Koppers (KOP) Conference Summary - June 12, 2025 Company Overview - Koppers is a leading supplier in critical infrastructure products, particularly in the railroad and utility sectors, with significant market shares in North America and Australia [12][13] Key Points and Arguments Strategic Focus - Koppers has been implementing a strategy over the past five years aimed at improving profitability through internal projects, resulting in lower expected capital spending in the near term, which is anticipated to enhance cash flow [6][7] Market Leadership - The company holds a number one or two position in critical end markets, including railroad products and utility poles, supplying major utilities and railroads in North America [12][13] Product Portfolio - Koppers' product offerings include: - Railroad crossties, with a significant market share among Class 1 railroads in North America - Utility poles, supplying eight of the ten largest utilities in the U.S. - Performance chemicals for wood treatment, serving the top ten lumber treating companies in the U.S. [12][13][14] Financial Performance - In the first quarter, Koppers reported a decrease in top-line revenue by approximately $40 million, primarily due to reduced performance in the chemicals business, but managed to increase adjusted EBITDA by around $44 million [29][30] - The adjusted EBITDA margin improved to 12%, with a long-term goal of reaching mid-teens [31] Capital Expenditures and Debt Management - Capital expenditures are projected to be around $65 million for the year, down from over $100 million in previous years due to the completion of major projects [32] - The company is focused on debt reduction, with current debt around $909 million and a long-term leverage target of 2-3 times [33][55] Share Repurchase and Dividends - Koppers has a share repurchase program, having repurchased $15 million in stock in the first quarter, with plans for opportunistic buying [34][51] - The company has steadily increased its dividend, currently at 8 cents per quarter [35] Growth Drivers - The performance chemicals business is driven by repair and remodeling spending, which has remained strong despite inflation [36] - The carbon materials and chemicals segment is linked to the aluminum industry, with demand driven by overall economic strength [37] Market Dynamics - The railroad sector is experiencing increased volume driven by maintenance and repair needs, with a cyclical nature to spending [42][44] - Pricing dynamics in contracts with railroads and utility providers can limit price increases, but there is more flexibility in utility contracts [46][48] Market Perception - Koppers' diversified business model allows for steady earnings streams, which may not be fully recognized by the market [50] Additional Important Insights - The company has reduced its carbon materials and chemicals business from 11 plants to 3 core plants over the past decade due to changing market conditions [26] - The utility pole business has a significant replacement demand, with 2-3 million poles needing replacement annually [21] This summary encapsulates the key insights from the Koppers conference, highlighting the company's strategic direction, market position, financial performance, and growth opportunities.

Financial Data and Key Metrics Changes - The company reported a consolidated adjusted EBITDA growth of 26%, outpacing a 12% revenue growth in the first quarter of 2025, with a margin expansion of 190 basis points [6][21] - The net debt to adjusted EBITDA ratio was maintained at 2.9 times, with expectations to reduce leverage to a target of 2 to 2.5 times over the next twelve months [7][19] Business Line Data and Key Metrics Changes - **Construction Products**: Revenues increased by 5%, driven by the Stabola acquisition, but organic revenues declined by 6% due to lower freight revenues and divestitures [11][12] - **Engineered Structures**: Revenues increased by 23%, largely due to higher wind tower volumes and the inorganic impact from the Amaron acquisition, with adjusted segment EBITDA increasing by 90% [15][16] - **Transportation Products**: Revenues were up 6%, with adjusted segment EBITDA increasing by 13%, driven by higher tank barge volumes [17] Market Data and Key Metrics Changes - The aggregates business represented 69% of construction materials revenues, with average organic pricing up 7% year-over-year and total pricing up 10% due to the Stabola acquisition [10][12] - The company expects continued investment in U.S. infrastructure to benefit operations, with strong demand conditions in various end markets [8][9] Company Strategy and Development Direction - The company is focused on executing its strategic vision, with a commitment to reducing leverage and enhancing operational efficiency [5][7] - The integration of the Stabola acquisition is expected to contribute positively in the second quarter, with a strong outlook for construction products and engineered structures [20][23] - The company anticipates sustained demand growth in utility structures due to increased electrification and renewable energy needs [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving macroeconomic environment, citing strong demand in most end markets and solid visibility from backlogs [8][9] - The company expects a strong 2025, reiterating full-year guidance with anticipated revenue of $2.9 billion and adjusted EBITDA of $570 million, reflecting a 17% and 30% increase, respectively [21][22] Other Important Information - The company reaffirmed its capital expenditure guidance of $145 to $165 million for the full year, with a focus on maintenance CapEx [20] - Free cash flow for the quarter was negative $30 million, but management expects improvement in the second half of the year [20] Q&A Session Summary Question: Can you elaborate on the wind tower contribution to sales and profit dollars in the quarter? - Management highlighted strong demand and volume growth in utility structures, with the wind tower facility ramping up effectively, contributing positively to margins [36][38] Question: What are the expectations for the construction products business moving forward? - Management indicated no surprises in the Stabola operations, with good demand and orders expected to improve significantly in the second quarter [66][71] Question: How is the company managing pricing versus volume declines in aggregates? - The company is focusing on margin rather than volume, with local decision-making to balance cost absorption and pricing strategies [92][93] Question: What is the outlook for the housing market and its impact on the business? - Management expects stabilization and a potential recovery in the housing market in the second half of the year, although not a booming market [104][105]