Koppers Holdings Announces First Quarter Results and Other Business Updates
Koppers Holdings Inc. (“Koppers”), an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds, today reported a net loss attributable to Koppers for the first quarter of $1.4 million, or $(0.07) per diluted share, compared to net income of $11.6 million, or $0.56 per diluted share, in the prior year quarter. Beginning in 2020, results of Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) are classified as held for sale and as discontinued operations for the current year as well as the comparable prior year period due to its pending divestiture. Net income from continuing operations attributable to Koppers for the first quarter of 2020 was $1.9 million, or $0.09 per diluted share, compared to $9.8 million, or $0.47 per diluted share, in the prior year quarter.
The adjusted net income and adjusted earnings per share (“EPS”) from continuing operations were $9.9 million and $0.47 per share for the first quarter of 2020, compared to $11.4 million and $0.55 per share in the prior year quarter, respectively.
Adjustments to pre-tax income totaled $10.6 million for the first quarter of 2020, compared with $3.9 million for the prior year quarter. For both periods, the adjustments included restructuring expenses as well as non-cash effects related to LIFO and mark-to-market commodity hedging.
The operating profit was $13.6 million, or 3.4 percent, compared with $24.3 million, or 6.4 percent, in the prior year period. The operating profit margin is calculated as a percentage of sales.
For the first quarter of 2020, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $37.6 million, or 9.4 percent, compared with $40.8 million, or 10.8 percent, in the prior year quarter. The adjusted EBITDA margin is calculated as a percentage of sales.
Additional items excluded from adjusted EBITDA in the first quarter of 2020 totaled $10.0 million of pre-tax charges, compared with $2.3 million in the prior year quarter. For both periods, the adjustments included restructuring expenses as well as non-cash effects related to LIFO and mark-to-market commodity hedging.
Consolidated sales were $401.9 million for the first quarter of 2020, an increase of $25.0 million, or 6.6 percent, from sales of $376.9 million in the prior year quarter. Excluding a negative impact from foreign currency translation of $6.3 million, sales were higher by $31.3 million, or 8.3 percent.
The Railroad and Utility Products and Services (“RUPS”) performance reflected a generally favorable demand environment with increased crosstie volumes and favorable pricing in its commercial crosstie business as well as higher volumes of utility poles, partially offset by continued weaker demand in its Railroad Structures and Recovery Resources businesses. The Performance Chemicals (“PC”) segment reported higher sales and profitability, on an adjusted basis, driven by organic growth as well as market share gains primarily in North America and lower year-over-year raw material costs, partially offset by lower demand in its European business. The Carbon Materials and Chemicals (“CMC”) business was negatively affected by softening demand in the global aluminum markets, and lower pricing and inventory write-downs due to the steep decline in oil prices.
President and CEO Leroy Ball said, “Final results for the first quarter were in line with what was communicated in our press release issued on April 27, 2020. I look forward to providing all stakeholders with details about our operations as we navigate through the challenges brought on by the COVID-19 pandemic when we have our next monthly business update on May 20, 2020.”
Pending Divestiture of Koppers (Jiangsu) Carbon Chemical Company Limited
In February, Koppers announced that it entered into a definitive agreement to sell Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”), a 75-percent owned China coal tar distillation business with the remaining 25 percent owned by Yizhou Group Company Limited.
On April 29, 2020, the State Administration for Market Regulation of China (“SAMR”) decided not to conduct further review and gave approval for the pending divestiture to proceed, which represents a significant step in the process.
Executive Vice President and Chief Operating Officer James Sullivan said, “I am happy to report that the work required to be completed prior to closing on the sale of KJCC is proceeding at a faster pace than originally anticipated. While we are holding to our original timeline of closing in August 2020 to account for any potential delays, I am hopeful that we may be able to close the transaction in July, based upon our current progress.”
Koppers expects to realize approximately $65 million of net cash, after taxes and expenses, and plans to apply the cash proceeds toward debt reduction.
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 on the Web: www.koppers.com.
Michael Zugay – Investor Relations – (412) 227-2231
Source: Koppers Holdings, Inc.