Koppers Holdings Inc. · NYSE:KOP
Koppers — Investor Presentation (January 2017)
45 slides from Koppers's investor presentation, Jan 10, 2017
Slide 1: Investor Presentation January 2017
Investor Presentation January 2017 Exhibit 99.1
Slide 2: Forward-looking statements
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 anticipated synergies, expenses a
Slide 3: Management Representatives
Leroy M. Ball President and Chief Executive Officer Michael J. Zugay Chief Financial Officer Management Representatives
Slide 4: Company Overview
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Slide 5: Global leader in oil and water-borne preservatives for treated wood
Global leader in oil and water-borne preservatives serving many market applications for treated wood Successfully transitioning from a business built on producing carbon pitch to serve global aluminum industry into an enterprise centered on the preservation and enhancement of wood Knowledge of wood
Slide 6: Koppers At-A-Glance
Koppers At-A-Glance Leading integrated global provider of oil and water-borne preservatives serving various market applications of treated wood Current business mix highlights de-emphasis of CMC as a standalone business Global geographic footprint: 30 locations across North America, South America, A
Slide 7: Segment Overview: CMC, PC and RUPS
Carbon Materials and Chemicals (CMC) Performance Chemicals (PC) Railroad and Utility Products and Services (RUPS) Products & Services Carbon Pitch Creosote Carbon Black Feedstock Naphthalene Phthalic Anhydride Wood Preservation Chemicals Coatings Water Repellants Pigmented Stains Fire Retardants Rai
Slide 8: Transforming Our Business Profile; Maximizing Our Profitability
PF 12/31/141 LTM 9/30/16 Net Sales $1,820 million $1,467 million EBITDA* Margin* $167 million 9.2% $165 million 11.3% Net Leverage2 5.1x 4.1x Business Segment Adj. EBITDA Wood-related Products & Services (RUPS & PC) 54% 68% Transforming Our Business Profile; Maximizing Our Profitability * On an adju
Slide 9: Additional Benefits of CMC Consolidation Strategy
Additional Benefits of CMC Consolidation Strategy Lower capex spending and lower repair and maintenance spending CMC requires significantly more property, plant and equipment compared to our other two segments Reduced working capital requirements Smaller operating footprint reduces working capital n
Slide 10: Strategy Well Received by Equity Investors
Strategy Well Received by Equity Investors Koppers market capitalization increased from $375 million on 12/31/15 to $815 million today Favorable Share Price Performance Underpinned by Successful Execution of Business Transformation;… …Additional Benefits Likely to Come as Transformation Continues
Slide 11: Zero Harm Focus
Zero Harm Focus Achieved certification in American Chemistry Council’s Responsible Care® initiative across 18 global facilities and corporate headquarters Received awards from BNSF Railway, Canadian National Railway and Union Pacific Railroad for excellence in chemical transportation safety performa
Slide 12: Key Investment Highlights
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Slide 13: Key Investment Highlights
Long-Term Contracts with Key Customers Consistent Free Cash Flow Generation and Deleveraging Key Investment Highlights Leading Global Producer of Wood Preservation and Enhancement Products Attractive End Markets with Stable Growth Prospects Over the Cycle Vertically Integrated, Strategically Located
Slide 14: Leading Global Producer of Wood Preservation and Enhancement Products
Approximately 65% of our 2015 net sales came from products where we have the leading market position Leading Global Producer of Wood Preservation and Enhancement Products Product Market Position North American Crosstie #1 North American Wood Treating Chemicals #1 North American Creosote #1 Australia
Slide 15: 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 a 3-year period (2014-2016) CMC processes coal tar into creosote consumed by RUPS fo
Slide 16: Attractive End Markets with Stable Growth Prospects Over the Cycle
Attractive End Markets with Stable Growth Prospects Over the Cycle Favorable trends in U.S. Class I Railroad infrastructure spending over a long-term period; reduced spending is expected in the next 12 months Installed base of 700 - 800 million wood crossties requiring periodic replacement Stable re
Slide 17: Long-Term Contracts with Key Customers
70% of 2015 North American RUPS sales are served under long-term contracts Currently supplies all 7 of the North American Class I railroads and have contracts with all of them Supplies 9 of the 10 largest lumber treating companies in the U.S., in addition to the top 3 lumber treating companies in Ca
Slide 18: We are in the 5th inning of our transformation
We are in the “5th inning” of our transformation Strategic Initiative Description Expected Completion Reduce China risk profile Restructured loan agreements in China; renegotiated soft pitch agreement with Nippon Steel and received $30 million (July 2015) Exited 2 of 3 existing joint ventures in Chi
Slide 19: Driving Improved Financial Results
…Driving Improved Financial Results… ~210 bps Improvement Wood-Related Revenue (%) 1 Adj. EBITDA Margin (%) 1 Total of RUPS and PC segments 2 PF for the Osmose acquisition that closed in August 2014 2 2 Focus on wood preservation has yielded significant operational improvement
Slide 20: Reducing Impact of Oil Price Volatility on Profitability
…While Reducing Impact of Oil Price Volatility on Profitability LTM Adj. EBITDA & WTI Price 1 As of September 30, 2016 Note: PF for the Osmose acquisition that closed in August 2014 Source: Factset 8.6% 9.2% 9.9% 10.7% 11.3% % Margin ($ / bbl)
Slide 21: Consistent Free Cash Flow and Deleveraging
Company generated >$1 billion in positive free cash flow since the 2008 recession Low maintenance capex and working capital requirements provide strong free cash flow conversion of >70% Additional cash flow from operational efficiencies as a result of the recent repositioning of the business Discont
Slide 22: Key Investment Highlights
Long-Term Contracts with Key Customers Consistent Free Cash Flow Generation and Deleveraging Key Investment Highlights Leading Global Producer of Wood Preservation and Enhancement Products Attractive End Markets with Stable Growth Prospects Over the Cycle Vertically Integrated, Strategically Located
Slide 23: Business Strategy & Financial Overview
Business Strategy & Financial Overview
Slide 24: Business Strategy
Business Strategy Continue transition to enterprise centered on wood preservation and enhancement Grow position in attractive railroad and residential wood treating industries Leverage long-term customer relationships and strategic footprint Match coal tar distillation in North America and Europe fr
Slide 25: Consolidated Performance Summary
Expansion driven by the diversification away from the low-margin CMC business and focusing on the higher-value wood preservatives market Consolidated Performance Summary Declining sales volume in the CMC segment driven by the Company’s strategy to reduce distillation capacity and directing productio
Slide 26: Historical Free Cash Flow Overview
Historical Free Cash Flow Overview Free Cash Flow 1 1 Free cash flow defined as Adj. EBITDA less capital expenditures 2 PF for the Osmose acquisition that closed in August 2014; Osmose capital expenditures not material 3 Excludes $41 million in capital expenditures attributable to the construction o
Slide 27: Estimated Debt Repayment
) KOPPER “vn uuu!” ‘\ Estimated Debt Repayment
Slide 28: 2016 Estimated Debt Repayment
2016 Estimated Debt Repayment ($ in millions) * Deferred until 2017 Substantial progress towards near-term debt reduction goals Long-term goal of 2-3X leverage ratio Allocate capital to maximize shareholder returns
Slide 29: 2016 Guidance
) KOPPER n uu” ‘\ 2016 Guidance
Slide 30: 2016 Sales Forecast of ~$1.4B
2016 Sales Forecast of ~$1.4B ($ in millions)
Slide 31: 2016 EBITDA Forecast: PC Net Improvement of $19M
2016 EBITDA* Forecast: PC Net Improvement of $19M ($ in millions) * On an adjusted basis
Slide 32: 2016 EBITDA Forecast: RUPS
2016 EBITDA* Forecast: RUPS Expect Lower Treating Volumes; Commercial Softening ($ in millions) * On an adjusted basis
Slide 33: 2016 EBITDA Forecast: CMC Increase of $10-$11M
($ in millions) 2016 EBITDA* Forecast: CMC Increase of $10-$11M * On an adjusted basis
Slide 34: 2016 EBITDA Forecast: Consolidated EBITDA of $168M-$172M
2016 EBITDA Forecast: Consolidated EBITDA* of $168M-$172M ($ in millions) EBITDA Margin* ~12% * On an adjusted basis
Slide 35: Appendix
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Slide 36: Non-GAAP Measures and Guidance
Non-GAAP Measures and Guidance Koppers believes that EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow, free cash flow conversion ratio and net leverage provide information useful to investors in understanding the underlying operational performance of the company, its business and perf
Slide 37: Consolidated Adjusted EBITDA and Free Cash Flow Reconciliation
Consolidated Adjusted EBITDA and Free Cash Flow Reconciliation 1 1 PF for the Osmose acquisition that closed in August 2014
Slide 38: Consolidated LTM Adjusted EBITDA Reconciliation
Consolidated LTM Adjusted EBITDA Reconciliation 1
Slide 39: LTM 9/30/16 Adjusted EBITDA Reconciliation by Segment
LTM 9/30/16 Adjusted EBITDA Reconciliation by Segment 1
Slide 40: 9M Ended 9/30/16 Adjusted EBITDA Reconciliation by Segment
9M Ended 9/30/16 Adjusted EBITDA Reconciliation by Segment 1
Slide 41: 9M Ended 9/30/15 Adjusted EBITDA Reconciliation by Segment
9M Ended 9/30/15 Adjusted EBITDA Reconciliation by Segment 1
Slide 42: 2015 Adjusted EBITDA Reconciliation by Segment
2015 Adjusted EBITDA Reconciliation by Segment 1
Slide 43: Pro Forma 2014 Adjusted EBITDA Reconciliation by Segment
Pro Forma 2014 Adjusted EBITDA Reconciliation by Segment 1
Slide 44: Koppers Holdings Inc. contact information
Koppers Holdings Inc. 436 Seventh Avenue Pittsburgh, PA 15219-1800 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 appl
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Koppers Holdings — Investor Presentation (January 2017) on 6ix