PITTSBURGH, Feb. 18, 2020 /PRNewswire/ -- Koppers
Holdings Inc. (NYSE: KOP), an integrated global provider of treated
wood products, wood treatment chemicals and carbon compounds, today
announced it had entered into a definitive agreement to sell
Koppers (Jiangsu) Carbon Chemical
Company Limited (KJCC), to Fangda Carbon New Material Co., Ltd.
(Fangda Carbon) and C-Chem Co., Ltd, a subsidiary of NIPPON STEEL
Chemical & Material Co., Ltd. KJCC is a tar distillation
facility located in Pizhou City, Jiangsu
Province, China and is 75-percent owned by the Company
with the remaining 25 percent owned by Yizhou Group Company
Limited.
The closing of the transaction is subject to customary closing
conditions, including receipt of regulatory approvals in
China and approval of the
transaction by the shareholders of Fangda Carbon. The Company
estimates that regulatory approvals could be received in
approximately four to six months based upon the timeline for
similar transactions. The total purchase price is $107 million, adjusted for cash, working capital
at closing and adjusted to the extent certain capital expenditures
of KJCC are incurred prior to closing and indebtedness of the
transaction. Koppers expects to realize approximately $65 million of net cash, after noncontrolling
interest, taxes and expenses. The Company plans to apply the
cash proceeds toward debt reduction, consistent with its stated
goals.
In connection with the transaction, KJCC has reached agreement
with its largest customer in China
to resolve the previously disclosed contractual dispute related to
application of contractual pricing terms. The settlement of the
dispute will become effective upon the closing of the
transaction.
Commenting on the sale, James
Sullivan, Executive Vice President and Chief Operating
Officer, said, "We are pleased to have signed the sale and purchase
agreement for the divestiture of KJCC and to put the negotiations
behind us. This is an immensely important step toward
sharpening our focus on our portfolio of wood-based technologies
which are built on our company's purpose of protecting what matters
and preserving the future."
President and Chief Executive Officer Leroy Ball added, "Despite KJCC's uneven
financial performance since being commissioned in mid-2014, the
overall returns were in line with our expectations on a cumulative
basis and the operations exhibited solid financial performance by
averaging approximately $10.5 million
of EBITDA annually over the five-year period of 2015 to 2019.
Although there is still much work to do to complete this
transaction, including receiving regulatory approvals, we have
reached a key milestone and I am confident that all parties are
interested in reaching a successful conclusion."
Fourth Quarter 2019 Estimated Financial
Performance
While the company is still conducting financial closing
procedures for the fourth quarter and full year, Koppers is
providing a preview of fourth quarter 2019 financial results.
- Estimated consolidated sales were $393.2
million for the fourth quarter of 2019, a decrease of
$32.2 million, or 7.6 percent, from
sales of $425.4 million in the prior
year quarter. Excluding a negative impact from foreign
currency translation of $3.1 million,
sales were lower by $29.1 million or
6.9 percent.
- Preliminary operating profit was $24.3
million, or 6.2 percent, compared with $13.6 million, or 3.2 percent, in the prior year
quarter. Estimated adjusted EBITDA was $39.0 million, or 9.9 percent, compared with
$46.9 million, or 11.0 percent, in
the prior year quarter. Operating profit margin and adjusted
EBITDA margin are calculated as a percentage of GAAP
sales.
- Adjustments to preliminary pre-tax income totaled $0.7 million for the fourth quarter of 2019,
compared to $18.3 million for the
fourth quarter of 2018.
- Preliminary net income attributable to Koppers for the fourth
quarter was $20.6 million, compared
to a net loss of $2.6 million in the
prior year quarter.
- Preliminary adjusted net income was $6.2
million for the fourth quarter of 2019, compared to
$12.4 million in the prior year
quarter, respectively.
- Preliminary diluted earnings per share (EPS) was $0.96, compared with $(0.13) per share in the prior year
quarter. Preliminary adjusted EPS for the quarter was
$0.29, compared with $0.60 for the prior year period.
At December 31, 2019, estimated
total debt was $901.2 million and,
net of cash and cash equivalents, the estimated net debt was
$868.2 million, compared with total
debt of $990.4 million and net debt
of $949.8 million at December 31, 2018. On a year-over-year
basis, the net debt was lower by $81.6
million, which reflects our relentless focus on debt
reduction. The company's net leverage ratio was 4.1 at
December 31, 2019, compared with 4.2
on a proforma basis at December 31,
2018.
Commenting on the results, President and CEO Leroy Ball said, "On a year-over-year basis, we
experienced weaker demand in the Railroad Structures and Recovery
Resources portion of our Railroad and Utility Products segment and
the international component of our Performance Chemicals
segment. Consequently, it appears that adjusted EPS for the
fourth quarter will fall short of our expectations.
Countervailing forces such as stronger sales volumes of treated and
untreated crossties and residential wood treatment preservatives
helped to mitigate some but not all of the impact."
Mr. Ball continued, "On the positive side, we had a very strong
fourth quarter cash flow, which has brought our net debt at
year-end to below $870 million.
In 2020, I expect a continued favorable trend for our wood
preservative-based businesses that should more than offset the
contribution from our KJCC operation. I look forward to
sharing much more color next week when we disclose Koppers final
2019 results and speak more regarding our outlook for the
future."
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 on the Web: www.koppers.com.
Questions concerning investor relations should be directed to
Michael Zugay at 412 227 2231 or
Quynh McGuire at 412 227 2049.
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 include, but are not limited to, statements
concerning the proposed sale of KJCC, the regulatory approvals and
other closing conditions required in connection with the
transaction and the expected settlement of a customer dispute. 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, risks
associated with the proposed sale of KJCC, including the inability
to obtain, or delays in obtaining, the required regulatory and
other approvals; 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 reports 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.
UNAUDITED
RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED
EBITDA (In millions)
|
|
|
Three Months Ended
December 31, 2019
|
|
(Preliminary)
|
Operating
profit
|
$
|
24.3
|
Other
income
|
|
0.1
|
Depreciation and
amortization
|
|
12.8
|
Depreciation in
impairment and restructuring charges
|
|
0.8
|
EBITDA with
noncontrolling interest
|
$
|
38.0
|
Unusual items
impacting EBITDA:
|
|
|
CMC
restructuring
|
|
5.4
|
Non-cash LIFO
expense
|
|
(0.4)
|
Mark-to-market
commodity hedging
|
|
(4.0)
|
Adjusted
EBITDA
|
$
|
39.0
|
UNAUDITED
RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED
EBITDA (In millions)
|
|
|
Three Months Ended
December 31, 2018
|
|
|
|
Operating
profit
|
$
|
13.6
|
Other
income
|
|
1.8
|
Depreciation and
amortization
|
|
12.3
|
Depreciation in
impairment and restructuring charges
|
|
0.2
|
EBITDA with
noncontrolling interest
|
$
|
27.9
|
Unusual items
impacting EBITDA:
|
|
|
CMC
restructuring
|
|
10.4
|
Non-cash LIFO
expense
|
|
6.3
|
Mark-to-market
commodity hedging
|
|
1.4
|
RUPS treating plant
closures
|
|
0.8
|
Sale of specialty
chemicals business
|
|
0.1
|
Adjusted
EBITDA
|
$
|
46.9
|
UNAUDITED
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA (In millions)
|
|
|
|
Three Months Ended
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
(Preliminary)
|
|
|
|
|
Net income
|
|
$
|
20.2
|
$
|
|
|
(2.4)
|
Interest
expense
|
|
|
14.3
|
|
|
|
16.2
|
Depreciation and
amortization
|
|
|
12.8
|
|
|
|
12.3
|
Depreciation in
impairment and restructuring charges
|
|
|
0.8
|
|
|
|
0.0
|
Income
taxes
|
|
|
(10.1)
|
|
|
|
1.6
|
EBITDA with
noncontrolling interests
|
|
|
38.0
|
|
|
|
27.7
|
Unusual items
impacting net income
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure costs
|
|
|
5.4
|
|
|
|
11.3
|
Non-cash LIFO
expense
|
|
|
(0.4)
|
|
|
|
6.3
|
Mark-to-market
commodity hedging
|
|
|
(4.0)
|
|
|
|
1.4
|
Acquisition closing
costs
|
|
|
0.0
|
|
|
|
0.1
|
Sale of specialty
chemical business
|
|
|
0.0
|
|
|
|
0.1
|
Total
adjustments
|
|
|
1.0
|
|
|
|
19.2
|
Adjusted
EBITDA
|
|
$
|
39.0
|
$
|
|
|
46.9
|
UNAUDITED
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KOPPERS AND ADJUSTED
NET INCOME (In millions)
|
|
|
|
Three Months Ended
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
(Preliminary)
|
|
|
|
|
Net income (loss)
attributable to Koppers
|
|
$
|
20.6
|
$
|
|
|
(2.6)
|
Unusual items
impacting net income
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure costs
|
|
|
5.0
|
|
|
|
10.5
|
Non-cash LIFO
expense
|
|
|
(0.4)
|
|
|
|
6.3
|
Mark-to-market
commodity hedging
|
|
|
(3.9)
|
|
|
|
1.4
|
Sale of specialty
chemical business
|
|
|
0.0
|
|
|
|
0.1
|
Total
adjustments
|
|
|
0.7
|
|
|
|
18.3
|
Adjustments to income
tax and noncontrolling interests
|
|
|
|
|
|
|
|
Income tax on
adjustments to pre-tax income
|
|
|
(15.1)
|
|
|
|
(3.3)
|
Effect on adjusted net
income
|
|
|
(14.4)
|
|
|
|
15.0
|
Adjusted net income
attributable to Koppers
|
|
$
|
6.2
|
$
|
|
|
12.4
|
UNAUDITED
RECONCILIATION OF DILUTED EARNINGS PER SHARE AND
ADJUSTED EARNINGS PER SHARE (In millions except share
amounts)
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Preliminary)
|
|
|
|
|
|
Net income (loss)
attributable to Koppers
|
|
$
|
20.6
|
|
|
$
|
(2.6)
|
|
Adjusted net
income
|
|
$
|
6.2
|
|
|
$
|
12.4
|
|
Denominator for
diluted earnings per share (in thousands)
|
|
|
21,369
|
|
|
|
20,511
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.96
|
|
|
$
|
(0.13)
|
|
Adjusted earnings per
share
|
|
$
|
0.29
|
|
|
$
|
0.60
|
|
UNAUDITED
RECONCILIATION OF TOTAL DEBT TO NET DEBT AND NET LEVERAGE
RATIO (In millions)
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
Preliminary
2019
|
|
|
Proforma 2018
|
|
|
2018
|
|
Total Debt
|
$
|
901.2
|
|
|
$
|
990.4
|
|
$
|
|
990.4
|
|
Less: Cash
|
|
33.0
|
|
|
|
40.6
|
|
|
|
40.6
|
|
Net Debt
|
$
|
868.2
|
|
|
$
|
949.8
|
|
$
|
|
949.8
|
|
Adjusted
EBITDA
|
$
|
210.8
|
|
|
$
|
225.7
|
|
$
|
|
221.6
|
|
Net Leverage
Ratio
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
UNAUDITED
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(In millions)
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
(Preliminary)
|
|
|
|
|
Net income
|
$
|
67.4
|
|
$
|
|
29.2
|
|
Interest
expense
|
|
62.6
|
|
|
|
56.3
|
|
Depreciation and
amortization
|
|
58.5
|
|
|
|
54.8
|
|
Income tax
provision
|
|
1.4
|
|
|
|
26.0
|
|
Income from
discontinued operations
|
|
0.0
|
|
|
|
(0.4)
|
|
EBITDA
|
|
189.9
|
|
|
|
165.9
|
|
Unusual items
impacting net income:
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure
|
|
20.4
|
|
|
|
23.5
|
|
Non-cash LIFO
expense
|
|
4.5
|
|
|
|
12.6
|
|
Mark-to-market
commodity hedging
|
|
(4.0)
|
|
|
|
6.9
|
|
Sale of specialty
chemicals business
|
|
0.0
|
|
|
|
0.9
|
|
UIP inventory purchase
accounting adjustment
|
|
0.0
|
|
|
|
6.0
|
|
Acquisition closing
costs
|
|
0.0
|
|
|
|
3.1
|
|
Contract
buyout
|
|
0.0
|
|
|
|
1.6
|
|
Sale of
land
|
|
0.0
|
|
|
|
1.1
|
|
Adjusted EBITDA with
noncontrolling interests
|
$
|
210.8
|
|
$
|
|
221.6
|
|
Proforma adjusted
EBITDA from acquisitions
|
|
0.0
|
|
|
|
4.1
|
|
Proforma adjusted
EBITDA with noncontrolling interests
|
$
|
210.8
|
|
$
|
|
225.7
|
|
For
information:
|
Michael J. Zugay,
Chief Financial Officer and Treasurer
|
|
412 227
2231
|
|
ZugayMJ@koppers.com
|
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SOURCE Koppers Holdings Inc.