Koppers Holdings Inc. Provides November 2020 Business Update; Reaffirms 2020 Outlook
Koppers Holdings, Inc. (“Koppers” or the “company”), an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds, today provided its November 2020 business update as part of the company’s ongoing communications to the investment community. In addition, Koppers plans to report preliminary results for the quarter and year ending December 31, 2020, during its next business update on January 28, 2021. The company will also conduct a conference call with the investment community on that day, which will be broadcast live on www.koppers.com, with a replay to be made available.
November Sales by Business Segment
For November 2020, consolidated sales were $121.7 million compared to $119.6 million in the prior year period, representing an increase of $2.1 million, or 1.8 percent. Compared to prior year, the increase was driven by Performance Chemicals (“PC”) continuing to benefit from robust demand for residential wood treatment preservatives in most geographic regions, partially offset by lower sales in Railroad and Utility Products and Services (“RUPS”) and Carbon Materials and Chemicals (“CMC”), consistent with the company’s expectations.
– Sales for RUPS of $51.1 million decreased by $3.9 million, or 7.1 percent, compared to sales of $55.0 million in the prior year month. Crosstie treating volumes for the month were lower than prior year due to reduced activity in both Class I and commercial markets, partially offset by improved demand in maintenance-of-way businesses related to bridge repair and engineering and crosstie disposal services. Sales from the utility pole businesses in Australia and the U.S., combined, were slightly lower than prior year.
– Sales for PC of $41.9 million increased by $9.4 million, or 28.9 percent, compared to sales of $32.5 million in the prior year month. The sales growth was primarily due to ongoing strong demand in the United States for residential treated lumber. A greater focus on home design and home entertainment, an aging housing stock and a shortage of new home construction are driving increased remodeling spending. In addition, international markets continued to experience strong demand in all geographic regions.
– Sales for CMC of $28.7 million decreased by $3.4 million, or 10.6 percent, compared to sales of $32.1 million in the prior year month. The decrease was driven by lower contributions from North America and Australia, partially offset by improved demand in Europe. The overall business continued to be negatively affected by lower average pricing associated with ongoing weakness in industrial production markets, such as aluminum, steel, energy and construction. In 2020, Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) results are classified as discontinued operations for the current year, as well as the comparable period in 2019 due to its divestiture.
President and CEO Leroy Ball said, “Our fourth quarter is continuing to play out as expected. Strong PC demand, driven by an extremely strong construction market, has outpaced market weakness in CMC and a seasonal slowdown in RUPS. A resurgence in COVID-19 means challenges remain, but our site leadership is doing a tremendous job of protecting the safety of our team members, while ensuring that our essential customer base receives the same high level of quality and service they expect from Koppers.”
Koppers continues to expect 2020 sales to be approximately $1.6 billion, compared with sales of $1.65 billion (excluding KJCC) in 2019. The company anticipates that adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) in 2020 will be in the range of $204 million to $210 million, compared with $201.1 million in the prior year. Adjusted earnings per share (“EPS”) is projected to be in the range of $3.65 to $3.90 in 2020, compared with $3.18 in the prior year.
Capital expenditures for November 2020 were $6.9 million, compared with $2.0 million in November 2019. For the year-to-date period ended November 30, 2020, capital expenditures were $60.8 million compared with $32.5 million for the prior year period. Koppers is on track to invest $65 million to $70 million in capital expenditures in 2020, primarily related to improving the safety and reliability of its existing infrastructure as well as a major treating expansion project.
Koppers continues to anticipate approximately $125 million of debt reduction in 2020. Based upon current adjusted EBITDA and debt reduction estimates, net leverage is projected to be between 3.5 and 3.6 at December 31, 2020, compared with 4.3 at December 31, 2019.
Mr. Ball commented on the outlook, “With two months of our final quarter completed, I am happy to say that we are trending toward the higher end of our adjusted EPS forecast, as long as our effective tax rate holds to our most recent projections. It’s amazing to think that when we close the door on 2020, we will have reached a number of significant financial milestones while navigating through a global pandemic. I remain inspired by how the entire global Koppers team has come together through these trying and challenging times to support our customers, each other, and the local communities in which we operate.”
Koppers does not provide reconciliations of guidance for adjusted EBITDA, adjusted EPS, net debt or net leverage ratio 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 restructuring, impairment, non-cash LIFO charges, acquisition-related costs, and non-cash mark-to-market commodity hedging that are difficult to predict in advance in order to include in a GAAP estimate and may be significant.
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 us on the Web: www.koppers.com.
Michael J. Zugay – Chief Financial Officer – email@example.com – (412) 227-2231
Source: Koppers Holdings, Inc.