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10-Q
KOPPERS HOLDINGS INC. filed this Form 10-Q on 08/03/2017
Entire Document
 

 

Segment Results

Segment operating profit for the three months ended June 30, 2017 and 2016 is summarized by segment in the following table:

 

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

2017

 

 

2016

 

 

% Change

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Railroad and Utility Products and Services

 

$

11.0

 

 

$

18.5

 

 

 

-41

%

Performance Chemicals

 

 

19.6

 

 

 

22.4

 

 

 

-13

%

Carbon Materials and Chemicals

 

 

7.8

 

 

 

(8.3

)

 

 

194

%

Corporate

 

 

(0.8

)

 

 

(0.6

)

 

 

-33

%

 

 

$

37.6

 

 

$

32.0

 

 

 

18

%

Operating profit (loss) as a percentage of net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Railroad and Utility Products and Services

 

 

8.1

%

 

 

11.3

%

 

 

-3.2

%

Performance Chemicals

 

 

17.5

%

 

 

20.7

%

 

 

-3.2

%

Carbon Materials and Chemicals

 

 

6.0

%

 

 

(7.4

)%

 

 

13.4

%

 

 

 

9.9

%

 

 

8.3

%

 

 

1.6

%

RUPS operating profit decreased by $7.5 million or 41 percent compared to the prior year period. Operating profit as a percentage of net sales for RUPS decreased to 8.1 percent from 11.3 percent in the prior year quarter. Operating profit as a percentage of net sales for the three months ended June 30, 2017 was impacted by reduced sales volumes of crossties, utility poles, and railroad services combined with reduced margins in the commercial crosstie market as a result of inventory over-supply in the commercial market. The negative impact from these factors was slightly offset by favorable volumes and sales mix of rail joint products.

PC operating profit decreased by $2.8 million or 13 percent compared to the prior year period. Operating profit as a percentage of net sales for PC decreased to 17.5 percent from 20.7 percent in the prior year quarter. Sales volumes have improved due to favorable market trends in the repair and remodeling markets and existing home sales. The increase was driven primarily by changes in treated wood product application standards in 2016 resulting in treated wood dealers stocking and selling more high retention ground contact treated wood, which has moderated in 2017 as dealer inventory has sufficiently been substantially restocked with higher retention treated wood. However, although we hedge the majority of our copper purchases, higher copper prices more than offset our sales increase and negatively impacted our operating profit margin for the three months ended June 30, 2017.

CMC operating profit increased by $16.1 million or 194 percent compared to the prior year period. Operating profit as a percentage of net sales for CMC increased to 6.0 percent from a loss of 7.4 percent in the prior year quarter. Operating profit for the three months ended June 30, 2017 was positively affected by lower raw material and logistics costs in North America, higher sales prices in Europe and higher sales volumes in Australasia particularly related to carbon pitch. The positive impacts were partially offset by lower sales prices in North America, accelerated depreciation, and unabsorbed fixed costs.

Corporate operating loss increased by $0.2 million or 33 percent compared to the prior year period due to increased foreign currency losses in the current year period.

Results of Operations – Comparison of Six Months Ended June 30, 2017 and 2016

Consolidated Results

Net sales for the six months ended June 30, 2017 and 2016 are summarized by segment in the following table:

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

2017

 

 

2016

 

 

Net Change

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Railroad and Utility Products and Services

 

$

271.4

 

 

$

315.8

 

 

 

-14

%

Performance Chemicals

 

 

208.5

 

 

 

196.4

 

 

 

6

%

Carbon Materials and Chemicals

 

 

244.7

 

 

 

219.7

 

 

 

11

%

 

 

$

724.6

 

 

$

731.9

 

 

 

-1

%

RUPS net sales decreased by $44.4 million or 14 percent compared to the prior year period. The sales decrease was primarily due to lower sales volumes of crossties, utility products and railroad bridge services. Sales of crossties declined by $34.8 million or 14 percent. The reduction in treated crossties and structure services is attributed to lower spending in the rail industry due to the impact of reduced freight car loadings and rail traffic across both the Class I and commercial markets. In addition, commercial crosstie pricing has been reduced due to an over-supply of crossties in the commercial

33