net Income Attributable to Koppers | $12.9 | $13.8 | -6.5% | | Adjusted Net Income Attributable to Koppers | $14.5 | $23.0 | -36.9% | | Diluted EPS | $0.59 | $0.65 | -9.2% | | Adjusted EPS | $0.67 | $1.09 | -38.5% | | Adjusted EBITDA | $53.9 | $52.1 | 3.5% | - RUPS segment achieved record fourth-quarter sales and adjusted EBITDA due to pricing increases and higher crosstie volumes, partially offset by increased raw material and operating costs. The domestic utility pole business also contributed to favorable performance[4](index=4&type=chunk) - PC segment benefited from global pricing initiatives and higher volumes, with profitability returning to historical norms as renegotiated contracts allowed for price increases to cover higher costs[5](index=5&type=chunk) - CMC segment sales and profitability declined primarily due to lower market prices and weaker demand for most products, despite higher carbon pitch volumes[6](index=6&type=chunk) [Full-Year 2023 Highlights](index=1&type=section&id=Full-Year%202023%20Highlights) Koppers achieved record full-year sales of $2.15 billion and record operating profit of $195.2 million, marking a 25% increase over the previous record. The company also reported a significant increase in net income attributable to Koppers and adjusted EBITDA Full-Year 2023 Key Financials | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Consolidated Sales | $2,150.0 | $1,980.0 | 8.6% | | Operating Profit | $195.2 | N/A | 25% (vs. previous record) | | Net Income Attributable to Koppers | $89.2 | $63.4 | 40.7% | | Adjusted Net Income Attributable to Koppers | $94.0 | $88.3 | 6.5% | | Diluted EPS | $4.14 | $2.98 | 38.9% | | Adjusted EPS | $4.36 | $4.14 | 5.3% | | Adjusted EBITDA | $256.4 | $228.1 | 12.4% | [CEO Commentary on Overall Performance](index=2&type=section&id=CEO%20Commentary%20on%20Overall%20Performance) CEO Leroy Ball highlighted a strong finish to 2023, with adjusted EBITDA near the top end of guidance. He credited the global team's execution in a challenging environment and emphasized the strength of the diversified portfolio, where PC and RUPS segments compensated for the struggling CMC segment - The company finished the year strong, near the top end of its adjusted EBITDA guidance range, attributing success to the global team's execution in a challenging environment[7](index=7&type=chunk) - A diversified portfolio, with strong performance from PC and RUPS segments, helped offset the struggling CMC segment, which is navigating a business cycle trough[7](index=7&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) Koppers achieved record full-year sales of **$2.15 billion** and operating profit of **$195.2 million**, with RUPS and PC segments showing robust growth, while CMC faced market challenges [Fourth Quarter 2023 Segment Performance](index=2&type=section&id=Fourth%20Quarter%202023%20Segment%20Performance) In Q4 2023, RUPS and PC segments demonstrated robust growth in sales and adjusted EBITDA, driven by pricing and volume increases. Conversely, the CMC segment experienced declines in both sales and profitability due to market price reductions and weaker demand [Railroad and Utility Products and Services (RUPS)](index=2&type=section&id=Railroad%20and%20Utility%20Products%20and%20Services%20(RUPS)) RUPS reported record Q4 sales of $216.4 million, a 12.1% increase, primarily due to $16.0 million in pricing increases for crossties and utility poles, and increased volumes for Class I crossties. Adjusted EBITDA also reached a record $20.7 million, up from $13.3 million in the prior year, driven by net sales price increases and improved plant utilization RUPS Q4 Performance | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $216.4 | $193.0 | 12.1% | | Adjusted EBITDA | $20.7 | $13.3 | 55.6% | | Adjusted EBITDA Margin | 9.6% | 6.9% | 2.7 pp | | Pricing Increase Contribution | $16.0 | N/A | N/A | - Sales growth was largely due to pricing increases across multiple markets, particularly for crossties and utility poles in the United States, and increased volumes for Class I crossties[10](index=10&type=chunk) - Profitability increased due to net sales price increases and improved plant utilization, which more than offset higher raw material and operating costs[10](index=10&type=chunk) [Performance Chemicals (PC)](index=2&type=section&id=Performance%20Chemicals%20(PC)) PC delivered Q4 sales of $164.4 million, an increase of 16.8%, driven by global price increases of $15.1 million, especially for copper-based preservatives in the Americas, and a 6.0% increase in global volumes. Adjusted EBITDA rose significantly to $29.4 million from $17.6 million, reflecting improved profitability despite slightly higher raw material costs PC Q4 Performance | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $164.4 | $140.8 | 16.8% | | Adjusted EBITDA | $29.4 | $17.6 | 67.0% | | Adjusted EBITDA Margin | 17.9% | 12.5% | 5.4 pp | | Pricing Increase Contribution | $15.1 | N/A | N/A | | Volume Increase | 6.0% | N/A | N/A | - Sales growth resulted from global price increases, particularly in the Americas for copper-based preservatives, and increased volumes globally for these products[10](index=10&type=chunk) [Carbon Materials and Chemicals (CMC)](index=2&type=section&id=Carbon%20Materials%20and%20Chemicals%20(CMC)) CMC sales decreased by 11.0% to $132.4 million in Q4, primarily due to reduced market pricing, with $25.5 million lower sales prices across most products, including a 24.3% drop in carbon pitch prices globally. Adjusted EBITDA fell sharply to $3.8 million from $21.2 million, impacted by lower prices and a $2.8 million bad debt reserve, partially offset by reduced raw material costs CMC Q4 Performance | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $132.4 | $148.8 | -11.0% | | Adjusted EBITDA | $3.8 | $21.2 | -82.1% | | Adjusted EBITDA Margin | 2.9% | 14.2% | -11.3 pp | | Sales Price Decline Contribution | -$25.5 | N/A | N/A | | Carbon Pitch Price Decline | 24.3% | N/A | N/A | - The sales decline was driven by reduced market pricing across most products, partly offset by higher carbon pitch volumes[10](index=10&type=chunk) - Profitability decreased due to lower prices and a **$2.8 million** bad debt reserve, partially offset by reduced raw material costs and increased volumes, particularly in Europe[10](index=10&type=chunk) [Full-Year 2023 Segment Performance](index=2&type=section&id=Full-Year%202023%20Segment%20Performance) For the full year 2023, RUPS and PC segments achieved record sales and significant adjusted EBITDA growth, contributing to the company's overall strong performance. The CMC segment, however, experienced a decline in both sales and adjusted EBITDA [Railroad and Utility Products and Services (RUPS)_FY](index=2&type=section&id=Railroad%20and%20Utility%20Products%20and%20Services%20(RUPS)_FY) RUPS delivered record full-year sales of $897.9 million, a 13.9% increase, and adjusted EBITDA of $84.0 million, up from $53.6 million in the prior year, demonstrating strong annual growth RUPS Full-Year Performance | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $897.9 | $788.3 | 13.9% | | Adjusted EBITDA | $84.0 | $53.6 | 56.7% | | Adjusted EBITDA Margin | 9.4% | 6.8% | 2.6 pp | [Performance Chemicals (PC)_FY](index=2&type=section&id=Performance%20Chemicals%20(PC)_FY) PC reported full-year sales of $671.6 million, a 15.8% increase, and adjusted EBITDA of $123.1 million, significantly up from $75.5 million in the prior year, reflecting strong market demand and effective pricing strategies PC Full-Year Performance | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $671.6 | $579.9 | 15.8% | | Adjusted EBITDA | $123.1 | $75.5 | 63.0% | | Adjusted EBITDA Margin | 18.3% | 13.0% | 5.3 pp | [Carbon Materials and Chemicals (CMC)_FY](index=2&type=section&id=Carbon%20Materials%20and%20Chemicals%20(CMC)_FY) CMC sales for the full year totaled $584.7 million, a 4.5% decrease, and adjusted EBITDA declined to $49.3 million from $99.0 million in the prior year, indicating ongoing challenges in market pricing and demand CMC Full-Year Performance | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Sales | $584.7 | $612.3 | -4.5% | | Adjusted EBITDA | $49.3 | $99.0 | -50.2% | | Adjusted EBITDA Margin | 8.4% | 16.2% | -7.8 pp | [Consolidated Financials Overview](index=2&type=section&id=Consolidated%20Financials%20Overview) Koppers reported record consolidated sales of $2.15 billion for the full year 2023, an 8.8% increase. Net income attributable to Koppers rose to $89.2 million, and operating cash flows reached a record $146.1 million. Capital expenditures increased to $120.5 million Consolidated Full-Year Financials (2023 vs. 2022) | Metric | FY 2023 (Millions) | FY 2022 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Consolidated Sales | $2,150.0 | $1,980.0 | 8.8% | | Net Income Attributable to Koppers | $89.2 | $63.4 | 40.7% | | Adjusted Net Income Attributable to Koppers | $94.0 | $88.3 | 6.5% | | Diluted EPS | $4.14 | $2.98 | 38.9% | | Adjusted EPS | $4.36 | $4.14 | 5.3% | | Operating Cash Flows | $146.1 | $102.3 | 42.8% | | Capital Expenditures | $120.5 | $105.3 | 14.4% | [2023 Accomplishments](index=3&type=section&id=2023%20Accomplishments) In 2023, Koppers achieved several significant milestones, including record sales for the fifth consecutive year, record operating profit, and record operating cash flow exceeding $100 million for the fifth year. The company also recorded its second-highest diluted EPS from continuing operations and received recognition for its safety and sustainability efforts - Achieved record sales for the **5th straight year**, record operating profit, and record operating cash flow (exceeding **$100 million** for the **5th consecutive year**)[18](index=18&type=chunk) - Reported the **2nd highest diluted EPS** from continuing operations and the **2nd best-ever safety rate**[18](index=18&type=chunk) - Recognized on Newsweek's list of Most Responsible Companies for the third year and USA Today's inaugural list of America's Climate Leaders[18](index=18&type=chunk) [2024 Outlook](index=3&type=section&id=2024%20Outlook) Koppers projects 2024 sales of approximately **$2.25 billion** and adjusted EBITDA of **$275 million**, driven by pricing benefits and facility efficiencies, with early 2024 results anticipated to be softer [Financial Projections](index=3&type=section&id=Financial%20Projections) Koppers projects 2024 sales of approximately $2.25 billion, an increase from $2.15 billion in 2023, and anticipates adjusted EBITDA of approximately $275 million, up from $256.4 million. Adjusted EPS is forecasted to be in the range of $4.60 to $4.80 per share, with operating cash flows expected around $150 million, excluding pension termination impact 2024 Financial Outlook vs. 2023 Actuals | Metric | 2024 Outlook (Approx. Millions) | 2023 Actuals (Millions) | Change (%) | | :-------------------------------- | :------------------------------ | :---------------------- | :--------- | | Sales | $2,250.0 | $2,150.0 | 4.7% | | Adjusted EBITDA | $275.0 | $256.4 | 7.2% | | Adjusted EPS | $4.60 - $4.80 | $4.36 | 5.5% - 10.1% | | Operating Cash Flows (excl. pension) | $150.0 | $146.1 | 2.7% | | Capital Expenditures | $100.0 | $120.5 | -17.0% | | Effective Tax Rate (Adjusted Net Income) | 28% | Slightly below 28% | N/A | - The company is pursuing a termination of its U.S. qualified pension plan, targeting completion in Q4 2024, which will require an estimated **$25 million** in funding impacting operating cash flow[14](index=14&type=chunk) [Strategic Drivers & CEO Commentary](index=3&type=section&id=Strategic%20Drivers%20%26%20CEO%20Commentary) CEO Leroy Ball expressed confidence in meeting 2024 targets, contingent on stable to slightly increased demand across segments. Key drivers for the projected 7% increase in adjusted EBITDA include carry-over pricing benefits, contributions from the new Leesville, Louisiana facility, and full-year cost efficiencies from the North Little Rock, Arkansas facility. Softer results are anticipated in early 2024 due to strong prior-year comps, carbon market recovery, and winter storm impacts - Factors driving the **7% increase** in adjusted EBITDA include carry-over pricing benefits from the prior year, contributions from the Leesville, Louisiana facility, and full-year cost efficiencies from the North Little Rock, Arkansas treating facility[16](index=16&type=chunk) - Anticipates softer results in early 2024 compared to strong Q1 2023, as the company emerges from the bottom of the carbon markets cycle and recovers from intense winter storm activity in the U.S[16](index=16&type=chunk) [Investor Information & Company Profile](index=3&type=section&id=Investor%20Information%20%26%20Company%20Profile) This section provides details on Koppers' investor conference call and an overview of the company's global operations as a provider of treated wood products, chemicals, and carbon compounds [Investor Conference Call Details](index=3&type=section&id=Investor%20Conference%20Call%20Details) Koppers management hosted a conference call on February 28, 2024, to discuss the quarter's results, with presentation materials available on their website. An audio replay was made available until May 28, 2024 - A conference call was held on February 28, 2024, at 11:00 a.m. Eastern Time, with presentation materials available on www.koppers.com[17](index=17&type=chunk) - An audio replay was available until May 28, 2024, via specified toll-free and international numbers[19](index=19&type=chunk) [About Koppers](index=5&type=section&id=About%20Koppers) Koppers Holdings Inc., headquartered in Pittsburgh, Pennsylvania, is a global provider of treated wood products, wood treatment chemicals, and carbon compounds. Its products serve diverse end markets including railroad, utility, and construction, through a global manufacturing and distribution network across North America, South America, Australasia, and Europe - Koppers is an integrated global provider of treated wood products, wood treatment chemicals, and carbon compounds[19](index=19&type=chunk) - Products and services are used in niche applications across diverse end markets such as railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries[19](index=19&type=chunk) - Operates through a global manufacturing and distribution network with facilities in North America, South America, Australasia, and Europe[19](index=19&type=chunk) [Non-GAAP Financial Measures & Safe Harbor](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Safe%20Harbor) This section explains Koppers' use of non-GAAP financial measures for performance assessment and includes a safe harbor statement regarding forward-looking statements and associated risks [Non-GAAP Financial Measures Explanation](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Koppers utilizes non-GAAP financial measures like adjusted EBITDA, adjusted net income, and adjusted EPS to provide investors with a clearer understanding of its operational performance and trends. These measures are used internally for performance assessment and incentive plans, but are not intended as alternatives to GAAP measures and should be read in conjunction with them - Adjusted EBITDA, adjusted net income, and adjusted EPS are used to help investors understand underlying operational performance, business trends, and facilitate comparisons[20](index=20&type=chunk) - These non-GAAP measures are used internally by management and for incentive plans, but should not be considered an alternative to GAAP measures[20](index=20&type=chunk)[21](index=21&type=chunk) - Reconciliations of non-GAAP financial measures to comparable GAAP measures are provided in attached tables[22](index=22&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements subject to various risks and uncertainties, including changes in commodity prices, economic conditions, supply chain disruptions, and regulatory changes. Koppers disclaims any obligation to update these statements to reflect future events or circumstances - Statements in the press release are 'forward-looking statements' subject to risks and uncertainties, including those related to sales levels, profitability, and cash outflows[23](index=23&type=chunk)[24](index=24&type=chunk) - Factors that might affect forward-looking statements include changes in commodity prices (oil, copper), general economic conditions, intellectual property protection, debt ratings, supply chain disruptions, and international economic/political conditions[25](index=25&type=chunk) - Koppers undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the release date[25](index=25&type=chunk) [Unaudited Financial Statements](index=7&type=section&id=Unaudited%20Financial%20Statements) This section presents Koppers' unaudited consolidated statements of operations, balance sheet, cash flows, segment information, and non-GAAP reconciliations for the reported periods [Consolidated Statement of Operations](index=7&type=section&id=Consolidated%20Statement%20of%20Operations) The unaudited consolidated statement of operations details Koppers' financial performance for the three months and year ended December 31, 2023 and 2022, showing net sales, cost of sales, operating profit, net income, and earnings per share KOPPERS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in millions, except share and per share amounts) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :---------------------- | :---------------------- | | Net sales | $513.2 | $482.6 | $2,154.2 | $1,980.5 | | Cost of sales | $416.7 | $406.5 | $1,729.7 | $1,635.9 | | Operating profit | $37.2 | $27.6 | $195.2 | $137.7 | | Net income attributable to Koppers | $12.9 | $13.8 | $89.2 | $63.4 | | Diluted Earnings per common share | $0.59 | $0.65 | $4.14 | $2.98 | [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) The unaudited consolidated balance sheet presents Koppers' financial position as of December 31, 2023, and 2022, detailing assets, liabilities, and equity. Total assets increased to $1,835.5 million in 2023 from $1,711.4 million in 2022 KOPPERS HOLDINGS INC. UNAUDITED CONSOLIDATED BALANCE SHEET (Dollars in millions) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Total assets | $1,835.5 | $1,711.4 | | Total liabilities | $1,332.5 | $1,308.4 | | Total Koppers shareholders' equity | $498.9 | $399.4 | | Cash and cash equivalents | $66.5 | $33.3 | | Inventories, net | $395.7 | $355.7 | | Long-term debt | $835.4 | $817.7 | [Consolidated Statement of Cash Flows](index=9&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) The unaudited consolidated statement of cash flows outlines the cash generated and used by Koppers for operating, investing, and financing activities for the years ended December 31, 2023, and 2022. Net cash provided by operating activities increased significantly to $146.1 million in 2023 KOPPERS HOLDINGS INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in millions) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :------------------------------------ | :---------------------- | :---------------------- | | Net cash provided by operating activities | $146.1 | $102.3 | | Net cash used in investing activities | ($116.0) | ($114.8) | | Net cash provided by financing activities | $2.6 | $4.8 | | Net increase (decrease) in cash | $33.2 | ($12.2) | | Cash and cash equivalents at end of period | $66.5 | $33.3 | | Capital expenditures | ($120.5) | ($105.3) | [Segment Information](index=10&type=section&id=Segment%20Information) The unaudited segment information provides a breakdown of net sales, adjusted EBITDA, and adjusted EBITDA margins for Koppers' three business segments (RUPS, PC, and CMC) for both the fourth quarter and full year 2023 and 2022 UNAUDITED SEGMENT INFORMATION (Dollars in millions) | Segment | Q4 2023 Sales | Q4 2022 Sales | FY 2023 Sales | FY 2022 Sales | | :-------------------------------- | :-------------- | :-------------- | :------------ | :------------ | | Railroad and Utility Products and Services | $216.4 | $193.0 | $897.9 | $788.3 | | Performance Chemicals | $164.4 | $140.8 | $671.6 | $579.9 | | Carbon Materials and Chemicals | $132.4 | $148.8 | $584.7 | $612.3 | | **Total Net Sales** | **$513.2** | **$482.6** | **$2,154.2** | **$1,980.5** | | Segment | Q4 2023 Adj. EBITDA | Q4 2022 Adj. EBITDA | FY 2023 Adj. EBITDA | FY 2022 Adj. EBITDA | | :-------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Railroad and Utility Products and Services | $20.7 | $13.3 | $84.0 | $53.6 | | Performance Chemicals | $29.4 | $17.6 | $123.1 | $75.5 | | Carbon Materials and Chemicals | $3.8 | $21.2 | $49.3 | $99.0 | | **Total Adjusted EBITDA** | **$53.9** | **$52.1** | **$256.4** | **$228.1** | | Segment | Q4 2023 Adj. EBITDA Margin | Q4 2022 Adj. EBITDA Margin | FY 2023 Adj. EBITDA Margin | FY 2022 Adj. EBITDA Margin | | :-------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Railroad and Utility Products and Services | 9.6% | 6.9% | 9.4% | 6.8% | | Performance Chemicals | 17.9% | 12.5% | 18.3% | 13.0% | | Carbon Materials and Chemicals | 2.9% | 14.2% | 8.4% | 16.2% | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP net income to non-GAAP adjusted EBITDA, and net income attributable to Koppers to adjusted net income attributable to Koppers and adjusted diluted EPS, for both the fourth quarter and full year periods [Net Income to Adjusted EBITDA Reconciliation](index=10&type=section&id=Net%20Income%20to%20Adjusted%20EBITDA%20Reconciliation) The reconciliation shows the adjustments made to net income to arrive at adjusted EBITDA, including interest expense, depreciation and amortization, income tax provision, and specific non-recurring items like LIFO expense and mark-to-market commodity hedging UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (Dollars in millions) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net income | $13.0 | $13.8 | $89.8 | $63.2 | | Interest expense | $17.7 | $12.5 | $71.0 | $44.8 | | Depreciation and amortization | $14.3 | $11.6 | $57.0 | $56.1 | | Income tax provision | $6.7 | $1.9 | $34.8 | $31.6 | | LIFO expense | $2.7 | $12.8 | $6.0 | $25.6 | | Mark-to-market commodity hedging | ($0.5) | ($2.5) | ($0.5) | $6.5 | | **Adjusted EBITDA** | **$53.9** | **$52.1** | **$256.4** | **$228.1** | [Net Income Attributable to Koppers to Adjusted Net Income and EPS Reconciliation](index=11&type=section&id=Net%20Income%20Attributable%20to%20Koppers%20to%20Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) This reconciliation details the adjustments from net income attributable to Koppers to adjusted net income and adjusted diluted EPS, accounting for items such as LIFO expense, impairment costs, and the tax impact of these adjustments UNAUDITED RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO KOPPERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO KOPPERS AND DILUTED EARNINGS PER SHARE AND ADJUSTED EARNINGS PER SHARE (Dollars in millions, except share and per share amounts) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Net income attributable to Koppers | $12.9 | $13.8 | $89.2 | $63.4 | | LIFO expense | $2.7 | $12.8 | $6.0 | $25.6 | | Impairment, restructuring, plant closure costs | $0.0 | $0.8 | $0.1 | $1.0 | | Mark-to-market commodity hedging | ($0.5) | ($2.5) | ($0.5) | $6.5 | | Income tax on adjustments | ($0.6) | ($3.1) | ($1.8) | ($7.6) | | **Adjusted net income attributable to Koppers** | **$14.5** | **$23.0** | **$94.0** | **$88.3** | | Diluted earnings per share | $0.59 | $0.65 | $4.14 | $2.98 | | **Adjusted earnings per share** | **$0.67** | **$1.09** | **$4.36** | **$4.14** |

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, 2023 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- ...

ii → ㎡ KOPPERS ) K 2 Executive Officer Formal Presentations & Remarks: 8:30 a.m. to 10:30 a.m. Central Time (9:30 a.m. to 11:30 a.m. Eastern Time) Wednesday, September 13, 2023, 6:40 p.m. Central Time For any questions, please contact KOP@christensenir.com · 480-614-3012 Q2 2023 Summary of Key Metrics 5 25% ▪ UIP Leadership: Completed Foundations and Observations Training ✓ YTD 6/30/23, UIP recordable injury rate decreased ~75% from prior year ▪ Zero Harm key elements discussed globally on monthly "Toolbox ...

[PART I—FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) Presents Koppers Holdings Inc.'s unaudited condensed consolidated financial statements and related notes [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Koppers Holdings Inc.'s unaudited condensed consolidated financial statements, including the statements of operations, balance sheets, and cash flows for the periods ended June 30, 2023, and December 31, 2022 [Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)](index=2&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) Details Koppers Holdings Inc.'s financial performance, including net sales, operating profit, and net income Three Months Ended June 30, 2023 vs. 2022 (in millions) | Metric | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Net sales | $577.2 | $502.5 | $74.7 | 14.9% | | Operating profit | $54.4 | $29.1 | $25.3 | 86.9% | | Income from continuing operations | $24.4 | $11.6 | $12.8 | 110.3% | | Net income attributable to Koppers | $24.5 | $11.7 | $12.8 | 109.4% | | Diluted EPS (Continuing operations) | $1.15 | $0.55 | $0.60 | 109.1% | | Comprehensive income (loss) attributable to Koppers | $19.0 | $(38.6) | $57.6 | 149.2% | Six Months Ended June 30, 2023 vs. 2022 (in millions) | Metric | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | Net sales | $1,090.6 | $961.8 | $128.8 | 13.4% | | Operating profit | $104.7 | $67.3 | $37.4 | 55.6% | | Income from continuing operations | $50.6 | $30.9 | $19.7 | 63.8% | | Net income attributable to Koppers | $50.0 | $30.5 | $19.5 | 63.9% | | Diluted EPS (Continuing operations) | $2.34 | $1.44 | $0.90 | 62.5% | | Comprehensive income (loss) attributable to Koppers | $52.2 | $(18.1) | $70.3 | 388.4% | [Condensed Consolidated Balance Sheet](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) Provides a snapshot of Koppers Holdings Inc.'s financial position, including assets, liabilities, and equity As of June 30, 2023 vs. December 31, 2022 (in millions) | Metric | June 30, 2023 | Dec 31, 2022 | Change | % Change | | :-------------------------------- | :------------ | :----------- | :----- | :------- | | Total current assets | $713.5 | $636.8 | $76.7 | 12.1% | | Total assets | $1,815.7 | $1,711.4 | $104.3 | 6.1% | | Total current liabilities | $294.1 | $324.0 | $(29.9) | -9.2% | | Long-term debt | $902.2 | $817.7 | $84.5 | 10.3% | | Total liabilities | $1,359.1 | $1,308.4 | $50.7 | 3.9% | | Total Koppers shareholders' equity | $452.6 | $399.4 | $53.2 | 13.3% | | Total equity | $456.6 | $403.0 | $53.6 | 13.3% | [Condensed Consolidated Statement of Cash Flows](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) Outlines Koppers Holdings Inc.'s cash inflows and outflows from operating, investing, and financing activities Six Months Ended June 30, 2023 vs. 2022 (in millions) | Metric | 2023 | 2022 | Change | | :-------------------------------------- | :----- | :----- | :----- | | Net cash (used in) provided by operating activities | $(2.1) | $21.2 | $(23.3) | | Net cash used in investing activities | $(60.6) | $(51.1) | $(9.5) | | Net cash provided by financing activities | $78.6 | $28.5 | $50.1 | | Net increase (decrease) in cash and cash equivalents | $14.9 | $(5.1) | $20.0 | | Cash and cash equivalents at end of period | $48.2 | $40.4 | $7.8 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(Unaudited)) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Basis of Presentation](index=5&type=section&id=1.%20Basis%20of%20Presentation) Explains the accounting principles and assumptions used in preparing the interim financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, omitting some footnotes required for complete annual statements[10](index=10&type=chunk) - Management believes all necessary adjustments for fair presentation are included and are of a normal recurring nature[10](index=10&type=chunk) - Interim results are not necessarily indicative of full-year results due to seasonality[10](index=10&type=chunk) [2. New Accounting Pronouncements](index=5&type=section&id=2.%20New%20Accounting%20Pronouncements) Discusses the adoption and impact of recent accounting standards on the financial statements - The company adopted ASU No. 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method," in Q1 2023[12](index=12&type=chunk) - This ASU aims to simplify guidance for more accurate presentation of risk management activities[12](index=12&type=chunk) - Its adoption did not materially impact the financial statements, as the company primarily uses cash flow hedges[12](index=12&type=chunk) [3. Fair Value Measurements](index=5&type=section&id=3.%20Fair%20Value%20Measurements) Details the fair value of financial instruments and the methodologies used for their measurement Fair Value of Financial Instruments (in millions) | Instrument | June 30, 2023 (Fair Value) | June 30, 2023 (Carrying Value) | Dec 31, 2022 (Fair Value) | Dec 31, 2022 (Carrying Value) | | :----------------------- | :------------------------- | :--------------------------- | :------------------------ | :---------------------------- | | Investments and other assets | $1.3 | $1.3 | $1.3 | $1.3 | | Long-term debt | $927.4 | $915.7 | $801.1 | $825.3 | - The fair value of the Term Loan B is estimated based on market prices or current rates for similar maturities (Level 2)[14](index=14&type=chunk) - The Credit Facility's fair value approximates its carrying value due to its variable rate nature[14](index=14&type=chunk) - Investments and other assets represent broker-quoted cash surrender value on universal life insurance policies, classified as Level 2[14](index=14&type=chunk) [4. Comprehensive Income (Loss) and Equity](index=6&type=section&id=4.%20Comprehensive%20Income%20(Loss)%20and%20Equity) Presents components of comprehensive income and changes in Koppers shareholders' equity Comprehensive Income (Loss) Attributable to Koppers (in millions) | Period | 2023 | 2022 | Change | | :-------------------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $19.0 | $(38.6) | $57.6 | | Six Months Ended June 30 | $52.2 | $(18.1) | $70.3 | - Changes in other comprehensive income (loss) include currency translation adjustments, unrealized gains/losses on cash flow hedges, and unrecognized pension net loss[17](index=17&type=chunk) - For the three months ended June 30, 2023, currency translation adjustment was **$(2.2) million** (vs. $(26.5) million in 2022) and unrealized loss on cash flow hedges was **$(3.8) million** (vs. $(24.4) million in 2022)[17](index=17&type=chunk) - Total Koppers shareholders' equity increased from **$399.4 million** at December 31, 2022, to **$452.6 million** at June 30, 2023, driven by net income and employee stock plans, partially offset by dividends and stock repurchases[7](index=7&type=chunk)[19](index=19&type=chunk) [5. Earnings per Common Share](index=8&type=section&id=5.%20Earnings%20per%20Common%20Share) Explains the calculation of basic and diluted earnings per common share for continuing operations Earnings per Common Share – Continuing Operations | Period | Basic EPS (2023) | Basic EPS (2022) | Diluted EPS (2023) | Diluted EPS (2022) | | :-------------------------- | :--------------- | :--------------- | :----------------- | :----------------- | | Three Months Ended June 30 | $1.17 | $0.56 | $1.15 | $0.55 | | Six Months Ended June 30 | $2.40 | $1.47 | $2.34 | $1.44 | - The computation of basic EPS is based on weighted average common shares outstanding, while diluted EPS includes the effect of non-vested nonqualified stock options and restricted stock units[21](index=21&type=chunk)[22](index=22&type=chunk) - Antidilutive securities are excluded[21](index=21&type=chunk)[22](index=22&type=chunk) [6. Stock-based Compensation](index=9&type=section&id=6.%20Stock-based%20Compensation) Describes the company's stock-based incentive plans and the associated compensation expense - Stock-based compensation awards are granted under the 2005, 2018, and 2020 Long-Term Incentive Plans (LTIP), including stock options, restricted stock units (RSUs), and performance stock units (PSUs)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - RSUs generally vest in three or four equal annual installments, while PSUs have three-year vesting periods based on performance or market conditions[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) Stock-based Compensation Expense Recognized (in millions) | Period | 2023 | 2022 | Change | | :----------------------------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $3.8 | $3.2 | $0.6 | | Six Months Ended June 30 | $7.8 | $6.7 | $1.1 | - As of June 30, 2023, total future compensation expense for non-vested stock-based arrangements is **$25.4 million**, expected to be recognized over approximately **25 months**[34](index=34&type=chunk) [7. Segment Information](index=11&type=section&id=7.%20Segment%20Information) Provides financial data and performance metrics for Koppers' three reportable business segments - Koppers operates three reportable segments: Railroad and Utility Products and Services (RUPS), Performance Chemicals (PC), and Carbon Materials and Chemicals (CMC)[35](index=35&type=chunk) - Each segment manufactures and distributes distinct products with different production processes[35](index=35&type=chunk) Revenues from External Customers (in millions) | Segment | Q2 2023 | Q2 2022 | Q2 Change | YTD 2023 | YTD 2022 | YTD Change | | :----------------------------------- | :------ | :------ | :-------- | :------- | :------- | :--------- | | RUPS | $234.4 | $204.2 | $30.2 | $447.5 | $387.6 | $59.9 | | PC | $180.9 | $149.6 | $31.3 | $327.8 | $286.0 | $41.8 | | CMC | $161.9 | $148.7 | $13.2 | $315.3 | $288.2 | $27.1 | | **Total** | **$577.2** | **$502.5** | **$74.7** | **$1,090.6** | **$961.8** | **$128.8** | Adjusted EBITDA (in millions) | Segment | Q2 2023 | Q2 2022 | Q2 Change | YTD 2023 | YTD 2022 | YTD Change | | :----------------------------------- | :------ | :------ | :-------- | :------- | :------- | :--------- | | RUPS | $22.3 | $13.2 | $9.1 | $38.1 | $24.8 | $13.3 | | PC | $32.3 | $20.4 | $11.9 | $58.6 | $41.2 | $17.4 | | CMC | $15.7 | $21.0 | $(5.3) | $35.1 | $41.2 | $(6.1) | | **Total Adjusted EBITDA** | **$70.3** | **$54.6** | **$15.7** | **$131.8** | **$107.2** | **$24.6** | [8. Income Taxes](index=13&type=section&id=8.%20Income%20Taxes) Details the company's effective income tax rates, unrecognized tax benefits, and related tax matters Estimated Annual Effective Income Tax Rate | Period | 2023 | 2022 | | :------------------- | :----- | :----- | | June 30 | 28.1% | 34.3% | - The effective income tax rates for Q2 2023 and YTD 2023 were **28.9%** and **28.1%**, respectively, slightly higher than the estimated annual effective rate due to various discrete items[46](index=46&type=chunk) - The prior year's higher effective tax rate was influenced by higher estimated non-deductible expenses, particularly interest expense[46](index=46&type=chunk) - Unrecognized tax benefits totaled **$1.5 million** as of June 30, 2023, and **$1.4 million** as of December 31, 2022[49](index=49&type=chunk)[50](index=50&type=chunk) - The company does not anticipate material changes to these amounts within the next twelve months[49](index=49&type=chunk)[50](index=50&type=chunk) [9. Inventories, net](index=14&type=section&id=9.%20Inventories,%20net) Presents the breakdown and valuation of Koppers' inventories, including raw materials and finished goods Net Inventories (in millions) | Category | June 30, 2023 | Dec 31, 2022 | | :--------------- | :------------ | :----------- | | Raw materials | $341.4 | $318.5 | | Work in process | $10.1 | $10.2 | | Finished goods | $125.5 | $130.4 | | **Total** | **$477.0** | **$459.1** | | Less revaluation to LIFO | $103.9 | $103.4 | | **Net** | **$373.1** | **$355.7** | [10. Property, Plant and Equipment](index=14&type=section&id=10.%20Property,%20Plant%20and%20Equipment) Details the company's property, plant, and equipment, net of accumulated depreciation Property, Plant and Equipment (in millions) | Category | June 30, 2023 | Dec 31, 2022 | | :---------------------- | :------------ | :----------- | | Land | $18.2 | $15.0 | | Buildings | $80.0 | $80.3 | | Machinery and equipment | $954.5 | $924.1 | | **Total** | **$1,052.7** | **$1,019.4** | | Less accumulated depreciation | $457.8 | $462.1 | | **Net** | **$594.9** | **$557.3** | [11. Pensions and Post-Retirement Benefit Plans](index=14&type=section&id=11.%20Pensions%20and%20Post-Retirement%20Benefit%20Plans) Describes the company's defined benefit and contribution plans and associated costs - Koppers maintains defined benefit and defined contribution plans for employees in the U.S. and internationally[53](index=53&type=chunk) - Most U.S. qualified and non-qualified defined benefit plans are closed to new participants and frozen[53](index=53&type=chunk) - In 2021, the company entered a buy-in bulk annuity insurance policy for its UK defined benefit plan, with the pension obligation expected to be irrevocably settled by late 2023, leading to an estimated pre-tax pension settlement loss of approximately **$20 million**[54](index=54&type=chunk)[55](index=55&type=chunk) Net Periodic Benefit Cost for Pension Plans (in millions) | Component | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------------ | :------ | :------ | :------- | :------- | | Service cost | $0.4 | $0.3 | $0.8 | $0.6 | | Interest cost | $2.0 | $1.5 | $4.1 | $2.9 | | Expected return on plan assets | $(1.8) | $(1.9) | $(3.5) | $(3.9) | | Amortization of net loss | $0.6 | $0.4 | $1.1 | $0.9 | | **Net periodic benefit cost** | **$1.2** | **$0.3** | **$2.5** | **$0.5** | | Defined contribution plan expense | $2.4 | $2.3 | $4.9 | $4.8 | [12. Debt](index=15&type=section&id=12.%20Debt) Summarizes Koppers' debt structure, including credit facilities, term loans, and interest rate management Debt Summary (in millions) | Debt Type | Weighted Average Interest Rate | Maturity | June 30, 2023 | Dec 31, 2022 | | :---------------------- | :----------------------------- | :------- | :------------ | :----------- | | Credit Facility | 7.36% | 2027 | $528.4 | $325.3 | | Term Loan B | 8.56% | 2030 | $387.3 | $0.0 | | Senior Notes due 2025 | - | - | $0.0 | $500.0 | | **Total Debt** | | | **$915.7** | **$825.3** | | Long-term debt (net) | | | $902.2 | $817.7 | - On April 10, 2023, Koppers entered Amendment No. 1 to its Credit Facility, adding a new **$400.0 million** Term Loan B[62](index=62&type=chunk)[65](index=65&type=chunk) - Proceeds from the Term Loan B, along with cash on hand and existing Credit Facility capacity, were used on April 11, 2023, to redeem all outstanding **$500 million** Senior Notes due 2025[62](index=62&type=chunk)[65](index=65&type=chunk) - During the six months ended June 30, 2023, the company entered interest rate swap agreements with a notional value of **$150.0 million** related to the Term Loan B, effectively converting the variable rate to a weighted average fixed rate of **7.45%** for that portion[63](index=63&type=chunk)[66](index=66&type=chunk) - An additional **$100.0 million** swap was entered in Q3 2023, bringing the total notional value to **$250.0 million** at a weighted average fixed rate of **7.73%**[63](index=63&type=chunk)[66](index=66&type=chunk) [13. Asset Retirement Obligations](index=16&type=section&id=13.%20Asset%20Retirement%20Obligations) Details the company's liabilities for future asset retirement and environmental remediation costs - Asset retirement obligations include costs for residue removal, tank dismantling, railcar cleaning, and site demolition[67](index=67&type=chunk) - The balance of asset retirement obligations was **$15.3 million** at June 30, 2023, a slight decrease from **$15.5 million** at December 31, 2022[67](index=67&type=chunk) [14. Leases](index=16&type=section&id=14.%20Leases) Outlines the company's operating lease arrangements, right-of-use assets, and lease liabilities - Koppers recognizes lease obligations and right-of-use assets for non-cancelable operating leases, primarily for railcars, facilities, storage tanks, ships, production equipment, and vehicles[68](index=68&type=chunk) - Leases expiring within twelve months are excluded from balance sheet recognition[68](index=68&type=chunk) Operating and Variable Lease Costs (in millions) | Cost Type | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------ | :------ | :------ | :------- | :------- | | Operating lease costs | $7.1 | $7.2 | $13.8 | $14.7 | | Variable lease costs | $1.2 | $0.6 | $2.1 | $1.4 | Operating Lease Liabilities (in millions) | Metric | June 30, 2023 | Dec 31, 2022 | | :-------------------------------- | :------------ | :----------- | | Operating lease right-of-use assets | $84.1 | $86.3 | | Current operating lease liabilities | $21.7 | $20.5 | | Operating lease liabilities | $62.5 | $66.3 | | **Total operating lease liabilities** | **$84.2** | **$86.8** | | Weighted average remaining lease term | 5.2 years | 5.6 years | | Weighted average discount rate | 6.7% | 7.2% | [15. Derivative Financial Instruments](index=17&type=section&id=15.%20Derivative%20Financial%20Instruments) Explains the use of derivatives to manage commodity, foreign currency, and interest rate risks - Koppers uses derivative instruments to manage commodity price risk (copper), foreign currency exchange risk (U.S. dollar, Australian dollar), and interest rate risk[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Commodity swaps are used for forecasted purchases, typically hedging for up to **36 months**[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Foreign currency forward contracts manage receivable/payable balances and foreign-denominated sales[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Interest rate swaps convert variable-rate debt to fixed-rate debt[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) Net Fair Value of Outstanding Copper Swap Contracts (in millions) | Contract Type | June 30, 2023 | Dec 31, 2022 | | :-------------------------------------- | :------------ | :----------- | | Cash flow hedges | $(0.3) | $2.5 | | Contracts where hedge accounting not elected | $0.6 | $0.6 | | **Total Net Fair Value - Asset (Liability)** | **$0.3** | **$3.1** | - Unrealized gains, net of tax, for commodity price hedging and interest rate swaps of **$2.1 million** are estimated to be reclassified from other comprehensive income into earnings over the next twelve months[79](index=79&type=chunk) [16. Commitments and Contingent Liabilities](index=19&type=section&id=16.%20Commitments%20and%20Contingent%20Liabilities) Discloses the company's legal, environmental, and other potential financial obligations - Koppers is involved in litigation related to environmental laws, product liability, and other matters[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - This includes **27 pending coal tar pitch lawsuits** (**26 in Pennsylvania**, **1 in Tennessee**) claiming various illnesses, with plaintiffs seeking compensatory and, in most cases, punitive damages[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - No reserve has been provided due to inability to reasonably determine probability or amount of loss[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - The company is subject to environmental laws and regulations, incurring costs for compliance and potential claims for contamination[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Agreements with former owners, particularly Beazer East, indemnify Koppers Inc. against certain pre-Acquisition environmental and product liabilities, with qualified expenditures not subject to monetary limits[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Koppers Inc. is a Potentially Responsible Party (PRP) at the Portland Harbor and Newark Bay CERCLA sites[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - An accrual of **$4.0 million** has been recorded for estimated costs and de minimis settlement amounts at these sites, though actual costs could be materially higher[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Environmental remediation liabilities for acquired sites total **$3.9 million** in the U.S. and **$1.2 million** in Australia[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Koppers Holdings Inc.'s financial condition and results of operations for the three and six months ended June 30, 2023, compared to the prior year [Overview](index=22&type=section&id=Overview) Provides a general description of Koppers' businesses, products, and global operational footprint - Koppers is a leading integrated global provider of treated wood products, wood preservation chemicals, and carbon compounds, serving diverse end-markets like railroad, specialty chemical, utility, and construction[103](index=103&type=chunk) - The company operates through a global manufacturing and distribution network across North America, South America, Australasia, and Europe[103](index=103&type=chunk) - The three principal businesses are Railroad and Utility Products and Services (RUPS), Performance Chemicals (PC), and Carbon Materials and Chemicals (CMC)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - RUPS is a major supplier of wood crossties and utility poles in North America and Australia[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - PC is a global leader in wood preservation chemicals[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - CMC processes coal tar into products like creosote and carbon pitch for various industrial applications[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) [Non-GAAP Financial Measures](index=23&type=section&id=Non-GAAP%20Financial%20Measures) Explains the definition and purpose of non-GAAP financial measures used by management - Koppers uses non-GAAP financial measures, primarily Adjusted EBITDA, to analyze and manage business performance[107](index=107&type=chunk)[109](index=109&type=chunk) - Adjusted EBITDA is defined as net income from continuing operations before interest, income taxes, depreciation, amortization, and other adjustments (e.g., impairment, restructuring, LIFO, mark-to-market commodity hedging)[107](index=107&type=chunk)[109](index=109&type=chunk) - It is used internally by management and for incentive plans[107](index=107&type=chunk)[109](index=109&type=chunk) - While Adjusted EBITDA enhances understanding of operational performance, it should not be considered an alternative to GAAP measures and should be read in conjunction with relevant GAAP financial measures[108](index=108&type=chunk) [Outlook](index=23&type=section&id=Outlook) Presents management's expectations and factors influencing future business performance across segments [Trend Overview](index=23&type=section&id=Trend%20Overview) Discusses key external factors and market trends impacting the company's business results - Business results are influenced by global economic conditions, raw material pricing and availability (e.g., hardwood lumber, scrap copper, coal tar), oil price volatility, competitive conditions in carbon pitch markets, and foreign exchange rates[110](index=110&type=chunk) [Railroad and Utility Products and Services](index=23&type=section&id=Railroad%20and%20Utility%20Products%20and%20Services) Provides an outlook on demand, raw material costs, and strategic initiatives for the RUPS segment - North American crosstie demand is projected to be slightly lower in 2023 (**18.2 million**, down **1.3%**) but expected to recover in 2024 (**18.6 million**, up **2.4%**)[111](index=111&type=chunk) - Crosstie availability is improving due to easing pallet lumber demand and moderating prices[111](index=111&type=chunk) - Utility pole demand is expected to grow in 2023 due to replacement programs, grid hardening, and investments in EV charging and telecommunications[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - Raw material costs for poles and transportation costs may increase[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - The Infrastructure Investment and Jobs Act is expected to benefit the segment[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - The company is optimizing its RUPS business by evaluating opportunities to improve efficiencies, capture more volume through existing facilities, or consolidate its operating footprint, including modernizing its North Little Rock, Arkansas facility[117](index=117&type=chunk) [Performance Chemicals](index=24&type=section&id=Performance%20Chemicals) Discusses market conditions, consumer spending, and housing trends affecting the PC segment - PC product demand is linked to consumer spending on home repair and remodeling[119](index=119&type=chunk) - Existing-home sales declined **18.9%** year-over-year in June, but pending home sales saw a modest increase[119](index=119&type=chunk) - Housing inventory remains low, leading to firm home prices[119](index=119&type=chunk) - Annual expenditures for home improvements are projected to decline by **2.7%** through Q1 2024 and **5.9%** through mid-2024 due to high interest rates and softening house price appreciation[120](index=120&type=chunk) - However, lower pressure-treated lumber prices make outdoor residential projects more affordable[120](index=120&type=chunk) - Consumer confidence increased in June and July 2023, reaching its highest level since July 2021, driven by softening inflation and a favorable labor market outlook[121](index=121&type=chunk) [Carbon Materials and Chemicals](index=25&type=section&id=Carbon%20Materials%20and%20Chemicals) Presents the outlook for raw material availability and demand in the CMC segment's end-markets - The CMC business primarily produces creosote for railroad crossties and carbon pitch for the aluminum industry[122](index=122&type=chunk)[123](index=123&type=chunk) - Coal tar availability, the primary raw material, is linked to metallurgical coke production, which has been reduced due to weakening global steel demand (excluding Asia)[122](index=122&type=chunk)[123](index=123&type=chunk) - Koppers is mitigating coal tar supply decline by seeking market acceptance for petroleum blended products and investing in projects to increase distillation yields[123](index=123&type=chunk)[124](index=124&type=chunk) - A slowdown is anticipated in the near-term for manufacturing, steel, aluminum, and carbon black industries[123](index=123&type=chunk)[124](index=124&type=chunk) - Global light-vehicle sales are forecast to increase by **5.6%** in 2023 to **83.6 million units**, with production reaching **85.6 million units**, as supply chain issues normalize[124](index=124&type=chunk) - However, the near-term outlook is uncertain due to potential vehicle affordability issues and rapid inventory build-up[124](index=124&type=chunk) [Seasonality and Effects of Weather on Operations](index=25&type=section&id=Seasonality%20and%20Effects%20of%20Weather%20on%20Operations) Explains how seasonal patterns and weather conditions impact quarterly operating results - Quarterly operating results fluctuate due to factors like inclement weather, which can reduce operations and demand during winter months[125](index=125&type=chunk) - Historically, operating results are significantly lower in the first and fourth calendar quarters compared to the second and third quarters[125](index=125&type=chunk) [Results of Operations – Comparison of Three Months Ended June 30, 2023 and 2022](index=26&type=section&id=Results%20of%20Operations%20%E2%80%93%20Comparison%20of%20Three%20Months%20Ended%20June%2030,%202023%20and%202022) Analyzes consolidated and segment-specific financial performance for the second quarter [Consolidated Results](index=26&type=section&id=Consolidated%20Results) Provides a high-level analysis of Koppers' overall financial performance for the quarter Net Sales by Segment (Q2 2023 vs. Q2 2022, in millions) | Segment | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | RUPS | $234.4 | $204.2 | $30.2 | 15% | | PC | $180.9 | $149.6 | $31.3 | 21% | | CMC | $161.9 | $148.7 | $13.2 | 9% | | **Total** | **$577.2** | **$502.5** | **$74.7** | **15%** | - RUPS net sales increased by **$30.2 million** (**15%**) due to **$20.3 million** in pricing increases (crossties, domestic utility poles) and volume increases[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - PC net sales rose by **$31.3 million** (**21%**) from **$21.0 million** in global price increases (copper-based preservatives) and **8%** global volume growth[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - CMC net sales grew by **$13.2 million** (**9%**) due to **$7.2 million** in higher carbon pitch prices and increased refined tar volumes[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Cost of sales as a percentage of net sales decreased to **81%** in Q2 2023 from **83%** in Q2 2022, as global price increases outpaced raw material and operating cost increases[129](index=129&type=chunk) - Interest expense increased by **$9.2 million** due to higher interest rates and a **$1.6 million** write-off of debt issuance costs[131](index=131&type=chunk) [Segment Results](index=26&type=section&id=Segment%20Results) Details the financial performance and key drivers for each of Koppers' operating segments for the quarter Adjusted EBITDA by Segment (Q2 2023 vs. Q2 2022, in millions) | Segment | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | RUPS | $22.3 | $13.2 | $9.1 | 69% | | PC | $32.3 | $20.4 | $11.9 | 58% | | CMC | $15.7 | $21.0 | $(5.3) | -25% | | **Total Adjusted EBITDA** | **$70.3** | **$54.6** | **$15.7** | **29%** | - RUPS Adjusted EBITDA increased by **$9.1 million** (**69%**) due to net sales price increases and **$6.5 million** from improved plant utilization, partially offset by **$23.2 million** higher raw material and operating costs[133](index=133&type=chunk)[134](index=134&type=chunk) - PC Adjusted EBITDA rose by **$11.9 million** (**58%**) as price increases from renegotiated contracts more than offset **$12.5 million** in raw material cost increases[133](index=133&type=chunk)[134](index=134&type=chunk) - CMC Adjusted EBITDA decreased by **$5.3 million** (**-25%**) due to a **$17.2 million** increase in raw material costs, mainly in Europe and North America, partially offset by higher pricing and volumes in North America[135](index=135&type=chunk) [Results of Operations – Comparison of Six Months Ended June 30, 2023 and 2022](index=27&type=section&id=Results%20of%20Operations%20%E2%80%93%20Comparison%20of%20Six%20Months%20Ended%20June%2030,%202023%20and%202022) Analyzes consolidated and segment-specific financial performance for the first half of the year [Consolidated Results](index=27&type=section&id=Consolidated%20Results) Provides a high-level analysis of Koppers' overall financial performance for the six-month period Net Sales by Segment (YTD 2023 vs. YTD 2022, in millions) | Segment | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | RUPS | $447.5 | $387.6 | $59.9 | 15% | | PC | $327.8 | $286.0 | $41.8 | 15% | | CMC | $315.3 | $288.2 | $27.1 | 9% | | **Total** | **$1,090.6** | **$961.8** | **$128.8** | **13%** | - RUPS net sales increased by **$59.9 million** (**15%**) due to **$44.0 million** in pricing increases and higher crosstie volumes[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - PC net sales rose by **$41.8 million** (**15%**) from **$46.0 million** in global price increases and **$16.2 million** in Americas volume increases, partially offset by **$15.8 million** in international volume decreases[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - CMC net sales grew by **$27.1 million** (**9%**) primarily due to **$50.9 million** in higher carbon pitch prices, partially offset by volume decreases[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Cost of sales as a percentage of net sales decreased to **80%** in YTD 2023 from **82%** in YTD 2022[139](index=139&type=chunk) - Interest expense increased by **$13.4 million** due to higher interest rates and a **$1.6 million** write-off of debt issuance costs[142](index=142&type=chunk) [Segment Results](index=28&type=section&id=Segment%20Results) Details the financial performance and key drivers for each of Koppers' operating segments for the six-month period Adjusted EBITDA by Segment (YTD 2023 vs. YTD 2022, in millions) | Segment | 2023 | 2022 | Change | % Change | | :----------------------------------- | :----- | :----- | :----- | :------- | | RUPS | $38.1 | $24.8 | $13.3 | 54% | | PC | $58.6 | $41.2 | $17.4 | 42% | | CMC | $35.1 | $41.2 | $(6.1) | -15% | | **Total Adjusted EBITDA** | **$131.8** | **$107.2** | **$24.6** | **23%** | - RUPS Adjusted EBITDA increased by **$13.3 million** (**54%**) due to net sales price increases and **$10.4 million** from improved plant utilization, partially offset by **$44.4 million** higher raw material and operating costs[144](index=144&type=chunk) - PC Adjusted EBITDA rose by **$17.4 million** (**42%**) as price increases more than offset **$25.4 million** in raw material and SG&A cost increases[144](index=144&type=chunk) - CMC Adjusted EBITDA decreased by **$6.1 million** (**-15%**) due to a **$60.5 million** increase in raw material costs, mainly in North America and Europe, partially offset by higher global pricing and lower North American operating costs[145](index=145&type=chunk) [Cash Flow](index=29&type=section&id=Cash%20Flow) Analyzes the company's cash generation and usage from operating, investing, and financing activities - Net cash used in operating activities for the six months ended June 30, 2023, was **$2.1 million**, a decrease from **$21.2 million** provided in the prior year, primarily due to higher working capital usage of **$36.6 million**[147](index=147&type=chunk) - Net cash used in investing activities increased to **$60.6 million** from **$51.1 million** in the prior year, driven by capital expenditures, including investments in growth projects like the RUPS facility expansion in North Little Rock, Arkansas, and a yield enhancement project at the CMC facility in Nyborg, Denmark[148](index=148&type=chunk) - Net cash provided by financing activities increased to **$78.6 million** from **$28.5 million** in the prior year, reflecting net borrowings of **$90.1 million**, partially offset by debt issuance costs, common stock repurchases, and dividends[149](index=149&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's financial flexibility, available capital, and debt management strategies [Restrictions on Dividends to Koppers Holdings](index=29&type=section&id=Restrictions%20on%20Dividends%20to%20Koppers%20Holdings) Explains the limitations on dividend payments from Koppers Inc. to Koppers Holdings - Koppers Holdings relies on dividends from Koppers Inc. and its subsidiaries[150](index=150&type=chunk) - The Credit Facility permits Koppers Inc. to pay dividends to Koppers Holdings for regularly scheduled dividends and common stock repurchases, up to the greater of **$50.0 million** annually (with carryover) or **6.0%** of market capitalization[150](index=150&type=chunk) [Liquidity](index=29&type=section&id=Liquidity) Assesses the company's ability to meet its short-term and long-term financial obligations - As of June 30, 2023, Koppers had approximately **$301 million** of unused revolving credit availability under its Credit Facility, down from **$412 million** at December 31, 2022[151](index=151&type=chunk) - Cash needs for the next twelve months include debt service, pension funding, purchase commitments, operating leases, working capital, capital maintenance, plant consolidation, dividends, and share repurchases[152](index=152&type=chunk) - Capital expenditures for 2023 are projected at **$110-$120 million**, to be funded by cash from operations[152](index=152&type=chunk) - Liquidity is anticipated to be adequate for the next twelve months[152](index=152&type=chunk) [Debt Covenants](index=29&type=section&id=Debt%20Covenants) Details the financial covenants under the Credit Facility and the company's compliance status - Koppers is in compliance with all Credit Facility covenants[154](index=154&type=chunk)[155](index=155&type=chunk) - Key financial ratios include a total net leverage ratio not exceeding **5.0** (actual **3.3** at June 30, 2023) and a cash interest coverage ratio not less than **2.0** (actual **4.7** at June 30, 2023)[154](index=154&type=chunk)[155](index=155&type=chunk) [Legal Matters](index=30&type=section&id=Legal%20Matters) Refers to the detailed disclosures on legal proceedings in the financial statement notes - Legal proceedings information is incorporated by reference from Note 16 to the Condensed Consolidated Financial Statements[156](index=156&type=chunk) [Recently Issued Accounting Guidance](index=30&type=section&id=Recently%20Issued%20Accounting%20Guidance) Refers to the detailed disclosures on new accounting pronouncements in the financial statement notes - Information on recently issued accounting guidance is incorporated by reference from Note 2 to the Condensed Consolidated Financial Statements[157](index=157&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) States that there are no material changes to previously disclosed critical accounting policies - There have been no material changes to the critical accounting policies disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[158](index=158&type=chunk) [Environmental and Other Matters](index=30&type=section&id=Environmental%20and%20Other%20Matters) Refers to the detailed disclosures on environmental matters in the financial statement notes - Information on environmental and other matters is incorporated by reference from Note 16 to the Condensed Consolidated Financial Statements[159](index=159&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=30&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Provides insights into the company's exposure to market risks, particularly interest rate fluctuations [Interest Rate Sensitivity](index=30&type=section&id=Interest%20Rate%20Sensitivity) This section updates the disclosure on market risk, specifically regarding interest rate sensitivity - A **one percentage point increase** in interest rates would decrease earnings and cash flows by approximately **$7.0 million** over a twelve-month period, considering interest rate swap effects[161](index=161&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=30&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Describes the evaluation of the effectiveness of the company's disclosure controls and internal control over financial reporting [Effectiveness of Disclosure Controls and Procedures](index=30&type=section&id=Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) Management, with the CEO and CFO's participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2023, concluding they were effective - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[162](index=162&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the quarter ended June 30, 2023[162](index=162&type=chunk) [PART II—OTHER INFORMATION](index=30&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) Contains additional information not covered in the financial statements, including legal, risk, and exhibit details [ITEM 1. LEGAL PROCEEDINGS](index=30&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section incorporates by reference the legal proceedings information detailed in Note 16 to the Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 16 to the Condensed Consolidated Financial Statements[163](index=163&type=chunk) [ITEM 1A. RISK FACTORS](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates the risk factors previously disclosed in the Annual Report on Form 10-K, adding a new risk related to the failure of financial institutions or transactional counterparties - A new risk factor has been added concerning the potential adverse effects of financial institution failures or transactional counterparty distress on business operations, liquidity, financial condition, and results of operations[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - The company maintains domestic cash deposits exceeding FDIC insurance limits and foreign bank deposits that may be uninsured or partially insured, posing a risk of disruption to access to funds or impact on liquidity if banks fail[165](index=165&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=31&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable for the reporting period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=31&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable for the reporting period [ITEM 4. MINE SAFETY DISCLOSURES](index=31&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable for the reporting period [ITEM 5. OTHER INFORMATION](index=31&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that no directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023[170](index=170&type=chunk) [ITEM 6. EXHIBITS](index=31&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to benefit plans, restricted stock unit agreements, certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include Amendment to the Koppers Holdings Inc. Benefit Restoration Plan, Form of Restricted Stock Unit Issuance Agreement, Certifications of CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906), and Inline XBRL documents[171](index=171&type=chunk) [SIGNATURES](index=32&type=section&id=SIGNATURES) Confirms the official submission of the report by an authorized corporate officer [Signature of Authorized Officer](index=32&type=section&id=Signature%20of%20Authorized%20Officer) The report is duly signed on behalf of Koppers Holdings Inc. by Jimmi Sue Smith, Chief Financial Officer, on August 3, 2023 - The report was signed by Jimmi Sue Smith, Chief Financial Officer of Koppers Holdings Inc., on August 3, 2023[172](index=172&type=chunk)

[Part I - Financial Information](index=2&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) Comprehensive financial data including statements, management's analysis, market risk disclosures, and internal controls [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements for Q1 2023, showing significant growth in net sales and income, supported by detailed accounting notes [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Highlights Q1 2023 financial performance with increased net sales and income, alongside changes in assets and cash flow from operations Condensed Consolidated Statement of Operations | (Dollars in millions, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Net sales** | $513.4 | $459.3 | | **Operating profit** | $50.3 | $38.2 | | **Net income attributable to Koppers** | $25.5 | $18.8 | | **Diluted earnings per common share** | $1.19 | $0.87 | Condensed Consolidated Balance Sheet Highlights | (Dollars in millions) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $710.6 | $636.8 | | **Total assets** | $1,800.6 | $1,711.4 | | **Long-term debt** | $881.0 | $817.7 | | **Total liabilities** | $1,365.7 | $1,308.4 | | **Total equity** | $434.9 | $403.0 | Condensed Consolidated Statement of Cash Flows | (Dollars in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($15.3) | ($8.0) | | **Net cash used in investing activities** | ($28.5) | ($22.0) | | **Net cash provided by financing activities** | $56.8 | $33.4 | | **Net increase in cash and cash equivalents** | $13.1 | $3.7 | [Notes to Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, segment performance, debt refinancing, derivative activities, and contingent liabilities, including environmental remediation and litigation - Subsequent to the quarter end, on April 10, 2023, the company entered into a new **$400 million Term Loan B**, using the proceeds to redeem all outstanding **2025 Senior Notes**[61](index=61&type=chunk)[62](index=62&type=chunk) - The company utilizes derivative instruments to manage commodity price risk (copper), foreign currency risk, and interest rate risk, with the net fair value of outstanding copper swap contracts being a **$10.1 million asset** as of March 31, 2023[69](index=69&type=chunk)[74](index=74&type=chunk) - The company is involved in **27 pending lawsuits** with **51 plaintiffs** regarding alleged illnesses from exposure to coal tar pitch, with no reserve provided as the outcome is not reasonably determinable[79](index=79&type=chunk)[81](index=81&type=chunk) - As of March 31, 2023, the company has accrued **$10.8 million** for environmental remediation liabilities, with **$4.0 million** related to the Portland Harbor and Newark Bay CERCLA sites[94](index=94&type=chunk)[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analyzes Q1 2023 financial performance, focusing on sales drivers, segment profitability, market trends, liquidity, capital resources, and debt covenant compliance - The company is a global provider of treated wood products, wood preservation chemicals, and carbon compounds, serving railroad, utility, construction, and chemical industries[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Key market trends affecting the business include raw material pricing (coal tar, copper, lumber), oil price volatility, and global economic conditions impacting demand in end-markets like steel and aluminum[107](index=107&type=chunk) - The company expects **2023 capital expenditures** to be approximately **$110 to $120 million**, funded by cash from operations[144](index=144&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Details Q1 2023 consolidated net sales and adjusted EBITDA growth, driven by price increases across segments, with varying profitability trends Net Sales by Segment (Q1 2023 vs Q1 2022) | Segment | 2023 Sales ($M) | 2022 Sales ($M) | % Change | | :--- | :--- | :--- | :--- | | Railroad and Utility Products and Services | $213.1 | $183.4 | 16% | | Performance Chemicals | $146.9 | $136.4 | 8% | | Carbon Materials and Chemicals | $153.4 | $139.5 | 10% | | **Total** | **$513.4** | **$459.3** | **12%** | Adjusted EBITDA by Segment (Q1 2023 vs Q1 2022) | Segment | 2023 Adj. EBITDA ($M) | 2022 Adj. EBITDA ($M) | % Change | | :--- | :--- | :--- | :--- | | Railroad and Utility Products and Services | $15.8 | $11.6 | 36% | | Performance Chemicals | $26.3 | $20.9 | 26% | | Carbon Materials and Chemicals | $19.4 | $20.1 | -3% | | **Total** | **$61.5** | **$52.6** | **17%** | - RUPS profitability increased due to price increases that offset **$19.2 million** in higher raw material and operating costs[132](index=132&type=chunk) - PC profitability grew as price increases from renegotiated contracts more than offset **$10.9 million** in raw material cost increases and an **8.6% global volume decrease**[133](index=133&type=chunk) - CMC profitability decreased due to a **$39.8 million increase** in raw material costs, particularly in North America and Europe, which was not fully offset by higher pricing[134](index=134&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Examines cash flow from operations, available liquidity, debt covenant compliance, and the impact of post-quarter debt refinancing activities - Net cash used in operating activities increased to **$15.3 million** from **$8.0 million** in the prior year, mainly due to a **$11.6 million increase** in working capital usage[138](index=138&type=chunk) - As of March 31, 2023, the company had approximately **$400 million** of unused revolving credit availability and was in compliance with all debt covenants[143](index=143&type=chunk)[146](index=146&type=chunk) - Post-quarter end, the company redeemed its **2025 Notes** using proceeds from a new **$400M Term Loan B**, cash on hand, and additional borrowings under its revolving Credit Facility[143](index=143&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Assesses market risk, primarily interest rate exposure, detailing the impact of variable-rate debt and mitigation strategies like interest rate swaps - Following the redemption of the fixed-rate **2025 Notes** in April 2023, all of the company's debt consists of variable rate debt[151](index=151&type=chunk) - A one percentage point increase in interest rates would decrease annual earnings and cash flows by approximately **$8.0 million**, holding other variables constant[151](index=151&type=chunk) - The company entered into a **$100 million interest rate swap** to convert a portion of its variable-rate debt to a fixed rate of **7.478%**, expiring in April 2027[151](index=151&type=chunk) [Controls and Procedures](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms the effectiveness of disclosure controls and procedures, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[152](index=152&type=chunk) [Part II - Other Information](index=29&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) Presents additional disclosures including legal proceedings, updated risk factors, and details on share repurchase activities [Legal Proceedings and Risk Factors](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS%20and%20ITEM%201A.%20RISK%20FACTORS) Incorporates legal proceedings by reference and introduces a new risk factor related to potential financial institution failures - Legal proceedings disclosures from Note 16 are incorporated by reference[153](index=153&type=chunk) - A new risk factor was added regarding the failure of financial institutions, which could adversely affect the company's liquidity and financial condition due to uninsured deposits and counterparty risk on credit agreements and derivatives[155](index=155&type=chunk)[156](index=156&type=chunk) [Share Repurchases](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details Q1 2023 share repurchase activity, including the number of shares bought back and remaining authorization Share Repurchase Activity (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining ($M) | | :--- | :--- | :--- | :--- | | March 1 - March 31 | 112,705 | $32.39 | $68.3 | | **Total Q1 2023** | **112,705** | **$32.39** | **$68.3** |

Koppers Holdings Inc. (NYSE:KOP) Q4 2022 Earnings Conference Call February 27, 2023 11:00 AM ET Company Participants Quynh McGuire - VP-IR Leroy Ball - President and CEO Jimmi Sue Smith - CFO Conference Call Participants Liam Burke - B. Riley FBR Laurence Alexander - Jefferies Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. [Operator Instruction] Please note that this event is being recorded. I ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the fiscal year ended December 31, 2022 Commission file number 1-32737 KOPPERS HOLDINGS INC. (Exact name of registrant as specified in its charter) Pennsylvania 20-1878963 (State of incorporation) FORM 10-K (IRS Employer Identification No.) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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, 2022 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- ...