Koppers Holdings(KOP) - 2025 Q2 - Quarterly Results

Financial Highlights Koppers reported a 10.4% decrease in net sales to $504.8 million for Q2 2025, with net income falling 38.8% to $16.4 million, while adjusted metrics showed modest increases | Financial Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $504.8 million | $563.2 million | $(58.4) million | -10.4% | | Net Income | $16.4 million | $26.8 million | $(10.4) million | -38.8% | | Diluted EPS | $0.81 | $1.25 | $(0.44) | -35.2% | | Adjusted Net Income | $29.9 million | $29.2 million | $0.7 million | 2.4% | | Adjusted EPS | $1.48 | $1.36 | $0.12 | 8.8% | | Adjusted EBITDA | $77.1 million | $77.5 million | $(0.4) million | -0.5% | - CEO Leroy Ball noted that despite sluggish demand and lower top-line revenue, the company's performance was strong due to cost-saving actions from the 'Catalyst' transformation process, including an 11% reduction in the global employee base since April 2024 and the exit from the phthalic anhydride business[6] - Year-to-date capital expenditures were significantly lower at $26.4 million compared to $43.4 million in the prior year period, enabling debt reduction and capital return to shareholders through share repurchases and dividends[7][6] Business Segment Performance All three business segments experienced a decline in net sales, but adjusted EBITDA performance was mixed, with RUPS and CMC seeing significant increases while PC decreased | Segment Net Sales (Q2 2025) | Amount | vs. Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Railroad and Utility Products and Services | $250.4 million | $(3.5) million | -1.4% | | Performance Chemicals | $150.8 million | $(26.1) million | -14.8% | | Carbon Materials and Chemicals | $103.6 million | $(28.8) million | -21.8% | | Segment Adjusted EBITDA (Q2 2025) | Amount | vs. Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Railroad and Utility Products and Services | $31.6 million | $9.2 million | 41.1% | | Performance Chemicals | $28.7 million | $(15.6) million | -35.2% | | Carbon Materials and Chemicals | $16.8 million | $6.0 million | 55.6% | Railroad and Utility Products and Services (RUPS) RUPS net sales slightly decreased due to lower Class I crosstie volumes, but adjusted EBITDA surged by 41.1% driven by reduced expenses - Net sales decrease was driven by lower volumes from Class I crosstie customers and reduced activity in the crosstie recovery business[10] - Adjusted EBITDA increased significantly due to $7.7 million in lower raw material, SG&A, and freight expenses, along with net sales price increases[10] Performance Chemicals (PC) PC net sales dropped 14.8% due to volume decreases in the Americas, and adjusted EBITDA fell 35.2% impacted by higher raw material costs - The sales decline was primarily caused by a 15% volume decrease, mostly in the Americas, resulting from a shift in U.S. market share[10] - Adjusted EBITDA decreased due to higher raw material costs and lower sales volumes, despite being partly offset by $2.2 million in lower SG&A expenses[10] Carbon Materials and Chemicals (CMC) CMC net sales fell 21.8% due to discontinued phthalic anhydride production, but adjusted EBITDA grew 55.6% driven by cost reductions and favorable sales mix - The discontinuation of phthalic anhydride production led to a $20.4 million decrease in sales volume; lower volumes for carbon black feedstock and lower prices for carbon pitch also contributed to the sales decline[10] - Adjusted EBITDA increased due to $11.5 million in lower raw material, SG&A, and operating expenses, particularly in North America, and a favorable sales mix[10] 2025 Financial Outlook Koppers revised its full-year 2025 guidance downwards for sales and adjusted EBITDA due to soft demand, while maintaining operating cash flow projections | Metric | 2025 Forecast (Revised) | 2024 Actual | | :--- | :--- | :--- | | Net Sales | $1.9 - $2.0 billion | $2.09 billion | | Adjusted EBITDA | $250 - $270 million | $261.6 million | | Adjusted EPS | $4.00 - $4.60 | $4.11 | | Operating Cash Flow | $150 million | $119.4 million | | Capital Expenditures | $52 - $58 million | $77.4 million | - The company revised its sales and earnings forecast down due to the current competitive environment, global economic conditions, and ongoing geopolitical and supply chain uncertainty[9] - Despite the guidance revision, the midpoint of the adjusted EPS forecast represents an approximate 5% increase over 2024, with free cash flow in the second half planned primarily for debt reduction[12] - The 'Catalyst' transformation process is expected to help achieve a sustainable mid to high teens adjusted EBITDA margin in the next two to three years[13] Consolidated Financial Statements The unaudited consolidated financial statements show a significant drop in net income for the first six months of 2025, while operating cash flow improved Statement of Operations For Q2 2025, net sales and net income decreased, with a significant six-month impact from impairment and pension settlement charges | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Sales | $504.8 | $563.2 | | Operating Profit | $39.1 | $57.5 | | Net Income | $16.4 | $26.8 | | Diluted EPS | $0.81 | $1.25 | | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Sales | $961.3 | $1,060.8 | | Operating Profit | $66.1 | $92.1 | | Net Income | $2.5 | $39.8 | | Diluted EPS | $0.12 | $1.83 | Balance Sheet As of June 30, 2025, total assets slightly increased to $1,930.8 million, total liabilities remained stable, and total equity grew due to comprehensive loss changes | (In millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $708.0 | $680.6 | | Total Assets | $1,930.8 | $1,890.2 | | Total Current Liabilities | $272.3 | $325.8 | | Long-Term Debt | $962.9 | $925.9 | | Total Liabilities | $1,403.7 | $1,401.2 | | Total Equity | $527.1 | $489.0 | Statement of Cash Flows Net cash from operating activities improved to $27.8 million for the six-month period, while investing activities decreased significantly due to no acquisitions | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $27.8 | $14.9 | | Net cash used in investing activities | $(39.3) | $(141.6) | | Net cash provided by financing activities | $3.3 | $111.6 | | Net decrease in cash | $(5.5) | $(17.6) | Non-GAAP Reconciliations The report provides detailed reconciliations of GAAP net income and diluted EPS to adjusted non-GAAP measures, primarily accounting for impairment and restructuring charges Reconciliation of Net Income to Adjusted EBITDA Q2 2025 Net Income of $16.4 million was reconciled to Adjusted EBITDA of $77.1 million by adding back interest, taxes, D&A, and significant impairment/restructuring costs - Key adjustments to reconcile Q2 2025 Net Income to Adjusted EBITDA include adding back $17.3 million in interest, $18.0 million in D&A, $7.5 million in taxes, and a net $17.9 million in other adjustments[37] - The largest single adjustment for the quarter was $17.6 million related to impairment, restructuring, and plant closure costs[37] Reconciliation to Adjusted Net Income and Adjusted EPS For Q2 2025, GAAP Net Income of $16.4 million was adjusted by $13.5 million (net of tax) to reach Adjusted Net Income of $29.9 million, resulting in an Adjusted EPS of $1.48 | (Q2 2025) | GAAP | Adjustments (Net of Tax) | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Net Income | $16.4 million | $13.5 million | $29.9 million | | Diluted EPS | $0.81 | $0.67 | $1.48 | Supplementary Information This section includes standard corporate information, details for the investor conference call, and the required Safe Harbor Statement regarding forward-looking statements About Koppers Koppers is a global provider of treated wood products, wood preservation technologies, and carbon compounds, focusing on preserving key infrastructure elements - Koppers (NYSE: KOP) is a global provider of treated wood products, wood preservation technologies, and carbon compounds, focusing on infrastructure preservation[18] Investor Conference Call Information Koppers management will host a conference call on August 8, 2025, at 11:00 a.m. Eastern Time to discuss the second-quarter results - A conference call to discuss Q2 2025 results is scheduled for 11:00 a.m. Eastern Time on the day of the release[14] Safe Harbor Statement This statement cautions that the press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The release contains forward-looking statements subject to known and unknown risks, uncertainties, and contingencies that could cause actual results to differ materially[24][25] - Key risk factors include fluctuations in raw material prices, changes in commodity prices, international market conditions, and supply chain disruptions[26]