UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 4, 2017

KOPPERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code: (412) 227-2001

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On May 5, 2017, we issued a press release announcing first quarter 2017 results. A copy of the press release is included in this Current Report on Form 8-K as Exhibit 99.1 and is furnished herewith.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The annual meeting of shareholders of Koppers Holdings Inc. (the “Company”) was held on May 4, 2017 (the “Annual Meeting”). At the Annual Meeting, the Company’s shareholders approved the Koppers Holdings Inc. Employee Stock Purchase Plan (the “ESPP”), pursuant to which the Company may issue up to 200,000 shares of its common stock to its employees and employees of its subsidiaries at purchase prices set forth in the ESPP, subject to the limitations set forth in the ESPP. The ESPP provides a means by which the Company’s employees (and employees of any subsidiary of the Company designated by the Board to participate in the ESPP) may be given an opportunity to purchase shares of the Company’s common stock at a discount through payroll deductions.

The ESPP is filed as Exhibit 10.1 hereto, incorporated by reference to Appendix A to the Company’s definitive proxy statement on Schedule 14A, filed with the Securities and Exchange Commission on April 4, 2017 (the “Proxy Statement”). The terms and description of the ESPP included in the Proxy Statement are incorporated herein by reference.  

 

Item 5.07 Submission of Matters to a Vote of Security Holders.

The Company held its Annual Meeting on May 4, 2017.  Five matters were considered and voted upon at the Annual Meeting: (1) the election of eight persons to serve on our board of directors; (2) approval of our Employee Stock Purchase Plan; (3) an advisory resolution to approve executive compensation; (4) an advisory resolution to approve the frequency of future advisory votes on executive compensation; and (5) the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2017.

Election of Directors: Nominations of Cynthia A. Baldwin, Leroy M. Ball, Jr., Sharon Feng, Ph.D., David Hillenbrand, Ph.D., Albert J. Neupaver, Louis L. Testoni, Stephen R. Tritch and T. Michael Young to serve as directors for one-year terms expiring in 2018 were considered and all nominees were elected. All nominees received a majority of votes cast. The final voting results are as follows:

 

Approval of Employee Stock Purchase Plan: The proposal to approve our Employee Stock Purchase Plan was approved. The final voting results are as follows:

 

Advisory Resolution to Approve Executive Compensation: The advisory resolution approving the compensation of the named executive officers of the Company as disclosed in the Notice of Annual Meeting and Proxy Statement for the 2017 Annual Meeting was approved. The final voting results are as follows:

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Advisory Resolution to Approve the Frequency of Future Advisory Votes on Executive Compensation: On the advisory resolution to approve the frequency of future advisory votes on executive compensation, the Company’s shareholders recommend that such votes be held annually as follows:

Ratification of Appointment of KPMG LLP: The Audit Committee of the Company’s Board of Directors appointed KPMG LLP as our independent registered public accounting firm for the year 2017. The final voting results to ratify the appointment of KPMG LLP are as follows:

 

There were no broker non-votes with respect to this matter.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.  The following exhibits are filed or furnished, as applicable, herewith:

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 5, 2017

 

 

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EXHIBIT INDEX

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

Koppers Holdings Inc. Reports First Quarter 2017 Results

Reported Q1 2017 Diluted EPS of $0.20 Compares Favorably to Prior Year of ($0.06)

Adjusted Q1 2017 EPS of $0.68 vs. Prior Year of $0.28

Company Increases 2017 Adjusted EPS Guidance of $2.80 to $3.00

 

PITTSBURGH, May 5, 2017 – Koppers Holdings Inc. (NYSE: KOP), an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds, today reported net income attributable to Koppers for the first quarter of $4.4 million, or $0.20 per diluted share compared to a net loss of $1.3 million, or $0.06 loss per diluted share in the prior year quarter.

Adjusted net income and adjusted earnings per share (EPS) were $14.8 million and $0.68 per share for the first quarter of 2017 compared to $5.9 million and $0.28 per share in the prior year quarter, respectively.

Adjustments to pre-tax income totaled $14.2 million for the first quarter of 2017 and $11.6 million for the first quarter of 2016, which primarily consisted of debt refinancing in 2017 and restructuring expenses for both periods.

Consolidated sales were $346.6 million for the first quarter of 2017, which were comparable to sales of $346.8 million in the prior year quarter.  The Performance Chemicals (PC) business had strong sales volumes, primarily driven by higher demand in North America for copper-based wood preservatives and additives.  The Carbon Materials and Chemicals (CMC) segment generated higher sales volumes for carbon black feedstock and other coal tar products with higher sales prices for carbon pitch, carbon black feedstock and phthalic anhydride, partially offset by lower demand for carbon pitch and creosote.  The Railroad and Utility Products and Services (RUPS) business reported a decrease in sales due to lower volumes of treated crossties, utility products and structure services.

CMC operating profitability improved significantly from the prior year quarter primarily due to restructuring savings, lower average raw material costs and higher sales prices in Europe and Australasia.  These positive impacts were partially offset by lower pricing in North America.  PC’s profit margins benefited from higher sales volumes due to changes in treated wood product application standards resulting in treated wood dealers stocking and selling more high-retention ground contact treated wood.  The results for RUPS were unfavorably affected by reduced sales volumes combined with pricing pressures for commercial crossties as a result of an over-supply of inventory in that market.

Commenting on the quarter, President and CEO Leroy Ball said, “It is encouraging to see consolidated sales stabilize after enduring five consecutive quarters of double-digit declines on a year-over-year basis.  That stabilization largely contributed to the significant growth in our profitability as well as improved earnings per share for the quarter.  The value created through the restructuring and repositioning of our business as the global leader in wood-based technology is now starting to be fully reflected in our results.  Another bright spot for the quarter was our ability to maintain a net debt

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leverage ratio of 3.7, which we had reached at year-end 2016.  The March quarter is typically our highest cash consumption quarter of the year, so this should position us to reach our net debt leverage goal of less than 3.5 by the end of this year.”

Summary of First-Quarter Financial Performance:

 

2017 Outlook

Koppers expects that its 2017 sales will be relatively flat year-over-year and remain at approximately $1.4 billion.  On an adjusted basis, the company is maintaining its EBITDA forecast of approximately $180 million.  Due primarily to a lower than anticipated effective tax rate, the adjusted EPS for 2017 is projected to be in the range of $2.80 and $3.00, compared with the prior estimate of $2.75 to $2.85.

Commenting on the 2017 forecast, Mr. Ball said, “The year began generally as we predicted when we first issued guidance in late 2016.  The sales volumes in our PC business continue to show strength, and our CMC operations are benefiting from ongoing savings related to its restructuring strategy as well as more favorable market conditions.  Our RUPS segment is experiencing softness as we projected, and there is a potential for further worsening before we see glimpses of improvement in 2018.  From the perspective of raw material cost trends, we are fairly well insulated in 2017 from the rise in copper prices that occurred in recent months, but we could start to feel some of the effects of higher input costs moving into 2018.  On balance, I have confidence in our ability to maintain our current run rate of profitability while setting a foundation for even more improvement in 2018 and beyond.”

 

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Investor Conference Call and Web Simulcast

Koppers management will conduct a conference call this morning, beginning at 11:00 a.m. Eastern Time to discuss the company’s performance.  Presentation materials will be available at least 15 minutes before the call on www.koppers.com in the Investor Relations section of the company’s website.

Interested parties may access the live audio broadcast by dialing 800-467-8998 in the United States/Canada, or 719-325-2157 for international, Conference ID number 2582596. Investors are requested to access the call at least five minutes before the scheduled start time in order to complete a brief registration. An audio replay will be available approximately two hours after the completion of the call at 866-375-1919 or 719-457-0820, Conference ID number 2582596. The recording will be available for replay through June 5, 2017.

The live broadcast of the Koppers conference call will be available online: http://edge.media-server.com/m/p/szr6984m. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your internet browser's URL address field.)

If you are unable to participate during the live webcast, the event will be archived on www.koppers.com and www.streetevents.com shortly after the live call and continuing through June 5, 2017.

 

About Koppers

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 applications in a diverse range of end-markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries.  Including our joint ventures, we serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, China and Europe.  The stock of Koppers Holdings Inc. is publicly traded on the New York Stock Exchange under the symbol "KOP."  For more information, visit us at www.koppers.com. Questions concerning investor relations should be directed to Michael J. Zugay at 412-227-2231 or Quynh McGuire at 412-227-2049.

 

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures.  Koppers believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share and net leverage ratio provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends, and facilitates 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 and adjusted earnings per share as performance measures under the company’s annual incentive plans.

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 Operating Profit to EBITDA and Adjusted EBITDA; Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA; Unaudited Reconciliation of Net Income Attributable to Koppers and Adjusted Net Income; Unaudited Reconciliation of Diluted Earnings Per Share and Adjusted Earnings Per Share; Unaudited Reconciliation of Total Debt to Net Leverage Ratio; and Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA on a Latest Twelve Month Basis.

For the company’s guidance, adjusted EBITDA, adjusted EBITDA margin and adjusted EPS excludes restructuring, impairment, non-cash LIFO charges, and non-cash mark-to-market commodity hedging.  The forecasted amounts for these items cannot be reasonably estimated due to their nature, but may be significant.  For that reason, the company is unable to provide GAAP earnings estimates at this time.

 

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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,” “plans,” “potential,” “intends,” “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 with and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding 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; potential impairment of our goodwill and/or long-lived assets; demand for Koppers goods and services; competitive conditions; interest rate and foreign currency rate fluctuations; availability and costs of key raw materials; 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 quarterly report on Form 10-Q.  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.

 

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Koppers Holdings Inc.

Unaudited Consolidated Statement of Operations

(Dollars in millions, except per share amounts)

 

 

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Koppers Holdings Inc.

Unaudited Consolidated Balance Sheet

(Dollars in millions, except per share amounts)

 

 

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Koppers Holdings Inc.

Unaudited Consolidated Statement of Cash Flows

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

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Unaudited Segment Information

The following tables set forth certain sales and operating data, net of all intersegment transactions, for the company’s businesses for the periods indicated.

 

 

 

 

 

 

 

 

 

 

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UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA

(In millions)

 

 

UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA

(In millions)

 

 

 

 

 

 

 

 

 

 

 

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UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

(In millions)

 

 

 

UNAUDITED RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KOPPERS AND ADJUSTED NET INCOME

(In millions)

 

 

 

 

 

 

 

 

 

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UNAUDITED RECONCILIATION OF DILUTED EARNINGS PER SHARE AND

ADJUSTED EARNINGS PER SHARE

(In millions except share amounts)

 

 

 

UNAUDITED RECONCILIATION OF TOTAL DEBT TO NET LEVERAGE RATIO

(In millions)

 

 

 

 

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ON A LATEST TWELVE MONTH BASIS

(In millions)

 

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