Koppers Holdings Inc. · NYSE:KOP
Koppers — Investor Presentation (March 2018)
48 slides from Koppers's investor presentation, March 2018
Slide 1: Investor Presentation March 2018
Investor Presentation March 2018
Slide 2: Michael J. Zugay, Chief Financial Officer
Michael J. Zugay Chief Financial Officer _______________________ 2
Slide 3: Forward Looking Statement
Forward Looking Statement Certain statements in this presentation 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, profitability and anticip
Slide 4: Company Overview
KOPPER (a a Yuu! Company Overview
Slide 5: Investment Thesis
Investment Thesis Global leader in oil and water-borne preservatives serving many market applications for treated wood Wood Treatment Technologies Are At Successfully transitioning from a business built on producing The Heart Of Our carbon pitch to serve global aluminum industry into an enterprise V
Slide 6: Business Strategy
Business Strategy Strengthen Balance Improve Profitability Reposition Koppers Sheet and Improve and Expand Margin as a Leader in Wood Financial Flexibility Treatment Technologies Reduced total debt by ~$174M Restructured CMC operating Niche markets with small number from 12/31/14 through 12/31
Slide 7: At-A-Glance
At-A-Glance Leading integrated global provider Selected Product and Brand Overview of oil and water-borne preservatives serving various market applications of treated wood De-emphasizing CMC business Pre-Treated Crossties Global geographic footprint: 30 locations across North America, South Am
Slide 8: Segment Overview
Segment Overview Unique Product & Service Portfolio; Niche End Market Focus Railroad and Utility Products Performance Chemicals Carbon Materials and Chemicals and Services (RUPS) (PC) (CMC) Net Sales: $513 Million Net Sales: $411 Million Net Sales: $552 Million Key 2017 Adj. EBITDA: $39 Mill
Slide 9: Transforming Business Profile; Maximizing Profitability
Transforming Business Profile; Maximizing Profitability PF 12/31/141 2017 Net Sales $1,820 Million $1,476 Million EBITDA* $167 Million $200 Million Margin* 9.2% 13.6% Net Leverage2 5.1x 3.1x RUPS 19% CMC 28% RUPS CMC Business Segment 42% 37% EBITDA* PC PC 30% 44% Wood-related Sales 54% 63% (RUPS & P
Slide 10: Delivering Results
KOPPER (a aA uu Delivering Results 10
Slide 11: Adjusted EBITDA & EPS
Adjusted EBITDA & EPS $200.4 $200 $4.00 Adjusted EBITDA Adjusted EPS $180 $174.2 $3.50 $3.68 $160 $150.2 $3.00 $140 $116.3 $2.50 $120 $2.60 $100 $2.00 $80 $1.50 $60 $1.51 $1.00 $40 $1.04 $0.50 $20 $0 $0.00 TTM EBITDA 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 TTM EBITDA Margin
Slide 12: Net Debt & Net Leverage
Net Debt & Net Leverage $900 8 $799.4 $800 7 $713.0 6.9 $700 [VALUE] 6 $600 [VALUE] $617.0 5 $500 [VALUE] 4 $400 [VALUE] 3.1 [VALUE] 3 $300 2 $200 Net Debt Net Leverage $100 1 $0 0 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12
Slide 13: 13
13
Slide 14: OSHA Recordable Injuries: Trended Lower in 2017
OSHA Recordable Injuries: Trended Lower in 2017 Safety Metrics Year-Over-Year 8 7.49 7.02 7 6.13 6 5 4 3.49 2.96 3.04 3 2 1.34 1 0.33 0.62 0 Total Recordable Rate (TRR) Serious Incident Event Rate Serious Incident Event Precursor Rate 2015 2016 2017 Achieved 3.04 TRR in 2017 Overall Count of OSHA Re
Slide 15: Zero Harm Facilities – Q4
Zero Harm Facilities – Q4 24 of 31 operating locations worked free of OSHA recordable accidents. PC CMC RUPS Auckland Clairton Bunbury Christchurch Follansbee Denver Darlington KCCC Florence Geelong KJCC Grafton Hubbell Mayfield Guthrie Marlow Nyborg Longford Millington Somerville Mt. Gambier Susque
Slide 16: Zero Harm Facilities – 2017
Zero Harm Facilities – 2017 13 of 31 operating locations worked free of OSHA recordable accidents. PC CMC RUPS Christchurch Bunbury Clairton Darlington Grafton KCCC Geelong Somerville KJCC Hubbell Takura Marlow Mt. Gambier
Slide 17: Key Investment Highlights
Key Investment Highlights 17
Slide 18: Key Investment Highlights
Key Investment Highlights Leading Global Producer of Wood Preservation and Enhancement Products Vertically Integrated, Strategically Located Footprint Stable Growth Prospects Over Cycle; Steady Gains in Attractive End Markets Long-Term Contracts with Key Customers Successfully Repositioned the Busin
Slide 19: Leading Global Producer of Wood Preservation and Enhancement Products
Leading Global Producer of Wood Preservation and Enhancement Products Products Play Critical Role In End Application; Often Have No Substitutes Product Market Position North American Crosstie #1 North American Wood Treating Chemicals #1 North American Creosote #1 Wood- Australian Creosote #1 Related
Slide 20: Vertically Integrated, Strategically Located Footprint
Vertically Integrated, Strategically Located Footprint Well positioned to capitalize on strong market presence Significantly improved efficiency since consolidating coal tar distillation facilities from 11 to 4 over 3-year period (2014-2016) CMC processes coal tar into creosote consumed by RUP
Slide 21: Railroad & Utility Products and Services: Stable Growth Prospects Over Cycle
Railroad & Utility Products and Services: Stable Growth Prospects Over Cycle U.S. Class I Railroad infrastructure spending expected to be favorable over long-term Currently in weaker part of rail industry cycle with AAR forecast of $22B spending in 2017; reduced crosstie replacement expected thr
Slide 22: Performance Chemicals: Steady Gains in Attractive End Markets
Performance Chemicals: Steady Gains in Attractive End Markets Growth Drivers: Existing Home Sales; U.S. Homeowner Improvements & Repairs Repair & Remodel Activity • Market for existing homes continues to be mixed • NAR reported that total existing home sales subsided for December, but up 1.1% year-o
Slide 23: Long-Term Contracts with Key Customers
Long-Term Contracts with Key Customers Key Customers Include Railroad, Wood Preservation & Other Blue-Chip Industrial Companies Approximately 70% of North American RUPS sales are served under long-term contracts Currently supply and have contracts with all 7 North American Class I railroads Su
Slide 24: Successfully Repositioned Business
Successfully Repositioned Business In “6th Inning” Of Our Transformation Strategic Initiatives Actions Taken • Restructured loan agreements in China; renegotiated soft pitch agreement with Nippon Steel and received $30M (July 2015) Reduce China Risk Profile • Divested TKK, a minority-held joint vent
Slide 25: Key Investment Highlights
Key Investment Highlights Leading Global Producer of Wood Preservation and Enhancement Products Vertically Integrated, Strategically Located Footprint Stable Growth Prospects Over Cycle; Steady Gains in Attractive End Markets Long-Term Contracts with Key Customers Successfully Repositioned Business
Slide 26: Appendix
KOPPER (a “A uu Appendix 26
Slide 27: Q4 & 2017 Results
KOPPER (a “A uu Q4 & 2017 Results 27
Slide 28: Q4 Sales of $366M; Higher CMC Sales Offset RUPS Weakness
Q4 Sales of $366M; Higher CMC Sales Offset RUPS Weakness ($ in millions) 28
Slide 29: 2017 Sales of $1,476M; Higher CMC & PC Sales Offset RUPS Decline
2017 Sales of $1,476M; Higher CMC & PC Sales Offset RUPS Decline ($ in millions) 29
Slide 30: Q4 Adjusted EBITDA of $42M; Higher CMC & PC Profitability Offset RUPS
Q4 Adjusted EBITDA of $42M; Higher CMC & PC Profitability Offset RUPS ($ in millions) 30
Slide 31: 2017 EBITDA of $200M; CMC Delivering Strong Profitability
2017 EBITDA of $200M; CMC Delivering Strong Profitability ($ in millions) 31
Slide 32: Net Leverage Ratio: Significantly Improved Balance Sheet
Net Leverage Ratio: Significantly Improved Balance Sheet ($ in millions) (a) Pro-forma 2014 32
Slide 33: 2018 Guidance
Wu! KOPPER (2 2018 Guidance 33
Slide 34: 2018 Adjusted EBITDA Forecast: RUPS Expecting Small Improvement
2018 Adjusted EBITDA Forecast: RUPS Expecting Small Improvement ($ in millions) 34
Slide 35: 2018 Adjusted EBITDA Forecast: PC Growth Offset by Raw Material Headwind
2018 Adjusted EBITDA Forecast: PC Growth Offset by Raw Material Headwind ($ in millions) 35
Slide 36: 2018 Adjusted EBITDA Forecast: CMC China & Restructuring Savings Drive Improvement
2018 Adjusted EBITDA Forecast: CMC China & Restructuring Savings Drive Improvement ($ in millions) 36
Slide 37: 2018 Sales Forecast of ~$1.7B
2018 Sales Forecast of ~$1.7B ($ in millions) 37
Slide 38: 2018 Adjusted EBITDA Forecast: Improved Business Model; Higher Profitability
2018 Adjusted EBITDA Forecast: Improved Business Model; Higher Profitability ($ in millions) 38
Slide 39: Non-GAAP Reconciliations
Wu! KOPPER (2 Non-GAAP Reconciliations
Slide 40: Non-GAAP Measures and Guidance
Non-GAAP Measures and Guidance This presentation includes unaudited “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934, including adjusted EBITDA. Koppers believes that the presentation of non- GAAP financial measures such as adjusted EBITDA provide in
Slide 41: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA, Q4 2017
UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA (In millions) Three months ended December 31,2017 Corporate RUPS PC CMC Unallocated Consolidated Operating (loss) profit $ (4.0 ) $ 14.8 $ 3.0 $ (1.6 ) $ 12.2 Other income (loss) 0.3 1.0 0.2 (0.8 ) 0.7 Depreciation and amorti
Slide 42: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA, Q4 2016
UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA (In millions) Three months ended December 31,2016 Corporate RUPS PC CMC Unallocated Consolidated Operating profit (loss) $ 5.6 $ 10.9 $ 6.2 $ (3.8 ) $ 18.9 Other income (loss) 0.2 0.8 0.2 (0.5 ) 0.7 Depreciation and amortizat
Slide 43: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA, 2017
UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA (In millions) Year Ended December 31, 2017 Corporate RUPS PC CMC Unallocated Consolidated Operating profit (loss) $ 25.3 $ 71.4 $ 27.4 $ (12.0 ) $ 112.1 Other (loss) income (0.3 ) 2.4 1.4 0.5 4.0 Depreciation 11.8 17.9 20.1 -
Slide 44: Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA, 2016
UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA (In millions) Year Ended December 31, 2016 Corporate RUPS PC CMC Unallocated Consolidated Operating profit (loss) $ 52.5 $ 63.5 $ (23.6 ) $ (6.0 ) $ 86.4 Other (loss) income (0.3 ) 3.7 (0.6 ) 0.1 2.9 Depreciation 11.9 18.7 22
Slide 45: Unaudited Segment Information
UNAUDITED SEGMENT INFORMATION Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 (Dollars in millions) Net sales: Railroad and Utility Products and Services $ 109.5 $ 125.0 $ 512.6 $ 586.5 Performance Chemicals 93.0 89.4 411.2 393.4 Carbon Materials and Chemicals 163.6 98.8
Slide 46: Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio
Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio UNAUDITED RECONCILIATION OF TOTAL DEBT TO NET DEBT AND NET LEVERAGE RATIO (In millions) Year ended December 31, Pro- Forma 2017 2016 2015 2014 Total Debt $ 677.0 $ 662.4 $ 722.3 $ 850.5 Less: Cash 60.3 20.8 21.8 $ - Net Debt $
Slide 47: Koppers Holdings Inc. Contact Information
Koppers Holdings Inc. 436 Seventh Avenue Pittsburgh, PA 15219-1800 Koppers is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds for the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and constructio
Slide 48: Koppers is an integrated global provider of treated wood products
Koppers is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds for the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries. Headquartered in Pittsburgh, Pennsylvania, we serve o
Koppers Holdings — Investor Presentation (March 2018) on 6ix