Koppers Delivers Record Q2 Margin

Core Insights - Koppers reported a second quarter 2025 adjusted EBITDA of $77 million with a margin of 15.3% on sales of $505 million, reflecting a 10.4% year-over-year decline in consolidated sales [1] - The company announced a $0.32 per share annual dividend for 2025, marking a 14% increase year-over-year, while also reducing full-year sales and adjusted EBITDA guidance due to ongoing demand weakness [1] - Key strategies include cost discipline, balance sheet strengthening, and strategic actions aimed at reshaping Koppers' margin trajectory and business mix in the coming years [1] Financial Performance - SG&A expenses decreased by 13% year-to-date, and the workforce was reduced by 11% since April 2024, contributing to the first adjusted EBITDA margin above 15% in eight years [2][3] - Cash flow exceeded $50 million in the quarter, and capital expenditure run rate fell below $60 million for fiscal 2025, enhancing free cash flow capacity amid demand challenges [2] Strategic Initiatives - The Catalyst transformation program was launched to target sustainable margin expansion through process reengineering, technology upgrades, and workforce upskilling [4] - The Chief Operating Officer was appointed as Chief Transformation Officer to lead this multi-phase effort, with initial assessments indicating potential for mid to high teen EBITDA margins by the end of 2027 [4] Guidance and Market Outlook - Koppers revised its consolidated sales outlook to $1.9 billion to $2 billion for 2025, down from $2.1 billion in 2024, and adjusted EBITDA guidance to $250 million to $270 million for 2025, compared to $262 million in 2024 [6][8] - Management highlighted weaker residential end-markets for wood preservatives and persistent challenges in carbon materials, with no significant improvement expected in the second half of 2025 [7][8] - Full-year 2025 adjusted EPS guidance is set at $4.00 to $4.60, with expectations for strong free cash flow and a focus on debt reduction [9]