PITTSBURGH, May 3, 2019 /PRNewswire/ -- 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 first quarter
of $11.5 million, or $0.55 per diluted share compared to net income of
$17.8 million, or $0.81 per diluted share in the prior year
quarter.
Adjusted net income and adjusted earnings per share (EPS) were
$13.0 million and $0.62 per share for the first quarter of 2019
compared to $26.2 million and
$1.18 per share in the prior year
quarter, respectively. Net income and earnings per share,
reported and adjusted, were negatively affected by lower
profitability related to the company's business operations in
China, with the prior year quarter
benefiting from significantly higher pricing for pitch
products.
Adjustments to pre-tax income totaled $3.8 million for the first quarter of 2019 and
$11.1 million for the first quarter
of 2018. For both periods, these items primarily reflected
restructuring expenses, non-cash LIFO expense and non-cash
adjustments related to mark-to-market commodity hedging.
Consolidated sales were $434.9
million for the first quarter of 2019, an increase of
$28.8 million, or 7.1 percent, from
sales of $406.1 million in the prior
year quarter. This represented a first-quarter record in
sales, driven by the company's wood-preservation businesses.
Excluding a negative impact from foreign currency of $10.7 million, sales were higher by $39.5 million or 9.7 percent.
The Railroad and Utility Products and Services (RUPS) business
benefited from favorable pricing and volumes in the commercial
crosstie markets, acquisitions, and improved production utilization
driven by higher volumes in all categories of railroad related
products and services in North America. Despite being
subjected to severe winter weather conditions in various parts of
North America and a softening
repair and remodeling market, Performance Chemicals (PC) results
benefited from modestly higher sales from a combination of volumes
and pricing, as well as cost efficiencies, partially offset by
higher year-over-year raw material costs. The Carbon
Materials and Chemicals (CMC) segment reported lower sales,
primarily due to lower pricing of soft pitch products in
China, and decreased volumes from
Europe and Australia, partially offset by higher volumes
for pitch products in China and
North America and favorable
pricing in Australia.
Commenting on the quarter, President and CEO Leroy Ball said, "I am particularly pleased with
how we withstood the challenges of several headwinds during the
quarter and still managed to post results in the range of our
expectations. Weather wreaked havoc on both our supply
chain and end markets, yet we were able to find ways to
mitigate those issues and remain on track for our 2019
guidance. In the RUPS segment, a strong commercial crosstie
market led to better pricing and made up for an ongoing lack of dry
crossties to treat to meet Class I demand. In PC, early
softness in its industrial markets, a slower-than-expected start to
the residential construction season, and higher average raw
material costs were mitigated by certain pricing and market share
gains, a further displacement of third-party raw material purchases
with lower-cost intermediate raw material production, and operating
and administrative cost savings. As expected, our profit mix
is shifting toward our wood preservative and treatment businesses
which aligns with the long-term strategy for Koppers."
First-Quarter Financial Performance
- Sales for RUPS of $166.1 million
increased by $57.7 million, or 53.2
percent, compared to sales of $108.4
million in the prior year quarter. The sales increase was
primarily due to the acquisition of the Utility and Industrial
Products business in the second quarter of the prior year. In
addition, crosstie demand improved, which was reflected in higher
volumes and favorable pricing in the commercial markets as well
as increased year-over-year procurement levels of untreated
ties for Class I customers. Operating profit for the first quarter
was $8.7 million, or 5.2 percent,
compared with operating profit of $1.1
million, or 1.0 percent, in the prior year quarter. Adjusted
EBITDA for the first quarter was $14.3
million, or 8.6 percent, compared with $5.4 million, or 5.0 percent, in the prior year
quarter. Profitability increased considerably from prior year
primarily due to improved demand in the legacy railroad business as
well as the contribution from recent acquisitions.
- Sales for PC of $99.0 million
increased by $1.6 million, or 1.6
percent, compared to sales of $97.4
million in the prior year quarter. The sales increase
reflects higher demand in North
America and Australia along
with higher average pricing in certain areas to address rising raw
material costs. Operating profit was $12.8
million, or 12.9 percent, for the first quarter, compared
with $5.6 million, or 5.7 percent, in
the prior year quarter. Adjusted EBITDA was $15.5 million, or 15.7 percent, for the first
quarter, compared with $13.8 million,
or 14.2 percent, in the prior year quarter. Compared to the prior
year quarter, the current quarter benefited from slightly higher
sales, improved cost efficiencies, and insurance proceeds received
which, collectively, more than offset higher raw material
prices.
- Sales for CMC totaling $169.8
million decreased by $30.5
million, or 15.2 percent, compared to sales of $200.3 million in the prior year quarter.
Excluding an unfavorable impact from foreign currency translation
of $9.0 million, sales decreased by
$21.5 million, or 10.8 percent, from
the prior year quarter. The decrease was due mainly to
substantially lower sales prices for soft pitch products in
China, partially offset by
increased pitch volumes in China,
North America and Europe. In Australia, sales were negatively impacted by
lower volumes and foreign currency, partially offset by higher
pricing. Operating profit was $7.4
million, or 4.4 percent, in the first quarter, compared with
$37.2 million, or 18.6 percent, in
the prior year quarter. Adjusted EBITDA was $16.7 million, or 9.8 percent, in the first
quarter, compared with $47.0 million,
or 23.5 percent, in the prior year quarter. The current quarter
results were more in line with normalized earnings for the segment
compared with the prior year period, which benefited significantly
from favorable market pricing for pitch products in China.
- Operating profit was $28.4
million, or 6.5 percent, compared with $43.3 million, or 10.7 percent, in the prior year
quarter. Adjusted EBITDA was $46.0
million, or 10.6 percent, compared with $66.2 million, or 16.3 percent, in the prior year
quarter, due primarily to lower profitability from the CMC segment
in China, partially offset by
higher profitability from the company's wood-based businesses, RUPS
and PC. Operating profit margin and adjusted EBITDA margin are
calculated as a percentage of GAAP sales.
- Net income attributable to Koppers in the first quarter was
$11.5 million compared with net
income of $17.8 million in the prior
year quarter. Adjusted net income was $13.0
million, compared with $26.2
million in the prior year quarter.
- In the first quarter of 2019, items excluded from adjusted
EBITDA consisted of $2.2 million of
pre-tax charges, while adjusted net income and adjusted EPS for the
quarter excluded $3.8 million of
pre-tax charges. Both of the adjustments consisted of restructuring
expenses, non-cash LIFO expense, and non-cash adjustments related
to mark-to-market commodity hedging.
- Diluted EPS was $0.55, compared
with $0.81 per share in the prior
year quarter. Adjusted EPS for the quarter was $0.62, compared with $1.18 for the prior year period.
- Capital expenditures for the three months ended March 31, 2019, were $11.0
million compared with $22.5
million for the prior year period. The current year amount
represents general spending to maintain the safety and efficiency
of global operations.
- At March 31, 2019, total debt was
$1,012.7 million and, net of cash and
cash equivalents, net debt was $974.6
million, compared with total debt of $990.4 million and, net of cash and cash
equivalents, net debt of $949.8
million at December 31, 2018.
By comparison, the net debt was higher by $24.8 million, primarily due to typical first
quarter working capital increases. At March
31, 2019, the company's net leverage ratio was 4.8.
Credit Facility Amendment
On May 1, 2019, Koppers entered into a Third
Amendment and amended the Credit Facility to extend the agreement
for an additional 12 months, for a term of five years in
total. Under the amended Credit Facility, certain financial
statement covenants and related definitions and other covenants
have been revised. The company was in compliance with all
debt covenants under the prior Credit Facility at March 31, 2019 and was projected to be in
compliance throughout 2019.
2019 Outlook
Koppers is maintaining its top-line
forecast for 2019, forecasting that sales will be approximately
$1.8 billion to $1.9 billion, based upon a full year's sales from
the acquisitions made in 2018, and an overall stronger demand
environment in the company's wood-based technology related
businesses.
Although headwinds associated with higher raw material costs
will likely continue and earnings in China are likely to be lower in 2019, demand
for the company's wood-preservation products is expected to improve
year over year. This will be contingent on the ongoing
cyclical recovery in the Railroad and Utility Products and Services
business, new commercial opportunities in the Performance Chemicals
business, an entire year of contribution from acquisitions, and
projected savings of approximately $10
million to $15 million related
to the completed naphthalene unit at the Stickney, Illinois, facility.
As previously announced, the company has identified certain
measures to improve profitability by approximately
$10 million in 2019, which is
included in the total estimated savings of $25 million to $40
million to be realized over the next five years. The
benefits are expected to be generated through network optimization,
commercial development, raw materials, and other cost savings.
On an adjusted basis, Koppers is increasing the lower end of the
range of its EBITDA forecast to $212
million to $225 million for
2019, compared with approximately $222
million in the prior year. The company is anticipating
higher year-over-year interest expenses and depreciation and
amortization costs in 2019. Accordingly, the 2019 adjusted
EPS is forecasted to be in the range of $3.16 to $3.61,
compared with $3.50 in the prior
year. The projected effective tax rate in 2019 will be
approximately 27 percent.
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 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.
Based on a capital expenditure plan of $140 million over a two-year period that began in
2018, $30 million of capital
investments are forecast to occur in 2019. Capital spending
was $11.0 million in the first
quarter and at quarter end, was trending toward the expected
$30 million run rate.
The pro-forma net debt to adjusted EBITDA ratio is projected to
be in the range of 3.8x to 4.1x at December
31, 2019. The company continues to focus on debt
repayment and plans to reduce debt by a minimum of $80 million in 2019.
Commenting on the forecast, Mr. Ball said, "With one quarter
behind us, 2019 is generally playing out as we expected.
End-market demand has improved in our railroad-related businesses
and we expect that demand will continue for at least the next
eighteen to twenty-four months. Our ability to get untreated
ties to our plant and dried for treatment will ultimately drive the
level of improvement. PC demand has started out weaker than
we had hoped, but we have had nice market share gains that will
begin having an impact during the second quarter and, combined with
cost reduction initiatives, should reach our expected level of
profitability for this year. CMC markets will
be challenging all year, but if we can replicate the success
we had under difficult circumstances in the first quarter, we will
be fine."
Mr. Ball continued, "Beyond 2019, we remain intently focused on
delivering the $25 million to
$40 million of annual estimated
benefits while pushing profitable top-line growth through our
proven vertically integrated wood preservation business
model. Furthermore, now that we have added a key
sustainability element to serve customers through our ability to
responsibly recycle much of our treated products when they reach
the end of their lifecycle, we are even better positioned to be a
supplier of choice."
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 performance. 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 by
dialing 833-366-1128 in the United
States/Canada, or
412-902-6774 for international, Conference ID number 10130987.
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 online at:
https://services.choruscall.com/links/koppers190503.html. (Due to
the length of this URL, it may be necessary to copy and paste this
hyperlink into your internet browser's URL address field.)
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, Conference ID number 10130987.
The recording will be available for replay through June 3, 2019.
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 J. Zugay at 412 227 2231 or
Quynh McGuire at 412 227 2049.
Non-GAAP Financial Measures
This press release
contains certain non-GAAP financial measures. Koppers
believes that 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 Operating Profit to EBITDA and Adjusted
EBITDA; Unaudited Reconciliation of Net Income 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
excludes restructuring, impairment, non-cash LIFO charges,
acquisition-related costs, and non-cash mark-to-market commodity
hedging. As described above, the forecasted 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.
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; 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
report 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.
Koppers Holdings
Inc.
|
Unaudited
Consolidated Statement of Operations
|
(Dollars in
millions, except per share amounts)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net sales
|
|
$
|
434.9
|
|
|
$
|
406.1
|
|
Cost of
sales
|
|
|
353.8
|
|
|
|
311.4
|
|
Depreciation and
amortization
|
|
|
14.6
|
|
|
|
11.8
|
|
Impairment and
restructuring charges
|
|
|
0.3
|
|
|
|
1.5
|
|
Selling, general and
administrative expenses
|
|
|
37.8
|
|
|
|
38.1
|
|
Operating
profit
|
|
|
28.4
|
|
|
|
43.3
|
|
Other income,
net
|
|
|
0.6
|
|
|
|
0.2
|
|
Interest
expense
|
|
|
16.7
|
|
|
|
10.5
|
|
Income before income
taxes
|
|
|
12.3
|
|
|
|
33.0
|
|
Income tax (benefit)
provision
|
|
|
(0.1)
|
|
|
|
9.2
|
|
Income from
continuing operations
|
|
|
12.4
|
|
|
|
23.8
|
|
Loss from
discontinued operations, net of tax benefit of $0.0
|
|
|
0.0
|
|
|
|
(0.1)
|
|
Net income
|
|
|
12.4
|
|
|
|
23.7
|
|
Net income
attributable to noncontrolling interests
|
|
|
0.9
|
|
|
|
5.9
|
|
Net income
attributable to Koppers
|
|
$
|
11.5
|
|
|
$
|
17.8
|
|
Earnings per common
share attributable to Koppers
common shareholders:
|
|
|
|
|
|
|
|
|
Basic -
|
|
$
|
0.56
|
|
|
$
|
0.86
|
|
Diluted -
|
|
$
|
0.55
|
|
|
$
|
0.81
|
|
Comprehensive
income
|
|
$
|
20.6
|
|
|
$
|
16.2
|
|
Comprehensive income
attributable to noncontrolling interests
|
|
|
1.1
|
|
|
|
6.1
|
|
Comprehensive income
attributable to Koppers
|
|
$
|
19.5
|
|
|
$
|
10.1
|
|
Weighted average
shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
Basic
|
|
|
20,575
|
|
|
|
20,894
|
|
Diluted
|
|
|
20,881
|
|
|
|
22,158
|
|
Koppers Holdings
Inc.
|
Unaudited
Consolidated Balance Sheet
|
(Dollars in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
38.1
|
|
|
$
|
40.6
|
|
Accounts receivable,
net of allowance of $2.4 and $2.5
|
|
|
188.1
|
|
|
|
186.7
|
|
Income tax
receivable
|
|
|
2.5
|
|
|
|
2.8
|
|
Inventories,
net
|
|
|
285.5
|
|
|
|
284.7
|
|
Other current
assets
|
|
|
29.1
|
|
|
|
25.5
|
|
Total current
assets
|
|
|
543.3
|
|
|
|
540.3
|
|
Property, plant and
equipment, net
|
|
|
417.3
|
|
|
|
417.9
|
|
Operating lease
right-of-use assets
|
|
|
116.3
|
|
|
|
0.0
|
|
Goodwill
|
|
|
296.4
|
|
|
|
296.5
|
|
Intangible assets,
net
|
|
|
183.0
|
|
|
|
188.0
|
|
Deferred tax
assets
|
|
|
13.2
|
|
|
|
15.5
|
|
Other
assets
|
|
|
23.9
|
|
|
|
21.7
|
|
Total
assets
|
|
$
|
1,593.4
|
|
|
$
|
1,479.9
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
143.1
|
|
|
$
|
177.2
|
|
Accrued
liabilities
|
|
|
99.5
|
|
|
|
109.9
|
|
Current operating
lease liabilities
|
|
|
22.2
|
|
|
|
0.0
|
|
Current maturities of
long-term debt
|
|
|
11.6
|
|
|
|
11.6
|
|
Total current
liabilities
|
|
|
276.4
|
|
|
|
298.7
|
|
Long-term
debt
|
|
|
1,001.1
|
|
|
|
978.8
|
|
Accrued
postretirement benefits
|
|
|
48.4
|
|
|
|
48.2
|
|
Deferred tax
liabilities
|
|
|
6.8
|
|
|
|
6.8
|
|
Operating lease
liabilities
|
|
|
94.9
|
|
|
|
0.0
|
|
Other long-term
liabilities
|
|
|
75.8
|
|
|
|
80.4
|
|
Total
liabilities
|
|
|
1,503.4
|
|
|
|
1,412.9
|
|
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; 23,161,309 and 23,028,957 shares issued
|
|
|
0.2
|
|
|
|
0.2
|
|
Additional paid-in
capital
|
|
|
209.0
|
|
|
|
206.0
|
|
Retained
earnings
|
|
|
38.8
|
|
|
|
27.2
|
|
Accumulated other
comprehensive loss
|
|
|
(79.2)
|
|
|
|
(87.2)
|
|
Treasury stock, at
cost, 2,513,362 and 2,480,213 shares
|
|
|
(90.8)
|
|
|
|
(90.0)
|
|
Total Koppers
shareholders' equity
|
|
|
78.0
|
|
|
|
56.2
|
|
Noncontrolling
interests
|
|
|
12.0
|
|
|
|
10.8
|
|
Total
equity
|
|
|
90.0
|
|
|
|
67.0
|
|
Total liabilities and
equity
|
|
$
|
1,593.4
|
|
|
$
|
1,479.9
|
|
Koppers Holdings
Inc.
|
Unaudited
Consolidated Statement of Cash Flows
|
(Dollars in
millions)
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12.4
|
|
|
$
|
23.7
|
|
Adjustments to
reconcile net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
14.6
|
|
|
|
11.8
|
|
Gain on disposal of
assets and investment
|
|
|
0.0
|
|
|
|
0.1
|
|
Insurance
proceeds
|
|
|
(1.4)
|
|
|
|
0.0
|
|
Deferred income
taxes
|
|
|
0.4
|
|
|
|
(0.1)
|
|
Change in other
liabilities
|
|
|
(3.2)
|
|
|
|
(1.4)
|
|
Non-cash interest
expense
|
|
|
0.6
|
|
|
|
0.5
|
|
Stock-based
compensation
|
|
|
2.9
|
|
|
|
2.9
|
|
Other - net
|
|
|
(3.8)
|
|
|
|
3.2
|
|
Changes in working
capital:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
1.7
|
|
|
|
(41.7)
|
|
Inventories
|
|
|
(0.5)
|
|
|
|
(10.7)
|
|
Accounts
payable
|
|
|
(30.1)
|
|
|
|
2.4
|
|
Accrued
liabilities
|
|
|
(4.5)
|
|
|
|
(20.2)
|
|
Other working
capital
|
|
|
(3.5)
|
|
|
|
0.5
|
|
Net cash used in
operating activities
|
|
|
(14.4)
|
|
|
|
(29.0)
|
|
Cash (used in)
provided by investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(11.0)
|
|
|
|
(22.5)
|
|
Acquisitions, net of
cash acquired
|
|
|
0.0
|
|
|
|
(62.9)
|
|
Insurance proceeds
received
|
|
|
1.4
|
|
|
|
0.0
|
|
Net cash provided by
divestitures and asset sales
|
|
|
0.3
|
|
|
|
0.3
|
|
Net cash used in
investing activities
|
|
|
(9.3)
|
|
|
|
(85.1)
|
|
Cash provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Net increase in credit
facility borrowings
|
|
|
34.0
|
|
|
|
116.9
|
|
Borrowings of
long-term debt
|
|
|
0.0
|
|
|
|
0.3
|
|
Repayments of
long-term debt
|
|
|
(12.6)
|
|
|
|
(4.1)
|
|
Issuances of Common
Stock
|
|
|
0.3
|
|
|
|
1.3
|
|
Repurchases of Common
Stock
|
|
|
(0.9)
|
|
|
|
(7.4)
|
|
Payment of debt
issuance costs
|
|
|
0.0
|
|
|
|
(1.1)
|
|
Net cash provided by
financing activities
|
|
|
20.8
|
|
|
|
105.9
|
|
Effect of exchange
rate changes on cash
|
|
|
0.4
|
|
|
|
0.1
|
|
Net decrease in cash
and cash equivalents
|
|
|
(2.5)
|
|
|
|
(8.1)
|
|
Cash and cash
equivalents at beginning of period
|
|
|
40.6
|
|
|
|
60.3
|
|
Cash and cash
equivalents at end of period
|
|
$
|
38.1
|
|
|
$
|
52.2
|
|
Cash paid for amounts
included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
Operating cash outflow
from operating leases
|
|
$
|
7.6
|
|
|
$
|
0.0
|
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
Right-of-use assets
obtained in exchange for new operating lease liabilities
|
|
$
|
14.3
|
|
|
$
|
0.0
|
|
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.
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
(Dollars in
millions)
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Railroad and Utility
Products and Services
|
|
$
|
166.1
|
|
|
$
|
108.4
|
|
Performance
Chemicals
|
|
|
99.0
|
|
|
|
97.4
|
|
Carbon Materials and
Chemicals
|
|
|
169.8
|
|
|
|
200.3
|
|
Total
|
|
$
|
434.9
|
|
|
$
|
406.1
|
|
Operating profit
(loss):
|
|
|
|
|
|
|
|
|
Railroad and Utility
Products and Services
|
|
$
|
8.7
|
|
|
$
|
1.1
|
|
Performance
Chemicals
|
|
|
12.8
|
|
|
|
5.6
|
|
Carbon Materials and
Chemicals
|
|
|
7.4
|
|
|
|
37.2
|
|
Corporate
Unallocated
|
|
|
(0.5)
|
|
|
|
(0.6)
|
|
Total
|
|
$
|
28.4
|
|
|
$
|
43.3
|
|
Operating profit
margin:
|
|
|
|
|
|
|
|
|
Railroad and Utility
Products and Services
|
|
|
5.2
|
%
|
|
|
1.0
|
%
|
Performance
Chemicals
|
|
|
12.9
|
%
|
|
|
5.7
|
%
|
Carbon Materials and
Chemicals
|
|
|
4.4
|
%
|
|
|
18.6
|
%
|
Total
|
|
|
6.5
|
%
|
|
|
10.7
|
%
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
Railroad and Utility
Products and Services
|
|
$
|
4.8
|
|
|
$
|
3.0
|
|
Performance
Chemicals
|
|
|
4.9
|
|
|
|
4.4
|
|
Carbon Materials and
Chemicals
|
|
|
4.9
|
|
|
|
4.4
|
|
Total
|
|
$
|
14.6
|
|
|
$
|
11.8
|
|
Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
Railroad and Utility
Products and Services
|
|
$
|
14.3
|
|
|
$
|
5.4
|
|
Performance
Chemicals
|
|
|
15.5
|
|
|
|
13.8
|
|
Carbon Materials and
Chemicals
|
|
|
16.7
|
|
|
|
47.0
|
|
Corporate
Unallocated
|
|
|
(0.5)
|
|
|
|
0.0
|
|
Total
|
|
$
|
46.0
|
|
|
$
|
66.2
|
|
Adjusted EBITDA
margin(2):
|
|
|
|
|
|
|
|
|
Railroad and
Utility Products and Services
|
|
|
8.6
|
%
|
|
|
5.0
|
%
|
Performance
Chemicals
|
|
|
15.7
|
%
|
|
|
14.2
|
%
|
Carbon Materials and
Chemicals
|
|
|
9.8
|
%
|
|
|
23.5
|
%
|
Total
|
|
|
10.6
|
%
|
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
The tables below
describe the adjustments to EBITDA for the quarters ended March 31,
2019 and 2018, respectively.
|
(2)
|
Adjusted EBITDA as a
percentage of GAAP sales.
|
UNAUDITED
RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED
EBITDA*
|
(In
millions)
|
|
|
|
|
|
|
Three months ended
March 31,2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
RUPS
|
|
|
PC
|
|
|
CMC
|
|
|
Unallocated
|
|
|
Consolidated
|
|
Operating profit
(loss)
|
|
$
|
8.7
|
|
|
$
|
12.8
|
|
|
$
|
7.4
|
|
|
$
|
(0.5)
|
|
|
$
|
28.4
|
|
Other income
(loss)
|
|
|
(0.2)
|
|
|
|
0.9
|
|
|
|
(0.1)
|
|
|
|
0.0
|
|
|
|
0.6
|
|
Depreciation and
amortization
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.9
|
|
|
|
0.0
|
|
|
|
14.6
|
|
Depreciation in
impairment and restructuring charges
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.2
|
|
|
|
0.0
|
|
|
|
0.2
|
|
EBITDA with
noncontrolling interest
|
|
$
|
13.3
|
|
|
$
|
18.6
|
|
|
$
|
12.4
|
|
|
$
|
(0.5)
|
|
|
$
|
43.8
|
|
Unusual items
impacting EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMC
restructuring
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
4.3
|
|
|
|
0.0
|
|
|
|
4.3
|
|
Non-cash LIFO
expense
|
|
|
1.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
1.0
|
|
Mark-to-market
commodity hedging
|
|
|
0.0
|
|
|
|
(3.1)
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
(3.1)
|
|
Adjusted
EBITDA
|
|
$
|
14.3
|
|
|
$
|
15.5
|
|
|
$
|
16.7
|
|
|
$
|
(0.5)
|
|
|
$
|
46.0
|
|
Adj. EBITDA % of
Consolidated Adj. EBITDA (excluding corporate unallocated)
|
|
|
30.8
|
%
|
|
|
33.3
|
%
|
|
|
35.9
|
%
|
|
|
|
|
|
|
|
|
UNAUDITED
RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED
EBITDA*
|
(In
millions)
|
|
|
|
|
|
|
Three months ended
March 31,2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
RUPS
|
|
|
PC
|
|
|
CMC
|
|
|
Unallocated
|
|
|
Consolidated
|
|
Operating profit
(loss)
|
|
$
|
1.1
|
|
|
$
|
5.6
|
|
|
$
|
37.2
|
|
|
$
|
(0.6)
|
|
|
$
|
43.3
|
|
Other income
(loss)
|
|
|
(0.3)
|
|
|
|
0.3
|
|
|
|
(0.4)
|
|
|
|
0.6
|
|
|
|
0.2
|
|
Depreciation and
amortization
|
|
|
3.0
|
|
|
|
4.4
|
|
|
|
4.4
|
|
|
|
0.0
|
|
|
|
11.8
|
|
Depreciation in
impairment and restructuring charges
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
1.4
|
|
|
|
0.0
|
|
|
|
1.4
|
|
EBITDA with
noncontrolling interest
|
|
$
|
3.8
|
|
|
$
|
10.3
|
|
|
$
|
42.6
|
|
|
$
|
0.0
|
|
|
$
|
56.7
|
|
Unusual items
impacting EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMC
restructuring
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
4.1
|
|
|
|
0.0
|
|
|
|
4.1
|
|
RUPS treating plant
closures
|
|
|
0.3
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.3
|
|
Non-cash LIFO
expense
|
|
|
1.3
|
|
|
|
0.0
|
|
|
|
0.3
|
|
|
|
0.0
|
|
|
|
1.6
|
|
Mark-to-market
commodity hedging
|
|
|
0.0
|
|
|
|
3.5
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
3.5
|
|
Adjusted
EBITDA
|
|
$
|
5.4
|
|
|
$
|
13.8
|
|
|
$
|
47.0
|
|
|
$
|
0.0
|
|
|
$
|
66.2
|
|
Adj. EBITDA % of
Consolidated Adj. EBITDA
(excluding corporate unallocated)
|
|
|
8.2
|
%
|
|
|
20.8
|
%
|
|
|
71.0
|
%
|
|
|
|
|
|
|
|
|
*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.
|
UNAUDITED
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA
|
(In
millions)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net income
|
|
$
|
12.4
|
|
|
$
|
23.7
|
|
Interest
expense
|
|
|
16.7
|
|
|
|
10.5
|
|
Depreciation and
amortization
|
|
|
14.6
|
|
|
|
11.8
|
|
Depreciation in
impairment and restructuring charges
|
|
|
0.2
|
|
|
|
1.4
|
|
Income
taxes
|
|
|
(0.1)
|
|
|
|
9.2
|
|
Loss from discontinued
operations
|
|
|
0.0
|
|
|
|
0.1
|
|
EBITDA with
noncontrolling interests
|
|
|
43.8
|
|
|
|
56.7
|
|
Unusual items
impacting net income
|
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure costs
|
|
|
4.3
|
|
|
|
4.4
|
|
Non-cash LIFO
expense
|
|
|
1.0
|
|
|
|
1.6
|
|
Mark-to-market
commodity hedging
|
|
|
(3.1)
|
|
|
|
3.5
|
|
Total
adjustments
|
|
|
2.2
|
|
|
|
9.5
|
|
Adjusted
EBITDA
|
|
$
|
46.0
|
|
|
$
|
66.2
|
|
UNAUDITED
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KOPPERS AND ADJUSTED
NET INCOME
|
(In
millions)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net income
attributable to Koppers
|
|
$
|
11.5
|
|
|
$
|
17.8
|
|
Unusual items
impacting net income
|
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure costs
|
|
|
5.9
|
|
|
|
6.0
|
|
Non-cash LIFO
expense
|
|
|
1.0
|
|
|
|
1.6
|
|
Mark-to-market
commodity hedging
|
|
|
(3.1)
|
|
|
|
3.5
|
|
Total
adjustments
|
|
|
3.8
|
|
|
|
11.1
|
|
Adjustments to income
tax and noncontrolling interests
|
|
|
|
|
|
|
|
|
Income tax on
adjustments to pre-tax income
|
|
|
(2.3)
|
|
|
|
(2.8)
|
|
Effect on adjusted net
income
|
|
|
1.5
|
|
|
|
8.3
|
|
Adjusted net income
including discontinued operations
|
|
|
13.0
|
|
|
|
26.1
|
|
Loss from
discontinued operations
|
|
|
0.0
|
|
|
|
0.1
|
|
Adjusted net income
attributable to Koppers
|
|
$
|
13.0
|
|
|
$
|
26.2
|
|
UNAUDITED
RECONCILIATION OF DILUTED EARNINGS PER SHARE AND
|
ADJUSTED EARNINGS
PER SHARE
|
(In millions
except share amounts)
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net income
attributable to Koppers
|
|
$
|
11.5
|
|
|
$
|
17.8
|
|
Adjusted net income
(from above)
|
|
$
|
13.0
|
|
|
$
|
26.2
|
|
Denominator for
diluted earnings per share (in thousands)
|
|
|
20,881
|
|
|
|
22,158
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.55
|
|
|
$
|
0.81
|
|
Adjusted earnings per
share
|
|
$
|
0.62
|
|
|
$
|
1.18
|
|
UNAUDITED
RECONCILIATION OF TOTAL DEBT TO NET DEBT AND NET LEVERAGE
RATIO
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended
|
|
|
March 31, 2019
|
|
|
December 31,
2018
|
|
Total Debt
|
$
|
1,012.7
|
|
|
$
|
990.4
|
|
Less: Cash
|
|
38.1
|
|
|
|
40.6
|
|
Net Debt
|
$
|
974.6
|
|
|
$
|
949.8
|
|
Adjusted
EBITDA
|
$
|
201.5
|
|
|
$
|
221.6
|
|
Net Leverage
Ratio
|
|
4.8
|
|
|
|
4.3
|
|
UNAUDITED
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA
|
ON A LATEST TWELVE
MONTH BASIS
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended
|
|
|
March 31, 2019
|
|
|
December 31,
2018
|
|
Net income
|
$
|
18.0
|
|
|
$
|
29.2
|
|
Interest expense
including refinancing
|
|
62.2
|
|
|
|
56.3
|
|
Depreciation and
amortization
|
|
56.4
|
|
|
|
54.8
|
|
Income tax
provision
|
|
16.8
|
|
|
|
26.0
|
|
Income from
discontinued operations
|
|
(0.5)
|
|
|
|
(0.4)
|
|
EBITDA
|
|
152.9
|
|
|
|
165.9
|
|
Unusual items
impacting net income:
|
|
|
|
|
|
|
|
Impairment,
restructuring and plant closure
|
|
23.5
|
|
|
|
23.5
|
|
Non-cash LIFO
expense
|
|
12.0
|
|
|
|
12.6
|
|
Mark-to-market
commodity hedging
|
|
0.3
|
|
|
|
6.9
|
|
UIP inventory purchase
accounting adjustment
|
|
6.0
|
|
|
|
6.0
|
|
Acquisition closing
costs
|
|
3.1
|
|
|
|
3.1
|
|
Contract
buyout
|
|
1.6
|
|
|
|
1.6
|
|
Sale of
land
|
|
1.1
|
|
|
|
1.1
|
|
Sale of specialty
chemicals business
|
|
1.0
|
|
|
|
0.9
|
|
Adjusted EBITDA with
noncontrolling interests
|
$
|
201.5
|
|
|
$
|
221.6
|
|
Proforma adjusted
EBITDA from acquisitions
|
|
0.0
|
|
|
|
4.1
|
|
Proforma adjusted
EBITDA with noncontrolling interests
|
$
|
201.5
|
|
|
$
|
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.