Koppers Holdings Inc. · NYSE:KOP
Koppers — Q1 2022 Earnings Presentation
41 slides from Koppers's earnings presentation, May 6, 2022
Slide 1: Q1 2022 Results
EXPAND & OPTIMIZE KOPPER Q1 2022 Results May 6, 2022 3)
Slide 2: 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 3: Zero Harm
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Slide 4: Advancing Our Zero Harm Commitment
Advancing Our Zero Harm Commitment Drive Zero Harm Deeper: Reducing Incidents on the Road Front Line Employees • Significant reduction in speeding • Safety, Health and Environmental • Commercial driver incentive audit activities and management programs include focus on safe visits now at pre-pandemi
Slide 5: Q1 2022 Results
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Slide 6: Q1: Sales by Segment (Unaudited)
Q1: Sales by Segment (Unaudited) Q1 2022 Sales vs. Prior Year $ in Millions $500 +12.7% $450 $459 $400 $408 $350 $300 $250 $200 -4.4% $183 $192 $150 +10.4% +51.6% $136 $140 $100 $124 $92 $50 $0 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 RUPS RUPS PC PC CMC CMC TOTAL 6
Slide 7: Q1: Adjusted EBITDA by Segment (Unaudited)
Q1: Adjusted EBITDA by Segment (Unaudited) Q1 2022 Adjusted EBITDA $ and % vs. Prior Year $ in Millions $60 13.5% 11.5% $55 $50 $53 $40 $30 22.5% $28 15.3% 14.4% $20 $21 8.5% $20 6.3% $16 11.3% $10 $12 $10 $0 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 RUPS RUPS PC PC CMC CMC TOT
Slide 8: Q1 2022 RUPS Segment
Q1 2022 RUPS Segment RAILROAD AND UTILITY PRODUCTS AND SERVICES Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions $200 $20 Highlights Highlights $192 $183 • Sales decreased due to: • Decrease in profitability primarily driven by: ✓ Lower volumes of utility poles in $150 U.S.
Slide 9: Q1 2022 PC Segment
Q1 2022 PC Segment PERFORMANCE CHEMICALS Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions $150 $30 Highlights Highlights $28 $136 • Achieved record first-quarter • Profitability was lower due to: sales, primarily due to the $124 following: ✓ Higher raw material costs, includ
Slide 10: Q1 2022 CMC Segment
Q1 2022 CMC Segment CARBON MATERIALS AND CHEMICALS Sales (Unaudited) Adjusted EBITDA (Unaudited) $ in Millions $ in Millions $150 $20 Highlights $20 Highlights $140 • Increase in sales primarily • Higher profitability due to: driven by: $15 ✓ Favorable demand and ✓ Higher pricing and pricing environ
Slide 11: Capital Allocation
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Slide 12: Uses of Cash: Balanced Approach
Uses of Cash: Balanced Approach • Investing in our business ✓ Capital expenditures • Returning capital to shareholders ✓ Reinstated dividends in 2022 ✓ Repurchased shares – $6.4M in Q1 2022 • Reducing leverage as appropriate ✓ Long-term target of 2x-3x net leverage ratio Confident In Ability To Grow
Slide 13: Q1 2022 Capital Expenditures
Q1 2022 Capital Expenditures 2021 Projected Q1 2022 2021 Projected CapEx by Category YTD Maintenance $8.8M Zero Harm 4.8M Growth & Productivity 12.6M Total $26.2 Less: Cash Proceeds from Asset Sales ($4.2) Capital Expenditures, Net $22.0M Growth & Q1 2022 CapEx by Business Unit Maintenance Zero Harm
Slide 14: Leverage & Liquidity Update
Leverage & Liquidity Update Net Leverage Ratio* 6 5.1 5 4.7 4.5 4.5 4.5 4.3 4 3.8 3.5 3.4 3.4 3.5 3.2 3.3 3 2 1 0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 * Excluding KJCC • Proven track record of disciplined debt reduction Net Leverage
Slide 15: Notable Happenings
Notable Happenings [eat KOPPER na uu!
Slide 16: Enhancing Our People-First Culture
Enhancing Our People-First Culture 16
Slide 17: Congratulations! Koppers College Graduates
Congratulations! Koppers College Graduates • First cohort of six-course Koppers Business Degree program with Robert Morris University. • Graduates were in Pittsburgh on April 19 for a graduation celebration. 17
Slide 18: Facility Upgrade: North Little Rock, AR
Facility Upgrade: North Little Rock, AR 2 of 3 new cylinders have been installed on their foundations. 18
Slide 19: Taking Care of Our Planet!
Taking Care of Our Planet! Millington, TN Ashcroft, BC L’Anse, MI Griffin, GA Galesburg, IL 19 Queen City, TX Nyborg, Denmark
Slide 20: Business Sentiment: Customers & Suppliers
Business Sentiment: Customers & Suppliers
Slide 21: Customers & Suppliers: Performance Chemicals 2022
Customers & Suppliers PERFORMANCE CHEMICALS 2022 • Existing-home sales, which drive home repairs and remodel activities, decreased 2.7% in March from prior month and 4.5% from prior year; housing market impacted by rising interest rates and inflation, which have unfavorable effects on purchasing pow
Slide 22: Customers & Suppliers: Performance Chemicals 2023 through 5
Customers & Suppliers PERFORMANCE CHEMICALS 2023 through 2025 • Record high copper prices prompting price discussions with customers earlier than usual; evaluating changes to contract pricing in the U.S. to allow more freedom to recoup rising costs • In Q1 2022 agreed to a five-year supply agreement
Slide 23: Customers & Suppliers: Utility and Industrial Products 2022
Customers & Suppliers UTILITY AND INDUSTRIAL PRODUCTS 2022 • Utilities indicating demand for higher pole volumes in 2022 due to project work and upgrades that were deferred during pandemic • Logistics, labor shortage, plant conversions as well as trend for sturdier class of poles putting strain on s
Slide 24: Customers & Suppliers: Utility and Industrial Products 2023-2025
Customers & Suppliers UTILITY AND INDUSTRIAL PRODUCTS 2023 through 2025 • Utilities need to maintain their infrastructure to avoid service interruption especially as remote working and extreme weather events more common; most major utilities stocking for storm inventories • Continued supply chain sh
Slide 25: Customers & Suppliers: Railroad Products and Services 2022
Customers & Suppliers RAILROAD PRODUCTS AND SERVICES 2022 • Rail traffic for Q1 2022 was mixed compared with prior year; U.S. carload traffic increased 2.6%; intermodal units down 6.9%; combined U.S. traffic lower by 2.7% (Association of American Railroads) • Currently tracking above $20M of price i
Slide 26: Customers & Suppliers: Railroad Products and Services 2023-2025
Customers & Suppliers RAILROAD PRODUCTS AND SERVICES 2023 through 2025 • Completed extensions for Class I contracts that were set to expire in 2021, pushing most contract maturities beyond 2025 • Network optimization initiatives expected to drive EBITDA improvements ✓ Expansion at facility in North
Slide 27: Customers & Suppliers: Carbon Materials and Chemicals 2022
Customers & Suppliers CARBON MATERIALS AND CHEMICALS 2022 • Demand from markets served as strong as it has ever been, but global supply chain challenges and significant inflationary pressures have us on alert for eventual slowdown • Due to the war between Russia and Ukraine, European tar distillers
Slide 28: Customers & Suppliers: Carbon Materials and Chemicals 2023-2025
Customers & Suppliers CARBON MATERIALS AND CHEMICALS 2023 through 2025 • Strong demand from markets served (i.e., aluminum, steel) expected to continue; cautiously optimistic regarding U.S. with passage of an infrastructure bill; seeing increase in recessionary concerns • Trend to reduce reliance up
Slide 29: 2022 Guidance
2022 Guidance ) KOPPER “n Wau! (
Slide 30: 2022 Sales Forecast: ~$1.9B
2022 Sales Forecast: ~$1.9B Sales ($ in millions) $100M ~$1.9B $70M $60M $1.68B 30
Slide 31: 2022 Adjusted EBITDA Forecast: $230M
2022 Adjusted EBITDA Forecast: $230M Adjusted EBITDA* ($ in millions) $18M ($6M) $230M $224M ($6M) * Excluding special charges 31
Slide 32: 2022 Adjusted EPS Forecast: $4.10
2022 Adjusted EPS Forecast: $4.10 Adjusted EPS* $0.43 $4.21 $4.10 ($0.03) ($0.15) ($0.36) * Excluding special charges 32
Slide 33: 2022 Capital Expenditures: $80M-$90M (Net)
2022 Capital Expenditures: $80M-$90M (Net) 2021 Projected CapEx by Category Amount Maintenance $50M Zero Harm 16M Growth & Productivity 29M Total $95M Less: Cash Proceeds from Asset Sales ($5M-$15M) Capital Expenditures, Net $80M-$90M Growth & CapEx by Business Unit Maintenance Zero Harm Productivit
Slide 34: Appendix
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Slide 35: Non-GAAP Measures & Guidance
Non-GAAP Measures & Guidance This presentation includes unaudited “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934, including adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, net debt and net leverage ratio. Koppers believes that the presentati
Slide 36: Unaudited Reconciliation of Net Income to Adjusted EBITDA
Unaudited Reconciliation of Net Income to Adjusted EBITDA 36
Slide 37: Unaudited Segment Information
Unaudited Segment Information 37
Slide 38: Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio
Unaudited Reconciliation of Total Debt to Net Debt and Net Leverage Ratio 38
Slide 39: Unaudited Reconciliation of Net Income to Adjusted EBITDA on a Latest Twelve Month Basis
Unaudited Reconciliation of Net Income to Adjusted EBITDA on a Latest Twelve Month Basis 39
Slide 40: Koppers World Headquarters, Pittsburgh, Pennsylvania
KOPPERS World Headquarters Pittsburgh, Pennsylvania, USA 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 lumb
Slide 41: koppers.com
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