Koppers Reports Fourth Quarter and Full-Year 2024 Results

Fourth-Quarter Sales of $477.0 Million vs. $513.2 Million in Prior Year Quarter

Full-Year Sales of $2.09 Billion vs. $2.15 Billion in Prior Year

Koppers Holdings Inc., an integrated global provider of treated wood products, wood treatment chemicals, and carbon compounds, reported net loss attributable to Koppers for the fourth quarter of 2024 of $10.2 million, or $0.50 per diluted share, compared to net income attributable to Koppers for the fourth quarter of 2023 of $12.9 million, or $0.59 per diluted share.

Adjusted net income attributable to Koppers and adjusted earnings per share (EPS) were $16.0 million, or $0.77 per share for the fourth quarter of 2024, compared to $14.5 million, or $0.67 per share in the prior year quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2024 were $55.2 million, compared with $53.9 million in the prior year quarter.

Consolidated sales of $477.0 million decreased by $36.2 million, or 7.1 percent, compared with $513.2 million in the prior year quarter.

The Railroad and Utility Products and Services (RUPS) business reported lower sales and profitability primarily as a result of lower volumes for Class I crossties and higher costs, despite fourth-quarter records in operating profit and adjusted EBITDA achieved by the domestic utility pole business.

The Performance Chemicals (PC) segment had decreased sales and slightly lower profitability primarily driven by lower volumes of preservatives and higher raw material costs; however, the segment saw improved margin due to cost savings initiatives.

The Carbon Materials and Chemicals (CMC) segment experienced a sales decline primarily driven by decreased prices across most products, while profitability increased due to lower raw material and overhead costs, as well as a bad debt reserve in the prior year period.

Chief Executive Officer Leroy Ball said, “While 2024 results fell short of our expectations for performance, I am proud of the many accomplishments of Koppers team members worldwide that enabled us to make continued progress on our journey of creating the foundation for a connected world through our diverse portfolio of leading products and services.  Record safety performance, continued advancements in sustainability, and financial performance in the final three quarters of the year that exceeded prior year in several key metrics are all highlights to build upon in 2025.  While a pullback in sales activity in the last six weeks of the year in all segments proved to be too much to overcome, the cost actions we began taking in the fourth quarter are setting us up nicely to weather the uncertainty ahead that’s brought on by the unpredictable economic and policy environment.”

Fourth Quarter Financial Performance

• RUPS reported fourth-quarter sales of $215.6 million, a decrease of $0.8 million, or 0.4 percent, compared to $216.4 million in the prior year quarter. The modest sales decrease was largely due to decreased volumes for Class I crossties, partly offset by 22.7 percent higher volumes of utility poles, primarily as a result of the acquisition of Brown Wood, and pricing increases across multiple markets, particularly commercial crossties and Australian utility poles. Adjusted EBITDA was $17.5 million, or 8.1 percent, compared with $20.7 million, or 9.6 percent, in the prior year quarter. Profitability decreased due primarily to higher raw material, operating and allocated selling, general and administrative costs, partly offset by sales price increases and insurance proceeds recognized in the current year period. The domestic utility pole business achieved fourth-quarter records in operating profit and adjusted EBITDA, which contributed favorably to the results.
• PC delivered sales of $147.9 million, a decrease of $16.5 million, or 10.0 percent, compared to sales of $164.4 million in the prior year quarter. Excluding an unfavorable foreign currency impact of $0.9 million, sales decreased by $15.6 million, or 9.5 percent, from the prior year quarter. The year-over-year sales reduction resulted primarily from lower volumes of residential and industrial preservatives, particularly in the Americas where total volumes were lower by 8.5 percent, while prices remained relatively flat. Adjusted EBITDA was $28.6 million, or 19.3 percent, compared with $29.4 million, or 17.9 percent, in the prior year quarter. Profitability was slightly lower due to volume decreases and higher raw material costs; however, the improved margin was the result of cost savings initiatives, including lower logistics and overhead expenses.
• Sales for CMC of $113.5 million decreased by $18.9 million, or 14.3 percent, compared to sales of $132.4 million in the prior year quarter. Excluding an unfavorable foreign currency impact of $1.6 million, sales decreased by $17.3 million, or 13.1 percent, from the prior year quarter. The sales decline was driven by reduced market pricing, with $11.3 million of lower sales prices across most products, including carbon pitch, where prices were down 8.1 percent globally, along with an 18 percent reduction in carbon pitch volumes, partly offset by higher volumes of other products. Adjusted EBITDA for the fourth quarter was $9.1 million, or 8.0 percent, compared with $3.8 million, or 2.9 percent, in the prior year quarter. The year-over-year profitability increase was due to lower raw material and allocated selling, general and administrative expenses in the fourth quarter as well as a bad debt reserve of $2.8 million recorded in the prior year period, partly offset by lower sales prices and volumes.

2024 Financial Performance

• Consolidated sales of $2.09 billion decreased $62 million, or 2.9 percent, compared to $2.15 billion in the prior year.
• RUPS delivered a record $942.7 million in sales for the year, an increase of $44.8 million, or 5.0 percent, compared to sales of $897.9 million in the prior year.  Adjusted EBITDA was $82.3 million, or 8.7 percent, compared with $84.0 million, or 9.4 percent, in the prior year.
• PC reported $651.6 million in sales for the year, a decrease of $20.0 million, or 3.0 percent, compared to sales of $671.6 million in the prior year.  Adjusted EBITDA was $142.7 million, or 21.9 percent, compared with $123.1 million, or 18.3 percent, in the prior year.
• Sales for CMC, totaling $497.8 million, decreased by $86.9 million, or 14.9 percent, compared to sales of $584.7 million in the prior year. Adjusted EBITDA was $36.6 million, or 7.4 percent, compared with $49.3 million, or 8.4 percent, in the prior year.
• Net income attributable to Koppers was $52.4 million, compared with $89.2 million in the prior year.  Adjusted net income attributable to Koppers was $87.5 million, compared with $94.0 million in the prior year.  Adjusted EBITDA was $261.6 million, compared with $256.4 million in the prior year.
• Diluted EPS was $2.46, compared with $4.14 in the prior year.  Adjusted EPS was $4.11, compared with $4.36 for the prior year.
• Operating cash flows were $119.4 million, compared with $146.1 million in the prior year.
• Capital expenditures were $77.4 million, compared with $120.5 million in the prior year. Net of insurance proceeds and cash provided from asset sales, capital expenditures were $74.0 million for the current year, compared with $116.0 million for the prior year.

2025 Outlook

After considering the current competitive environment, global economic conditions, as well as the ongoing uncertainty associated with geopolitical and supply chain challenges, Koppers expects 2025 sales of approximately $2.17 billion, compared with $2.09 billion in 2024. Adjusted EBITDA is anticipated to be approximately $280 million in 2025, compared with $261.6 million in 2024.

The effective tax rate for adjusted net income attributable to Koppers in 2025 is projected to be approximately 28 percent, consistent with the adjusted tax rate of 26 percent in 2024.  Accordingly, 2025 adjusted EPS is forecasted to be $4.75 per share, compared with $4.11 per share in 2024.

Koppers expects operating cash flow of approximately $150 million in 2025, compared with operating cash flow of $119.4 million in 2024, including any impact from planned pension terminations and other special items. The company completed the termination of its largest U.S. qualified pension plan in February 2025, which required additional funding of $1.6 million in 2024 and $13.9 million in 2025.

Koppers anticipates capital expenditures of approximately $65 million in 2025, with approximately $9 million allocated to discretionary growth projects, compared with $77.4 million in 2024.  The capital expenditure amounts include capitalized interest.

Commenting on the forecast, Mr. Ball said, “Our forecast for this year is our attempt at valuing what we know today with our best guess of how the next ten months will unfold in what is currently an extremely chaotic environment.  Tariffs and their follow-on impacts could potentially benefit or hurt Koppers profitability on the scale of tens of millions of dollars to the extent they go unmitigated.  Fortunately, we have several options to mitigate at least a good portion of the potential negative impact and have not baked any potential indirect positive benefits into our forecast.  Because of the heightened level of uncertainty that surrounds the economy in general, we are doubling down on bringing cost and efficiency benefits to realization as quickly as possible in order to buffer the unpredictability of the markets and create an organization transformed and aligned to higher performance.

“We have completed the heavy investment period of our growth strategy and are now poised to maximize the value of those investments in the form of increased earnings and free cash flow.  As a result, we will primarily direct that cash to reducing our debt and repurchasing shares as they remain undervalued, which will both be additive to earnings per share.”

Koppers does not provide reconciliations of guidance for adjusted EBITDA and adjusted EPS to comparable GAAP measures, in reliance on the unreasonable efforts exception.  Koppers is unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include, but are not limited to, restructuring and impairment charges, acquisition-related costs, mark-to-market commodity hedging, and LIFO adjustments that are difficult to forecast for a GAAP estimate and may be significant. Forward-looking statements, including the guidance above, are based upon current expectations and are subject to factors that could cause actual results to differ materially from those set forth below. Please see “Safe Harbor Statement” below for more information.

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About Koppers

Koppers, with corporate headquarters in Pittsburgh, Pennsylvania, is an integrated global provider of treated wood products, wood treatment chemicals, and carbon compounds.  Our products and services are used in a variety of niche applications in a diverse range of end markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries.  We serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, and Europe.  The stock of Koppers Holdings Inc. is publicly traded on the New York Stock Exchange under the symbol “KOP.”

Contact:

Ms. Jessica Franklin Black – Media Contact – BlackJF@koppers.com – (412) 227-2025

Source: Koppers Holdings, Inc.