false000131525700013152572024-02-282024-02-28

 

 

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): February 28, 2024

 

 

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))

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. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On February 28, 2024 we issued a press release announcing fourth quarter and full year 2023 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.

 

99.1		Press Release dated February 28, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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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: February 28, 2024

KOPPERS HOLDINGS INC.
By:		/s/ Jimmi Sue Smith
		Jimmi Sue Smith
		Chief Financial Officer

 

 

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		Koppers Holdings Inc. 436 Seventh Avenue Pittsburgh, PA 15219-1800 Tel 412 227 2001 www.koppers.com

 

News Release

FOR IMMEDIATE RELEASE

For Information:		Quynh McGuire, Vice President, Investor Relations
		412 227 2049
		McGuireQT@koppers.com

Koppers Reports Fourth Quarter and Full-Year 2023 Results; Provides 2024 Outlook

Record Fourth-Quarter Sales of $513.2 Million vs. $482.6 Million in Prior Year Quarter

Record Year Sales of $2.15 Billion vs. $1.98 Billion in Prior Year

Record Operating Profit of $195.2 Million, 25 percent higher than previous record

PITTSBURGH, February 28, 2024 – 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 fourth quarter of 2023 of $12.9 million, or $0.59 per diluted share, compared to $13.8 million, or $0.65 per diluted share, in the prior year quarter.

Adjusted net income attributable to Koppers and adjusted earnings per share (EPS) were $14.5 million and $0.67 per share for the fourth quarter of 2023, compared to $23.0 million and $1.09 per share in the prior year quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2023 were $53.9 million, compared with $52.1 million in the prior year quarter.

Consolidated sales of $513.2 million increased by $30.6 million, or 6.3 percent, compared with $482.6 million in the prior year quarter.

The Railroad and Utility Products and Services (RUPS) business delivered record fourth-quarter sales and adjusted EBITDA as a result of pricing increases and higher volumes for crossties, which improved throughput, partially offset by increased raw material and operating costs. In addition, fourth-quarter records in operating profit and adjusted EBITDA from the domestic utility pole business contributed to the favorable performance.

The Performance Chemicals (PC) segment benefited from global pricing initiatives, as well as higher volumes. Profitability returned to historical norms as renegotiated customer contracts allowed for price increases to address higher raw material and other operating costs experienced in the prior year.

The Carbon Materials and Chemicals (CMC) segment sales and profitability declined from the prior year, primarily due to lower market prices and weaker demand for most products, partly offset by higher carbon pitch volumes.

 

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Chief Executive Officer Leroy Ball said, "We finished the year on a strong note near the top end of our adjusted EBITDA range of guidance. Once again, for the things we control, our global team did an amazing job of executing by continuing to provide our customer base with the highest-quality products and services in a challenging environment. Our diversified portfolio drove the strong performance, as our PC and RUPS business segments picked up a struggling CMC segment that continues to work through the trough of its business cycle. As always, I credit our global team for remaining focused on performing safely and at a high level, as our success begins with them."

 

Fourth Quarter Financial Performance

2023 Financial Performance

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2023 Accomplishments

In 2023, Koppers continued implementing its value creation strategy and further positioned the company for long-term growth and profitability, as highlighted by the following:

2024 Outlook

Koppers continues to expand and optimize its business and make further progress on the company's strategic pillars toward its long-term financial goals. After considering global economic conditions, as well as the ongoing uncertainty associated with geopolitical and supply chain challenges, Koppers expects 2024 sales of approximately $2.25 billion, compared with $2.15 billion in 2023. Adjusted EBITDA is anticipated to be approximately $275 million in 2024, compared with $256.4 million in 2023.

The effective tax rate for adjusted net income attributable to Koppers in 2024 is projected to be approximately 28 percent, slightly above the adjusted tax rate in 2023. Accordingly, 2024 adjusted EPS is forecasted to be in the range of $4.60 to $4.80 per share, compared with $4.36 per share in 2023.

Koppers expects operating cash flows of approximately $150 million in 2024, excluding any impact from pension termination. The company is pursuing a termination of its U.S. qualified pension plan and is targeting this effort for completion in the fourth quarter 2024. An estimated $25 million of funding will be required when this is completed, which will impact operating cash flow.

Koppers anticipates capital expenditures of approximately $100 million in 2024, including capitalized interest, with approximately $29 million allocated to discretionary projects.

Commenting on the forecast, Mr. Ball said, "I feel good about meeting our 2024 targets, as long as demand in our segments meets our projections of flat to slightly up from 2023 in existing markets. Factors driving the 7 percent increase in adjusted EBITDA include some carry-over pricing benefits from prior year; contributions from our Leesville, Louisiana, facility coming online to feed the Texas pole market; and the benefits of a full year of cost efficiencies from our North Little Rock, Arkansas, treating facility. We anticipate softer results in early 2024 versus strong comps from the first quarter of 2023 as we emerge from the bottom of the carbon markets cycle and recover from the intense winter storm activity in the U.S. which affected much of Koppers and our customers' operating network. I expect that as the year progresses, we will make up any ground lost in the first quarter and deliver another year of record performance."

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 forecast for a GAAP estimate and may be significant.

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 833-366-1128 in the United States and Canada, or 412-902-6774 for international, Conference ID number 10184851. 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.

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An audio replay will be available approximately two hours after the completion of the call at 877-344-7529 for U.S. toll free, 855-669-9658 for Canada toll free, or 412-317-0088 for international, using replay access code 1964782. The recording will be available for replay through May 28, 2024.

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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 Black at BlackJF@koppers.com or 412-227-2025. Inquiries from the investment community should be directed to Ms. Quynh McGuire at McGuireQT@koppers.com or 412-227-2049.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures. Koppers believes that adjusted EBITDA, adjusted net income attributable to Koppers and adjusted earnings per share 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 and for certain performance share units granted to management.

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 Adjusted EBITDA and Unaudited Reconciliations of Net Income Attributable to Koppers to Adjusted Net Income Attributable to Koppers and Diluted Earnings Per Share and Adjusted Earnings Per Share.

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 future dividends, 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.

 

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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; unexpected business disruptions; potential impairment of our goodwill and/or long-lived assets; demand for Koppers goods and services; competitive conditions; capital market conditions, including interest rates, borrowing costs and foreign currency rate fluctuations; availability and fluctuations in the prices of key raw materials; disruptions and inefficiencies in the supply chain; economic, political and environmental conditions in international markets; changes in laws; the impact of environmental laws and regulations; 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.

 

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KOPPERS HOLDINGS INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in millions, except share and per share amounts)

		Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net sales		$	513.2			$	482.6			$	2,154.2			$	1,980.5
Cost of sales			416.7				406.5				1,729.7				1,635.9
Depreciation and amortization			14.3				11.6				57.0				56.1
Selling, general and administrative expenses			45.0				36.9				174.1				153.3
(Gain) on sale of assets			0.0				0.0				(1.8	)			(2.5	)
Operating profit			37.2				27.6				195.2				137.7
Other income, net			0.2				0.7				0.4				2.5
Interest expense			17.7				12.5				71.0				44.8
Income from continuing operations before income taxes			19.7				15.8				124.6				95.4
Income tax provision			6.7				1.9				34.8				31.6
Income from continuing operations			13.0				13.9				89.8				63.8
Loss on sale of discontinued operations			0.0				(0.1	)			0.0				(0.6	)
Net income			13.0				13.8				89.8				63.2
Net income (loss) attributable to noncontrolling interests			0.1				0.0				0.6				(0.2	)
Net income attributable to Koppers		$	12.9			$	13.8			$	89.2			$	63.4
Earnings (loss) per common share attributable to Koppers    common shareholders:
Basic -
Continuing operations		$	0.62			$	0.67			$	4.28			$	3.05
Discontinued operations			0.00				(0.01	)			0.00				(0.03	)
Earnings per basic common share		$	0.62			$	0.66			$	4.28			$	3.02
Diluted -
Continuing operations		$	0.59			$	0.66			$	4.14			$	3.00
Discontinued operations			0.00				(0.01	)			0.00				(0.02	)
Earnings per diluted common share		$	0.59			$	0.65			$	4.14			$	2.98
Weighted average shares outstanding (in thousands):
Basic			20,826				20,839				20,835				20,977
Diluted			21,687				21,224				21,539				21,313

 

 

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KOPPERS HOLDINGS INC.

UNAUDITED CONSOLIDATED BALANCE SHEET

(Dollars in millions, except share and per share amounts)

		December 31, 2023				December 31, 2022
Assets
Cash and cash equivalents		$	66.5			$	33.3
Accounts receivable, net of allowance of $6.5 and $3.5			202.4				215.7
Inventories, net			395.7				355.7
Derivative contracts			7.1				3.1
Other current assets			27.3				29.0
Total current assets			699.0				636.8
Property, plant and equipment, net			631.7				557.3
Operating lease right-of-use assets			90.5				86.3
Goodwill			294.4				294.0
Intangible assets, net			102.2				116.1
Deferred tax assets			10.4				11.7
Other assets			7.3				9.2
Total assets		$	1,835.5			$	1,711.4
Liabilities
Accounts payable		$	202.9			$	207.4
Accrued liabilities			95.1				96.1
Current operating lease liabilities			22.9				20.5
Current maturities of long-term debt			5.0				0.0
Total current liabilities			325.9				324.0
Long-term debt			835.4				817.7
Accrued post-retirement benefits			31.6				34.7
Deferred tax liabilities			25.9				21.5
Operating lease liabilities			67.4				66.3
Other long-term liabilities			46.3				44.2
Total liabilities			1,332.5				1,308.4
Commitments and contingent liabilities
Equity
Senior Convertible Preferred Stock, $0.01 par value per share; 10,000,000    shares authorized; no shares issued			0.0				0.0
Common Stock, $0.01 par value per share; 80,000,000 shares authorized;    25,163,238 and 24,547,000 shares issued			0.3				0.2
Additional paid-in capital			291.1				263.9
Retained earnings			444.0				360.2
Accumulated other comprehensive loss			(88.8	)			(97.3	)
Treasury stock, at cost, 4,302,996 and 3,783,901 shares			(147.7	)			(127.6	)
Total Koppers shareholders’ equity			498.9				399.4
Noncontrolling interests			4.1				3.6
Total equity			503.0				403.0
Total liabilities and equity		$	1,835.5			$	1,711.4

 

 

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KOPPERS HOLDINGS INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

		Year Ended December 31,
		2023				2022
Cash provided by (used in) operating activities:
Net income		$	89.8			$	63.2
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization			57.0				56.1
Stock-based compensation			17.3				13.2
Change in derivative contracts			(0.9	)			6.5
Non-cash interest expense			4.9				2.8
(Gain) on sale of assets and investment			(2.0	)			(2.6	)
Insurance proceeds			(1.7	)			(0.8	)
Deferred income taxes			5.7				2.7
Change in other liabilities			0.2				1.1
Other - net			2.2				5.3
Changes in working capital:
Accounts receivable			14.9				(32.3	)
Inventories			(37.2	)			(41.8	)
Accounts payable			(0.4	)			32.7
Accrued liabilities			(2.4	)			(7.3	)
Other working capital			(1.3	)			3.5
Net cash provided by operating activities			146.1				102.3
Cash (used in) provided by investing activities:
Capital expenditures			(120.5	)			(105.3	)
Insurance proceeds			1.7				0.8
Acquisitions			0.0				(14.7	)
Net cash provided by sale of discontinued operations and asset sales			2.8				4.4
Net cash used in investing activities			(116.0	)			(114.8	)
Cash provided by (used in) financing activities:
Borrowings of credit facility			1,032.5				444.4
Repayments of credit facility			(896.4	)			(406.1	)
Borrowings of long-term debt			388.0				0.0
Repayments of long-term debt			(501.0	)			(2.0	)
Issuances of Common Stock			9.9				1.1
Repurchases of Common Stock			(20.1	)			(23.6	)
Payment of debt issuance costs			(5.3	)			(4.8	)
Dividends paid			(5.0	)			(4.2	)
Net cash provided by financing activities			2.6				4.8
Effect of exchange rate changes on cash			0.5				(4.5	)
Net increase (decrease) in cash and cash equivalents			33.2				(12.2	)
Cash and cash equivalents at beginning of period			33.3				45.5
Cash and cash equivalents at end of period		$	66.5			$	33.3
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease    liabilities		$	26.6			$	12.1
Accrued capital expenditures			5.6				11.1
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	70.0			$	41.3
Income taxes			34.3				20.7

 

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UNAUDITED SEGMENT INFORMATION

(Dollars in millions)

		Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net sales:
Railroad and Utility Products and Services		$	216.4			$	193.0			$	897.9			$	788.3
Performance Chemicals			164.4				140.8				671.6				579.9
Carbon Materials and Chemicals			132.4				148.8				584.7				612.3
Total		$	513.2			$	482.6			$	2,154.2			$	1,980.5
Adjusted EBITDA(1):
Railroad and Utility Products and Services		$	20.7			$	13.3			$	84.0			$	53.6
Performance Chemicals			29.4				17.6				123.1				75.5
Carbon Materials and Chemicals			3.8				21.2				49.3				99.0
Total		$	53.9			$	52.1			$	256.4			$	228.1
Adjusted EBITDA margin(2):
Railroad and Utility Products and Services			9.6	%			6.9	%			9.4	%			6.8	%
Performance Chemicals			17.9	%			12.5	%			18.3	%			13.0	%
Carbon Materials and Chemicals			2.9	%			14.2	%			8.4	%			16.2	%

 

 

 

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Dollars in millions)

		Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net income		$	13.0			$	13.8			$	89.8			$	63.2
Interest expense			17.7				12.5				71.0				44.8
Depreciation and amortization			14.3				11.6				57.0				56.1
Income tax provision			6.7				1.9				34.8				31.6
Discontinued operations			0.0				0.1				0.0				0.6
Sub-total			51.7				39.9				252.6				196.3
Adjustments to arrive at adjusted EBITDA:
LIFO expense(1)			2.7				12.8				6.0				25.6
Impairment, restructuring and plant closure costs			0.0				0.8				0.1				1.1
(Gain) on sale of assets			0.0				0.0				(1.8	)			(2.5	)
Mark-to-market commodity hedging (gains) losses			(0.5	)			(2.5	)			(0.5	)			6.5
Inventory adjustment			0.0				1.1				0.0				1.1
Total adjustments			2.2				12.2				3.8				31.8
Adjusted EBITDA		$	53.9			$	52.1			$	256.4			$	228.1

 

 

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UNAUDITED RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO KOPPERS TO

ADJUSTED NET INCOME ATTRIBUTABLE TO KOPPERS AND

DILUTED EARNINGS PER SHARE AND ADJUSTED EARNINGS PER SHARE

(Dollars in millions, except share and per share amounts)

		Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net income attributable to Koppers		$	12.9			$	13.8			$	89.2			$	63.4
Adjustments to arrive at adjusted net income:
LIFO expense(1)			2.7				12.8				6.0				25.6
Impairment, restructuring and plant closure costs			0.0				0.8				0.1				1.0
(Gain) on sale of assets			0.0				0.0				(1.8	)			(2.5	)
Mark-to-market commodity hedging (gains) losses			(0.5	)			(2.5	)			(0.5	)			6.5
Inventory adjustment			0.0				1.1				0.0				1.1
Write-off of debt issuance costs			0.0				0.0				2.0				0.4
Total adjustments			2.2				12.2				5.8				32.1
Adjustments to income tax and noncontrolling interests:
Income tax on adjustments to pre-tax income			(0.6	)			(3.1	)			(1.8	)			(7.6	)
Deferred tax adjustments			0.0				0.0				0.2				0.0
Noncontrolling interest			0.0				0.0				0.6				(0.2	)
Effect on adjusted net income			1.6				9.1				4.8				24.3
Adjusted net income including discontinued operations			14.5				22.9				94.0				87.7
Loss on sale of discontinued operations			0.0				0.1				0.0				0.6
Adjusted net income attributable to Koppers		$	14.5			$	23.0			$	94.0			$	88.3
Diluted weighted average common shares outstanding   (in thousands)			21,687				21,224				21,539				21,313
Earnings per share:
Diluted earnings per share - continuing operations		$	0.59			$	0.66			$	4.14			$	3.00
Diluted earnings per share - net income		$	0.59			$	0.65			$	4.14			$	2.98
Adjusted earnings per share		$	0.67			$	1.09			$	4.36			$	4.14

 

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