Koppers (NYSE: KOP) Conference Summary Company Overview - Koppers is positioned as a strong player in its industry, focusing on profitability and cash flow generation to create shareholder value [2][3] - The company has completed its "build phase" and is transitioning into a growth stage, aiming to leverage past capital investments for future cash flow [3] Key Business Segments 1. **Railroad Products and Services** - Focuses on manufacturing wooden cross-ties, primarily serving Class I railroads in North America [5] - Annual replacement demand for cross-ties is estimated at 18-20 million [12] 2. **Utility and Industrial Products** - Involves treating wooden utility poles, with a leading market presence in the U.S. and Australia [6] - Sells to eight of the ten largest utilities in the U.S. [6] 3. **Performance Chemicals** - Produces wood preservation chemicals, with a patented technology called MicroPro for residential lumber [7] - Generated $140 million in EBITDA last year, but saw a decline in margin from 22% to 18% due to market share shifts [10] 4. **Carbon Materials and Chemicals** - Produces carbon pitch and creosote, with a focus on vertical integration with the railroad business [8] Financial Performance - The railroad and utility pole segment generated EBITDA margins of just under 9% in 2024, projected to exceed 12% in 2025 [9] - The Performance Chemicals segment remains the most profitable, despite a slight decline in EBITDA margin [10] - Operating cash flow has consistently exceeded $100 million for seven years [18] Strategic Initiatives - The **Catalyst Initiative** aims to improve cash flow generation and operational efficiency, targeting $40 million in annual benefits [14][15] - The company is focused on maintaining recurring EBITDA margins above 15% and achieving 10% annual EPS growth [16] Market Dynamics - The utility pole market has over 140 million poles in service in the U.S., with 2-3 million needing replacement annually [11] - The railroad cross-tie market remains stable, with Class I railroads expected to resume maintenance spending [25] Shareholder Returns - Koppers has been active in share repurchases, buying back over $40 million in stock in 2024 and $33 million year-to-date [20] - The company has a quarterly dividend of $0.08, which has been increased by $0.01 annually since its reintroduction [19] Sustainability Focus - Koppers emphasizes sustainability through wood preservation, contributing to infrastructure and renewable resource utilization [17] Conclusion - Koppers is strategically positioned for growth with a focus on improving margins, generating cash flow, and returning value to shareholders through share buybacks and dividends [2][3][20]

Financial Performance - Q3 2025 sales were $485.3 million, a decrease of 12.4% compared to $554.3 million in Q3 2024[17, 85] - Adjusted EBITDA for Q3 2025 was $70.9 million, a decrease of 8.4% compared to $77.4 million in Q3 2024[20, 85] - The company generated approximately $50 million in cash flow during Q3 2025[9] - The company deployed $50 million to dividends, share buybacks, and debt reduction[9] Segment Performance - Railroad and Utility Products and Services (RUPS) sales decreased by 6.2%, from $248 million in Q3 2024 to $233 million in Q3 2025[17] - Performance Chemicals (PC) sales decreased by 18.3%, from $177 million in Q3 2024 to $144 million in Q3 2025[17] - Carbon Materials and Chemicals (CMC) sales decreased by 16.4%, from $130 million in Q3 2024 to $108 million in Q3 2025[17] Business Optimization and Market Dynamics - Year-to-date adjusted SG&A expenses decreased by 14% compared to the prior year[9] - The company reduced headcount for five consecutive quarters, with full-time employees (FTEs) 17% lower compared to April 2024[9] - Most end markets remain soft, with PC volumes down 5% in residential (excluding market share loss) and up 2.5% in industrial, Class I demand down 3% year-to-date, and CMC markets at a trough[9] - UIP volumes for Q3 2025 increased by 6.5% compared to the prior year[9] 2025 Guidance - The company forecasts sales of approximately $1.9 billion for 2025[70, 71] - Adjusted EBITDA is forecasted to be between $255 million and $260 million for 2025[72] - Adjusted EPS is forecasted to be between $4.00 and $4.15 for 2025[75]