Koppers (NYSE:KOP) 2025 Conference Transcript

Summary of Conference Call Company Overview - Company: Koppers - Segments: - Performance Chemicals (PC): Wood treatment production chemicals - Railroad and Utility Products and Services (RUPS): Treated and untreated wood products for railroads and utility poles - Carbon Materials and Chemicals (CMC): Leader in coal tar distillation and related products [1][1][1] Key Financial Insights - Cash Flow Guidance: - Cash interest for 2025 is projected at approximately $65 million, with a goal of achieving $100 million in free cash flow annually from 2026 to 2028 [3][3][3] - Cash taxes expected to be in the range of $15-$20 million, with incremental EBITDA growth of 25%-30% on top of that [4][4][4] - Working Capital: - Recent outflows due to business growth and inventory increases; no substantial inflow expected as business continues to grow [5][5][5] - Capital Expenditures (CapEx): - Guidance for normalized CapEx is around $55 million, with potential increases for significant growth projects [6][6][6] Segment Performance Performance Chemicals (PC) - 2025 Guidance: Expected decrease in EBITDA by $41 million-$43 million compared to 2024, primarily due to market share losses and fixed cost impacts [12][12][12] - Market Dynamics: Major customers have shifted to dual sourcing, impacting volume and EBITDA [13][14][14] - Product Competitiveness: The company’s MicroPro product is a gold standard for treating residential lumber, with competitors licensing this technology [16][16][16] Railroad and Utility Products and Services (RUPS) - 2025 EBITDA Guidance: Expected to be $28-$30 million, driven by improved margins in the rail business and cost structure adjustments [22][22][22] - Utility Poles Demand: Recent destocking has been positive, with signs of increased quoting activity and approvals in the market [24][24][24] - Geographic Expansion: Plans to expand westward, building infrastructure and supply chains to support growth in new markets [25][25][25] Carbon Materials and Chemicals (CMC) - 2025 Guidance: Expected increase in EBITDA by $8 million-$9 million, primarily driven by cost reductions rather than significant price improvements [28][28][28] - Market Conditions: The CMC market remains cautious, with a focus on improving cost structures to prepare for future demand [29][29][29] Risk Factors and Challenges - Copper Market Dislocation: The company faced challenges due to dislocation between LME and COMEX copper prices, impacting hedging effectiveness [17][18][18] - Pension Funding: The North America pension is substantially funded, with minor unresolved issues in Europe [11][11][11] Strategic Focus - Cost Management: Emphasis on controlling costs and improving operational efficiency across all segments to weather market cycles [29][29][29] - Future Outlook: The company is positioning itself for potential demand increases by enhancing its cost structure and operational capabilities [29][29][29]