false 0001315257 0001315257 2021-11-04 2021-11-04

 

 

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):  November 4, 2021

KOPPERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

Pennsylvania	1-32737	20-1878963
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
436 Seventh Avenue Pittsburgh, Pennsylvania		15219
(Address of principal executive offices)		(Zip Code)

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):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KOP	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company 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. ☐

 

---

 

 

Item 2.02 Results of Operations and Financial Condition.

On November 4, 2021 we issued a press release announcing third quarter 2021 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 9.01 Financial Statements and Exhibits.

(d) Exhibits.  The following exhibits are furnished herewith:

 

99.1		Press Release dated November 4, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

---

 

 

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: November 4, 2021

 

KOPPERS HOLDINGS INC.
By:		/s/ Michael J. Zugay
		Michael J. Zugay
		Chief Financial Officer

 

 

Exhibit 99.1

 

 

News Release  

FOR IMMEDIATE RELEASE

Koppers Holdings Inc. Reports Third Quarter 2021 Results

Sales of $424.8 Million vs. Prior Year of $437.5 Million

Net Income Attributable to Koppers of $10.2 Million vs. Prior Year of $75.6 Million

Adjusted EBITDA of $53.9 Million vs. Prior Year of $66.7 Million

Diluted EPS of $0.47 vs. Prior Year of $3.53; Adjusted EPS of $1.01 vs. Prior Year of $1.64

 

PITTSBURGH, November 4, 2021 – 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 third quarter of 2021 of $10.2 million, or $0.47 per diluted share, compared to $75.6 million, or $3.53 per diluted share, in the prior year quarter.

Adjusted net income attributable to Koppers and adjusted earnings per share (EPS) were $22.0 million and $1.01 per share for the third quarter of 2021, compared to $35.1 million and $1.64 per share in the prior year quarter, respectively.  Adjustments to pre-tax income totaled $15.1 million of net expenses for the third quarter of 2021, compared with $5.3 million of net benefits for the third quarter of 2020. The adjustments for both periods reflected non-cash effects related to LIFO adjustments and mark-to-market commodity hedging, while the prior year quarter also included costs from restructuring activities.

Consolidated sales were $424.8 million, a decrease of $12.7 million, or 2.9 percent, compared with $437.5 million in the prior year quarter.  Excluding a $1.7 million favorable impact from foreign currency changes, sales decreased by $14.4 million, or 3.3 percent, from the prior year.

The Railroad and Utility Products and Services (RUPS) business experienced lower sales and profitability than prior year, primarily driven by a continued market shortage of hardwood production for untreated crossties as well as lower volumes for utility poles, partially offset by commercial crossties and rail joints benefiting from higher activity levels.

The Performance Chemicals (PC) segment reported lower sales and profitability against record results fueled by the pandemic in the prior year quarter, primarily due to more normalized demand in residential remodeling and higher raw materials and logistics expenses.

The Carbon Materials and Chemicals (CMC) segment delivered higher sales and profitability compared with the prior year, benefiting from a favorable pricing environment attributable to strong underlying market demand along with an improved cost profile.

Throughout the third quarter of 2021, each business segment was impacted, at various degrees, by key factors such as higher input costs, raw material availability and higher transportation costs as a result of inefficiencies in the global supply chain and a tight labor market.

 

---

 

President and CEO Leroy Ball said, “Koppers third quarter turned out to be a microcosm of the varied challenges that many companies are dealing with as a result of the pandemic.  We believe the issues are temporary and not a material threat to achieving our long-term strategy.  Supply chain challenges and rising input costs, which exceeded our expectations going into the quarter, hampered both sales and earnings, with our RUPS segment experiencing the biggest negative impact.  In our PC segment, residential preservative demand remained soft for longer than we anticipated, limiting our ability to absorb the shortfall.  On the other hand, our CMC business performed well despite logistical and inflationary headwinds, reflecting the positive impact of our pricing actions as well as our efficient operations.  While we continue to work through supply chain bottlenecks and the various challenges of working effectively while safely navigating our workforce through COVID-19 conditions, implementing continual cost increases to the ultimate consumer is our most significant near-term objective.  We have systematically raised prices in almost all markets so far in 2021 and plan to be even more aggressive in the fourth quarter and into 2022 to ensure that we are recapturing full value for the essential products and services that we provide.”

 

Third Quarter Financial Performance

2

---

 

 

2021 Outlook

Koppers remains committed to driving improvements through the execution of its strategic initiatives and making continued progress toward its long-term financial goals.  Based on current global economic activity and in consideration of the near-term economic uncertainty associated with the pandemic, the company expects that 2021 sales will be approximately $1.7 billion.  By comparison, sales were $1.67 billion in 2020, excluding Koppers (Jiangsu) Carbon Chemical Company Limited, which was sold on September 30, 2020.  Koppers expects adjusted EBITDA will be approximately $220 million for 2021, compared with $211.0 million in the prior year.

The effective tax rate for adjusted net income in 2021 is projected to be approximately 27 percent, compared to the tax rate in 2020, excluding certain income tax effects relating to non-recurring items, of 20.1 percent.  The higher 2021 tax rate is primarily due to benefits in the prior year related to the federal Coronavirus Aid, Relief, and Economic Security Act and other tax regulations that are not expected to continue in 2021.  Accordingly, the 2021 adjusted EPS is forecasted to be approximately $4.12, compared with adjusted EPS of $4.12 in the prior year.  The higher tax rate anticipated in 2021 is estimated to have a negative impact on adjusted EPS of approximately $0.40 compared to the prior year.

Koppers does not provide reconciliations of guidance for adjusted EBITDA and adjusted EPS to comparable GAAP measures, in reliance on the unreasonable efforts exception.  Koppers is unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures.  These items include, but are not limited to, restructuring and impairment charges, acquisition-related costs, mark-to-market commodity hedging, and LIFO adjustments that are difficult to predict in advance in order to include in a GAAP estimate and may be significant.

Koppers expects to invest $115 million to $120 million in capital expenditures in 2021.  Net of cash received from the sale of closed properties and property insurance recoveries, Koppers expects its net investment in capital expenditures to be $80 million to $85 million.

Commenting on the forecast, Mr. Ball said, “Higher uncovered costs and global macro supply chain inefficiencies combined to chip away at third quarter profitability. While these issues are not unique to Koppers, we are actively addressing them by implementing historic price increases in certain relevant business segments beyond the modest increases already made earlier this year.  We believe that nagging supply chain issues related to unexplained production delays, clogged ports, rail delays and inefficiency, and trucking shortages will continue into next year.  As such, we are deploying a number of measures to mitigate future short-term disruptions. Those measures, plus over $50 million in 2022 annualized price increases, should keep us solidly on the path of growing EBITDA by almost one third to $300 million by 2025.”

 

Investor Conference Call and Webcast

Koppers management will conduct a conference call this morning, beginning at 11:00 a.m. Eastern Time to discuss the company’s results for the quarter.  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 toll free by dialing 1-833-366-1128 in the United States and Canada, or 1-412-902-6774 for international, Conference ID number 10161343. Participants are requested to access the call at least five minutes before the scheduled start time to complete a brief registration.  The conference call will be broadcast live on www.koppers.com and can also be accessed here.

An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 for U.S. toll free, 855-669-9658 for Canada toll free, or 1-412-317-0088 for international, Conference ID number 10161343. The recording will be available for replay through February 3, 2022.

3

---

 

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.  We serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, 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: www.koppers.com. Inquiries from the media should be directed to Ms. Jessica Franklin at 412-227-2025.  Inquiries from the investment community should be directed to Mr. Michael Zugay at 412-227-2231 or Ms. Quynh McGuire at 412-227-2049.

 

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures. Koppers believes that EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, net debt and net leverage ratio provide information useful to investors in understanding the underlying operational performance of the company, its business and performance trends, and facilitate 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 as a performance measure 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 Net Income to EBITDA and Adjusted EBITDA; Unaudited Reconciliation of EBITDA to Adjusted EBITDA by Segment; Unaudited Reconciliation of Operating Profit 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 Debt and 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 and adjusted EPS exclude restructuring and impairment charges, acquisition-related costs, mark-to-market commodity hedging, and LIFO adjustments.  As described above, the forecast 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 estimates at this time.

 

4

---

 

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,” “plan,” “potential,” “intend,” “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 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; existing and future adverse effects as a result of the coronavirus (COVID-19) pandemic; disruption in the U.S. and global financial markets; 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 any subsequent filings by Koppers with the Securities and Exchange Commission.  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.

5

---

KOPPERS HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

(Dollars in millions, except per share amounts)

 

 

6

---

 

KOPPERS HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions, except per share amounts)

 

 

7

---

 

KOPPERS HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

 

 

8

---

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.

 

 

 

 

 

 

 

9

---

 

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

(In millions)

 

 

 

UNAUDITED RECONCILIATION OF EBITDA TO ADJUSTED EBITDA BY SEGMENT

(In millions)

10

---

 

UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA*

(In millions)

 

 

 

UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA*

(In millions)

 

*A reconciliation of segment net income to adjusted segment EBITDA is not available without unreasonable efforts as we do not measure net income at the segment level or use it as a measure of operating performance.

11

---

 

UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA*

(In millions)

 

 

UNAUDITED RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA*

(In millions)

 

 

*A reconciliation of segment net income to adjusted segment EBITDA is not available without unreasonable efforts as we do not measure net income at the segment level or use it as a measure of operating performance.

12

---

 

 

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

(In millions)

 

 

 

UNAUDITED RECONCILIATION OF DILUTED EARNINGS PER SHARE AND

ADJUSTED EARNINGS PER SHARE

(In millions except share amounts)

 

 

 

13

---

 

UNAUDITED RECONCILIATION OF TOTAL DEBT TO NET DEBT AND NET LEVERAGE RATIO

(In millions)

 

 

 

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

ON A LATEST TWELVE MONTH BASIS

(In millions)

 

 

14