Koppers Reports First Quarter 2024 Results; Provides Updated 2024 Outlook
Koppers Holdings Inc. reported First Quarter 2024 Results showing a net income of $13.0 million, or $0.59 per diluted share, a decrease from the prior year. Adjusted EPS was $0.62, a decline from $1.12 in the prior year. Consolidated net sales decreased by 3.1% to $497.6 million. The Railroad and Utility Products and Services business performed well, while the Performance Chemicals segment saw growth. However, the Carbon Materials and Chemicals segment experienced reduced market demand. The outlook for 2024 projects sales of $2.25 billion and adjusted EPS of $4.10 to $4.60 per share.
Railroad and Utility Products and Services business generated record first-quarter sales and higher profitability.
Performance Chemicals segment delivered strong sales and profitability in the first quarter.
Outlook for 2024 shows projected sales of approximately $2.25 billion, an increase from 2023.
Adjusted EBITDA anticipated to be around $265 million to $280 million in 2024.
Operating cash flows expected to be approximately $150 million in 2024.
Consolidated net sales decreased by 3.1% to $497.6 million in the first quarter of 2024.
Carbon Materials and Chemicals segment experienced reduced market demand and lower sales and profitability.
First Quarter Diluted EPS declined to $0.59 from $1.19 in the prior year quarter.
Adjusted EPS for the first quarter was $0.62, lower than $1.12 in the previous year quarter.
CMC reported a 20.2% decrease in sales compared to the prior year quarter.
Insights
Completed Acquisition of Brown Wood Preserving Company
First Quarter Sales of
First Quarter Diluted EPS of
Adjusted EPS of
Adjusted net income attributable to Koppers and adjusted earnings per share (EPS) were
Consolidated net sales of
The Railroad and Utility Products and Services (RUPS) business generated record first-quarter sales and higher year-over-year profitability as a result of higher crosstie volumes, pricing increases and improved plant utilization, which combined to more than offset higher expenses.
The Performance Chemicals (PC) segment delivered a strong first quarter in sales and profitability, driven by volume increases, primarily for copper-based preservatives in the
The Carbon Materials and Chemicals (CMC) segment experienced reduced market demand, with sales and profitability unfavorably impacted by price and volume decreases, as well as lower plant utilization in
Chief Executive Officer Leroy Ball said, "As projected, PC and RUPS showed year-over-year improvement in profitability, which was unfortunately negated by slumping CMC markets. Weather-related plant outages and higher costs early in the quarter ultimately became too much to overcome as end markets performed mostly as expected. Additionally, various unfavorable factors affected our rail maintenance-of-way businesses and created an additional unexpected earnings drag. A mixed market outlook and specific short-term customer challenges are causing us to be cautious about the remainder of 2024. Our team will continue to focus on the things that we can control, particularly actions related to cost reduction and free cash flow."
First Quarter Financial Performance
- RUPS delivered record first-quarter sales of
$225.1 million $12.0 million $213.1 million $0.6 million $12.6 million $9.6 million $8.1 million $17.7 million $15.8 million $3.7 million $10.6 million - PC generated first-quarter sales of
$150.1 million $3.2 million $146.9 million $0.2 million $3.4 million $6.8 million Americas , primarily for copper-based preservatives. These increases were partly offset by$3.3 million Americas andAustralasia . Adjusted EBITDA for the first quarter was$29.8 million $26.3 million - CMC reported first-quarter sales of
$122.4 million $31.0 million $153.4 million $1.7 million $29.3 million $28.6 million $11.5 million $4.0 million $19.4 million $18.6 million Europe andNorth America . - Capital expenditures for the first quarter of 2024 were
$26.3 million $30.4 million $25.8 million $28.5 million
2024 Outlook
Koppers continues to expand and optimize its business and make further progress on the company's strategic pillars toward its long-term financial goals. After considering global economic conditions, as well as the ongoing uncertainty associated with geopolitical and supply chain challenges, Koppers expects 2024 sales of approximately
The effective tax rate for adjusted net income attributable to Koppers in 2024 is projected to be approximately 28 percent, slightly above the adjusted tax rate in 2023. Accordingly, 2024 adjusted EPS is forecasted to be in the range of
Koppers expects operating cash flows of approximately
Koppers anticipates capital expenditures of approximately
Commenting on the forecast, Mr. Ball said, "Lower than originally forecast volumes for RUPS, driven by certain utility pole customers right sizing inventories and a temporary slowdown in project spend driven by the expectation of a higher interest rate environment persisting for a longer period of time, are expected to offset the contribution to this year's results from the Brown Wood acquisition. While CMC will show definite improvement the remainder of this year, it will be difficult to make up the first quarter gap that was created by its poor results without an upward turn in our end markets before year end. With that said, we are actively working on several initiatives in CMC that will result in long-term improvement but much of that will not materialize until 2025 at the earliest. On the plus side, our PC business overall is in good shape and expected to sustain its first quarter outperformance through the rest of this year.
"As always, our business has many moving parts that are constantly shifting in different directions, but I still remain confident in our ability to not only exceed our original 2025 adjusted EBITDA goal of
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.
Investor Conference Call and Webcast
Interested parties may access the live audio broadcast toll free by dialing 833-366-1128 in
An audio replay will be available approximately two hours after the completion of the call at 877-344-7529 for
About Koppers
Koppers (NYSE: KOP) is an integrated global provider of essential treated wood products, wood preservation technologies and carbon compounds. Our team of 2,200 employees create, protect and preserve key elements of our global infrastructure – including railroad crossties, utility poles, outdoor wooden structures, and production feedstocks for steel, aluminum and construction materials, among others – applying decades of industry-leading expertise while constantly innovating to anticipate the needs of tomorrow. Together we are providing safe and sustainable solutions to enable rail transportation, keep power flowing, and create spaces of enjoyment for people everywhere. Protecting What Matters, Preserving The Future. Learn more at Koppers.com.
Inquiries from the media should be directed to Ms. Jessica Franklin Black at BlackJF@koppers.com or 412-227-2025. Inquiries from the investment community should be directed to Ms. Quynh McGuire at McGuireQT@koppers.com or 412-227-2049.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures. Koppers believes that adjusted EBITDA, adjusted net income attributable to Koppers and adjusted earnings per share provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends, and facilitate comparisons between periods and with other corporations in similar industries. The exclusion of certain items permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that Koppers management internally assesses the company's performance. In addition, the Board of Directors and executive management team use adjusted EBITDA as a performance measure under the company's annual incentive plans and for certain performance share units granted to management.
Although Koppers believes that these non-GAAP financial measures enhance investors' understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures and should be read in conjunction with the relevant GAAP financial measure. Other companies in a similar industry may define or calculate these measures differently than the company, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.
See the attached tables for the following reconciliations of non-GAAP financial measures included in this press release: Unaudited Reconciliation of Net Income to Adjusted EBITDA, and Unaudited Reconciliations of Net Income Attributable to Koppers to Adjusted Net Income Attributable to Koppers and Diluted Earnings Per Share and Adjusted Earnings Per Share.
Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of Koppers assets and the effect of any resulting impairment charges, profitability and anticipated expenses and cash outflows. All forward-looking statements involve risks and uncertainties.
All statements contained herein that are not clearly historical in nature are forward-looking, and words such as "outlook," "guidance," "forecast," "believe," "anticipate," "expect," "estimate," "may," "will," "should," "continue," "plan," "potential," "intend," "likely," or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in other press releases, written statements or other documents filed with the Securities and Exchange Commission, or in Koppers communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, the benefits of acquisitions, divestitures, joint ventures or other matters as well as financings and debt reduction, are subject to known and unknown risks, uncertainties and contingencies.
Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements include, among other things, the impact of changes in commodity prices, such as oil and copper, on product margins; general economic and business conditions; potential difficulties in protecting our intellectual property; the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures; our ability to operate within the limitations of our debt covenants; unexpected business disruptions; potential impairment of our goodwill and/or long-lived assets; demand for Koppers goods and services; competitive conditions; capital market conditions, including interest rates, borrowing costs and foreign currency rate fluctuations; availability and fluctuations in the prices of key raw materials; disruptions and inefficiencies in the supply chain; economic, political and environmental conditions in international markets; changes in laws; the impact of environmental laws and regulations; unfavorable resolution of claims against us, as well as those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Koppers, particularly our latest annual report on Form 10-K and any subsequent filings by Koppers with the Securities and Exchange Commission. Any forward-looking statements in this release speak only as of the date of this release, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
KOPPERS HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in millions, except share and per share amounts) | ||||||||
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Net sales | $ | 497.6 | $ | 513.4 | ||||
Cost of sales | 401.4 | 409.3 | ||||||
Depreciation and amortization | 16.1 | 14.0 | ||||||
Selling, general and administrative expenses | 45.5 | 41.6 | ||||||
(Gain) on sale of assets | 0.0 | (1.8) | ||||||
Operating profit | 34.6 | 50.3 | ||||||
Other loss, net | (0.1) | (0.2) | ||||||
Interest expense | 17.1 | 14.0 | ||||||
Income before income taxes | 17.4 | 36.1 | ||||||
Income tax provision | 4.4 | 9.9 | ||||||
Net income | 13.0 | 26.2 | ||||||
Net income attributable to noncontrolling interests | 0.0 | 0.7 | ||||||
Net income attributable to Koppers | $ | 13.0 | $ | 25.5 | ||||
Earnings per common share attributable to Koppers common shareholders: | ||||||||
Basic | $ | 0.61 | $ | 1.22 | ||||
Diluted | $ | 0.59 | $ | 1.19 | ||||
Weighted average shares outstanding (in thousands): | ||||||||
Basic | 21,066 | 20,842 | ||||||
Diluted | 21,909 | 21,385 | ||||||
KOPPERS HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET (Dollars in millions, except share and per share amounts) | ||||||||
March 31, | December 31, | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 49.0 | $ | 66.5 | ||||
Accounts receivable, net of allowance of | 218.3 | 202.4 | ||||||
Inventories, net | 399.0 | 395.7 | ||||||
Derivative contracts | 11.4 | 7.1 | ||||||
Other current assets | 30.0 | 27.3 | ||||||
Total current assets | 707.7 | 699.0 | ||||||
Property, plant and equipment, net of accumulated depreciation | 640.5 | 631.7 | ||||||
Goodwill | 293.1 | 294.4 | ||||||
Intangible assets, net | 98.5 | 102.2 | ||||||
Operating lease right-of-use assets | 85.8 | 90.5 | ||||||
Deferred tax assets | 9.8 | 10.4 | ||||||
Other assets | 9.9 | 7.3 | ||||||
Total assets | $ | 1,845.3 | $ | 1,835.5 | ||||
Liabilities | ||||||||
Accounts payable | $ | 195.2 | $ | 202.9 | ||||
Accrued liabilities | 87.5 | 95.1 | ||||||
Current operating lease liabilities | 22.2 | 22.9 | ||||||
Current maturities of long-term debt | 4.0 | 5.0 | ||||||
Total current liabilities | 308.9 | 325.9 | ||||||
Long-term debt | 865.1 | 835.4 | ||||||
Operating lease liabilities | 63.4 | 67.4 | ||||||
Accrued postretirement benefits | 27.9 | 31.6 | ||||||
Deferred tax liabilities | 28.1 | 25.9 | ||||||
Other long-term liabilities | 42.0 | 46.3 | ||||||
Total liabilities | 1,335.4 | 1,332.5 | ||||||
Commitments and contingent liabilities | ||||||||
Equity | ||||||||
Senior Convertible Preferred Stock, | 0.0 | 0.0 | ||||||
Common Stock, | 0.3 | 0.3 | ||||||
Additional paid-in capital | 300.0 | 291.1 | ||||||
Retained earnings | 455.4 | 444.0 | ||||||
Accumulated other comprehensive loss | (95.3) | (88.8) | ||||||
Treasury stock, at cost, 4,441,930 and 4,302,996 shares | (154.6) |
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FAQ
What were Koppers' First Quarter 2024 Sales?
Koppers reported First Quarter 2024 Sales of $497.6 million.
What was the Diluted EPS for Koppers in the First Quarter of 2024?
Koppers' Diluted EPS for the First Quarter of 2024 was $0.59.
What is Koppers' stock symbol?
Koppers' stock symbol is 'KOP'.
What is the 2024 Outlook for Koppers?
Koppers projects 2024 sales of approximately $2.25 billion and adjusted EPS of $4.10 to $4.60 per share.
What segments of Koppers showed growth in the First Quarter of 2024?
The Railroad and Utility Products and Services business, as well as the Performance Chemicals segment, showed growth in the First Quarter of 2024.
Koppers Holdings, Inc.
NYSE:KOPKOP RankingsKOP Latest NewsKOP Stock Data
763.73M
20.27M
4.28%
95.96%
1.41%
Specialty Chemicals
Lumber & Wood Products (no Furniture)
United States of America
PITTSBURGH
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